The Olympics and Liberty

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I’m often asked what makes a film “libertarian.” Does it need to be set in a dystopian totalitarian future? Must the protagonist be fighting a government bureaucracy or authority? Many libertarian films do contain those features. But my favorites are those in which a protagonist achieves a goal or overcomes obstacles without turning to the government to fix things.

Two such films are in theaters now, and both are based on true stories about Olympic athletes who achieved their goals in spite of government interference, not because of government aid. Race tells the Jesse Owens story, and Eddie the Eagle tells the Michael Edwards story. Both are worth seeing.

Race is the perfect title for this film that focuses on both racing and racism. Owens was one of the most famous athletes of the 20th century. Historian Richard Crepeau (who spoke at FreedomFest last year) described the 1935 college track meet at Ann Arbor in which Owens, in the space of 45 minutes, set three world records and tied a fourth as “the most impressive athletic achievement since 1850.” Nevertheless, Owens (Stephan James) is not welcome at the 1936 Olympics in Berlin. Adolf Hitler (Adrian Zwicker) intends to use “his” Olympics as a propaganda piece to highlight the physical superiority of the Aryan race, and he does not want any blacks or Jews to spoil his plan. He hires filmmaker Leni Riefenstahl (Carice van Houten) to document the glorious event.

The film reveals the backstage negotiations between Olympic Committee representative Avery Brundage (Jeremy Irons) and the German organizing committee at which Brundage insisted on assurances that Jews and blacks would be allowed to compete. Brundage’s insistence is somewhat hypocritical, considering the treatment Owens and other black athletes were enduring at home, but he was successful in forestalling a threatened American boycott of the Games.

What makes a film “libertarian”? Does it need to be set in a dystopian totalitarian future? Must the protagonist be fighting a government bureaucracy or authority?

Owens faces similar pressure from the NAACP, as he is warned that he ought to boycott the Games to protest racism in Germany. Owens feels the weight of his race as he considers the conflict, but in the end he delivers the most resounding protest of all, winning four gold medals and derailing Hitler’s plan in short order. This is as it should be. What good would it have done if Owens had stayed home to protest German policy? Would it have made any difference? Would anyone even have noticed? I felt the same way when President Carter made the opposite decision in 1980 and forced American athletes to boycott the 1980 Games in Moscow to protest Russia’s invasion of Afghanistan. What good did it do to destroy the dreams of hundreds of American athletes who had trained their whole lives to compete in a tournament that comes along only once every four years? Did it help anyone in Afghanistan? Did it hurt all those Russian athletes who took home more medals because the Americans weren’t there? I think not.

In the movie, Owens also faces the pressure of athletic celebrity, and Stephan James skillfully portrays the ambition and the temptations of a small-town boy chasing big-time dreams. He is anchored in his pursuits by his college coach Larry Snyder (Jason Sudeikis) and his girlfriend Ruth (Shanice Banton), who would become his wife and partner until the day he died in 1980. As with most sports films, the outcome of the contest is known from the beginning. The real story is how the hero gets there, and how he conducts himself along the way. Owens was a hero worthy of the title.

Eddie the Eagle tells the story of an Olympic hero of a different sort — one who is remembered for his tenacity rather than his innate skill. Michael Edwards (played by Taron Egerton as an adult and by brothers Tommy Costello, Jr. at 10 years old and Jack Costello at 15) simply dreams of being an Olympian; he doesn’t care what sport. His mother (Jo Hartley) nurtures that dream, giving him a special biscuit tin to hold his medals and praising his accomplishments, even if it’s just holding his breath for 58 seconds. Ironically, Eddie is motivated by a picture of Jesse Owens in a book about the Olympics. By contrast, Eddie’s father (Keith Allen) is a pragmatist, encouraging Eddie to give up his silly dreams and become a plasterer like him. His father isn’t a bad man; he just wants to protect his son from disappointment and financial waste. Fortunately for Eddie, he has the kind of optimistic personality that simply doesn’t hear criticism.

Owens feels the weight of his race as he considers the conflict, but in the end he delivers the most resounding protest of all, winning four gold medals and derailing Hitler’s plan in short order.

Eddie settles on skiing as his sport and manages to qualify for the British Olympic team, but the Committee cuts him because he “isn’t Olympic material.” Read: you don’t dress well or look right and you’re rather clumsy. Undaunted, Eddie turns to ski jumping because — well, because no one else in Britain competes in ski jumping. If he can compete in an international event and land on his feet, he can qualify for the Calgary Olympics. This is the same year that the Jamaican bobsled team slipped through the same loophole — a loophole that was quickly closed before the following season. Now athletes must compete internationally and place in the top 30% of finishers in order to qualify. But in 1988, if you could find a sport that few people in your country competed in, you could literally “make the team.”

With his father’s van and his mother’s savings, Eddie takes off for the training slopes in Germany. There he tackles the jumps, crashes on his landings, and tackles the jumps again. When he lands the 15-meter jump successfully, he moves on to the 40 and the 70, crashing more than he lands. Low camera angles during the jumps create the sensation of height and speed, providing a rush of adrenaline for the audience. Frequent shots of Eddie tumbling after a crash emphasize just how risky this beautiful sport is. We admire Eddie’s persistence, even as we cringe at his crashes. He believes in himself, no matter what.

Eventually he meets up with Bronson Peary (Hugh Jackman), a chain-smoking, hard-drinking slope groomer who looks incredibly lean and buff for an alcoholic. Peary turns out to be a former ski jumper who lost his chance for Olympic glory by not taking his training seriously. This, of course, sets us up for the perfect sports metaphor movie: unskilled amateur with indomitable heart meets innately talented athlete who threw it all away, and both find redemption while training for the Games.

Eddie turns to ski jumping because — well, because no one else in Britain competes in ski jumping.

It’s a great story about overcoming obstacles, sticking with a goal, and ignoring the naysayers. It demonstrates the power of a mother’s encouragement, and the possibility that even a poor, farsighted boy from a working-class neighborhood can achieve his dreams — if he doesn’t kill himself practicing for it.

All this allows us to forgive the fact that the movie mostly isn’t true. Yes, Michael Edwards did compete in the Calgary Olympics. He did set a British record for ski-jumping, despite coming in dead last in both events, simply because, as the only British jumper, his was the only British record. His exuberance and joy just for participating in the Olympics led to his being the only individual athlete referred to specifically in the closing speech that year (“some of us even soared like an eagle”). But Bronson Peary never existed, and Michael Edwards actually trained with US coaches at Lake Placid, albeit with limited funds that caused him to use ill-fitting equipment. But that wouldn’t have given us such a feel-good story.


Editor's Note: Reviews of "Race," directed by Stephen Hopkins. Forecast Pictures, 2016, 134 minutes; and "Eddie the Eagle," directed by Dexter Fletcher. Pinewood Studios, 2016, 106 minutes.



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Pandora’s Book

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What would you do if you were told that something you believe is not true? It would depend on who was telling you, I guess. It would also depend on how important the belief was to you, and on the strength of the evidence offered, wouldn’t it?

Suppose the belief in question had shaped your career and your view of how the world works. What if you were offered strong evidence that this fundamental belief was just plain wrong? What if you were offered proof?

Would you look at it?

In his 2014 book, A Troublesome Inheritance: Genes, Race and Human History, Nicholas Wade takes the position that “human evolution has been recent, copious, and regional.” Put that way, it sounds rather harmless, doesn’t it? In fact, the book has caused quite a ruckus.

What if you were offered strong evidence that this fundamental belief was just plain wrong? What if you were offered proof?

The following is not a review of Wade’s book. It is, instead, more a look at how the book was received and why. There are six parts: a story about Galileo, a summary of what I was taught about evolution in college, a sharper-edged rendering of the book’s hypothesis, an overview of some of the reviews, an irreverent comment on the controversy over Wade’s choice of a word, and, finally, an upbeat suggestion to those engaged in the ongoing nurture vs. nature debate.

1. It is the winter of 1609. In a courtyard of the University of Padua, Galileo Galilei closes one eye and peers at the moon through his recently improved telescope. As he observes the play of light and shadow on its surface, there comes a moment when he realizes that he is looking at the rising and setting of the sun across the mountains and valleys of another world. He is stunned.

Galileo hurries to tell his friend and colleague, Cesare Cremonini, then drags him to the courtyard, urging him to view this wonder. Cesare puts his eye to the scope for just a moment, then pulls his head back, pauses, frowns, and says, “I do not wish to approve of claims about which I do not have any knowledge, and about things which I have not seen . . . and then to observe through those glasses gives me a headache. Enough! I do not want to hear anything more about this.”

What a thing to say.

A little context might help. Cesare taught the philosophy of Aristotle at Padua. Aristotle held that the moon was not a world but a perfect sphere: no mountains, no valleys. Furthermore, the Inquisition was underway, and a tenured professor of philosophy who started rhapsodizing about “another world” would have been well advised to restrict his comments to the Celestial Kingdom. The Pope, you see, agreed with Aristotle. To him, and, therefore, to the Roman Catholic Church, the only “world” was the earth, the immobile center of the universe around which everything else moved. Any other view was taboo. Poor Cesare! Not only did he not want to look through the telescope; he did not want there to be mountains on the moon at all.

The question in the present drama is this: who is playing the role of Cremonini?

It would get worse. Soon Galileo would point his scope at Jupiter and discover its moons, heavenly bodies that clearly weren’t orbiting the earth. Then he would observe and record the astonishing fact that Venus went through phases as it orbited not the earth but the sun. So: Ptolemy was wrong, Copernicus was right, and Cesare Cremonini would go down in history as the epitome of willful ignorance. Galileo, of course, fell into the clutches of the Inquisition and became a hero of the Renaissance.

To be fair to Cesare, the story has been retrospectively streamlined into a sort of scientific morality tale. While the part about Galileo’s discovery is probably more or less right, Cremonini’s remark wasn’t made directly to Galileo. It was reported to him later in a letter from a mutual friend, Paolo Gualdo. The text of that letter is included in Galileo’s work, Opere II. And while those jagged borders of light and dark on the moon, imperfectly magnified, were certainly thought-provoking, to say that the case against Ptolemy was closed on the spot, that night in Padua, would be too neat.

It makes a good story, though, and a nice lens for viewing reactions to scientific breakthroughs. Changing our focus now from the moons of Jupiter to the molecular Rubik’s cube we call the human genome, the question in the present drama is this: who is playing the role of Cremonini?

2. In an undergraduate course, taken decades ago, I was taught that human evolution had more or less stopped when the glaciers retreated about 10,000 years ago. Evolution had been driven primarily by natural selection in response to a changing environment; and, as such changes had, for the time being at least, halted, so too had the evolution of man.

I was taught that races exist only as social constructs, not as meaningful biological categories, and that these constructs are only skin deep. They told me that the social behavior of an individual is not genetic, that behavioral and cognitive propensities just aren’t in our genes.

I was taught that the differences among social organizations are unrelated to the genetic differences of the populations that comprise those various organizations, and that social environments have no influence on human evolution.

3. To show how Wade’s book stirred things up, I will present his central hypothesis with an emphasis on the controversial parts. I’ll avoid scientific jargon, in an effort to make the meaning clearer to my fellow nonscientists.

Wade believes that humanity has been evolving rapidly during the past 30,000 years and continues to evolve rapidly today. It is not just our physical characteristics that continue to evolve. The genes that influence our behavior also evolve. (Yes, that’s what the book says, that our behavior is influenced by our genes.)

is humanity rapidly evolving? Is there such a thing as race in biological terms? Nicholas Wade believes that the answer is “yes.”

He also believes that humanity has evolved differently in different locations, most markedly on the different continents, where the major races evolved. (Yes, the book calls them races.)

These separately evolved genetic differences include those that influence behavior. (Yes, the book says that race is deeper than the skin.)

Furthermore, these genetic differences in behavioral propensities have contributed to the diversity of civilizations. The characteristics of any given civilization, in turn, influence the direction of evolution of the humans who compose it.

Oh, my.

We now know that the earth goes around the sun. But is humanity rapidly evolving? Is there such a thing as race in biological terms? Does the particular set of alleles in an individual’s genome influence how that person behaves? Does the particular frequency of alleles in the collective genetic material of the people who compose a civilization influence the characteristics of that civilization? Do the characteristics of a civilization influence the direction of the evolution of the humans that compose it? Nicholas Wade believes that the answer to all these questions is “yes.” While he does not claim that all of this has been proven, he is saying, in effect, that what I learned in college is not true. Am I now to be cast as Cremonini?

4. There are those who disagree with Wade.

In fact, lots of people didn’t like A Troublesome Inheritance at all. I’ve read about 20 reviews, few of them favorable. Even Charles Murray, writing in theWall Street Journal, seemed skeptical of some of Wade’s arguments.Most of the others were simply unfavorable, among them reviews in the Washington Post, the New York Review of Books, Scientific American, the New York Times, The New Republic, and even Reason. Slate and The Huffington Post piled on. While Brian Bethune’s review in MacLean’s was gentler than most, it was gently dismissive.

The reactions run from disdain to anger to mockery. Nathaniel Comfort’s satirical review Hail Britannia!,in his blog Genotopia, is the funniest. Donning the persona of a beef-fed, red-faced, pukka sahib at the height of the Raj, he praises Wade’s book as a self-evident explanation of the superiority of the West in general and the British in particular. (I once saw a retired British officer of the Indian Army being told by an Indian government official that he had to move his trailer to a remote area of a tiger preserve to ensure the security of a visiting head of state. He expressed his reluctance with the words, “I’m trying to be reasonable, damn it, but I’m not a reasonable man!”)

There’s some pretty heated language in these reviews, too. That the reviewers are upset is understandable. After all, they have been told that what they believe is not true. And the fellow doing the telling isn’t even a scientist.Sure, Nicholas Wade was a science writer and editor for the New York Times for three decades, but that doesn’t makehim a scientist. Several of the reviews charge that Wade relies on so many historical anecdotes, broad-brush impressions, and hastily formed conclusions that it’s a stretch to say the book is based on science at all.

Of course they’re angry. Some of these guys are professors who teach, do research, and write books on the very subject areas that Wade rampages through. If he’s right, then they’re wrong, and their life’s work has been, if not wasted, at the very least misguided.

The consensus is that Wade has made a complete hash of the scientific evidence that he cites to make his case: cherry-picking, mischaracterizing, over-generalizing, quoting out of context, that kind of thing.

Another common complaint is that, wittingly or not, Wade is providing aid and comfort to racists. In fact, the animosity conveyed in some of the reviews may spring primarily from this accusation. In his review in the New York Times, David Dobbs called the book “dangerous.” Whoa. As I said, they don’t like A Troublesome Inheritance at all.

So, is Nicholas Wade just plain wrong, or are his learned critics just so many Cremoninis?

5. While the intricacies of most of the disagreements between Wade and his critics are over my head, one of the criticisms is fairly clear. It is that Wade uses the term “race” inappropriately.

The nub of the race question is that biologists want the word “race” as it applies to humans to be the equivalent of the word “subspecies” as it applies to animals. As the genetic differences among individual humans and the different populations of humans are so few, and the boundaries between the populations so indistinct, biologists conclude that there are no races. We are all homo sapiens sapiens. We are one.

Several of the reviews charge that Wade relies on so many historical anecdotes, broad-brush impressions, and hastily formed conclusions that it’s a stretch to say the book is based on science at all.

Just south of Flathead Lake in Montana is an 8,000-acre buffalo preserve. One summer day in the mid-’70s, I walked into its visitors center with my wife and father-in-law and asked the woman behind the counter, “Where are the buffalo?” She did not hesitate before hissing, “They’re bison.” Ah, yes: the bison-headed nickel, Bison Bill Cody, and, “Oh, give me a home where the bison roam . . .” You know the critter.

Put it this way: to a National Park Ranger, a buffalo is a bison; to a biological anthropologist, race is a social construct. That doesn’t mean there’s no such thing as a buffalo.

I don’t mean to make light of it. I’ve read the explanations. I’ve studied the printouts that graph and color-code populations according to genetic variation. I’ve studied the maps and charts that show the differences in allele frequencies among the groups. I’ve squinted at the blurry edges of the clusters. I get all that, but this much is clear: the great clusters of genetic variation that correspond to the thousands of years of relative isolation on the various continents that followed the trek out of Africa are real, and because they are genetic, they are biological. In any case, we are not in a biology class; we are in the world, where most people don’t talk about human “subspecies” very often, if ever. They talk about human “races.” To criticize Wade’s use of the term “race” seems pedantic. Whether to call the clusters “races” or “populations” or “groups” is a semantic dispute.

Put it another way: If you put on your “there is no such thing as race” costume for Halloween, you’ll be out trick-or-treating in your birthday suit, unless you stay on campus.

Besides, use any word you want, it won’t affect the reality that the symbol represents. The various “populations” either have slightly different genetic mixes that nudge behavior differently, or they don’t. I mean, are we seeking the truth here or just trying to win an argument?

6. While Wade offers no conclusive proof that genes create behavioral predispositions, he does examine some gene-behavior associations that point in that direction and seem particularly open to further testing. Among them are the MAOA gene and its influence on aggression and violence, and the OXTR gene and its influence on empathy and sensitivity. (The symbols link to recent research results.)

What these have in common is that the biochemical chain from the variation of the gene to the behavior is at least partly understood. The chemical agents of the genes in question are L-monoamine oxidase and oxytocin, respectively. Because of this, testing would not be restricted to a simple correlation of alleles to overt behaviors in millions of people, though that is a sound way to proceed as well. The thing about the intermediate chemical triggers is that they could probably be measured, manipulated, and controlled for.

We are in the world, where most people don’t talk about human “subspecies” very often, if ever. They talk about human “races.”

The difficult task of controlling for epigenetic, developmental, and environmental variables would also be required but, in the end, it should be possible to determine whether the alleles in question actually influence behavior.

If they do, the next step would be to determine the frequency of the relevant allele patterns in various populations. If the frequency varies significantly, then the discussion about how these genetic differences in behavioral propensities may have contributed to the diverse characteristics of civilizations could be conducted on firmer ground.

If the alleles are proven not to influence behavior, then Wade’s hypothesis would remain unproven, and lots of textbooks wouldn’t have to be tossed out.

Of course, it’s not so simple. The dance between the genome and the environment has been going on since life began. At this point, it might be said that everything in the environment potentially influences the evolution of man, making it very difficult to identify which parts of human behavior, if any, are influenced by our genes. Like Cremonini, I have no wish to approve of claims about which I do not have knowledge.

But the hypothesis that Wade lays out will surely be tested and retested. The technology that makes the testing possible is relatively new, but improving all the time. We can crunch huge numbers now, and measure genetic differences one molecule at a time. It is inevitable that possible links between genes and behavior will be examined more and more closely as the technology improves. Associations among groups of alleles, for example, and predispositions of trust, cooperation, conformity, and obedience will be examined, as will the even more controversial possible associations with intelligence. That is to say, the telescope will become more powerful. And then, one evening, we will be able to peer through the newly improved instrument, and we shall see.

That is, of course, if we choose to look.




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Report From Iquitos

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I am writing from Iquitos, a town in Peru, encircled by the jungle of the Amazon. The only connection to the external world is by air. Boats — loaded with cattle, exotic animals, human beings, and forest-produce that in the US would put you in prison for several lives — go downstream and upstream, providing access to smaller villages and tribes, but not to anything beyond. Iquitos is very spacious and well-planned. The mighty Amazon and its tributaries surround the town, and most people have come here from its tribal areas.

For less than $40 a day, I can have a very good style of life. It costs me $22 for a good, clean, air-conditioned hotel, with full breakfast included. A tip of 30 cents a day gets me all the attention I want. A very good meal at an “expensive” restaurant costs me $8. The cost is much less — about $3 — if I go to a good, busy place for locals. Most taxi rides cost 60 cents. Yet because most things are flown in, Iquitos tends to be about 25% more “expensive,” in my estimation, than similar places I have visited in Peru.

During 30 minutes of my sitting in a boat one evening, several fish jumped in, without a need for bait.

I tend to eat at local places. I buy fruit from roadside vendors; a handful costs me 30 cents. This helps the local economy the most, for the money that I spend in touristic areas mostly accrues to the well-connected, entrenched interests. Moreover, spending money directly with locals ensures that their emotions get aligned with my interests and safety — eventually they will go out of their way to win my favors. People are very friendly.

The Amazon offers cheap and good food. During 30 minutes of my sitting in a boat one evening, several fish jumped in, without a need for bait. Fruit trees are easy to find. It is hard to go hungry.

Not too far away is dense jungle and animals of all sorts, all of which are hunted down, irrespective of the diktats of the federal government, the World Wildlife Fund, and so forth. If something “protected” is not killed, it is because its meat is not tasty. In the local market every endangered or protected species can be bought. Locals might show revulsion if you asked them directly whether they hunt monkeys and dolphins. But ask them subtly — without evoking any implanted defences — what dolphin and monkey meat tastes like, and they will describe it.

I feel very free in Iquitos. But for locals it is not a libertarian paradise, not even close. Outside the core, touristic area, Iquitos is very dirty, because people utterly lack the concept of hygiene.

The receptionist at my hotel works every single day, from 3 PM to 11 PM. She works 365 days a year, with no vacation or weekends. This is how they all exist. In the morning she looks after her younger siblings while her own parents go to work. She has nine siblings, all younger, six of them are girls. When asked, she had to count to remind herself how many there are. All of them share a couple of small, dark rooms. Every woman is loaded with children, mostly girls.

The rule is babies first, with whomever, with no thought whatsoever about the future.

There is something about this area that results in a high female-to-male ratio. Some say there might be twice as many — or more — female births than male births in this area; anecdotal evidence shows this. One possible reason is a local fruit called aguaje, which apparently encourages certain hormones in women, although I failed to find a properly researched document to support this.

Girls here want to get pregnant quickly, partly because they have very strong maternal instincts, and being a single mother is perfectly acceptable socially — in fact this is the only way. The rule is babies first, with whomever, with no thought whatsoever about the future. My travel guide, who speaks fluent English, sees absolutely no reason why he should have any discussion with his daughters about the risks of unplanned, early, single motherhood. At the age of 23, he has three daughters, from three different women. Mostly he does not care what the woman he has a relationship with does when he is not with her. Incest is not uncommon.

People have enough to eat, so major crimes do not happen. But when crime must be controlled, it is through fear of punishment and much more importantly through real-time policing; those who cannot think much into a future don’t worry about punishment tomorrow. This reminds me that in many parts of Africa there is no word for “tomorrow” or “future.”

As I have seen elsewhere among people lacking reflective, critical reason — which is the situation in most of the non-Western world — petty crime, such as seizure of cellphones, is not considered immoral and hence is very common. The police and military must stand on every corner.

The area around Iquitos could be better than Switzerland. It isn’t. But you cannot blame lack of resources, lack of space, or even lack of educational possibilities. People here have a very high time-preference. A remote village of 500 people that I went to, about two hours away by boat from Iquitos, started getting surplus money through its interactions with jungle-related tourism, so it set up a night club and two bars. Not a piece of machinery was bought.

Contrary to what a rational person might have expected, Iquitos isn’t a peaceful paradise — the situation got worse with the influx of money.

Any excess money over basic needs gets spent on pleasure, right away. Iquitos is very noisy, because people like loud music and other loud sounds. Girls in very short skirts stand outside shops to attract people to buy motorbikes, TVs, and big, high-capacity sound systems, all playing at full blast. Casinos (and I am told brothels, in this rather promiscuous society) are everywhere, showing how bored people are. They are addicted to constant distractions.

Any rational person would have expected the surplus to go into investments in capital. But of course, the World Bank with its Ivy League educated “economists” must be happy, for they want consumption to go up. Contrary to what a rational person might have expected, Iquitos isn’t a peaceful paradise — the situation got worse with the influx of money.

Outside the supermarket here, there are several women sitting with scales, to let people weigh themselves for a few cents. None has business. There are shops after shops after shops, all well stocked, selling exactly the same wares, with none too busy. Hundreds of women sit next to one another selling exactly the same vegetables and fruit, all staring in oblivion, from early morning to late in the evening. Everywhere people, including the receptionist at my hotel, sit glued to the soap operas on their TVs. Soap operas are packed with fighting and exaggerated emotional dramas.

Anyone who tried to understand the situation might come, quite contrary to what the mainstream developmental economists would suggest, to the conclusion that in the final analysis the problem here — as elsewhere in the developing world — is not lack of capital, space, resources, safety, or property rights; nor is it overpopulation. The World Bank, the IMF and most economists are looking in the wrong direction.

The problem of poor societies is their lack of imagination, creativity, and reason, which is the dominant characteristic of the non-Western world. Modern education has completely failed to inculcate these human qualities. Perhaps it has made the situation worse, for education has been marketed to people in the non-Western world as something that offers a better material future, not a bigger vision of life. This has encouraged rote learning, not a passion for understanding the universe. In the end the education instilled in such students becomes just another baggage of beliefs, burdening them and distancing them from imagination, creativity, and reason.

Material prosperity without intellectual and spiritual growth does not add up and is not sustainable.

In most parts of the poor world (Africa, India, Peru, Central America, the Middle East, etc.) economic growth — the kind encouraged by international institutions — has had many bad consequences. These regions did not develop the concept of reasoning, planning, and strategic thinking. In the absence of these things, removing people from their tribal lives leads to emptiness and confusion. Any money they get goes into showing off and into too much drinking and partying. Noise, smell, chaos seem to develop quickly wherever surplus money comes to exist. Obesity and other lifestyle diseases are growing rapidly in all of these poor countries. And most rational people in the West fail to understand the situation: rational people’s rationality preempts them from understanding how irrational the developing world really is.

In such places wealth does not lead to peace, hygiene, improved health, and enlightened living. Even what could be an oasis becomes noisy, dirty, and diseased. The developing world has been the economic beneficiary of easy imports of technology, almost all of it attributable to the internet and telephony — both of which, during the past two decades, opened the floodgates of quick economic growth. Contrary to the claims of international institutions, growth in most of the developing world cannot be shown to be a product of liberalization, the spread of democracy, or public education.

For now, the World Bank and the IMF can justify their existence, but correlation is not causation. Liberalization didn’t really happen, although democracy is rearing its ugly head everywhere in the developing world. It has involved masses of people in public policy, masses who cannot think and reason, and are mostly driven by the desire for bread and circuses. Public education hasn’t delivered.

At the core, material prosperity without intellectual and spiritual growth does not add up and is not sustainable. Now the low-hanging fruit has been plucked, and growth rate in the developing world is falling rapidly. The consequences of overconsumption and lack of capital investment are becoming visible.

A true developmental economist should look at the reality beyond the superficial economic numbers. I am extremely happy and free in Iquitos, but what a tourist and an outsider with money can experience is not the full reality. Never trust economists who do a quick fly-in and fly-out of a poor country and while there get driven around in Mercedes cars and stay in five-star hotels. Ask them if they have been to Iquitos, and the jungles with mosquitoes and naked tribes.




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Take This Climate Deal — Please!

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On December 12, 2015, climateers the world over celebrated as a new climate change accord, known as "the Paris Agreement," was approved. It was the culmination of four grueling years of behind-the-scenes negotiations designed to save the planet from catastrophic anthropogenic global warming (CAGW). At the stroke of the gavel marking its acceptance, the more than 40,000 climate change diplomats from 195 countries erupted into cheers, ovations, high-fives, champagne toasts, tearful embraces, and, of course, rampant backpatting.

“This is truly a historic moment,” proclaimed United Nations Secretary General Ban Ki-moon — the first "truly universal agreement on climate change." According to the New York Times, President Obama "strode triumphantly into the Cabinet Room of the White House to declare victory in his quest" for the ambitious deal. An ebullient John Kerry tweeted: "#COP21 agreement is the strongest, most ambitious global climate agreement ever negotiated." It is "the best chance to save the one planet we got," intoned Mr. Obama, perhaps too choked up for grammar. Or perhaps he noticed the Eiffel Tower illuminating the phrase "no Plan B," and the shuddering possibility that the deal — his vaunted legacy — could fall apart.

It is a progressive's dream: a profligate, utopian scheme that will fail, even if it achieves its goal.

Scaremongering climateers tell us that, unabated (i.e., absent the Paris climate change accord), mean global temperature will rise 3.7 °C by 2100, rendering earth uninhabitable. With the accord, the nations of the world pledge to reduce their greenhouse gas (GHG) emissions to levels intended to limit the rise to no more than 2.0 °C. But the decline in GHG emissions resulting from the Paris agreement is predicted to reduce the temperature rise by a vanishingly small 0.2 °C. That is, if the pledges of all 195 participating nations are carried out to a tee, including the expenditure of trillions of dollars on green technology, the mean global temperature will rise 3.5 °C by 2100, rendering earth uninhabitable.

While cameras inside the convention hall captured the joyous tears of climate diplomats as they celebrated fabricated success, they missed the angry tears of climate activists outside, as they rebuked the Paris agreement as an irresponsible, fraudulent charade, too diluted to be of any meaningful value. The soft-spoken Dr James Hansen, father of CAGW, referred to the deal as "a fake," "a fraud," "just worthless," and "just bullshit." But it will establish a colossal, intrusive UN climate bureaucracy that will haunt the world forever. It is a progressive's dream: a profligate, utopian scheme that will fail, even if it achieves its goal. Measured on a scale of maudlin self-congratulation (the auto-aggrandizometer), this is progressivism's finest achievement in central planning.

Although the agreement is not legally binding, climate change luminaries such as Obama, Kerry, and Ban Ki-moon assure us that the emission reduction goals will be met. Signatory nations must fulfill their pledge or face international ridicule through the agreement's clever "name-and-shame" mechanism. There is nothing like peer pressure to bring totalitarian police states such as China into compliance.

Similar pressure will be applied to support the Green Climate Fund — a coffer to be filled annually with $100 billion from rich nations for the purpose of cajoling poor nations into remaining poor.

Without the fund, none of the 130 nations of the developing world would have signed the agreement. With the fund — according to the delusions of progressives from the developed world — dictators, bureaucrats, and crony industrialists from impoverished countries will purchase exorbitantly expensive solar panels and windmills instead of extremely cheap coal, oil, and gas, and they will convince their citizenry that chronic disease and poverty can wait while 0.2 °C is shaved off the 2100 global temperature. (To the 1.3 billion people who have never experienced electricity, what's the rush?)

There is nothing like peer pressure to bring totalitarian police states such as China into compliance.

To ensure compliance, the Paris accord mandates that all nations shall report on their emissions reduction progress every five years — “a serious form of enforcement and compliance,” insists Mr. Kerry. Patting himself on the back, Kerry said that the voluntary pact (a 31-page cornucopia of vague commitment, toothless aspiration, and astounding deceit) would "prevent the worst most devastating consequences of climate change from ever happening." Who knows? With CAGW thought to be so solved, progressives may use the Paris agreement as a model to tackle other vexing problems, such as social injustice or income inequality. At this very moment, liberal thinktanks could be pondering the idea of bribing African or South Asian countries into pledging lower birth rates; or shaming Islamic terrorist organizations when their beheading reduction pledges are not met.

Returning to reality, the pledges of the landmark Paris accord (an agreement that will not work even if its pledges are met) will not be met — not even close. Rich countries will try; they will achieve some token, largely symbolic, degree of success. Poor countries won't bother; they have vastly more pressing challenges. No matter the size of the Green Climate Fund, the developing world will not be persuaded to replace cheap, reliable fossil fuels with expensive, unproven solar and wind technology — technologies that, after more than 30 years of development, still rely on subsidization for survival. These are also technologies that have become staggeringly more expensive after only five years of the enormous, unsubsidized strides in US fracking technology that have produced staggering declines in oil and gas prices. Oil prices, for example, which have been above $100 per barrel since 2011, have plummeted to below $40.

Media accounts credit Obama for the agreement's acceptance. They say that in pledging the US to draconian emission cuts, he leveraged the rest of the world to follow. But the US is in no position to make such a commitment, it is not legally bound to do so, and there is neither congressional nor popular support for it. Warned Senate Majority Leader Mitch McConnell, “Before his international partners pop the champagne, they should remember that this is an unattainable deal based on a domestic energy plan that is likely illegal, that half the states have sued to halt, and that Congress has already voted to reject.”

This lack of enthusiasm is produced, in no small part, by the economic stagnation that has plagued the US economy from the day Obama took office. With unprecedented, and growing, national debt, declining net worth, and labor participation at its lowest since the Carter years, where will the money come from?

Dictators, bureaucrats, and crony industrialists from impoverished countries will convince their citizenry that chronic disease and poverty can wait while 0.2 °C is shaved off the 2100 global temperature.

Ironically, the most promising source of money is the energy bonanza that fracking has created — the very source of prosperity that progressives seek to ban, in their efforts to decarbonize the world's economies. Unleashing US energy production could swiftly stimulate the US economy, lift incomes and wages, expand the middle class, create new jobs, generate enormous tax revenues, and eradicate the debt. But with the 2016 election drawing near, Democrat candidate Hillary Clinton pledges to outdo Obama. She plans to build 500 million solar panels and promises that 33% of all US electricity will be generated from wind and solar by 2027. Not to be outpandered by Mrs. Clinton, rival candidate Bernie Sanders promises 80% by 2050; and Martin O’Malley promises 100%.

It is highly unlikely, however, that a beleaguered American public will allow a Democrat president to shutter its energy goldmine, thereby continuing economic stagnation. As to the prospect of a Republican president, McConnell says that Obama should not make "promises he can’t keep." Nor should he "take credit for an ‘agreement’ that is subject to being shredded in 13 months.”

The Paris deal has no chance of thwarting CAGW — if planet salvation was even an important consideration. For those who are astounded by Mr. Obama's claim of victory, or who are wondering how so much credit could be awarded for so little accomplished, his triumph has nothing to do with saving the planet. It is a purely political victory — one for which he does deserve credit, and the highest of praise from progressivism, considering the coming creation of the UN climate change behemoth.

It is this deceitful absurdity that has progressives doing cartwheels and patting themselves on the back. The agreement itself is irrelevant, serving only to set the stage for future global central planning. The four years taken to write it featured little more than a backroom search for language that would read like a treaty but would be watered down and rendered toothless enough to get 195 nations to sign it — of which, 130 had to be bribed with the Green Climate Fund. It is not legally binding; the emissions reduction pledges are voluntary and aspirational, enforced only by the palsied hand of a “name-and-shame” system of global peer pressure. As to contributions to the slush fund, rich countries are "strongly urged" to fulfill their commitments.

The watering down process persisted to the end, holding up the vote to adopt the agreement for two final hours. Fearing that the Obama administration might be required to seek Senate approval for a binding treaty, US diplomats insisted that the word "shall" be changed to "should" in a clause on meeting emissions targets. They might as well have found a place for "pretty please" or "just bullshit."




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Climate Hype Shatters Charts

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In what seems like a preemptive strike at Steve Murphy, who laughed about the Paris “climate change” fandango in Liberty’s November 19 edition, CNN ran a story about climate change just a few hours before. The story announced:

Looks like Earth is already halfway to the danger zone.

Less than two weeks before a crucial global climate summit in Paris kicks off, NOAA, NASA and other global temperature monitors released data showing that the planet is halfway to two degrees of warming, the much publicized limit of "controllable" climate change.

Those statements have at least one function. They are a test of sanity. If you’re wondering, as I am, where exactly was this “much publicized” limit publicized, and what does “limit” mean, and what does “controllable” mean, and what is “crucial” about a meeting in Paris —you’re still sane.

You’re also sane if you wonder why such a chatty, informal approach is taken to the “news” that follows, which is supposed to terrorize you. According to CNN, which heard the news from agencies of the US government,

the average temperature across the entire planet for the month of October was a record shattering 0.98 degrees Celsius (1.76 degrees Fahrenheit) warmer than average for the month of October — making it the highest average temperature reached compared to normal in Earth's historical record.

Well, maybe a record was “shattered,” but I wasn’t. October was 1.76 degrees warmer than average — so what?

It was probably expected that the map accompanying the story would complete the shock administered by shattered records, but it had the opposite effect on me. The map is exactly what you’d expect: it shows splotches of color that look like pus spotting or spreading across parts of the globe, mainly in the southern hemisphere, and mainly in the ocean. The splotches, I suppose, are stand-ins for “the entire planet,” but they don’t look that threatening to me. As for “Earth’s historical record,” this goes back only to the late 19th century. If that. I mean, who trusts what the interpreters of climate records say any more?

It was a warmish October for a fairly small percentage of the world’s people. End of story, unless you’re looking for a “climate change” grant. Then the diminutive size of the “change” might give you a sizable scare.




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Impossible Dreams

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Climate change experts from more than 190 countries are said to be on the verge of forging a binding international accord that will reduce humanity's CO2 emissions to a level sufficient to stave off future global warming. The details of the agreement will be negotiated this December in Paris, France at the 2015 United Nations Framework Convention on Climate Change (UNFCCC), aka COP-21, short for"the twenty-first session of the Conference of the Parties” (COP) — to distinguish the futility of the Paris summit from thatof the previous 20 such conclaves, the first of which was held at the Rio Earth Summit, by the climate shamans of 1992. Who knows? The 21st time might be the charm.

President Obama thinks so, and is counting on it. According to Politico, Mr. Obama has been working furiously behind the scenes (and the backs of Republican climate deniers in Congress) to "seal his environmental legacy" by creating "the broadest, farthest-reaching deal in history, reworking environmental regulations for governments and corporations around the world and creating a framework for global green policy for decades."

As with the Iran nuclear weapons deal, Obama's objective is the agreement, not what the agreement will accomplish. His goal is to obtain any "broadest, farthest-reaching deal in history" that enshrines his name at the top of the signatory list. The goal of the Paris agreement, which is to reduceglobal greenhouse gas (GHG) emissions to a level that prevents the average global temperature from increasing more than 2°C by 2100, is an irrelevant, environmentalist dream, impossible to achieve — even if Obama possessed congressional endorsement or public support, both of which he does not.

China and India (who, together, are responsible for 30% of the world's CO2 emissions) only pledged to reduce their emissions. A pledge is not a commitment.

Obama's Clean Power Plan (CPP) and his cancellation of the Keystone XL pipeline were not designed to curb global temperature increase. They were merely symbolic gestures contrived to invoke similar gestures from countries such as China and India. The CPP (15 new EPA regulations, estimated to cost Americans $230 billion) will have essentially no affect on global temperature. The Iran agreement will: from four to five million barrels per day of new Iranian oil unleashed into the atmosphere — a glib concession just to secure an agreement, any agreement. Apparently, that was not "the moment" that Obama spoke of in his 2008 nomination speech, "when the rise of the oceans began to slow and our planet began to heal."

To hear Obama tell it, securing an agreement in Paris will be a simple matter of establishing an emission reduction commitment for each nation, a process that will now be less contentious because of his encouragement and leadership. Last month, after a five-day climate session was held in Bonn to draft the blueprint of the Paris negotiations, Obama took credit for persuading India and China to reduce their emissions. He hopes to use their pledges "to leverage the entire world for the conference." Once the Paris deal is reached, the nations of the world will begin the task of fulfilling their commitments by replacing fossil fuels (coal, oil, and natural gas) with renewable energy (solar and wind) — right after Obama proclaims victory for the planet, and, of course, for himself.

Of the climate negotiations, Mr. Obama might tritely say that the devil is in the details. But the real devil is in what he has not mentioned in his crusade to promote the deal. China and India (who, together, are responsible for 30% of the world's CO2 emissions) only pledged to reduce their emissions. A pledge is not a commitment, and no mention was made of the revolt at the Bonn meeting by 130 developing nations, who rejected a preliminary draft because it omitted their most important concern: climate justice — aka reparations for damages done to poor countries by rich countries, whose wealth has been obtained through the rampant injection of CO2 into the atmosphere since the beginning of the Industrial Revolution. That protest, which has now expanded the negotiations into the realm of extortion (of money and technology from rich countries), was led by China and India. Obama may simply have "leveraged the entire [third] world" to line its pockets with climate justice money from the industrialized world.

Developing countries will not install the solar and wind farms that Obama incessantly praises as earth's only salvation. They can't afford to do so — not if they want to raise their burgeoning, destitute populations from what is by Western standards abject poverty. The energy they need will be generated from cheap, abundant fossil fuels. As he blatantly flaunts a storybook promise of renewable energy, Obama is obstinately silent about its harsh reality. Despite technological strides, renewable energy remains prohibitively expensive and woefully inadequate for generating the quantity of clean energy required to stave off global warming. After decades of development and untold billions spent (more than $150 billion by the Obama administration alone), solar and wind power combined generate less than 4.5% of US electricity, and both industries would immediately collapse without taxpayer-funded subsidies.

Developing countries will not install the solar and wind farms that Obama incessantly praises as earth's only salvation. They can't afford to do so.

Nor has he mentioned the global carbon budget, which setsan upper bound on the quantity of CO2 that humanity can emit without pushing the average global temperature over the 2°C threshold before 2100. According to Oren Cass of the Manhattan Institute, under optimistic assumptions regarding energy efficiency and the adoption of renewable energy, total emissions by the end of the century are projected to be almost five times greater than the quantity budgeted to save the planet. What is the point of committing the US to costly emission reductions of 26% to 28% by 2025, when the global carbonbudget will be consumed by the early 2030s?

No matter what the US does by 2025 to reduce its emissions, by 2030 it will already be too late to “save the planet” — a tidbit of climate change knowledge that Obama is reluctant to divulge. Indeed, no matter what wealthy nations collectively do is futile. Observes Cass,

If developed-world CO2 emissions ceased tomorrow, the developing world would still need to instantly slash its emissions by more than half — and hold at that level indefinitely — to remain within the carbon budget until 2100.

Any success that Obama has in Paris, therefore, will depend on his ability to "leverage" developing nations into meaningful emissions reductions. His chances are slim, if he even cares to try. As Cass notes:

In short, no evidence — distant or more recent — indicates any willingness by developing nations to make even nonbinding pledges to slow the growth of CO2 emissions, let alone accept the dramatic reductions required to substantially alter the trajectory of atmospheric concentrations.

To climate catastrophists such as Mr. Obama, the solution to this conundrum is simple, self-evident, and not to be discussed in public: an enormous transfer of wealth from rich nations to poor nations, where the money will be used (a) to buy solar panels and windmills, (b) to create decent jobs and lives of dignity, and (c) to defray the cost of adapting to the coming storms, droughts, floods, famines, terrorism, rape, and innumerable other products of the Industrial Revolution.

The idea is not new, and has captured the effusive support of Hillary Clinton, Pope Francis, and other climate change experts. In his encyclical on climate change, the Pope asserted that wealthy nations owe an “ecological debt” to poor nations and argued for “mechanisms and subsidies which allow developing countries access to technology transfer, technical assistance and financial resources.” As Secretary of State, Hillary Clinton proposed a Green Climate Fund that would provide at least $100 billion annually to developing nations. Last year, at COP-20 in Lima, Peru, Alex Rafalowicz of Friends of the Earth (FOE) demanded that rich countries pay poor countries more than $1 trillion annually.

Obama can be expected to agree. After all, there's not much distance between social justice and climate justice. But he has not indicated what concessions he would be willing to make to the clamoring bloc of 130 developing countries (representing more than 85% of the world's population) who insist that climate reparations must be the centerpiece of the Paris negotiations.

No matter what the US does by 2025 to reduce its emissions, by 2030 it will already be too late to “save the planet.”

FOE has developed a method of allocating the global carbon budget in a manner that it believes should be adopted by climate treaty negotiators. Known as Climate Fair Shares, it calculates the emission reduction commitments and reparation amounts that must be allocated to each nation to preserve earth through 2100. Beyond the appeal to planet salvation, it no doubt has political appeal: what nation could object to paying its fair share?

To illustrate how the negotiations would work out under the FOE scheme, China would be allowed to increase its GHG emissions from its current level of 12.1 billion tons to 16.2 billion tons by 2030. It would also receive $604 billion annually in climate justice payments from rich countries. In contrast, the US would be required to reduce its emissions from its current level of 6.7 billion tons to 1.8 billion tons by 2030 — a reduction of 73%, even though Obama has thus far commited the US to only a 26% to 28% reduction by 2025.

After all, there's not much distance between social justice and climate justice.

The US cost to achieve a 73% reduction would be many trillions of dollars, and require that all coal- and gas-fired power plants be replaced with extravagant solar and wind farms. On top of this immense cost are climate justice payments, $810 billion per year by 2030. According to Climate Fair Shares, these payments, compliments of US taxpayers, will "create 24,291,600 new decent jobs" and "deliver renewable energy for lives of dignity to 810 million people" — in other countries.

The developing world expects the Paris negotiations to produce an agreement along the lines of the Climate Fair Shares scheme. Mr. Obama has not addressed that possibility, nor has he indicated where the money will come from if it materializes. The US, which is in much better shape economically than most countries, is more than $18 trillion in debt, not to mention the crushing debt of Medicare and Social Security, enormous programs that will be insolvent by the early 2030s — right around the time when humanity blows its entire carbon budget and irreversible, hellish climate catastrophe begins, 70 years ahead of schedule.

These are some of the obstacles that face Mr. Obama in his quest for prominence in the annals of climate history. He has dismissed most of them, or chosen not to bother the American public with their stark realities. Then there is the warming pause, now in its 18th year, which threatens the anthropogenic global warming hypothesis motivating the Paris charade, and which Obama denies (a clumsy irony, since “denier” is his principal argument against any and all global warming skepticism). To secure his environmental legacy and fulfill his promise to heal the planet, the desperate Obama must find common ground between rich and poor countries. But in the Venn diagram of possible treaty outcomes, the intersection of planet salvation and climate justice is the empty set. The negotiators from developed nations and the negotiators from developing nations have only one thing in common: both parties seek a goal that they know, and have known all along, is impossible to achieve.




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I Hate When That Happens

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American manufacturing, once the principal source of American economic power, has become a pale shadow of the world-dominant competitor it was only 30 years ago. Although the productivity of American workers still vastly exceeds the worker productivity of all major manufacturing economies, America has become a laggard in the global marketplace. For decades many have bemoaned the descent of America's industrial power. Now they say that the decline has been the result of economic misfortune: globalization, technological advance, foreign competition, unions, and so forth.

The actual misfortune is that US economic policy has been formulated by feckless politicians in Washington DC. It's as if the nebbish Willie (from the “Willie and Frankie” sketches of Saturday Night Live fame) had been behind it all. Because Willie had no grasp of causality, his life was fraught with excruciating experiences, experiences of his own making. In one skit, he came up with a scheme to test mouse traps, only to discover that "the thing came down right on my tongue!" It was an accident, even though "after 40, 50 times, I . . . I . . . I couldn't even feel the cheese." With each painful incident (which included encounters with a meat thermometer, a ball-peen hammer, and a self-threading film projector), the baffled Willie sullenly whined, "I hate when that happens."

Since the turn of this century, 5.7 million American manufacturing jobs have been lost, and the US trade deficit has soared. According to a Council on Foreign Relations study, "between 2000 and 2012, the cumulative total of U.S. spending on imports of goods and services exceeded U.S. export earnings by $7.1 trillion dollars." For manufacturing workers and, for that matter, most Americans, there has been no recovery from the recession of 2008. Two of the Willies that deserve special thanks for this misfortune are former President Bill Clinton — for his role in causing the recession — and current President Barack Obama — for his role in causing the non-recovery.

Although the productivity of American workers still vastly exceeds the worker productivity of all major manufacturing economies, America has become a laggard in the global marketplace.

It's a safe bet that in none of the 542 speeches given since he left office (for which he has reaped $104.9 million) did Mr. Clinton mention how his policies caused the housing bubble and the financial crisis. These policies (deregulation of credit-default swaps, spurious use of the Community Reinvestment Act, and shenanigans with Fannie Mae, Freddie Mac, HUD, and other organizations, to name a few) were discussed here (“Sticking It To Wall Street”), and the following week, at Reason (“Clinton’s Legacy: The Financial and Housing Meltdown”). They set the stage for the recession that occurred seven years later, no doubt to Clinton's astonishment.

The Clinton legacy also included the unfortunate accidents that followed the North American Free Trade Agreement (NAFTA), passed in 1993, and permanent normal trade relations (PNTR) for China, granted in 2000. Clinton expected NAFTA to increase US exports and therefore jobs (one million in five years, he promised). Instead, according to a recent Public Citizen report, "millions have suffered job loss, wage stagnation, and economic instability from NAFTA." The export of manufactured products from the US dwindled and the trade deficit with Mexico and Canada shot from $27 billion in 1993 to $177.2 billion today. And the economic chaos that engulfed Mexico prompted "a new wave of migration from Mexico."

Granted, Public Citizen is an anti-NAFTA advocacy group, but its claims are substantiated bytrustworthy sources — namely the US International Trade Commission (for the NAFTA trade deficit data, p. 7 of the report) and the Economic Policy Institute (for the job loss and wage decrease data, p. 8). Ironically, the immigration spike was caused by one of the few US export benefits from NAFTA. With NAFTA, Mexico eliminated its corn subsidy, but the US did not. Asa result, “seventy-five thousand Iowa farmers grew twice as much corn as three million Mexican farmers at half the cost." As subsidized U.S. corn flooded into Mexico, displaced Mexican farmers flooded into the US, greatly contributing to the surge of illegalimmigrants, from 4.8 million in 1993 to 11.7 million by 2012 (p. 22).

For manufacturing workers and, for that matter, most Americans, there has been no recovery from the recession of 2008.

NAFTA has paid off well for US corn farmers. American workers who, in the wake of the immigrant influx, lost their jobs or saw their wages shrink, have come up a little short. As have American taxpayers, who foot the bill for the subsidies awarded to corn industry cronies. This should not be confused with the bill from their cousins, the ethanol industry cronies, for subsidizing the ethanol scam — the ongoingenvironment-friendly fuel program, whose accidents include increasedair pollution, water contamination, soil erosion, andgreenhouse gas emissions, as well as increased prices for gasoline, automobiles, farmland, and food.

Clinton had loftier expectations in his efforts to help China gain World Trade Organization (WTO) membership. But instead of wielding American economic power to establish a level playing field for US industry, Clinton followed the wishes of Wall Street power, which did not extend to protecting US manufacturers from the mercantilist antics of brutal, authoritarian states such as China. As Robert Kuttner explained in “Playing Ourselves for Fools”:

In 1999, when China was negotiating its entry into the WTO, it was a lot weaker economically and financially, and the stench of the Tiananmen massacre still lingered, the U.S. had far more diplomatic leverage than the rather pitiful show of humility befitting a debtor nation displayed on President Barack Obama's recent maiden trip to Beijing. But as the memoirs of both Robert Rubin and Joseph Stiglitz confirm, that leverage was used mainly to gain access for U.S. banks and insurance companies to Chinese markets, not to require China to modify its system of predatory industrial mercantilism.

Clinton promised that China's admission to the WTO would provide the US with a vital trading partner who would change its ways and "play by the rules"; trade with China would "increase U.S. jobs and reduce our trade deficit." All the experts agreed. Then presidential candidate and fellow Willie, George W. Bush, agreed. "It is primarily U.S. exporters who will benefit," echoed the Cato Institute. It would be “a win-win result for both countries,” said Clinton, that could only "grow substantially with the new access to the Chinese market."

Alas, the tremendous US-China trade that ensued has, to date, resulted in the loss of 3.2 million American jobs, a US trade deficit with China of almost $500 billion (that grew from $100 billion in 2001), and, according to the New York Times (“Come On, China, Buy Our Stuff!”), American exporters are still waiting for the payoff. The main reason: currency manipulation by China's Central Bank makes American products more expensive to Chinese consumers. Furthermore, our trade deficit, which enables such manipulation, allows China to use its surplus of US dollars to purchase US Treasury bonds, which, in turn, enables the US government to plunge itself more deeply into debt (now at more than $18 trillion), with US taxpayers paying interest for the privilege.

Instead of wielding American economic power to establish a level playing field for US industry, President Clinton followed the wishes of Wall Street power.

American consumers have benefited, but foreign competitiveness has suffered. As a percentage of GDP, US manufacturing has shrunk from 14% in 2000 to about 11% today. According to a recent Economic Policy Institute study, of the 3.2 million jobs shed by our trade with China, 2.4 million were manufacturing jobs. Moreover, trade with low-wage countries such as China "has driven down wages for workers in U.S. manufacturing and reduced the wages and bargaining power of similar, non-college-educated workers [a pool of 100 million workers] throughout the economy."

Under Clinton's version of free trade, the outsourcing of American production, jobs, and technical expertise has flourished. To participate in such trade, observed Kuttner, many US manufacturing companies engage in

deals to shift their research, technology, and production offshore, sometimes in exchange for explicit subsidies for land, factories, research and development, and the implicit subsidy of low-wage and powerless workers and weak environmental or safety requirements. At other times, the terms of the deal are more stick than carrot: If you want to sell here, the companies are told, you must manufacture here. Or even worse, you can manufacture here but only for re-export to your own domestic market and not for local sale.

Describing Clinton’s legacy, the Huffington Post called him the "Outsourcer-in Chief," saying that

Manufacturers never emerged from the 2001 recession, which coincided with China's entry into the World Trade Organization. Between 2001 and 2009 the U.S. lost 42,400 factories and manufacturing employment dropped to 11.7 million, a loss of 32 percent of all manufacturing jobs.

But things are booming in China, which, thanks to US investment in the expansion and modernization of its manufacturing sector, has now surpassed the US as the world's leading exporter, and in our federal government, which now employs twice as many people as the entire American manufacturing industry — an industry to which Clinton could say, "The thing [WTO deal] came down right on my tongue!"

If Bill Clinton was the Outsourcer-in-Chief, then Barack Obama is the Regulator-in-Chief. With annual federal regulatory compliance costs now at an astounding $1.9 trillion, no one has done more to increase the cost, and decrease the desirability, of doing business in America than Mr. Obama. His regulatory obsession has exceeded that of George Bush, who, in eight years, increased regulatory costs by $318 billion. Obama has increased it by $708 billion, in only six years.

Unhindered by a timid Congress that has consigned its legislative powers to regulators, there's no telling how high Obama can drive regulatory costs during his final two years. But American manufacturing is doubly harassed by existing regulatory overreach, paying a staggering $20,000 per employee in annual compliance costs, compared with $10,000 for the average US firm. The cost is $35,000 per employee for small manufacturers (<50 employees), who, if they can't feel the cheese, can smell the pungent odor of our federal government.

The stagnation that began creeping into the economy under Bush is in full stride under Obama, with GDP growth averaging little more than 2% since he took office. Unconventional oil and gas production (i.e., fracking of oil and gas deposits, mostly on non-federal land) has been the only bright spot. Without fracking, even this tepid GDP growth would have been impossible. With fracking, says the Cato Institute, oil and gas prices have plummeted, increasing disposable income by $1,500 per household, 2.5 million jobs have been created, and a tax windfall of $100 billion has been garnered by government.

No one has done more to increase the cost, and decrease the desirability, of doing business in America than President Obama.

After almost seven years of stagnation, the US economy — with its shrinking middle class and its growing cohort of 55 million jobless working age adults, all desperate for a meaningful recovery from the recession of 2008 — has enthusiastically welcomed the fracking revolution. Mr. Obama's greeting has been less ardent. After almost seven years of tightening drilling regulations, his response has been to tighten fracking regulations, followed by more plans to tighten fracking regulations.

Existing regulations "are more than 30 years old, and they simply have not kept pace with the technical complexities of today’s hydraulic fracturing operations,” explained Interior Secretary Sally Jewell. Nor has the 40-year-old crude oil export ban, which is no longer needed, now that the US is flush with oil and gas. Free trade in US energy would help reduce our trade deficit, our national debt, and our dependence on foreign energy. Surging US oil production has been responsible for plummeting global oil prices, thereby improving our national security with respect to countries and terrorist organizations whose bellicosity depends exclusively on oil revenues. Additional production, therefore, would further enhance US security and would likely reduce the frequency with which thugs such as Vladimir Putin and Ayatollah Ali Khamenei embarrass our president.

Crudely Put,” an article that explains the folly of this archaic ban, alludes to Putin's crushing energy grip on Europe and the reason for America’s reluctance to export more energy. Last February, Vaclav Bartuska, the Czech Republic’s energy envoy, pleaded with "American policymakers to liberalise energy exports . . . to safeguard allies under pressure from Russia," and asked, "if freeing crude exports makes America richer, its allies stronger, its foes weaker and the world safer, what stands in the way?" Willie Obama's colossal green mousetrap, of course.

This from the man who promised shovel-ready jobs, then green jobs, and now brags about the low-income jobs created under his stifling reign.

Perhaps American manufacturers will have better luck with Mr. Obama's new free trade brainchild, the Trans-Pacific Partnership, which gives him "fast-track" authority to negotiate trade deals with Pacific Rim countries. Covering the legislation's East Room signing ceremony, Politico's Sarah Wheaton noted its bipartisan support, usually a good sign. But the more telling sign, Wheaton indicated, may have been discerned by the pianist in the Grand Foyer, who played "understated renditions of the theme to ‘Charlie and the Chocolate Factory’ and ‘Puff the Magic Dragon,’ songs depicting fantasy worlds undone by cynicism and lost innocence."

Reminiscent of Clinton's trade deal confidence, Mr. Obama stated that he was "absolutely convinced that these pieces of legislation are ultimately good for American workers." This from the man who promised shovel-ready jobs, then green jobs, and now brags about the low-income jobs created under his stifling reign — while middle-income manufacturing jobs languish.

Last November, Mr. Clinton conjectured, "NAFTA is still controversial but people will thank me for it in 20 years." He might as well have bit his lower lip and said, "after 40, 50 years, we  . . . we . . . we will feel the cheese." It will take much longer for American manufacturing to thank him for hustling China into the WTO. And who knows how long it will "ultimately" take for manufacturing workers to thank Obama for the trade deals that he hopes to negotiate — deals with trading partners who cannot be controlled by the $2 trillion regulatory mousetrap that punishes American manufacturers. It is a mousetrap with a spring force that Obama has increased by $708 billion. And, as the thing comes right down on his tongue, he orders costly new climate change regulations — to be paid for by US manufacturers, and ignored by their foreign competitors.

Federal trade and regulatory policy, not foreign competition and unions, is responsible for the decline of American manufacturing. Free trade, whose banner is routinely hoisted to adorn trade negotiations, exists only in the delusional minds of our hapless political leaders. Indeed, that American manufacturers must conform to inordinately higher standards (of trade, finance, health, safety, environment, etc.) than their foreign competitors is considered an achievement by the causality-challenged Obama. Green ideology, not economics or trade, is his forte. Officious regulation, not sound industrial policy, is his goal. As to the unfortunate accidents — chronic economic stagnation, declining household income, growing income inequality, immense pubic debt, enormous trade deficits, shrinking geopolitical power, and waning foreign competitiveness — that have befallen his presidency, he hates when that happens.




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The Great Debaters

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I feel that I should say something about the presidential debates. I don’t want to do it. Probably you don’t want to read it. But it’s as inevitable as someone going to a wake and saying, “Doesn’t he look natural?”

“Natural,” of course, would not be the right word for our current debaters. Most of them look deranged, and their talk confirms the impression. I think one sample will suffice. It’s the now-famous outburst from Bernie Sanders, standing next to his alleged opponent, Hillary Clinton, and screaming, “"The American people are sick and tired of hearing about your damn emails. . . . Enough of the emails. Let's talk about the real issues facing America.”

Can’t you just hear the Witch of the West cackling, “Helping the little lady along, are you, my fine gentleman?” In this case, the cackling was supplied by the little lady herself, who shrieked a series of those demented sounds that pass with her for laughter. But why would anybody say what Sanders said? It’s not the kind of thing you say if you actually want to beat your opponent.

Media speculation holds that Bernie wants a high position in a Clinton administration, and one can imagine many posts for which he would be qualified. As someone who doesn’t realize that the arguments for socialism were completely discredited over a hundred years ago, he’s suited to be Undersecretary for Historic Preservation. Maybe he could rise as far as Executive Director of the Steam Locomotive Bureau.

In this case, the cackling was supplied by the little lady herself, who shrieked a series of those demented sounds that pass with her for laughter.

My own speculation is that Sanders simply hates Republicans so much that he is willing to do anything to express contempt for them. Because that’s what his statement was — a mere declaration of contempt. No reasoning about the evidence, no consideration of the many problems that Clinton’s “damn emails” have brought up, and of course no interest in the, after all, very interesting question of why he thinks he can speak for “the American people.” The same populace that he pictures as alternately vomiting over the email scandal and trying to sleep it off (“sick and tired”) is depicted by the polls as actively concerned with the issue and actively engaged in revising its opinion of Hillary Clinton — downward. Why wouldn’t Sanders use this as a campaign talking point, or at least leave it lay, unless he was mastered by his vindictive spirit? The reason his campaign got traction is that even Democrats consider Clinton a hateful, dishonest person. But with his carefully plotted debate outburst, Sanders showed that for him, nothing is worth so much as reviling the Republicans. This is ordinary for Democrats. The family that reviles together, stays together.

But to do Sanders the justice he is never willing to do other people, we need to consider his own explanation of his motive — his belief that discussion of Hillary’s “damn emails” crowds out discussion of “the real issues facing America.”

(I like quoting “damn emails,” because it’s such a dumb thing to say. “Damn” is the default term of abuse. It’s what people say when they can’t think of anything else. It’s exactly what a dumb, befuddled, obnoxious old coot would say about any problem in daily life. “Damn junk mail! Why do they send me the damn stuff? Damn toaster! Burns the bread every damn time! Damn kids! I’m sick of the damn kids in this neighborhood!”)

As someone who doesn’t realize that the arguments for socialism were completely discredited over a hundred years ago, Sanders is well suited to be Undersecretary for Historic Preservation.

So let’s consider his belief. The essential idea is one he shares with most of the other candidates, Democratic or Republican — the notion that there is a giant pile of issues out there, as tall as Mt. Everest and just as gnarly, and that America has to face those issues,and would be busy doing so if Americans could only see them. The candidate’s mission is to reveal the existence of those issues, now cleverly concealed behind the opponents’ lying contemptible hateful hate-filled propaganda. No one else is willing to undertake this mission.

If this is true, it’s surprising that political candidates almost never initiate a dialogue about the issues that is remotely similar to anything that normal people do when they have a real issue to discuss. Normal people try to find the facts, and if the facts turn out not to be alarming, they are happy not to argue about solving a problem that no one can find. But if there is a problem, and it’s apparent enough to be a subject of debate, they try to sharpen their arguments and communicate them clearly and concisely. They entertain objections and attend to plausible counterarguments. And they present a clear plan of action. They don’t go on and on about how the door needs to be fixed; they say, “Tomorrow morning, I’ll call up Dave the Fixit Guy and see what he’ll charge to take care of that door.”

Political candidates address the issues in a different way. They declare, usually out of the blue, that they have discovered an issue that must be faced. Then they invent facts to support their statements, denounce anyone who takes a more optimistic view of the situation, declare that the problem must be solved instantaneously, and exclude any possibility of solving it except by taking all the money out of other people’s bank accounts. This is not what you or I mean when we urge other people to face an issue. Still stranger is the fact that the political discussion, or national dialogue, never reaches the level of argument. It’s all declarations and demands.

Sanders is a convenient, and hilarious, example. When, during the Democrats’ debate, Anderson Cooper asked him whether he was electable, given his history — he supported the Sandinistas, honeymooned in the Soviet Union, and bills himself as a socialist — Sanders replied by saying that in the last election “63% of the American people didn’t vote, Anderson. 80% of young people didn’t vote.” He implied that these people would vote for him. Some discussion.

As for his positive program, consider this masterpiece of argumentation:

And what democratic socialism is about is saying that it is immoral and wrong that the top one-tenth of 1% in this country own almost 90% — almost — own almost as much wealth as the bottom 90%. That it is wrong, today, in a rigged economy, that 57% of all new income is going to the top 1%.

That when you look around the world, you see every other major country providing health care to all people as a right, except the United States. You see every other major country saying to moms that, when you have a baby, we're not gonna separate you from your newborn baby, because we are going to have — we are gonna have medical and family paid leave, like every other country on Earth.

Sanders has a remarkable ability to make things up — remarkable for a human being, that is, but not for a presidential candidate. Their custom is just to say things, convinced that their audience won’t even take the trouble to check with Wikipedia. Very well. When you do subject yourself to that enormous task and find the Wiki article “Wealth in the United States,” you will not discover that one one-thousandth of the American population owns “almost as much wealth as the bottom 90%.” That’s just something that Sanders goes around saying, or yelling. He yells a lot.

But suppose you don’t care about piddling matters of fact. Suppose you care only about mighty matters of morality. What is the argument that allows Sanders to get from the existence of income inequality to the claim that income inequality is immoral? What is the argument that allows him to go, for instance, from the idea that people who receive $11,000 a year in Social Security benefits should be recompensed by taking 15% of incomes over $118,000 a year and giving it to them?

Moral lectures come strangely to the lips of a speaker who has no moral sense.

There is no argument. He never presents one. He just says things. To go back to the Wiki article, why shouldn’t Sanders demand that families headed by people between 65 and 74 years of age surrender huge amounts of money to households headed by people under 35 years of age? After all, the median net worth of the former is $232,100, and the median net worth of the latter is $10,460. And how about childless couples? They have a median net worth of $213,730, which is more than twice that of couples with children, and about 15 times that of single people with children, or single people under 55 years of age, without children. Shouldn’t these culprits, these viciously immoral childless couples, be compelled to give their wealth to those less fortunate?

Moral lectures come strangely to the lips of a speaker who has no moral sense. If he had any, wouldn’t he hesitate to tell one lie after another? Wouldn’t he hesitate to say, for instance, that “we are gonna have medical and family paid leave, like every other country on Earth”? Ah, Haiti — famous for its medical and family paid leave. Burma — a paradise for early childcare. Is Sanders so stupid that he doesn’t know what life on earth is like, or is he so cynical that he figures he can say anything at all, and an audience will lap it up?

In either case, he shouldn’t be shouting about morality. Even if he does believe that his visible audience consists of mindless oysters, why should he assume that everyone else is? “When you have a baby, we're not gonna separate you from your newborn baby” — as if mothers with newborns were as unwitting as Sanders’ followers, and simply allowed their offspring to be snatched away from their passive arms.

Most voters have something like free will. So if liberty and prosperity are snatched from them by the likes of Bernie Sanders, it’s their own fault. In the last sentence I originally typed “liberty and responsibility,” but “responsibility” may be the problem — that word is apparently so detestable to some of our fellow citizens that they’d rather hear Bernie Sanders bleating away, like the guy in the restaurant whom you ask not to be seated next to, than take a few moments to fulfill the duty of reflective thought.

Is Sanders so stupid that he doesn’t know what life on earth is like, or is he so cynical that he figures he can say anything at all, and an audience will lap it up?

Nevertheless, I doubt that many voters are as fearful of their own free will as are the media that attempted to fry Ben Carson for his answer to a question about what he would do if he were attacked by a mass murderer. He said he would try to take the guy down. He suggested that the targeted victims should act together to do that. In response, this headline appeared, typical of many:

2016 Contender Ben Carson Defends Remarks Criticizing Victims of Oregon Shooting

The preposterous idea was that Carson had criticized the victims for not having attacked the maniac who was assaulting them. He did no such thing. It seems that the media will settle for nothing short of “Carson Commends All Americans Who Plan to Cower and Be Killed.” Certainly the media were pleased enough when other presidential candidates suggested that the only acceptable options are (A) shivering like a sheep before any lunatic with a gun, and (B) keeping guns out of the hands of sane people.

I hope that if I am ever targeted by a lunatic, I will follow Dr. Carson’s advice. I know that if Carson happens to be with me, I can trust him to lead the charge. But I can never stand up to another Bernie Sanders debate. I’d rather be shot.




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The Karma of Flaming Cronyism

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In 2009, Vice President Joe Biden announced a $539 million Department of Energy (DoE) loan awarded by the federal government to Fisker Automotive. Fisker, a newly formed crony capitalist firm, would use the money (together with private funding from the venture capital firm Kleiner Perkins Caufield & Byers, whose partners include green crony capitalist and former Vice President Al Gore) to produce hybrid electric vehicles in Biden's home state of Delaware. The investment would create 2,500 American jobs, by 2014 produce an annual 75,000–100,000 "highly efficient vehicles," and by 2016 "save hundreds of millions gallons of gasoline and offset millions of tons of carbon pollution."

With gasoline prices below $2 per gallon at the time, free enterprise could not be counted on to produce planet-saving electric vehicles (EVs) and establish the US as the world leader in EV technology. Capitalism can only be counted on to produce what consumers demand. Then-DoE Secretary Steven Chu believed that the demand for EVs would not materialize until gasoline prices reached nine or ten dollars per gallon. In the interim, only crony capitalism would do.

The Fisker loan was considered a vital, timely investment for America: in 2009, thanks to years of US outsourcing of jobs and manufacturing expertise that propped up its emerging crony capitalist economy, China had become the world’s leader in green technology spending. “We are putting Americans back to work,” exclaimed Chu, “and reigniting a new Industrial Revolution that is paramount for the economic success of this country.” The loan was "seed money," heralded Biden, "that would return back to the American consumer in billions and billions and billions of dollars in good new jobs."

Fisker Automotive was founded by crony capitalist Henrik Fisker, in fall 2007, only to be sued by Tesla Motors, in spring 2008, for stealing design concepts and trade secrets that Fisker allegedly used to develop the Karma — a heavily subsidized vehicle that would compete with the heavily subsidized Tesla Roadster.

The true brilliance of Elon Musk, who is regarded by many as a genius, lies in his ability to hornswoggle governments and investors.

It was also in 2008 when fellow, and far superior, crony capitalist Elon Musk became CEO of Tesla. Barely one year later, Tesla received a $465 million DoE loan. Mr. Musk knows no other form of capitalism. According to the LA Times, he "has built a multibillion-dollar fortune running companies that make electric cars [Tesla], sell solar panels [SolarCity] and launch rockets into space [SpaceX]," with the help of a staggering $4.9 billion in taxpayer-funded government subsidies. Apparently, Musk will have nothing to do with any enterprise from which he cannot obtain "government incentives, including grants, tax breaks, factory construction, discounted loans and environmental credits that Tesla can sell. It [the $4.9 billion] also includes tax credits and rebates to buyers of solar panels and electric cars."

The true brilliance of Musk, who is regarded by many as a genius ("our generation's Thomas Edison"), lies in his ability to hornswoggle governments and investors. While ordinary crony capitalists are content with bellying up to the government trough for tax breaks and loans to help build their businesses, Musk has the government build businesses for him. He's "so adept at landing incentives that states now compete to give him money."

New York State, for example, is building a $750 million manufacturing plant for SolarCity. With property tax gimmicks, investment tax credits, and cash grants, the entire deal constitutes a $2.5 billion windfall for Musk — courtesy of the taxpayers. Without their coerced support, crony SolarCity, indeed, the entire solar industry, could not survive. Yet in June, New York crony capitalists prevailed over the use of drastically cheaper energy, derived from free market fracking, by officially banning the technology (and denying billions and billions and billions of dollars in lower utility costs for New York residents), ostensibly because of safety concerns: natural gas might leak from wells drilled in the Marcellus Shale bonanza that the state sits on top of, causing flames to shoot out of water faucets.

Inspired by Musk's promises to lead the world into a future without gasoline (he pledged to make millions of electric vehicles by 2025), investors have bid up Tesla stock from $16 per share, when it was first publicly offered in 2010, to $260 per share today. With this runup, Tesla was able to raise more than enough private capital to repay its DoE loan — an event that the DoE declared as "living proof" that "Tesla and other U.S. manufacturers are in a strong position to compete for this growing global market.” Only in the world of green cronyism is debt repayment celebrated as success.

At least the Model S doesn't burst into flames, as did Fisker's Karma, which had a few flaws.

Tesla, which sold 31,655 vehicles in 2014, is valued at $33.8 billion — more than half the value of Ford Motor Company, which sold 6.3 million vehicles during that year. And Ford made a profit, unlike Tesla, which has failed to do so since its inception in 2003. In 2014, Ford posted a profit of $6.3 billion; Tesla lost $294 million. Incredibly, even with its government side business of selling zero-emission-vehicle (ZEV) credits to its competitors, from which it made $217 million, Tesla still lost $294 million. But Musk promises profitability by 2020.

So confident is he of continued government largesse that he scoffs at competitors such as Toyota, which has developed a hydrogen fuel cell vehicle, the Mirai, that sells for $10,000 less than Tesla's $71,000 Model S. Musk's response: “Fuel cells should be renamed ‘fool cells’” — demonstrating a wit as sharp as his automotive genius.

Nevertheless, no one has done more than Mr. Musk to advance EV development in the United States, and, by all accounts, the Model S is a flawless vehicle that has exceeded the expectations of elite Silicon Valley and Hollywood car buyers. It doesn't burst into flames, as did Fisker's Karma, which had a few flaws.

The Karma — which was initially projected to ship in 2009 and to sell over 15,000 units built by 2500 American workers at a refurbished GM plant in Delaware — did not come to market until 2011. But, according to an ABC News investigation, by October of the year only 40 Karmas were produced, all of them assembled by 500 Finnish workers at a factory in rural Finland.

There was not a single US firm with the manufacturing expertise to produce the Karma. "We're not in the business of failing; we're in the business of winning," exclaimed Mr. Fisker. "That's why we went to Finland."

Less than a year later, Fisker Automotive failed — ceasing production in July 2012 and declaring bankruptcy in November 2013. Of the 2,450 Karmas that were eventually built, 1,600 were purchased by consumers, and 2,000 were recalled because of lithium-ion battery-related fire risks (including the possibility that, while parked and disconnected from a charging station, a Karma could mysteriously explode into flames, and burn to unrecognizable rubble).

Numerous reasons have been cited for Fisker's collapse: unrealistic sales goals, compressed launch timeline, insufficient funding, flaming rubble, etc. In the end, however, most subsidized green-technology companies simply find ways to lose money. They can't make a profit, even with government support. The most famous example is Solyndra (the recipient of a $535 million DoE loan), which went bankrupt selling solar panels for half of what it cost to make them. Then there is A123 Systems, Fisker's battery supplier and the recipient of a $249 million DoE grant. A123 sold batteries that cost the company $1.57 for each dollar of sales — leading to its bankruptcy in October 2012, and, in no small part, hastening Fisker's.

A123 might have charged Fisker twice as much, thereby returning a per unit profit of 43%. Why not? Couldn't Fisker absorb the cost increase? It was getting government money too, not to mention the $7,500 tax refund awarded to EV buyers. And, with the price of gasoline heading towards $4 a gallon, surely the demand for EVs was growing. Besides, anyone who could afford the $103,000 Karma might be willing to pay a little extra. Except that, on average, Fisker spent $660,000 for each vehicle produced. To make even a meager profit of, say 10%, Fisker would have had to charge $733,000 — a price that might have scared off early Karma buyers such as pop stars Justin Bieber and Al Gore.

Most subsidized green-technology companies simply find ways to lose money. They can't make a profit, even with government support.

The purpose of the DoE grant to A123 was to help America compete with China. "President Obama was determined not to let China run away with green energy technologies," said a Forbes article covering the bankruptcy auction, where A123 was unloaded for, one could say, a fire sale price. Guess who won the bidding (hint: it wasn't an American company). It was the Wanxiang Group, a Chinese conglomerate run by Lu Guanqiu, an auto-parts magnate with deep ties to the Chinese Communist Party.

Forbes characterized the business acumen of our green cronies as a triple irony:

The U.S. borrowed money from China to subsidize a battery company to compete with state-subsidized Chinese battery companies. The American company gets bought out by a Chinese company for about the same amount of money that the U.S. government gave it. The U.S. still has to pay the money back to China. The Chinese company buying the American company makes a lot of money by providing auto parts for the cars that Americans drive.

Perhaps of greater significance is the national security implication. The sale of A123 included US technology developed for advanced ultra-light lithium-ion phosphate batteries — technology that extends beyond powering EVs, to important applications for electricity generation and distribution, not to mention sensitive military applications. As a presidential candidate in 2008, Hillary Clinton vehemently opposed such sales, asserting the need for "ensuring that technologies . . . critical to U.S. national security are not sold off and outsourced to foreign governments." Yet Clinton, who was secretary of state at the time, did nothing to interfere with the sale.

The Fisker bankruptcy snuffed out the DoE plan of "reigniting a new Industrial Revolution," as well as Joe Biden's hopes of "billions and billions and billions of dollars" for American consumers. It was followed by a DoE announcement that, instead, American taxpayers would get a bill for $139 million, the amount that the government lost in the Fisker debacle. Fisker was sold, in another fire sale, not only to a Chinese company but to the same one that bought A123.

Today, just one year afterward, Mrs. Clinton is running for president and Mr. Biden is thinking about throwing his hat into the race. Mr. Guanqiu is planning to resurrect the Karma with his new company, formed from the old Fisker and A123, businesses he picked up for a song: a measly $406 million. The amount is much less than the manufacturing assets and intellectual property he purchased. They represent a value that the DoE must have believed was significantly greater than the $778 million it invested in these companies. But that's life in the risky world of green cronyism: sometimes seed money leads to abysmal failure, especially when it is other people's seed money.

Mr. Musk is now getting into the battery business, building the world’s largest battery factory, a gigafactory, he says. That is, he bamboozled the state of Nevada into a $1.3 billion incentive package to build it. What crony could turn down a deal projected to generate $100 billion? With capitalist fracking driving gasoline prices down to less than $2 a gal (when $9 gasoline is needed for EV's to be competitive), any capitalist sees folly. But crony capitalists see only the delusion of billions and billions and billions of dollars — that, and taxpayer-funded subsidies for fellow cronies.

That's life in the risky world of green cronyism: sometimes seed money leads to abysmal failure, especially when it is other people's seed money.

And Mr. Fisker is planning to start another automotive venture. He is "intrigued with Millennials, their craving for new kinds of transportation and their fascination with all things digital." It would behoove him to rekindle his relationship with Al Gore, this time for marketing purposes. Who is better than Mr. Climate Change at pitching flimflam to Millennials? Whatever Mr. Fisker has in mind, he remains optimistic, believing that "the timing is right for something completely new."

But none of this is new. Under our current political system, the timing is always right for crony capitalism. And, unlike taxpayers, crony capitalists will profit from another completely new green auto company, even if it goes down in flames.

#39;s Thomas Edison




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