More Thoughts on Green Energy

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Look, I apologize — okay? — but this story just won’t stop. I know that I’ve written a fair amount on crony green capitalism, but more things keep propping up, and the mainstream media keep ignoring them. They have made green energy their shibboleth. So those of us in the alterative media just have to step up to the plate.

First, some recent material on the most notorious “green energy” scandal: the Solyndra case. Solyndra was loudly touted by the Obama Regime as a “jobs machine,” and its chief investor was a billionaire leftist Obama fundraiser. This “company” was given a half-billion bucks in taxpayer-backed loans, after which it went belly up. The Republicans in the House of Representatives have been trying to get all the information on the scandal, but they are naturally facing a White House stonewalling campaign. The Democrats in the Senate, led by Majority Leader Harry Reid, who has his own ties to the corrupt green energy program, are ignoring this issue.

The House served a subpoena on the White House for all its internal emails about the company. The White House is obviously frightened of those coming to light. An early release of emails showed that very high officials in the Regime knew Solyndra was in trouble even as the Regime was looking at plans to shovel it more taxpayer-backed loan guarantees; the subsidies were given, nonetheless. The emails caused the Regime considerable embarrassment, and it is clearly worried about more unfavorable publicity. So it is practicing what the Nixon Watergate cover-up hatchetman had called a “modified, limited hang out.” That is, it has released some highly redacted emails, but with crucial information omitted, and has refused to release all pertinent information.

More recently released emails show that the Department of Energy (DOE) put pressure on Solyndra to squelch an announcement that Solyndra planned worker layoffs and a plant closing until after the election.

That’s right. Solyndra’s CEO warned the DOE on Oct. 25, 2010 that because the wretched company was running out of cash, it planned to lay off employees on Oct. 28. He noted that reporters had apparently learned the company was in trouble. In an email of Oct. 30, advisers to Solyndra’s main investor note that the DOE has pressured the company to put off the announcement until a day after the Nov. 2 midterm elections. The email says, “DOE continues to be cooperative have indicated that they will fund the November draw on our loan (app. $40 million) but have not committed to December yet. . . . They did push very hard for us to hold our announcement of the consolidation to employees and vendors to Nov. 3rd — oddly they didn’t give a reason for the date.”

That last sentence indicates that the unnamed author of the email was either an idiot or a comedian.

These emails and others reveal a level of coordination between the company and the DOE that can only be called crony capitalist collusion.

Now let us mourn the demise of yet another “promising” green energy company — one I haven’t mentioned before — Beacon Power. I know what you’re thinking: why lament the passing of another startup company? Don’t 56% of all new companies fail in the first four years, Jason? What part of Schumpeterian economic theory don’t you understand, the “creative” part or the “destruction” part?

Now that’s a great return on your investment: pay less than a hundred grand, and pocket $400 million in return.

The reason you should mourn, dear friend, is that more of your tax dollars were spent on this boondoggle. Yes, Beacon Power got a tidy $43 million in taxpayer-backed loan guarantees from Obama’s DOE, and it has just filed for bankruptcy.

Then again, there is the chipper, choice news that another solar company, Colorado-based Abound Solar, received $400 million in (as always with this corrupt regime) taxpayer-backed DOE loan guarantees. Now, I know this will shock you, but one of the major investors in Abound Solar was a big financial backer of — Obama!

In a story that abounds in irony, though not in legitimate profits, one of the major investors in Abound Solar — a creature delightfully named Pat Stryker (as in, striking at our tax dollars) — “bundled” $87,500 for Honest Barry. Now that’s a great return on your investment: pay less than a hundred grand, and pocket $400 million in return.

And I must not omit the news about Robert Kennedy, Jr.’s, sly crony capitalist deal. This story has been unearthed by the keen eye of Peter Schweizer, who has an expose of the morass of crony capitalism our nation has become in his new book, Throw Them All Out.

Kennedy made his name as a big booster of green energy (except, of course, in his own backyard). His company, BrightSource, snagged a very tidy $1.4 billion bailout from Obama’s DOE. Apparently, though the details are still murky, this bailout — a DOE taxpayer-backed loan guarantee — was arranged by a key DOE employee who had only recently worked for Kennedy’s company.

The central player may have been Sanjay Wagle. He was one of the owners of BrightSource, and he raised money for Obama’s 2008 campaign. Upon election, Obama appointed him to the DOE as an adviser — on energy grants! Pretty convenient for the company, no?

At the time it requested the loan, BrightSource was a basket case, with $1.8 billion in debt, losses of $71.6 million, and a lousy $13.5 million in revenue.

The corruption these stories reveal is truly Nixonian. But there is a difference between Nixon’s and Obama’s corruption. The mainstream news media were interested in exposing Nixon’s (because they loathed him), but aren’t in the least interested in exposing Obama’s (because they love him).

For the record: this whole green energy loan guarantee program was approved by George Bush, and was dramatically increased by Obama with so-called stimulus money. Can we all not now agree just to kill the whole freaking stupid program?




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How Green Were My Cronies

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One of the signature issues of the Obama administration has been “green energy.” From its first day in office, the Green Regime has attempted to get America to convert to the so-called “renewable” sources of energy: biofuels (especially corn ethanol), geothermal power, wind power, and solar power.

Behind its ideological commitment to green energy, however, is a solid core of self-interest. It gets a huge amount of financial support from environmental organizations, and a large number of wealthy environmentalists. It is using its funding and regulatory power to reward these donors, giving them not only psychic benefits but also material ones.

In short, it is green for the green.

This crony green capitalism has two sides: a regulatory side (negative) and a subsidization side (positive). Both sides are needed, because “renewable energy” sources are seldom even remotely price competitive with fossil fuels. Not only must they be subsidized by government, because private investors are reluctant to put up their own money for them, but they can become saleable only if the government drives up the cost of fossil fuels by piling up regulations on fossil fuel production.

The regulatory side of crony green capitalism is the administration's jihad against all fossil fuel industries. It has locked away vast parts of the continent from oil and gas drilling, and has fought the new fracking technology tooth and nail. It has set loose the EPA with the goal of ending the use of coal, and has severely restricted drilling in the Gulf of Mexico. And it is opposing even the exploration of the US continental shelf.

The flip side is the lavish subsidization of so-called green energy sources, especially wind and solar. It is here that the play for pay game gets frisky. A flurry of recent reports about who has gotten these taxpayer subsidies dramatically increases the stench of corruption that emanates from the Regime.

It is hard to know just where to begin, but we can start with Solyndra, that striking piece of rentseeking dreck Obama boasted would create tons of jobs. We first learned that the billionaire who backed the company, George Kaiser, was a big donor to and “bundler” (i.e., a collector of donations ostensibly from others) for the Obama campaign. Kaiser’s company Solyndra was given a half-billion dollar loan guarantee by the Green Regime’s Department of Energy (DOE), structured in such a way that if the company hit the wall, the American taxpayer (as opposed to the billionaire bundler) would be liable for the loan. And hit the wall it did.

The regulatory side of crony green capitalism is the administration's jihad against all fossil fuel industries.

Well, now we learn that the entrepreneurial genius, Kaiser, this bien-pensant billionaire who wants so very much to help his country — paid zero income taxes for years. He did this by buying companies that had unrealized losses that he could then use to wipe away his personal income taxes. Kaiser is an interesting pal for a president who has shown deep fondness for bashing “millionaires and billionaires” for not paying “their fair share” in taxes.

It also turns out that an advisor for the loan program that shoveled the cash at Solyndra was — by an astonishing coincidence — a huge Obama fundraiser. This fellow, Steve Spinner, raised over a half-million dollars for Obama. And he is also — by an even more astonishing coincidence — the husband of a lawyer whose firm represented the company during its application for the loan. Moreover, despite the fact that Spinner agreed in writing to stay out of the loan process, emails show that he was involved up to his eyebrows.

It has also come to light that RockPort Capital, one of Solyndra’s biggest investors (and a board member) used its seat on a Pentagon panel that exists to help the Armed Forces identify useful new technologies to push Solyndra on the military. While RockPort disclosed that it had an investment in Solyndra, it never mentioned that the latter was a financial basket-case.

We now also learn that at least four other solar energy firms that received massive loan guarantees had executives and board members who were big donors to major Democratic politicians. These companies include Abengoa SA, First Solar, SolarReserve, and SunPower Corporation.

Start with Abengoa, a Spanish company. (Spain, remember, embraced wind and solar as the key to a jobs renaissance a decade ago. But green energy proved a veritable economic Black Plague for a country that has massive state-induced financial problems.) It turns out that Abengoa has worked with Sen. Dianne Feinstein (D-CA) to get nearly $3 billion in loan guarantees from the Regime to finance Arizona solar farms.

First Solar, upon which the Regime has lavished over $2 billion in taxpayer-backed loan guarantees, is likewise a supporter of the self-same Regime. Its founder and CEO Michael Ahearn donated nearly $125,000 to Democrats in the last election. He cleared nearly $69 million by selling some of his stock last month, even though the company cannot qualify for another loan from the DOE. Ahearn is clearly using the guarantees to keep a shaky company afloat, even as he sells his personal stock. His $125k investment in crony green capitalism has paid off big time — $69 million — while the taxpayer faces a $2.1 billion hosing. No, no corruption there!

SolarReserve is even more choice. The aforementioned billionaire bundler Kaiser (the Solyndra genius) also owns a majority of this rotten company, which got a tidy $737 million taxpayer-backed loan guarantee from the DOE. His company, Argonaut, has a voting share on the SolarReserve board of directors. Another member of the SolarReserve board of directors is one James McDermott, who just happens to have given over $60,000 to various Democrats since 2008, with about half going to Obama’s campaign. McDermott’s company, US Renewable Energy Group, has also donated heavily to Sen. Harry Reid (D-NV), who needs no introduction.

Moreover, another SolarReserve board member, Lee Bailey, is a lavish campaign donor to Regime members and other prominent Democrats. Not to mention the fact that yet another board member, Jasandra Nyker, is partners with the brother-in-law of Nancy Pelosi (D-CA) in an investment company (Pacific Corporate Asset Management). And SolarReserve paid $100K in fees to a lobbying firm headed by Obama’s transitional team leader John Podesta, to push its loan and other interests.

Then there is SunPower, whose stock price has recently plummeted with its projection of losses for this year and next. It received a $1.2 billion taxpayer-backed loan guarantee, even after it announced that it would be building its solar panels in a new plant — in Mexico! So much for the idea that “green jobs,” paid for by Americans, would go to Americans.

SunPower gave $14,650 to Congressional Democrats in 2010 (and $500 to one Republican), with about a fourth of the money going to Reid. Oh, and the company paid nearly $300K to a lobbying firm headed by Reid’s close associate Patrick Murphy. Another major SunPower lobbyist just happens to be the son of Rep. George Miller (D-CA), who touted for the company in Congress, and publicity-toured its plant with the Regime’s interior secretary, Ken Salazar. The right honorable Rep. Miller also received funds for his own campaign war chest from the company in question.

SunPower, by the way, now has a market capitalization of only $800 million, not much in the face of corporate debt of $820 million, and is facing a mass of investor lawsuits. No doubt it will, like Solyndra before it, eventually hit the wall and hose the taxpayers.

In general, the solar energy boom is going bust, because it was solely a function of political, not market, forces. Taxpayer money was shoveled to economic losers, to enrich the crony capitalists who shoveled money at the Regime.

Let’s turn next to the latest news on electric cars (EVs). Start with the frisky Frisker fiasco.

Frisker Automotive is a Finnish company that makes pricey EVs — cars in the $100K range, sticker price, making them attractive to movie stars such as Leonardo DiCaprio, but few others. Fisker was given — yes, you guessed it! — a $529 million dollar taxpayer loan guarantee from the Energy Department. No doubt pushing the idea was Reverend Al Gore, the Green Giant who is also a major investor in — Fisker! (Gore, by the way, has already earned tens of millions from preaching the environmentalist religion, making him eerily similar to a corrupt televangelist.) Also on the list of investors in Fisker Automotive are several big donors to the Obama regime, and also John Doerr, one of Obama’s advisors.

So much for the idea that “green jobs,” paid for by Americans, would go to Americans.

The Regime justified the loan on the usual lying basis, i.e., that it would bring jobs to Americans. Vice President and Chief Buffoon Joe Biden bragged that the Fisker loan would create “thousands” of American manufacturing jobs. But Fisker has just announced that because it couldn’t find any facility in America suitable for building its cars, it will build them in Finland. Again, so much for the idea that American tax dollars are bringing jobs to America. Oh, and Fisker's electric motor and batteries are made in China! All of these cars will get a $7,500 tax credit, meaning that the few rich buyers of the Finnish-made cars with Chinese-made innards will have part of the tab covered by average-income American taxpayers. Comedy writers must have scripted this.

The kicker is that the Fiskers that were recently showcased in DC are not pure EVs, but hybrids, whose gas mileage is about that of an older model Ford Explorer.

By the bye, also receiving a similar-size taxpayer loan guarantee is Tesla Motors. Tesla’s main investors include Larry Paige and Sergey Brin, both Google-billionaires who lavishly supported Obama. So much for their corporate motto, “Don’t be evil.”

Then there is EnerDel, a maker of lithium-ion car batteries. Back in 2009, Obama doled out $2.4 billion in grants to battery makers to support EVs, including $118 million to EnerDel. Again, the insufferably dense Joe Biden saucily minced around two EnerDel plants in Indiana, boasting before cameras that the administration wasn’t only creating jobs “but sparking whole new industries.”

EnerDel, which has never turned a profit since its founding nearly a decade ago, closed the last fiscal year with a whopping $165 million loss, a mindboggling $100 million more in losses than it had reported previously. Its shares have plummeted 95% in the last years, down to a risible 27 cents a share. Nasdaq looks like it will delist the stock, and Ener1 — the parent company — has notified the SEC that it “is in the process of determining whether the company has sufficient liquidity to fund its operations.”

In short, it’s a goner, and when it goes, the taxpayer will again eat a big loss. This company was dicey all along, but the Regime still threw money at it — because it is only taxpayer money.

EnerDel also got huge support from the state of Indiana, promising 1,700 new jobs by next year and 3,000 in four years. Unfortunately, it only employs 380 people, and they look like goners, too.

The problem is obvious, at least to everyone but the cretins and corrupt clowns who populate the Regime: the market for EVs is and will remain tiny, given their inherent limitations.

Now, let’s look at wind power. First is the news that Obama went out this month to raise money with a “businessman,” a supporter of long standing, named Tom Carnahan. They chummed it up at a $25,000 a plate fundraising dinner for the Obama reelection campaign. (That has a sickening ring, doesn’t it?) Carnahan is another bundler, having garnered between $100,000 and $200,000 for Obama in 2008.

Al Gore has already earned tens of millions from preaching the environmentalist religion, making him eerily similar to a corrupt televangelist.

Yet by amazing coincidence, Carnahan is the head of a wind power company, Wind Capital Group, which just happened to receive $107 million in federal tax credits from the Regime. By the same kind of coincidence, Carnahan is part of the Democratic family that has long dominated the state’s political scene, and a brother of Congressman Russ Carnahan (D-MO).

Even more egregious is the case of the Shepherds Flat project in Oregon.

Shepherds Flat is an 845-megawatt wind farm that will cost $1.9 billion. Of this, astoundingly, the DOE will pay the developers $490 million in an outright cash grant, and give them another $1.06 billion in loans. The developers are putting up only about 11% of the total cost, and — according to Carol Browner (the Regime’s own “energy czar”) and Larry Summers (its economic advisor) — they will reap a staggering 30% return on their investment. This compares very favorably with the average 7.1% that most utility companies receive on their projects.

And just who might these lucky “entrepreneurs” be? The biggest player is — wait, let the suspense build! — GE!, which is being joined by Google and a couple of other partners. Google, as I mentioned earlier, was a big donor to Obama’s campaign. And GE? It is headed by Jeffrey Immelt, whom Obama appointed head of the President’s Council on Jobs and Competitiveness. And he was a big donor to Obama as well, natch.

This is the same GE that has a market cap of $170 billion, earned $5.1 billion in profit last year, and paid no taxes at all. Did it really need the money?

The project is questionable on other grounds as well. It is being built in a region that is already experiencing electricity congestion (the region of the massive Bonneville Dam). CNNMoney reports that it will create only 35 permanent jobs, which works out to around $16 million per job. Not that GE really cares much about American jobs — it is shipping its medical devices division to China.

No, no corruption here. None at all.

By the way, geothermal is looking pretty putrid, too. Two large geothermal companies, Raser Technologies and Nevada Geothermal Power, both received massive taxpayer backing, and are both sucking wind — the same wind that the solar and the (literal) wind companies are sucking.

Raser Technologies received a $33 million grant from the DOE. After pissing away all that taxpayer cash, along with a couple of hundred million bucks in private investor cash, the company has now filed for bankruptcy.

And Nevada Geothermal — a favorite pet of Harry Reid — received $66 million in grants from the Department of Energy, as well as a nearly $99 million taxpayer-backed loan guarantee. But it has just revealed that it has never operated at a profit for even one lousy day, and that it, too, is facing oblivion.

Still another geothermal company, US Geothermal, received a $97 million loan from the Department in February of this year, even though its financial filing with the SEC shows it hasn’t made a profit — in four years. And the stocks of two other geothermal companies that also got DOE loans are down 60% to 80%. These are just some of the tidbits of recent news from the taxpayer-supported green energy front.

Now, every time I report on the green "capitalism" that has been shoved down the throat of the American taxpayer by this corrupt Regime, I get wails of tearful anger from its supporters. The wails are of two types.

1. I am told that Republicans (especially the Evil Bush) have also supported various green energy projects. So, for example, the aforementioned Raser Technologies was backed by Sen. Orrin Hatch (R-UT). I am aware of that, and I criticized Bush in these very pages for doing the same thing.

But please spare me the simple-minded faux equation of the past administration with this one. There are massive differences in scale and focus. Bush did fund some green energy projects, but never on this massive scale. And his administration allowed oil, coal, and natural gas to flourish, and took the heat for it. He was pilloried for being too fond of fossil fuels. He was portrayed in the mainstream press as a creature of the oil industry; and Cheney and Halliburton — God, we never heard the end of that. Bush at least tried to push everything. . . . I certainly would have much preferred that he had pushed, or freed up, only what works (fossil fuels and nuclear power), but his approach was certainly better than the present crusade against fossil fuels, inaction on nuclear energy, and a massive splurge in technologies that are proven losers, yet owned by supporters.

The problem is obvious, at least to everyone but the cretins and corrupt clowns who populate the Regime: the market for electric vehicles is and will remain tiny.

You have to be blind to all recent history not to comprehend that since Carter at least, the Democrats have been by far more focused than Republicans on pushing inefficient green energies. Granted, Public Choice Theory posits that all politicians (Democrat, Republican, Communist, or Libertarian) are self-interested, so will be prone to spend public resources to advance their careers. But the point here is that precisely because green energies are absolutely commercially unviable without subsidies, while fossil fuels are extremely viable, a fossil fuels based energy program won’t need much subsidization, so will leave less scope for paying off supporters.

Really, if Obama dropped hydrogen bombs on every major red state in America, these same apologists would squeal, “But Bush bombed Iraq!”

2. I am told that I am being “hyperbolic.” In no way, these Regime apologists yelp, can the Green Regime be compared to, say, that of Putin.

My response is to ask the reader, with all we now know of the crony car capitalism, the crony green energy capitalism, and the numerous other crony dealings between the Regime and its supporters over the last three years, whether the comparison isn’t just. You decide: am I really being hyperbolic, or are the supporters of the Regime being merely obtuse?

While entertaining that question, you might consider this point. What has come to light so far has come out basically from the investigations of the alternative media. The mainstream media have done very little to look into any of the Regime’s scandals (contrast the unremitting, endless investigations of Bush). The Republican-controlled House of Representatives held some feckless hearings on the Solyndra farce, and only saw Solyndra’s executives smirk and plead the Fifth. If there were — as there ought to be — Watergate-style hearings into the whole green energy boondoggle, as well as the whole Government Motors scam, just imagine (if your stomach can bear it) what would come to light.

it announced that it would be building its solar panels in a new plant rdquo; of American manufacturing jobs. But Fisker has just announced that because it couldn$2.4 billion in grants




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Enron, Solyndra, and Double Standards

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In the wake of the Solyndra debacle, no less than the head of the Solar Energy Industries Association — one Rhone Resch — opined, “It’s going to be very similar to Enron’s legacy in the oil and gas industry” (though he quickly added, “Just in the sense of a history that flared out fairly quickly and fairly publicly”). Enron, we all recall, was the energy company that hit the wall after misleading investors with fraudulent financial reports.

Pace Resch, I think that the comparison between Solyndra and Enron is a false analogy. It overlooks their salient differences. First and foremost, when Enron went bust, it didn’t burn the American taxpayer, which Solyndra most assuredly did. It had nearly a half billion bucks in guaranteed loans, which the taxpayer must now cover.

Second, while Solyndra’s CEO was a major supporter of Obama, as Enron’s was of Bush, when Enron’s CEO called the White House for help, he got none; but when Solyndra’s head called his buddy in the White House, he got plenty.

Third, the mainstream media trumpeted the Enron fiasco for months, using it as a handy cudgel with which to bash Bush; but the media have been virtually silent about the Solyndra mess, even in the face of the Solyndra execs pleading the Fifth before a congressional committee trying to investigate the mess.

Fourth, it is doubtful that Hollywood will make a movie about Solyndra, as it did with Enron (The Smartest Guys in the Room), indicting both the industry and the president. The Green neo-socialists — aka Watermelons — are much too worshipful of both the solar industry and Obama.




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We See Through You, Mr. President

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Reverend Obama, when he was running for the office he now decorates, preached the need for transparency and honesty in government. In particular, he derided “the cynics, the lobbyists, the special interests" who held sway in the District of Columbia. He promised to stop the practice of rewarding donors with political favors.

Well, scratch another promise. As iWatch News has reported, about 200 of Obama’s biggest contributors (each raising anywhere from 50 to 500 grand) have gotten top jobs in his holy administration, big contracts for their businesses, or various other payoffs.

Interestingly, iWatch News is a news outfit supported by the Center for Public Integrity, a nonprofit organization whose avowed goal is to produce nonpartisan investigative journalism that will help achieve transparency in government.

And here’s the stinger. The Center for Public Integrity is funded by a number of primarily left-liberal donors, most notoriously one George Soros, the leftist billionaire and Obama booster.

That’s worth a chuckle, no?




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Cuba, While Collapsing

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On January 14, President Obama announced that he would issue an executive order loosening US travel restrictions and remittances to Cuba. Though the administration has yet to spell out the details of the change in policy, several areas have been targeted.

Students seeking academic credit and church groups traveling for religious purposes will now be able to visit the island. But it’s the broadening of the definition of “cultural” groups permitted to travel to Cuba that could really open up the island to US tourism — depending on exactly what the new guidelines allow. The indications, according to Arthur Frommer, a travel guide writer, are that these, if not broad indeed, will be fuzzy enough to allow the entire head of the camel to slip into the tent. Additionally, authorized charter flights to the island will be able to depart from any US international airport equipped with proper customs and immigration facilities. Right now, only LAX, Miami, and New York City can offer flights to Cuba.

Predictably, Republicans reacted skeptically — or unfavorably. Hence, Obama’s end-run around Congress. But the reformed Cuban American National Foundation, once the hardest of hardliners, welcomed the proposal, stating that “it’s going to help the interaction between regular Cubans and US citizens; it’s going to help Cuban people inside the island to gain independence from the Cuban government, especially now that roughly a million will be without jobs” — a reference to Raúl Castro’s decision to reduce the government workforce.

Bribery has become endemic. It is, in effect, an institutionalized way of getting things done and maximizing foreign exchange.

Right now, because of currency transaction restrictions, cash is king, which means that US visitors must lard themselves with reams of the green stuff to last their stay — a situation vulnerable to scams and ripoffs. Luckily, Cuban moral standards in the crime-against-US-tourists realm have not depreciated noticeably. But they have snowballed in Cubans’ relations with their own government, an area in which there does seem to be a convoluted method to this madness.

US State Department memoranda, recently leaked by Wikileaks, between Washington DC and the US Interest Section (USINT) in Havana indicate that bribery — high, low, and everywhere — has become endemic. It is, in effect, an institutionalized way of getting things done and maximizing foreign exchange.

The leaks themselves, unlike some Iraqi and Afghan communiqués, are definitely not sensitive. In fact, ever since the profoundly anti-Castro James Cason became our “ambassador” in Havana in 2002, the USINT has — as an official policy position — decided to pour sugar into the Castros’ gas tank. It wouldn’t surprise me if our mission welcomed the leaks. According to the USINT’s website, “The objectives of USINT in Cuba is [sic] to promote a peaceful transition to a democratic system based on respect for rule of law, individual human rights and open economic and communication systems.”

The most recent propaganda war began in the late 1990s, when the Cuban government erected a billboard in front of the mission with a cartoon revolutionary shouting to Uncle Sam, “Señores Imperialistas ! No les tenemos absolutamente ningún miedo!” (Messrs. Imperialists! We have absolutely no fear of you!”) This was followed — during the Elián Gonzales case — by the building of the Jose MartíAnti-Imperialist Plaza just east of the mission, where rallies, protest meetings (particularly targeting US policy), and concerts are held. At first, the USINT pulled its punches by displaying innocuous Christmas figures of Santa Claus, Frosty the Snowman, and a sleigh — censored symbols of a past era. But then, in January 2006, the USINT unleashed the full weight and measure of American creativity. That month, a scrolling electronic billboard in the windows of the top floor of the mission began displaying a quotation by George Burns: “How sad that all the people who would know how to run this country are driving taxis or cutting hair.”

Ever since the profoundly anti-Castro James Cason became our “ambassador” in Havana in 2002, the USINT has — as an official policy position — decided to pour sugar into the Castros’ gas tank.

The Cuban government responded with a huge protest march and the erection of a large number of flagpoles flying black flags with white stars, in a vain attempt to shield the billboard (which brings to mind the old Cuban saying about the fool who tries to deny reality: “You can’t cover the sky with one hand over your eyes”). There was also a Granma International editorial condemning the billboard as “the systematic launching of the crudest insults of our people via the electronic billboard, which, in violation of the most elemental regulations of international law, they think they can maintain with impunity on the façade of that imperial lair.” Apparently, George hit the funny bone again.

Cuban corruption, according to the leaked communiqués, includes bribery, inappropriate “tips,” illegal commissions, influence peddling, graft, embezzlement of state resources, and every other sort of unauthorized expedient used to gain advantage — from the highest levels of the bureaucracy, to ordinary members of the Cuban Communist Party, to the police, the security organs and anti-corruption watchdogs, to professionals of every stripe, right down to the average citizen navigating the reefs of Cuban quotidian life.

Many of the cables refer to illegal commissions either paid to fictitious third parties and deposited in foreign banks or paid openly to the Cuban concessionary and deposited in open accounts. One memo, quoting a Swiss businessman, says, “Like any other place in the world, a million dollar contract assumes $100,000 in the bank [as commission to the Cuban provider].”

If planning to visit Cuba, bring lots of cash — or blue jeans, perfume, soap, spices, sporting and electronic equipment, whatever we usually take for granted in a free society.

A Cuban told the USINT political advisor that “some entire government departments are run as, in effect, mafia fiefdoms. The director of the state bread distribution department placed friends in central hubs and now controls the entire chain of state bakeries.” Along these lines, many of the state jobs most susceptible to skimming, graft, or rent seeking are available only on a commission basis from the functionary in control. As another memo stated, “For example, a position with access to gasoline can cost thousands of dollars because it would permit the beneficiary to traffic in the combustible. Employment in the tourist sector, with access to its tips, can cost hundreds of dollars. A job with Cimex (the import/export bureau) would cost more than $500.” Government departments in charge of transport, construction, health, and food distribution are thoroughly suborned and maintain parallel black markets in lumber, cement, paint, meat, drugs, and many other goods.

Another cable cites the case of a woman who admitted to having her teeth fixed “paying hard currency to a clandestine dental clinic, run by dentists from the Ministry of Health and furnished with equipment stolen from the state.”

Michael Parmly, chief of USINT from 2005 to 2008, writes that the police “are famous for taking bribes. They’re so corrupt that the government replaces the entire force with new recruits from the eastern extremity [rural backwaters] of the island periodically. With time, the rookies become as corrupt as the old hands and they need to be replaced with a new crop.”

A previous Spanish ambassador characterized the situation to the USINT in this way: “Corruption is necessary to survive. When in the majority of Latin American countries a corruption scandal consists of one person stealing $11 million, in Cuba it’s that each one of the 11 million Cubans steals one dollar.” In 2009 the USINT provided this summary to Washington: “Corruption in Cuba is an accepted tool of survival. Cubans average an income of $18 monthly, and the security organs are well aware of it.” Madrid’s El País adds,Nevertheless, conduct considered corrupt in the United States, such as conflicts of interest or influence peddling, is business as usual in Cuba. The authorities tolerate corruption up to a certain point, but for serious corruption they respond with severity.” Makes one wonder how they define “serious.”

Now corruption is not normally part of the libertarian theoretical arsenal. Nonetheless, in this case (and probably in others as well), I will attempt a defense of the practice.

First, it is a relief valve for the constraints placed on normal market activities by unrealistic regulations — especially when they are “regulations without representation.”

Second, “corruption” is more understandable within certain frameworks and traditions. Modern political systems that evolved from Roman tradition — a tradition based less on ideology than on personal loyalty, patronage, and nepotism — are often perceived as corrupt by people nurtured wholly within Enlightenment political tradition. The Roman tax collection system is particularly instructive. Government collected taxes by selling the position of tax collector to the highest bidder. The price was determined by an estimate of the taxes that could be collected. The revenue agent then pocketed whatever he could garner from taxpayers — that was the return on his investment.

The Castro regime attempted to shift the traditional order — extant under Batista and his predecessors, albeit modified considerably over time — to an ideologically-based system. The draconian approach failed. Now, if anything — and in spite of many Cubans’ naïve admiration for the ideals of socialism — ideologically-based standards have suffered a crushing blow. Damage has been done that will be difficult to reverse when the regime collapses.

Bradley K. Martin, in his account of North Korea and the Kim dynasty (Under the Loving Care of the Fatherly Leader), interviewed many defectors from the hermit kingdom. North Korea has a much worse reputation than Cuba. It is surprising, therefore, that the North Korean defectors’ attitudes have much in common with Cuban attitudes. For one thing, reverence and admiration for Kim the Elder is widespread — for fighting the Japanese and imperialism and for socialist idealism, which the defectors are at pains to reconcile with the North’s economic failure, the primary reason for their escape. Similarly, in Cuba much of the populace still admires Castro’s accomplishments and idealism.

“When in the majority of Latin American countries a corruption scandal consists of one person stealing $11 million, in Cuba it’s that each one of the 11 million Cubans steals one dollar.”

In the course of describing how things get done in North Korea, Martin quotes one defector’s eloquent defense of the country’s widespread corruption: “I feel it’s justified. The official works hard to [fulfill the petitioner’s request], so there should be a payoff for him. Above that official there may be higher officials. This lower official has to work hard to [get his own requests fulfilled], has to pay off higher-ups. I just thought that was the way things were. I thought it was understandable. This system is prevalent throughout society. For example, if I couldn’t make it to the factory one day, I’d see the manager and give him some gifts and ask him to look the other way. In North Korea most bribery involves goods, not money. When my father worked as an official at a county economic committee he received so many ‘presents’ from farmers — potatoes, green onions and so on. If a person receives a present in the form of goods, that’s a ‘friendly present’.”

Conchita, a woman I know, understands. The not-so-recent émigré’s extended family and friends keep trickling into the USA, while she keeps visiting people who are still on the island. Those experiences, and her American dream job, conducting publicity for one of the state lotteries, invest her with an extremely pragmatic attitude to government in all its forms. She cultivates contacts in official and unofficial, high and low places. Her advice, if planning to visit Cuba, is to bring lots of cash — or blue jeans, perfume, soap, spices, sporting and electronic equipment, whatever we usually take for granted in a free society — to facilitate every contingency and make a Cuban’s day.




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Are You Kidding?

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Jonathan Alter, a leading Obama sycophant, appeared on a talk show recently with Washington Examiner columnist Tim Carney. The topic turned to a comment made by Rep. Darrell Issa (R-CA), who observed that Obama’s administration is “one of the most corrupt administrations ever.” Issa’s claim sent Alter into an apoplectically angry rant, saying there was “zero” evidence of corruption.

To Alter’s evident surprise, Carney immediately demurred, incredulous that Alter couldn’t see any evidence. While Carney said that Issa’s comments were “hyperbolic,” he gave a few choice illustrations, and later listed a few more on the Examiner’s website. Carney’s list included the following:

1. Ex-Google lobbyist Andrew McLaughlin, employed by the White House as a tech policy specialist, chatting with Google lobbyists about the rules governing “Net Neutrality,” from which Google stands to gain. (Carney’s blog doesn’t mention it, but Google gave lavishly to the Obama campaign.)

2. A former Goldman Sachs lobbyist took the job of the Treasury Department’s Chief of Staff within nine months of his Goldman employment. (Again, we can add that upper-level management at Goldman Sachs was a big contributor to Obama’s coffers.)

3. Former H&R Block CEO Mark Ernst was hired by Obama to help the IRS write new regulations on tax preparation (which Block subsequently endorsed, because it stands to benefit from them).

4. Obama officials have met “off-campus” repeatedly in order to dodge the Presidential Records Act.

5. When AmeriCorps Inspector General Gerald Walpin started investigating Obama’s friend and supporter Kevin Johnson, Walpin was summarily fired.

6. In the Obama-orchestrated Chrysler bankruptcy, the UAW was given the bulk of the stock in the new company (while the secured creditors were burned).  Naturally, the UAW was a big contributor to Obama’s campaign.

As good as Carney’s list is, it only scratches the surface. Here are a few more illustrations:

7. Besides the crony bankruptcy deal that gave the bulk of the stock in the new company to the UAW, there was a similar deal that gave a big chunk of the new GM stock to the UAW.

8. Moreover, in the recent IPO, the feds held onto the public’s shares while the UAW was allowed to dump its own. This ensured that the UAW pension fund would be made whole.

9. ACORN, the bogus “community service” group for which Obama was counsel and which worked so hard to register voters (even fictional ones) on Obama’s behalf, received lavish amounts of “stimulus” money.

10. When Obama was campaigning for Democrats in the last election, he doled out stimulus money in the states he visited (especially Nevada). Indeed, the stimulus fund was a grab-bag of cash for Obama’s backers. A disproportionate share of the money was spent in precisely those states that supported Obama.

As to whether Issa’s statement was “hyperbolic,” I don’t think so. The Obama administration has racked up a lot of corruption in its two years in office. If it isn’t one of the most corrupt administrations in history, it is surely on track to become so.




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