The Fake Facebook Scandal

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The Founding Fathers of the United States of America had a vision of an educated public kept informed by a vigilant, incisive press. If a crystal ball had granted them a vision of what the Fourth Estate has become nowadays, they'd have gone home, and we'd be paying taxes in pound sterling.

Case in point: the Facebook affair, a manufactured scandal that would make William Randolph Hearst and his anti-Spanish campaign look like pikers. Granted, we have seen quite a few artificial outbursts coming from a disarrayed press, but this one is rather peculiar and thus deserves a second look.

If a crystal ball had granted the Founding Fathers a vision of what the Fourth Estate has become nowadays, we'd still be paying taxes in pound sterling.

It is no mystery that Facebook painstakingly accumulates a detailed profile of every user. Their locations, habits, purchases, relationships, and opinions are carefully analyzed and stored. These data will then be sold to advertisers or marketers.

Collecting consumer data is not in itself a groundbreaking feature. Since the 1970s, such marketing data giants as Epsilon and Acxiom have made a fortune by collecting and analyzing our credit card purchases, travel habits, magazine subscriptions, and financial information. What Facebook brings is a very precise knowledge of its users, obtained by dissecting their posts, their "likes," and their friend lists. A fast, automated review of user profiles can easily establish their political leanings.

A.M.G. downloaded Facebook data on every American user — so much data that it triggered an alert in Facebook's monitoring system.

Like most companies collecting user data, Facebook exploits this information to sell ads and resell user data to third parties. In exchange for the free service, users click through a lengthy consent form and become the product that Facebook sells. Third-party companies purchasing user data are the actual Facebook customers. Facebook created and published an "API" (Application Programming Interface), a way for third-party programmers to query and receive Facebook user data — provided they pay.

From 2010 to 2015 or so, Facebook allowed customers using their API to download and keep user data. Many Facebook customers took advantage of the feature. Among these customers was the firm A.M.G., which worked for the 2012 Obama campaign to identify hesitant voters in swing states. A.M.G. downloaded Facebook data on every American user — so much data that it triggered an alert in Facebook's monitoring system. Facebook looked the other way and told the campaign it could go on until the election — which is not surprising, considering that Zuckerberg's company was, from the inception, militantly leftist.

Zuckerberg stooped to abject apologies for something that was done legally and publicly.

The 2016 Trump campaign hired a British data mining company, Cambridge Analytica, which also used Facebook user data. It remains to be seen how helpful this was. However, every anti-Trump activist can now blame Facebook for the election of Trump, who obviously — or so the "reasoning" goes — would not have been elected without the Facebook superpowers usurped by Cambridge Analytica. How did Zuckerberg, an irreproachable progressive until then, dare lend some of his divine grace to such a devil? Traitor! Have him drawn and quartered!

Thus the press suddenly turned against Facebook and its creator. The business-as-usual data sale was deemed a "breach" or a "leak," which is actually a redeeming wording, since it implies that Facebook's juicy data were not voluntarily sold to the Enemy.

In a sane world, Zuckerberg would have released an open letter to the press that would go like this:

Dear journalists,

Thank you for amply demonstrating why idiocy-uttering cannot be an Olympic discipline: the arena would simply be overcrowded by you cheap hacks vying for the gold.

The current topic of your inept blabber is the way the Trump campaign used Facebook data to produce targeted ads.

However, a simple foray into the archives of your own papers would show that not so long ago, you were swooning at the cleverness of the Obama campaign’s use of Facebook's technology to unceremoniously slurp the friend list of every American user. The campaign used these data to concoct ads and sway voters soured by Obama's first four years. Back then it was genius. Remember? Hey, I still have the message you sent to your friends recommending the raving article about A.M.G. Right above the pictures of this arugula salad you had for lunch.

Today, you pretend to blush and faint at the "revelation" that several companies, included one Cambridge Analytica, bought similar services and thus got similar info. I got news for you (I know, you aren't doing much of these anymore, nowadays — sorry for the discomfort). I didn't get filthy rich by letting Mrs. Smith upload pictures of little Timmy's pasta collage for his granny. I make money by accumulating detailed data about Timmy, his parents, his grandma, their freaking dog, and the whole entourage of this sadly ordinary family. Along with hundreds of millions of other working stiffs. Then I sold those data to anybody who happened to possess the requisite amount of cash and immorality. Talk to your publisher. See the Facebook button on the front page of your rag's web site? That's right: your employer is selling me data about your readers.

So lose the antics and get back to "reporting" about Russians and the NRA. Or I might follow the lead of my pal Bezos and buy a few of your outfits, replace you with a cheap guy on an H-1B, and make sure that the only job you'll ever find is cleaning spittoons.

Love and kisses,
Z.

Sadly, Mark Zuckerberg didn't write anything of the sort. To the contrary, he stooped to abject apologies for something that was done legally and publicly. He self-flagellated and accepted an imaginary complicity with the election of Trump, an act that makes him despised by his liberal pals grasping at straws to delegitimize the president.

Now, Zuckerberg might be a greedy sociopath and a cloying statist, but he is not an idiot. And he doesn't give off the martyr vibe, either. So what’s going on?

Like every good rentseeking statist, Zuckerberg is now turning to the force of government.

Let's go back to Timmy for a second. He is now 12 and developing new friendships. But Grandma has invaded his Facebook news feed with links to her bingo tournaments, and mom's friends' comments on his potty training are still visible to all in her history. There is no way he can use this trite, embarrassing channel to communicate with his cool preteen friends. And Timmy is not alone. According to market research company eMarketer, 5 to 10% of young users — from preteens to age 25 — are dropping off Facebook every year. Just when they are becoming juicy advertising targets. Not to mention the odd libertarian outraged by the company's shoddy practices and sneaky censorship.

So Zuckerberg needs to stop the user hemorrhage. He can take a risk and change the services and features offered by Facebook. He tried a few times, but these changes either backfired or failed to retain users.

Thus, like every good rentseeking statist, Zuckerberg is now turning to the force of government. He is advocating regulation that would force social media companies to increase transparency on ads and fight hate speech. And ban offensive messages. And vet content. And more.

Interestingly, Facebook is already severely limiting free speech. To voice a non-Marxist opinion on Zuckerberg's platform is to take the risk of being suddenly banned by his anonymous, unaccountable censors. Zuckerberg employs a horde of rabid activists that roam the site, looking for popular pages that contain un-PC keywords, and will block off any user sounding vaguely conservative if he or she becomes too popular. His biased censorship, which would make the Chinese government proud, is starting to attract attention.

Facebook is actively fanning the fires of liberal hysteria over normal — if disputable — business practices and is trying to convert it into a push for regulations.

Zuckerberg is now advocating regulation mandating similar censorship and content vetting for all social media. This is a clever triple play. It would raise costs, and thus the barrier to entry, for all potential social network rivals, thereby keeping these pesky competitors at bay. It would absolve him from his anti-conservative witch hunt, since he would merely be implementing a regulation. And it would deprive banned users of a tribune where they can publish their horrid un-PC diatribes.

The latter implies that all censorship would systematically be biased toward statism. Wouldn't some regulated social media company limit its censorship? It's unlikely. Think about the type of person who would want to be hired as a "content verification specialist." Would this censor job attract the average Joe? Or the average libertarian? Or would it be a magnet for vengeful social justice warriors looking for an outlet for their resentment?

Facebook is actively fanning the fires of liberal hysteria over normal — if disputable — business practices and is trying to convert it into a push for regulations. It's the old tale of Br’er Rabbit (a charming tale probably censored by Facebook for its “racist” depiction of a dark-colored figure): "Please don't throw me into the briar patch." It turns out that Br’er Zuckerberg was born and bred in the briar patch of governmental regulations and would simply love for his clumsy critics to throw him into the thickest of it.




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Butterfly Police

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The iconic orange- and black-winged monarch butterfly, one of North America’s insect wonders, is on the path to extinction. Its population has collapsed by 90% since the 1990s.

Each fall, the butterflies travel up to 3,000 miles from their breeding grounds in the US and Canada to their winter sanctuaries in the oyamel fir forests of central Mexico. In late winter, they mate, and begin the return trip to the US and Canada, where they lay their eggs on milkweed plants, and die. The eggs hatch into caterpillars, who feed exclusively on these host plants, until they fly back to Mexico.

Freezing temperatures in March! In central Mexico! Blamed on global warming!

The reported population decline is based on annual estimates of the number of butterflies overwintering in Mexico. That number is, in turn, based on the number of acres occupied by the monarchs. In 2016, ten acres were occupied, compared with 44 acres 20 years ago. The cause of the decline has been attributed to habitat shrinkage, both in Mexico (trees, because of illegal logging) and in the US (milkweed acreage, because of urban sprawl and agriculture). The problem, of course, is anthropogenic: global warming and pesticide use. So says the Center for Biological Diversity, and the solution, of course, is “immediate action to rein in pesticide use and curb global climate change.”

And, of course, there is no real-world connection to either. Regarding devastation of the monarch’s Mexican habitat, environmentalist Homero Aridjis wrote, in 2016, "The Mexican government should be taking measures to mitigate the probable effects of climate change on the [monarch butterfly] reserve.” The operative word is “probable.” In March of that year, Mexico experienced the destruction of 133 acres of forest, in a storm that froze or killed an estimated 6.2 million monarch butterflies. Said monarch expert Lincoln Brower, "Never had we observed such a combination of high winds, rain and freezing temperatures.” According to Weather.com, “this storm was unexpectedly intense, fueled by shifting temperatures due to climate change.” Freezing temperatures in March! In central Mexico! Blamed on global warming!

As to the habitat effects of illegal logging, most of the land occupied by overwintering butterflies is owned by indigenous Mexicans, who must cut the forest to survive. To stave off such habitat devastation, conservationists have tried to convince impoverished landowners that “the forest is worth more to them in terms of tourism when left standing instead of being cut down.” The thinking apparently is that if the conservation pitch is successful, then future tourists will joyously snap memorable pictures of a soaring monarch migration, as it descends onto oyamel fir forests — whose then-dense canopy will hide the waning, forgotten indigenous farm and mountain communities, as they descend into deeper poverty.

No announcements have been made as to how the butterfly police will handle the environmental crimes of bark beetles.

But in case destitute locals cannot be persuaded to give up their supplemental logging incomes, “Mexico's government announced it would create a special national police squad to patrol nature reserves and fight environmental crimes.” No announcements have been made as to how the butterfly police will handle the environmental crimes of bark beetles, whose infestations of the monarch sanctuary have no doubt destroyed at least as many trees as has illegal logging.

Not to be outdone by Mexico, the US has concocted measures of equal inanity. For example, the Obama administration proposed a “fly-way” program in which milkweed refuges for the butterflies would be created along highways that follow monarch migration routes. “According to the national strategy plan released by the White House, the fly-way is intended to increase the population to 225 million butterflies by 2020.” Another plan calls for placing the monarch on the Endangered Species List. “Our government must do what the law and science demands, and protect monarchs under the Endangered Species Act, before it’s too late,” scowled George Kimbrell, legal director at the Center for Food Safety. As a resident of Alabama, I pledge that as soon as the insect appears on the list, never to stomp on a monarch that lands in my yard, and to encourage my fellow Alabamians to demonstrate similar restraint. Good God, it’s our state insect.

"Monarch Watch" counted milkweed instead of monarchs?

Unfortunately, what science demands is evidence. And the scientific evidence does not support the climate change or pesticide propaganda. According to an exhaustive study of World Wildlife Fund and citizen scientist butterfly migration data, it is most likely that neither milkweed nor herbicides limit monarch population. “Monarch numbers begin declining at the end of the summer, when the butterflies begin their long migration to Mexico, and the numbers continue to decline as they travel. During this southern migration, adult monarchs do not feed on milkweed,” wrote lead author Anurag Agrawal. “By the time they get to Mexico their numbers are plummeting, but at the end of the summer when they start their migration, their numbers are not down . . . Herbicides are not likely to be the problem, and genetically modified crops that are herbicide resistant are not likely to be the problem for the monarch.”

In their incurious haste to blame the plight of monarchs on the climate change and pesticide boogeymen that they so vividly, and obsessively, imagine, crack US scientists relied on the overwintering counts estimated by crack Mexican scientists. They didn’t think to estimate the number of butterflies that depart the US in the fall. They counted the milkweed loss (up to 6,000 acres of potential habitat a day, because of US land development, says Monarch Watch), but not the monarchs. Monarch Watch counted milkweed instead of monarchs?

Had that storm not occurred, the headline story might have been the miraculous resurgence of our cherished monarchs.

Who knows what is happening to the monarch butterfly? Most of its population decline — as any non-environmentalist would guess — seems to be occurring during its arduous 3,000-mile journey to Mexico. Some of the decline in Mexico may be caused by illegal logging, and some by the bark beetle. But even this possibility is suspect. It’s extremely difficult to believe that tenacious monarchs could not find 44 acres of sufficiently dense and healthy fir trees, unassaulted by loggers and bark beetles, somewhere in their 138,379-acre biosphere reserve. And none is caused by the shrinkage of milkweed acreage in the US.

The monarch population had been rebounding in the few years prior to the March 2016 storm. Had that storm not occurred, the headline story might have been the miraculous resurgence of our cherished monarchs. Instead, the storm was used to blame climate change and pesticides for their demise. One can only hope that this silly, condescending, ideological attribution — that millions of monarchs were frozen to death, in the spring of the year, in central Mexico, by global warming — causes a similar decline in the population of braying environmentalists, and the rapid extinction of moronic, politically motivated scientists who come up with ideas such as butterfly highways and butterfly police.




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Why I Won’t Be Watching the Oscars This Year

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I used to love the glitz of Oscar night. I saw all the movies, reviewed them for Liberty, rooted for my favorites, and predicted the winners. I looked forward to Billy Crystal’s opening monologue, the mashup of Best Picture nominees, the performances of the nominees for Best Songs, Barbara Walters' pre-show interviews, the schmaltzy in memoriam list, and even the acceptance speeches. My friends gave fancy black-tie viewing parties and held contests to see who would correctly forecast the most winners. I wouldn’t miss Oscar night.

But I’m not watching the Oscars this year. I’m writing this before the ceremonies, so you can compare what I say with what actually happened; but I’m not changing my mind. It’s not that I’m boycotting the ceremony; frankly, it isn’t important enough to boycott. I just don’t care anymore. The awards shows have made themselves obnoxiously political and tediously irrelevant. Last year it was “Not my President.” At the Golden Globes it was black dresses and #MeToo. Now it’s “Boycott the NRA.” Do we really need Meryl Streep lecturing us about gun control this week? How do they even find time to make movies with all the activism they’re involved in?

It’s not that I’m boycotting the ceremony; frankly, it isn’t important enough to boycott.

For some actors, the answer is: they don’t. Four-time Oscar nominee and one-time winner Jennifer Lawrence recently announced that she’s taking a year off from making movies to teach kids about the importance of “getting big money out of government.” (Not sure if she means “from government” or “away from government,” but there you have it. She’s involved.) The 27-year-old middle-school dropout explained to Stephen Colbert, “When Trump got elected, my head spun off. And I read all these books and I have really learned myself good about our government.” (Yes, that’s how she said it. She learned herself good.) She went on to admit that she didn’t know how to answer any of the students’ questions during her first high school visit. “They were so smart!” she said incredulously. Nevertheless, she will spend the next year visiting schools to teach children about corruption in politics because, you know, she plays a spy in Red Sparrow.

And then there’s the Harvey Weinstein scandal, with everyone in the entertainment field expressing outrage as though they had been learning about his sexual aggressions and manipulations for the first time. I have to admit I miss Harvey a little bit: how can we get excited about the Oscars or even know which movies are “The Best Film of the Year!” without Weinstein out there promoting his entries with full-page ads in all the papers for the past two months? The stardust is gone. I just don’t know what to do or what to think without his help.

Nevertheless, Lawrence will spend the next year visiting schools to teach children about corruption in politics because, you know, she plays a spy in Red Sparrow.

Oscar is responding to the scandal by protecting its ingénues with items in the famous swag bags given to each attendee. In a press release the security systems company Sabre said that it planned to “help others by inspiring self-empowerment,” and therefore would be handing out items including a keychain pepper spray, gel pepper spray, and personal body alarms, as well as a testing kit that determines whether a drink has been drugged.

The irony of all this “pepper spray” is that it wouldn’t have done a bit of good in the Weinstein scandal, since all these women had to do to protect themselves was to get up and walk out the door. Or how about not going through the door in the first place? Who “takes a meeting” in a hotel room at 2 a.m.? On the other hand, being able to tell whether your drink was spiked with roofies is probably a good tool to have when you’re partying with Hollywood bigwigs. So thank you, Sabre, for inspiring our ingénues with empowerment. And for handing them a weapon.

Kimmel argues that entertainers have an obligation to use their platform for politics. I don’t find that particularly entertaining. Or pleasant.

In an interview with Good Morning America, Oscar host Jimmy Kimmel (who loaded last year’s monologue with digs at the newly elected President Trump) said he wants to be kinder this year. “This show is not about reliving people’s sexual assaults,” he said. “It’s an awards show for people who have been dreaming about maybe winning an Oscar for their whole lives. And the last thing I want to do is ruin that for someone who is nominated for, you know, best leading actress or best supporting or best director or cinematographer or whatever, by making it unpleasant.”

Unless you happen to be a nominee whose politics don’t mix with Kimmel’s. Then he’ll be as unpleasant as he likes. In that same interview he hinted that he will be delving into politics and voicing his opposition to President Trump, arguing that entertainers have an obligation to use their platform for politics. I don’t find that particularly entertaining. Or pleasant.

And what about the movies the Academy has chosen lately as Best Picture? Yes, there are some good nominees this year. I like the new policy of nominating up to 10 films for Best Picture. It allows unexpected little gems such as last year’s Mad Max: Fury Road and this year’s Get Out to have a moment of glory. My favorites this year are The Shape of Water, Dunkirk, Get Out, and Darkest Hour. Each is artistically stunning and each has an engaging storyline with strong character development. But they won’t win.

There ought to be some connection between the films people like and the films that are considered best picture.

And that’s why the Oscars have become irrelevant. The audience-pleasers don’t have a chance any more. In the past ten years, only one of the Best Picture winners (Argo) has earned more than half a million dollars on opening weekend, and most have earned under $300 thousand. Only three of them have broken through the $100 million barrier in lifetime worldwide box office receipts. I mean come on — The Hurt Locker ($50 million) beating out Inglourious Basterds ($300 million) and Avatar ($2 billion) in 2009? Even the animated film Up ($780 million — also nominated in 2009) would have been a better choice than The Hurt Locker with the viewing audience that year. I’m not suggesting that box office should determine the award, but there ought to be some connection between the films people like and the films that are considered best picture.

In short, middle America doesn’t have a dog in the race any more. The Academy insists on awarding the coveted statue to “important” films rather than the best film of the year, and most movie goers simply don’t care enough to sit through three-plus hours of self-adulation and snide remarks about their president to cheer for a film they haven’t seen. Neither do I. Sure, I’ll check out the results on Monday morning, and I might catch some of the speeches on YouTube if I learn that something outrageous has happened — like last year’s erroneous announcement that La La Land won instead of Moonlight, while the man whose sole purpose is to stand in the wings with the list of winners and quickly step in to make the correction if someone ever makes such a mistake was distracted backstage taking a selfie with the beautiful Emma Stone, who had just won the Oscar for Best Actress. Now that was worth watching. Almost.




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OPEC Death Watch

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A number of recent articles suggest that OPEC — that kleptocratic cartel that has artificially jacked up oil prices for so many decades — is in its death throes.

The cause is something upon which I have long commented in these pages: the roaring renaissance of the American oil and natural gas industry, a renaissance produced by entrepreneurial capitalism — as opposed to interventionist statism. While the Department of Energy funded wind and solar power, along with biomass and ethanol production, all of which together have accounted for only a tiny sliver of American energy production, and that only with massive subsidies and draconian mandates — private enterprise backed the winners: oil and natural gas.

But the recent dramatic increase in production and exportation was occasioned by Speaker Paul Ryan’s success in enacting into law the right of American energy companies to export those resources. This allows frackers (and ordinary drillers) to increase production, because they now have an unlimited world market within which to sell their products.

There's a roaring renaissance in the American oil and natural gas industry, a renaissance produced by entrepreneurial capitalism — as opposed to interventionist statism.

And this is already happening, as several noteworthy articles report. One is a Bloomberg report that of all countries, no less than the United Arab Emirates (UAE) — the fourth largest oil exporter in OPEC — is buying oil from shale wells in Texas. It turns out that the Texas crude is much “sweeter” (lighter and of superior quality) and more useful to the UAE’s refining than the local brand. The 700,000 barrels of oil that it is buying are their first purchase from us.

Bloomberg notes that while American exports to the UAE are not projected to continue, the explosion of American oil exports will. Shipments from America rose from a mere 100,000 barrels per day (BPD) five years ago to 1.53 million BPD in November of last year.

Besides increasing American exports of oil, the fracking revolution has reduced non-American imports to below 3 million BPD, the lowest level since data were first gathered 45 years ago. Our current net imports are only one-fourth of what they were in 2006, and we are likely to become a net exporter in about a decade — sooner, if ANWR is finally tapped, and new offshore areas are opened up for drilling.

The 700,000 barrels of oil that the UAE is buying are their first purchase from the US.

A second story reports the rapid growth in exports of domestically produced natural gas. It reveals that China has signed a long-term contract with Cheniere Energy — a major exporter of liquefied natural gas (LNG) — under which Cheniere will ship LNG from the Gulf Coast to China. Under this contract, Cheniere will provide 1.2 million tons of LNG annually to China, starting in five years, and lasting for 20 years after that.

And there is a third story, which notes that besides a rapid rise in American LNG shipments to China, we are seeing an explosion of exports of American crude oil shipments to that country. These exports have mushroomed from zero, before two years ago, to 400,000 barrels per day during the past two months. And again, if we bust open ANWR and the coastal waters of Alaska, such exports will increase even more quickly.

One nice side effect of this is that the more oil China buys from us, the lower our balance-of-trade deficit is with China. Two months ago our trade deficit with China was $25.55 billion. Last month it dropped to $21.895 billion.

Our current net imports are only one-fourth of what they were in 2006, and we are likely to become a net exporter in about a decade.

For the foreseeable future, of course, China will continue to buy most of its oil from Russia and the OPEC countries. But our share of the Chinese market will grow, for two reasons. First, at $60 per barrel, American crude is more than $4 cheaper than the benchmark (Brent) price. Second, while there are certain infrastructure bottlenecks that have to be overcome, they are being addressed. For example, while we don’t yet have ports capable of handling the biggest oil tankers (“Very Large Crude Carriers”), we have already started expanding one of the largest ports on the Louisiana coast.

All of this has added to the stress on OPEC that may result in its collapse as a cartel: the members of the cartel may go their own ways. The recent uptick in oil prices above the $60 per barrel range has helped OPEC find some relief. The recovery of the old price from its lows in the $40–50 range has two causes.

One is the meltdown of socialism in Venezuela, which has cut its oil production dramatically. Venezuela, a founding member of OPEC, is allocated by the Cartel to produce 1.97 million BPD. But the near civil war in Venezuela has dropped actual production to only 1.64 Million BPD. In fact, Venezuela’s production dropped by a whopping 30% last year alone. This is a steeper decline than that experienced by Russia when the Soviet Union broke up, and that experienced by Iraq following the 2003 invasion!

As noted by the Wall Street Journal article that I am referencing, the drop in Venezuelan petroleum output will likely continue, if not accelerate, because the nation is trapped in a vicious socialized spiral. As it exports less, it receives less foreign currency, which cuts its ability to buy food and other necessities that its own dysfunctional economy cannot produce, which in turn increases its hyperinflation and thus the political and economic failure. Moreover, Venezuela’s declining shipments of crude are deducted to paying creditors (such as Russia) and are in constant danger of being seized by creditors.

All of this has added to the stress on OPEC that may result in its collapse as a cartel: the members of the cartel may go their own ways.

In short, the ill winds that have so badly buffeted the hapless Venezuelan people have blown great good to the rest of OPEC. I suspect this is the real reason why Russia — no longer itself socialist — so strongly supports the Venezuelan socialist regime: it keeps a formidable competitor on the ground. The Russians want nothing so much as fair competition — the history of their Olympic teams shows that!

Speaking of Russia, the second major reason that OPEC has been able to keep the price of oil as high as it has recently (i.e., in the $60–70 per barrel range) is that so far Russia has stuck to its agreement with OPEC to hold down production. In early 2017, OPEC and Russia — which, while not a member of OPEC, is certainly an ally of it — agreed to cut back Russia’s production. This agreement has held up for thirteen months, now, and the Russians have signaled that they are inclined to keep to the bargain through the rest of this year and even into the first half of next year. However, the Russian oil oligarchs are expressing doubts about the deal — since Russia needs to maximize its income in order to arm itself maximally.

Vadim Yakovlev, deputy CEO of Gazprom Neft, the giant Russian oil company, has said that the company views the OPEC agreement as only temporary, and it irks the company to be forced to hold back production. Gazprom’s CEO Alexander Dyukov has said, “Following the OPEC agreement, instead of growing at eight to nine percent, we [Gazprom] have increased by just 4.5 to five percent. Which is, without a doubt, a negative factor for us.”

At this point, American production is a regulator of world prices: whenever the price rises much above $60, the industry jacks up production, and the result brings the price right back down.

It is clear that OPEC’s day of rule is coming to an end. America — already the greatest producer of oil and natural gas combined — is on track to become the world’s biggest oil producer this year. Energy research firm Rystad Energy estimates the US production will rise by 10%, hitting 11 million BPD. America hasn’t been the global leader since — 1975!

The report from which I have drawn that last piece of information notes that in 2015 the Saudis drove oil prices down to $26 a barrel. This lowered American production by 11%. But the American oil industry, not destroyed, became stronger — and more efficient, able to turn a profit with prices as low as $30 a barrel. While some experts are not so sanguine about the US becoming number one, it is clear that our production will continue to grow. At this point, American production is a regulator of world prices: whenever the price rises much above $60, the industry jacks up production, and the result brings the price right back down. A recent article spells this out — oil prices have been driven down by American production’s rise to a new high of 10.25 million BPD.

In sum, the days of OPEC — an evil cartel of evil states, from socialist Venezuela to religious-fascist Iran to duplicitous Saudi Arabia to revanchist neofascist Russia — are numbered. The free market will at last prevail.




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Run for the (Sea)Wall

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Every Memorial Day for the past 30 years a now-grizzled convoy of Viet Nam vets astride choppers swarms the Vietnam Veterans Memorial in Washington, DC. Groups of two, ten, twenty and more, hailing from every corner of the continent, converge at minor and major crossroads into a host of hundreds of thousands. This grassroots commemoration is known as the Run for the Wall. It was started in 1989 by two vets on Harleys. By last count the run numbers 350,000.

At the nation’s capital, Army, Navy, Marines, and Air Force; enlistees and draftees; non-coms and warriors; enlisted men and officers, relatives and sympathizers; WWII, Korea, Vietnam, Granada, Afghanistan, Iraq, and, yes, Bay of Pigs vets (everyone is welcome) — all long in the tooth, mostly hirsute, amply girthed and outfitted in Harley Davidson garb — cry like spurned orphans as their fingers graze the black granite of remembrance searching for the names of long lost comrades. The tears are contagious. Onlookers mist up or avert their gaze in respect and abide the circumstance.

The men harbored much resentment and bad blood: against Castro for their inhumane treatment; against Kennedy for condemning the operation to defeat.

This past Christmas Eve, an entirely different group of vets commemorated its 55th anniversary of freedom. On Christmas Eve, 1962, the last of the 1,113 Bay of Pigs POWs of Brigade 2506 were released after nearly two years of incarceration in Fidel Castro’s prisons. My cousins Carlos “Cachorro” León Acosta and Armando “Armandito” Lastra Faget, both 19, were the first to taste liberty that day. For Carlos, that was the night he was born again.

The Brigade had signed up to liberate Cuba from Castro’s communist fist. For a variety of reasons, and in spite of inflicting nearly 5,000 casualties on the Castro troops and suffering only 67 combat deaths, the Brigade was unable to achieve its goal.

Contrary to the narrative Fidel Castro has popularized — that the Bay of Pigs operation was a US CIA invasion manned by mercenaries — the true nature of that debacle has seldom been put into words. This is mainly because the freed prisoners were sworn to press silence, to avoid offending either the Castro or the Kennedy government and imperiling nascent and fragile agreements between the two countries. The men harbored much resentment and bad blood: against Castro for their inhumane treatment; against Kennedy for condemning the operation to defeat.

Fidel knew this was a Cuban vs. Cuban affair, and that if his forces fired on the US, the behemoth would retaliate and taps would sound on his revolution.

In contrast to Castro’s narrative, the true version is that the Bay of Pigs invasion was part of a civil war in which one side was supplied with arms, money, and training by the USSR, East Germany, and Czechoslovakia, while the other side was supplied with the same kit by the US, Guatemala, and Nicaragua. If anyone doubts this version, let him examine the event’s rules of engagement, to which both sides scrupulously adhered: US forces never fired a shot at Castro’s combatants, and Castro’s forces never attacked offshore US support ships. Fidel knew this was a Cuban vs. Cuban affair, and that if his forces fired on the US, the behemoth would retaliate and taps would sound on his revolution.

The Bay of Pigs was the second climax in a Cuban civil war that began on March 10, 1952 when Fulgencio Batista wrested control of Cuba in a coup. Immediately, a variety of disparate groups declared resistance to the new regime, Fidel Castro’s 26th of July Movement being only one of many. The first climax in these civil wars was Castro’s triumph over Batista on December 31, 1958.

Within four days of Castro’s victory, a nascent resistance — reading the writing on the wall and unrelated to the Batista regime — declared against Castro. The Bay of Pigs invasion two and a half years later was the second climax in the ongoing civil war.

Whenever the next climax occurs and whatever it brings, it will be peaceful.

The Bay of Pigs veterans are dwindling in numbers, many having added their eternal energy toward Cuba’s liberation. Only 550 are left. My cousin Armandito died in 2010. The latest to pass away was Maximo “Ñato” Cruz just a short while ago, on November 26. Cruz was an exceptional hero, the leader of F Company, 2nd Battalion, who distinguished himself in combat during the Battle of the Rotonda to such a degree that he received the only battlefield promotion during the fight.

Whenever the next climax occurs and whatever it brings, it will be peaceful. All of the exile and resident anti-Castro groups have renounced violence in achieving their aim of a free and democratic Cuba.

To commemorate the 55th anniversary of the Bay of Pigs veterans’ release, a small group of vets and vets’ relatives — in sincere flattery and imitation of the Run for the Wall ride — participated in a real (pedal) bike ride from the Bay of Pigs Memorial in Little Havana to Key West — as close to Cuba as possible. We called this our Run for the (Sea)Wall. Here’s my account of the journey.

Forget Little Havana and Calle Ocho — they’re full of gringo and European tourists. All of south Florida has become Cubanized. Ubiquitous are Cuban coffee (espresso brewed with sugar), Cuban sandwiches (roast pork, ham, Swiss cheese, and pickles stacked between sliced French bread and ironed in a plancha, a waffle press-like flat grill), and black beans (as a standard side in nearly all restaurants). We heard Spanish more often than English, though everyone, except for the very recent arrivals (mostly Venezuelans), speaks both languages and uses them interchangeably. Unlike immigrant enclaves elsewhere, south Florida is no “enclave” of struggling refugees lacking in skills, knowledge, or financial nous and isolated from its native residents. On the contrary, the mélange is dynamic, inspiring, and surprisingly free of cross-cultural frictions.

My wife Tina and I left Boca Raton on fully loaded bikes in a drizzly dawn, aiming first for Miami. We’d been staying with my Venezuelan cousin, Marta, who’d finally gotten her green card two years ago. Our next destination was Key Biscayne, 72 miles away, where another cousin, MariCris — a Cuban this time — would put us up at her corporate condo.

Forget Little Havana and Calle Ocho — they’re full of gringo and European tourists. All of south Florida has become Cubanized.

We reached Key Biscayne in one day, and on the next met with the president of the Bay of Pigs Veterans Association, Humberto “Chino” Argüelles, and a handful of veterans and family members at the Casa, the museum and headquarters of Brigade 2506. I was presented with a Brigade 2506 emblem and flag. One 82-year-old vet, Emilio “Ernesto Guerra” Martinez Venegas, had not been a member of the invasion force. Instead, he’d been a key participant in the subsequent infiltration programs, had been captured, and had spent 15 years in Castro’s prisons.

After touring the Casa and meeting with some of the veterans, we proceeded to Calle Ocho’s Bay of Pigs Monument, where — over the noise of traffic and tourist passersby — I explained the purpose of our ride: “Today we don’t mourn [the fighters’] defeat; we celebrate their freedom.” Our ride was "in remembrance of the patriots who gave their life, fortunes, and honor for Cuba’s liberty. Today we are all Cubans. Viva Cuba Libre!”

Launch of the ride. L to R: Carlos "Cachorro" León; the author; Humberto "el Chino" Arguelles. At the eternal flame, Bay of Pigs Memorial, Little Havana, Miami.Launch of the ride. L to R: Carlos "Cachorro" León; the author; Humberto "el Chino" Arguelles. At the eternal flame, Bay of Pigs Memorial, Little Havana, Miami.

One passing Danish tourist, captivated by the event, offered to photograph our entire group in front of the monument. Carlos, a veteran paratrooper of the Bay of Pigs (and the cousin earlier mentioned) handed over his camera. Afterward, the Dane asked Carlos if he’d fought “on the Cuban side.” The query was symptomatic of how pervasively the Castro narrative has permeated the public. Carlos, momentarily baffled yet no stranger to such ignorance, just answered “Yes.”

He then offered to take his family members to lunch. I suggested Versailles, the iconic Cuban exile restaurant where the movers and shakers of the Cuban community had met for years to impress one another, argue politics, and concoct financial and insurrectional plans. He gave me the same look he’d given the Danish tourist, saying, “Versailles’ food is no longer what it used to be; Cubans no longer go there; it’s a tourist magnet with long lines. I know a better place.”

He led us to a Spanish restaurant full of old Cubans — all of whom he knew — taking advantage of the $12.95 set lunch, and introduced Tina and me to all of them. He flirted with the waitress — he was a regular — and she reparteed back. After she took our order, Carlos leaned over and said, “She’s Russian.” The fortyish blonde was the daughter of minor Russian functionaries once assigned to Cuba, where she’d grown up and learned Spanish.

The query was symptomatic of how pervasively the Castro narrative has permeated the public.

After a delicious meal of caldo gallego, merluza a la plancha and flan, we went to Books&Books in Coral Gables. It’s the flagship of south Florida’s best book store, and a microcosm of south Florida’s intellectual milieu. Books&Books is old fashioned: huge, rambling, encyclopedic — with books arranged thematically, irrespective of language, on the same dark oak shelves — liberal with easy chairs for tome dipping, and hosting a sophisticated coffee and snack bar. The staff is multilingual, knowledgeable, and very helpful. Apparently, the many customers in the aisles were unaware of the “death of the independent book store.” (And yes, they carried my book, Closing the Circle: A Memoir of Cuba, Exile, the Bay of Pigs and a Trans-Island Bike Journey. Whew!)

The next day we saddled up early and headed for the Florida Keys, along Miami’s M-path, a dedicated bike trail under the city’s elevated tramway. Carlos met us partway on his bike for a photo op along a defile of Royal Palms, the Cuban national tree. Because of injuries acquired at the butt end of a rifle from a sadistic guard in Castro’s Modelo Prison, Carlos has to lay down his bike, step into its triangular frame, lift it up, and step out of the frame to straddle the bike in order to mount it. Afterward we joined him for breakfast at the Rinconcito Cubano, an unassuming breakfast and lunch joint where, again, he knew all the patrons and waitresses and introduced us to them all.

Armandito had been an outsized character at the Battle of the Rotonda in the Bay of Pigs operation, muscling a .30 caliber tripod machine gun continuously during the 48-hour siege of Playa Larga.

By lunchtime we reached Homestead, home of the Air Force base that welcomed the freed Bay of Pigs prisoners back on that Christmas Eve in 1962. Alina Lastra, sister of my late cousin Armandito Lastra, met us along the dedicated, tarmacked bike path. Armandito had been an outsized character at the Battle of the Rotonda in the Bay of Pigs operation, muscling a .30 caliber tripod machine gun continuously during the 48-hour siege of Playa Larga. Again, we took pictures — this time with the Brigade 2506 flag and a rendition of the MAGA hat with “America” replaced by “Cuba.”

But now we faced the Everglades’ aptly named Overseas Highway, a single traffic lane each way, with a divider, over 20 miles long, connecting the tip of Florida to Key Largo over swampland and sea. But that is merely the first key in an improbable island chain that stretches 113 miles to Key West (Cayo Hueso). Luckily, the shoulder was six feet wide — wide enough to shield us from the impatient, albeit 55 MPH controlled, continuous traffic. Boring and stressful!

Key West was first connected to the road grid in 1928, with a couple of intermittent ferries. All the bridges along the way, including the famous seven-mile bridge, were completed and open to traffic in 1938, when FDR toured the finished highway. We did not enjoy the amenities of his tour, but after a 64-mile day, we were relieved to find a motel on Key Largo and indulge in a pricey blackened Yellowtail dinner.

An iguana, on the way. It would be hard to leave him out.

An iguana, on the way. It would be hard to leave him out.

Of course, winter’s cold seldom finds the Florida Keys. New Year’s Eve welcomed us with 70 degree temperatures under bright sunshine in the morning. Hurricane Irma debris lined Highway 1 and sometimes blocked the adjacent bike path, a dedicated trail that often included its own connecting bridges separate from the vehicular bridges. Fishermen, some with tents and BBQs, lined these long bike and pedestrian spans. At times we had to dodge colorful iguanas, which otherwise mostly sunbathe on abandoned abutments and supporting berms, scurrying away when troubled.

Fifty-two miles to Marathon Key. Our tiredness and the isolation of our motel shielded us from the New Year's celebrations — raucous in a population given to no-shirts, no-shoes, and lots of recreational boozing.

* * *

Over the years Key Largo and Marathon Key have played a little-publicized but outsized role in US-Cuba relations. After the serial imposition of progressively stricter US embargos on the island, the Castro nomenclatura found itself in want of both luxuries and specialty technical apparatus. Even when these items could be obtained through convoluted schemes involving passthrough countries or ingenious smuggling, little foreign exchange was available to pay for them. So Fidel — or someone close to him who provided plausible deniability to the Comandante en Jefe — came up with a two-part idea implemented by the De la Guardia twins, Tony and Patricio, heroes of the Angola war, with popular (second only to Fidel) General Arnaldo “Negro” Ochoa, also from the Angola (and Somalia) war playing a supporting role.

Some funds for the operation were generated by charging Colombian drug runners a safe passage fee when traversing Cuban territorial waters. These funds were laundered by Fidel’s criminal asylee, Robert Vesco, the fugitive financier. Another part of the scheme involved stealing luxury yachts from Florida marinas. Since these were heavily insured and were owned, after all, by rich capitalists, the insurance companies reimbursed the owners promptly, and little fuss ensued. As Nobel-nominated author Norberto Fuentes, best friend with Ochoa and Tony De la Guardia, relates in his book, Dulces Guerreros Cubanos, the yachts were then employed in the “Caribbean Express,” smuggling Marlboros, specialty arms, and technology obtained through the services of shady Florida arbitragers and go-betweens. The delivery, loading, payment, and shipping took place on Key Largo and Marathon Key. Everyone involved skimmed and squirreled away thousands of dollars (the principals, hundreds of thousands of dollars) — insurance policies, commissions and brokerage fees being frowned upon in socialist Cuba.

Since these stolen yachts were heavily insured and were owned, after all, by rich capitalists, the insurance companies reimbursed the owners promptly, and little fuss ensued.

In 1989, for reasons that I can’t — yet — quite understand, Ochoa, the De la Guardia twins, and author Fuentes, all intimates of the Castros, were purged in a series of show trials reminiscent of Stalin’s in the 1930s. The charges had to do with drugs; the ostensible reason was the Castros’ desire to improve their image before international opinion. But there were other, murkier reasons, all too complex to elaborate here.

Ochoa and Antonio De la Guardia went to the firing squad. When Raúl Castro announced the verdict to Cuba’s rubberstamp constituent assembly, he was drunk and tearful and wore a bullet-proof vest; Arnaldo Ochoa was one of his best friends. Norberto Fuentes was saved through the special pleading of Fidel’s friend, Nobel laureate Gabriel Garcia Marquez, the Colombian writer. Fuentes now lives in Miami surrounded by his Castro-era memorabilia, in the same building as my cousin Carlos’ son. Fuentes and Carlos were schoolmates before the Revolution.

And the stolen luxury yachts? These became part of the fleet that takes rich tourists out on exclusive fishing excursions around Cuba.

* * *

The run down to Key West, at 48 miles, was our shortest — and most expensive, with a basic Best Western room costing over $300, not untypical of Key West prices. Carlos tells a story of impetuously driving down to Key West 30 years ago on New Year’s Eve for his honeymoon. At the first likely lodging he encountered, he inquired about a room. The attendant asked if he had a reservation.

“No,” answered the newlyweds. The attendant immediately began laughing. Carlos avers that, to this day, the man is still laughing. He adds that every subsequent motel they tried — even as they then began driving back to Miami — was fully booked. Nevertheless, we had our Best Western room and at 5 p.m. headed for El Siboney, a popular Cuban restaurant only two blocks away, hoping to avoid the crowds that are given to much later, Latin eating habits. Still, Tina and I — by now our small group had been reduced to just the two of us, for a variety of reasons, most having to do with age, health and the holidays — had to wait in line.

End of the ride. Author and his wife unfurling the Brigade 2506 flag, Key West.End of the ride. Author and his wife unfurling the Brigade 2506 flag, Key West.

Then, on January 2, at dawn, we packed up and headed the three blocks to the monument that marks the southernmost point of the US and declares in bold print, “90 Miles to Cuba.” It was a blustery day with tourists already posing before the giant faux buoy for pictures. We waited our turn. Then we posed our bikes before the monument, unfurled the Brigade 2506 flag, and recited José Martí’s La Rosa Blanca:

Cultivo una rosa blanca                            I cultivate a white rose
en junio como en enero                              in June as in January
para el amigo sincero                                 for the sincere friend
que me da su mano franca.                        that proffers his open hand.
Pero para el cruel que me arranca             But for the knave that rips out
el corazón con que vivo,                             the heart that gives me life,
cardo ni ortiga cultivo,                              I cultivate neither thistle nor nettle,
cultivo la rosa blanca.                               I cultivate a white rose.

I then pivoted towards Cuba, saluted the Castros with a single finger, folded our flag, and headed back to Boca.

* * *

After enduring nearly two years in Castro’s prisons, 240 out of approximately 1,400 Bay of Pigs veterans enlisted in the US military. Most fought in Vietnam. Both operations ended in defeat. Both sets of vets were widely spurned upon their return to the United States. But that attitude is finally changing.




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Alas, Zimbabwe!

 | 

I had visited several African countries, but my 2009 flight to Harare turned out to be the most stomach churning. The ongoing expropriation of farms owned by people of European descent and the associated violence in Zimbabwe was international news in those days. On the plane, I watched two movies, Blood Diamond and The Last King of Scotland. Aided by a couple of glasses of wine, the two movies and the news from Zimbabwe got mixed up in my mind. I was expecting to encounter a violent society, general chaos, and militants with AK-47s. I was craving for my plane to somehow turn around.

But Harare proved safer than many other places I had been to in Africa. When we arrived, the airport was in complete darkness because of a shortage of electricity. The officials looked bored and sleepy. Yet interesting events awaited me. I was to get arrested in Harare. I was to spend time with Morgan Richard Tsvangirai, who was at that time an international star, a hero of human-rights activists for his opposition to President Robert Mugabe, and soon to be prime minister (a position without much power) under him. I was to be befriended by a relative of Mugabe, with whom I spent two days. I was also soon to become, to use a word that is yet to find a place in the dictionary, a multitrillionaire.

When I asked for it, someone soon brought me a bundle of 100-trillion dollar bills, all for free.

Zimbabwe had recently lost control of its currency. Inflation was so rapid — reaching as much as one million percent at one point — that the nation’s money was left with no value. A few months before I arrived, people had stopped using the local currency. The only medium of transactions was the US dollar, the South African rand, or the euro. When I asked for it, someone soon brought me a bundle of 100-trillion dollar bills, all for free. By this time, you couldn’t even buy a local bus ticket with those notes.

Nothing was cheap. Even for simple food and fruit, the prices were much higher than I would have paid in Canada. A kilo of onions was US $1.60, sugar was $0.85, and potatoes were a dollar. I could have bought a cheap table fan for something between $50 and $110. A 300-gram packet of Kellogg’s cornflakes was $2.10. A 400 ml of Pantene shampoo was $7.

In Zimbabwe, labor is dirt cheap — a couple of dollars or less a day — and land amply fertile. Development economists struggle to explain why even basic foodstuffs are so expensive in such countries. Why does manufacturing from China or at least from Europe not flood into places like Zimbabwe?

The explanation is very easy, but very incorrect, politically. I will zero in on it at the end.

Despite the high price of goods that should have provided huge incentives for people to work, the roads of Harare were full of thousands and thousands of unemployed men. Those trying to do something were selling produce — exactly the same produce — from small roadside shops. Prepaid vouchers for cellular phones were being sold everywhere, partly as currency or a hedge against inflation.

In Zimbabwe, labor is dirt cheap. Why does manufacturing from China or at least from Europe not flood into the country?

But what I was exploring was the economy that represented the higher tail-end of the national GDP, which was then $606 per capita. Harare, not the hinterland, was my principal location.

Despite extreme poverty and unemployment, Harare was a safe city. I tried striking up conversations in fast-food joints with those of European descent, and contrary to what I expected, they told me about the lack of ethnic conflicts in Zimbabwe. Most of the land expropriation and violence that had been happening was the responsibility of a minority of the populace, mostly connected with the ruling party. I got the impression that it wasn’t necessarily the violent aspects of Zimbabwean culture but its relative sheepishness that allowed violent people to rule the country’s institutions and not get challenged. If a significant minority doesn’t get fired up about liberty and proper institutions, the society must fall into political tyranny and chaos. I soon lost my fear and walked around freely, but bad things managed to happen, evidence of the tyranny beneath the calm.

At one point, a policeman came out of nowhere, started shouting at me, and held my wrist while I was midway crossing a road. He was shouting at me and pulling me in the other direction. I declined to go with him unless he let go of my wrist. We agreed that I would walk with him to his small post at the corner of the road. He had seen me photographing the parliament building, which is illegal. For him not knowing that law was the ultimate crime. He was obviously looking for a bribe, but not knowing how much to give, I could have easily fallen into a never-ending negotiation. My only other option was to look important and name-drop. So that’s what I did. In a tribal society, it is pecking-order and might-is-right that rule. The rule of law is not just unimportant, it isn’t worth the paper it is written on — it is incomprehensible to anyone, including the judges.

Most of the land expropriation and violence that had been happening was the responsibility of a minority of the populace, mostly connected with the ruling party.

One evening, Morgan Tsvangirai visited the hotel bar, where I managed to have a private conversation with him. Before becoming a politician, he was a trade union leader and had worked in a nickel mine. He told me bluntly that if he came to power he would be “fair” but would expropriate whatever he needed for the good of Zimbabwe. When I told him that international investors would not put money into Zimbabwe unless they saw profits and safety for their capital, the idea made no sense to him. He seemed to have absolutely no understanding of the concepts of private property and profit. Lack of ideas was in him so palpable that I doubt he could even be labeled a Marxist.

The truth was staring nakedly at my face: Zimbabwe after Mugabe would be much worse. Ironically, that understanding had completely escaped the international media and other international organizations that were lobbying to have Mugabe replaced by Tsvangirai.

I had met a lot of well-educated Zimbabweans who were living in London and New York. They expressed their patriotism and their craving to return. But they made it amply clear that they weren’t going to do so except as expatriates with hardship allowances added to their Western salaries. In the economic structure of Zimbabwe this would simply not add up. So they did not return.

He was obviously looking for a bribe, but not knowing how much to give, I could have easily fallen into a never-ending negotiation.

For whatever reason, I had come to be seen in Harare as a man wielding huge money power. A relative of Mugabe befriended me and decided to show me around during the last two days of my visit. He showed me his fleet of cars and his several palatial houses. He also showed me expropriated properties and farms of ethnically European farmers. Genteel readers may find my happily “enjoying” a trip to such farms a bit repulsive. But revulsion would simply have meant that I wouldn’t have had the experience, or have been able to write about it. We drove around Harare and surrounding areas like royalty, with the police now extremely servile. Our vehicle always picked up pace when we drove closer to police blockades.

So what does the future hold for Zimbabwe?

Zimbabweans are extremely unskilled and have a very high time preference. The moderately skilled Zimbabweans have moved on to greener pastures. Brain-drain is real, in Zimbabwe as in the rest of the Third World. None of this augurs well.

I reflected on what the “liberation” movement of Zimbabwe must have been like. I had good laughs with a lot of Zimbabweans and found them very friendly, but I found no ingredient in them that would make them fight for liberty and freedom, if they had any concept of what those words meant. The nationalist movements of the colonized countries are too sugarcoated in history books. Those movements were mainly about local goons fighting for power when Europeans were getting tired and colonization had started to become less profitable.

The truth was staring nakedly at my face: Zimbabwe after Mugabe would be much worse.

As I write this, Robert Mugabe has been removed in a coup. He had been in power since the foundation of the republic in 1980. He was, in effect, installed by a relatively rational entity: the British. No such entity exists in the extremely irrational and tribal Zimbabwe. The concepts of liberty, planning, reason, and the rule of law do not exist there. Zimbabwean democracy is incapable of finding another Mugabe. It will by definition find a significantly worse “leader.”

The world today is celebrating the end of Mugabe and the rise of new light in Zimbabwe. Zimbabweans danced and celebrated the removal of Mugabe and the appearance of their new-found “freedoms.” But behind the facade they are happy for something completely different. When they use the word “freedom” they are expecting the end of Mugabe to produce an era of free-stuff, goodies that flow without having to put in any effort. In their worldview, free-stuff should come to them without obligation to plan, invest, or strive for something more than momentary pleasure, including the pleasure of political “liberation.”

Let us zero in.

Zimbabwe was once the breadbasket of Africa. Gleaning out the key factors that made it a comparatively prosperous society is fairly easy, but hard to utter. In the old days its institutional spine was British rule and farmers of European heritage. Without their return in some form, Zimbabwe has no hope.

A year or two from now, the World Bank, the UN, and the media will again be complaining about Zimbabwe not turning out to be what they thought it would.

Of course, the milieu of Western society and international organizations is such that anyone who holds a politically incorrect view is immediately thrown out. So these organizations simply do not have the capacity to prescribe corrective action for Zimbabwe. They recite “democracy” as a treatment for all ills. But a “democratic” society that lacks the concepts of practical reason, limited government, and the rule of law does not have the ability to find a good leader. It will merely feel attraction toward the person who offers the most goodies.

A year or two from now, the World Bank, the UN, and the media will again be complaining about Zimbabwe not turning out to be what they thought it would. They will be expecting fresh elections to do the job. This demand for elections and democracy has been the never-ending, simplistic prescription of international organizations in the postcolonial world. But the prescription does not work. Zimbabwe will, unfortunately, get worse, much worse.




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Alas, Zimbabwe!

 | 

I had visited several African countries, but my 2009 flight to Harare turned out to be the most stomach churning. The ongoing expropriation of farms owned by people of European descent and the associated violence in Zimbabwe was international news in those days. On the plane, I watched two movies, Blood Diamond and The Last King of Scotland. Aided by a couple of glasses of wine, the two movies and the news from Zimbabwe got mixed up in my mind. I was expecting to encounter a violent society, general chaos, and militants with AK-47s. I was craving for my plane to somehow turn around.

But Harare proved safer than many other places I had been to in Africa. When we arrived, the airport was in complete darkness because of a shortage of electricity. The officials looked bored and sleepy. Yet interesting events awaited me. I was to get arrested in Harare. I was to spend time with Morgan Richard Tsvangirai, who was at that time an international star, a hero of human-rights activists for his opposition to President Robert Mugabe, and soon to be prime minister (a position without much power) under him. I was to be befriended by a relative of Mugabe, with whom I spent two days. I was also soon to become, to use a word that is yet to find a place in the dictionary, a multitrillionaire.

When I asked for it, someone soon brought me a bundle of 100-trillion dollar bills, all for free.

Zimbabwe had recently lost control of its currency. Inflation was so rapid — reaching as much as one million percent at one point — that the nation’s money was left with no value. A few months before I arrived, people had stopped using the local currency. The only medium of transactions was the US dollar, the South African rand, or the euro. When I asked for it, someone soon brought me a bundle of 100-trillion dollar bills, all for free. By this time, you couldn’t even buy a local bus ticket with those notes.

Nothing was cheap. Even for simple food and fruit, the prices were much higher than I would have paid in Canada. A kilo of onions was US $1.60, sugar was $0.85, and potatoes were a dollar. I could have bought a cheap table fan for something between $50 and $110. A 300-gram packet of Kellogg’s cornflakes was $2.10. A 400 ml of Pantene shampoo was $7.

In Zimbabwe, labor is dirt cheap — a couple of dollars or less a day — and land amply fertile. Development economists struggle to explain why even basic foodstuffs are so expensive in such countries. Why does manufacturing from China or at least from Europe not flood into places like Zimbabwe?

The explanation is very easy, but very incorrect, politically. I will zero in on it at the end.

Despite the high price of goods that should have provided huge incentives for people to work, the roads of Harare were full of thousands and thousands of unemployed men. Those trying to do something were selling produce — exactly the same produce — from small roadside shops. Prepaid vouchers for cellular phones were being sold everywhere, partly as currency or a hedge against inflation.

In Zimbabwe, labor is dirt cheap. Why does manufacturing from China or at least from Europe not flood into the country?

But what I was exploring was the economy that represented the higher tail-end of the national GDP, which was then $606 per capita. Harare, not the hinterland, was my principal location.

Despite extreme poverty and unemployment, Harare was a safe city. I tried striking up conversations in fast-food joints with those of European descent, and contrary to what I expected, they told me about the lack of ethnic conflicts in Zimbabwe. Most of the land expropriation and violence that had been happening was the responsibility of a minority of the populace, mostly connected with the ruling party. I got the impression that it wasn’t necessarily the violent aspects of Zimbabwean culture but its relative sheepishness that allowed violent people to rule the country’s institutions and not get challenged. If a significant minority doesn’t get fired up about liberty and proper institutions, the society must fall into political tyranny and chaos. I soon lost my fear and walked around freely, but bad things managed to happen, evidence of the tyranny beneath the calm.

At one point, a policeman came out of nowhere, started shouting at me, and held my wrist while I was midway crossing a road. He was shouting at me and pulling me in the other direction. I declined to go with him unless he let go of my wrist. We agreed that I would walk with him to his small post at the corner of the road. He had seen me photographing the parliament building, which is illegal. For him not knowing that law was the ultimate crime. He was obviously looking for a bribe, but not knowing how much to give, I could have easily fallen into a never-ending negotiation. My only other option was to look important and name-drop. So that’s what I did. In a tribal society, it is pecking-order and might-is-right that rule. The rule of law is not just unimportant, it isn’t worth the paper it is written on — it is incomprehensible to anyone, including the judges.

Most of the land expropriation and violence that had been happening was the responsibility of a minority of the populace, mostly connected with the ruling party.

One evening, Morgan Tsvangirai visited the hotel bar, where I managed to have a private conversation with him. Before becoming a politician, he was a trade union leader and had worked in a nickel mine. He told me bluntly that if he came to power he would be “fair” but would expropriate whatever he needed for the good of Zimbabwe. When I told him that international investors would not put money into Zimbabwe unless they saw profits and safety for their capital, the idea made no sense to him. He seemed to have absolutely no understanding of the concepts of private property and profit. Lack of ideas was in him so palpable that I doubt he could even be labeled a Marxist.

The truth was staring nakedly at my face: Zimbabwe after Mugabe would be much worse. Ironically, that understanding had completely escaped the international media and other international organizations that were lobbying to have Mugabe replaced by Tsvangirai.

I had met a lot of well-educated Zimbabweans who were living in London and New York. They expressed their patriotism and their craving to return. But they made it amply clear that they weren’t going to do so except as expatriates with hardship allowances added to their Western salaries. In the economic structure of Zimbabwe this would simply not add up. So they did not return.

He was obviously looking for a bribe, but not knowing how much to give, I could have easily fallen into a never-ending negotiation.

For whatever reason, I had come to be seen in Harare as a man wielding huge money power. A relative of Mugabe befriended me and decided to show me around during the last two days of my visit. He showed me his fleet of cars and his several palatial houses. He also showed me expropriated properties and farms of ethnically European farmers. Genteel readers may find my happily “enjoying” a trip to such farms a bit repulsive. But revulsion would simply have meant that I wouldn’t have had the experience, or have been able to write about it. We drove around Harare and surrounding areas like royalty, with the police now extremely servile. Our vehicle always picked up pace when we drove closer to police blockades.

So what does the future hold for Zimbabwe?

Zimbabweans are extremely unskilled and have a very high time preference. The moderately skilled Zimbabweans have moved on to greener pastures. Brain-drain is real, in Zimbabwe as in the rest of the Third World. None of this augurs well.

I reflected on what the “liberation” movement of Zimbabwe must have been like. I had good laughs with a lot of Zimbabweans and found them very friendly, but I found no ingredient in them that would make them fight for liberty and freedom, if they had any concept of what those words meant. The nationalist movements of the colonized countries are too sugarcoated in history books. Those movements were mainly about local goons fighting for power when Europeans were getting tired and colonization had started to become less profitable.

The truth was staring nakedly at my face: Zimbabwe after Mugabe would be much worse.

As I write this, Robert Mugabe has been removed in a coup. He had been in power since the foundation of the republic in 1980. He was, in effect, installed by a relatively rational entity: the British. No such entity exists in the extremely irrational and tribal Zimbabwe. The concepts of liberty, planning, reason, and the rule of law do not exist there. Zimbabwean democracy is incapable of finding another Mugabe. It will by definition find a significantly worse “leader.”

The world today is celebrating the end of Mugabe and the rise of new light in Zimbabwe. Zimbabweans danced and celebrated the removal of Mugabe and the appearance of their new-found “freedoms.” But behind the facade they are happy for something completely different. When they use the word “freedom” they are expecting the end of Mugabe to produce an era of free-stuff, goodies that flow without having to put in any effort. In their worldview, free-stuff should come to them without obligation to plan, invest, or strive for something more than momentary pleasure, including the pleasure of political “liberation.”

Let us zero in.

Zimbabwe was once the breadbasket of Africa. Gleaning out the key factors that made it a comparatively prosperous society is fairly easy, but hard to utter. In the old days its institutional spine was British rule and farmers of European heritage. Without their return in some form, Zimbabwe has no hope.

A year or two from now, the World Bank, the UN, and the media will again be complaining about Zimbabwe not turning out to be what they thought it would.

Of course, the milieu of Western society and international organizations is such that anyone who holds a politically incorrect view is immediately thrown out. So these organizations simply do not have the capacity to prescribe corrective action for Zimbabwe. They recite “democracy” as a treatment for all ills. But a “democratic” society that lacks the concepts of practical reason, limited government, and the rule of law does not have the ability to find a good leader. It will merely feel attraction toward the person who offers the most goodies.

A year or two from now, the World Bank, the UN, and the media will again be complaining about Zimbabwe not turning out to be what they thought it would. They will be expecting fresh elections to do the job. This demand for elections and democracy has been the never-ending, simplistic prescription of international organizations in the postcolonial world. But the prescription does not work. Zimbabwe will, unfortunately, get worse, much worse.




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The Geo-Petroleum Order Overturned

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Several recent articles point to the continuing rapid evolution of the world’s geopolitical order in regard to energy — what I dub the “geo-petroleum order”. The upheaval was caused by America’s resurrection as a dominant oil and natural gas superpower, which in turn was caused by the fracking revolution. This resurrection, I would suggest, has had two phases.

The first phase started in the 1990’s, when George P. Mitchel combined hydraulic fracturing (known for decades) with horizontal drilling. This technique — fracking, as it has come to be known — allowed oil production in America to grow like a bodybuilder on steroids. It grew linearly up about 50% between 2011 and 2015. This allowed the US to shrink steadily as a net oil importer. We are close to hitting the goal of zero net imports, which is to say we are close to energy independence. Moreover, fracking drove the price of oil down by something like two thirds, to the current range of $40 to $60 per barrel.

The introduction of that kaleidoscope creator of pointless boondoggles, the US Department of Energy, was another monumental mistake.

The second phase began when House Speaker Ryan managed — amazingly! — to get a bill through Congress allowing domestically produced oil to be sold abroad. And he got President Obama — no big fan of fossil fuels — to sign it into law. As I noted at the time, this was an astounding piece of work. It overturned a grotesquely stupid law (passed during the energy crisis of the 1970s) that forbade the sale of presumably scarce domestic oil abroad. It never occurred to the morons who enacted this law that it would discourage oil companies and innovators from finding different ways to extract oil here, and making them look abroad instead.

Parenthetically, I would suggest that future historians will record that it was primarily our own idiocy that caused our energy shortages during the period running from the OPEC oil embargo to the rapid rise of fracking — a period that saw the greatest transfer of wealth from the US to its enemies ever known, for which we were “rewarded” by terrorist attacks and Russian neoimperialism. The enactment of the aforementioned subhumanly stupid law prohibited the shipment of American-produced oil, incentivizing oil producers and innovators to focus on foreign oil production. The introduction of that kaleidoscope creator of pointless boondoggles, the US Department of Energy (DOE), was another monumental mistake. The projects it forced innovators to pursue exhibited a degree of asininity seldom exceeded in the private realm. These projects range from syn-fuels and geothermal energy to biomass and corn ethanol (the mother and father of all boondoggles) to solar farms and windmills that shred birds and produce expensive energy at the very times it is least needed. Another DOE achievement was killing of the fast breeder reactor, which would have taken the nuclear “waste” we have accumulated and use it as fuel.

The DOE should top the list of federal departments to be eliminated. And for those of you who are worried about a rise of ocean levels said to be caused by global warning, may I offer a helpful hint? Just create a US Department of Water Creation, and the ocean levels won’t just fall; they will simply dry up.

Development in ANWR will provide thousands of high-paying jobs and $60 billion in royalties for the state — some of which goes directly to the people of Alaska.

But I digress. The flawed tax bill recently passed by Congress and signed into law by the president contains a provision allowing limited drilling in the formerly locked away Alaskan National Wildlife Reserve (ANWR). ANWR — which is in the middle of nowhere, and protects nothing but mosquitoes — was created at a time of high oil prices, and with only one purpose: to deny oil companies the chance to develop a small piece of vast Alaska. ANWR was, of course, opposed by the great majority of actual Alaskans but favored by soi-disant “environmentalists” in Silicon Valley and Beverly Hills. But then, neither Silicon Valley nor Beverly Hills has Alaska’s unemployment rate, which is the highest in the nation. Nor do they have Alaska’s large budget deficit.

Development in ANWR will provide thousands of high-paying jobs and $60 billion in royalties for the state — which puts some of the funds in a master-fund, the income of which goes directly to the people of Alaska. ANWR will also rejuvenate the Alaskan Oil Pipeline, keeping that great project alive. Not bad, considering that the drilling will take place on less than 2,000 acres — which is one-hundredth of 1% of the ANWR reserve.

It has also been reported that the $3.8 billion dollar Dakota Access Pipeline — created to ship the burgeoning oil production from fracking operations in North Dakota — is delivering bountiful benefits after only six months of operation. Lowering the cost of shipping has caused an increase in production. October’s production hit 1.185 million barrels per day (BPD), which is about a 13% increase over the peak before the pipeline.

As a result, unemployment in North Dakota is exceptionally low (2.3% in November), state revenues rose by $43.5 million in the first five months since the pipeline opened, and the pipe is projected to deliver $210 to $250 million in extra tax revenue by the end of its first two years. That’s delivering the green!

Saudi Arabia is now looking to invest in — American shale operations! How the geo-petroleum worm has turned.

Speaking of green, there has been a bonus for the environment as well. The pipeline has eliminated about 83% of the train traffic carrying oil, with only two trains a day now needed to transport oil instead of the 12 needed before the pipeline. This dramatically decreases the chance of ecologically damaging oil spills, or hominid-damaging oil explosions when trains carrying oil crash.

Another encouraging report explores an unseen upside of the growth in American fossil fuel production. The domestic steel industry — long an industry under stress from foreign competition — is itself experiencing a rebirth. Both oil and natural gas are shipped mainly by pipeline (unless misguided environmental activists stop the projects) and the pipes aren’t made of wood; they’re made of steel. Recently the newer domestic steel plants have become dramatically more efficient and are increasing capacity in anticipation of the pipeline buildout.

One American steel manufacturer projects growth in domestic oil and natural gas for the next ten to 20 years. Shipments from American steel producers went up 5% in the first ten months of last year — not as good as the 15% experienced by foreign producers, but still on the right track.

Some American manufacturers worry that the domestic buildout in steel plants will lead to a glut. But research done by Pipe Logix estimates that the number of oil and natural gas wells increased by 60% in 2016 alone. Those wells, and the pipes that ship their products, both require steel. So the worry about a “glut” of domestic steel mills seems exaggerated.

The foxy frackers just tightened their operations and kept innovating, winding up with an amazingly flexible industry that remains profitable in a below-$40 per barrel environment.

The American fossil fuel renaissance is having an impact on our major oil competitors. There is fascinating news that Saudi Arabia is now looking to invest in — American shale operations! How the geo-petroleum worm has turned!

Specifically, Aramco — the Saudi state-owned oil company — has approached the Houston based natural gas producer Tellurian, looking to invest. Aramco is also looked at acquiring assets in the two huge fossil fuel basins, Permian and Eagle Ford.

Admittedly, these developments are only incipient. But the fact that the Saudis are knocking at the door marks a major shift. They realize that America — once a pitifully energy-dependent giant brought its knees by despicable dictators sitting on top of large oil reserves — is now the world’s biggest producer of oil and natural gas, eclipsing both the always-treacherous Saudis and the authoritarian Russians. If you add on our coal production, we completely eclipse other countries in fossil-fuel production.

How sad that is for oil potentates, socialist caudillos, and dictators in general, who got fat on oil at an over-$100 price!

Of course, while we are the world’s largest producer of oil and natural gas, we are still net importers, because we consume so much. But as we increase production, we will become a net exporter. And this is what the Saudis realize. Aramco already owns some refineries in the US (and elsewhere in the world), but all Saudi production of oil and natural gas takes place in Saudi Arabia. The new leader of the country (Crown Prince Mohammed bin Salman) plans to privatize Aramco, and the IPO shares would fetch a higher price if Aramco sites production here.

The Saudis have two other reasons for wanting to buy into US oil and natural gas production. First, they aim to understand better how fracking works in such nimble ways. A couple of years ago, the Saudis tried to drive the frackers out of business by jacking up their own production and thus driving down prices. For a while, the price of oil hit about $30 per barrel. This caused the Saudi government to hemorrhage foreign reserves, but the foxy frackers just tightened their operations and kept innovating, winding up with an amazingly flexible industry that remains profitable in a below-$40 per barrel environment. When the price drops that low, less efficient operations get closed, but they can be expanded again, in the blink of an eye, when oil goes over $50 a barrel. How sad that is for oil potentates, socialist caudillos, and dictators in general, who got fat on oil at an over-$100 price!

The Saudis envy this flexibility and deeply resent the fact that it will keep the price of oil below $60 a barrel for the indefinite future. Witness the Crown Prince’s attempt to seize the assets of corrupt relatives and get Saudis used to working, rather than living on welfare paid by the rest of the world.

The Russians have “kept up” with American technology since the time of Lenin, usually by stealing it.

The other reason the Saudis want to have operations here is that they want to shift from their reliance on their own oil to power everything. The world’s natural fossil fuel distribution has involved using oil to power transportation, but natural gas and coal to generate electricity — and coal is a much dirtier fuel. But Saudi Arabia’s own natural gas reserves — which are about equal to America’s — are sulfur-laden and hard to get out of the ground. So to convert its production of electricity to natural gas, the country would have to import 12 million metric tons of LNG annually. Extracting that here in America would make sense.

But I have another, deliciously rich, piece of news. It is said that imitation is the sincerest form of flattery. If that’s true our archenemy Russia is flattering us in the extreme. It is trying to develop its own shale.

Russia’s main shale formation — the Bazhenov formation — is the largest in the world. And Russian oil production is the largest in the world. But Russians are looking at oil fields that are six decades or more old, and have declining outputs. So they want to do what America did: recover peak production by means of fracking. The trick is to replicate America’s technological expertise. To this end, the Russian government — i.e., Putin and his corrupt cronies — is offering tax incentives for shale companies, and incentivizing cooperation among energy companies and research institutes to develop fracking technology.

Alexei Vashkevich, exploration director for Russian energy conglomerate Gazprom Neft, who conveniently worked on the North Dakota’s Bakken formation operations, assures us that the Russians won’t rip off American technology but will develop a totally different Russian technology.

Oh, please, Alexei — as if the new Russian 5th-generation fighter weren’t a direct clone of America’s F35. The Russians have “kept up” with American technology since the time of Lenin, usually by stealing it. Witness A-bomb plans stolen by spies, F35 plans, obviously filched by cyberspies, aka hackers, who use the computer and internet technology they stole from — Americans!

We should work to keep oil prices so low that they delay Russia’s massive military buildup.

The news article just mentioned observes that it will be, perhaps, another six or seven years before Russian fracking operations produce very much, in part because of the embargo placed on Russia when it dismembered Ukraine. But wait: if the Russian technology-to-be is going to be totally different from America’s, why would the denial of that technology hold back Russia’s development?

I think you can expect Russia to do three things in the immediate future.

First, you will see it unleash its hackers to steal massive amounts of American fracking technology. My advice to American fracking companies is this: If you haven’t done so already, set up encryption and other barriers to stop cyberspies from an orgy of theft.

Second, you should be prepared to see mysterious “environmental” groups spew colossal amounts of deceitful anti-fracking propaganda. These groups will be funded by Putin for the sole purpose of retarding America’s own fracking.

Third, you can expect a dramatic increase in Russian meddling with elections, here and in Europe, by feeding propaganda to news media and funds to political activist groups. They likely played a role in strangling Poland’s development of its own substantial shale formations — keeping Poland and the rest of Eastern Europe dependent on Russian natural gas and oil. No doubt they will try to elect anti-fracking candidates here as well.

My strong belief is that we should work to keep prices so low that they delay Russia’s massive military buildup. To do this, we need to open up more offshore sites, and more in Alaska, and push for the systematic exploration of the Arctic.

In this regard, there is some very recent good news. Secretary of the Interior Ryan Zinke has announced a plan that would overturn the Obama administration’s effort to restrict offshore drilling to only 6% of the American coastline. Under the new plan, fully 90% of offshore areas would be opened, in the largest sale of offshore leases in history. This is a huge new step towards the goal of making America, in Zinke’s words, “the strongest energy superpower.”

While oil company CEOs may fear a glut — and lower prices — consumers would welcome it.

This means that Southern California’s coastline would be open for offshore drilling for the first time since the late 1960s, when it was closed because of an oil spill in Santa Barbara. The East Coast offshore areas would also be reopened.

Naturally, environmentalist groups are already screaming. For example, Diane Hoskins of the activist group Oceana called the plan “absolutely radical.” This is to be expected. Democratic governors in several states (including California, Oregon, North Carolina, and Washington) also expressed complete opposition, and some Republicans became alarmed as well. Senator Marco Rubio and Governor Rick Scott both came out against drilling off Florida’s coastline.

Even oil companies have stated reservations, since they are now experiencing what they regard as a glut of oil. But while oil company CEOs may fear a glut — and lower prices — consumers would welcome it.

Zinke has pointed out that the plan will not be finalized until 2019, and only after comments have been received in public hearings around the country. While all that is pending, we can be thankful for inventive frackers and the prosperity they have given us.




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Why Do Economists Disagree?

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The influence of economics suffers from the idea that economists disagree to the point of uselessness. George Bernard Shaw supposedly complained that “if all the economists were laid end to end, they'd never reach a conclusion.” A similar old adage says that if you ask the advice of five economists, you will get five different answers, or, if Keynes is one of the five, six answers.

Such talk may be fun, but it is unfair. "The first lesson of economics,” said Thomas Sowell, “is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics." Why? With characteristic exaggeration, H.L. Mencken observed that “no educated man, stating plainly the elementary notions that every educated man holds about the matters that principally concern government, could be elected to office in a democratic state, save perhaps by a miracle . . . by a combination of miracles that must tax the resourcefulness even of God” (Notes on Democracy, 1926, pp. 103, 106). A politician who understands economics and tries to apply it loses votes. One who understands it but conceals that fact is dishonest. Honest ignorance is an electoral advantage.

Externalities, monopoly, inflation, recessions, mistakes, inadequate foresight — all do occur. Economists are tempted to damn reality for being real.

Economists agree on the basics of their subject; disagreement on policy has other sources. The following list merely names the main points of agreement. Explaining them would go beyond this note, although, toward the end, it does expand on the most fundamental of them.

  1. Scarcity and the need for choice; opportunity cost.
  2. The division of labor, gains from trade, and comparative advantage.
  3. Marginalism and diminishing marginal returns.
  4. The role of the price system in exploiting the fragmented knowledge and coordinating the productive efforts of millions and billions of people in the nationwide and worldwide economy. The task includes allocating resources between the present and the future. The midget economy of the Swiss Family Robinson on its desert island contrasts instructively with the vast capitalist world of diverse resources, abilities, and preferences.
  5. “Economic calculation,” which is more than the mere dovetailing of such activities as automobile production and tire production, suitably proportioned. It refers, further, to producing the chosen amount of each good and service at minimum sacrifice of other desired things. Efforts at such calculation without genuine markets and prices, whether in theory or in the real world, have failed.
  6. Money as an institution that vastly promotes specialization and gains from multilateral trade. Money prices express opportunity costs, convey information and incentives, and ration scarce resources and goods.
  7. Private property, innovation, and entrepreneurship as essential to a thriving economy.
  8. Refutation of fallacies that have contaminated policy for centuries, especially ones relating to international trade and to a supposed self-regulation of money — the “real-bills doctrine” that the money supply will be correct if based on short-term bank loans to finance the production or marketing of real goods.

Shared understanding does not end there. Economists agree that reality has “imperfections” in comparison with an imaginary perfectly working price system. Externalities, monopoly, inflation, recessions, mistakes, inadequate foresight — all do occur. Economists are tempted to damn reality for being real, and they agree on many such matters. Price inflation traces above all to creating too much money.

Recessions are episodes of snowballing impediments to transactions, and economists explain them in various ways. In no field do professionals totally agree. An example in macroeconomics is the opinion of central bankers worldwide, shared by many but not all economists, that 2% inflation — a halving of money’s purchasing power every 36 years — is a proper objective of policy and that lower inflation is a cause for concern. Some technically valid arguments do exist for chronic mild inflation, but they are not decisive. Economists disagree on the weights to be accorded to agreed considerations.

Disagreement on policy traces overwhelmingly to matters other than economics.

But disagreement makes news while agreement does not. Lack of total agreement parallels what also occurs in the natural sciences: total understanding and consensus never are reached; room always remains for further research. As in other disciplines, economists disagree, when they do, on details and at the “frontiers” of research but not on the basics.

Disagreement on policy traces overwhelmingly to matters other than economics. Economists are not equally bold in predicting the future. They (as well as political scientists) hold differing opinions about how well government and politics function. Scientific issues join in policy disagreement, as about how serious a problem global warming is.

Economists are not equally knowledgeable about history, as about periods of advance and stagnation, crises, recessions, and monetary systems. Historical knowledge is valuable for making judgments about prospective population growth and technical and other innovation, but agreement cannot be expected to the extent that it can be expected on the basics of economics.

Psychology is sometimes at issue. Not all economists have the same understanding of people’s psychological quirks and of whether policy “nudges” might improve their decisionmaking.

Economists sometimes yield to wishful thinking. An example is the belief that proposed tax-rate cuts will so stimulate economic activity as to increase, not reduce, tax revenues.

Sociological questions arise, such as whether and to what extent welfare programs foster a culture of dependency and undermine the traditional family. So do issues of ethics and social philosophy, as about inequality of wealth and income, concern for future generations, how progressive the tax structure should be, whether the estate tax is fair, and what claims poor people at home and abroad are entitled to make on the more fortunate. “Bleeding-heart libertarians” do exist and have a web site of that name.

Like other people, economists sometimes yield to wishful thinking. An example is the belief that proposed tax-rate cuts will so stimulate economic activity as to increase, not reduce, tax revenues. Such a belief does not mean rejection of economic principles; in rare circumstances, that happy result could occur.

Career advancement can be a factor. Some economists seek distinction in cleverly working on the “frontiers” of research, in deploying impressive mathematics, or in finding exceptions to generally agreed applications of basic principles. Alternatively, some may be paid for rationalizations about policy that selectively emphasize some valid principles while disregarding (though not denying) others.

Some economists, perhaps seeking influence and fame, make compromises by taking account of political feasibility (i.e., votes), endorsing policies other than those they truly consider best. Full honesty would require openly acknowledging what they are doing (see Clarence Philbrook’s eloquent article in the American Economic Review, December 1953).

If enough demand exists, wouldn’t private enterprise satisfy it, and in a less costly and otherwise more suitable part of town?

Not all so-called economists are real ones who have completed graduate studies in the field and try to keep up with and occasionally contribute to the professional literature. It is not enough to hold an economics-related government position or to be prominent on TV. Disagreement among such people shouldn’t be allowed to disparage the professionals.

The most basic economic principles concern scarcity and opportunity cost. The city council of Auburn, Alabama, has voted to build an outdoor ice-skating rink downtown, where it will gobble up scarce parking space, worsen traffic problems, and otherwise inconvenience nonskaters. Evidently the council has not made a full cost-benefit analysis. Might not the money be better spent for other city purposes or left to taxpayers for their own purposes? How intense, anyway, is the demand for ice-skating here in the Deep South, where, by the way, the ice would have to be artificial? If enough demand exists, wouldn’t private enterprise satisfy it, and in a less costly and otherwise more suitable part of town?

I conjecture that the city council simply agreed with someone’s idea that a rink would be a good thing. So why not build it? It is easy to forget asking how desirable it would be and how great the opportunity cost in sacrifice of other public or private use of resources.

Disregard of opportunity cost is disregard for a principle accepted by all economists.

Such blitheness about opportunity cost shows up on the big-city and national levels. If a proposed museum would be nice or another overseas military base would seem to be a wise precaution, why not vote for it? A new sports stadium might please the fans, and consultants will conceive of side benefits for nearby restaurants, so why not support it with city money? An individual legislator pays practically nothing himself and might gain some votes.

James L. Payne shows how disregard of opportunity cost supports thinking that government money is somehow “free” (The Culture of Spending, 1991). Lobbyists not only for governors and mayors but also for industries swarm Washington seeking local projects and grants of money. Understandably, witnesses calling for such favors in congressional hearings far outnumber those who dissent. A similar explanation applies to firms and industries seeking protection from competition. But disregard of opportunity cost is disregard for a principle accepted by all economists.

Nothing said here denies that economists have expertise in contributing to policy judgments and that they — and quasi-economists — often disagree. Such disagreement rarely hinges on core principles and does not excuse disregarding them. Specialists cannot and should not have the decisive vote on policy, but that judgment does not excuse neglecting the basic principles that concern everybody and on which economists emphatically do agree.




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The Econ of Eating

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I recently reconnected with the editor of my high school newspaper when I discovered that he has been attending FreedomFest for several years. A former bureau chief for Forbes, he is now retired in the northern California town where we attended high school and writes a weekly column as a restaurant critic. I’ve enjoyed reading his reviews. They tend to focus as much on the restaurateur as on the food, and they are always kind and encouraging to entrepreneurs. Just for fun, I decided to mimic his formula and write a restaurant review of my own. Those who frequent New York diners will feel right at home in my review, if not in my specific diner.

Every Monday and Wednesday I drive up the river to Ossining where I park my car in an upper lot and hike down 122 uneven stone steps (yes, I’ve counted them) to Sing Sing, the notorious maximum security prison where I teach college and pre-college courses to the inmates. I check in at noon for my 1:00–3:00 class, hike back up to the lot for my two-hour break, and then return at 5:30 for my 6:30–8:30 class. The hardest part of teaching at Sing Sing isn’t dealing with the security guards, or the stairs, or the oppressive heat from the radiators, or the faint odor of mold that permeates the air and clings to the students’ papers. It’s figuring out where to eat between classes.

“How can they offer so many choices?” you might ask. It’s simple: most of the food is exactly the same, with a variation on the sauce.

Ossining is a small village on the Hudson River, and dining options are limited. It has several convenience-store delis, a couple of Chinese takeouts, a few nice restaurants that don’t open until dinner time, a McDonald’s, and a diner. I usually opt for one of the latter two for my afternoon break, since those are the only places that offer seating.

At least once a week I select the Landmark Diner, so named because it has been a landmark in Ossining for over half a century. Most New York diners are owned by Greek families that immigrated to America shortly after World War II. The Landmark's story may be the same. What I know is that the owner — let’s call him Themi Papadopoulos — recognizes me and shows me to a booth in a corner where I can eat my solitary meal and grade papers until class time. The restaurant is slow between 3:30 and 5:30, so he doesn’t mind my taking up the booth. And I always purchase a full meal.

Like most New York diners, the Landmark sports a menu at least 25 pages long, including four pages of breakfast plates, eight kinds of burgers, a dozen styles of chicken breast, another dozen fish options, at least 20 pastas, plus soups, salads, and steaks. “How can they offer so many choices?” you might ask. It’s simple: most of the food is exactly the same, with a variation on the sauce. And most of it seems to be pre-cooked. The only difference between chicken piccata and chicken marsala is the jar the sauce comes out of. Your best bet at a diner is either bacon and eggs or a hamburger and a milkshake. It’s the only food that tastes fresh. And it’s usually pretty tasty.

Apparently the “special” had been cooked previously, frozen or refrigerated until needed, and then dipped into the deep fryer to give it that crispy, just-browned appearance.

This week, after showing me to my booth, Themi told me about the day’s specials — pasta primavera, braised salmon, and a half roasted chicken. Tired of my usual hamburger patty, and thinking the specials would actually be fresh, I chose the half roasted chicken. But first, wanting to make sure my selection would be half a chicken and not half-roasted, I asked him if the specials were already available, so early in the afternoon. “Of course!” he assured me.

Platters are huge at New York diners, harking back to the days in the old country when family members labored long in the vineyards or marble quarries and needed a hearty meal. The specials come with soup or salad, bread, potato, and vegetable. That day’s vegetable was red cabbage, another staple at Greek diners. Braised in vinegar, it has a sweet, tangy flavor that complements chicken or pork nicely. Of course, the flavor pairings are more successful when the vegetables are served along with the meat rather than between the salad and the main course, as mine were. Still, the delay of that course boded well for a thoroughly well roasted chicken, so I didn’t complain about my side dishes not being on the side of anything.

When my chicken arrived it was huge, almost the size of a capon, and the outer skin was brown and crisp, adding to my expectation of a succulent, moist, well-roasted meat. Alas, it was not so. The meat was hard and dry, with that unmistakable gaminess that happens after the Thanksgiving turkey has rested in the refrigerator overnight. Apparently the “special” had been cooked previously, frozen or refrigerated until needed, and then dipped into the deep fryer to give it that crispy, just-browned appearance. I should have remembered that diners don’t roast anything.

I moved my chicken plate to the edge of the table and continued to nibble at my potatoes and cabbage until it was time to return to the uneven staircase at Sing Sing. As I was paying, the cashier asked how my food was.

At Sing Sing my students have only two choices: eat it or leave it. In the free market, I can choose from a multitude of eateries.

“Since you asked, the chicken was a little overcooked,” I acknowledged helpfully.

“Did you eat it? Would you like something else?” she asked.

“No, I didn’t eat it, but the rest of the food was fine. I don’t need anything else,” I insisted, not wanting to look like one of those people who try to get a free meal.

Themi walked over and apologized. “She’s a regular customer,” he said to the cashier. “Take 10% off the bill."

What a bargain! With tax and tip I paid $24.00 for a side salad, a scoop of potatoes and a scoop of cabbage. Yet I knew that the offer of a free meal was sincere. At Sing Sing my students have only two choices: eat it or leave it. In the free market, I can choose from a multitude of eateries. The successful restaurateurs are those who keep their customers satisfied.

It was a bargain because I didn’t come in for a great meal. We don’t go to diners for great food. We go for the familiarity of that 25-page menu. For the familial welcome of the owners. For the quiet table where we won’t be rushed out. And because all of those desires were satisfied, there was no reason for me to ask for a refund. I received what I came for.

I’ll be at the Landmark again next week. It will always beat standing at the deli.




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