Atlas on Woodward Avenue

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The great power outage that struck Detroit on Dec. 2 reminded me — did it remind you also? — of the way in which Ayn Rand and some of her disciples used to look for signs that “Atlas is shrugging.” They closely inspected every sign that scientists and engineers were withdrawing from the industrial grid and that the grid itself was collapsing.

The apocalypse never came. Jimmy Carter was kicked out of the White House. Stagflation went away. Capitalism kept producing wealth even faster than the government could devour it. Even in this Age of Entropy, Atlas is not so much shrugging as working harder than ever to pay his medical bills. He’s depressed; he’s ailing; but he’s still showing up at work.

Nevertheless, there is something emblematic, something that provides a startling reminder of the End envisioned in Atlas Shrugged, in the horrible fate of the former industrial capital of America. Detroit is bankrupt. It has lost almost two-thirds of its population. Large segments of the city have returned to wilderness. Along Woodward Avenue, once the Champs Elysées of the Midwest, every large business has disappeared. The avenue’s distinguished churches, each an architectural masterpiece, still raise their towers, but several have been abandoned, and all are struggling. A classic theater, a classic movie palace, a classic this and that have been heroically preserved, but the monumental beaux-arts building that used to be GM world headquarters is a nearly empty hulk in a crime-ridden neighborhood, a square mile in which only 3,000 people dare to live. A magnificent art deco skyscraper now houses the countless bureaucrats of the failed public school system. The Institute of Arts, one of the world’s most important museums, the gift of fortunes created by the automobile, has been supported by the state for many years. Its hours are limited; its parking structure has been closed because of structural decay.

A picture tells part of the story. It shows visitors standing in the museum’s central court during the outage. The court, which is lit by windows in the ceiling and is therefore not dependent on electricity, is decorated by murals made by Diego Rivera, a communist, and financed by Edsel Ford, an industrialist. The murals show the progress of industry and suggest that it can be used either to create or to destroy. Beneath the murals, people mill about, apparently oblivious to the art. Perhaps a few of them are reflecting on the process of cultural disintegration. Perhaps one of them is asking himself, Did Atlas shrug — or did he merely lose what made him Atlas?

rsquo;s still showing up at work.




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The UAW Smackdown

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A spectre is haunting the American labor movement movement — the spectre of Detroitism.

Last month, the UAW in particular and Big Labor in general suffered a devastating defeat when the workers at the VW plant in Chattanooga, Tennessee voted to reject the UAW.

Big Labor has had and continues to have a lot of influence on the American political system, because of its ability to seize workers’ dues and use them to elect progressive and other leftist candidates for office. But it has seen a massive melting of its membership over the last few decades. In 1983, around 20% of all American workers were members of unions; now, only 11.3% are. And while the percentage of public sector workers currently in unions is 35.3%, in the private sector it is a meager 6.7%.

And in the UAW — the venal organization of a minority of American autoworkers — the figures are even worse: in the last three decades, it has lost 75% of its membership. (The UAW claims it has 382,500 members, but that is out of about 820,000 total American autoworkers).

The Obama administration used every trick possible to help the UAW win in Tennessee.

So for several years, the UAW has set its eyes on the South, where — thanks to the prevalence of right-to-work laws — automakers, mainly foreign ones, have opened plants. The unprincipled union has had the help of the Obama administration, which it helped elect by lavish logistical and financial support, and which in turn ripped off both taxpayers and secured investors in a cynical crony bankruptcy deal to enrich the UAW.

The Obama administration used every trick possible to help the UAW win in Tennessee. First, the president stacked the National Labor Relations Board (NLRB) with union tools by means of “recess appointments” that are probably illegal. The NLRB then allowed unions to use “card check” to win representation; that is, instead of holding a secret ballot election, the NLRB lets a union to be certified if the majority of workers sign authorization cards.

Of course, this opens the door for union coercion of workers, intimidating them into signing under the threat that if they don’t and the union gets voted in anyway, it will retaliate against them.

Some brave workers (represented by the estimable National Right to Work Legal Defense Foundation) filed allegations that they had signed under UAW deception and coercion. The Obama-controlled NLRB dismissed the charges, but the worker outrage was so great that it forced VW — which, as explained below, needed to be forced — to ask that a secret ballot election be held.

Also helping the UAW was IG Metall, the union that represents autoworkers in Germany (and in fact has members on the boards of directors of not just VW, but BMW and Daimler as well). IG Metall is deeply afraid that more and more German auto plants will move to the Southern US, where right-to-work laws prohibit unions from forcing workers to support them, and lower energy costs prevail (thanks to our embrace of fracking — and Germany’s embrace of inefficient so-called “renewable” energy sources).

The NLRB was gaming the system, but VW (under pressure from its German union) tried to give away the game itself. VW pushed for a quick election (within nine days, far less than the average 40 days) and agreed not to speak against unionization. Moreover, VW agreed to allow the UAW to campaign inside the plant itself, and did not allow workers opposed to unionizing the same freedom.

But in spite of the blatant deck-stacking by Obama, his bogus NLRB, the company, the UAW, and the German union, the Big Labor gang was defeated by a 53% to 47% margin. Considering that the opponents of unionization were banned from stating their case in the plant, and considering the hardball tactics of the UAW, this was a decisive defeat for the union. As Art Schwartz (a former General Motors labor negotiator) put it, “If they can’t win this one, what can they win?

There seem to have been several specific factors that led to the workers giving the UAW the bum’s rush. First, the very unfairness of the scheme — letting the UAW speak, silencing its critics, and rushing the election — had to have been infuriating to the honest autoworkers.

Second, Obama made this a personal issue. He attacked Tennessee Republicans in his characteristically snide, mendacious way as caring more for “German shareholders than American workers.” His involvement brought the suffocating stench of his administration to the issue. Workers, in a state that voted for Obama’s opponent Romney by a margin of 20%, were reminded of the extensive corruption, abuse of power, and radical politics regnant in the White House. Grover Norquist, head of the invaluable group Americans for Tax Reform, pointed out the connection between Obama and the UAW on a billboard near the plant. The billboard message was that the “United Obama Workers” had spent millions in union dues to elect the man.

Third, workers were scared off by the miserable history of the UAW’s destructive and selfish war of confrontational tactics against the American automakers. The UAW drove GM and Chrysler off a cliff. VW and the other foreign carmakers pay and treat their employees in the southern US very well. Thus the workers were rightly afraid of losing their good jobs.

Fourth, workers obviously resented the UAW’s massive financial support of progressive and other leftist politicians, who vote for policies the workers generally hate, such as unlimited abortion and the elimination of gun rights. As one worker, Travis Finnell, put it forcefully, “We’re in the South. We have a lot of religion. I don’t want my money going to those causes.” This brings up what is doubtless another reason workers refused to enslave themselves to the UAW: the dues it takes from workers are quite steep — 2.5 hours of pay a month, and 1.15% of all the worker’s bonuses.

As a former General Motors labor negotiator put it, “If they can’t win this one, what can they win?”

Finally, it was well known in Tennessee that VW will soon decide where to locate a major new SUV factory — in Tennessee or Mexico. Please note: Mexico is a country that, unlike the US, has a free-trade agreement with the EU. The workers don’t want to give the company another reason to locate there.

But I suspect that the overarching reason for the UAW’s ignominious rout was the specter of Detroit. The Democrat-Big Labor complex has utterly destroyed one of America’s iconic cities. Between them, the UAW, the iniquitous city employee unions, and a mob of unscrupulous Democratic politicians drove two of the domestic automakers and the city itself into bankruptcy. As one worker said in a TV interview, the “common denominator” of the city’s collapse into a cesspool of decay was — the unions.

The reaction of the union was as predictable as it was despicable. Despite assurances that it would honor the workers’ decision, the UAW has just asked the Obama jury-rigged NLRB to call for a revote. The union is whining about “a coordinated and widely publicized coercive campaign” by outside interests (namely, Tennessee Republicans) to deprive the VW employees of their voices. The UAW naturally never mentions the coercive campaign by Obama, his stooge-packed NLRB, IG Metall, and the UAW itself to shove a ruinous union down the workers’ throats.

We will see if these miscreants can carry this off.




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And We All Frack On

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Several recent stories show that the amazing technology of fracking continues to transform the energy world.

First is the news out of Russia that it has begun drilling a well that aims to tap the huge Bazhenov shale formation. The Bazhenov field, in Siberia, may be the biggest shale formation in the world.

Until now, Russia hasn’t bothered with fracking, even though it has the world’s largest reserves of shale oil (and the ninth largest of shale gas), because it has immense reserves of conventional fossil fuels. But lately its conventional production has begun to stagnate.

So Russia is allowing Royal Dutch Shell and Exxon Mobil to partner with its state-owned Gazprom Neft to start the process of developing fracking operations. How quickly it can mimic the American success in this area is hard to tell — certainly, other countries with large shale reserves (such as China, Poland, and the UK) have yet to get any production going, because the technology is tricky. What Russia has going for it is that — unlike the US — Russia has a leader who actually wants to enhance fossil fuel production, rather than destroy it.

Even more fascinating is the report out of Brussels that the European Commission now wants to cut back on the “climate protection” schemes it has pushed in the past and — wait for it — embrace fracking!

Yes, apparently the Commission’s plan is to step back from its aggressively Green agenda, called “20-20-20,” set back in 2007. The plan then was to achieve a 20% drop in greenhouse gas emissions, raise the EU’s output of renewable energy to 20% of all energy consumed, and achieve a 20% increase in the EU’s energy efficiency — all by 2020. The plan now is to switch to pursuing these green energy goals only on a voluntary basis.

As regards fracking, the Commission now intends to establish only minimal rules, instead of the very strict ones it was considering.

The interesting question is whether Germany’s head Angela Merkel will continue to push for an increase in the use of renewables. She has set the goal for generation of renewable energy in Germany at 60% by 2036. Considering that after Fukushima, Merkel ordered that the German nuclear power industry be closed by 2022, and that half the plants are already shuttered, achieving the renewable goals will drive the cost of German power through the roof.

But she is running into flak from German industry. An article late last year noted that the rising energy prices in Germany and dropping prices elsewhere were beginning to put pressure on German manufacturers to start offshoring much of their operations.

I mean, this is just fascinating: when America is finally free from our current Green president, and we once again encourage domestic oil and gas production, we may find that we get back some of the heavy industry we lost to the Germans decades ago. Hell, maybe their automakers will completely relocate here.

Of course if they do, they will need new names. Instead of Bayerische Motoren Werke, might I suggest Tennessee Motor Works? And Mercedes Benz — well, “Mercedes” is so dated. We might try “Miley” (after our famous twerker-girl pop star). Perhaps “Miley Bends” would work . . .

A recent Wall Street Journal piece noted that many EU companies are moving production to the US, because of our relatively inexpensive energy — and, one might add, because at least in the half of all American states that have right-to-work laws, our labor rules are more realistic.

Finally there is a story about a start-up company called Siluria, which may possibly have solved the technological hurdles in the way of turning abundant natural gas into cheap gasoline — gasoline at about half the price of the current product distilled from petroleum.

Siluria is trying to do what so far has been impossible. While gas-to-liquids plants do exist (plants that convert natural gas to liquid fuels, including gasoline), they are very costly. It takes a lot of energy to do the conversion. For years, companies have searched for a catalyst that would make the conversion more cost-efficient, but so far, no catalyst has succeeded. Siluria has a new approach: it has built an automated system for making and trying out new catalysts. The system has already sifted through 50,000 possibilities, and the company feels that the performance of the catalyst currently in use at its experimental conversion plant justifies opening two larger-scale plants to prove to investors that it has a commercially viable approach.

A number of other companies are trying to find a commercially attractive way to convert natural gas to liquid fuels — none of which, please note, receiving the lavish funding accorded Obama cronies’ multitudinous green energy companies (most of which have failed).

In fact, the whole fracking revolution was entirely the creation of a handful of brilliant entrepreneurs in the private economy, operating in the face of the administration, not with its help. Over the decades, the role of the federal government in confronting our energy dependence on the Mideast has been one of trying to pick winning technologies, and failing every time. Not just failing, but failing at a cost to taxpayers of billions of dollars, all the while impeding private enterprise.

It is time just to end the idiotic Federal Energy Department, and let the free market solve the problem.




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Bhopal, 1984

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The Bhopal Disaster of 1984 was the worst industrial disaster in the history of the world. It was caused by the accidental release of 40 tons of methyl isocyanate (MIC) from a Union Carbide India Limited (UCIL) pesticide plant located in the city of Bhopal, capital of the Indian state of Madhya Pradesh. UCIL was a joint venture between Union Carbide USA and a public-private consortium of Indian investors.

When the gas leaked, all safety devices — water spray, scrubber, and alarms — failed to function. None of the employees of UCIL were affected, but there was no evacuation plan or mechanism to alert the citizens of Bhopal; and there was no suggested “antidote.” The leak killed thousands outright and injured between 150,000 and 600,000 others, at least 15,000 of whom later died from their injuries. Some sources give much higher numbers of fatalities. Tens of thousands and their next generations continue to suffer.

When constructed, the UCIL factory was in an area exclusively earmarked for industrial development and was a considerable distance away from the populated part of Bhopal. As time went by, slums developed in what had been a “green zone.” A few months before the incident, Arjun Singh, chief minister of the province, had given legal titles to those slums, which were his vote-bank. The slums were small, and were constructed of mud walls and tin roofs. No water or sewage facilities existed. The people who lived in these slums were the most affected by the gas leakage.

Very early in the morning of December 3, 1984, I was awakened by incessant honking and sirens.

As I write this, 29 years after the incident, the factory, now in disrepair, has been under the direct control of the government for over 15 years, but it has yet to be dismantled and cleaned. To research this article, I visited the factory. I entered the premises, with no barriers or security to stop me. Children were playing around. The roofs were falling apart. There were still bags of substances lying there. As one of the documented victims, I even tried to collect the money due to me, just to experience how the system was working. I did that five years ago but procrastinated about finishing my article, for reasons I will explain.

A lot has been written about the conduct of UCIL, but little attention has been paid to the conduct and character of the state and people of Bhopal. It is clear to me that the state washed its hands of all responsibility. So did the people.

A superficial observer might see the tragedy as merely one of the most visible features of a land of catastrophes. Yet its origin was in the human mind and its development depended on the specific defects of a collective worldview.

Dystopian 1984

My parents’ house is only a block away from the highway in suburban Bhopal. Very early in the morning of December 3, 1984, I was awakened by incessant honking and sirens. Noise and lack of personal space are an essential part of life in India. My brain would have flawlessly filtered out the noise and let me sleep, had it not identified an unusual flavor in it.

We had recently been witnessing horrible riots. About a month earlier, Prime Minister Indira Gandhi had been killed by her Sikh bodyguards. Early in the year, Indira had sent army tanks and commandos into the Sikhs’ most sacred temple, although their mission could have been achieved by simply disconnecting the water supply. Indira had run a brutal and murderous regime in separatist Punjab, a predominantly Sikh state, but she had the "moral" support of most Indians. What followed her murder was a pogrom against Sikhs around the country, organized by the ruling Congress Party. Sikhs were raped and burned alive in Bhopal. Their properties were destroyed. The servile armed forces and police were mostly silent spectators.

My acquaintances affirmed that the Sikhs deserved what they got. When the stories came out that the police had pulled the fingernails out of some people, against whom there was no evidence, most of my acquaintances seemed to have no moral qualms about it.

Asking myself what new was happening on the morning of December 3, I went to the rooftop of my parents' house to check. There were thousands and thousands of people on the highway. Cars jammed the roads. I had never seen so many cars; there weren’t many in the city, and those that existed were mostly owned by the government. Every self-respecting bureaucrat had a siren on his car. The cars were all going in one direction, and with a very strong sense of purpose: out of the city, as fast as they could. This was clearly an exodus. Winter mornings in India are very smoggy, from biomass burning for heating, cooking, and Indian cities’ preferred way of disposing of roadside garbage. What I smelled, however, was not the normal smoke, or the ever-pervading smell of India, which has scores of sources, including the rotting feces of the majority of Indians who still go out in the open.

Only many hours later did All India Radio announce a minor, insignificant gas leakage in Bhopal. By this time, hospitals were overflowing, hundreds had died, and human and animal corpses littered the streets.

A cold sweat broke out on me. My legs felt numb. This too was something we experienced quite regularly in life. Even under normal circumstances, nerves were at the breaking point, particularly the nerves of those who tried to live by reason and evidence and a sense of causality and who did not have the warped instinct of relieving tension by perpetuating it. Each premonition of something bad evoked a blurry sum of earlier, unpleasant memories. Human beings have an amazing capacity to block such memories, but the crux of the incidents still survives in the subconscious, influencing much of our behavior and personalities all our lives.

That cold morning of December, standing alone on the rooftop, I knew something terrible was afoot. Normally, however, such challenges would never lead us to live by the alien concept of a more fulfilling and productive life. The challenge was to preempt personal destruction in a society in which nearly everyone considered it his duty to run other people’s lives, a society in which reason and objectivity had absolutely no place. It was a life of tug-of-war, of wasted energies and unnecessary sufferings. The mode of discussion offered “expediency” as a supreme “moral” value. It was based on rhetoric and soundbites. Anything could be rationalized away, for nothing was held by philosophical anchors. The mindset of the people was rooted in the medieval period and incapable of communicating on the grounds of logic, reason, and evidence.

And now a very major crisis was in progress.

Gas leak!

I woke up my parents and took their radio — an unlicensed, smuggled one — to see if Mark Tully of the BBC, or the Voice of America, or Deutsche Welle had some news. These were our only sources of real news. Alas, Bhopal, a city of a million people, was then relatively unknown, and the international organizations did not have their tentacles there. All India Radio (AIR) was playing the music of state-funded musicians. Only many hours later did AIR announce a minor, insignificant gas leakage in Bhopal. The announcement was lumped together with irrelevant and marginal items. By this time, hospitals were overflowing, hundreds had died, and human and animal corpses littered the streets.

A half-dead family of six, friends of my dad, arrived from their place very close to the Union Carbide factory. They brought in the first news, about a gas leak. In the afternoon, we heard a rumor that the factory had been set on fire by the families of the victims and was leaking a much higher quantity of the gas, and that the fire was spreading to the nearby, massive petrol tanks of the state-owned companies. I thought that something akin to a nuclear bomb was in the making. This rumor made logical sense. The conduct was what one might expect from the people of Bhopal: their first instinct would be to set Union Carbide on fire rather than help their families or remedy the problem. Another exodus began, one far larger than the one that occurred in the night. We had no other choice but to join the herds.

AIR did not have any news in the afternoon, for the “irrelevant” news had already been announced once. By this time, our political leaders were safely in the higher-altitude resort town of Pachmarhi, about 200 km away, where all hotels were owned by the government. Earlier in the night, when I was watching from our rooftop, it was to this town that the cars with sirens and flashing lights were taking our utterly spineless and irresponsible politicians and bureaucrats. They had hijacked whatever small emergency services we had. It is important to note that ambulances mostly did not exist, as they don’t even today.

The conduct was what one might expect from the people of Bhopal: their first instinct would be to set Union Carbide on fire rather than help their families or remedy the problem.

Once settled down in Pachmarhi, the official class started issuing self-righteous, brave instructions. They decided that there was no need for the people of Bhopal to evacuate, so they issued orders to petrol stations to close. Our telephones, as usual, were not working. Moreover, all out-of-the city phone calls had to be made manually, using an operator of the state-run telephone company. Even on a normal day, he was difficult to find. That day and for several weeks thereafter, he had gone missing. Tens of thousands of people were now arriving, sitting on the rooftops of trains, hoping to get information about their relatives. Everything that could go wrong was going wrong in that overcentralized system.

For months thereafter, the government was administered from the distant resort town. Even after our rulers returned, their food and water continued to be imported from faraway places. For over a year, the state continued to give us minimal information, if at all. We lived like helpless victims in a war, ever cautious and ever nervous. I am confident that this incident would have stayed out of the news were there no multinational company involved and had the state not realized that there was a opportunity to benefit from it.

For a couple of decades from that day, the sound of sirens would make my heart pound and my palms and armpits sweat. Indeed I am finishing this article after much procrastination, with my psyche revolting against my efforts to relive those days.

The immediate aftermath

For many days after the incident, I worked as a volunteer in government hospitals. There was a serious shortage of doctors, as most had run away. Hospitals were manned by student doctors. Every space was occupied, with several people on the same bed, people on the floors and in the corridors, on the roads leading to the hospitals, and in the parks outside. There was no one to look after them; they were dying miserable deaths.

We were given a bunch of different tablets to distribute to those dying. I asked a doctor on duty how I should decide what to administer. He responded with complete equanimity, “Give whatever.” Later we ran out of them all. Either way, except for a couple of VIP rooms with dedicated resources for the well-connected, these were hospitals in name only. The VIP rooms were empty, because the VIPs had escaped the city unscathed.

The Bhopal incident would have stayed out of the news were there no multinational company involved and had the state not realized that there was a opportunity to benefit from it.

For a few days I worked to collect information about those missing. What struck me most was that so often if someone’s daughter was missing she was not even mentioned. Indians at that time had no concept of getting compensation for a calamity like this. The state-owned insurance companies hardly paid anything, even to victims of road accidents. A few days after the incident, when people got to know that there might be compensation involved, they started mentioning their missing daughters. It took me many years to understand this attitude. For the same people, a daughter missing for a night was suspicious and not acceptable to the family. We collected the people’s information on scraps of paper, which I am sure never went into any official records.

What went deep into my teenage heart during those initial days was that most people behaved deplorably. People of Bhopal had killed and raped Sikhs. Of course, only a small minority had actively participated, but not for lack of interest, only for lack of “courage." As I have said, most that I knew gave their intellectual support to the anti-Sikh pogrom. That day in Bhopal when the gas was leaking, drivers ran their cars over other people without blinking their eyes. I wondered how, for those in such misery, thought of a possible illicit relationship their daughter might have had during the night as more important than her wellbeing.

Our utterly spineless and irresponsible politicians and bureaucrats had hijacked whatever small emergency services we had. It is important to note that ambulances mostly did not exist, as they don’t even today.

My "help" at the hospitals was a complete waste of time and energy, and emotionally draining. Disgusted, I stopped volunteering. It was obvious in my mind that given the individual mindsets, the culture, and the institutions, what was happening was nothing exceptional. The Bhopal gas tragedy was a product of our karmas.

I had never known a life without fear. I still vividly remember the fear that the blackouts during the Indo-Pak war of 1971 generated in us, when I was only four years old. Then came famine. Through most of the 1970s, even our relatively well-off, well-connected family had to depend on rationed sugar and oil or on the black market. Indira appointed herself a dictator in 1976 and instituted emergency powers in the hands of the police. My elders lived in constant fear of the warrantless arrests the police could make. One of my relatives had to pay several thousand dollars in bribes for the crime of owning an imported cigarette lighter. Our family and others had to melt away precious gold coins of major historical value, the only alternative being to deposit them at a government office for no compensation while taking the risk of possible arrest. Then the problems of terrorism started in Punjab, in Kashmir, and in the northeastern provinces. There was a constant state of tension with Pakistan. We lived a life of continual, amorphous, chronic anxiety.

Were the people of Bhopal going to reflect on their deeds and thoughts, their irrationalities and superstitions and their worldviews that had placed a huge brigade of rude and uncultured pests in positions of power? Would they see the causal link between their worldview and the spontaneous emergence of extremely corrupt institutions? Would their medieval thinking give ground to rationality? A major tragedy has a possibility of focusing people’s minds. Was the gas tragedy going to make people see how their dependency, totalitarianism, lack of pride and self-respect, their expediency with no moral underpinnings, and their lack of respect for others had generated nonstop catastrophes and had created fissures for sociopaths to rise to positions of power?

Extreme distrust of the state

Eventually it became clear that the Union Carbide factory would cease to exist. It was time to empty some of the bigger chemical tanks. When the time came, the state told us that the process was going to be flawless. The “brave” politicians and bureaucrats, of course, went to the resort-town of Pachmarhi, to watch the event from a safe distance. But on this occasion, people refused to trust them. Bhopal, a city of over a million people, was a ghost town for several days. The Indian army, which has a major base close to Bhopal, and which did show up during the aftermath of the gas tragedy, was brought in to police the streets.

My elders lived in constant fear of the warrantless arrests the police could make. One of my relatives had to pay several thousand dollars in bribes for the crime of owning an imported cigarette lighter.

The Union Carbide tragedy shook people up. They had seen, with all the nakedness, the harms that the state causes, harms that in the West are usually hidden behind a softer façade. People in Bhopal had seen the utterly irresponsibility of a state that had monopolized the crisis management machinery and then hijacked it when the crisis erupted. Society realized that behind all the brave sounding talk of the state were extraordinarily spineless and timid people, with absolutely no sense of individual responsibility. “They are worse than animals,” people would say.

Over those months, I saw people becoming increasingly anti-statist. There were open discussions about making bribery legal, making it a mere transaction cost rather than a huge impediment. People frequently discussed the possibility of privatizing not only industries but particularly law and order, and crisis management machinery.

More of the same

Within months Bhopal faced another wave of social turmoil. On this occasion, the Indian government increased the scope of its affirmative policy for lower caste people in educational institutions. Riots erupted in Bhopal and in the whole of the province. The increase was designed not only to distract but to offer stolen crumbs to those who had suffered most, to make them cling to the idea of government as their savior. In the meantime, the opposition political party, BJP, was strengthening its political position by calling for construction of a Hindu temple at the exact location of a mosque in the town of Ayodhya. This was to lead to another series of nationwide riots. When I was living in the UK in 1992, one of the top news items I watched on the BBC one day was Hindu gangs freely roaming the city of Bhopal. On this occasion, Sikhs were on the side of Hindus! The people of India were extremely gullible and could be manipulated in whatever way desired by the sociopaths running the country.

Bhopal was fortunate that the UCIL was owned by an American company. Had it not been a foreign company, not a penny would have been paid to the victims. To get compensation from Union Carbide USA, making an utter mockery of the sovereignty of India, the Indian government took the case to an American court. The American court (figuratively) threw the papers to the floor. Social pressure against Union Carbide in America was the impetus for the payment. An amount of $470 million dollars was paid to the Indian government, which accordingly passed a law, the Bhopal Gas Leak Disaster Act of 1985, to usurp all the money, appointing the state as the trustee of all the claims and at the same time taking away individual people’s notional right to file cases against Union Carbide. Only a part of the money was to be distributed.

The state insisted that the people of Bhopal line up outside its dirty offices, manned by abusive and repulsive bureaucrats, to collect about $4 every week. The total paid was about $500 to those who did not suffer significant physical, visible injuries. I did not want to humiliate myself and did not see the worth in lining up to collect a mere $4 a week. But in an attempt to understand the state of affairs, and in order to write this article, I went to that office to claim my money. The office proved itself by far the worst I had ever seen in my life. Given that hundreds of thousands of people had walked that space, begging and groveling, for $4 a week, it had developed a Stalinist aura, perhaps worse. When the head of the department entered the office, it was as if a curfew had been declared. Everyone was expected to stand up and stand still. I stayed sitting.

After much cajoling the babu looked at my document. But in his file my name had been erased and someone else's had been overwritten. The corrupt office had stolen my due. Despite valid documents in my hand, I had no chance of getting my money unless I paid a bribe. (I have no intention in using this article to claim my $500. If however this article leads to an investigation, I will donate twice as much to an organization that looks after the gas victims.)

Bhopal was fortunate that the UCIL was owned by an American company. Had it not been a foreign company, not a penny would have been paid to the victims.

It seemed at one point that the people of Bhopal would fight for a smaller, more responsible state. But given their groveling character and readiness to sacrifice any values for small scraps of money, the state, ironically, became only bigger. They now had a monstrous new Department of Gas Tragedy. The guy on the street, alas, does not rebel, because he lacks integrity. When he is victimized, he does not challenge those in power. His instinctive reaction is to get into a position of unearned power where he himself can victimize others. It is the triumph of a deeply embedded psychology of “might is right” and the absence of a sense of justice.

India continues to be a land of catastrophes. In 2012, over 143,000 people died on Indian roads. In India’s mostly non-moving traffic, there are 100 deaths for every 100,000 vehicles; in China there are only 36, and in the US, only 15. On average, seven people die each day on the railway tracks, just in the city of Mumbai. Only recently, 115 people lost their lives in a stampede not too far from Bhopal.

Rationality has no place here. The state will not change until the medieval mind has changed. Despite our overt claims that we would like it small and free of corruption, the state will never go away until we realize our own personal contribution to feeding it.




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Athena 4, Gaia 0

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From the start of the industrial revolution to the present day, many Green critics have decried the rise of technology. Gaia (Mother Earth) worshipers — Green neo-pagans — have viewed with alarm the dramatic rise in human flourishing, and the key determinant in this flourishing, which has been the development of plentiful energy. From the year 1800 to the year 2000, the world’s average per capita income rose tenfold (in real terms), while the world’s population rose sixfold, thanks to this productive and peaceful revolution. But the Gaia cult has resisted every step of the way.

During the past half century, the Gaia groupies have achieved tremendous political power in America and Europe. (They have yet not been able to dominate in Asia — one big reason Asia is so rapidly rising economically.) It is a struggle between those who embrace technological progress and those who reflexively and viscerally oppose it. The struggle can be viewed as a contest between Greek goddesses: Athena, goddess of wisdom and technology, is fighting Gaia, and Athena keeps winning — thank goddess!

Four recent reports of technological progress in energy production are worth noting. The first is about the fracking revolution, which I believe will be viewed by future historians as one of the major turning points in the evolving industrial age. It conveys the news that the largest American railroad, BNSF, is planning to test the use of natural gas as power for its locomotives. Currently, BNSF uses diesel fuel exclusively, and by its own estimates has the largest diesel-burning American fleet, second only to the US Navy.

It is not because but in spite of the neo-pagan policies of the Oval Office that we have the natural gas miracle.

The reason BNSF is considering the move is that because of the fracking revolution, natural gas is getting very cheap. Under current pricing, while a gallon of diesel fuel costs about $4, the same power can be produced for less than 50 cents worth of natural gas — though there are additional costs when you compress or liquefy it.

This is leading BNSF to follow other industries in moving toward natural gas. Utility companies are rapidly abandoning coal for gas, and manufacturers are moving toward it as well. Many municipal bus fleets have been using compressed natural gas (CNG) for years, and other commercial vehicle fleets (such as garbage trucks) are looking into switching to CNG. Already, tugboats are being fitted to run on liquefied natural gas (LNG). And long-haul freight companies are looking at LNG as well — in fact, Shell is planning to provide LNG in Ontario and Louisiana and distribute it at 200 truck stops.

The hurdle that BNSF faces is that it costs upwards of $1 million to retrofit a diesel locomotive to run on LNG as well, and BNSF has almost 7,000 locomotives to retrofit. So this conversion likely will take time, but given that the cost advantage of natural gas shows no sign of going away anytime soon, the conversion seems inevitable.

Lest anybody be addlepated enough to thank the current Green regime for this flourishing of clean, low-cost energy, let me disabuse him now. The crony-capitalist administration has placed all of its — oops! I mean, the taxpayers’ — money on solar and wind power, bankrolling numerous projects (headed by various Obama donors) that have gone nowhere but bankrupt. The EPA and the Department of the Interior have gone out of their way to stop drilling on federal lands. This is documented in a recent report from Marc Humphries of the Congressional Research Service. The report documents the fact that the fracking revolution has increased American natural gas production by 20% over the past five years alone — a total of 4 trillion additional cubic feet of natural gas pumped into the nation’s supply. But this overall increase hides a revealing disparity: while natural gas production on non-federal (mainly private) lands is up by 40% over this period, production on federal land has plummeted by 33%.

In short, it is not because but in spite of the neo-pagan policies of the Oval Office that we have the natural gas miracle.

But the miracle just might become even more miraculous. The second story about technological advances in energy production is a news release from the Japan Oil, Gas and Metals Corporation, which notes that it is preparing the first test of commercial production of natural gas from methane hydrate layers under the ocean. Essentially, methane hydrate is natural gas (methane) trapped in ice crystals along the ocean’s floor. This source of energy is estimated by some experts as potentially exceeding all of the world’s existing coal, natural gas, and petroleum reserves — combined! Developing the resource will be tricky, given the instability of the layers that have to be processed, but then, the minds of self-interested creative individuals are tricky as well.

The third technological development in energy production worth noting is the advent of a new type of nuclear (fission) reactor.

Nuclear power, of course, can’t get no respect from nobody. Despite its exemplary safety record in the US and other advanced economies (which always excluded, of course, the Soviet Union), people fear it. These fears were only intensified two years ago when a Japanese earthquake led to the destruction of four reactors at the Fukushima Daiichi power plant.

Actually, the quake — a massive magnitude 9.0 one that moved Japan’s main island eight feet to the east and shifted the Earth’s axis by six inches — didn’t destroy the reactors. They were ruined by the tsunami it generated (a tidal wave that destroyed 300,000 buildings and killed 20,000 people). Despite the fact that the reactors’ disaster killed nobody, sickened nobody, and is likely to cause few health problems in the future, organized pressure led to the shutdown of the country’s 53 other reactors. These reactors jointly produced 30% of the country’s electric power. As a consequence, last year Japan ran a record deficit ($78 billion) because it had to import more energy, increasing the cost of its manufactured goods, and reducing exports accordingly.

But nuclear power is by no means dead. There is a new company, Transatomic Power, that is perfecting a design for a molten-salt reactor — a design that may well cut in half the cost of future nuclear reactors. It is the high cost of building reactors, especially in the face of the dramatically dropping price of electricity from natural gas plants, along with the Green Regime’s preference for solar and wind power, that has been holding up the expansion of nuclear power in the US over the past few years. But this new reactor will probably reignite that expansion.

Molten-salt reactors were explored as long ago as the 1960s in the Oak Ridge Lab, but the design now being worked on would produce 20 times the power for the same size reactor. It would allow reactors smaller than the 1,000 megawatt behemoths currently running. Besides the smaller footprint, the reactor under design would save money because it could be factory-built (as opposed to being custom-built on site).

Its chief advantage, though, would be the use of molten-salt rather than water as a coolant. Water is the coolant used in all present reactors. The problem with water is that it boils at 100o C, whereas the fuel pellets in the core operate at about 2,000o C. So in the event of an emergency shutdown, unless water can be continuously pumped over the core to cool it, the water will vaporize and the core will melt down (as one did at Fukushima).

But the salt, which is combined with the fuel, has a boiling point much higher than 2,000o C. So if the reactor core starts to overheat, the salt will expand but not evaporate, separating the pellets and thus slowing the core reaction. In a complete shutdown, a stopper at the bottom of the core container would melt, and the molten fuel and salt would flow into a holding container, where the salt would solidify and encapsulate the fuel.

If global warming is real — as all good, pious Gaia supplicants believe — then it’s either nukes or solar and wind power, and the latter is clearly not economically viable.

The clever pups behind this innovative design are the cofounders of Transatomic Power, Leslie Dewan and Mark Massie, who are still only Ph.D. candidates at MIT. These two are Schumpeterian entrepreneurs of the best sort. America is lucky to have them, as the Chinese are also working on a similar design.

This all comes at a crucial time for nuclear power. For as a recent Wall Street Journal article notes, the fracking revolution has lowered natural gas prices so much that gas powered electrical plants are driving both coal-fired plants and many nuclear plants (especially the smaller ones, and the ones facing expensive repairs) out of deregulated markets.

For examples, Excelon has announced that it will soon close its Oyster Creek, New Jersey nuke, ten years before its license expires. And Dominion Energy has announced that it will soon close its Kewaunee, Wisconsin nuke, a full 20 years before its operating license expires.

Pricing makes the reason for this clear. The fixed costs to run a nuke are $90,000 per megawatt; the fixed costs for coal fired plants are $30,000; for natural gas fired plants, only $15,000. And, of course, existing nukes require intensive security and safety costs, precisely because of the risk of meltdown. In the first 11 months of 2012, natural gas plant output rose by 24%, while the output for nuclear powered plants dropped by 2.5%.

This all presents an interesting dilemma for the Gaia communicants. As natural gas prices continue low, gas will, absent extensive subsidies or other protection for other forms of energy, supplant nuclear power. Now, natural gas emits just half the carbon that coal does, but nuclear plants emit none. So if global warming is a hoax, we could easily go all natural gas. But if global warming is real — as all good, pious Gaia supplicants believe — then it’s either nukes or solar and wind power, and the latter is clearly not economically viable. All this is clear except to the blindest Gaia devotees (and the greediest Green crony capitalists).

And indeed, there has been an interesting schism in the Green faith. In a recent piece, the excellent science writer Robert Bryce calls this “the rise of the nuclear Greens.” He notes that an increasing number of Gaia votaries now support nuclear power. One prominent convert is British environmental activist George Monbiot, who has now admitted — belatedly, to understate it massively — that solar energy (in the UK, and by extension everywhere else) is “a spectacular waste of scarce resources,” and that wind power is “largely worthless.” Referring to the Fukushima disaster, he concludes, “Atomic energy has just been subjected to one of the harshest of possible tests, and the impact on people and the planet has been small. The crisis at Fukushima has converted me to the cause of nuclear power.”

Wow.

Monbiot now joins other Gaia disciples Stewart Brand, Ted Nordhaus, Michael Shellenberger, Mark Lynas, James Lovelock, and Patrick Moore (co-founder of Greenpeace) in favoring nuclear power. This is nauseatingly ironic: it was the environmentalist zealots who stopped the growth of nuclear power 40 years ago. But the pro-nuke Gaia devotees are still a distinct minority. Most of the cult still lights candles in front of wind and solar power.

The fourth interesting development concerns an energy source that has been tantalizing but elusive for many decades: fusion power.

A news report out of Europe indicates that an important international project is moving forward. The “Iter” (Latin for “the way”) project is a collaboration of 34 nations working on building a pilot fusion nuclear reactor. Nuclear fusion is, of course, what powers the sun and other stars. In principle, it offers a chance to provide virtually unlimited supplies of reliable, consistent energy at the levels needed to power an industrial economy. And it would provide that power from clean, nontoxic fuel (extracted from water), with no possibility of any kind of core meltdown.

The new Iter experimental reactor has received an operating license. It is projected to be the first fusion reactor (“tokamak”) to generate more power than it uses — ten times more, in fact. The Iter design would serve as the prototype for the first generation of commercial fusion power plants.

The foundations for the reactor are now being laid, but the work of putting together the million or so components (made at factories all over the world) will take a long time. The tentative date for firing it up is about 15 years in the future — though with a project of this enormity, it will probably be longer. And it has cost about $20 billion. However, it signals that by the second half of this century, commercial fusion power will be a reality.

That would be nothing less than the crowning achievement of the industrial revolution. It would be the human mind harnessing the power of the stars to secure permanent prosperity for our species.

In spite of the Gaia cult, Athena is ascendant.




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Philosophical Thriller

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When Martin (Channing Tatum), the husband of Emily Taylor (Rooney Mara), is released from prison after serving five years for insider trading, her troubles should all be over. Her handsome husband has come home, ready to start rebuilding his life with her. Instead, they are just beginning. She just can't seem to shake the depression and sadness. First she drives herself head-on into a brick wall. Then she nearly steps off a platform into the path of a subway train. She feels inexplicably sad and cries all the time. Her psychiatrist Dr. Banks (Jude Law) prescribes traditional antidepressants, but they don't seem to help. Then he prescribes a newly developed antidepressant that picks her right up. She laughs again. Her libido returns. But there are side effects. She sleepwalks. And she kills her husband.

True depression — not an occasional bout of the blues — is a serious problem. It has been described clinically as "the inability to imagine a future," and poetically as "a poisonous fog bank rolling in at 3 pm." Clinical depression is often caused by the brain's inability to release or absorb essential hormones or communicate effectively with itself. In these cases, psychotropic drugs can offer relief. As Dr. Banks tells Emily, "It doesn't make you someone you aren't; it just makes it easier for you to be who you are." As the parent of an epileptic daughter whose grand mal seizures are completely controlled by medication, I am grateful for pharmaceutical companies that have worked diligently to develop better and more effective drugs.

But psychotropic drugs can also have severe side effects, including erratic and even violent behavior. Public massacres in recent months have brought the discussion of these drugs to the forefront, but it is difficult to know whether the drugs themselves cause the violent urges, or whether the violent urges already existed within the troubled mind of these young men who planned the massacres. Michael Jackson's doctor was convicted of administering drugs that his client requested — demanded! — but those drugs ended up killing him. Who is culpable in these cases?

Director Steven Soderbergh examines these issues in his fine film Side Effects, which opened this week. We watch Emily as she struggles with sadness and suicidal desires. Her psychiatrists Dr. Banks and Dr. Seibert (Catherine Zeta-Jones) attend conferences where new drugs are introduced and promoted. Banks attends a lunch meeting where he is offered a lucrative deal for recruiting his patients to participate in experimental trials of a new drug.

The first half of the film seems almost like an anti-pharmaceutical Public Service Announcement sponsored by Scientology. In one scene, several doctors are interviewed on "Good Morning America," allowing the screenwriters to ask — and answer — several probing questions. One of the cops investigating Martin's death threatens Dr. Banks to make him comply with the prosecutor's office, saying, "Either she's a murderer, or she's a victim of her medical treatment. Which do you want it to be?" After all, Dr. Banks had already been told about Emily's sleepwalking. Shouldn't he have taken her off the drug?

Under these circumstances, "Did she do it?" and "Is she guilty?" become two very different questions. Can she be guilty if she was completely unconscious of the act? But a man is dead. If she isn't guilty, who is? Since most people are able to use these drugs without adverse effects, should the doctor be held accountable when a patient does have a bad reaction? Is she not guilty by reason of insanity, or a victim of circumstance and her own biology?

The first half of the film presents the audience with these philosophical questions. But don't be put off by the PSA sensibility. The second half of the film turns into a taut and engaging murder thriller as Dr. Banks tries to salvage his career by answering these questions. In the end, the film is as tense and exciting as it is philosophically engaging. Great performances and a fascinating denouement make this a film well worth seeing.


Editor's Note: Review of "Side Effects," directed by Steven Soderbergh. Endgame Entertainment, 2013, 106 minutes.



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Education and Underemployment

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It took a German to speak truth to power.

Eric Spiegel, CEO for German engineering giant Siemens’ US operations, was talking with reporters while waiting for Treasury Secretary Tim Geithner to visit a Siemens facility in Ohio late last month. Spiegel caused considerable consternation when he bluntly asserted that Siemens and other high-level manufacturers were having trouble finding adequately skilled workers, despite America’s high unemployment rate.

As Spiegel put it, “There’s a mismatch between the jobs that are available . . . and the people who are out there. There is a shortage [of workers with the right skills].”

Spiegel went on to say that the hidden problem of finding qualified employees among the hordes of the unskilled and unemployed exposes the weaknesses in the American system of education and job training. He noted that Siemens has had to turn to over 30 “headhunters” (professional job recruiters) to find qualified American workers, and is also trying to hire workers from abroad.

Now, with an unemployment rate that just went back up to 9.2%, and an anemic recovery that created only a laughable 18,000 jobs last month (with a pathetic 500,000 net new new jobs in the past two years of “recovery”), it may seem strange to say that there is a shortage of trained people.

But a recent survey by the major employment agency Manpower shows that over half of all the top American firms are having trouble finding key staff. It’s a dramatic increase from as recently as 2010, when only 14% reported recruiting difficulties.

Ironically, the need for skilled workers is greatest in an area of the American economy that has long been considered defunct: manufacturing. The number of manufacturing jobs available for the high-skilled has risen from 98,000 in early 2009 to 230,000 today.

The Obama regime has of course responded — by proposing to expand the “Skills for America’s Future Program.” That is, throw more money at the problem.

So far, this government program has miserably failed to provide correctly skilled workers in the requisite numbers. The idea of dramatically increasing school choice, so that schools could spring up that would work with various industries to give them what they need, and what is profitable for the students, seems like a better place to start. But that’s not likely to happen.  To speak an absurd understatement, this regime shows little stomach for free markets in education — or anything else.




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Clowns of Industry

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This June, President Obama began celebrating the success of his auto industry bailout. In a speech at an Ohio Chrysler plant, he bragged that he had saved the industry from collapse. Under a brilliant "tough love" plan engineered by his Auto Industry Task Force (Team Auto), GM and Chrysler are turning a profit, hiring more workers, retooling for a "new age," and paying back TARP money — all at very little cost to taxpayers. Now, they are patting themselves on the back and taking bows before cheering media — for brashly spending over $80 billion in a hamhanded attempt to save two companies whose combined market capitalization was less than $10 billion. I can think of only one profession for which clumsy jokes, tricks, and illusions earn praise.

 The president's claims are hopeful pronouncements and disingenuous statements. GM and Chrysler are not hiring and paying back TARP money on the scale of his victory manifesto. The Washington Post (“The Fact Checker”), usually a staunch supporter of Obama's policies, said of the self-congratulatory speech, "What we found is one of the most misleading collections of assertions we have seen in a short presidential speech." President Obama's boasts of recovered TARP money (e.g., Chrysler has paid back "every dime and more") identify payments on TARP loans made only during his administration, but the reality is that to date only $39.61 billion of the official $80 billion TARP total has been repaid. Much of the rest is unlikely ever to be recouped by taxpayers, especially if GM goes broke awaiting the huge, future demand for green energy cars foreseen undauntedly through the rose-colored glasses of Team Auto. The bailout has been a circus run by elite bureaucrats to rescue unions more than auto companies and nudge us to an imaginary green economy more than to real prosperity. 

And the tinkering may make meaningful success permanently elusive. What is the long-term viability of an industry hastily restructured by a task force with no auto industry experience? What is the so-called new age, and when is it to arrive? Where is the brilliance in concocting what certainly must have been among the costliest and most insidious of bailout solutions?

Charged with overhauling the US auto industry, Team Auto was composed of cabinet members and Obama administration officials with extensive auto industry, well, inexperience and ineptitude. Headed by investment banker Steven Rattner, it included experts in energy, transportation, commerce, environmental protection, climate change, and “economics.” The team's industrial expertise resided in Ron Bloom, a former United Steelworkers Union advisor. According to the Wall Street Journal, team members underwent "a crash course in the myriad woes plaguing the US auto industry" and "spent days trying to understand the complexities of the hundreds of companies that supply the car companies with axles, seats and other parts."

Days! Imagine. No wonder they are patting themselves on the back. They learned in days what thousands from the executive ranks of American industry evidently failed to learn in decades — an extraordinary achievement, even for whiteface clowns. Unfortunately for taxpayers, the crash course didn't include a tutorial on Ford's recent turnaround. Ford not only succeeded, it succeeded with private capital and restructuring costs of less than $12 billion. And it succeeded quickly enough that, two years later, it did not need a bailout. To save GM, anyone but a Team Auto wizard might have chosen a similar approach. Then, by recruiting a CEO such as Ford's Allen Mulally and paying the restructuring costs from the $13.4 billion already allocated by the Bush administration, GM could have been rescued with money left over.

A successful GM bailout using $13.4 billion is barely commendable — after all, Ford did it with less. I would expect a truly qualified team to do it for much less. But with incompetence exceeding that of GM management and intransigence exceeding even that of its labor unions, Team Auto couldn't find a solution under $65 billion, which is $5 billion more than GM's highest market cap of $60 billion, reached back in 1999. Brilliant! And they are bragging about it. Perhaps,in a lapse of frugality, the madcap buffoons rejected even more wasteful, corrupt, and extravagant gags.

The recent ascent of the automobile industry is more a descent into the new "too-big-to-fail" abyss. Team Auto pranksters usurped the normal bankruptcy process, cobbling together daffy, impromptu rules to reward two American auto companies and the UAW for decades of foolery and an Italian auto company for its "valuable technology," while punishing legitimate creditors, private bidders, and taxpayers. The rights of creditors, including holders of secured bonds, were subordinated to those of the UAW. Private bidders for GM or Chrysler could not be found. That is, Team Auto could not find investors who would match its political favors, bankruptcy manipulations, and financial pratfalls. For example, GM was allowed to write off, in future years, up to $45 billion of past losses (an under-the-table write-off worth up to $15 billion), and more than $4 billion of Chrysler's debt was immediately forgiven (also under-the-table). All those years of losing money finally paid off — in a financial sleight of hand amounting to $19 billion, ratcheting the bailout total to $100 billion.

After more than two years of "tough love" spending, nine of the 12 vehicles on Forbes' "The Worst Cars on The Road" list for 2011 were from GM and Chrysler.

Team Auto had no trouble gaining Fiat’s cooperation, regaling the company with managerial control and 20% ownership of Chrysler, along with the ability to increase its share of the property to 51% and beyond. And the largess continued. A call option was granted allowing Fiat to buy up to 16% of Chrysler stock at a reduced price, provided Chrysler paid back at least $3.5 billion of the remaining $7.6 billion owed to the Treasury Department. At the time, private banks were afraid to lend Fiat more money. But audacious Team Auto member Steven Chu (Secretary of Energy) pulled a low-interest Energy Department loan out of his green hat for Fiat to develop fuel-efficient vehicles. Magically, it was just the right amount, $3.5 billion. As a result, Fiat will develop a green economy car for Chrysler. It is expected to get 40 mpg — almost as much as the economy car I bought in 1978. Such was Team Auto's assessment of Fiat's advanced technology. Unfortunately, its opinion of Chrysler automotive designers was lower than the demand for Fiats.

The call option giveaway and the sordid $3.5 billion Energy Department loan to pay the Treasury Department loan enabled Fiat to accumulate a majority stake in Chrysler (up to 57% by the end of 2011). Thus, Team Auto rescued Chrysler, an American company currently worth $5 billion, at a cost of $6.44 billion (the $4 billion cancelled plus the amount owed to the Bush administration) and converted it into an Italian company in the process. More brilliance, more bragging.

Splurging money on companies does not create pressure to build a quality product that people want. After more than two years of "tough love" spending, nine of the 12 vehicles on Forbes' "The Worst Cars on The Road" list for 2011 were from GM and Chrysler. None, it should be noted, were from Ford. This is an indicator of the malfeasance of Team Auto's intervention and is fraught with an irony appreciated, no doubt, by sad clowns everywhere. Equally important, it does not bode well for the sustained profitability needed to repay taxpayers. Nor does GM's market valuation. To recover the remaining GM bailout money, it is estimated that GM's stock price must reach $55 a share. Opening at $33 a share last November in Team Auto's IPO, GM closed at just over $29 a share on the day of president Obama's speech.

That GM and Chrysler have shown recent quarterly profits is clearly a favorable development. Nevertheless, the bailout hatched by Team Auto is an appalling mockery. With $100 billion, a group of professional clowns could have produced a quarter or two of profit after a run of two years, probably doing so without giving Chrysler away to a foreign automaker. But they would have had the decency not to brag about the tax money squandered. When I hear President Obama and Team Auto members boasting of their success, I hear a loud, obnoxious clown horn — much like the one I imagine they used to end each tutorial session and to inaugurate each brilliant idea they came up with in formulating the scam.

Ron Bloom boasts that the bailout will "ensure America wins the future." Steve Rattner is peddling the book he wrote about his experience and crowing, "The bailout was a bargain for taxpayers." Obama is so enthralled by his self-declared success he plans to use it as a centerpiece of his 2012 campaign. I imagine that as the election nears, there will be a highly publicized ceremony awarding Team Auto for its sterling performance. Task force members will arrive at the White House and, one by one, with grotesquely painted faces, ruffled collars and pointed hats, clumsily but endearingly emerge from a single, little green economy car.




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Appleby's Revolution

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One thing that has always struck me about the Communist Manifesto is that Karl Marx and Friedrich Engels held capitalism in awe. “The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together,” they wrote in 1848. They listed the wondrous accomplishments one by one, from steam navigation to canal building, and “whole populations conjured out of the ground.” Of course, their praise preceded a call for workers to overthrow the great capitalist conjuror.

Joyce Appleby’s book, The Relentless Revolution: A History of Capitalism, conveys the same sense of wonder. She praises capitalism, saying that its “distinctive characteristic . . . has been its amazing wealth-generating capacities. The power of that wealth transformed traditional societies and continues to enable human societies to do remarkable things."

Appleby certainly doesn’t recommend overthrowing the system. But her appreciation of capitalism diminishes as the book goes on, just as Marx’s and Engels’ did in the manifesto. At the start, The Relentless Revolution is like an exhilarating train ride, full of insights and a historian’s gold mine of information, but it loses steam and slows to a crawl once the Rubicon of the Industrial Revolution has been crossed. At the end, Appleby is praising the US government for trying to rein in the capitalist beast.

Appleby, who taught history at UCLA, describes herself as a “left-leaning liberal with strong . . . libertarian strains.” Given today’s academic history departments and her own attitudes, she deserves admiration for looking at capitalism as objectively as she can. “In this book,“ she writes, “I would like to shake free of the presentation of the history of capitalism as a morality play, peopled with those wearing either white or black hats.” For half the book, she achieves that goal.

The Relentless Revolution fits into the recent parade of big books trying to explain the rise of the industrial West — books such as Jared Diamond’s Guns, Germs, and Steel, Kenneth Pomeranz’s The Great Divergence, and Ian Morris’ Why the West Rules — For Now. These and other authors are trying to answer a couple of giant questions: why did the West (not China, India, or another part of the world) make the transition from subsistence living to a world of constantly increasing productivity? And how exactly did it happen? As I shall explain, Appleby offers two major responses that I found valuable.

Appleby identifies two main factors in Britain’s rise: higher wages providing the incentive to increase productivity, and coal providing the means.

The pivotal moment in world history is normally called the Industrial Revolution (although perhaps that’s a misnomer, given its slow gestation). Many factors contributed to this revolution, and part of the “game” motivating the big books is to offer new factors. It’s generally agreed that the process flowered first in Great Britain, but the reasons may stretch back to such things as the European practice of primogeniture, the separation of powers between the Catholic Church and the state, and the system of rights spawned by feudalism under changing population pressures.

Appleby focuses on 17th and 18th-century England (why she gives short shrift to Scotland is a puzzle). She points to two reasons why the Industrial Revolution occurred there: England had higher wages than the Continent, and also cheap sources of coal. Higher wages provided the incentive to increase productivity, and coal provided the means.

The idea that England’s wages were higher is actually new to me and undoubtedly has a complex history of its own; Appleby merely says that England’s population growth had leveled off in the 17th century. As for coal accessibility, she agrees with Pomeranz, who says that China fell behind Europe partly because its coal deposits were harder to reach.

Whatever the precursors, actual inventions — especially of the steam engine — required talent and knowledge, and herein lies the first of Appleby’s distinctive insights. In a way that I haven’t seen before, Appleby integrates two related forces: the British tendency toward scientific theorizing (or “natural philosophy”), and the British tendency to tinker. “Technology met science and formed a permanent union. At the level of biography, Galileo met Bacon,” she writes.

She elaborates: “Because of the open character of English public life, knowledge moved from the esoteric investigations of natural philosophers to a broader community of the scientifically curious. The fascination with air pressure, vacuums, and pumps became part of a broadly shared scientific culture that reached out to craftsmen and manufacturers in addition to those of leisure who cultivated knowledge.”

The Royal Society illustrates this integration. Created in 1662, it was both practical and scientific. Its members studied that New World import, the potato, but it also “brought together in the same room the people who were most engaged in physical, mechanical, and mathematical problems.”

Appleby’s second valuable contribution is to take a cold-eyed look at the role of New World slavery in creating the markets that nurtured the Industrial Revolution. Indeed, like Pomeranz, she sees slavery as a major factor behind the engine of progress.

In The Great Divergence, Pomeranz says that the vast expansion of agricultural cultivation in the New World enabled Europe to avoid the “land constraint” that kept the Chinese from developing an industrial economy. And slave labor played an enormous role in the cultivation of sugar in the Caribbean and cotton in the United States. Thus, Pomeranz says, Europe overcame the limitations of land by colonizing the New World, which made agriculture possible to an extent unlikely in tiny Holland or England.

Appleby’s take is a little different. She emphasizes more the three-way trade that we learned about in middle school (slaves from Africa were taken to the New World, where sugar was purchased and taken to Great Britain, where finished clothing and other products were bought, to be sold in Africa). Pomeranz and Appleby are not arguing that slavery was profitable, or that it was “necessary,” but, rather, that it was a significant element in the system of trade that led to the Industrial Revolution. Enthusiasts for capitalism such as myself tend to focus on the “trade”; critics of capitalism — along with Appleby — stress the “slave” part of the trade.

Furthermore, Appleby considers American plantations and British inventions as two sides of the same coin. “These two phenomena — American slave-worked plantations and mechanical wizardry for pumping water, smelting metals, and powering textile factories — may seem unconnected. Certainly we have been loath to link slavery to the contributions of a free enterprise system, but they [the phenomena]must be recognized as twin responses to the capitalist genie that had escaped the lamp of tradition during the seventeenth century.”

Whether she is right about this, I don’t know, but she brings to public attention the periodic debate by economic historians over the role of slavery, a debate that Pomeranz reawakened with The Great Divergence.

Unfortunately, after these interesting observations, The Relentless Revolution begins to wind down. As the book moves on, Appleby tends to equate anything that takes industrial might — such as the imperialist armies that took possession of Africa in the late 19th century — with capitalism. “Commercial avarice, heightened by the rivalries within Europe, had changed the world,” she writes in explaining the European adventures in Africa. I dispute that. While Cecil Rhodes and Henry Morton Stanley may have been private “investors,” for the most part Africa was overcome by government power, not by individuals or corporations.

While Cecil Rhodes and Henry Morton Stanley may have been private “investors,” for the most part Africa was overcome by government power, not by individuals or corporations.

Even greater blindness sets in as Appleby’s 494-page volume moves into the recent past and she becomes influenced by modern prejudices. In Appleby’s view, the financial crash in 2008 was caused by financiers; the only contribution by public officials was to “dismantle the regulatory system that had monitored financial firms.” No word about the role of the Federal Reserve, the Community Reinvestment Act, or Fannie Mae and Freddie Mac.

Indeed, capitalism becomes the same as exploitation, in spite of her more balanced initial definition of capitalism as “a cultural system rooted in economic practices that rotate around the imperative of private investors to turn a profit.”

In her last chapter, Appleby writes, “The prospect of getting rich unleashed a rapacity rarely seen before in human society.” This extravagant statement does not jibe with archaeological (not to mention historical) evidence of the human past. In Why the West Rules — For Now, Morris reports on an archaeological excavation at Anyang village in China. In 1300 BC, this home of the Shang kings was the site of massive deaths. Morris estimates that, in a period of about 150 years, the kings may have killed 250,000 people  — an average of 4 or 5 a day, but probably concentrated in large, horrific rituals — “great orgies of hacking, screaming, and dying.” This was the world before capitalism.

To be fair to Appleby, she is saying that the productivity unleashed by capitalism extended the breadth of human rapacity, and to some degree the example of slavery supports that notion. Eighteenth-century British gentlemen could think high-minded thoughts while enjoying their tea with sugar grown by often brutally treated slave labor — which they may have invested in. “This is the ugly face of capitalism,” Appleby writes, “made uglier by the facile justifications that Europeans offered for using men until they literally dropped dead.”

True. At the same time, it was the British who abolished the slave trade, at high cost in patrolling the seas. Before that, Africans were enslaved only because other Africans captured and sold them to the Europeans. (Malaria and other diseases kept Europeans out of the interior of Africa until late into the 19th century.) There is a lot of blame to go around.

So this book is a mixed bag. Even though Appleby increasingly departs from objectivity as she proceeds into modern times, I respect her project and appreciate her insights. I hope that her “left-leaning” historian colleagues read her book and expand their understanding of the past — just as I have.

fits into the recent parade of big books trying to explain the rise of the industrial West


Editor's Note: Review of "The Relentless Revolution: A History of Capitalism," by Joyce Appleby. Norton, 2010, 495 pages.



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