A Conversation with Mosquitoes

June 29, 2008


Setting out on a hike through the woods one day, I was soon attacked by a pesky mosquito. As it lit upon my arm, I dispatched him with a smack. But it reminded me that, foolishly, I had forgotten to apply insect repellent before I left the cabin. Before long, I was beset by a whole swarm of mosquitoes. Although there was a nice breeze rustling the leaves of the trees overhead, it couldn’t penetrate the forest canopy, leaving me an easy target in the still air of the forest floor.

Now the annoying, buzzing “eeeeeeeee” sound made by their tiny wings was all around me. I flailed at them in vain, unable to keep all of them from lighting and biting. I cursed my foolishness and simultaneously prayed for God to deliver me from this awful swarm.

Suddenly, the wind in the treetops died and without the sound of the rustling leaves, the forest became quite still. The sound of the mosquitoes was now clearer and, to my amazement, seemed to emanate not from their wings but from tiny voices. I rubbed my ears in disbelief, but the voices seem to grow clearer. They seemed to be chanting something and I listened closely.

“Freeeeeeeeee trade!” “Freeeeeeeeee trade!” they all seemed to be chanting in unison. “Why do you keep chanting ‘freeeeeeeeee trade?'” I asked the mosquitoes, not really expecting a reply because I was sure I had gone mad at this point. But to my surprise, a very eloquent mosquito replied “because freeeeeeeeee trade is a wonderful thing for us.” He went on to explain: “Through freeeeeeeeee trade with you, we sustain ourselves by feeding on you, and you can sustain yourself by feeding upon us.” “That’s not really true,” I replied, now beginning to itch profusely. “While you can sustain yourselves by sipping my blood, you don’t have enough blood to sustain me, even if I were to eat all of you whole,” trying to ignore the distasteful picture I had just painted in my own mind. “That’s your problem,” replied the mosquito. “For us, freeeeeeeee trade is wonderful! Freeeeeeeeee trade! Freeeeeeeeee trade!”

Then I became aware of another mosquito’s voice that seemed slightly out of tune with the others. He perched on the leaf of an overhanging branch and seemed too sick to fly. I listened very closely. “Freeeeeeeeee trade is bad!” he was saying. I asked the eloquent mosquito why this one seemed to be in disagreement with the rest. He explained, “that one is beset by microscopic mites which are feeding on his blood.” “For him, free trade isn’t working out so well.” I asked, “But you said that free trade is wonderful!” “We only say that when it works to our advantage,” he replied.

Now I became angry and, while drawing back my open palm to take a swipe at this deceitful little pest, I suddenly remembered – as though my prayer had been answered – that I always carried a tiny sample bottle of mosquito repellent in my shirt pocket for just such emergencies. But before applying, I was curious to know what it was that was so effective against the diabolical pests. I checked the label and found the words, “Contains D.E.E.T.” “What exactly is D.E.E.T.?”, I wondered. Squinting at the fine print in the parentheses following that abbreviation, I read the words “Dynamic Economy-Energizing Tariffs.” I applied it liberally and watched the cloud of parasitic freeloaders vanish like magic, their chant fading once again to a faint “eeeeeeeeee” as they went in search of some other D.E.E.T.-less fool! I continued on my way, freed of this pestilence and feeling more healthy and alive than ever, taking in and enjoying all the wonderful sights and sounds of the forest.

Another Bad Week for the Economy

June 27, 2008

I’ve been able to keep up with little snippets of the news when I’m not fishing, hiking or canoeing up here in the north woods. There’ve been several items of interest this week.

First of all, Treasury Undersecretary Ryan pronounced that it may be in our best interest to let some financial institutions fail. What this means is that the Federal Reserve is out of ammo for Bear-Stearns like bail-outs for stockholders. One of my long-shot predictions for 2008 (see “2008 Predictions“) was the failure of a major financial institution. Well, hold onto your hats because there may be more than one coming! The mortgage default mess has ravaged the balance sheets of banks. Only a day or so later, Citigroup announced that it will have to take yet another $9 billion in write-offs. By and large, these mortgage defaults and foreclosures are by average folks like you and me who just can’t make ends meet anymore, thanks to the failure of wages to keep pace with inflation, thanks to the millions of job losses due to our enormous trade deficit.

Then came the Federal Reserve’s decision to leave interest rates unchanged, and the accompanying announcement that it’s worried about inflation. The Fed has found that it’s interest-cutting campaign of the past few months has been totally ineffective in restoring the economy because the low rates haven’t translated into reduced lending rates at the consumer level. Why? Because treasury yields didn’t drop a bit. Why? Because the Fed’s bond auctions have gone poorly. Investors won’t buy them when they can get better interest rates elsewhere which, currently, is almost anywhere. This is why credit is drying up, seizing up the economy. Why does the government need to keep selling more and more treasury bonds? To finance its budget deficit, largely due to programs to offset the negative consequences of our trade deficit.

So if the Fed’s interest cutting has all been illusory, will the Fed now raise rates to fight inflation? It may, but it knows that it’s equally powerless here as well. The inflation we’re experiencing is due to the decline in the dollar. Interest rate moves by the Fed will do virtually nothing to affect this. The decline in the dollar is due to our persistent, enormous trade deficit. We’ve been flooding the world with dollars and the over-supply is steadily eroding their value. One third of the trade deficit is due to oil imports and two thirds is due to imports of manufactured goods. You may ask, “won’t the decline of the dollar help reverse the trade deficit?” That’s what economists would have you think, but it’s not true because the value of the dollar has nothing to do with the trade deficit. The trade deficit is due almost entirely to the collision of economic forces I warned of in Five Short Blasts – the inability of overpopulated nations to bring to the trade table an equivalent market in exchange for access to ours. The fact that the trade deficit has held steady while the dollar has declined dramatically is proof of this.

So the Fed is caught between a rock and a hard place. It’s only recourse to affect the direction of the economy is the one that its chairman, Ben Bernanke, may find the most distasteful (for him) of all: admit that free trade (what I call blind trade) is a failed economic model and press the President and Congress to begin imposing tariffs as necessary to eliminate the trade deficit. Failing this, the U.S. economy will continue to unravel, which is now happening at an alarming rate as the financial, manufacturing and construction sectors of the economy are simultaneously nearing collapse.

One final item of interest is that Barack Obama had a meeting with CEO’s of major U.S. companies. This is significant because the deteriorating economy assures that Obama will soon be president. Such a meeting calls to mind a similar meeting that Dick Cheney held with energy industry leaders soon after election to seek advice in formulating energy policy. We all know how that turned out. Let’s hope Obama’s meeting doesn’t yield similar results. What did the CEO’s tell Obama? Only Ford CEO Alan Mulally (sp?) was talking afterwards and made some vague reference to emphasizing the importance of government and industry working together.

So no one’s talking, but I can tell you exactly what each one of them told Obama: 1) “We need tax breaks,” and 2) “Beware of protectionist trade sentiment. Everything will be alright if we just have more free trade.”  Frankly, I don’t worry that much about tax policy. It takes a certain amount of revenue to run an orderly society and, regardless of how it’s collected, in the end it will be paid by you and me, either directly to the government or indirectly, in the form of higher prices paid for goods. But, regarding the second item above, we can only hope that Obama can see through the smoke and mirrors of free trade pushers and cheerleaders and put the nation’s interests ahead of those of global corporations. He’d better. He certainly doesn’t want to leave the economy in far worse shape than he found it, as his predecessor has.

Musings from the North Woods

June 23, 2008

You may have noticed that I haven’t posted as much for the past week. That’s because my wife and I are back at our cabin on the lake in northern Wisconsin, the place that provided much of the inspiration for Five Short Blasts. Our only internet access here is dial-up and the only numbers available for such access incur long distance charges. Thus, the drop-off in my posting activity. It’ll be this way for a couple more weeks. I thought it might be a good time to share some thoughts from our north woods retreat.

It’s not entirely certain when this little cabin was built, but 1923 appears to be a good estimate. I found bits of newspaper in the wall many years ago, when we were renovating the bathroom. They were dated 1935, but I’m told that that was the year that indoor plumbing was added. The cabin remains much the same as it was built in 1923. The windows are single-pane, wavy glass. The original wood siding remains, now bearing many, many coats of paint. The kitchen sink is porcelain-coated cast iron – probably original. The stove is an old Roper, fired by propane gas and the refrigerator is a Philco, probably dating back to the ’50s or ’60s. The cabin is heated by a Coleman wall furnace. Upon arrival, you’re immediately transported eighty years back in time to a much simpler world, a time when the population of the U.S. stood at about 100 million (one third of today’s population), when travelers arrived here by Model A Ford over dirt roads, a time when the cool north breezes were the only respite from the summer heat in Chicago, since air conditioning had yet to be invented.

But it was also a time of transition for the north woods. The forest was regenerating after decades of heavy logging and clear-cutting in the late 1800’s. Much of the lumber taken in the early 1890s provided lumber for construction of the Chicago World’s Fair. The oppression of the native Ojibwe Indians went on relentlessly as the federal government employed a new tactic to assimilate them into the white man’s world – encouraging them to sell off parcels of their reservation, usually to logging companies who, after clearing the land, would lease it back to the Indians for farming. But it was poor land for farming and God never intended for the Ojibwe to be farmers. This practice was finally halted in 1934 with the passage of the Indian Reorganization Act, which forbid any further selling of Indian land.

Today, my wife and I hiked the same trails that I described in the Epilogue of the book. Much of the land, about eight hundred acres, is owned by a trust which operates a camp for underprivileged kids from Chicago. It’s mission is to provide them a retreat from their urban jungle into near-pristine wilderness, a once-in-a-lifetime experience for most of them. The camp used to be operated by men who cared deeply for the pristine nature of the place. But the newer generation of caretakers doesn’t seem to share the same values and relies upon logging revenue to help support operation of the camp. So, sadly, the stand of old growth forest described in the Epilogue was logged a few years ago. It wasn’t clear cut, and part of it was left untouched (so far), but it really ruined the nature of the place.

This year the logging operations have moved to another section of the forest, along the same path that we hike, spoiling this section as well. I know that it will recover with time, and I’m grateful that the area isn’t sold to developers. But it’s still a shame to see it happen. I suppose that there isn’t any place outside of state and national parks that is immune to such harvest.

On a different note, the fishing has been pretty good this year. I have one of those “peel and stick” yardsticks attached to the boat, making it easy to determine if a fish meets the DNR (Department of Natural Resources) requirements that define a “keeper.” It’s hard to imagine that there was a time when such requirements didn’t exist. You didn’t need a license to fish. You could catch and keep as many as you wanted, judging the size by whether or not it was worth the effort to clean the fish. Many people put food on the table this way without over-fishing being a problem. I wonder: could this have been the “canary in the mineshaft” to warn us of overpopulation, when state governments found it necessary to place restrictions on fishing to prevent the collapse of fish populations? Were it not for the fact that many now practice “catch and release” fishing, our lakes and streams might be nearly devoid of game fish. If it wasn’t for the fact that this particular lake on which I’m located is very lightly fished (due to very limited public access), I’d probably be releasing my catch as well.

Up here, I’m hyper-sensitive to the effects of overpopulation and development. Perhaps other people would be more sensitive too if they could experience what it’s like to live amid (mostly) unspoiled wilderness like this – if they could sit in a little row boat at sunset and watch a beaver glide through the water while the mournful cry of a loon echoes in the distance, without another human or sign of civilization in sight for miles; or if they could watch bald eagles soar above the tree tops or watch otters splashing and playing in a quiet lagoon. It can’t be experienced by an afternoon visit to a park. You have to live it. Only then can you realize that no man-made creation can come close to matching the ability of nature to refresh the soul. The world would be a much better place if there was a lot more of this kind of place and a lot less urban jungle.

Will the Federal Government Let the “Big Three” Die?

June 19, 2008

As gas prices have soared, SUV and light truck sales, the only thing keeping the “Big 3” (GM, Ford and Chrysler) afloat, have plummeted. These vehicles were the only models still profitable for them, since there was much less market penetration in this segment by imports, although the Japanese were making inroads. The “Big 3” had basically abandoned the market for cars, since it had become glutted with countless models from Japan, Korea, Germany, Sweden and the U.K. This wouldn’t be so bad if the “Big 3” had access to equivalent markets in those countries. With the exception of Sweden, they don’t – not even close. We have given away America’s auto market and gotten nothing in return.

Now we face the very real possibility of total collapse of our domestic auto manufacturers. (Please don’t point out to me that the Japanese, Koreans and Germans are also “domestic” manufacturers now. Assembling imported parts isn’t the same as designing and building parts and finished cars in the U.S.) When I wrote my “2008 Predictions” in November of last year, many probably thought I was overly pessimistic in predicting the bankruptcy of either Ford or Chrysler this year. It hasn’t happened yet, but now both of these and General Motors as well are running on empty. It’s unlikely that all three will fail this year, but the day when none of these will continue to exist is rapidly approaching. And with the loss of these companies will come the collapse of the parts manufacturers, distributorships and thousands of companies that provide them all with services.  Job losses will be in the millions – added to the millions of manufacturing jobs already lost to free (blind) trade. It’s impossible to overestimate the devastating impact this would have on the economy. It would surely tip this country into depression. Not recession. A depression.

Will the federal government stand by and let this happen? Will it try to arrange some sort of bail-out, or help broker deals for the “Big 3” to be bought up by foreign companies or sovereign funds? Who would want them? Daimler is still paying the price for their failed “merger” with Chrysler, and the private equity group (whose name escapes me) who bought Chrysler from Daimler already regrets it.

That leaves the government only one option – protectionism – which could take one of two forms: 1) limiting imports or 2) imposing tariffs on auto imports. The first option would be a nightmare to manage. How would the quotas be allocated between countries and manufacturers? What would happen when models are dropped and new models added?  Prices would rise and the windfall profits would go directly to foreign manufacturers.

The second option makes much more sense. Tariffs would drive prices higher for imports and the market (consumers) would determine which models thrive and which ones fail. The foreign manufacturers would cut their costs and prices to the bone in a vain effort to offset the tariffs. And all of the tariff money would remain in America, increasing federal revenue and potentially allowing for income tax cuts.  But, most importantly, the higher prices for imports would drive customers to the Big 3’s showrooms.  (Yes, auto prices may rise some, but the rise would be more than offset by rising wages as manufacturing jobs rebounded.)  Domestic manufacturers, American workers and taxpayers would all be the big winners.

It’s not as though we’d be venturing into uncharted trade waters. America thrived under these kinds of tariffs from the beginning of our country until 1947, when we signed the Global Agreement on Tariffs and Trade (GATT), turning our backs on the trade policies that built us into the world’s preeminent industrial power. Tariffs are the only thing that can protect our domestic industry from the predation of grossly overpopulated foreign countries, desperate to sustain their bloated work forces by gobbling up our market while all we get in return is access to markets emaciated by over-crowding and low per capita consumption.

Will the next president have the guts to take such measures and reassert America’s right to set our own trade policies? Or will he let the rest of our domestic manufacturing die and throw us a few more crumbs in the form of job training programs, extended unemployment benefits and more “economic stimulus” checks?

We’ve been locked in a global trade war for decades and have been losing badly because we don’t have the will or good sense to even put up a fight. Will the demise of our domestic auto manufacturing be the final battle in a lost war, or will this battle be the turning point?  Time will soon tell.

Shrinking Population is Smarter than Cutting Per Capita Consumption

June 18, 2008

I’ve recently had a couple of exchanges with other bloggers on this topic and, although I posted something on the same topic recently, I think it’s worth revisiting it again. This seems to be a hard concept for folks to grasp, that falling per capita consumption can be a bad thing while sustaining high per capita consumption is the more desirable alternative. People associate high per capita consumption with waste, excess, the plundering of natural resources and environmental degradation. At the same time, they are unable to grasp that low per capita consumption is indicative of a low standard of living rather than some sort of “enlightened” way of maintaining a high standard of living in an environmentally sustainable way.

Not helping matters, recent stories in the news reported on a study that showed that per capita carbon emissions are lower in big cities than in more rural areas. Many people have been left with the impression that this is the way to address global warming, by crowding people together into cities to improve efficiency. They fail to recognize that, while per capita emissions may be lower, the total emissions from large cities dwarf the emissions from less densely populated areas due to the sheer number of people.

There is nothing wrong with sustaining high per capita consumption in a less densely populated society. It is the only way to sustain a high standard of living and high quality of life. But the key is to keep the population density low, not letting it drift ever higher. A rising population density, beyond some critical, optimum level, will drive down per capita consumption, reducing the standard of living and quality of life, while driving total consumption higher.

Consider the example of housing in Japan. The size of Japanese dwellings is, on average, only 30% that of Americans. So their per capita consumption of housing materials is only 30% of our ours. Many people see this as being more efficient and environmentally sustainable. But it’s not. Because Japan is ten times more densely populated than the U.S., their total consumption of materials for housing is higher than it would be if their population density was the same as the U.S.

How can this be? Do the math. In the U.S., per capita dwelling space is about 500 square feet. Japan’s per capita dwelling space is about 150 square feet. (Their country is just far too crowded for them to have any more than this.) Their total population is 127 million people, so their total dwelling space is 19.05 billion square feet. Now, if their population density was no higher than the U.S., they would have a population of 12.7 million people and each could occupy 500 square feet like in the U.S. In that case, their total dwelling space would be 6.35 billion square feet.

Therefore, in spite of the fact that they live more “efficiently” than in the U.S., consuming only 30% as much housing materials as an average American, their total consumption of housing materials is exactly three times what it would be if they lived like us while reducing their population density to match ours.

Now, some may counter that, taking the two countries together, the most effective way to reduce total consumption is for the U.S. to reduce its per capita dwelling space to match Japan’s, rather than Japan reducing its population by 90%. If Japan did reduce their population by 90% and increased their per capita dwelling space to 500 square feet, while the U.S. did nothing, the total consumption of dwelling space would be 156 billion square feet. Conversely, if Japan did nothing while the U.S. cut its per capita dwelling space to 150 square feet (to match Japan’s), then the total consumption of dwelling space would fall to 64 billion square feet – less than half. So that’s better, right?

Aha! Herein lies the rub! The problem is that, if we take that latter approach, we have also cut employment in the housing industry by more than half. What will those people do for a living? Work in some other sector of the economy? Not if we’re cutting per capita consumption of everything! This is where unemployment and poverty take hold, just as I’ve warned in Five Short Blasts.

A third alternative, the one I’ve proposed in the book, is to reduce the population of both the U.S. and Japan to an “optimum” level. Let’s say that, for the U.S., that’s 200 million people and for Japan it’s 8.5 million people. We now have 208.5 million people occupying 500 square feet each, for a total dwelling space of 104 billion square feet. That’s 65 billion square feet less than today’s situation and, while we have also cut total employment in the housing industry, the percentage of people working in the housing industry has actually risen because now people in both countries live in larger dwellings. It’s a win-win situation – a huge cut in the total consumption of materials used for housing construction and an increase in the demand for labor to manufacture that housing. It’s good for the environment and good for the people.

I hope this helps everyone understand why it’s much smarter to reduce population density than to reduce per capita consumption.

More Useless Trade Negotitations with China

June 15, 2008


Once again, the U.S. sends unarmed combatants into a battle of wits with Chinese trade negotiators.  Treasury Secretary Henry Paulson and Fed chief Ben Bernanke will meet with Chinese leaders to discuss rising protectionism and currency valuations.  Discussion of both topics is a complete waste of time and represents more of the same trade dilly-dallying we’ve witnessed for decades.  Currency valuation has almost nothing to do with the trade deficit in manufactured goods.  There’s more proof in this article:

Washington thinks the Chinese currency, which has risen about 20 percent against the dollar over the last three years, should appreciate further as part of exchange rate reforms that could also be helpful to control inflation, a politically sensitive issue in China where half of family incomes go for food.

The result of those three years’ of 20% yuan appreciation?  Our trade deficit with China has soared, not declined.  Negotiations to lower China’s barriers have yielded the same results.  The trade deficit isn’t declining because, without implementation of tariffs by the U.S. – tariffs that would compensate the U.S. for China’s inability to offer an equivalent market in exchange for access to ours – it’s impossible for it to decline.  The deficit is due to the gross disparity in per capita consumption between the U.S. and China – a disparity that’s due to China’s gross overpopulation, something that isn’t going to change any time soon. 

Perhaps this situation will begin to improve next year:

“If this tendency of protectionism grows unchecked, it may become a threat to the global trade and the multilateral trading system,” said Sun Zhenyu, China’s ambassador to the WTO.

Adding to the concerns is the prospect of a US rollback of market opening measures under a Democratic president, amid concerns over the US trade deficit with China, which ballooned to a record 256.2 billion dollars last year.

Democratic White House candidate Barack Obama has promised to review US free trade policies if he wins the presidential election in November.

If Obama is a man of his word, we may finally start to see some real action.  Does he have the courage to take on the Chinese and the WTO?  Time will tell.  But he’d better.  It’s our only hope.  The time has come to stop relying on currency valuation and the vague promises of our trading “partners.”  It’s time for the U.S. to take matters into its own hands to begin the rollback of the enormous trade deficit that is drowning our economy. 

The Solution to Overpopulation: More People?

June 13, 2008


I’m on the road and don’t have a copy of Five Short Blasts in front of me, but I’m pretty sure I recall mentioning in the book about a column I saw in a major newspaper, written by a respected columnist, that suggested the solution to overpopulaton lies in maintaining a high birth rate, because that increased the chances of a genius being born who could solve the problem.

You may have thought I was joking – that no such person could possibly exist.  Well, I came across this one while blogging today.  It’s not the guy who wrote the column I was remembering, but his beliefs are the same.  He’s a father of twelve children (including three adopted).  He is criticizing a Baptist minister by the name of Oliver “Buzz” Thomas for having the courage to say that overpopulation is a problem.  While I don’t agree with Reverend Thomas that it’s “sinful” to have more than two children, he should be given credit for going against the grain and acknowleding overpopulation as a threat.  Here’s a quote:

I think if there is one thing that we have learned in an age of scientific enlightenment is that our planet’s resources are diverse and abundant. It takes creativity and hard work to tap and distribute the earth’s resources. Even though Oliver “Buzz” Thomas is saying that I am sinful and selfish by having a lot of children, imagine the fact that my children may actually work towards the solution to what he thinks is the problem through creativity and hard work.

In other words, using his twisted logic, by fathering nine children he has actually contributed to the solution to overpopulation instead of adding to the problem.  I wonder what he would say if one or more of his children arrived at the only reasonable solution, the same solution reached by millions of other children of fathers like him – that it’s time to stabilize our population?

I just want you to be aware that such people actually exist.  Be ready if you encounter one in a discussion.  Otherwise, they and others might interpret your silence and gaping jaw as an inability to fashion a reasoned response when, in fact, you’ve simply been dumbfounded by the degree of irrationality to which you’ve just been exposed.