Geithner to Play Dual Roles in China

May 29, 2009

As reported in the linked article, Treasury Secretary Tim Geithner will meet with Chinese officials next week to discuss U.S. – Chinese economics.  He’ll be playing two different roles.

Act I:

Geithner, playing the role of George Bailey from the movie “It’s a Wonderful Life,” will throw himself at the mercy of evil banker Mr. Potter, played by China.  Desperate for cash, Geithner will grovel and plead for China not to cut off our line of credit.


Treasury Secretary Timothy Geithner will discuss the Obama administration’s efforts to deal with record U.S. budget deficits in talks next week with top Chinese officials, a senior Treasury official said Thursday.The official said that Geithner would stress to the Chinese that the administration was committed to bringing down the deficits once the country has emerged from the current recession and financial crisis. Officials in China, the largest foreign holder of U.S. Treasury securities, have expressed worries about the exploding U.S. deficits.

Act II:

Geithner, playing the role of Dudley Do-Right, rides to the rescue of  poor Nell Fenwick, a representation of the American worker, and takes on Snidely Whiplash, the evil villain played by China, who has been robbing poor Nell blind and has left her tied to the railroad tracks. 

Geithner will also stress the need for countries like China to do more to boost consumer spending in their countries to achieve a better balance of global growth, the official said. The United States is pushing China to increase purchases of U.S. exports to deal with a huge trade gap between the two countries.

We’ve seen this last act played over and over.  Dudley dashes in to save the day for poor Nell and yet, next week, there’s Whiplash again, holding her upside down and shaking the change out of her pockets.  In the past, the part of Dudley Do-Right was played by the U.S. Trade Representative or an even lower-level flunky trade delegation. 

Now the Obama administration is taking the same approach:  talk, talk, talk.  But at least now it’s his Treasury Secretary going to the bother of making the long trip to China to make the case.  Is it a sign that the U.S. is running out of patience – that real action by the U.S. may be near?  We’ve often threatened action to restore a balance of trade, but we’ve never come through.  But, then again, the U.S. economy had never experienced a complete collapse brought on by that imbalance. 

Stay tuned.  But don’t be surprised to see Snidely Whiplash dragging poor Nell by the hair again next week.


Billionaires Meet to Curb Overpopulation?

May 28, 2009

This has been all over the blogoshpere in the last few days.  This London Times article is the only one I’ve been able to find that reported on the story. 

SOME of America’s leading billionaires have met secretly to consider how their wealth could be used to slow the growth of the world’s population and speed up improvements in health and education.

The philanthropists who attended a summit convened on the initiative of Bill Gates, the Microsoft co-founder, discussed joining forces to overcome political and religious obstacles to change.

Described as the Good Club by one insider it included David Rockefeller Jr, the patriarch of America’s wealthiest dynasty, Warren Buffett and George Soros, the financiers, Michael Bloomberg, the mayor of New York, and the media moguls Ted Turner and Oprah Winfrey.

They gathered at the home of Sir Paul Nurse, a British Nobel prize biochemist and president of the private Rockefeller University, in Manhattan on May 5. The informal afternoon session was so discreet that some of the billionaires’ aides were told they were at “security briefings”.

Stacy Palmer, editor of the Chronicle of Philanthropy, said the summit was unprecedented. “We only learnt about it afterwards, by accident. Normally these people are happy to talk good causes, but this is different – maybe because they don’t want to be seen as a global cabal,” he said.

Some details were emerging this weekend, however. The billionaires were each given 15 minutes to present their favourite cause. Over dinner they discussed how they might settle on an “umbrella cause” that could harness their interests.

The issues debated included reforming the supervision of overseas aid spending to setting up rural schools and water systems in developing countries. Taking their cue from Gates they agreed that overpopulation was a priority.

Is it really possible that the world’s biggest benefactors of overpopulation, who rely upon further population growth to expand their empires and fortunes, could actually become conscious of the dangers of further growth?  This whole story seems rather implausible, but not impossible.  We can only hope, right?  These are some people with serious influence in power circles.  If the world’s richest elite grow concerned about overpopulation, can meaningful action be far behind?

Obama Advocates Legal Immigration from Cuba

May 27, 2009

As reported in the linked article, President Obama has proposed a resumption of talks with Cuba aimed at establishing legal immigration from Cuba to the United States. 

In a fresh overture to Cuba, President Barack Obama is asking the communist government to resume talks on legal immigration of Cubans to the United States.Obama’s proposal would reopen discussions that had been closed off by former President George W. Bush since they were last held in mid-2003. His move comes ahead of the United States’ attendance at a high-level meeting early next month of the Organization of American States, where Cuba’s possible re-entry into the regional bloc will be discussed.

The State Department said Friday it had proposed restarting the talks to “reaffirm both sides’ commitment to safe, legal and orderly migration, to review trends in illegal Cuban migration to the United States and to improve operational relations with Cuba on migration issues.”

Cuba’s readmission to the O.A.S. and a normalization of relations with Cuba is a noble goal.  The U.S. has nothing to fear from such a relationship.  Free trade with Cuba would likely be a plus for the U.S., since the U.S. typically enjoys a nice trade surplus with island nations whose economies revolve around tourism instead of manufacturing. 

But what about the issue of immigration?  As an advocate of stabilizing the U.S. population, an impossible task without dramatic cuts in both legal and illegal immigration, you might think I’d be opposed to this course.  Not so.  What I oppose is admitting more immigrants than the number of people who choose to emigrate from the U.S. – about 50,000 per year.  I have no problem with that figure including Cuba’s fair share.  With a population of about 11.3 million people out of a global population (less the U.S.) of about 6.4 billion people, that means that we could afford to take in about 88 people per year from Cuba. 

Is that the figure Obama has in mind?  It’s impossible to know, but I doubt it.  I suspect the figure he has in mind is orders of magnitude larger.  The problem then is not legalizing immigration from Cuba; it’s the government’s lack of understanding of the ruinous effects of continued rampant population growth in the U.S.  The problem isn’t 88 Cubans; it’s the economic philosophy that says we need to import 1.5 million immigrants every year in order to prop up economic growth. 

Obama seems to be a man with one foot in the future and one in the past.  He understands the dangers of our heavy dependence on imported oil, our over-reliance on rapidly dwindling supplies of fossil fuels, and the dangers of climate change exacerbated by the burning of those fuels.  But, at the same time, he’s stuck in the economic mindset that can’t let go of population growth as an engine for economic growth, not wanting to ponder what happens when that strategy arrives at its inevitable failure. 

President Obama speaks of change and hope – genuinely, I think.  But what hope is there for breaking our dependence on imported oil and fossil fuels if every gain in efficiency is offset by population growth?  What hope is there for averting climate change if a 30% reduction in per capita emissions is offset by a 30% growth in the number of “capita?”  What hope have we for reducing unemployment if we import workers faster than jobs are created?  In the end, what will have changed?  Nothing, except that there will be a lot more of us burning oil, emitting CO2 and competing for relatively fewer jobs. 

It’s time for the president to stop straddling the line between the past and the  future if we are to have real hope or any meaningful change.

Sen. Grassley: Trade Agreements and False Premises

May 26, 2009

Senator Charles Grassley of Iowa opened a hearing on the U.S.-Panama free trade agreement on Thursday with remarks supportive of the agreement and free trade in general.

First of all, let me begin by stating that I support the trade agreement with Panama.  With a population density of 109 people per square mile – very close to the population density of the U.S. at 85 people per square mile – Panama presents no threat to our economy whatsoever.  However, it’s not clear to me why we want to modify the terms of our existing trade arrangements with Panama, since the U.S. already enjoys a significant trade surplus with Panama – $2.3 billion in 2006, including a trade surplus in manufactured goods.  But it’s Grassley’s defense of trade liberalization in general and his support of free trade with South Korea – making no distinction between the extreme population density found there versus the low population density of countries like Panama and Colombia – that concerns me.   

I support the timely implementation of this trade agreement, which is long overdue. Its implementation has been sidetracked by various issues. But now that the Finance Committee is taking the first step to advance a positive agenda of trade liberalization under a new Administration, I want to take a moment to address the critics who would rather we not implement any of our pending trade agreements with Panama, Colombia, and South Korea.

Grassley begins with a defense of trade in general:

The chief argument I’ve heard is that given the magnitude of our global trade deficit, the last thing we should do is implement new trade agreements. I’ve even heard that argument from some of my colleagues in the Senate. The problem is, that argument is based on a false premise. It suggests that trade agreements translate into trade deficits. I dispute that.

I agree.  There’s nothing wrong with trade in general or any specific trade agreement that’s structured properly. 

He defends trade with Central America, excluding Mexico from the data for obvious reasons, and then addresses trade with Mexico separately: 

Before NAFTA, over 51 percent of imports from Mexico entered the United States duty-free, and the average tariff on the remaining imports was about 4.2 percent, for an overall average tariff rate of just over 2 percent.

Thank you, Grassley, for illustrating how powerful tariffs can be in maintaining a balance of trade!  Looking at Grassley’s own data from the opposite perspective, 49% of Mexico’s exports were subject to tariffs prior to NAFTA, and half of those were 4.2% or higher – some significantly higher.  Will American companies shift their manufacturing across the border to gain a 4% or a 10% price advantage?  Most of the companies I know would move their operations to hell for that kind of profit improvement.  We eliminated the tariffs and, as many predicted, we went from a trade surplus with Mexico to a huge trade deficit, much of which is due to manufactured goods and not just oil. 

Grassley goes on:

In this time of economic downturn and uncertainty, we can ill afford to base our trade policies on false premises. Trade is more complicated than that, and the benefits of expanding trade are too important—for both us and our trading partners.

Indeed trade is complicated and cannot be based on false premises.  And there are just as many false premises out there about free trade as there are about protectionism.  They are two extreme ends of the spectrum of trade policies and each in varying degrees has its place.  Let’s understand what makes free trade successful in some instances and an abysmal failure in others.  Everyone involved in crafting trade policy needs to understand the dominant role of population density in driving trade imbalances and why unfettered free trade becomes such a dangerous trade policy when applied to badly overpopulated nations. 

“We can ill afford to base our trade policy on false premises.”  I hope that Grassley remembers those words when he turns his attention to the free trade agreement with South Korea.  And perhaps its time to review all of our trade agreements to determine if corrections need to made for false premises upon which those agreements were based.

Population Management and Abortion

May 21, 2009

As a graduate of the University of Notre Dame, a Catholic and an author of a book advocating population management, I’d be remiss if I didn’t say a few words about President Obama’s commencement address at Notre Dame this past Sunday. 

It’s not what he said that I’d like to address, but the firestorm of controversy that preceded it.  The university took a lot of heat for their decision to invite the president to speak, and especially their decision to award him an honorary degree, because of his stated positions on abortion and embryonic stem cell research.  Donations to the university are sure to take a hit. 

For those who advocate a population management program designed to stabilize and even reduce our population, this controversy highlights the necessity of excluding the use of abortion from any such program, without being judgmental one way or the other in favor of either the pro-life or right-to-choose factions.  The issue is so divisive that any inclusion of abortion in such a program will make the whole subject of population management a non-starter.  Just-released polling data shows that a slim majority of Americans identify themselves with the pro-life side of the debate.  Among pro-life supporters, the subject of population management is universally synonymous with abortion.  Some even associate the subject with infanticide, genocide and all sorts of horrible plots to eradicate some groups in favor of others.  That’s why it’s absolutely crucial to be very clear, right up front, that your vision of population management expressly excludes all such practices – especially abortion.

But the right-to-choose faction, according to the latest polling, is nearly as large and will be just as quick to reject a plan that is perceived as taking away that option.  So it’s a very fine line that we advocates of population management must walk to avoid an instant loss of credibility with one half of the population or the other.  And without the support of a majority of people, population management will never happen. 

So how would one factor abortion out of national policies designed to manage our population?  Pro-life advocates would correctly point out that, even if federal dollars aren’t used to fund abortions or if government-run family planning services don’t even mention abortion, economic incentives designed to reduce the birth rate will only encourage the careless to fall back on abortion to take advantage of the incentives.  That’s true, and even most pro-choice advocates would concede that we don’t want to do anything that actually encourages more abortions.  That’s why I’ve proposed counting abortions (with exceptions in the cases of rape and incest) as live births, meaning that abortion could not be used to escape the economic consequences associated with having additional children. 

Won’t the pro-choice faction have a problem with this?  Perhaps.  But it doesn’t remove the choice of having an abortion.  It just makes it more expensive.  Besides, it’s not as though the woman doesn’t still have a choice.  It just pushes the decision point back to conception, where it should be in the first place.  Every woman still has a choice as to whether or not to give birth.  But the choice should be made when the decision regarding the use contraceptives is made.  It’s a serious decision and, once made, there should be commitment to live with the results.  Where no choice is involved, as in the case of rape, abortion would still be an option.

A perfect solution to the question of where abortion fits in a population management program?  Probably not, but at least it addresses the major concerns of both camps – actually discouraging abortion while preserving choice.  Once one understands the consequences of overpopulation and its potential for condemning people to a life of poverty, ignoring the problem isn’t a responsible course of action.  And there are no other options that don’t require addressing the subject of abortion head-on.  If you’re serious about working toward general acceptance of the concept of population management, then you need to be prepared with ideas on how to address abortion in a way that will seem to both sides to be a reasonable approach.

Higher Mileage Standards to Cut Oil Consumption – or Not?

May 19, 2009

Today President Obama announced plans to increase auto fuel efficiency to an average of over 35 miles per gallon, an improvement of approximately 30% over today’s level. 

The Obama administration announced Tuesday what amounts to a sweeping revision to auto-emission and fuel-economy standards, putting them in the same package for the first time.

The plan would require cars and trucks to average 35.5 miles per gallon by 2016, President Obama said at a ceremony with legislators, regulators, executives of 10 car companies and the United Auto Workers union. The plan would increase the standard and accelerate the requirement from 35 mpg in 2020 set by the 2007 Energy Act.

The president hailed the plan’s potential for cutting our dependence on foreign oil and for cutting greenhouse gas emissions, cutting both by about 30% once all vehicles on the road have been replaced by these more efficient models. 

Thirty percent less oil consumption.  Thirty percent lower CO2 emissions.  Sounds great, doesn’t it?  There’s just one problem.  It’s not true.  Because the government also plans to rapidly grow the U.S. population, through ever-higher rates of immigration and through high birth rates, by 2035 we will be consuming as much oil to fuel our vehicles and we will be emitting as much CO2 as we do today.  After that, further population growth will actually drive oil consumption and CO2 emissions even higher than today’s level!  Don’t believe me?  Check out the government’s own population projections at

It’s not as though the government has no control over this.  They have total control of immigration and use tax policy to encourage a high birth rate.  Why?  Because they can’t envision a healthy economy that doesn’t rely on population growth as the major source of “economic” growth. 

I applaud the president for taking this action, but to sell this as a plan for cutting oil consumption and reducing greenhouse gas emissions is just a bit disingenuous when they also quietly plan to explode the population, more than offsetting any gains from this program.  If the president wants to get serious about cutting oil consumption and CO2 emissions, then we not only need a plan to cut the per capita consumption of oil but a plan to simultaneously stabilize and even reduce our population, the number of “capita,” to a sustainable level. 

Obama Approach to Economy Faltering

May 12, 2009

With the first 100 days of the Obama administration in the rear-view mirror, the effects of his approach to the economy – especially his approach to the trade deficit – are beginning to come into focus.  And it’s not the picture they hoped for.  Yesterday, the Obama administration increased its project for this year’s federal budget deficit by $89 billion, an admission that the economy is not recovering at the rate they had planned.  

And just minutes ago this morning, it was announced that the March trade deficit rose from $26.0 billion in February to $27.6 billion in March, ending a dramatic, several-month decline.  The rise wasn’t unexpected, but the reason was.  In spite of the fact that oil prices rose as expected, that rise was offset by falling imports.  But what was an unpleasant surprise was that exports also fell a sharp 2.4%.  Exports held up surprisingly well in February, perhaps the result of the rest of the world trying to hold up their end of the bargain struck at the G20 summit in London, when they promised to boost their own economies and start buying more American products, in exchange for Obama’s promise to disavow any moves toward protectionism.  I predicted that approach was doomed to failure, and so it is.  It lasted about a month.  

Some of the stimulus measures taken by the Obama administration are having some minimal effect in slowing our economic decline.  How could they not?  Pour trillions of dollars into the economy, through economic stimulus and through various measures to lower interest rates and boost spending, and it has to have an effect.  But the results are disappointing.  While job losses have moderated slightly, they’re still at a level that would elicit bugged eyes and dropped jaws from economists during any other period.  And home purchases have ticked upward ever-so-slightly, like the twitch of a limb of some poor animal that has come to a violent end.  

Obama has said repeatedly that a recovery in the manufacturing sector is crucial to revival of our economy, especially as the finance sector fades into oblivion.  But falling exports bode ill for any such recovery.  This is exactly the scenario I predicted in my 2009 Predictions.  Obama has relied upon the same approach to our trade problems that decades of experience has proven to be a failure – trying to talk our way out of the deficit instead of taking meaningful measures.  Perhaps he thought that he could make it succeed by simply trying harder, bringing his charisma to bear and shaming other world leaders into pulling their weight.  This will go on for some time as the administration clings to hope that their approach will begin to take hold.  

But it won’t. It can’t.  It ignores the economic realities associated with trading freely with overpopulated nations and ignores our own growing problem of overpopulation, and the consequences of these for unemployment.  The question becomes what “plan B” might be.  He will have only two choices:  stick with “plan A,” relying on even more stimulus or begin moving away from the extreme free trade end of the spectrum of trade policy, which means beginning to adopt some forms of protectionism, whether it’s import quotas or tariffs.  Sticking with Plan A for too long will leave too little time for Plan B to work and will assure a place in history as a one-term president and a failure.

Mounting Evidence of Japanese Dumping

May 12, 2009

As reported in the linked article, Nissan today has announced a $2.4 billion loss in their fourth quarter, and they forecast a larger loss for the coming year.  Yesterday it was Toyota announcing an $8.6 billion loss.  In previous weeks it was Sony.  Recently, Toyota announced that, in spite of the fact that they have lost thousands of dollars on every Prius sold in the U.S. to date, they will reduce the price by several thousand dollars more.  

The Japanese strategy for combatting unemployment is becoming quite clear – they are blatantly “dumping” products on the U.S. and European markets in order to sustain market share.  “Dumping” is the practice of selling products in foreign markets at below-cost, a practice expressly forbidden by the World Trade Organization. The reason for the losses in these Japanese companies is irrelevant, whether it’s due to the falling dollar, rising yen, volumes declining in a recession, or whatever.  It’s still dumping and it’s an unfair trade practice.

The time has come for the Obama administration to acknowledge what’s taking place and demand that Japanese companies raise prices.  Failing that, the U.S. should immediately lodge a complaint with the WTO and, if the WTO doesn’t act swiftly, the U.S. should immediately impose stiff tariffs on all Japanese products.

GM Recovery Plan Presents Obama with Paradox

May 6, 2009

The linked article reports on the UAW’s opposition to General Motors’ restructuring plan, which relies heavily on shutting down U.S. plants and outsourcing production to countries like Japan, China, Korea and Mexico.  (In case you’re not aware, Chevy Aveo and Pontiac G3 are already imported from Korea.  GM plans to do much more of this.) 

This presents the Obama administration with quite a paradox.  As the major stakeholder in GM, the government is now responsible for approving or disapproving GM’s plan.  However, given the current climate of extreme trade policy and tax regulations that favor foreign production, no recovery is possible for GM that doesn’t involve outsourcing production, which will dramatically worsen the trade deficit.  But, at the same time, no plan by the government to restore the economy and our nation’s fiscal health is possible if a balance of trade isn’t restored.  So what’s Obama to do? 

My prediction is that he will approve GM’s plan and hope that changes in the trade climate and in tax regulation in the meantime will make their plans to outsource production moot before it ever comes time to implement them.  He’d better hope that’s the way things unfold because, as unemployment rises beyond 10% and climbs into the teens, there’s going to be a real groundswell of anger if people see more jobs being exported. 

As this recession wears on, Obama will find that bank bail-outs, optimism and happy talk of economic “green shoots” won’t restore prosperity.  He’ll eventually have to confront the collision of economic forces that underlies the  ruination of our economy.

Weeds Growing Amid Economic “Green Shoots”

May 5, 2009

Amid the happy talk of “green shoots” in the economy – tiny increases in construction and new home purchases, retail sales holding steady, a soaring stock market and general rates of slowing decline in the economy, this may be a good time to remember that the only consequences of the economic decline that matter, unemployment and poverty, continue to grow like weeds.  The linked article is a good reminder of that, chronicling the tent cities now populated by the growing ranks of unemployed who now count themselves among the homeless. 

The story features a laid-off autoworker who fled to Florida looking for work, and now finds himself living in a tent.  The article closes with his outlook for the future, one that pretty well summarizes the state of the American economy:

At this point, he has lowered his expectations. “I don’t expect ever to make $50,000 a year working in the auto industry, but just enough to survive, have my own place, buy my own food, my own clothes,” he says. “What every American would expect.”

What’s so telling about this statement is that it not only applies to his situation but, sadly, echoes what a lot of Americans are feeling today – that they’d be happy just to have a roof over their head, clothes on their back and food on the table.  This is exactly the situation I warned of in Five Short Blasts, that our slowly growing problem of overpopulation and our practice of trading freely with grossly overpopulated nations would steadily drive up unemployment and poverty.  We kept it at bay for a while by building a mountain of debt, but that strategy could never work indefinitely.

In spite of the “green shoots” that Federal Reserve Chairman Bernanke speaks of, hoping to build a self-sustaining wave of optimism, there are problems brewing that may spell a turn for the worse.  The entire Chrysler Corporation is now shut down indefinitely, awaiting its fate in bankruptcy court, a fate not at all as clear as the government might like to believe. General Motors is now only weeks away from the same fate.  And the entire network of suppliers is teetering on the brink of bankruptcy as well.  In addition, the delusion of a recovering banking sector may be exposed when the results of the bank stress tests are released this week. 

The one real bright spot in the economy is the rapidly declining trade deficit, most of which is due to the recession itself, but some of which is a real shift away from imports to domestically produced products.  The real test will come as export-dependent nations become desperate and more insistent upon free access to the American market.  I see a major trade battle brewing. 

Regarding the surge in the stock market, a few words are in order.  It’s important to remember that the stock market is driven by corporate profits, not by the state of the economy and especially not by the economic plight of the masses.  Corporations will find a way to make money in any environment.  It may take a period of adjustment to new conditions, during which the market may decline, but in the end they will always make money.  Don’t confuse the stock market and the economy and expect the former to reflect the latter.

With the stock market soaring and economic concerns waning, let’s not forget that virtually nothing has been done to address the consequences of economic overpopulation, both home-grown and imported.  Without action to permanently restore a balance of trade and to stabilize our population, no long-term improvement in the micro-economies of folks like you and me is possible.  Our economic lawn will resemble a vacant lot overgrown by the weeds of unemployment and poverty.  A nice place to pitch a tent, perhaps.