Not Ready to Lead?

September 8, 2008

Qualifications:

  1. Lawyer.
  2. Served in the Illinois state legislature.
  3. One term on Capitol Hill.

It has recently been said by many that someone with the above resume’ is clearly not ready to take over the reins of the presidency and the leadership of the free world.  History seems to prove otherwise, for the above resume’ belongs to Abraham Lincoln, the greatest president in American history, the Commander-in-Chief during the fiercest, bloodiest war in American history. 

It is not experience on Capitol Hill nor executive experience behind the desk in a governor’s office that determine greatness in a potential president.  Rather, it is intelligence, leadership, vision and core values that really matter.  These are the measures by which we need to judge our candidates.

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Don’t Peek Under America’s Economic Rugs

July 12, 2008

http://www.reuters.com/article/topNews/idUSN1135284920080711?sp=true

We’re now learning how America has kept the floor of its grand Economic Ballroom so spotlessly clean. It’s been sweeping the dirt under pretty rugs. This week, someone lifted a corner and peeked under the rug known as GSE’s (government-sponsored enterprises), otherwise known as Fannie Mae and Freddie Mac, and found a disgusting mess. The mortgage crisis has eroded their balance sheets to the point where their continued viability – the very under-pinning of the mortgage industry – the heart and soul of the American economy – is at risk of collapse.

There’s no easy way out of this mess. There are only two bad choices that will have the same result:

1. Let them fail. Without the GSEs as a source of mortgage funds for the banks, mortgage interest rates will skyrocket, making it much more difficult to buy a home and driving home values down further, forcing more people into foreclosure. Essentially, it would accelerate the downward spiral in the housing industry.

2. Give them a government bail-out. Whether it’s handled by the federal government or by the Federal Reserve, the result will be the same. The value of U.S. government-issued bonds will move closer to “junk” status in the eyes of investors (especially foreign investors), driving interest rates sky high. The net effect will be the same as option 1 above – an acceleration of our downward spiral.

What’s the real root cause of all of this? It’s our trade deficit, pure and simple. Our cumulative trade deficit since 1976 now stands at $9 trillion, a good chunk of which was swept under the GSE rug. (The collective debt backed by Freddie Mac and Fannie Mae is $5.1 trillion.) The trade deficit has eliminated many millions of jobs, driving down incomes. To compensate, the GSEs have held interest rates artificially low to enable people to still afford homes. They’ve pumped trillions of dollars into the economy, packaging the debt and selling it to foreign buyers. Everything was rosy until the mountain of debt began to collapse under its own weight.

There is no light at the end of this tunnel. With the trade deficit continuing to drain $2 billion a day from the economy, the dike holding back the effects of a sea of debt is crumbling faster than the Federal Reserve can stick fingers into the holes. It’s impossible to overstate the economic danger the U.S. is facing, and most Americans are oblivious. They walk along at the foot of that dike and enjoy the pretty stream flowing by, not realizing that they’re about to be inundated.


Catholic Church’s Position on Birth Control

May 14, 2008

http://www.reuters.com/article/lifestyleMolt/idUSL146364620080514?sp=true

The above link will take you to an article that really has nothing to do with this subject, but it got me to thinking:  If the Catholic Church can be so progressive in its thinking on a subject like the existence of extraterrestrials, why can’t it apply the same logic to a subject much closer to home – the subject of overpopulation and birth control?  As you may or may not know, the Catholic Church is opposed to all forms of birth control with the exception of the “rhythm” method.  Why?  They believe that birth control thwarts the will of God if it is His will that the couple conceive a child.  They allow use of the rhythm method (timing intercourse to occur when the female is at a point in her cycle when she is much less likely to conceive) because it is very unreliable and leaves open the possibility of conception.

The Catholic Church has the potential to have tremendous impact on the subjects of overpopulation and population management.  True, many Catholics simply ignore the Church’s position on birth control, but there are still many who adhere.  It is out of fear of reaction by religious voters that our nation’s leaders avoid this subject like the plague.  Imagine the possibilities if the Church were to change its position.

In the linked article, the Reverend Joseph Gabriel Funes, head of the Vatican Observatory and a science advisor to the pope, says of the possibility of extraterrestrials:

“Just as there is a multiplicity of creatures on earth, there can be other beings, even intelligent, created by God. This is not in contrast with our faith because we can’t put limits on God’s creative freedom,” …

Father Funes goes on to discuss his belief in the “big bang” theory of the origin of the universe, which obviously means that he believes in evolution as well – evolution guided by the creator, but evolution nonetheless.  This is a far more progressive stance than many other fundamentalist Christian sects.  Why can’t the Catholic Church apply the same logic to the subjects of birth control and overpopulation?  Father Funes observes that “we can’t put limits on God’s creative freedom.”  Applying the same logic, how can we pretend to know what is God’s will, beyond what has been laid out for us in the Bible?  Nowhere in the Bible are these subjects addressed.  Who is to say that it’s not God’s will that we use our intellect and technology to manage our procreative capacity?  If we allow that it may be God’s will for someone to bear a child, is it not also possible that His will may be that they not bear another child?  He endowed us with a high reproductive capacity in order to assure the survival of our species in the beginning when our death rate was high.  Now that, through God’s gifts, our intellect and technology have enabled us to dramatically reduce that rate, wouldn’t He expect us to use our intellect (and our common sense) to manage our reproductive capacity? 

Recently, the Vatican issued a list of new sins.  One of them was the sin of causing harm to the environment.  It was long overdue – an admission that man has the capability of causing irreparable harm to the home God has created for us.  Can’t they extend this logic one step further and acknowledge that our sheer numbers present a threat to the environment?  Does it not then become a sin to ignore that threat?  Does it not become sinful for a government to shirk its responsibilities to manage its population?  Is it not sinful for the Vatican to be a roadblock to progress on this issue? 

Every municipality in the country recognizes the need to manage pet populations and has established animal control agencies.  Every state in the union recognizes the need to manage wildlife populations and has established departments of natural resources for that purpose.  How can the Vatican and the federal government not recognize the need to manage our own population?

It’s just astounding that the Church can be so progressive in some ways, as displayed in this linked article, and yet so rigid and dumb when it comes to this one issue. 

 


Trade Negotiators in Panic to Close Doha Deal Soon

May 13, 2008

http://www.reuters.com/article/newsOne/idUSL1341307920080513

WTO (World Trade Organization) trade negotiators from around the world are in full panic mode to close the deal in their “Doha Round” of negotiations.  (Each round of WTO negotiations is named for the city in which it began.  This round was begun in Doha, Qatar in 2001.  This round of negotiations has been focused on services, intellectual property, textiles and agriculture.)  They are desperate to finish a deal before the Bush administration leaves office, acknowledging that any deal will have a much tougher time getting passed by the next administration.  Bush has advised negotiators that he’ll sign practically anything they come up with. 

Why have the negotiators had such a difficult time with this round?  It’s because this round is more focused on concessions from wealthier nations, like the U.S., instead of lowering trade barriers among all participants.  Like I said on page 162 of Five Short Blasts, the WTO has a secondary agenda to its stated objective of expanding free trade, and that is to elevate the standard of living of third world countries.  The WTO has seen that free trade has done nothing to benefit these countries, so in this round of negotiations it’s taking a different tack.  It’s seeking to grant free access to the U.S. market to those countries, while enforcing protectionism for them.  In other words, they get to export to us while maintaining barriers to U.S. products.   Just look at the following excerpts from this article:

The WTO’s Doha negotiations for a global trade deal were launched in 2001 to help poor countries export more and to boost the global economy. But they have missed a string of deadlines due to deep differences over how to lower barriers to exports.

Help poor countries by lowering barriers to exports.  It’s an amazing repudiation of the very principle upon which the WTO is founded – that every nation benefits when it trades what it makes best for products made best by others.  Ricardo’s principle of comparative advantage (the 1817 theory upon which free trade is based) says that it doesn’t matter whether a nation is rich or poor, trade will benefit both parties.  Obviously, even the WTO doesn’t believe it when it enforces protectionism in favor of two thirds of nations.  It begs the question:  If protectionism is good for third world countries, why isn’t it good for everyone?  When does “free” trade suddenly become a good thing and while protectionism stops working?  Why not let each nation decide for itself what trade policies work best?  Why do you have to arm-twisting and coercion if “free” trade is such a good deal?

He (Pascal Lamy of the WTO) added that to do that, WTO members still needed to reach an accord on three areas — agricultural subsidies, and agricultural and industrial custom tariffs.

This accord he’s talking about is the elimination of farm subsidies and all agricultural tariffs by the U.S. in particular, tilting the playing field in favor of third world countries, in order to drain more money from the U.S. economy.

Without a deal soon, the changeover of administrations in Washington and Brussels in 2009 risk causing several more years of delay, adding to concerns that support for free trade is giving way to protectionism as economic growth slows.

Those last three words could have been phrased “… as it becomes ever-more evident to Americans that their trade policy is a failure.”  The WTO negotiators know a “pushover” administration when they see one, and they see that their window of opportunity is rapidly closing.  Keep an eye on this situation and write your congressmen to oppose the deal if something does get passed.  Otherwise, you can kiss goodbye the service sector of our economy (the sector that was supposed to be our salvation when we handed over the manufacturing sector), along with our agricultural sector.  If we can hold them off, it could spell the beginning of the end of the WTO and the start of a slow rebirth for American industry. 


Optimum Population Density

May 10, 2008

I have used the term “optimum population density” quite a bit, but what exactly does that mean and what is the optimum population density for the United States?  It’s a really tough question to answer. 

To me, an optimum population density is attained when the following conditions are met:

  1. A large nation – certainly one the size of the United States – is self-sufficient in natural resources.  Now, obviously, no country can be self-sufficient in terms of each and every resource, since God has chosen to concentrate various resources in different areas scattered around the world.  For example, in spite of our size, the U.S. can’t be self-sufficient in providing our own coffee and bananas, because none of our geographic area extends into the tropics.  However, we can be self-sufficient in natural resources overall by trading what we have in excess for what we don’t.  If the dollar value of those exchanges is in balance, then we’re self-sufficient.
  2. We have sufficient labor to provide all of the products and services that we need to maintain a high standard of living.  This includes labor to man our factories, plant and harvest our crops, provide services, staff our governments, man our military, etc. 
  3. At the same time, we need to maintain our work force in a state of full employment.  Here I’m talking about true “full employment,” in which everyone is able to work as much as they want to support themselves at a standard of living that they’re comfortable maintaining.  In fact, it’s beneficial to maintain a supply of labor that is slightly below the level of demand in order to drive improvement in productivity. 
  4. Finally, the population cannot exceed the earth’s “carrying capacity” in terms of our effect on the environment.  That is, it cannot exceed the level at which the environment is able to absorb and break down our wastes.  This final point may be the most difficult to quantify.

It would be a very interesting exercise, one that the government should undertake, to load these parameters into a computer program and see what comes out.  It would probably yield an algorithm that would require a mainframe computer to crunch.  Factors 3 and 4 above would require knowing exactly how the per capita consumption of every product and service is affected by population density in accordance with the theory I’ve presented in Five Short Blasts.  A computer would probably have to run trial-and-error scenarios, assuming a certain population and then determining the effect upon consumption and the corresponding effect upon the demand for labor.  I think this would be a truly fascinating exercise, one that I’m surprised hasn’t yet been attempted by the world of academia.

But what does my gut tell me?  Well, it’s been decades since we were energy sufficient, but we were at one time, when our population was about half of what it is now.  And, at that same time, despite what the Labor Department’s official “unemployment rate” says, we were much closer to “full employment.”  Incomes were high, health care was affordable and pensions were secure.  Good jobs were plentiful.  And, although pollution was a problem in those days, it wouldn’t have been if environmental control technologies in use today were available then. 

So, my gut tells me that a population density of about 40 people per square mile, about half of today’s level, would be about right.  I came across an interesting microcosm just a couple of days ago that seems to lend support to this level.  I’ve been reading Fair Wind & Plenty of It, a chronicle of a modern-day round-the-world voyage on a square rigger brigantine ship, by Rigel Crockett, one of the ship’s crew.  In Chapter 23 he tells of the ship’s stop at Palmerston Island, a tiny one-square-mile patch of land in the middle of the Pacific Ocean, settled by one man, William Marsters, and his three wives in 1863.  Mr. Crockett observes that:

With William Marsters as that island’s strict autocrat, the family established a tribe that grew to one hundred, shrunk to thirty, and today hovered at forty souls, still living with remarkable self-reliance.

Forty souls on a one-square mile island in the middle of nowhere, completely self-reliant.  That’s exactly the population density – about 40 people per square mile – about half of today’s level of 83 people per square mile – that my gut says is about right for a much bigger land – the United States – and perhaps for the world as a whole. 

 

 


September Trade Deficit – lots of bad news, little good news

November 11, 2007

The September trade deficit was released Friday.  Another $56.5 billion given away in the form of trade welfare, to be financed by a further sell-off of American assets.  That’s an annual rate of $678 billion.  Imagine what could be done with that money here in the U.S.!  That’s an extra $2,260 for every man, woman and child in the U.S. – an extra $9,040 for every family of four.! 

The only good news in Friday’s report was that the deficit shrank very slightly from August’s level, due to higher exports and lower imports.  But  improving our trade balance by letting our currency steadily devalue isn’t the right approach.  We need trade policies (a tariff structure indexed to population density, specifically) to restore a balance of trade while simultaneously strengthening the dollar. 

Expect more slight improvement in the trade deficit in the coming months, but nothing much – not enough to slow the problems eating away at Americans’ finances.  Our trade “partners” simply won’t tolerate falling exports.  They’ll cut prices to maintain their market share. 

Pete