Rory Stewart on the Afghan War
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Category Archives: Politics – General
A brush with governmental bankruptcy
As Washington dithers over whether the federal government should default on its debt obligations, it is helpful to remember that New York City faced the same problem a generation ago.
This Financial Times video provides an excellent overview of the background and implications of that financial crisis.
Reflecting on the Space Shuttle
The space shuttle Atlantis’ landing this past Thursday was the end of an era of U.S. space exploration.
Lawrence Krauss contends that the space shuttle was a dud and that we can do better in space exploration. Former shuttle program manager Wayne Hale disagrees and believes that the shuttle program was worthwhile.
Meanwhile, Neil deGrasse Tyson asserts in the video below that the space shuttle program was never really about the promotion of science in the first place.
Why security theater survives
The latest security theater outrage from the Transportation Security Administration almost defies belief – forcing a dying, elderly woman in a wheelchair to remove her soiled diaper before she could board a flight to go die peacefully near her relatives.
And what is even more outrageous is the TSA’s official response to public outcry over the incident:
"We have reviewed the circumstances involving this screening and determined that our officers acted professionally and according to proper procedure."
In other words, the TSA followed its self-prescribed “process,” so what it did must have been right regardless of the consequences to a dying 95 year-old.
Such reasoning is preposterous, of course. But, as Cato’s Jim Harper explains, the TSA and other governmental agencies routinely get away with such nonsense because of the bureaucratic prime directive – i.e., maximize discretionary budget:
The TSA pursues the bureaucratic prime directive–maximize budget–by assuming, fostering, and acting on the maximum possible threat. So a decade after 9/11, TSA and Department of Homeland Security officials give strangely time-warped commentary whenever they speechify or testify, recalling the horrors of 2001 as if it’s 2003.
The prime directive also helps explain why TSA has expanded its programs following each of the attempts on aviation since 9/11, even though each of them has failed. For a security agency, security threats are good for business. TSA will never seek balance, but will always promote threat as it offers the only solution: more TSA.
Because of countervailing threats to its budget–sufficient outrage on the part of the public–TSA will withdraw from certain policies from time to time. But there is no capacity among the public to sustain “outrage” until the agency is actually managing risk in a balanced and cost-effective way. . . .
TSA should change its policy, yes, but its fundamental policies will not change. Episodes like this will continue indefinitely against a background of invasive, overwrought airline security that suppresses both the freedom to travel and the economic well-being of the country.
As with overcriminalization and drug prohibition policies, the TSA’s policies are an ominous reflection of a federal government with bipartisan support that is increasingly remote and unresponsive to U.S. citizens.
Have the incumbent leaders of both political parties become too insulated to address these policies effectively and modify them?
The Rule of Law
In an insightful scene from the Academy Award-winning movie A Man for All Seasons, one of Sir Thomas More’s apprentices — Richard Rich — confronts Thomas while he is chatting with his wife, daughter, and his daughter’s fiancee, Will Roper, who is an aspiring lawyer.
Rich proceeds to beg Sir Thomas for a political appointment, which Thomas refuses. Sir Thomas knows that Rich is tempted by corruption and would never be able to resist the bribes that he would be offered in such an appointment. During an earlier scene in the movie, Sir Thomas attempts to persuade Rich to pursue a career as a teacher, where he could avoid such temptations and potentially achieve true fulfillment.
An embittered Rich proceeds to leave Sir Thomas and his family to take a political job with Thomas Cromwell, who King Henry VIII has ordered to pressure Thomas to take the King’s oath forsaking Catholicism and the Pope. It is obvious to everyone in the room that the resentful Rich will ultimately betray Sir Thomas, which indeed he does later in the story.
When Sir Thomas’ wife and daughter, as well as Roper, demand that Sir Thomas arrest Rich because of what he will probably do (i.e., betray Thomas), those demands lead to the following exchange in which Sir Thomas lucidly explains the importance of maintaining the rule of law and not trumping up charges even in regard to an unsavory man who will betray him:
Resolved: America Should Legalize Drugs
Jeffrey Miron and Robert DuPont, M.D. debate at the Cato Institute whether the governmental policy of drug prohibition should be continued or ended.
Energy Economics 101
Sounds as if Vermont Senator Bernie Sanders and Connecticut Senator Richard Blumenthal missed Energy Economics 101 in school. But that doesn’t stop them from publicizing their utter ignorance (H/T Byron Hood) of basic energy economics:
Sen. Bernie Sanders, I-Vt. introduced legislation today that would require the Commodity Futures Trading Commission to impose strict regulations on oil speculators, who some blame for rising gasoline prices.
Sanders said if the agency failed to meet the two-week deadline outlined in his legislation, he would call for the resignation of commission chair Gary Gensler.
The legislation, if passed, would cap the amount of oil that speculators are allowed to buy and sell annually to 20 million barrels, increase the amount of money investors would have to back bets with from 6 to 12 percent and redefine investment banks as speculators rather than hedgers – investors who use the product they are buying for business.
The bill would limit speculators’ influence over the energy futures market. [. . .]
“There is mounting evidence that the increased price of gasoline has nothing to do with supply and demand and everything to do with Wall Street speculators jacking up oil and gas prices in the energy futures market,” Sanders said. [. . .]
Sen. Richard Blumenthal, D-Conn., a co-sponsor of the bill, said: “These price increases have been absolutely crushing. We need to attack these increasing prices that are the result of gaming and gambling. The CFTC should have acted five months ago.” [. . .]
The instinct of most politicians and much of the mainstream media is to embrace simple “villain and victim” morality plays when attempting to explain price increases in markets or investment loss.
The more nuanced story about the financial decisions that underlie the market fluctuations doesn’t garner enough votes or sell enough newspapers to generate much interest from the politicians or muckrakers.
That’s why we are again enduring demagoguery regarding speculators. Thus, it’s important that citizens who are not familiar with the function of speculation in markets take a moment to learn about its beneficial nature.
For example, check out Mark Perry’s excellent primer on futures trading here, here and here.
Or read University of Houston finance professor Craig Pirrong’s fine overview of how speculation in oil and gas markets actually helps all of us in dealing with rising energy prices.
Or peruse this Matthew Lynn/Bloomberg piece on how bubbles in oil markets are a reason to celebrate.
In Texas, one has to look no farther than Southwest Airlines’ success to understand the beneficial nature of speculation. Over most of the past decade, Southwest has taken advantage of futures markets to hedge its fuel costs (previous posts on Southwest’s hedging program are here). That hedging program has been one of the major factors in allowing Southwest to become the most (and one of the only) profitable U.S. airlines.
So, what Sanders and Blumenthal are really trying to do is restrict the very markets that provided Southwest and many other businesses with the platform on which they hedged fuel-cost and other business risk. The wealth and lower prices that is generated from those hedges is not inconsequential.
Stay informed fellow citizens. Demagogues such as Sanders and Blumenthal can inflict real damage on all of us.
Math of the Incarceration Nation
The appalling U.S. incarceration rate has been a frequent topic on this blog, so this Veronique de Rugy/Reason.com piece on the troubling numbers involved in the U.S. prison systems caught my eye:
In 2009, according to the Bureau of Justice Statistics, there were 1,524,513 prisoners in state and federal prisons. When local jails are included, the total climbs to 2,284,913. These numbers are not just staggering; they are far above those of any other liberal democracy in both absolute and per capita terms. The International Centre for Prison Studies at King’s College London calculates that the United States has an incarceration rate of 743 per 100,000 people, compared to 325 in Israel, 217 in Poland, 154 in England and Wales, 96 in France, 71 in Denmark, and 32 in India.
Incredibly, de Rugy reports that research indicates that approximate 60 per cent of those prisoners are non-violent offenders (i.e., mostly possession of illegal drug defendants). What is one of direct costs of the drug prohibition policy?:
[S]tate correctional spending has quadrupled in nominal terms in the last two decades and now totals $52 billion a year, consuming one out of 14 general fund dollars. Spending on corrections is the second fastest growth area of state budgets, following Medicaid. According to a 2009 report from the Pew Center on the States, keeping an inmate locked up costs an average of $78.95 per day, more than 20 times the cost of a day on probation.
And, as de Rugy goes on to point out, these direct costs don’t even approach the indirect costs of locking up non-violent offenders with hardened criminals and leaving the children of non-violent criminals without the support of a parent during the prison sentence.
A truly civilized society would find a better way.