Quis Custodiet Ipsos Custodes?

I read an article about Helen Thomas’ Playboy interview, which I didn’t find particularly remarkable (the article, I mean — I never saw the interview).  The comments, however (all 636 of them), were more interesting.  The reply I liked the best seems to have disappeared, so I’ve chosen another I like much less well.  About 60% excoriated Ms Thomas, many focusing on her physical appearance.  The replies that partially agreed with her tended to be written with more forethought (and no, that doesn’t make their position more, or less, correct).  18 March 5:29pm: The problem here is… well, it is that anyone, who starts a sentence with “the Jews are” is by definition wrong at the outset if the sentence does not continue with “being Jewish.”  Too many people, who realise the lopsidedness of American support for Israel look for the easy way out by making the quick-and-dirty connection Israel-Jews-America.  ... Complex problems are rarely understood by people hunting for bumper sticker slogans and sound bites.  From another comment: Israel’s National Information Directorate, set up in 2008, deals with hasbara — Hebrew for “explanation”, referring to information, spin, or propaganda.  One of the challenges of Israel’s media offensive is to counter the disturbing images of Gaza in the conflict.  “In the war of the pictures we lose, so we need to correct, explain or balance this in other ways,” said Aviv Shir-On, foreign ministry deputy director-general for public affairs.  The hasbara directive liaises over core messages with bodies such as friendship leagues, Jewish communities and bloggers using online networks.  “New media is a war zone within the media — we plan to be relevant,” said Israeli military spokesman Major Avital Leibovich.  So — was hasbara responsible for some of this article’s negative comments (as the writer contends) and/or the disappearance of some of the better-written comments?  (Unlikely.)  The director-general seems to be saying much the same thing as Ellsberg did only far less eloquently.

US citizen and CIA contractor Raymond Davis was released from a Pakistani prison on Wednesday after $2.3 million was paid to the families of the two Pakistani men he shot and killed.  Secretary of State Hillary Clinton said repeatedly on Wednesday that the United States had not paid any “blood money” to win his release.  But that’s not the whole story.  The truth is that the Pakistani government paid the victims’ families the $2.3 million and the US promised to reimburse them in the future, according to a senior Pakistani official.  In several other interviews, Clinton told reporters to ask the families — or anyone else other than the US government — how the reported $2.3 million appeared.  Obama administration officials want to focus on the fact that Davis is now returning home, not the quid pro quo that made it happen.  “The understanding is the Pakistani government settled with the family and the US will compensate the Pakistanis one way or the other,” the senior Pakistani official said.
This issue is mired in so many versions of the truth that it’s hard to know who’s telling the truth and who isn’t.  My guess is that all sides are lying. — Cyril Almeida, columnist for dawn.com.  (So everyone is lying?  Yes, I can believe that…)

Speaking of lying…  Should lying be illegal?  The FCC’s rationale for getting rid of the Fairness Doctrine is twofold: first, the Fairness Doctrine inhibits broadcasters’ rights to free speech, and second, the free market is a better regulator of news content on television than the government.  Specifically, the FCC said then that individual media outlets would compete with each other for viewers, and competition would necessarily involve establishing the accuracy, credibility, reliability and thoroughness of each story … and over time, the public would weed out new providers that proved to be inaccurate, unreliable, one-sided, or incredible.  One wonders, really, if the FCC knows anything human behaviour or the desire of individuals to have their points of view validated.  Far from “weeding out” providers of one-sided, or even incredible information, we now revel in what New York Times columnist Nicholas Kristof once called “The Daily Me” — a selection of news outlets that never ever challenge our particular points of view.  The public seems to reward, rather than punish, outrageous or one-sided news providers.  One would be hard-pressed to argue that it enhances the quality of public — or even personal — discourse, especially given the questionable “truth” of many of the statements or inferences made on those highly targeted outlets.  In theory, we could all fact-check everything we hear on the TV or radio, of course.  But few people have the time to do that, even if they have contacts and resources.  The damage that widely-disseminated false information does to the goal of a well-informed public and a working, thriving democracy is significant.  I joined a few social media sites for business reasons but now never visit them.  Yet I find myself staring at the photo of myself I uploaded only to them on a multiple sites I visit, placed somewhere on the page, in part to encourage my participation in a complex information-gathering system.  The merchandise I’m shown at Amazon and the news I’m shown at Google are purportedly displaying to me more of what I would like to see.  Soon, we’ll all start thinking that everyone (at least online) agrees with us because we’ll see a lot of indicators that help move us along in that direction.  Perhaps this will make society run more smoothly?  (But I’d rather avoid that type of engagement.)  Also, I’ve noticed how my own photo invariably gets at least a little of my attention.

1.  Total public funding of elections.  No private donations.  The present system is legalised bribery and incredibly time wasting for legislators.  (Okay — no private donations to candidates.  But what about independent spending?  Can I write a book about a candidate?  A blog?  What about issues that a candidate advocates?  A party advocates?  What rule lets us have “public funding of elections” but does not stop Greenpeace from highlighting a candidate’s poor record on environmental issues when he/she was in state government?  And if no such rule exists, how could such a restriction mesh with even mild protections of free speech?  Answer: It can’t — but that’s okay, because this is misdiagnosing the problem.  What makes elections so crazy is all the OTHER media — books, talk shows, blogs, radio, advertisements, focus groups, PACs, spin, et cetera.  To stop THAT comes back to the logic behind Citizens United — do you WANT to live in a country where the government can stop critical documentaries of leading politicians from being published?  Other countries, with systems like this poster proposes, still face many of these problems.)

2.  Substantially increased congressional staff, both political and civil service, to counteract the overwhelming power of paid lobbyists and their staffs, so that congress can write its own legislation and [then] evaluate it instead of depending on lobbyists to do that.  (Representatives currently have roughly 14 staff each, senators 34, for a total of almost 12 THOUSAND aides — this was in 2000, might be higher now — plus another 12 thousand in general staff for committees, GAO, CBO, et cetera.  So apparently Congress — with over 20,000 staffers — can’t manage to read bills before passing them, but if they just had another few thousand more people, then they could?  I see what you’re getting at, but I don’t think this will be what you hope.)

3.  Three weeks on, two weeks off congressional schedule.  Free housing for legislators and their families so they stay in Washington and get to know each other and then go home to their home districts and interact with their constituencies.  (I think they’re paid enough as it stands, but sure, give 'em free housing too.  Whatever.  Dormitories?  Houses that are all equal and they MUST stay in them?  Too few details.)

4.  Full transparency on procedural action on legislation.  (That’s…good. A bit vague, but desirable policy.  Candidate Obama gave some rousing speeches on how important it was.  But President Obama appears to have a different view.  Candidate Obama was right, but it’s not going to have a huge impact.  BEST case — greater transparency allows more interactions like occured with tea party groups over health care or with anti-war groups over the Iraq war, or civil liberty groups over the PATRIOT Act.  But greater information without greater power to influence the outcome is unhelpful.)

5.  Biennial reauthorisation and pay-as-you-go funding votes on every war or police action.  (95% of the time — if not more — meaningless.  Congress could defund any war or police action they want, at any time.  They don’t, even when they want to.  Another 4.5% of the time changing the rules to require re-passing authorisation would have a negative impact; fighting a war is a serious business, not something that should be started lightly, but also not something to end lightly, either.  A US that starts wars at the drop of a hat but ends them after 2 years, come what may, is NOT a good outcome for a whole range of reasons.  But once in a while, this might help stop a war that clearly should be stopped.  You probably thought of Iraq and Afghanistan, but they aren’t good examples as Congress already has the power to end them or restrict them, but doesn’t want to use it.  Giving Congress even more power not use gets us little benefit.  For a more isolationist US, one would need to think of things which change the incentives the US faces.  This doesn’t.)

6.  For business: Executive bonuses are not to exceed twice the level of base pay, and all bonuses, whatever their form, are taxed as earned income, not at the capital gains, rate.  (How is that supposed to help?  What problem does it solve?  We can argue about the proper tax rate, but an arbitrary limit on bonuses borders on silly.  At the end of the day, if some hotshot trader is going to make a $500 million for whoever employs him, then: (a) he will be employed by someone; (b) he will be employed by whoever is willing to offer him the biggest slice of the pie; (c) the exact mix that his compensation takes — in terms of salary, bonus, commission, shares, options — doesn’t much matter; and (d) any steps the US takes to try to mandate an inefficient or undesirable mix will have drive the targets overseas, lowering the overall tax take.  This may not be fair, but it is realistic.  Nobody is more mobile — or less sentimental — than a high-end financial trader.  Britain is running into this issue already; they’re seeing entire banks starting to decamp… and as members of the EU, they can’t do anything to stop it.)

7.  End Bush tax cuts and transfer increased federal revenue to states.  (Ending the Obama tax cuts — hey, he touched them last, so they’re his now — is fine.  But let’s be clear: this is not “ending a tax cut,” it is a tax rise.  Is now a good time to raise taxes?  Perhaps not.  Is any tax hike going to solve the fiscal problems facing the federal government?  Unlikely.  Further, the individual states are incredible cesspools of dysfunctional politics, crooked accounting, and sweetheart pension deals.  Many of them have managed to double their spending over the last few years, and rack up incredibly huge liabilities.  The argument for bailing them out is WHAT, again?  The US can’t default on its debt without financial Armageddon coming, but California sort of could.  Given how massively, terribly irresponsible California has been, would the US want to federalize THAT disaster?  I feel Ireland erred by assuming the debts of its banks.  There’s not a lot of daylight between that and starting down the slippery slope of bailing out states.  It’s not like the federal government is very solvent.  It could use the money at least as much.  Why not start by plugging urgent holes?  To ensure government employees can make 6-digit pensions without nasty talk of haircuts or renegotiations may not be as urgent.)

8.  Establish a $2-per-gallon fuel tax, funds from which go for rapid replacement of the existing auto fleet with higher efficiency vehicles, transportation aid for low income people, and funding of public transport expansion.  (Okay, carbon taxes — as an example of a Pigou tax — are good to the extent global warming is an isssue.  Let’s accept that it is.  $2 a gallon…whatever, let’s pretend that figure iasn’t pulled out of the air, but is a valid number with a robust model backing it.  But funding HIGH EFFICIENCY VEHICLES?  1) If you tax gas, it gets more expensive.  If it’s more expensive, then DRIVING is more expensive.  People consume less, and — like MAGIC — start looking for more efficient vehicles, check into telecommuting, maybe move closer to work, and so forth.  What they end up doing depends on the situation, their preferences, all sorts of complicated tradeoffs that nobody can answer EXCEPT them.  But if Americans start funding high efficiency vehicles then incentives flip.  A highly-efficient vehicle is CHEAPER to drive!  This encourages more driving, and more fuel use.  All else equal, there’s no particlar reason why a family that drives 1,000 miles in a given time period in a car that gets 15 miles-per-gallon might not drive 2,000 miles in a car that gets 25 miles-per-gallon — which is MORE total fuel use.  Plus, while some funding of efficiency is good, you’re pretty much guarenteed to get the wrong amount of funding if you centrally plan it.  Too much or too little — who knows?  Either way, you’re wasting money AND harming the environemnt.  By forcing people into the “efficiency route” you force them away from the telecommunication or denser-urban-living routes, ideas I personally like.  Does the government NEED to pick winners and losers here?  Transportation aid essentially pays people to travel around, but a gas tax hits EVERYTHING which is transported using fossil fuels [inasmuch as there aren’t many nuclear-powered container ships just at the moment].  The poor don’t need vouchers for the BUS so much as they need cash to offset the fact that every single thing is now more expensive.  Instead, they get vouchers for the bus whether they want to use them or not?  The effect of transportation assistence [as with coupons and rebates] is to pay people to act in ways they ordinarily may not.  If funding of public transport is needed in a world of $8 gas (or whatever) it’ll happen.  Improperly imposed, it could be a recipe for boondoggles like…oh….the high speed rail project in California connecting tiny towns in the middle of the desert because planning permissions are so much easier to get there.)

9.  Since buildings use 40% of total energy, an energy audit of every building in the country, offering subsidised and tax-incentive efficiency-improvement programmes.  Allow for early retirement with lower Social Security payments but allow tax-free pay for workers employed on this programme.  This would put the building industry back to work and move elderly workers out of the job market, making room for younger people.  (An energy audit is not necessarily useless.  Note: Solving global warming by shipping ice from the Artic Circle via rail looks great from some angles, too.  But early retirement?  This is wrongheaded.  At the end of the day, you can figure out what percentage of his life the average person spends productively working.  Anything you do to reduce that is detrimental to the economy.  An alternate way of expressing it: consider an economy that ONLY makes widgets — and all those widgets must be spread around somehow to cover the widget needs of everyone — men, women, children, retired, unemployed.  Anything you do that reduces the numerator without reducing the denominator makes us poorer as a society.  Encouraging people to retire reduces the total widgets made.  Forcing capable people to retire is wrong.  Social security problems can be fixed just by raising retirement age — each year is not just a year where government doesn’t pay benefits, but ALSO a year where they collect payroll taxes: a 2-for-1.  Reverse that, and Social Security IS in crisis.)

I had never run across Alyona Minkovski before and this clip made prior to President Obama’s 2011 State of the Union address, was the first that I saw.  I have no idea if she writes her material or if she is fed what to say.  There seems to be little information about her online (other than she apparently had a famous mother, she speaks several languages, and she is a citizen of both the US and Russia.  I find her entertaining but a trifle naive.  I wonder why the fire is blue...

When President Dwight Eisenhower named Charles Wilson — then the president of General Motors — to be his secretary of defense in 1953, some senators considering the nomination wondered whether Wilson could distinguish his loyalty to GM from his obligations to the country.  Wilson assured them that he could, but then added that he didn’t think a conflict would ever come up.  “For years I have thought that what was good for the country was good for General Motors, and vice versa,” he said in his confirmation hearing.  Wilson’s statement — especially that “vice versa” — has long been considered the epitome of corporatist excess.  To many, it represents the view that the government exists to advance the interests of large corporations (and, of course, vice versa), even if the arrangement comes at the expense of average citizens and workers.  In the past 3 years, however, Wilson’s attitude has come back into vogue, as a new approach to the relationship between the government and the private sector has taken hold in Washington.  That approach — a kind of state capitalism that seeks to entangle the government and large corporations in order to allow for careful management of the economy — is perhaps best embodied in the government bailout, and subsequent bankruptcy, of Wilson’s old company and also that of one of its longstanding competitors.  The Obama administration’s economic policy returns us to the thinking of the 1950s and ’60s — to an economy in which big business, big labour, and big government are tied together in a relationship of mutual succor and support.  The overall effect of such state capitalism is a kind of controlled stasis, in which the preservation of old jobs takes priority over the creation of new ones.  Managed decline, rather than dynamic growth, is the defining feature.

The US White House Office of Management and Budget predicts that in the current fiscal year (2011), mandatory spending alone will exceed all federal receipts.  So even if nothing is spent on discretionary programmes (national defense, interstate highways, national parks, homeland security, others), there’d still be no way for the US to balance the budget this year — let alone pay off any of the $14 trillion or so in debt already accumulated.  In 2008, the Bush administration released a report issuing a rather dire warning: “If left unchanged, mandatory spending alone is projected to exceed total projected Government receipts in approximately 50 years.”  Fortunately, next year mandatory spending is expected to be only 81% of receipts because the Obama administration is projecting a 21% increase in federal receipts from 2011 to 2012.  (The largest increase in the past 40 years has been only 16%.)  Obama’s 2011 Budget Proposal: How It’s Spent (rectangles in the chart are sized according to the amount of spending for that category; colour shows changes in spending from the previous year).

The cascade of events at Fukushima was foretold in a US report published more than 20 years ago.  The US Nuclear Regulatory Commission, an independent agency responsible for safety at the country’s power plants, identified earthquake-induced diesel generator failure and power outage leading to failure of cooling systems as one of the “most likely causes” of nuclear accidents from an external event.  The report was cited in a 2004 statement by Japan’s Nuclear and Industrial Safety Agency, but adequate measures to address the risk were not taken.  Mitsuhiko Tanaka, engineer, helped design and supervise the manufacture of a $250-million steel pressure vessel for Tokyo Electric in 1975.  Today, that vessel holds the fuel rods in the core of the No. 4 reactor at Fukushima’s Dai-Ichi plant, hit by explosion and fire after the tsunami.  Tanaka says the vessel was damaged in production years ago.  He says he orchestrated the cover-up.  When he revealed this to the government more than a decade later, he was ignored, he says.  The accident occurred when he and his team were strengthening the steel in the pressure vessel, heating it in a furnace to more than 600ºC (1,112ºF), a temperature that melts metal.  Braces that should’ve been inside the vessel during blasting were either forgotten or fell over.  After it cooled, Tanaka found the walls had warped.  The law required the flawed vessel be scrapped, a loss that might’ve bankrupted the company.  Rather than sacrifice years of work and risk the company’s survival, Tanaka used computer modelling to devise a way to reshape the vessel so that no one would know.  He did that with Hitachi’s blessings, he said.  “I saved the company billions of yen.” He added that he got a 3 million yen bonus ($38,000) from Hitachi and a plaque acknowledging his “extraordinary” effort.  “At the time, I felt like a hero.”  That changed with Chernobyl.  Two years after the world’s worst nuclear accident, Tanaka went to the Ministry of Economy, Trade and Industry to report the cover-up he’d engineered more than a decade earlier.  (I wonder if he offered to return the bonus and plaque, too.  Perhaps he hoped for another bonus instead?)  Hitachi denied his accusation and the government refused to investigate.  But Tokyo Electric in 2002 admitted it had falsified repair reports at nuclear plants for more than two decades.

The account starts in the Netherlands.  In the 1970s, the Dutch designed a tall, thin machine for enriching uranium.  As is well known, A Q Khan, a Pakistani metallurgist working for the Dutch, stole the design and in 1976 fled to Pakistan.  The resulting machine, known as the P-1, for Pakistan’s first-generation centrifuge, helped the country get the bomb.  And when Dr Khan later founded an atomic black market, he illegally sold P-1’s to Iran, Libya, and North Korea.  The Stuxnet computer virus seeks out computers running software used to programme Siemens controllers regulating the motors used in these centrifuges.  While computers in a secure facility may not be on any accessible network, they can be infected with a removable drive (this presumably requires a saboteur).  After infecting a controller, Stuxnet hides itself.  Several days later, it begins speeding and slowing the motors, trying to damage or destroy the machinery.  It also sends out false signals to make the system think everything is running smoothly.  One small section of the code appears designed to send commands to 984 machines linked together.  Curiously, when international inspectors visited Iran’s major enrichment centre (Natanz) in late 2009, they found that the Iranians had taken out of service a total of exactly 984 machines (roughly 20% of their nuclear centrifuges) that had been running the previous summer.  Experts express fear that the attack legitimizes a new form of industrial warfare, one to which the US is highly vulnerable.

A number of economists say that the environmental benefits of energy efficiency have been oversold.  Paradoxically, there could be even more emissions as a result of some energy efficiency improvements.  This problem is known as the energy-rebound effect.  While there’s no doubt that fuel-efficient cars burn less gasoline per mile, the lower cost at the pump tends to encourage extra driving.  There is also an indirect rebound effect as drivers use money saved on gasoline to buy other things producing greenhouse emissions, like new electronic gadgets or vacations using fuel-burning airplane trips.  Some of the biggest rebound effects occur when new economic activity results from energy-efficient technologies that reduce the cost of making products like steel, or from generating a given amount of electricity.  In some cases, the overall result can be what’s called “backfire”: more energy use than would have occurred without improved efficiency.  Another term for backfire is the Jevons Paradox, named after a 19th-century British economist who observed that while the steam engine extracted energy more efficiently from coal, it also stimulated so much economic growth that coal consumption had increased.  That paradox is mostly ignored by modern environmentalists, who have argued that rebound effects are much smaller today.  But accumulating evidence says that may be not be a correct assumption — for example, the amount of energy needed to produce a unit of light has plummeted.  Yet people have found so many new places to light that today we spend the same proportion of our income on light as our much poorer ancestors did in the year 1700.

A study using census data from 9 countries shows that religion in those countries is set for extinction.  The study found a steady rise in those claiming no religious affiliation.  The result indicates that religion will all but die out altogether in those countries.  The countries are Australia, Austria, Canada, the Czech Republic, Finland, Ireland, the Netherlands, Switzerland, and (I’m pleased to say) New Zealand.  In a new survey carried out in Britain by the British Humanist Association (BHA) to coincide with the 2011 Census, 1,900 adults were polled in England and Wales and 61% of the poll’s respondents said they “belonged” to a religion, but 65% answered “no” to the further question: “Are you religious?”  Among respondents who identified themselves as Christian, fewer than half said they believed Jesus Christ was a real person who died, came back to life and was the son of God.  Another 27% said they did not believe that at all, while 25% were unsure.

November 2010: President-elect Obama addressed the devastation in the construction and manufacturing industries by proposing an ambitious New-Deal-like program to rebuild the nation’s infrastructure.  He called for a 2-year “shovel ready” stimulus programme to modernise roads, bridges, schools, electrical grids, public transportation, and dams and made reinvigorating the hardest-hit sectors of the economy the goal of the legislation that would become the American Recovery and Reinvestment Act pf 2009 (the stimulus).  Women’s groups were appalled.  Opinion pieces immediately appeared in major newspapers with titles like “Where are the New Jobs for Women?” and “The Macho Stimulus Plan.”  A group of “notable feminist economists” circulated a petition that quickly garnered more than 600 signatures, calling on the president-elect to add projects in health, child care, education, and social services and to “institute apprenticeships” to train women for “at least 1/3” of the infrastructure jobs.  At the same time, more than 1,000 feminist historians signed an open letter urging Obama not to favour a “heavily male-dominated field” like construction: “We need to rebuild not only concrete and steel bridges but also human bridges.”  As soon as these groups became aware of each other, they formed an anti-stimulus plan action group called WEAVE — Women’s Equality Adds Value to the Economy.  Many prominent feminist groups joined the battle against the supposedly sexist bailout of men’s jobs.  An executive of one group canvassed for a female equivalent of the “testosterone-laden ’shovel-ready’” terminology.  (“Apron-ready” was broached but rejected.)  Christina Romer, the highly regarded economist President Obama chose to chair his Council of Economic Advisers, would later say of her entrance on the political stage, “The very first email I got was from a women’s group saying ‘We don’t want this stimulus package to just create jobs for burly men.’”  (No matter that those burly men were the ones who had lost most of the jobs.)  So nothing got built.  I hope these women now realise the scope of their mistake.  (But at least bankers were able to get their bonuses.)  The main problem with Keynesian Economics has always been the fact that governments do not spend money for economic reasons, they spend it for political reasons.

The United States of Shame: What is your state the worst at?  It turns out that every state ranks dead last in at least one unsavory category.

Regarding the US involvement in Libya: Is it acceptable for Qadhafi to remain in power once the military campaign ends?  If not, how will he be removed from power?  Since the stated US policy goal is removing Qadhafi from power, is there an engagement strategy for the opposition forces?  If the strife in Libya becomes a protracted conflict, what are the US administration’s objectives for engaging with opposition forces?  What standards must a new regime meet to be recognised by the US?  What vital US interest is at stake which demands intervention in Libya?  Max Boot, a senior fellow at the Council on Foreign Relations, predicts air power will not be sufficient to knock out the Qadhafi regime and warns of a “protracted and costly stalemate” if the US doesn’t send in military advisers to help arm and train rebels.  Boot blasted the White House for “not really preparing the American people for the possibility that this could be a protracted and expensive conflict.  The public and the administration should not be going into this with rose-coloured blinkers on.”  Wendy Schiller, a Brown University political scientist, argues that Obama may have eventually paid a political price if he didn’t intervene before Qadhafi’s troops took control of the last rebel stronghold in Benghazi.  “Americans generally do not like to see protesters seeking political rights shot, wounded or killed,” she said.  “Standing by and watching that happen, especially after the UN authorised a no-fly zone, would have made Obama look weak and indifferent to their struggle.”  Being president is a tough job and pleasing all of the people any of the time doesn’t seem possible.  6 minutes of Keith Olberman on the same subject.  (And William Blum seems remarkably bitter on this.)

In its December 2008 report on the use of tax havens by American corporations, the US Government Accountability Office was unable to find a satisfactory definition of a tax haven but regarded the following characteristics as indicative of one:
1.  Nil or nominal taxes;
2.  Lack of effective exchange of tax information with foreign tax authorities;
3.  Lack of transparency in the operation of legislative, legal or administrative provisions;
4.  No requirement for a substantive local presence; and
5.  Self-promotion as an offshore financial centre.
New Zealand is included on the list produced by the US National Bureau of Economic Research because they don’t tax foreign income derived by NZ trusts settled by foreigners of which foreign residents are the beneficiaries, nor tax the foreign income of new residents for 4 years.  There’s also no capital gains tax.  (Sadly for me, I’ve never been in a position to realise benefits from any of this.)  The total amount of money stashed away in tax havens has been estimated to be as high as $11.5 trillion.  But havens provide opportunities for tax planning by multinational corporations.  While it is often argued that they erode the tax base of high-tax countries by attracting such corporate activity and while tax havens do host a disproportionate fraction of the world’s foreign direct investment (FDI), their existence need not make high-tax countries worse off.  Under certain conditions, they can enhance efficiency and mitigate tax competition.  Indeed, corporate tax revenues in major capital-exporting countries have exhibited robust growth, despite substantial FDI flows to tax havens.  There’s a difference between hiding money (illegal) and minimising the taxes paid on it.

Notwithstanding the less-than-courageous and fundamentally similar budget policies of the Bush administration (runaway spending combined with no tax increases) and the Obama administration (runaway spending combined with no tax increases on 99% of the population), there is widespread agreement that the country will soon need to move closer to fiscal balance (pdf file).  In the absence of necessary political courage on both the left and right to face up to this, it may be necessary for bond markets to provide the impetus.  Cutting spending, of course, is one way to do it.  But options in this regard are limited, as so much of is nondiscretionary.  So increasing taxes would appear to be necessary, even inevitable.  But how, and on whom?  It can’t be done in a way that makes America uncompetitive, so they need to attach value to international conformity — to look more like other countries in terms of both overall tax level (not particularly high by international standards) and the tax mix.  This in turn probably means adopting a VAT or other national-level sales tax.  The US is notably out of step with other countries in that they rely excessively on income taxes in general, and corporate income taxes in particular.  They underuse consumption taxes.  As a practical matter, little more can be squeezed out of the income tax, and in particular out of the corporate income tax, in view of the constraints imposed by incentive effects and the mobility of capital (as the tax haven issue illustrates).  Given the need to increase taxes, this is a practical step.  But it may be that adopting a VAT isn’t politically saleable until after a showing is made of doing everything possible to “save” the income tax system, in part by wringing more out of big corporations seen as abusing tax havens to avoid paying their fair share.  In this regard, going after low-hanging fruit — the “pure” tax havens — may be a necessary step, regardless of its (likely modest) direct effects.  (To be blunt, telling the electorate that you can fund Obama’s agenda with a VAT is going to get you agreement — yes, you could — but no significant support right now.)

Apparently India has begun outsourcing some of the business outsourced to it.  Currently, most go to Central and Eastern Europe.  The focus is on former communist countries.  The Czech Republic has had a head start over most and has established something of a fledgling “nearshore” industry.  The big draw for the Czech Republic is labour arbitrage and English language skills.  Czech universities have a history of turning out highly-skilled technical graduates — a legacy of the communist era — and the gross monthly salary for an IT operator in Prague is 1/3 that of the UK.  Indian firms are also tempted by generous government investment subsidies.  Most clients don’t care where in the world the services are done as long as the cost and quality are right.  At left is a Filipino call centre that employs 1,600 people.

“One afternoon in 1961 I held in my hand a written answer to a question I had drafted for President John F Kennedy to address to the US Joint Chiefs of Staff.  The question was: 'If your present nuclear war plans were executed as planned, how many people would die in the Soviet Union and China?’  The figure for immediate deaths from the first hours and days of US attacks was 270 million and rose over 6 months to 320 million dead.  After subsequent questions from the White House, the Joint Chiefs provided estimates for the numbers of people outside the Soviet Union and China that US attacks would kill if they carried out their current plans for general nuclear war.  Another 100 million in East Europe; close to 100 million from fallout in neutral countries bordering the Soviet Union such as Finland, Austria, and Afghanistan, along with Japan — even though no warheads would fall in those countries; and up to 100 million in West Europe, depending on the season and the direction of winds carrying fallout from the explosions in the Soviet Bloc.  The total death toll from US attacks in a US first strike — responding not to Soviet nuclear attacks but to conventional conflict with Soviet forces anywhere in the world — was estimated by the Joint Chiefs to be in the neighbourhood of 600 million dead — 100 Holocausts.  These plans were not intended solely for deterrence, nor were they bluffs.  They were operational plans intended to be executed in a wide variety of circumstances; full preparations had been made and frequently rehearsed to start producing these effects within minutes to hours of a presidential decision.  How ordinary, patriotic, conscientious Americans, men I worked with every day and drank beer with at night, could have brought into being a machinery for destruction on this scale, with the readiness to use it, is a horror and a mystery to me that I have struggled to understand ever since.  But it is a reality which persists to this day, not only in the US and Russia but to a lesser but still appalling degree in every nuclear state, declared and undeclared.  It is a reality whose existence in each of these states has depended from its beginning on governmental secrecy, on people keeping secrets from their fellow citizens.” — Daniel Ellsberg (again).  (Some people think that deterrence is a valid doctrine.  Maybe it is.  But I’d rather not be a part of it.)

In the American study of international relations, Idealism usually refers to the school of thought personified in American diplomatic history by Woodrow Wilson, such that it is sometimes referred to as Wilsonianism, or Wilsonian Idealism.  Idealism holds that a state should make its internal political philosophy the goal of its foreign policy.  For example, an idealist might believe that ending poverty at home should be coupled with tackling poverty abroad.  Wilson’s idealism was a precursor to liberal international relations theory, which would arise amongst the “institution-builders” after World War II, emphasising the ideal of American exceptionalism.  Idealism is also marked by the prominent role played by international law and international organisations in its conception of policy formation.  One of the most well-known tenets of modern idealist thinking is democratic peace theory, which holds that states with similar modes of democratic governance do not fight one another.  Idealism transcends the left-right political spectrum.  Idealists can include both human rights campaigners (traditionally, but not always, associated with the left) and American neoconservatism (which is usually associated with the right).  Idealism may find itself in opposition to Realism, a worldview which argues that a nation’s national interest is more important than ethical or moral considerations; however, there need be no conflict between the two.  Recent practitioners of Idealism in the United States are thought to include Ronald Reagan and George W Bush.  (I think that sometimes a politician says he is an idealist, but in his heart, he is actually a realist.)

I’m not sure why this struck me as funny.  Sorry.

Sales have picked up.  (The same apology applies to this.)

Stephan Tillmans, a Berlin-based artist, recently set to work capturing television screens the exact second they are turned off.  Each abstract system is like a fingerprint.  Unique to the moment of release, the duration of exposure and the device type, so each of Tillmans’ photographs is one-of-a-kind.  Still found in televisions that haven’t been replaced by newer (and slimmer) LCD screens, the cathode ray tube (CRT) technology necessary for this photography project has been around for more than 110 years.  Also used in computer monitors, video camera, radar displays and more, cathode ray tubes are modified vacuum tubes in which images are produced by electron beams hitting a phosphorescent surface.  In modern tubes, multiple beams of electrons are used to display millions of different colours.