What the EuroPact Doesn't Accomplish

"Revolutions can be neither made nor stopped.  The only thing that can be done is for one of several of its children to give it a direction by a dint of victories." -Napoleon

The Bond Vigilantes and the other Gods of the Marketplace may have been temporarily mollified by the weekend's emergency EU accord, in spite of the fact that none of the agreements can be certain with a constitutional challenge to the entire notion of sovereign bailouts looming in the Bundesverfassungsgerict (the German Supreme Court).  Angela Merkel's party was obliterated in local elections in the Rhine-Westphalia region because of the governing coalition's support of the bailouts--so the bailout itself is far from a certainty, and it is all based on the nebulous concept of "loan guarantees" whereby one bankrupt state whose credit rating hasn't been junked (e.g. Germany) promises to back the debts of another bankrupt state whose credit rating has been junked (e.g. Greece).  So what the markets are cheering here is the idea that things are going to be ok, and certainly not any reality of that.

But that doesn't get us past the real issue.  The markets seem happy today, but the Greeks are still rioting.  If the bailout does in fact happen, they are going to riot even more, what with the myriad of unreasonable conditions accompanying the bailout--telling government employees they can't get paid for 14 months of work in each 12 month calendar year, advising people that they have to work until they are at least 55, or, god forbid, 65.  Europe is in a veritable double-bind.  If the bailouts don't happen, the markets will decimate the Euro, and turn the PIIGS into Argentina circa 2001.  If the bailouts do happen, the Greeks will burn Athens to the ground.  Whatever happens, I don't expect the Greeks will be contributing any actual work to their own recovery.  

Greece's sovereign debt is $405 Billion, about 125% of GDP.  That is about $35,000 per man, woman, and child in the small mediterranean republic. The rescue package for Greece totals out to about $140 billion, which is about what was ultimately spent on the bailout of AIG after Lehman Brothers collapsed. Spain's public debt is approximately $650 Billion.  Portugal is another $200 Billion.  Italy, the behemoth, is more than $2 Trillion.  The sort of financial austerity necessary to get these numbers under control will inflame the latin passions of the Spanish, Portugese, and Italian people, and Rome, Madrid, and Lisbon will soon look like Athens does today.  

There is no bailout that fixes this fundamental problem.  The welfare state is like a drug addiction, and there are a lot of junkies about to be forced to quit cold turkey.  What may please the bond vigilantes today will turn the masses into mobs tomorrow.  There is simply too much debt and not enough equity (real, tangible, underlying assets) in the world.  All of this will pale in comparison to the effect of a downgrade of US or UK sovereign debt--that chapter is yet to come.

In the meantime, I wonder what will happen when the next German general election rolls around and these unpopular bailouts are put to the ballot box test.  Or, perhaps more titillating is the thought of an enterprising Tea Party candidate putting 2 and 2 together and realizing that when the IMF is putting up half of this mammoth rescue package, most of that money is coming directly or indirectly from the American taxpayer.  

As I pointed out more than a year ago--if you borrow from Peter to pay Paul for long enough, eventually Peter will be broke.  

For now, I wouldn't be planning any vacations to Europe. The worst is yet to come.

Posted via email from The Invisible Sand

The Question of Vocation

I have spent much of my life answering the questions "what am I here for?" and "what am I called to do?" In many respects, I think these are actually the most central questions to Christian Ethics. Most people allow their lives to be governed, from the day they achieve memorable consciousness until the day they lose it, by the force of inertia. This, I think, is the concrete manifestation of "original sin," and I think all other sinful behaviour stems from it. The man who is unhappy with his marriage and cheats on his wife does so because it is easier to find a mistress than repair a marriage. It was easier for Bernie Madoff to run a ponzi scheme than to make good investment decisions for his clients. Genuine success in business is a lot of hard work. Inertia, and its human personality trait, laziness, tell us there is an easier way. Addiction to drugs and alcohol are another clear example of inert sin, as they provide an ersatz solution to every one of life's problems, all wrapped up in one simple little substance. Vocation, quite literally, means "a calling." It is the thing that we were born to be doing. But vocation is not just a calling, but a calling away. Rarely are we born into the circumstances in which we are to perform our calling. Rarely do we grow into it as a natural process. This mode of living and thinking is perhaps the most grave manifestation of our original sin. After all, what could be more offensive to our Creator than to let the gifts He gave us rust and decay? Our tendency in life is to grow wildly, like a tree, with a branch shooting out here and another there, weeds growing at the base of our trunks. Our lives instead should be like a bonzai tree, carefully twisted and turned in well-planned detail, and responding to the unexpected curves as they come about, constantly uprooting any of the weeds that may inhibit our growth, and cutting off branches that are bound to die or have died already. Such intentionality has been the hallmark of greatness throughout history, but it is among the rarest of all humanity's deeds. Responding to our respective vocations, then, requires an intentional confrontation with our own laziness. We must consciously eschew the easy path, we must each day fight the natural tendency of regressing to the mean, and as a result bear and endure a tremendous level of legitimate suffering. In most cases, we must make the decision to leave our families and friends, the comfort of our childhood circumstances, and in many cases, we must even leave our homeland itself. We tend to have two unique problems when it comes to responding to our vocation. The first is that often our vocation is for many years unclear to us. We may have inclinations at various points in time, and sometimes we are even presented with a sort of "divine hint." But the process of discerning our true vocation can be long and arduous. For the lucky few, the brilliant physicist, the prodigy violinist, the magnificent artist, vocation is clear. For the rest of us, it rarely is so simple. Sometimes, too, we look for a vocation that fits neatly into a job description. But we are born with so many talents that such a narrow focus will not do our calling justice. It is for those of us who seem to be pulled in many directions at once that the discernment of vocation can be most difficult. Then, we are likely to suffer a long process of trial and error, of fine tuning, and in some cases making wholesale changes, abandoning a path that we once thought was ours, and diverting completely anew.

The other problem is that so often we know what our vocation is, and yet we ignore it. Too many painful decisions, too much risk, too much worry, "what will people say?" and all of the other excuses our inert innerself makes for not striking out on our own personal life journey. Common also is the unpleasant truth that pursuing our vocation means a lot of unfulfilled dreams in life. When we set our hopes and expectations on what we are supposed to do, there is virtually no chance it will be achieved in our lifetime, and we do not see the benefit of what comes after. Moses did not live to see the promised land. King Solomon described the vocational problem thusly,

"Concerning the condition of the sons of men, God tests them, that they may see that they themselves are like animals." For what happens to the sons of men also happens to animals; one thing befalls them: as one dies, so dies the other. Surely, they all have one breath; man has no advantage over animals, for all is vanity. All go to one place: all are from the dust, and all return to dust. Who knows the spirit of the sons of men, which goes upward, and the spirit of the animal, which goes down to the earth? So I perceived that nothing is better than that a man should rejoice in his own works, for that is his heritage. For who can bring him to see what will happen after him?

We have only a finite period of time on the planet, and it is well that we are kept unaware of how much time it is. Parkinson's law tells us that "work expands so as to fill the time available for its completion." By not knowing how much time we have left, we are forced to assume (if we are rational) that it could come to an end at any time. As such, we must behave as if our vocation must be pursued with the greatest urgency. Urgency requires us then to prioritize our activities and behave strategically. When building a house, most people are constrained to operate within a budget during construction. Since in most cases, many of the resources used for completion are purchased on credit, the person is also constrained by time as well is finance. Our lives operate in much the same way if we desire to pursue our calling. Each idle minute that ticks away without our focus and dedication to that thing which we are meant to do is a moment of sin, of giving in to our nature of inertia. This does not mean that we are not to enjoy any leisure at all. We must orient ourselves to a proper balance of focus and relief. The Judaic notion of the Sabbath (which Christians have all but come to ignore, and which Jews tend to ignore the purpose of in giving in to a legalistic view of it) recognizes that we cannot work without rest. "Sabbath" indeed shares a root with the word "sabbatical" and we all need short intermissions each week combined with more infrequent periods where we disconnect, reflect, and refresh ourselves. But I fear that in the current era, we have forgotten how to work as well as rest. We never dedicate our attention to anything. We are constantly divided, our minds running in many directions at once. What with email, facebook, twitter, text messaging, phone calls, the 24 hour news cycle, and the crisis of the day in our jobs and families, what time is there for real focus on our calling? And how little time is left for true rest? In the Anglican liturgy, all of the various forms of the penitential order include a request for forgiveness for the things we have left undone. Most people probably read this and think about specific interactions where they perhaps could have been more helpful, or other micro-instances of the sin of omission. Rarely do I think we really consider the meta-context of our life and calling, in that every day we allow inertia to prevent us from doing the things necessary to respond to our calling. "The burden" of this, as the prayer goes "is intolerable." Or at least it should be.

The beauty of responding to one's calling is that there is no "freeloader" problem. In many aspects of life, people refrain from doing certain things because they are afraid somebody else might get a free ride. But in this case, there is no such problem. The world assuredly is enriched when one of its inhabitants follows his or her dream, but nobody will enjoy the unique blessing of living life with a purpose unless he himself is pursuing his own calling. There are approximately 7 billion people living in the world today. That is more people than have lived in the entirety of human history combined. How many of us pursue each day our vocation in life? How might the world be radically changed if but 1% of us did? And how would each of our lives be more fulfilled if we did so?

Posted via email from The Invisible Sand

How the Mainline Churches Can Grow Again

Lewis Rothschild: People want leadership, Mr President, and in the absence of genuine leadership, they'll listen to anyone who steps up to the microphone.  They want leadership.  They're so thirsty for it they'll crawl through the desert toward a mirage, and when they discover there's no water, they'll drink the sand.

President Andrew Shepherd: Lewis, we've had presidents who were beloved, who couldn't find a coherent sentence with two hands and a flashlight.  People don't drink the sand because they're thirsty.  They drink the sand because they don't know the difference.

-The American President

This week I read two interesting articles, one a Christian Science Monitor article about the resurgence of Calvinism which juxtaposes with a blog by Walter Russell Mead about the decline of the Mainline denominations in America.  Both articles cause me more than just a bit of grief.  As a "recovering Calvinist" (which I think, much like alcoholism, one is never a fully recovered Calvinist) and an Anglican, they hit home in their own respective ways.  

Mead makes a point that is rarely, if ever, addressed from the pulpits of the mainline churches,

The great question for fundamentalist and evangelical religion is the relationship of revelation to modern science.  The great question for modernist and mainline religion is the ’so what’ question.  If members are not sinners being saved from the flames of Hell, if Christianity is not the one path of salvation offered by a merciful God to a perishing world, if a relationship with God is not the only means to surmount the challenges of each day much less to meet the great tests of life — why go to church?  Why pledge?  Why have the kids go to Sunday school rather than soccer practice?

This is something readily grasped by the Neo-Calvinists.  They answer that we are indeed Sinners in the hands of an angry God, damned to hell, and hanging by a thread if not for the unknowable grace of God.  Undoubtedly, we always know where the Calvinists stand, and that is much of their appeal when faced with the Spiritual and Theological vacuum not only from the mainline churches, but from Stadium Church America and the likes of Joel Olstein and the other counterfeits who are just happy clappy motivational speakers thinly veiled by the rhetoric of pseudo-New Testament Christianity.  

I contend that the resurgence of Calvinism is the direct result of a lack of alternatives.  People would rather be told that they are damned to hell than that life will be better if only they think positively and pray to God to make them rich.  The Calvinist claim is at least more believable, and the harshness of it leads people to the belief that it must be true, because it sure isn't a good marketing tactic.  

Yet that is precisely what makes it a good marketing tactic.  People are seeking truth, they want to hear from somebody who will level with them and be honest, rather than somebody who tries to play bait & switch with them.  The Calvinists, as wrong and backward as they may be, at least appear to be telling hard truths, hence their appeal.

The mainline churches, on the other hand, assuming they choose to abandon their current raison d'etre, which is to attempt to provide theological cover for a radical left-wing political ideology, have the unique opportunity to reopen a dialogue with the unchurched, and with many people who have been drawn to Calvinism by its harsh message.  That dialogue goes something like this (and it will work in growing the Church not because it is a clever marketing tool, but because it is manifestly true):

The world is a tough place.  We are born, and then before we know it, we are on our deathbeds, wondering what more we could have made of our lives, wishing we had done this or that better or just differently.  Our lives, as much as they last, are filled with physical ailment, broken hearts, financial worries, and unfulfilled dreams.  No matter how smart we are, no matter how hard we work, most of these things are unavoidable.  We don't know why it is, we just know that it is.  Yes, life is difficult.  No, there aren't any easy answers.  St. Paul tells us that we are each to "work out our faith with fear and trembling."  With life the way that it is, the uncertainty of what happens to us at our death, and our attempt to find meaning while we're here, we know there is a lot of fear and a lot of trembling out there.  

But the good news is that you don't have to do any of it alone.  We won't insult your intelligence by claiming to have the answers, because we don't.  We aren't any different than you are in that sense.  But we have decided that the unexamined life isn't worth living, and so we gather every week, sometimes more, to examine life, to live in community with each other, sharing each other's struggles, bearing each other's burdens.  Nobody deserves to go through life alone, and that is why Jesus told us that we should be known as his followers in the way that we love one another.  And that is what you will find when you come to see us--we truly love one another.  There are no contrived handshakes and pointless mechanical greetings.  We know each other and we want to get to know you too.  We have our chaos, we have our times of depression and emptiness, and none of that will ever go away.  But we have each other to lean on, and we have a remarkable example to follow in the life and sacrifice of Jesus.  And that is something you won't find anywhere else.  

Community through communion, shared struggles and common purpose.  That is the Shepherding of the Flock, the Feeding of the Sheep, the task that Jesus laid at the feet of St Peter, and the task that is at the feet of the Church today, woefully left undone.  The Gospel (Good News) is not that we are saved from the incomprehensible abstraction of Hell, but rather the Gospel of Jesus is "Come unto me, all you who labour and are heavy laden, and you will find rest for your weary souls."  

Posted via email from The Invisible Sand

Thought of the Day - 16 April 2010

If voters suddenly stopped fighting cultural wars at the ballot box, politicians would be stripped down to those who support the productive members of society and those who are just shameless thieves.

Posted via email from The Invisible Sand

The Fall of Rome

by W.H. Auden

The piers are pummelled by the waves; In a lonely field the rain Lashes an abandoned train; Outlaws fill the mountain caves. Fantastic grow the evening gowns; Agents of the Fisc pursue Absconding tax-defaulters through The sewers of provincial towns. Private rites of magic send The temple prostitutes to sleep; All the literati keep An imaginary friend. Cerebrotonic Cato may Extol the Ancient Disciplines, But the muscle-bound Marines Mutiny for food and pay. Caesar's double-bed is warm As an unimportant clerk Writes

I DO NOT LIKE MY WORK On a pink official form. Unendowed with wealth or pity, Little birds with scarlet legs, Sitting on their speckled eggs, Eye each flu-infected city. Altogether elsewhere, vast Herds of reindeer move across Miles and miles of golden moss, Silently and very fast.

Posted via email from The Invisible Sand

Friedman's Fools and Krugman's Kronies

“A foolish consistency is the hobgoblin of little minds.” -Ralph Waldo Emerson

Since the earthquake struck Chile a little over a week ago, the opinion press in the United States has run rampant with polarised ideological pieces lauding Milton Friedman and Augusto Pinochet on one side and condemning him in favour of Marxist Salvadore Allende on the other.  The Wall Street Journal and the triage of Krugman, the Huffington Post, and Salon have battled each other with useless rants based on a tenuous grasp of the facts. 

Life and economics are messy businesses, and economic theory (on either side of the spectrum) rarely accommodates reality. Chile, like all macroeconomic success stories, lacks a history that falls neatly along any ideological lines.  

Massive privatizations of state-owned enterprises, the strict protection of private property, deregulation, and free trade have driven the country’s prosperity, attracted tens of billions in foreign investment, and have made Chile the most developed country in Latin America.  Simultaneously, strict building codes, the surpluses from state-owned copper giant Codelco, and the state-funded nascence of the salmon farming industry in the 1980s have made Chile the diversified and stable country with a resistance to the effects of earthquakes.

To call the country a mixed economy would be too obvious, as every economy in the world (save perhaps North Korea, Zimbabwe, Cuba and a few others) is in some way a mixed economy with some market mechanisms and some state control.  

What ultimately differentiates Chile from its neighbours in the region (and with countries like Haiti) is that ideology has actually played very little role in policymaking in the last 30+ years, and successive governments have eschewed most interventionist policies in the economy while maintaining those that seemed to work.  The right-wing dictatorship of Pinochet pursued both free market and statist economic policies, as has the centre-left Concertacion since the return to democracy.  And the new centre-right government of Sebastian Piñera will have more in common with Concertacion than not.

This no doubt frustrates both the Krugmanites and the Friedman sycophants who want to turn every disjointed bit of data in other countries into an indisputable case for their respective partisan ideological claims in the United States, a country with more than 17 times as many people as Chile, an economy 88 times larger, and with a radically different historical context.  

Chile has neither vindicated Keynes nor substantiated Friedman.  What it has proven, however, is that:

• People, when left alone in most matters, are more productive and more prosperous than people whose lives are subject to constant meddling. 
• Private property protection is a necessary prerequisite for foreign investment. 
• State encouragement of targeted new industries where the country has a competitive advantage can work.
• Saving rather than deficit spending promotes stability (even if it is achieved through a state-owned copper company).
• Litigious countries discourage economic growth (Chile is notoriously not litigious).
• Lack of government corruption and faith in institutions engenders an honest citizenry (How many other countries could convince looters to return stolen merchandise after a natural disaster?)
• Building codes in earthquake-prone countries prevent people from dying.
• Free trade, even if unilateral, creates unparalleled prosperity and discourages countries from militancy. 

If people wonder how Chile could have developed so differently from Argentina or Venezuela, for example, there is a clear historical answer: for some reason, throughout Chile’s recent history, the country has been run by mature people who more often than not put their country’s interests above their own political power and above their own political ideology.  Pinochet gave up power willingly after losing the plebiscite of 1988, the first president after the return to democracy refused to extend his term in spite of his immense popularity, and in 2010, the Concertacion has handed over power to the centre-right amicably, even after more than 20 years in power.  

Other countries in Latin America and the various emerging economies of the rest of the world would do well to imitate Chile in this basic premise--that ideology and personality cults do not bring nations to sustained prosperity: hard work, reason, and flexibility do.

Posted via email from The Invisible Sand

A Tale of Two Chiles

This past weekend's earthquake exposes a geographic and cultural rift in South America's strongest, most stable, and most resilient country that the incoming government must address if it desires to sustain the miraculous economic development that this country has enjoyed over the last two and a half decades.

Having recently returned from a trip to the South of Chile myself, and having been in Santiago for nearly the last two years, I am struck by the developmental disparities. In the more touristic city of Puerto Varas, one might find modern 4 star hotels, nice restaurants, clean streets, new buildings, and modern grocery stores. But the surrounding towns cause one a bit of a time warp, with old, unrenovated houses, small local markets, and deteriorating infrastructure. Compared to the steel and glass high rises and hypermarkets of Santiago's Las Condes or Vitacura comunas, one might think they had been transported to another country.

Growing up in rural northwest Arkansas has given me a reasonable perspective on the subject, however, for Chile's problems are little different from the same problems facing largely rural areas in the highly developed economies of the United States and Canada. The urban-rural divide is perhaps not a problem to be solved, but a reality to be dealt with over the course of time. However, my own home town of Bentonville is an excellent example of how a rural, small-town community can be transformed into a hotbed of commerce and innovation by the presence of entrepreneurship and market forces. Chile does not need another Santiago in the same way that the United States does not need another New York City. But Chile needs a Bentonville, a Redmond, a Cupertino, an Omaha, and a Research Triangle spread over its beautiful and diverse 2,600 mile corner of paradise, wedged between the mighty Andes mountains and the cold blue Pacific Ocean. The new government, personally led by entrepreneur and billionaire Sebastian Piñera (who also holds a PhD in Economics from Harvard) has this challenge ahead of it. His dynamic teams at both the Ministry of Economy and the Ministry of Planning and Development should work to design attractive market mechanisms to draw industry, culture, and entrepreneurs from all over the world, while encouraging the talents of its (by Latin American standards) highly educated population to be directed toward entrepreneurship as well.

So many developing economies have made the mistake of offering temporary gimmicks and short-term tax breaks to attract foreign investment, and for the most part Chile has avoided this temptation (and should continue to do so), but the country is reaching the limits of current policy and incentives. Santiago is bursting at the seams, and is sprawling into the valleys outside the city in search of lower-cost real estate. The further development of Santiago will undoubtedly come at costs, even while Chile is among the least densely populated countries in the world. The right permanent shifts in tax policy combined with a few strategic investments in infrastructure could transform the unipolar economy of Chile, centered around Santiago, into a bustling and diverse nation with several regional economic hubs that lift millions into the global middle class, eradicate poverty, and transform Chile into the Hong Kong or the Singapore of the Western Hemisphere. The 5th freest economy in the world already (according to the CATO institute), Chile is poised for this transformation, but political speeches and mere desire alone are insufficient to inaugurate the necessary legal and cultural changes.

If the cities of southern Chile were as well developed as Santiago, the human tragedy of this weekend's earthquake would have been substantially mitigated, and the impact in the South would have been closer to the minor impact it has had on the city of Santiago. The question is: does the new government have the the will and the creativity to aid in this transformation, or will it let inertia dictate its developmental agenda?

Posted via email from The Invisible Sand

Still Standing in Santiago

When I moved to Santiago, Chile nearly 2 years ago, I knew that at some point I would experience a massive earthquake. This weekend, that experience transpired, and I am happy to report that we escaped unscathed, and did not even sustain any property damage. Undoubtedly, we have been quite fortunate, as the people in other parts of Santiago have been harder hit, and the people in the South of Chile have been devastated.

However, if there is anything I have learned from this experience, witnessing first hand a major natural disaster in a foreign country, it is that the English-language media is not only comprised of wild-eyed hysterics, but they are abjectly irresponsible in the manner of their reporting to the point of crossing numerous ethical boundaries in their attempt to create sensational headlines and sell their news. Contrary to the headlines of widespread looting and panic, a drive around many parts of Santiago would reveal the diametric opposite. Traffic is flowing as normal, though slightly-longer-than-average lines at the gas stations might make one wonder if there is a long holiday weekend coming up. A few signs are crooked, or even downed, and a few buildings have glass panes that have been broken out. Other parts of Santiago have sustained more damage, to be sure, but there have been no gangs of marauders darting from house to house or business to business taking everything in sight. On the contrary, the subway in Santiago is already back online, and in this city of nearly 6 million, only 300,000 are still without electricity (though I happen to be among them).

The human tragedy in Concepcion, Talca, Constitution, and other cities in the South of Chile is unquestionable. Yet, what has happened here is nothing in comparison with the chaos and panic witnessed recently in Haiti, and the quake here was much stronger. Chile should be commended for its remarkable preparedness in both the quality of the construction of its buildings, in addition to the preparedness of its medical and law enforcement personnel, which have prevented any semblance of anarchy from emerging onto the scene.

Most grocery stores in the eastern part of Santiago are now re-opened, and I am typing from a stable WiFi connection in the restaurant of a hotel here, with the hopes that my power will be restored in the next few hours. We in Santiago are the lucky ones, and my prayers go out to the people in the South as they begin rebuilding their lives. One thing I can state confidently about the Chilean people, after my interactions with them over the last 2 years is that they will rebuild stronger than ever, recover faster than virtually any other group of people from a similar type of disaster, and they will be even better prepared for the next disaster than they were for this one. Such resilience is a rare find, but it is found in abundance is this sturdy Republic at the end of the world.

Posted via email from The Invisible Sand

Why I Support Ben Bernanke's Confirmation

The Federal Reserve is a broken institution predicated on inflationary, boom & bust principles, the intellectually and morally bankrupt concept of fractional reserve banking, and the concentration of the benefits of credit in the hands of government and a few privileged elites. The institution itself needs serious reform at the least, or else it needs to be disbanded altogether and replaced with a system of market-driven credit and interest rates. Ben Bernanke has by all accounts been a crafty Fed Chairman, though that is not necessarily a compliment. He is a dire inflationist, and spends too much time studying the wrong aspects of the Great Depression. I generally think he has engaged in and covered up massive and widespread fraud through the private Federal Reserve Bank of New York. But in spite all of this, I think he should be re-confirmed. Like everything in the politics of a democracy, we do not choose leaders in a vacuum; the choice is always between and amongst a variety of alternatives. So the real reason I support Ben Bernanke is that I am mortified of the alternative:

The Elephantine Ego that is Larry Summers.

Posted via email from The Invisible Sand

Paul Krugman, The Great Nobel Joke: Part I

Paul Krugman recently wrote a blatantly fallacious and purely political bit of nonsense (no surprise) entitled "Learning From Europe."

When I read it, I considered writing a response, but fortunately, these guys did it for me. Funny that France has a lower per capita GDP than Arkansas.  Ouch.

Posted via email from The Invisible Sand

When the Dust Settles, Leftists are all the Same

The Austrian School economists have long held that moderate government involvement in the economy always leads to total government, and that it is merely a matter of time.  It seems that there is a corollary: all Left/Centre-Left politicians are merely Marxists constrained by their political climate, and that given the chance, they would all become a Chavez or a Castro.

Our closeted Marxist of the day is none other than Gordon Brown, the bumbling buffoon who, thanks only to the fact that he was a necessary tool in the grander political designs of Lord Mandelson, continues to be the Prime Minister of the United Kingdom (or, in a post-Lisbon Treaty world, perhaps we should begin referring to it as the United Fiefdom).  

Anybody who follows the British press will know about the near-mass hysteria over Kraft's attempted buy-out of British candy maker Cadbury.  Much of the hysteria has simply been popular nostalgia over the continued loss of Britishness, but today, Gordon Brown has decided to insinuate himself in the matter, by warning Kraft not to make any money in its investment by trimming costs:

"We are determined that the levels of investment that take place in Cadbury in the United Kingdom are maintained and we are determined that, at a time when people are worried about their jobs, that jobs in Cadbury can be secure."

Such populist muddle should not be surprising from a beleaguered politician whose days at No. 10 are growing few, but what we should recognize is the remarkable parallels between Mr Brown and the recent actions of the glorious leader of that bastion of stability and prosperity euphemistically known as the "Bolivarian Republic of Venezuela."

Mr Chavez recently took steps to devalue the Venezuelan currency (which anybody with an elementary understanding of economics will know leads necessarily to inflation), and then declared that any companies, large or small, that dared raise their prices (a requirement, if they had any desire to stay financially viable) would be shut down and assets confiscated.  Nobody can possibly be permitted to thwart the political designs of the central planners, because the history of government-imposed industrial and pricing policy has such a record of success--like the 30 million people who died as a result of Mao's Great Leap Forward, or the catastrophic poverty in the Soviet Union.

So Mr Brown may not be dispatching Scotland Yard to shut down a Kraft-owned Cadbury in the event of some cost-trimming, but we shouldn't be surprised if he concocts a specialized bonus tax that only applies to American-owned subsidiaries of food conglomerates who acquired their British operation in the last 5 years.  Rather than a total confiscation, it would merely be a partial confiscation, in the form of tax.  Alas for Mr Brown, his central planning would be so much easier to implement if he were the dictator of an oil-rich country.  But, at least for now, the remnants of English law and the political will of the Britons will constrain him. 

Posted via email from The Invisible Sand

Chilean Stock Market Surges on Election Results

The Wall Street Journal reports that Chile's Blue Chip Index, IPSA, has surged 0.6% on the outcome of the second round in yesterday's presidential election. 

With the substantial bolstering of financial markets in Panama after the election of Ricardo Martinelli and now the same happening with the victory of Sebastian Piñera in Chile, other Latin countries with elections on the horizon (especially Peru and Colombia) will hopefully be following suit.  For a region that has suffered mightily under the hands of interventionist governments, the healing process is beginning, and the economic future of Latin America appears to be getting better by the day.

Posted via email from The Invisible Sand

Chilean Presidential Election News Articles

For those who want to read a bit more on the historic election in Chile:

The Telegraph

The Wall Street Journal

The Financial Times 

Reuters

Posted via email from The Invisible Sand

Chile Elects Free Market President

With about 60% of the votes counted, free market candidate (and billionaire businessman) Sebastian Piñera appears to have won Chile's presidential election, making him the first popularly elected centre-right president since 1958.  Center-left candidate and former President Eduardo Frei has conceded the race to Piñera.

http://www.elecciones.gov.cl/Sitio2009/index.html

Piñera joins Panama's Ricardo Martinelli amongst Latin America's entrepreneurial free market leaders, setting the stage for a renewed period of economic growth in Latin America's freest and most prosperous (per capita) country.

Posted via email from The Invisible Sand

Political Stability and Fiscal Discipline

Carl Delfeld in SeekingAlpha today, writes:

Chile offers global investors the opportunity of gains from a country that hasweathered the current global economic meltdown better than most countries. It is politically stable, resource rich and fiscally conservative and since 2003, I have been in and out of Chile several times. As a percentage of GDP, Chile is the most export-oriented country in the world and has growing trade ties to Asia. According to the Economist, the share of Chileans living in poverty fell from 38.6% in 1990 to 13.7% in 2006, and education, health care and pensions are now much more widely available...The national copper company, Codelco, controls more than 20% of the world's copper reserves. Chile’s national debt is only 4% of GDP, and its sovereign wealth fund tops $20 billion. In addition, Chile’s announced $4 billion economic stimulus package packs some punch, being equal to 3% of GDP. Chile is also a free trader with a quiver of free-trade agreements with countries such as the U.S., the European Union, China, Japan, Canada, and South Korea. Chile depends on exports for 43% of its GDP. 

Emerging markets (and developed markets) everywhere can learn from Chile's experience.  Manage your resources responsibly, keep your politicians' crooked fingers out of the treasury, open your economy to the world, and reduce regulation, and you can not only insulate yourself from massive financial shocks, but position yourself to attract foreign capital and entrepreneurship as well as inspire it from within.

I am proud to call Chile home.

Posted via email from The Invisible Sand

Paying for the Health Care Bill

I have an idea for Nancy and Harry--

25% VAT on attorneys' invoices. With the US legal industry raking in about $230 Billion per year, that would be $57 Billion in added revenue.

It would have the added benefit of raising legal costs on the end user and reducing the demand for legal services.

I would also propose a 50% "windfall" tax on attorneys fees derived from so-called "blockbuster" punitive damage awards. I couldn't readily find the statistics on that, but it seems like another good place to squeeze out some revenue that isn't shouldered by the productive class.

Posted via email from The Invisible Sand

Why Federalism Always Turns to Bullying

Writing in a Wall Street Journal blog, Ian Martin observed today that the veto by Iceland's president of a bill to compensate British and Dutch depositors for the $5.5 billion in losses sustained when the bank Icesave collapsed last year could scuttle Iceland's chances of admission to the European Union.  The bill will now be submitted to a popular referendum.  Martin notes:

"Here one suspects that the Icelanders are about to find out how the EU works.  If they dare vote no in a referendum, they can always be asked to vote again, and again and again.  Until they get the right answer."

Martin was of course alluding to the sham that was the second Irish referendum on the European Constitution Lisbon Treaty, where the Irish were bullied by the Brussels power elites and mammoth bureaucracy into going along to get along.  The people of France and the Netherlands had previously rejected the European Constitution, and it was renamed "Lisbon Treaty" and rammed through Europe's parliaments as a mere emendation to the Treaty of Rome thus avoiding the nastiness of democracy.  The Irish Constitution required a referendum for Ireland to ratify Lisbon, and as a result it was the only country to actually subject the document to a referendum.

Ireland rejected Lisbon in the first referendum, and a second one was held late last year, when it was at last ratified under heavy pressure from the European machinery.  

This situation, and something not dissimilar on the horizon for Iceland beg the question--does federalism really serve its stated purposes?

As somebody who has traditionally been a committed believer in federalism, I now must express serious doubts.  There is certainly great benefit to small, local government.  The massive success of the modern city states of Hong Kong, Macau, and Singapore attest to this, as does the relative success of the smaller Soviet successor states like Estonia compared to larger ones such as Ukraine.  This is not to say that smallness is an economic panacea, as there are plenty of examples of large successful countries and small poor ones.  

The United States was historically the shining example of federalism's success--a perfectly struck balance of power between the national government and its 50 constituent parts.  But Progressivism (especially with the advent of the Income Tax, the Direct Election of Senators, and the creation of the Federal Reserve) followed by the two World Wars and the New Deal substantially eroded this balance, and the subsequent decades only exacerbated this process, supported by a series of complicit Supreme Courts' universalist interpretation of the Commerce Clause.  

The U.S. Congress is now the embodiment of federalist bullying, with the representatives of the various states being bribed and threatened to support legislation or risk being excluded from the doling out of fiscal goodies, which self-serving members of Congress rely on to secure their own re-election.  

The justification behind federalism is a deluded belief that political union with other economically interested peoples is necessary to foster economic cooperation and coordinated security policy.  This was the reason the thirteen sovereign republics of Atlantic North America abandoned their confederation in favor of a federation.  This was the reason the culturally and economically diverse peoples of Europe originally began the process of integration.  But as soon as power began to flow from Paris, London, and Berlin into Brussels, the people controlling Brussels had a sudden interest in expanding the size and scope of the political union, and threatened those who dared oppose that expansion with "exclusion" in much the same way heretics were excommunicated by the Papacy as a method to eliminate threats to its political power.

If this is the ultimate reality of federalism, it is no wonder that small republics like Chile have outperformed larger federations like Argentina and Mexico. 

We should learn a distinct lesson from this as we make prescriptions for the world's economic ills:

"Cooperation" is all too often a political euphemism for coercion.

Posted via email from The Invisible Sand

The Anti-capitalist Mentality

From the Opinion section of the Wall Street Journal

Posted via email from The Invisible Sand

Drinking Largely in 2010

I will forever be indebted to me high school English teacher, Mrs Southern (who sadly passed away this year) for assigning me to memorize an excerpt from Alexander Pope's An Essay on Criticism.  It seems a fitting end to 2009, and a fitting beginning to 2010 to reflect on Pope's words:

A little Learning is a dang'rous Thing;
Drink deep, or taste not the Pierian Spring:
There shallow Draughts intoxicate the Brain,
And drinking largely sobers us again.
Fir'd at first Sight with what the Muse imparts,
In fearless Youth we tempt the Heights of Arts,
While from the bounded Level of our Mind,
Short Views we take, nor see the lengths behind,
But more advanc'd, behold with strange Surprize
New, distant Scenes of endless Science rise!
So pleas'd at first, the towring Alps we try,
Mount o'er the Vales, and seem to tread the Sky;
Th' Eternal Snows appear already past,
And the first Clouds and Mountains seem the last:
But those attain'd, we tremble to survey
The growing Labours of the lengthen'd Way,
Th' increasing Prospect tires our wandering Eyes,
Hills peep o'er Hills, and Alps on Alps arise!

It has been 5 years since I took the picture at the top of this post (Wrangell-St. Elias National Park in Alaska), but it wasn't until today that I made the connection between the picture and the Pope poem.

I do not feel the need to give a lengthy analysis of the poem and the picture, as I am often wont to do.  I think they speak for themselves.  

So, to a 2010 of drinking largely and tasting the Pierian Spring--Salut.

Posted via email from The Invisible Sand

The Constitutional Guard

America needs a special set of talented, intelligent, selfless public servants right now. 1,070 of them to be exact. That number represents 2 people for every Member of the House of Representatives and 2 people for every Senator. Their purpose would be to stand as the Shadow Members of Congress, leading the monitoring effort of every bill, every vote, every taxpayer-funded junket, and hold them accountable in the public eye in their respective constituencies. And then, when that member breaks the public trust, violates major campaign promises, or otherwise sells out the people for a campaign contribution or a posh committee appointment, these noble Constitutional Guards would be ready to run and unseat the incumbent with a pledge to only serve one term.

The second guard would exist to make sure the first guard kept his or her commitment to serving only one term.

After serving a term and stepping down, the Constitutional Guard would make the seat open for potential longer-term occupants to vie against each other without the uphill battle of fighting incumbency.

I would envision each district's Constitutional Guard operation would have an active blog, YouTube Channel, Facebook profile, and Twitter. In real time, these public servants would keep the constituents of each district abreast of federal government intrusions into their lives, budget busting appropriations bills, and all of the other chicanery that takes place, unchecked, every single day in Washington, DC. The Constitutional Guard organization would be able to negotiate commitments with incumbent members of Congress, getting them to pledge not to raise taxes, pledging to vote only for balanced budgets, etc. Unlike current election pledges, these would come with teeth: You violate the pledge, and you will have a serious, credible opponent in your next re-election.

Establishing informal institutions like the Constitutional Guard has the merit of circumventing other proposed reform measures that would be Dead on Arrival thanks to the political elites' desire to protect their own interests. This plan requires no constitutional amendments, no legislation, nothing at all that isn't already available to the people under the current system. But this novel and unique approach, applied nationally, could radically transform American political institutions into ones that serve The People, advance liberty rather than encroach upon it, and keep the financial and political elites permanently in check.

This may be the last viable option we have to keep the Union from breaking apart in a wave of secessions. That tipping point is not far away. Either we rein in Congress or States will start considering their other options. Given those alternatives, I say it is worth trying to salvage the system we have.

Posted via email from skinnerlayne's posterous