Baptists and Bootleleggers

The Ethanol Scam

Politicians are high on turning corn into fuel — but ethanol not only hurts the environment, it's also one of America's biggest political boondoggles

By JEFF GOODELL

 The great danger of confronting peak oil and global warming isn't that we will sit on our collective asses and do nothing while civilization collapses, but that we will plunge after "solutions" that will make our problems even worse. Like believing we can replace gasoline with ethanol, the much-hyped biofuel that we make from corn.

 The Dark Lord of Coal Country

 Ethanol, of course, is nothing new. American refiners will produce nearly 6 billion gallons of corn ethanol this year, mostly for use as a gasoline additive to make engines burn cleaner. But in June, the Senate all but announced that America's future is going to be powered by biofuels, mandating the production of 36 billion gallons of ethanol by 2022. According to ethanol boosters, this is the beginning of a much larger revolution that could entirely replace our 21-million-barrel-a-day oil addiction. Midwest farmers will get rich, the air will be cleaner, the planet will be cooler, and, best of all, we can tell those greedy sheiks to fuck off. As the king of ethanol hype, Sen. Chuck Grassley of Iowa, put it recently, "Everything about ethanol is good, good, good."

 This article appeared in the August 7, 2007 issue of Rolling Stone. The issue is available in the online archive.

 This is not just hype — it's dangerous, delusional bullshit. Ethanol doesn't burn cleaner than gasoline, nor is it cheaper. Our current ethanol production represents only 3.5 percent of our gasoline consumption — yet it consumes twenty percent of the entire U.S. corn crop, causing the price of corn to double in the last two years and raising the threat of hunger in the Third World. And the increasing acreage devoted to corn for ethanol means less land for other staple crops, giving farmers in South America an incentive to carve fields out of tropical forests that help to cool the planet and stave off global warming.

 12 Politicians and Execs Blocking Progress on Global Warming

 So why bother? Because the whole point of corn ethanol is not to solve America's energy crisis, but to generate one of the great political boondoggles of our time. Corn is already the most subsidized crop in America, raking in a total of $51 billion in federal handouts between 1995 and 2005 — twice as much as wheat subsidies and four times as much as soybeans. Ethanol itself is propped up by hefty subsidies, including a fifty-one-cent-per-gallon tax allowance for refiners. And a study by the International Institute for Sustainable Development found that ethanol subsidies amount to as much as $1.38 per gallon — about half of ethanol's wholesale market price.

 Q&A: Bill Gates on How to Stop Global Warming

 Three factors are driving the ethanol hype. The first is panic: Many energy experts believe that the world's oil supplies have already peaked or will peak within the next decade. The second is election-year politics. With the first vote to be held in Iowa, the largest corn-producing state in the nation, former skeptics like Sens. Hillary Clinton and John McCain now pay tribute to the wonders of ethanol. Earlier this year, Sen. Barack Obama pleased his agricultural backers in Illinois by co-authoring legislation to raise production of biofuels to 60 billion gallons by 2030. A few weeks later, rival Democrat John Edwards, who is staking his campaign on a victory in the Iowa caucus, upped the ante to 65 billion gallons by 2025.

 Coal's Toxic Sludge

 The third factor stoking the ethanol frenzy is the war in Iraq, which has made energy independence a universal political slogan. Unlike coal, another heavily subsidized energy source, ethanol has the added political benefit of elevating the American farmer to national hero. As former CIA director James Woolsey, an outspoken ethanol evangelist, puts it, "American farmers, by making the commitment to grow more corn for ethanol, are at the top of the spear on the war against terrorism." If you love America, how can you not love ethanol?

 Ethanol is nothing more than 180-proof grain alcohol. To avoid the prospect of drunks sucking on gas pumps, fuel ethanol is "denatured" with chemical additives (if you drink it, you'll end up dead or, at best, in the hospital). It can be distilled from a variety of plants, including sugar cane and switch- grass. Most vehicles can't run on pure ethanol, but E85, a mix of eighty-five percent ethanol and fifteen percent gasoline, requires only slight engine modifications.

 But as a gasoline substitute, ethanol has big problems: Its energy density is one-third less than gasoline, which means you have to burn more of it to get the same amount of power. It also has a nasty tendency to absorb water, so it can't be transported in existing pipelines and must be distributed by truck or rail, which is tremendously inefficient.

The looting of the American Taxpayer

Among The Costs Of War: $20B In Air Conditioning

by NPR STAFF

The amount the U.S. military spends annually on air conditioning in Iraq and Afghanistan: $20.2 billion.

That's more than NASA's budget. It's more than BP has paid so far for damage during the Gulf oil spill. It's what the G-8 has pledged to help foster new democracies in Egypt and Tunisia.

"When you consider the cost to deliver the fuel to some of the most isolated places in the world — escorting, command and control, medevac support — when you throw all that infrastructure in, we're talking over $20 billion," Steven Anderson tells weekends on All Things Considered guest host Rachel Martin. Anderson is a retired brigadier general who served as Gen. David Patreaus' chief logistician in Iraq.

Why does it cost so much?

To power an air conditioner at a remote outpost in land-locked Afghanistan, a gallon of fuel has to be shipped into Karachi, Pakistan, then driven 800 miles over 18 days to Afghanistan on roads that are sometimes little more than "improved goat trails," Anderson says. "And you've got risks that are associated with moving the fuel almost every mile of the way."

Anderson calculates more than 1,000 troops have died in fuel convoys, which remain prime targets for attack. Free-standing tents equipped with air conditioners in 125 degree heat require a lot of fuel. Anderson says by making those structures more efficient, the military could save lives and dollars.

Still, his $20.2 billion figure raises stark questions about the ongoing war in Afghanistan. In the wake of President Obama's announcement this week that about 30,000 American troops will soon return home, how much money does the U.S. stand to save?

Dollars And Cents

The 30,000 troops who will return home by the end of next year were sent to Afghanistan in 2009, at a cost of about $30 billion. That comes out to about $1 million a soldier.

But the savings of withdrawing those troops won't equal out, experts say.

"What history has told us is that you don't see a proportional decrease in spending based on the number of troops when you draw them down," Chris Hellman, a senior research analyst at the National Priorities Project, tells Martin.

"In Afghanistan that's going to be particularly true because it's a very difficult and austere environment in which to operate," he says.

That means most war expenditures lie not in the troops themselves but in the infrastructure that supports them — infrastructure that in some cases will remain in place long after troops are gone.

"We're building big bases," American University professor Gordon Adams tells Martin. The costs of those bases are, in economic terms, "sunk" costs, he says.

"We're seeing this in Iraq. We're turning over to the Iraqis — mostly either for a small penny or for free — the infrastructure that we built in Iraq. But we won't see back any money from that infrastructure."

Then there's the costly task of training Afghan security forces. The Obama administration has requested almost $13 billion to train and equip Afghan security forces in the next fiscal year.

And more importantly, Hellman says, "[Afghan President Hamid] Karzai indicated a couple years back that [Afghanistan] wasn't going to be a position to support their own military forces 15, 20 years out. I suspect we're going to be called on to pay a substantial part of that bill going forward."

Criticism From The President's Own Party

For critics of the president, the idea that the troop drawdown won't save much money is reason enough to suggest it should be bigger.

One outspoken critic is Sen. Joe Manchin (D-WV). He notes the wars in Afghanistan and Iraq have cost hundreds of billions of dollars so far, and he argues a larger troop drawdown isn't a national security risk.

"We have the greatest special ops in the world. We have more technology than any other country on earth," Manchin tells Martin. "Do we actually need to have 70,000 troops on the ground?"

"When you have this many people in a country that doesn't want you there — that has no economy, no infrastructure and a corrupt government — and you're trying to stabilize it and build them into a viable nation? I'm not sure we have enough time, and I definitely know we don't have enough money," Manchin says.

But others argue war should be waged independent of cost.

"The realm of war and peace exists separately apart — and justifiably so — from the economic realm," says Lawrence Kaplan, a visiting professor at the U.S. Army War College, who says critics like Manchin are looking for "economic answers to a non-economic question.

"And anyway, it's not the war that's broken Washington's piggy bank," he adds, noting that Medicare, Medicaid and Social Security account for far more spending than the $107 billion the Pentagon says it will spend in Afghanistan next year.

"Remember, we're talking about 30,000 troops," he says "I don't think that hundred-billion-dollar price tag should be the determining one."

Can Greener Mean Safer?

But for Anderson, the retired brigadier general, economics does have a role to play in modern warfare.

Anderson advocates for increased energy efficiency for military structures in order to cut down on the need for long, dangerous fuel-transport missions. A few months ago, Anderson heard from a company commander in Afghanistan.

"He literally has to stop his combat operations for two days every two weeks so he can go back and get his fuel. And when he's gone, the enemy knows he's gone, and they go right back to where they were before. He has to start his counter-insurgency operations right back at square one."

Anderson says experiments with polyurethane foam insulation for tents in Iraq cut energy use by 92 percent and took 11,000 fuel trucks off the road. But he adds there's a lack of enthusiasm for a greener military among top commanders.

"People look at it and say 'It's not my lane. We don't need to tie the operational commanders' hands' — things like this," he says.

"A simple policy signed by the secretary of defense — a one- or two-page memo, saying we will no longer build anything other than energy-efficient structures in Iraq and Afghanistan — would have a profound impact."

Decline by choice

Ex-IMF Chief: Emerging Markets to Dominate World; Dollar to Lose Power

By Kenneth Rapoza

As much as 80%of the world’s economic growth in the next 40 years will come from emerging market countries, ex-managing director of the International Monetary Fund (IMF), Michel Camdessus predicted this week in Buenos Aires.

“By 2050 we can expect that close to 80% of the global economic growth will be a result of emerging countries,” Camdessus, a French economist and managing director of the IMF from 1987-2000, said at the Annual Meeting for the Christian Association of Company Directors.

Xinhua news agency covered the conference last week, quoting Camdessus on a story that ran on the wire June 23. Camdessus said that emerging markets “are narrowing the gap with developed nations by developing their middle-class and improving their life quality.”

Dollar Losing its Lure

He also said international economists believe that in the next few years the dollar will cease to dominate the global monetary system, which will help promote a multi-currency system. The monetary and finance system will in the future “be renewed so that emerging countries are recognized, changing from a dollar-dominated system to a multi-currency one.”

Many economists and anti-dollar investors have been bearish on the dollar over the last five years, at least, with some commodities bulls being dollar bears as far back as the early 2000s. Some have even called for a return to the gold standard, meaning each dollar would have to be backed by an ounce of gold. Such a policy would cause the price of precious metals to skyrocket.

The dollar is the world’s trading currency. All commodities are priced in dollars. Many nations, including Brazil and Argentina, have considered pricing commodities in their local currency, whereas Buenos Aires buyers would not have to pay for Brazilian commodities like oil in dollars. They could be in Brazilian reals, or pesos. However, the underlying value of the product is still dollar-based, and their currency’s would have to be converted to the market rate even if they were trading in their local currency.

The IMF estimates that total GDP of the emerging market nations, led by China and India, will surpass that of developed economies in 2014.

According to Ernst & Young, the emerging markets already attract almost 50% of foreign direct investment (FDI) global inflows and account for 25% of FDI outflows. By 2020, the BRICs are expected to account for nearly 50% of all global GDP growth.

Securing a strong base in these countries will be critical for investors seeking growth beyond the US, Europe and Japan.

The plot thickens Part II

An American Default Would Put Us “In The Land Of The Unpredictable”

By Robert Lenzner

The suave El-Erian hopes for a medium term resolution to the need to reduce the nation’s debt. “Otherwise.” he tells Zakaria ( I have transcript) there could  be “a catastrophic” succession of “legal contracts being triggered.” In other words, confusion, bordering on chaos, and even a loosening of all the strictures by which we keep financial and economic order.

At the very least, the nation should realize that the end of QE2– that’s June 30, next Thursday– “is a major event that the market is underestimating.”  And volatility in prices of stocks and bonds and commodities could result from this “major event that the market is underestimating.”

Stay tuned. Get focused. Is there some move you’d like to make before next Thursday– when Ben Bernanke will stop putting about $ 4 billion a day  into the monetary system. He has been doing this since late September, 2010– for y our information.

Add to a US default a Greek default, which some economists believe is coming sooner or later. Could this possibility trigger a Lehman-like global liquidity panic/  Another sophisticated financial analyst I know personally– Christopher Wood, author of the weekly commentary, GREED & Fear, said this past week the best hedge for investors against this risk is to short European financial stocks– “for this area remains the epicentre of systemic risk globally.”

He’s talking about the $1.5 trillion the major European banks have lent to troubled Greece, Ireland, Italy, Portugal and Spain. God help us if the insolvency of European banks in 2011-12 is   to be an event similar to the insolvency of the US banks in 2008.

The plot thickens

PIIGS Owe Over $2 Trillion to U.S. and European Banks

By Robert Lenzner

The latest BIS report on bank loans to Potugal, Ireland, Greece and Spain is not bullish for shareholders of the German, French, British, Dutch and Spanish banks.

They are owed some $1.5 trillion by sovereign Portugal, Ireland, Spain and Greece at the end of June, 2010. That figure is down some $400 billion so far this year, suggesting that ECB or some other central bank institution has been helpng out the banks as well as the governments.

European bank exposure is $206 billion, Portugal, $509 billion, Ireland, $142 billion, Greece, and $657 billion, Spain. BIS, naturally, does not break out the commitment of individual banks.

U.S. bank exposure to these four troubled nations is $353 billion, or about 17% of the $2 trillion.

So, U.S. banks do have something to lose if Ireland, Greece, Portugal or Spain ever have to default.

This $2 trillion is almost the size of the Federal Reserve’s balance sheet, which suggests just how troubling all this debt owed by nations in economic trouble could be to the banking industry.

What’s curious, though, is that for the first time the BIS has broken out a new debt category termed “other exposures” which it defines as “other exposures consist of the positive market value of derivative contracts, guarantees extended and credit commitments.” These “other exposures” — quite clearly meant to be abstruse– amount to $668 billion of the $2 trillion in loans to the PIIGS.

So, bank analysts everywhere; you now have to cope with evaluating derivative contracts that could expose lenders to losses on sovereign debt. Be on notice!

Son, Get a government Job

Mommy, Mommy When I Grow Up I Want to Be A Federal Worker

by SCOTT REDLER

Things were sure different when I was growing up. My parents taught me the value of a strong work ethic because that was how you got ahead in life. I shoveled snow off neighborhood driveways starting at age 10, and by the time I hit 13 I was busing tables at a local restaurant where, at 16, I became a waiter. In high school I hit the books hard with dreams of going to college and becoming a doctor, lawyer or fortune 500 CEO. Sadly, our society has allowed itself to drift in an altogether different direction.

“Anyone who wants to work an interesting job, earn a generous salary, enjoy unbeatable, rock-solid job security and, most importantly, advance the public good in pivotal ways would probably favor the federal sector,” said Lily Whiteman, federal careers expert. This quote represents a troubling new reality in today’s American society: the public sector has become more attractive than the private sector. Today, government favoritism towards public workers has skewed the sense of values that is the American capitalist hallmark.

Ms. Whiteman continues on to say, “. . .government employees seem to work shorter hours, have more vacation time, access unbelievable healthcare, never worry about job security and even make more money than people slugging it out in the private sector.” Sounds like a dream job, right? Work less, don’t worry about losing your job over poor performance, get better benefits, and get paid more for doing a job that contributes very little to the nation’s output. So what, now, are parents supposed to tell their kids, “weasel your way into a government job and you will be set for life”? The reality of the situation is that the government always looks out for its own, even when the economy is spinning down the toilet.

The growth of public sector compensation and benefits in the context of a global recession is not only a travesty, it is a serious impediment to the future growth of our country. Why would a graduate from a top university pursue a job in the private sector (in which jobs are now even more scarce) when, after nine years of pay hikes and benefits in the context of a struggling economy, the compensation of federal civil servants is now, on average, twice that of private sector workers?

Recently, another $26 billion has been appropriated to the States, which, President claims, is about “saving the jobs of teachers and other essential professionals”. It wasn’t about saving jobs, it was about using tax payer money to pay off teacher union bosses, reward them for past political favors and to get the votes for the Democrats for the all-important November election. The additional funding is also to help bail out the bloated pension plans that guarantee a healthy yearly gain when the S&P is down over 10%-12% for the decade! Washington doesn’t seem to care about the busted 401k system of the private sector worker, they just want to shove their free-spending agenda down our throats while they raise taxes.

The United States right now needs to be moving in the opposite direction from the one we are currently heading in. We need the brightest college graduates innovating in the private sector, not working as overcompensated, underperforming federal workers. We need lower tax rates to stimulate private industry. We need to reorganize the flawed and broken pension system. We need to stop bailing out the unions in return for votes.

I’m just a technical analyst, but until we restore the core values that have driven this nation since its founding, our country will keep heading down this dangerous and self-destructive path. Until we correct these fundamental problems and get back on the road to growth, the stock market will not reward investors.

Renaissance On The Mississippi

The Katrina Effect

By Joel Kotkin

In this most insipid of recoveries, perhaps the most hopeful story comes from New Orleans. Today, its comeback story could serve as a model of regional recovery for other parts of the country — and even the world.

You could call it the Katrina effect. A lovely city, rich in history, all too comfortable with its fading elegance and marred by huge pockets of third-world style poverty, suffers a catastrophic natural disaster; in the end the disaster turns into an opportunity for the area’s salvation.

Had Katrina never occurred New Orleans would likely have continued its inexorable albeit genteel decline; the area’s population dropped from 627,000 in 1960 to 437,000 in 2005, the year the hurricane occured. Instead the disaster brought new energy and a sense of purpose to the Big Easy.

I first realized that New Orleans was going through some kind of renaissance when looking at some numbers.  In Forbes’ list of the country’s biggest brain magnets — based on analysis of where college-educated adults were moving to by demographer Wendell Cox —  New Orleans ranked No. 1, ahead of such hot spots as Raleigh-Durham, N.C., and Austin, Texas.

Then came our analysis of the best large cities for jobs: New Orleans ranked No. 2 in our survey, up a remarkable 46 places. New Orleans’ performance was particularly impressive in the information field, which includes software and entertainment, and in which the Big Easy grew the most — over 30% last year alone – among our major metros.

Yet numbers do not tell the whole story. Sometimes statistics simply look great against the background of catastrophic decline. New Orleans was so far down and received so much recovery money that recent improvements could be explained as a short-term bounce back from a disaster.

But the resurgence of New Orleans, whose population is now back to almost 350,000, represents something far more significant and long-term. For one thing, the storm undermined the corrupt, inept political regimes that had burdened the area for decades. “Katrina shattered the networks and broke down the old hierarchies,” notes Tim Williamson, a New Orleans native and founder of Idea Village, a nonprofit focused on aiding local entrepreneurs.  ”People felt we were dying. Now we feel like we are refounding a great American city.”

For example, inept leaders like former Mayor Ray Nagin and the equally lost Kathleen Blanc have been replaced by more effective figures like Mayor Mitch Landrieu and Gov. Bobby Jindal. Equally important, according to a recent Brookings report, New Orleanians have become noticeably more engaged with their community. Particularly impressive have been improvements in the local schools, once among the nation’s worse. Last year, the majority (61%) of public school students in Orleans Parish (counties in NOLA are called parishes) attended charter schools, which are now attracting some middle class families.

Most impressive, this once stagnant region has transformed into an entrepreneurial hot bed. “Five years ago people thought we were crazy to be here,” says Matt Wisdom, founder of Turbosquid, a firm with 45 employees that provides three-dimensional images to corporate clients. “Now instead of people being amazed we are here, they want to get here to ride the wave.”

Walking along Magazine Street from the edge of the Garden District to the Central Business District, you still pass some rough areas. But the way is peppered with scores of independently owned shops and small businesses, many of them opened since the hurricane. Their owners for the most part appear to be younger than 40.

“We used to have this huge brain drain to the Northeast, the West Coast and Texas, but this has changed,” Williamson says. “After Katrina everyone was forced to become an entrepreneur. The dominant concept for the rebuilding has become one of resiliency and self-employment — it’s been bottom up. It’s become as much of our identity as Mardi Gras or the Jazzfest.”

Since its founding back in 2000 Idea Village has assisted 1,000 local companies with business plans, financing and focus. Most are small, but some of what Williamson calls post-Katrina generation companies, like Naked Pizza, founded in 2006, have expanded rapidly. Specializing in a healthy, organic version of the traditional high-fat fast food, Naked Pizza has won financial backing from Dallas Maverick owner Mark Cuban. The company, which employs 40 employees at its New Orleans headquarters, expects to have over 70 franchises by the end of the year  .

Many rapidly rising businesses specialize in digital media, attracting talent from other places like the West Coast and New York. 37-year-old Kenneth Purcell, founder of Iseatz, moved his entertainment and travel business from New York to NOLA in 2009 and has since grown his company from seven people to 25.

The Socialist paradigm - punishing success while rewarding failures

Google Faces The Big Question Of Whether Success Is Illegal

By DANIEL FISHER

There was an interesting guest seated at the Google table at the American Antitrust Institute meeting in Washington yesterday, an attendee tells us: Ralph Nader.  What’s the old saying about keeping your enemies close?

The search-engine giant may need all the friends it can get as it battles state and federal antitrust investigations. (It confirmed a Federal Trade Commission probe today, saying “It’s still unclear exactly what the FTC’s concerns are.”) Like Microsoft, AT&T, IBM and Standard Oil before it, Google has obtained such dominance over the business of finding information and selling ads on the Internet that it has drawn the attention of regulators who worry it might be stifling competition.

The complaints seem to be coming mostly from Google’s competitors and might just reflect sour grapes. The purpose of antitrust law, after all, isn’t to protect competitors but to make sure consumers have the best selection of goods at the lowest price. Only if Google is using its roughly 65% control over Internet searches to drive competitors out of other markets and deprive consumers of a choice there, will the government have a legitimate case.

“Google has legitimately obtained a monopoly in the search-engine market,” said Melissa H. Maxman, an antitrust lawyer with Cozen O’Connor in Washington who led the foreign plaintiffs’ committee in the big antitrust case against Microsoft in the 1990s. She said there are “substrata of search,” however, such as airline flights and mortgages, where competitors might fear Google is manipulating its search algorithms to their disadvantage.

To understand what Google executives will be facing next, I spoke with Robert Lande, a professor at the University of Baltimore Law School and former attorney both for the Federal Trade Commission and the large corporate law firm  Jones Day. He said the process will be expensive, time-consuming and involve terrabytes of data as regulators try to determine whether Google is providing efficiency and ease of use to consumers or hurting competition by serving up biased search results.

The government took a pretty good look at Google’s business when it considered whether to block its $700 million purchase of ITA, a Cambridge, Mass. company that provides flight-information software used by many airlines. The Justice Department approved that takeover in April with a few conditions including requiring Google to license the travel software to competitors and banning it from entering into agreements that would prevent airlines from offering services like seat selection to rivals.

Any investigation will likely be similar to the one Microsoft faced when competitors including Netscape argued it used its control over PC operating systems — a legitimate monopoly that reflected the usefulness of having most computers run on the same OS — to dominate other markets such as Web browsers and applications. Microsoft complained the suit was mostly about it bundling Microsoft Explorer with Windows, a move that killed Netscape but which was the equivalent of shipping cars with radios installed, which killed the independent car-radio merchants. But that’ wasn’t the problem, Lande said. The government was suing over allegations of  threats and tactical maneuvers Microsoft made with its customers to discourage them from installing rival browsers on PCs.

The question surrounding Google’s dominance of search is whether it helps consumers get more information faster and cheaper or somehow hurts them.

“If I can plug into Google search `Washington to Tahiti’ and easily get what I want, that would be great for consumers,” Lande said. The fact that Google dominates the search business just reflects the economies of scale that come from processing billions of consumer information requests a day and using those queries to better refine search results.

If Google tinkers with the software to bias results toward its own businesses, however, or refuses to make its software available to rivals, that could hurt consumers. Antitrust in the Internet era, therefore, is similar to when John D. Rockefeller was accused of “sweating” smaller refiners by cutting prices until they went bankrupt and domineering railroads into subsidizing the transport of his oil, Lande said. “It’s just much more complicated and changes more quickly,” he said.

Free Bernie Madoff!

Public Unions Take On Boss to Win Big Pensions

By CHARLES DUHIGG

COSTA MESA, Calif. — City council elections in this Southern California city are usually sedate. Hot-button issues include whether libraries should stay open at night. Campaign budgets often don’t top $10,000.

Then Jim Righeimer, a conservative activist and real estate developer, jumped into the race last year.

The city was on the road to insolvency, he warned, because public employee unions had pressured politicians into handing over generous salaries and pensions. The police chief received $298,000 a year in total compensation, Mr. Righeimer noted. The deputy fire chief had retired with a pension of more than $182,000 a year.

City workers weren’t fans of Mr. Righeimer, who had been critical of public unions for years. Local police and firefighter groups started mailing leaflets and towing a billboard around town attacking him, implying he had skipped out on numerous debts. Public employees spent more than $100,000 opposing him, and six unions from neighboring regions spent another $33,000 endorsing his opponents.

“They try to drag you through the mud so bad that everyone else says, ‘I don’t ever want these guys as enemies, I’ll just leave them alone,’ ” said Mr. Righeimer, who still managed to win a council seat.

Costa Mesa, population 110,000, is California in miniature. For years, public employee unions across the state have often used their influence — sometimes behind the scenes but occasionally with public, hardball campaigns — to push for improved worker pay and benefits. They have exercised power beyond their numbers by donating money to lawmakers, burnishing candidates’ credentials with endorsements and supplying volunteers during elections.

 Public employee unions are hardly the only group involved in bare-knuckles politics. Businesses lobby fiercely and executives make hefty campaign donations.

But public workers have a unique relationship with elected officials, because government employees are effectively negotiating with bosses whom they can campaign to vote out of office if they don’t get what they want. Private unions, in contrast, don’t usually have the power to fire their members’ employers.

Even in recent years, as economic troubles have worsened, benefits for some government workers have grown. In 2008, for instance, lifeguards in Laguna Beach started receiving increased retirement benefits as the state’s economy began to slow. The next year, the town’s chief lifeguard retired at age 57, with a $113,000-a-year pension after 36 years on the job.

Lawmakers in both political parties have often acceded to unions’ requests to avoid political confrontations or to curry favor. They have pushed difficult choices into the future.

But now, with the expenses of past promises coming due, the cost of deferred decision-making is mounting. California alone needs to begin devoting an additional $28 billion a year to state and local public pensions to remedy an existing shortfall, according to one nonpartisan study — and nationwide, estimates of such deficits reach into the trillions over the next few decades.

“We had no idea what we were doing,” said Tony Oliveira, who as a supervisor in Kings County, in central California, voted to increase employees’ benefits, and now is on the board of the state’s enormous pension fund. “This was probably the worst public policy decision in the state’s history. But everyone kept saying there was plenty of money. And no one wants to be responsible if all the cops quit to get paid more in the next town.”

Public employee unions, in their defense, say politicians have unfairly made them into simplistic bogeymen, responsible for problems that have myriad causes. Not all government workers receive generous pensions, they note. A public worker enrolled in the state’s largest pension fund who retired in 2008 with more than 30 years of service received a pension of $66,828 a year, on average, and a retiree with 20 to 25 years of service received around $34,872. Public workers who retire with fewer years on the job receive even less.

Moreover, unions note that they have improved millions of lives and are standing up for workers, who are mostly middle class, at a time when many families are losing ground financially.

“We fight for our pensions and paychecks the same way C.E.O.’s fight for theirs,” said Scott Diederich, a lifeguard and president of the Laguna Beach Municipal Employees’ Association.

Union leaders argue that pension shortfalls account for a proportionally tiny portion of governments’ financial problems and, by all accounts, there are plenty of parties to blame for the growth in payrolls and obligations. Pension officials add that workers are making sacrifices: in the last year, more than 100 California cities and agencies have lowered retirement benefits for new hires or increased the amount employees must contribute for pensions.

The Big Fat Greek Gravy Train

A special investigation into the EU-funded culture of greed, tax evasion and scandalous waste

By Andrew Malone

Even on a stiflingly hot summer's day, the Athens underground is a pleasure. It is air-conditioned, with plasma screens to entertain passengers relaxing in cool, cavernous departure halls - and the trains even run on time.

There is another bonus for users of this state-of-the-art rapid transport system: it is, in effect, free for the five million people of the Greek capital.

With no barriers to prevent free entry or exit to this impressive tube network, the good citizens of Athens are instead asked to 'validate' their tickets at honesty machines before boarding. Few bother.

This is not surprising: fiddling on a Herculean scale — from the owner of the smallest shop to the most powerful figures in business and politics — has become as much a part of Greek life as ouzo and olives.

Indeed, as well as not paying for their metro tickets, the people of Greece barely paid a penny of the underground’s £1.5 billion cost — a ‘sweetener’ from Brussels (and, therefore, the UK taxpayer) to help the country put on an impressive 2004 Olympics free of the city’s notorious traffic jams.

The transport perks are not confined to the customers. Incredibly, the average salary on Greece’s railways is £60,000, which includes cleaners and track workers - treble the earnings of the average private sector employee here.

The overground rail network is as big a racket as the EU-funded underground. While its annual income is only £80 million from ticket sales, the wage bill is more than £500m a year — prompting one Greek politician to famously remark that it would be cheaper to put all the commuters into private taxis.

‘We have a railroad company which is bankrupt beyond comprehension,’ says Stefans Manos, a former Greek finance minister. ‘And yet, there isn’t a single private company in Greece with that kind of average pay.’

Significantly, since entering Europe as part of an ill-fated dream by politicians of creating a European super-state, the wage bill of the Greek public sector has doubled in a decade. At the same time, perks and fiddles reminiscent of Britain in the union-controlled 1970s have flourished.

Ridiculously, Greek pastry chefs, radio announcers, hairdressers and masseurs in steam baths are among more than 600 professions allowed to retire at 50 (with a state pension of 95 per cent of their last working year’s earnings) — on account of the ‘arduous and perilous’ nature of their work.

This week, it was reported that every family in Britain could face a £14,000 bill to pay for Greece’s self-inflicted financial crisis. Such fears were denied yesterday after Brussels voted a massive new £100bn rescue package which, it insisted, would not need a contribution from Britain.

After running battles with riot police, who used tear gas to disperse protesters, thousands are still camped out in the square ahead of a vote by Greek politicians next week on whether to accept Europe-imposed austerity measures.

Even if this is true — and many British MPs have their doubts — we will still have to stump up £1billion to the bailout through the International Monetary Fund.

In return for this loan, European leaders want the Greeks’ free-spending ways to end immediately if the country is to be prevented from ‘infecting’ the world’s financial system. Naturally, the Greek people are not happy about this.

In Constitution Square this week, opposite the parliament, I witnessed thousands gathering to campaign against government cuts designed to save the country from bankruptcy.

After running battles with riot police, who used tear gas to disperse protesters, thousands are still camped out in the square ahead of a vote by Greek politicians next week on whether to accept Europe-imposed austerity measures.

Yet these protesters should direct their anger closer to home — to those Greeks who have for many years done their damndest to deny their country the dues they owe it.

Playing God

 Gore: Population Needs to ‘Stabilize’ to Prevent Global Warming

By Nat Brown

The Los Angeles Times notes:

From the safety of the political sidelines, former Vice President Al Gore is venturing into a touchy topic, presenting his holistic view of how to curb the buildup of greenhouse gases warming the planet. Besides improving technology to reduce fossil fuel emissions, he is advocating “educating and empowering girls and women.” “That’s the most powerful leveraging factor,” Gore said in a speech Monday in New York. “When that happens, then the population begins to stabilize and societies begin to make better choices.”Although not entirely spelled out in the speech, Gore’s thinking goes this way: If women are confident their children will survive, and if they have access to “fertility management,” and if they have the power to decide how many children they want and when to have them, the result would be stabilization of the global population.As it stands now, demographers at the United Nations forecast that the world’s population will hit 7 billion later this year, march past 9 billion in 2045 and exceed 10 billion by the end of the century. Nearly all of the growth is expected to come in poor nations in Asia, Africa and Latin America.

Though I think most of us can guess what “educating and empowering” really means, it looks like Gore’s daughter didn’t get the memo (she has three kids).

There is no place in the Western civilization for Islam

Putting the Wilders Win in Context

By Nina Shea 

After being acquitted by a Dutch court of five criminal charges of hate speech against Muslims, parliamentarian Geert Wilders told reporters: “This is not so much a win for myself, but a victory for freedom of speech.” While Wilders was understandably happy and relieved he is not going to be spending the next 16 months behind bars, the significance of his victory seems overstated.

As I wrote in the Corner on October 17, “The Wilders case demonstrates the continued willingness of authorities in Europe’s most liberal countries to regulate the content of speech on Islam in order to placate Muslim blasphemy demands.” Wilders’ acquittal does not change that.

The presiding judge in the case determined that Wilders’s remarks were sometimes “hurtful,” “shocking,” and “offensive.” But the Court of Amsterdam reached its decision, as Reuters reported, by noting that “they were made in the context of a public debate about Muslim integration and multiculturalism, and therefore not a criminal act.” Thus, this case was decided on the basis that Wilders’s remarks were made in the proper context — in an ongoing public debate on specifically legitimate issues. Using this subjective criterion, the court evaluated the content of Wilders’ words to determine that they were lawful. In another context, or evaluated by another court, they might not be.

Wilders is not the first Dutch parliamentarian to have faced anti-Muslim hate-speech charges, and, based on today’s decision, he may not even be the last. Before Wilders, Dutch parliamentarian Ayaan Hirsi Ali was accused of hate speech against Muslims. In 2003, Hirsi Ali, a women’s rights activist born a Muslim in Somalia, was subject to a criminal investigation for hate speech for her statements linking Islam’s Prophet Mohammed to abuses against women in Muslim communities. While that case was dropped, she was subsequently forced to stand trial in a civil action in the Netherlands for hate speech after announcing plans for a film on the treatment of homosexuals in Islam, a prospect the complainant — Holland’s main Muslim lobbying group — found to both cause “a great deal of pain” and be “blasphemous.” The court did not rule against the defendant but merely reprimanded the MP for having “sought the borders of the acceptable.”

It would seem that the public comments of an influential parliamentarian, like Wilders and Hirsi Ali, would necessarily always be in the context of a public debate, even if his or her comments initiated that debate. Wilders essentially made that argument part of his defense, without avail.

Proceedings against Wilders were in their third year, after several false starts with the prosecutors first refusing to prosecute this case, then a ruling that the initial three judges hearing the trial demonstrated possible bias against Wilders, with a new trial ordered last October, and most recently an investigation into witness tampering by the judge who initially ordered the prosecution that ultimately found no judicial wrongdoing. The dogged adjudication of the Wilders case over the past 29 months shows that Dutch courts remain all too willing to regulate speech on behalf of Islam, even when public officials are talking about matters of public interest, publicly.

Moreover, the offences of “group insult” and “incitement to hatred,” set forth in articles 137 (c) and (d) of the Dutch penal code, remain on the books, and the Council of Europe and European Union require such laws in their member countries. These laws attempt to distinguish between speech against members of a religious minority, which is banned, and speech against the religion, itself, which is allowed. Wilders claimed his speech was the latter, while the court’s deliberations show that the two are easily blurred. Not even Wilders argued against the basic jurisprudence behind these laws.

Whether the Wilders case sets any useful legal precedent for an ordinary Dutch citizen is particularly doubtful. That Wilders has substantial political clout and conducted an effective international campaign to warn that “lights were going out” in Europe with such prosecutions no doubt helped his case, as the national Dutch media pointed out. Average Dutch citizens are very much left in the dark about what they can or can’t say about Islam with legal impunity. Then, there’s the matter of violence to consider; Wilders will continue to require bodyguards against those who have threatened him with death for blasphemy against Islam.

Even without a conviction in the Wilders case, the chilling effect on free speech on and within Islam continues to widen in Europe.

Sinking into Modernity

James Franco Makes Invisible Art He Sells for Real Money

By Annie Vaughan

James Franco is now an artist. But you can't see his work.

Franco, a man of all trades, has been a student, professor, actor, soap actor (there's a difference), and a musician.

But his nifty trick in the art world is finding a way to be an artist without actually executing a physical work.

His work is completely invisible.

Along with Brainard and Delia Carey, the art duo known as Praxis, Franco has helped the Museum Of Non-Visible Art, MONA open its doors.

But it’s pretty empty inside.

Described as “an extravaganza of imagination,” the different pieces of invisible art are on sale from $20 to $10,000. Buyers receive a plaque in the mail describing the art, but no physical work itself.

“You are not buying a visible piece of art; you are buying the title and description card for the imagined artwork” the website stresses.

Works by James Franco include the film "Red Leaves," $25; a costume from the film, $50; and a sculpture costing $100.

The film is said to be “a portrait of a culture on the brink of destruction." It is based on a Faulkner story about imaginary people, MONA founder Brainard Carey told FOXNews.com.

"I originally intended this to be a film that would go to festivals," explained Franco in a video promo for the museum. "But it got so expensive, you know, the budget was so high back then that I never realized it. So I've finally been able to realize it for this museum and now I consider it a piece of art."

Carey said he and his wife came up with the idea of an invisible museum when they gave out hugs and bandages for non visible wounds. “We’re sincere…this is not a hoax or a scam” he told FOXNews.com.

So far the project has made $11, 901.

And that's real money you can see. 

Looting success

What Does "Class Action" Mean?

By L. Rockwell

The news of the Supreme Court decision on Walmart — declining to approve a massive lawsuit against an amazing company — was reported as if it amounted to some devastating blow to American life. Nonsense: the decision actually permits normalcy in economic development to proceed without a new round of destruction of wealth. Some lawyers might be sad, but it is great for the rest of us.

The lawsuit grouped the interests of 1.6 million women who had worked for 3,400 stores since 1998. One can only imagine the looting that would have commenced had the decision gone the other way. It would have been catastrophic. What the Supreme Court did was narrowly decline to wreck even more American labor markets and the gears of free enterprise. It is a small favor, but thank goodness for it.

The lawsuit that was turned back was called a "class-action lawsuit." The word "class" is the English lexicon is usually used in two ways.

The first is the popular sense that refers to social standing. A person can be from the "working class." A person can be part of the "middle class." In American society, there is by tradition no such thing as an "upper class." There might be a "leisure class" or an "upper middle class" or an "upper crust" but no "upper class" — and that probably stems from the charming myth that we abolished such a thing with the elimination of lords and dukes. (A derivative sense is more colloquial. We say that a person "has class," which means that he or she acts and behaves in ways that are generally higher on the social strata than the norm. We might say something is "classy," meaning pretty, beautiful, impressive, or suggestive of wealth and opulence.) This is not the sense in which the term "class" is used for these lawsuits.

The second definition is the relevant one, and it is mostly drawn from academia and the Marxist tradition in particular: The Marxist theory is that all of society is constantly seething in conflicting and exploitative social relationships that pit group against group.

In Marx's view, the core economic conflict was labor versus capital. The idea is that capitalists exploit the workers by sucking the surplus value of production from them such that capital grows ever richer and labor ever poorer. The guy built an entire system of thought based on this idea, and it has inspired revolutions around the world.

It's all a bit strange, because it is so obviously untrue. If I hire you to mow my grass, you are not being exploited. We are cooperating in mutually beneficial exchange. No one has a gun to your head, and we both are free to negotiate the terms of the deal. You can work for anyone who wants to hire you and I can hire anyone who is willing to work for me. This is called peace and exchange; there is nothing exploitative about it.

Marx was just brewing buckets of envy in a time when people were confused about the accumulation of capital and confused about demographic movements and the like. His theory explained nothing and was based on nothing, but somehow it stuck and it still festers, inspiring governments and theorists around the world to try to reinvent Marxism.

One reinvention of Marxist theory is the idea that the gains of whites come at the expense of blacks, or that the gains of men come at the expense of women, or that the gains of abled people come at the expense of the disabled, or that the gains of people in general come at the expense of the environment. They all assume that there is something like a class of people whose interests and outlook are homogeneous in every sense that matters.

This is obviously not the case with the people who joined — or who were joined without their permission, in the usual way — the "class-action lawsuit" against Walmart. First, there is no such thing as the interests of women — or of men, or blacks, or disabled people, or the environment. Interests are always radically heterogeneous because the world is filled with unique individuals with subjective perspectives, ideas, and experiences.

Second, there was no class "acting" in this case. It was a bunch of lawyers using some former Walmart employees — let's just say that these people were being exploited by attorneys — in the attempt to pick the deepest pockets around. Had the lawsuit been won, the women would have received settlements that would pay a day of parking meter fees. The lawyers would have looted it all.

The American legal system should never let such a ridiculous lawsuit make any headway in the court system at all. If we had strict property rights, freedom of association and exchange, and freedom of contract, there would be no such thing as a class-action suit. If we had a real free market, we would be spared that massive social waste that was involved in this preposterous lawsuit.

But then what about discrimination? It comes down to this. If Walmart systematically discriminated against women, there is a wonderful market opportunity open for some other company to hire up all these millions of downtrodden people and make a great killing in the market. It is for this reason that irrational and invidious discrimination is not a feature of the market economy.

There is no such thing as class in a free market. Its members are fluid and based on a huge range of economic conditions that are mostly left to human choice. Class is fluid and nonconflicting. Peace prevails.

As for the Marxist idea of class, yes, its appearance can be created but only by legislation and lawsuits that pit one group against another group. It is wholly artificial and a good example of how the state creates the very problem it purports to solve.

The Supreme Court should never be asked to decide this sort of matter, but its majority opinion grants us a temporary reprieve from more looting of the capitalist class (in the best sense of that term).