The sound of a falling "settled" theory

 Science getting settled

 New, convincing evidence indicates global warming is caused by cosmic rays and the sun — not humans

by L. Salomon, Financial Post
The science is now all-but-settled on global warming, convincing new evidence demonstrates, but Al Gore, the IPCC and other global warming doomsayers won’t be celebrating. The new findings point to cosmic rays and the sun — not human activities — as the dominant controller of climate on Earth.
The research, published with little fanfare this week in the prestigious journal Nature, comes from über-prestigious CERN, the European Organization for Nuclear Research, one of the world’s largest centres for scientific research involving 60 countries and 8,000 scientists at more than 600 universities and national laboratories. CERN is the organization that invented the World Wide Web, that built the multi-billion dollar Large Hadron Collider, and that has now built a pristinely clean stainless steel chamber that precisely recreated the Earth’s atmosphere.

In this chamber, 63 CERN scientists from 17 European and American institutes have done what global warming doomsayers said could never be done — demonstrate that cosmic rays promote the formation of molecules that in Earth’s atmosphere can grow and seed clouds, the cloudier and thus cooler it will be. Because the sun’s magnetic field controls how many cosmic rays reach Earth’s atmosphere (the stronger the sun’s magnetic field, the more it shields Earth from incoming cosmic rays from space), the sun determines the temperature on Earth.

The hypothesis that cosmic rays and the sun hold the key to the global warming debate has been Enemy No. 1 to the global warming establishment ever since it was first proposed by two scientists from the Danish Space Research Institute, at a 1996 scientific conference in the U.K. Within one day, the chairman of the Intergovernmental Panel on Climate Change, Bert Bolin, denounced the theory, saying, “I find the move from this pair scientifically extremely naive and irresponsible.” He then set about discrediting the theory, any journalist that gave the theory cre dence, and most of all the Danes presenting the theory — they soon found themselves vilified, marginalized and starved of funding, despite their impeccable scientific credentials.

The mobilization to rally the press against the Danes worked brilliantly, with one notable exception. Nigel Calder, a former editor of The New Scientist who attended that 1996 conference, would not be cowed. Himself a physicist, Mr. Calder became convinced of the merits of the argument and a year later, following a lecture he gave at a CERN conference, so too did Jasper Kirkby, a CERN scientist in attendance. Mr. Kirkby then convinced the CERN bureaucracy of the theory’s importance and developed a plan to create a cloud chamber — he called it CLOUD, for “Cosmics Leaving OUtdoor Droplets.”

But Mr. Kirkby made the same tactical error that the Danes had — not realizing how politicized the global warming issue was, he candidly shared his views with the scientific community.

“The theory will probably be able to account for somewhere between a half and the whole of the increase in the Earth’s temperature that we have seen in the last century,” Mr. Kirkby told the scientific press in 1998, explaining that global warming may be part of a natural cycle in the Earth’s temperature.

The global warming establishment sprang into action, pressured the Western governments that control CERN, and almost immediately succeeded in suspending CLOUD. It took Mr. Kirkby almost a decade of negotiation with his superiors, and who knows how many compromises and unspoken commitments, to convince the CERN bureaucracy to allow the project to proceed. And years more to create the cloud chamber and convincingly validate the Danes’ groundbreaking theory.

Yet this spectacular success will be largely unrecognized by the general public for years — this column will be the first that most readers have heard of it — because CERN remains too afraid of offending its government masters to admit its success. Weeks ago, CERN formerly decided to muzzle Mr. Kirby and other members of his team to avoid “the highly political arena of the climate change debate,” telling them “to present the results clearly but not interpret them” and to downplay the results by “mak[ing] clear that cosmic radiation is only one of many parameters.” The CERN study and press release is written in bureaucratese and the version of Mr. Kirkby’s study that appears in the print edition of Nature censored the most eye-popping graph — only those who know where to look in an online supplement will see the striking potency of cosmic rays in creating the conditions for seeding clouds.

CERN, and the Danes, have in all likelihood found the path to the Holy Grail of climate science. But the religion of climate science won’t yet permit a celebration of the find.

Financial Post

Something out of nothing

The Green Jobs Scam - and Confusion

By IAIN MURRAY

With the massive $787-billion stimulus bill including provisions to encourage the creation of "green jobs," Americans deserve an honest appraisal of how such green jobs will work.  So far, they aren't getting it. 

In fact, a recent statement by Al Gore shows just how much Americans are being misled on this issue.  Green jobs are a shell game, and we're falling for it.  In the Financial Times, on February 17, Gore, in an op ed co-authored with United Nations Secretary General Ban Ki-Moon, asserts that, "In the US, there are now more jobs in the wind industry than in the entire coal industry." 

But as Roger Pielke Jr of the University of Colorado points out, there is something wrong there.  In November 2008, the coal industry generated 155 million megawatt-hours of electricity, while wind generated only 1.3 million megawatt-hours.  If wind really does employ more people than coal, it is doing so at a huge cost to American efficiency, productivity, and competitiveness.

Of course, the wind industry does not employ more people.  Gore and Ban were flat out wrong in their assertion, which should make one question any assertions in Gore's An Inconvenient Truth, or any U.N. document, for that matter. 

As the Christian Science Monitor found out, the figure comes from an apples-and-oranges comparison.  An environmentalist blog had reported that the wind industry employed 85,000 people and the coal industry just 81,000. 

But the wind industry figure represented jobs as "varied as turbine component manufacturing, construction and installation of wind turbines, wind turbine operations and maintenance, legal and marketing services, and more," while the coal industry figure represented just coal miners.

Comparing apples to apples, the coal industry probably employs over 1.4 million people-and those workers are still over seven times as productive as the wind energy workers.

Moreover, when considering how much of the current boom in renewable energy is fueled by subsidies, it becomes clear that a large number of those wind industry jobs are temporary-engaged in the manufacture of parts for and construction of new wind farms.  Meanwhile, we have seemingly called a halt to the construction of new coal-fired power plants, just when the nation is facing a likely power generation shortage.

This problem is highlighted in a report from, of all people, The Sierra Club and the Teamsters union (among others).  "High Road or Low Road?" reveals that, "low pay is not uncommon" in green industries, that "wage rates at many wind and solar manufacturing facilities are below the national average," and suggests that wages for workers employed in the "green building" industry are also far lower than those of union members in other sectors.  Their proposed solution is to unionize these industries, but remember just how unproductive they are even at these low wages.  Replacing a coal job with a "green job" is likely to be a net loss to the economy, meaning further unemployment down the chain.

Other nations have already started down this road.  The German government found that green jobs could only benefit the economy as long as the country remained a net exporter of green technology.  The finding in "High Road or Low Road?" that "some U.S. wind and solar manufacturers have already begun to offshore production of components destined for U.S. markets to low-wage havens such as China and Mexico" should therefore be sobering for green jobs proponents. 

A forthcoming study from Dr Gabriel Calzada of the Instituto Juan de Mariana in Spain reveals an even greater problem.  For every green job created in Spain, 3.9 jobs have been lost as a result throughout the economy.  The author calls them "subprime jobs," with good reason.

When America is in recession, the last thing we can afford to do is destroy more jobs than we create in the name of "stimulus."  The American people deserve to hear the truth about "green jobs." Unfortunately, as long as Al Gore and his allies continue to have the loudest bullhorns, they won't.

Plundering the future

 The welfare state was always an illusion

 

By M. Milke

The latest deals to “save” American and Greek public finances—allowing those countries to put themselves into even deeper debt—should puncture the illusion the welfare state was ever a success. The fact is, it was always built on borrowed time and borrowed money.

That intergenerational sleight of hand worked for a while. Successive post-war generations went to the doctor, availed themselves of government services, built roads and enjoyed other partially debt-financed benefits. Problematically, they handed part of the bill for the same to future generations. It’s akin to buying an expensive home and handing the delayed mortgage payments to your kids when they turn eighteen. 

Greece is merely the most dramatic example of this intergenerational public finance “con job.” The recent European Union deal for Greece, where $109 billion Euros will be lent to tide that profligate country over yet again, is equivalent to $149 billion Cdn. Put another way, every Greek just borrowed another $13,847 Cdn.

To put the worldwide rise in government debt in some historical perspective, consider the debt trajectory of the U.S. and selected European countries since 1995. That’s about the time many Canadian governments began to grapple with our red ink problem.

In 1995, Greece’s net liabilities already amounted to 81 per cent of GDP. (A country’s net liabilities are arrived at by subtracting assets from liabilities; GDP is the value of a country’s economy).  Back then, Canada’s net-debt-to-GDP figure was 71 per cent; Italy stood at 99 per cent; France, Germany and the United Kingdom had net liabilities of 38 per cent, 30 per cent and 26 per cent respectively. Portugal’s was 24 per cent and the U.S. debt figure was 54 per cent of GDP.

Fast forward to 2011 and all the countries on that list are deeper in debt as a percentage of GDP, save Canada: Greece: 125 per cent; Italy: 101 per cent; France 60 per cent; Germany: 50 per cent; Portugal: 76 per cent; the United Kingdom: 62 per cent; the United States: 75 per cent.

In Canada, our net liabilities are 34 per cent of GDP, substantially down from 1995, though up from the low-point in 2008 when the figure was just 22 per cent. (Between 1995 and 2008, our lowered ratio was helped both by a growing economy and some debt payback. Most other countries just kept borrowing.)

For the record, the fault for the ramped-up public debt cannot be placed on “too low” taxes. A variety of countries with widely differing tax levels all continued to borrow massively over that period.

For example, since 1995, and as a percentage of its economy, Greece’s total tax take has been about one-eighth to one-fifth higher than the United States (depending on the year). But high-tax Greece put itself into more debt as did the (relatively) low-tax U.S. Or consider the UK; its tax rates rose steadily since 1995 but so too its red ink problem.

In other words, the assumption that higher tax revenues will save a country from its spending and borrowing addiction is mistaken. That’s not any more likely than a modest raise for a consumer maxed out on her credit cards whose real problem is overspending.

Besides, higher tax rates do not necessarily equal higher revenues when compared with a moderately taxed nation.  A high-tax, inefficient tax regime can slow economic growth and encourage tax cheating and depress tax receipts—another one of Greece’s many problems, actually. 

In Canada, despite our relatively low net debt-to-GDP ratio at present, in most years, our governments played the same pass-the-social-welfare-bill-forward game.

Since 1961 up to the present, the federal government ran deficits in 37 of 50 years (never mind provincial or local red ink or unfunded liabilities on top of all this). Problematically, the federal Conservatives in Ottawa are now in their fourth consecutive red ink year and forecast deficits until at least 2014/15. At that point, the federal debt will stand at $615 billion up from $457 billion in 2008, a one-third increase over that period.

Looking back over post-war years, there were always alternative policy options to the welfare state, ones that would still have provided security to citizens in Europe, the U.S. and Canada. For starters, options included mandated private savings accounts for health and pensions.  Had such accounts been started decades ago, each generation would have been forced to finance its own major social benefits through pre-funding. This would have been superior to the intergenerational transfer of wealth through the politicized tax-and-spend system.    

Instead, for decades, government borrowed massively to finance current social programs out of future tax revenues and handed the bill to future generations. It led to the illusion that the welfare state was sustainable.

Lenin was right

A Conspiracy of Counterfeiters

By Patrick J. Buchanan    

“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”

“Lenin was certainly right,” John Maynard Keynes continued in his 1919 classic, “The Economic Consequences of the Peace.”

“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

Keynes warned that terrible hatreds would be unleashed against “profiteers” who enriched themselves through inflation as the middle class was wiped out. And he pointed with alarm to Germany, where the mark had lost most of its international value.

By November 1923, the German currency was worthless, hauled about in wheelbarrows to buy groceries. The middle class had been destroyed. German housewives were prostituting themselves to feed their families. That same month, Adolf Hitler attempted his Munich Beer Hall Putsch.

Today a coterie of economists is prodding Federal Reserve Chairman Ben Bernanke to induce inflation into the American economy.

Fearing falling prices, professor Kenneth Rogoff, former chief economist for the International Monetary Fund, is pushing for an inflation rate of 5 to 6 percent while conceding that his proposal is rife with peril and “we could end up with 200 percent inflation.”

Paul Krugman, Nobel Prize winner and columnist for The New York Times, is pushing Bernanke in the same direction.

Bernanke, writes Krugman, should take the advice he gave Japan in 2000, when he urged the Bank of Japan to stimulate the economy with “an announcement that the bank was seeking moderate inflation, ‘setting a target in the 3-4 percent range for inflation, to be maintained for a number of years.’”

And who inspired Bernanke to urge Tokyo to inflate? Krugman modestly credits himself.

“Was Mr. Bernanke on the right track? I think so — as well I should, since his paper was partly based on my own earlier work.”

But Krugman is not optimistic about Bernanke’s injecting the U.S. economy with a sufficient dose of inflation.

Why is Ben hesitant? Two words, says Krugman: “Rick Perry.”

Krugman believes Bernanke has been intimidated by Perry’s populist threat in Iowa after his first day of campaigning:

“If this guy (Bernanke) prints more money between now and the election, I don’t know what y’all would do to him in Iowa, but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treasonous.”

Perry was indulging in Texas hyperbole, and the press came down hard on him for language unbefitting a presidential candidate.

Yet Perry has raised a legitimate series of questions.

What should be done to high officials of the U.S. government who consciously set out to dilute and destroy the savings and income of working Americans? What should be done to those who have sworn an oath to defend the Constitution and then steal the wealth of citizens by secretly manipulating the value of the currency, the store of wealth upon which those people depend?

Is inducing inflation — debauching the currency, the systematic and secret theft of the savings of citizens — a legitimate policy option for the Federal Reserve? Has Congress authorized official thievery?

Who do these economists think they are?

Inflation rewards debt — and erodes savings. It is legalized counterfeiting, the deliberate creation of money with nothing to back it up.

If a citizen printed dollars bills, he would be tracked by the Secret Service, prosecuted and imprisoned. Why, then, is the Fed’s clandestine printing of money with nothing to back it up a legitimate exercise and, according to Krugman & Co., a desirable policy for Bernanke and the Fed?

Schooled economists such as Rogoff, Krugman and Bernanke know how to shelter their wealth from the ravages of inflation — and even to get rich. But what about widows whose husbands leave a nest egg of savings in cash and bonds? What are they supposed to do as the value of their savings is wiped out at 4, 5 or 6 percent a year — or whatever annual rate of ruin the Rogoffs and the Krugmans decide upon?

This is not only an economic issue but a moral issue.

To inflate a currency is to steal the money citizens have earned and saved and entrusted their government to protect. Any government that betrays that trust and steals that wealth is not only unworthy of support. It is worthy of being overthrown.

On this one, as Keynes said, Lenin was right.

Perry and Ron Paul deserve the nation’s gratitude for putting this issue of the unfettered power and the amorality of our unelected Federal Reserve on the political docket.

Prepare to Be Betrayed

Marx’s Tea Party

 

The populist right has forgotten an older form of class analysis.

By Anthony Gregory

Last summer Angelo Codevilla’s American Spectator essay “America’s Ruling Class and the Perils of Revolution” made waves in conservative circles for its compelling treatment of the minority ruling class (the political elite and its partisans) versus the “country class” (the rest of us). It was a sophisticated exposition but also broke down the class conflict in simple terms: “The rulers want the ruled to shut up and obey. The ruled want self-governance.” Rush Limbaugh praised the article for helping to explain the struggle of the Tea Party’s populists against the political establishment.

The Tea Party’s rhetoric of defending the little guy against the powerful has always seemed discordant to the left, which regards such class consciousness as its own domain. The left has long identified itself with the idea of two classes in society—the common people and the power elite—each with its own, usually conflicting, interests. When left-wingers speak this way, conservatives like Limbaugh accuse them of “class warfare.” But neither side grasps the full picture: in fact, it was the classical liberal tradition that first employed the class analysis that has survived to this day in altered forms.

“There was a theory of class conflict developed by classical liberals before Marxism and on which Marx himself drew,” libertarian historian Ralph Raico has argued. This theory was associated with such 19th-century French scholars as historian Augustin Thierry and economist Charles Dunoyer, as well as Jean-Baptiste Say and his followers Charles Comte and Jérôme-Adolphe Blanqui. As Raico noted in a January 1991 essay in Liberty, Blanqui wrote “what is probably the first history of economic thought, published in 1837,” in which the French liberal explained:

In all the revolutions, there have always been but two parties opposing each other; that of the people who wish to live by their own labor, and that of those who would live by the labor of others. … Patricians and plebeians, slaves and freemen, guelphs and ghibellines, red roses and white roses, cavaliers and roundheads, liberals and serviles, are only varieties of the same species.

Class analysis was thoroughly incorporated into classical liberal rhetoric by the time Richard Cobden and John Bright were fighting against Britain’s Corn Laws. Bright saw this struggle as “a war of classes. I believe this to be a movement of the commercial and industrial classes against the Lords and the great proprietors of the soil.” The dichotomy between a plundering political class—the rulers and their favored interests—and the masses victimized by state power is further seen in the 19th-century writings of Frederic Bastiat, Herbert Spencer, and John C. Calhoun, among others.

According to Raico, Marx expropriated class analysis from the classical liberals and transformed it from a libertarian framework into a socialist one: the historically inevitable clash between profiting capitalists and exploited workers. Marx regarded the state as the capitalists’ tool. The most wealthy merchants tended to be in bed with the political class, and so it was not difficult for Marx to adapt class analysis from a theory based on legally defined categories—those who had state privileges and those who did not—to one where class was defined according to status in the process of economic production. Instead of rulers versus their subjects, Marx gave us owners vesrus workers.

This permutation of class analysis seduced many thinkers of a liberal, humanitarian inclination and aided the statist makeover of liberalism, which made peace with the state as a means of elevating the masses. By endorsing the proletarian capture of state power, Marx, his followers, and the entire left side of the spectrum have in a sense inverted the original purpose of class analysis. In seeing the state as the people’s best hope, and viewing the wealthy as being opposed to the interests of the democratic state, left-liberals have turned the anti-statist, anti-taxation, anti-monopoly thrust of class analysis on its head, converting it from a case against the state into a case for it.

Modern libertarians, as heirs to classical liberalism, have attempted to reclaim the original vision—while still, like the Marxists, “following the money” to see how the state provides monopoly benefits and direct subsidies to corporate interests. Radical libertarian class analysis maintains the classical liberal focus on the taxing state as the chief enemy, while agreeing with leftists on many particulars of how big businesses—especially the banking industry and defense contractors—use the state to line their pockets at the expense of the people.

The man most responsible for libertarian attention to this subject was economist and historian Murray N. Rothbard. Likely the most significant theorist of modern libertarianism—he built a system integrating natural-rights ethics, anti-imperialism, Austrian economics, and individualist anarchism all under the rubric of one political theory—Rothbard was a dedicated practitioner of classical-liberal class analysis. In a 1967 critique of Lyndon Johnson’s Great Society, Rothbard drew on the work of sociologist Franz Oppenheimer to describe the distinction between the minority ruling class and the victimized majority: “By seizing revenue by means of coercion and assigning rewards as it disburses the funds, the state creates ruling and ruled ‘classes’ or ‘castes’; for one example, classes of what Calhoun discerned as net ‘taxpayers’ and ‘tax-consumers,’ those who live off taxation.”

In his 1974 essay “The Anatomy of the State,” Rothbard finds the state’s origins in plunder—the state was born when bands of marauders decided to stick around and extract regular tribute from their victims, rather than taking all they could at once and killing their prey. The state is “the systematization of the predatory process over a given territory.” And since the state’s relationship with the people is parasitical, it can only maintain its grip through subterfuge.

“[T]he chief task of the rulers is always to secure the active or resigned acceptance of the majority of the citizens” through “the creation of vested economic interests” as well as by “promoting [statist] ideology among the people.”

Hans-Hermann Hoppe, a disciple of Rothbard in economics and political theory, elaborates on these principles in his 1990 paper “Marxist and Austrian Class Analysis,” in which he explains the major disagreements as well as similarities between the two schools:

[T]he basic proposition of the Marxist theory of the state in particular is false. The state is not exploitative because it protects the capitalists’ property rights, but because it itself is exempt from the restriction of having to acquire property productively and contractually.

In spite of this fundamental misconception, however, Marxism, because it correctly interprets the state as exploitative (unlike, for example, the public choice school, which sees it as normal firm among others), is on to some important insights regarding the logic of state operations. For one thing, it recognizes the strategic function of redistributionist state policies.

Scrutinizing the relationships between the state and its favored interests is a focus that has long energized Rothbardians and endeared them to New Left historians like Gabriel Kolko—if not for their conclusions then for their amassing incriminating examples of corporatism at work. Rothbard begins his 1984 essay “Wall Street, Banks, and American Foreign Policy” indicting an entire industry for its intimate ties to the modern state. Unlike businessmen and manufacturers, who “can either be genuine free enterprisers or statists,” bankers, dependent on the state’s credit expansion and protection of fractional reserve banking, “are inherently inclined toward statism.” With this charge Rothbard begins his detailed analysis of how the financial industry has been in cahoots with the American empire since the dawn of the Progressive Era and how other corporate interests have long instigated U.S. military action to open up markets on their behalf.

Rothbard, guided by libertarian class consciousness, wrote that the mark of a radical libertarian was that he demonstrates  “a deep and pervasive hatred of the State and all of its works, based on the conviction that the State is the enemy of mankind.” This orientation of opposition to the political class and seeing it as an enemy informed Rothbard’s coalition-building strategy. He sought alliances with those who seemed naturally adverse to the power elite. In the 1960s, he worked with antiwar radicals who resented being forced to finance and fight a war in Vietnam. In the 1990s, Rothbard saw hope on the anti-Clinton populist right. As Rothbard’s student and colleague Lew Rockwell later noted, after the Cold War “a new opening appeared to achieve Rothbard’s dream of bringing about a middle-class revolution against the state.”

In his 1992 article “Right-Wing Populism,” Rothbard proposed an agenda both populist and radical. He suggested decentralizing government to settle controversies on social issues, while focusing on questions that libertarians and conservatives could rally behind—including slashing taxes, cutting welfare, abolishing racial and other group privileges, dismantling the Federal Reserve (“attacking the banksters”), bringing the troops home, and defending family values against the politically correct state. He emphasized that Washington, D.C., was the enemy. The class analysis was always implied or declared.

The Tea Party at least superficially resembles the bourgeois uprising that Rothbard favored. Its rhetoric opposes Wall Street bailouts, corporate cronyism, and the national political elite. But is the Tea Party’s class analysis accurate enough to constitute a revolutionary movement—or are these mostly partisan opportunists who will unite behind the next Republican president, just as the 1990s anti-Clinton movement backed the spendthrift Bush administration?

Much of the Tea Party’s focus on the elites has been understandable, and even left-liberals like Glenn Greenwald and Jane Hamsher and left radicals like Noam Chomsky have defended some of it, warning fellow leftists not to dismiss the populist anger as unjustified or hypocritical. But whereas some left-liberals have had a mixed reaction to the Tea Parties, Rockwell and many of Rothbard’s other libertarian followers have been skeptical or downright hostile. Ryan McMaken wrote in an April 2009 LewRockwell.com article, “The Tea Parties: We’ve Seen it All Before”:

In fact, Social Security is a bit worse than that.

Yes, It Is a Ponzi Scheme 
by M. Tanner

Texas governor Rick Perry is being criticized for calling Social Security a “Ponzi scheme.”  Even Mitt Romney is reportedly preparing to attack him for holding such a radical view. But if anything, Perry was being too kind.  

The original Ponzi scheme was the brainchild of Charles Ponzi. Starting in 1916, the poor but enterprising Italian immigrant convinced people to allow him to invest their money. However, Ponzi never actually made any investments. He simply took the money he was given by later investors and gave it to his early investors, providing those early investors with a handsome profit. He then used these satisfied early investors as advertisements to get more investors. Unfortunately, in order to keep paying previous investors, Ponzi had to continue finding more and more new investors. Eventually, he couldn’t expand the number of new investors fast enough, and the scheme collapsed. Ponzi was convicted of fraud and sent to prison.
Social Security, on the other hand, forces people to invest in it through a mandatory payroll tax. A small portion of that money is used to buy special-issue Treasury bonds that the government will eventually have to repay, but the vast majority of the money you pay in Social Security taxes is not invested in anything. Instead, the money you pay into the system is used to pay benefits to those “early investors” who are retired today. When you retire, you will have to rely on the next generation of workers behind you to pay the taxes that will finance your benefits.
As with Ponzi’s scheme, this turns out to be a very good deal for those who got in early. The very first Social Security recipient, Ida Mae Fuller of Vermont, paid just $44 in Social Security taxes, but the long-lived Mrs. Fuller collected $20,993 in benefits. Such high returns were possible because there were many workers paying into the system and only a few retirees taking benefits out of it. In 1950, for instance, there were 16 workers supporting every retiree. Today, there are just over three. By around 2030, we will be down to just two.
As with Ponzi’s scheme, when the number of new contributors dries up, it will become impossible to continue to pay the promised benefits. Those early windfall returns are long gone. When today’s young workers retire, they will receive returns far below what private investments could provide. Many will be lucky to break even.
Eventually the pyramid crumbles.
Of course, Social Security and Ponzi schemes are not perfectly analogous. Ponzi, after all, had to rely on what people were willing to voluntarily invest with him. Once he couldn’t convince enough new investors to join his scheme, it collapsed. Social Security, on the other hand, can rely on the power of the government to tax. As the shrinking number of workers paying into the system makes it harder to continue to sustain benefits, the government can just force young people to pay even more into the system.
In fact, Social Security taxes have been raised some 40 times since the program began. The initial Social Security tax was 2 percent (split between the employer and employee), capped at $3,000 of earnings. That made for a maximum tax of $60. Today, the tax is 12.4 percent, capped at $106,800, for a maximum tax of $13,234. Even adjusting for inflation, that represents more than an 800 percent increase.
In addition, at least until the final collapse of his scheme, Ponzi was more or less obligated to pay his early investors what he promised them. With Social Security, on the other hand, Congress is always able to change or cut those benefits in order to keep the scheme going.
Social Security is facing more than $20 trillion in unfunded future liabilities. Raising taxes and cutting benefits enough to keep the program limping along will obviously mean an ever-worsening deal for younger workers. They will be forced to pay more and get less.

Rick Perry got this one right.

Reality is Messy

Anti-nuclear policies leave Germany scrambling for power

By Kelly McParland  

Germany was all in a lather to shut down its nuclear reactors after the disaster at Fukushima panicked the country’s leaders.

What if a similar tsunami and earthquake hit Germany? Nevermind that Germany, unlike Japan, isn’t located on an ocean coastline prone to tsunamis. The point was to make a public show of devotion to alternatives (even if that might mean coal), and please Euro envirozealots.

So Berlin declared that it would shut down eight of its 17 reactors immediately, and the rest within a decade or so. Great celebration. Hurray for the far-seeing legislators and their deep appreciation  of environmental concerns.

Except now Europe’s economic powerhouse is worried about brownouts, and is busily importing energy from countries with working rectors and pollution-spewing coal plants.

The New York Times reports:

“… electricity producers are scrambling to ensure an adequate supply. Customers and companies are nervous about whether their lights and assembly lines will stay up and running this winter. Economists and politicians argue over how much prices will rise.“It’s easy to say, ‘Let’s just go for renewables,’ and I’m quite sure we can someday do without nuclear, but this is too abrupt,” said Joachim Knebel, chief scientist at Germany’s prestigious Karlsruhe Institute of Technology. He characterized the government’s shutdown decision as “emotional” and pointed out that on most days, Germany has survived this experiment only by importing electricity from neighboring France and the Czech Republic, which generate much of their power with nuclear reactors.Then there are real concerns that the plan will jettison efforts to rein in manmade global warming, since whatever nuclear energy’s shortcomings, it is low in emissions. If Germany, the world’s fourth-largest economy, falls back on dirty coal-burning plants or uncertain supplies of natural gas from Russia, isn’t it trading a potential risk for a real one?

Much is made of the fact that Germany produces 17% of its energy from renewables, especially wind, which on some days produces more power than is needed. Except future plans call for an expansion of coal and gas-fired plants anyway, because wind power can only be used when it blows.

But not to worry. The new plants will use “the cleanest technology available and should not aggravate climate change.” (So, if you can generate clean power with coal, why bother with big ugly windmills?) And the plants “will operate within the European carbon-trading system in which plants that exceed the allowed emissions cap have to buy carbon credits from companies whose activities are environmentally beneficial.” Just like Al Gore, who justifies his monster, energy-sucking mansion by buying offsets from someone who, unlike him, practices what they preach.

Energy conservation always sounds so morally upright on paper. But turns out to be so messy in practise.

Which side are you on ?

Castro vs. The Ladies in White

By Mary Anastasia O'Grady

Rocks, iron bars and sticks are no match for the gladiolas and courage of these peaceful Cuban protesters.

Rocks and iron bars were the weapons of choice in a government assault on a handful of unarmed women on the outskirts of Santiago de Cuba on the afternoon of Aug. 7. According to a report issued by the Paris-based International Federation for Human Rights (FIDH), the beatings were savage and "caused them injuries, some considerable."

It was not an isolated incident. In the past two months attacks on peaceful women dissidents, organized by the state security apparatus, have escalated. Most notable is the intensity with which the regime is moving to try to crush the core group known as the Ladies in White.

This is not without risk to the regime, should the international community decide to pay attention and apply pressure on the white-elite regime the way it did in opposition to apartheid in South Africa. But the decision to take that risk suggests that the 52-year-old dictatorship in Havana is feeling increasingly insecure. The legendary bearded macho men of the "revolution," informed by the trial of a caged Hosni Mubarak in an Egyptian courtroom, apparently are terrified by the quiet, prayerful, nonviolent courage of little more than 100 women. No totalitarian regime can shrug off the fearless audacity these ladies display, or the signs that their boldness is spreading.

The Castro brothers' goons are learning that they will not be easily intimidated. Take, for example, what happened that same Aug. 7 morning in Santiago: The women, dressed in white and carrying flowers, had gathered after Sunday Mass at the cathedral for a silent procession to protest the regime's incarceration of political prisoners. Castro supporters and state security officials, "armed with sticks and other blunt objects," according to FIDH, assaulted the group both physically and verbally. The ladies were then dragged aboard a bus, taken outside the city and dropped off on the side of a highway.

Some of them regrouped and ventured out again in the afternoon, this time to hold a public vigil for their cause. That's when they were met by another Castro onslaught. On the same day thugs set upon the homes of former political prisoner José Daniel Ferrer and another activist. Six people, including Mr. Ferrer's wife and daughter, were sent to the hospital with contusions and broken bones, according to FIDH.  

Cuban Talibans

Hispanic Heroines for “Women’s History Month”

This Castroite "improvement of status” and “good life" for Cuban women also somehow tripled Cuban women's pre-revolution suicide rate, making Cuban women the most suicidal on earth. This according to a 1998 study by scholar Maida Donate-Armada that uses some of the Cuban regime’s own figures.

By Humberto Fontova. 


When feminist icon Barbara Walters sat quivering alongside Fidel Castro in 1977 cooing: “Fidel Castro has brought very high literacy and great health-care to his country. His personal magnetism is powerful!” dozens of Cuban suffragettes suffered in torture chambers within walking distance of the hyperventilating Ms. Barbara Walters.
“They started by beating us with twisted coils of electric cable,” recalls former political prisoner Ezperanza Pena from exile today. “I remember Teresita on the ground with all her lower ribs broken. Gladys had both her arms broken. Doris had her face cut up so badly from the beatings that when she tried to drink, water would pour out of her lacerated cheeks.”
“On Mother’s Day they allowed family visits,” recalls, Manuela Calvo from exile today. “But as our mothers and sons and daughters were watching, we were beaten with rubber hoses and high-pressure hoses were turned on us, knocking all of us to the ground floor and rolling us around as the guards laughed and our loved-ones screamed helplessly.”
“When female guards couldn’t handle us male guards were called in for more brutal beatings. I saw teen-aged girls beaten savagely their bones broken their mouths bleeding,” recalls Polita Grau. ^[2]
OK, I apologize for baiting feminist readers during this “Women’s History Month “with the term “suffragette.” In fact voting was merely one of the rights these heroic Cuban ladies sought. Castro’s Stalinist regime jailed political prisoners at a higher rate than Stalin’s own, murdered more political prisoners its first three years in power than Hitler’s murdered in its first six, and abolished private property. And yes, Castro also outlawed voting. So you’ll please excuse these Cuban ladies if they regard the “struggles” of Betty Freidan and Gloria Steinem as a trifle overblown.
I also apologize for singling out Barbara Walters. “Fidel Castro is old-fashioned, courtly–even paternal, a thoroughly fascinating figure!” (NBC’s Andrea Mitchell)
Back in 1996 Fidel Castro was hosted by Mort Zuckerman at his Fifth Avenue pad. A throng of Beltway glitterati, including Mike Wallace, Peter Jennings, Tina Brown, Bernard Shaw, Barbara Walters and Diane Sawyer all jostled for a photo-op and stood in line for Castro’s autograph. But Diane Sawyer was so overcome in the mass-murderer’s presence that she lost control, rushing up, breaking into that toothy smile of hers, wrapping her arms around Castro and smooching the Stalinist torturer on his bearded cheek.
“You people are the cream of the crop!” beamed the Stalinist/terrorist to the smiling throng he’d come within a hair of nuking in 1962.
“Hear, hear!” chirped the delighted guests, while tinkling their wine glasses in honor of the smirking agent of their near vaporization.
We’re smack in the middle of “Women’s History Month.” So let’s chew on this: Fidel Castro and Che Guevara’s regime jailed 35,150 Cuban women for political crimes, a totalitarian horror utterly unknown–not only in Cuba–but in the Western Hemisphere. Some of these Cuban ladies suffered twice as long in Castro’s Gulag as Alexander Solzhenitsyn suffered in Stalin’s.
Their prison conditions were described by former political prisoner Maritza Lugo. “The punishment cells measure 3 feet wide by 6 feet long. The toilet consists of an 8 inch hole in the ground through which cockroaches and rats enter, especially in cool temperatures the rat come inside to seek the warmth of our bodies and we were often bitten. The suicide rate among women prisoners was very high.”
Many of these heroic ladies (Ana Rodriguez, Miriam Ortega, Georgina Cid, Caridad Roque, Mercedes Pena, Aída Díaz Morejón, Ana Lázara Rodríguez, Ágata Villarquide, Alicia del Busto, Ileana Curra, among them) live in the U.S. today ^[3]. But no producer for Oprah or Joy Behar or Katie Couric, none from the Lifetime or Oxygen TV–much less the History Channel, has ever called them. No writer for Cosmo or Glamour or Redbook or Vogue has bothered either.
But you’ve certainly seen their torturer hailed by “Feminist” reporters.
Upon the death of Raul Castro’s wife Vilma Espin in 2006 the Washington Post gushed that: “she was a champion of women’s rights and greatly improved the status of women in Cuba, a society known for its history of machismo.” Actually, in 1958 Cuba had more female college graduates as a percentage of population than the U.S.
This Castroite “improvement of status” and “good life” for Cuban women also somehow tripled Cuban women’s pre-revolution suicide rate, making Cuban women the most suicidal on earth. This according to a 1998 study by scholar Maida Donate-Armada that uses some of the Cuban regime’s own figures.
On Christmas Eve of 1961 a Cuban woman named Juana Diaz spat in the face of the executioners who were binding and gagging her. Castro’s Russian-trained secret police had found her guilty of feeding and hiding “bandits” (Cuban rednecks who took up arms to fight the Stalinist theft of their land to build Soviet –style Kolkhozes.) When the blast from Castroite firing squad demolished her face and torso Juana was six months pregnant. The Taliban’s atrocities against women seem trivial compared to those of the regime gushed over by Barbara Walters, Andrea Mitchell, Diane Sawyer, Medea Benjamin, Maxine Waters, etc. etc. etc.
Thousands upon thousands of Cuban women have drowned, died of thirst or have been eaten alive by sharks attempting to flee the Washington Post’s dutifully transcribed “improvement of status.” This from a nation formerly richer than half the nations of Europe and deluged by immigrants from same.

Debauching your human capital

OLD BLIGHTED

By Mark Steyn

I had a new book out the other day. Usual doom and gloom, as the more alert reader may just about be able to discern from the subtle title: After America: Get Ready for Armageddon. One always hopes, in a competitive market for shrill apocalyptic alarmists, that there will be some topical news peg to give the release date a bit of a lift. And sure enough, the weekend before the launch day, S&P obligingly downgraded the United States from its triple-A rating for the first time in history. You can’t buy publicity like that. Well, okay, you can, if you’ve got $15 trillion and toss it in the Potomac and watch it float out to sea, as the government of the United States has done. But other than that, the stars have to align pretty darn precisely. (It is untrue, by the way, that S&P stands for Steyn & Publicity.)

A few days after the U.S. release, the book debuted in the United Kingdom. Halfway through my narrative, there’s a chapter about civic disintegration in the old country called “The Depraved City.” Obligingly enough, 48 hours before the British launch, London erupted in flames. Switching on the TV to find a beautifully posed image of one of those double-decker buses beloved by tourists vividly ablaze and as perfectly lit as the iconic shot in a disaster movie (the aliens zapping the White House in Independence Day, say), I wondered if my publicist had perhaps let things get a little out of hand. You probably want to be out of town when she decides the nuclear finale could use a bit of a plug.

What’s happening in London is part of the same story as the downgrade. S&P run the numbers, factor in the political probabilities, and produce a green-eyeshade assessment. London reminds us that (as I wrote in this space a couple of issues back) culture trumps economics. The blazing double-decker is where the plot goes after the financial pages.

I quote a little bit of Anthony Burgess in my book. Burgess isn’t as famous a name in the futuristic-dystopia biz as Orwell or Huxley, but he was remarkably prophetic and in a rather lightly worn way. His most famous novel is A Clockwork Orange, thanks to the Stanley Kubrick movie. At one point in the book, the precocious psychopathic teen narrator offers his dad some (stolen) money so his parents can enjoy a drink down the pub. “Thanks, son,” says his father. “But we don’t go out much now. We daren’t go out much now, the streets being what they are. Young hooligans and so on. Still, thanks.”

Burgess published his book in 1962, an era when working-class Britons lived in cramped row houses on dingy streets that were nevertheless some of the most tranquil on the planet. Their residents kept pigeons and tended vegetable allotments. The idea that the old and not so old would not go out, “the streets being what they are,” “young hooligans and so on,” was not just the stuff of fiction but of utterly transformative fantastic fiction.

But it happened in little more than a generation. The men on our TV screens rampaging through the streets were born three decades after Burgess’s novel, yet he had their measure. There is no great “cause,” despite the best efforts of leftie commentators to kit them out with one. They are the children of dependency, the product of what Sir William Beveridge, the father of the British welfare state, called a world without want. And certainly these ski-masked bandits do not want. They do not want to work, they do not want to marry and raise children, they do not want the responsibilities of adulthood, they do not want to live productive lives of any kind. So instead, under the eyes of a cowed and craven politically correct constabulary, they smash the windows of electronics stores and steal the latest toys.

Nineteen sixty-two was a good year for Burgess. He published a second, less well-known futuristic novel. If A Clockwork Orange predicted the Morlocks of the 21st century, The Wanting Seed with disarming ease conjured our Eloi. The other day, a reader reminded me of this passage, written in a Britain with very little television (and certainly no sets in bedrooms) and a healthy fertility rate, and well before Ehrlich’s Population Bomb, mass vasectomies and tube-tying, or even the decriminalization of homosexuality:

How long had it been in England since anyone had seen a play? For generations, people had lain on their backs in the darkness of their bedrooms, their eyes on the blue watery screen on the ceiling: mechanical stories about good people not having children and bad people having them, homos in love with each other, Origen-like heroes castrating themselves for the sake of global stability.

He anticipates an entire aesthetic there, although it barely existed even in embryo back then.

The Eloi and the Morlocks do not interact much except during street riots, but occasionally the former are obliged to acknowledge the latter—as when a handsomely remunerated London advertising designer gets the contract for a stylish campaign about public violence. At bus stops in London, there are posters warning, “DON’T TAKE IT OUT ON US.” At the Underground stations, you see the slogan “IF YOU ABUSE OUR STAFF, LONDON SUFFERS” above a poster of Harold Beck’s iconic Tube map rendered as a giant bruise—as if one of those energetic young rioters had punched London itself in the kisser and beaten the map Northern Line black and Piccadilly Line blue, with other parts of the pulverized skin turning Circle Line yellow and even Central Line livid red.

It is a visually striking ad, made with all the award-winning expertise of the Soho advertising world. Alas, on the streets of London, the real thing didn’t look half so stylish and witty.

My book’s thesis is stated upfront: It starts with the money, but it never stops there—in part because it’s never really about the money. What’s worse than debauching your finances? Debauching your human capital. As London reminds us, much of the Western world is too far down that grim path.

Who is in charge of this asylum?

Take It Away!

By Mark Steyn  

John Hinderaker provides a good precis of the Gibson guitar raids. It seems a curious law-enforcement priority even for the Brokest Nation in History. Very few pianos are now made in the United States, but hey, that’s no reason not to do the same to the guitar industry. I would only add that the (century-old but recently expanded) Lacey Act is a characteristic example of the degeneration of federal “law”-making, whereby narrowly drawn legislation metastasizes way beyond its original intent to the point that no reasonable man, no matter how prudent, can know whether he is or isn’t in breach of it.

Such open-ended “laws” are an invitation to tyranny, and it would be expecting an awful lot for a money-no-object bureaucracy not to take advantage of it. For example:

Consider the recent experience of Pascal Vieillard, whose Atlanta-area company, A-440 Pianos, imported several antique Bösendorfers. Mr. Vieillard asked officials at the Convention on International Trade in Endangered Species how to fill out the correct paperwork—which simply encouraged them to alert U.S. Customs to give his shipment added scrutiny.There was never any question that the instruments were old enough to have grandfathered ivory keys. But Mr. Vieillard didn’t have his paperwork straight when two-dozen federal agents came calling.

Two dozen federal agents? To raid a piano importer? Does the piano industry have a particular reputation for violent armed resistance? Or is it that the most footling bureaucrat now feels he has no credibility unless he’s got his own elite commando team? When you’re wondering how America’s national government settled into the habit of spending $4 trillion a year while only raising $2 trillion, it’s easy to get hung up on fine calibrations of entitlement reform circa 2030. But look at it this way: Imagine if, instead of 24 agents, the federal piano police had to make do with a mere dozen to raid a small importer.

Note this, too:

Facing criminal charges that might have put him in prison for years, Mr. Vieillard pleaded guilty to a misdemeanor count of violating the Lacey Act, and was handed a $17,500 fine and three years probation.

They’re antique pianos. They come with ivory keys. They’re grandfathered in. There is no criminal intent and, in the most basic sense, no underlying crime. Yet he’s looking at being tossed in jail “for years”? Any “justice” system with such an utter lack of proportion is not justice at all. It speaks very poorly for us that we tolerate it.

Been there, done that.

The Marxist at UBS and His Confusion

George Magnus, Senior Economic Adviser at UBS is a Marxist. FT has given him space to write an article which includes such gems as:

Marx analysed and explained insightfully how and why capitalism would succumb to recurrent crises, and especially big ones after a credit bust.

Let's be clear about a few things. The current financial crisis was caused by the on again, off again, money printing by central banks, such as the Federal Reserve.

Austrian business cycle theory fully explains the crises. Indeed, if one understood ABCT, you could have seen the current crisis coming in real time. (See here, here, here, here,here, here, here and here.)

Marx theories were a combination of bad economics, mixed with bad political theory, all wrapped with a Hollywood happy ending:

...in communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, shepherd or critic.

As far as Marx's so called forecast of the crumbling of capitalism. He saw it first developing by the proletariat taking political control. In the Communist Manifesto, Marx and Frederick Engels wrote (My emphasis):

We have seen above, that the first step in the revolution by the working class, is to raise the proletariat to the position of ruling as to win the battle of democracy. The proletariat will use its political supremacy to wrest, by degrees, all capital from the bourgeoisie, to centralise all instruments of production in the hands of the State, ie, of the proletariat organised as the ruling class, and to increase the total production of forces as rapidly as possible.

Once the proletariat is in charge Marx/Engels see 10 steps the proletariat should generally implement to put the world on the road to bliss, including, as first steps, a graduated income tax and a central bank:

Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.

Thus, the Federal Reserve can be seen as Marxist-lite. The quantity of credit in the economy is controlled by the Fed (via control of the money suuply), but the recipients of the credit are not as directed by the Fed. But it is the contol of the quantity of credit that results in the business cycle, as money supply is first increased and then the money growth is slowed or stopped entirely.

In other words, it is the Marxian notion of a central bank controlling credit activities that is at the heart of the Fed. And these central bank activities are what cause the business cycle. So to Marxists like Magnus who claim capitalism is failing and that "Marx-is-relevant school", the response should be, "Yeah, we know what Marxist central banking is all about. It's not capitalism. It's government control. Further we have been there, done that with the Fed and it sucks."