Japan Burns with ‘Fire Ice’ Momentum

In terms of technology, it exists, but is prohibitively expensive to use in most cases

By James Stafford

Japan, desperate for new domestic energy sources, is where we now look for research and development that no one else has the patience for—like last week’s news of a Japanese construction company’s plans to build a massive belt of solar panels around the moon’s equator, or this week’s revival of talk about “fire ice”, otherwise known as methane hydrates.
Methane hydrates represent the frozen form of natural gas trapped in crystal lattices underwater—and the news this week is that Tokyo has now discovered another source of fire ice in the Sea of Japan. 
Elsewhere, particularly in North America, the shale boom means that no one is paying too much attention to fire ice, though it is being researched, but in Japan, where there is no shale to speak of—fire ice could be at least a longer-term answer to domestic energy problems. After all, methane hydrates—if we are to believe the experts—could be more plentiful than all known reserves of natural gas, while one cubic foot of solid methane hydrate yields about 164 cubic feet of gas. However, there is some disagreement over the actual volume of commercially viable methane hydrate deposits.
In March, Japan Oil, Gas & Metals National Corp successfully extracted the first gas from deposits of methane hydrate from the ocean, producing 120,000 cubic meters of gas in six days of testing in the Pacific Ocean, off central Japan.
Last week, Japan stumbled upon another source of fire ice in the Sea of Japan, and now the game is on to predict when Japan will start producing commercial quantities of gas from methane hydrates. Those estimations range from two years to 15 years, so we don’t have much to go on.

Caveat on Nelson Mandela

“There’s one place where (Fidel Castro’s) Cuba stands out head and shoulders above the rest – that is in its love for human rights and liberty!”

By Humberto Fontova

A martian visiting earth this week, coasting TV channels and perusing papers, would have to conclude that among the items that most interest this planet’s news bureaus is the plight of former political prisoners, especially black ones.

Well, many Cubans (many of them black) suffered longer and more horrible incarceration in Castro’s KGB-designed dungeons than Nelson Mandela spent in South Africa’s (relatively) comfortable prisons, which were open to inspection by the Red Cross. Castro has never allowed a Red Cross delegation anywhere near his real prisons. Now let’s see if you recognize some of the Cuban ex-prisoners and torture-victims:

Mario Chanes (30 years), Ignacio Cuesta Valle, (29 years) Antonio López Muñoz, (28 years) in Dasio Hernández Peña (28 years) Dr. Alberto Fibla (28 years) Pastor Macurán (28 years) Roberto Martin Perez (28 years) Roberto Perdomo (28 years) Teodoro González (28 years.) Jose L.Pujals (27 years) Miguel A. Alvarez Cardentey (27 years.) Eusebio Penalver (28 years.)

No? None of these names ring a bell? And yet their suffering took place only 90 miles from U.S. shores in a locale absolutely lousy with international press bureaus and their intrepid “investigative reporters.” From CNN to NBC, from Reuters to the AP, from ABC to NPR to CBS, Castro welcomes all of these to “embed” and “report” from his fiefdom.

This fiefdom, by the way, is responsible for the jailing and torture of the most political prisoners (many black) per-capita of any regime in the modern history of the Western hemisphere, more in fact than Stalin’s at the height of the Great Terror. But the Martian would only learn that it provides free and fabulous healthcare and is subject to a “cruel” and “archaic” embargo by a superpower.

Here are some choice Mandela-isms:

“Che Guevara is an inspiration for every human being who loves freedom.”

“The cause of Communism is the greatest cause in the history of mankind!”

“There’s one place where (Fidel Castro’s) Cuba stands out head and shoulders above the rest – that is in its love for human rights and liberty!”

Here are a few items the martian would probably never learn regarding Nelson Mandela or the Stalinist regime he adored:

South Africa’s apartheid regime was no model of liberty. But even its most violent enemies enjoyed a bona fide day in court under a judge who was not beholden to a dictator for his job (or his life.) When Nelson Mandela was convicted of “193 counts of terrorism committed between 1961 and 1963, including the preparation, manufacture and use of explosives, including 210,000 hand grenades, 48,000 anti-personnel mines, 1,500 time devices, 144 tons of ammonium nitrate,” his trial had observers from around the free world. “The trial has been properly conducted,” wrote Anthony Sampson, correspondent for the liberal London Observer. “The judge, Mr Justice Quartus de Wet, has been scrupulously fair.” Sampson admitted this though his own sympathies veered strongly towards Mandela. (Indeed, Sampson went on to write Nelson Mandela’s authorized biography.)

In sharp contrast, when Ruby Hart Phillips, the Havana correspondent for the flamingly Castrophile New York Times, attended a mass-trial of accused Castro-regime enemies, she gaped in horror. “The defense attorney made absolutely no defense, instead he apologized to the court for defending the prisoners,” she wrote in February 1959. “The whole procedure was sickening.” The defendants were all murdered by firing squad the following dawn.

In 1961 a Castro regime prosecutor named Idelfonso Canales explained Cuba’s new system to a stupefied “defendant,” named Rivero Caro who was himself a practicing lawyer in pre-Castro Cuba. “Forget your lawyer mentality,” laughed Canales. “What you say doesn’t matter. What proof you provide doesn’t matter, even what the prosecuting attorney says doesn’t matter. The only thing that matters is what the G-2 (military police) says!”

A reminder:

According to Anti-Apartheid activists a grand total of 3,000 political prisoners passed through South Africa’s Robben Island prison in roughly 30 years under the Apartheid regime, (all after trials similar to the one described above by Anthony Sampson.) Usually about a thousand were held. These were out of a South African population of 40 million. Here’s what Mandela’s “jail cell” looked like towards the end of his sentence.

“‘N*gger!’ taunted my jailers between tortures,” recalled Castro’s prisoner Eusebio Penalver to this writer. “We pulled you down from the trees and cut off your tail!”  they laughed at me. “For months I was naked in a 6 x 4 foot cell That’s 4 feet high, so you couldn’t stand. But they never succeeded in branding me as common criminal, so I felt a great freedom inside myself. I refused to commit spiritual suicide,” continued the late Mr Penalver.

According to the Human Rights group, Freedom House, a grand total of 500,000 political prisoners have passed through Castro’s various prisons and forced labor camps (many after trails like the one described by R.H Phillips above, others with none whatsoever.) At one time in 1961, some 300,000 Cubans were jailed for political offenses (in torture chambers and forced-labor camps designed by Stalin’s disciples, not like Mandela’s as seen above.) This was out of a Cuban population in 1960 of 6.4 million.

So who did the world embargo for “injustice?” and “human-rights abuses?” (Apartheid South Africa, of course)  And who currently sits on the UN’s Human Rights Council? (Stalinist Cuba.)

In brief, none of the craziness Alice found after tumbling down that rabbit hole comes close to the craziness Cuba-watchers read and see almost daily.

What's Wrong with Police in Iceland?

Still burdened with civilized scruples

By William Norman Grigg

In Iceland, police are mourning the unprecedented shooting death of a suspect. In the United States, police are scandalized by the unfamiliar spectacle of an officer using non-lethal means to subdue and arrest an emotionally unstable man who appeared to be armed. Icelandic police are stunned and grieving because officers took a human life. Some American cops are alarmed by the “recklessness” displayed by an officer who spared the life of a Mundane.

The fatal police shooting of a 59-year-old Icelandic man on December 2 was the first to take place in that country since it achieved independence in 1944.

Iceland is not inhospitable to privately owner firearms: it is ranked 15^th in the world in terms of per-capita gun ownership. Its police typically don’t carry weapons – and its population, which is blessed to live in a country where violent crime is all but non-existent, quite sensibly prefers this arrangement.

Following an “officer-involved shooting” in the United States, the department will place the shooter on paid vacation and erect an information barricade to prevent public disclosure of critical facts. It will also quietly leak whatever damaging information about the victim it can find in order to reinforce the presumption that any use of lethal force by police is justified. 

The shooter, who is clothed in “qualified immunity,” will be given a generous interval to confer with police union attorneys in order to devise a suitable story before speaking with investigators. In some cities – Dallas, for example – a cop who fatally shoots a citizen won’t have to worry about being questioned until three days after the incident, and he can use that time to review video records of the event.

Owing to their lack of prior experience with officer-involved shootings, police in Iceland (who are certainly capable of brutal behavior on occasion) are ignorant of this ritual.

Rather than execrating the dead man and extolling the valor of the officers who shot him, the police treated the incident as a tragedy. Police chief Haraldur Johannessen told reporters that he and his department “regret this incident and would like to extend [our] condolences to the family of the man.” Some of the officers involved in the shooting have sought grief counseling to deal with the burden of taking an irreplaceable human life.

Statism: Whether Fascist or Communist, It's The Deadly Opposite of Capitalism

The political spectrum–Left vs. Right–must be defined in terms of statism vs. individual liberty

By Harry Binswanger

Over the last few years, a new and immensely clarifying concept has entered public discussion: “statism.” It has been said that he who controls language controls history. The growing use of “statism” may portend a political sea change, because it pierces a major Leftist-created smokescreen: the placing of fascism on the Right.

This twisting of language and facts has reached ludicrous levels. On November 9th, The New York Times featured a page-one article whose headline blared: “Right Wing’s Surge in Europe Has the Establishment Rattled.” But it turns out that these alleged Rightists “want to strengthen not shrink government and they see the welfare state as an integral part of their national identities.” The article reveals that “The platform of France’s National Front … reads in part like a leftist manifesto.”

We need a rational way of setting up the political spectrum. We have to have some axis of measurement in terms of which we can locate the political meaning of particular ideas and policies. I have no objection to calling this spectrum “Right vs. Left.” I have every possible objection to defining the extreme Right as fascism and the extreme Left as communism.

Suppose that someone proposed a Right-Left axis for eating, saying that the extreme Right is to eat arsenic and the extreme Left is to eat cyanide. The choice would only be: which poison do you want to die from? And the “moderates” would then be those who eat a mixture of arsenic and cyanide. What would be omitted from this setup? Food.

The political equivalent of the arsenic-cyanide spectrum is the fascism-communism spectrum. What is omitted from the setup? A free society–which means: capitalism. What is the actual opposite of capitalism? Statism.

The term “statism” was tirelessly promoted by Ayn Rand. A computer search of her published works for “statism” or “statist” gives over 300 hits. She described statism as the idea that “man’s life and work belong to the state–to society, to the group, the gang, the race, the nation–and that the state may dispose of him in any way it pleases for the sake of whatever it deems to be its own, tribal, collective good.”

Fascism and communism are two variants of statism. Both are forms of dictatorship. Neither one recognizes individual rights nor permits individual freedom. The differences are non-essential: fascism is racial statism and communism is statism of economic class.

Designed by Kafka and Inspired By Hitler?!!

Japan Secures Final Passage Of Secrecy Bill  

Shinzo Abe secured final passage of a bill granting Japan’s govt sweeping powers to declare state secrets. The Bill won final approval of the measures at about 11:20 p.m. Tokyo time after opposition parties first forced a no-confidence vote in Abe’s govt in the lower house. The first rule of the pending Japan’s Special Secrets Bill is that what will be a secret is secret. The right to know has now been officially superseded by the right of the government to make sure you don’t know what they don’t want you to know. It might all seems like a bad joke, except for the Orwellian nature of the bill and a key Cabinet member expressing his admiration for the Nazis,

 "just as Germany needed a strong man like Hitler to revive defeated Germany, Japan needs people like Abe to dynamically induce change." 

from Japan's Subculture Research Center blog,

The first rule of the pending Japan’s Special Secrets Bill is that what will be a secret is secret. The second rule is that anyone who leaks a secret and a reporter who writes it up can face up to ten years in jail. The third rule is that there are no rules at to what government agency can declare state secrets and no checks on them to determine they don’t misuse the privilege; even of no longer existent agencies may have the power to declare their information secret. The fourth rule  is that anything pertaining to nuclear energy is of course a state secret so there will not longer be any problem with nuclear power in this country because we won’t know anything about it. And what we don’t know can’t hurt us.

The right to know has now been officially superseded by the right of the government to make sure you don’t know what they don’t want you to know.

Legal experts note that even asking pointed questions about a state secret, whether you know or don’t know it’s a secret, could be treated as “instigating leaks” and the result in an arrest and a possible jail term up to five years. Of course, the trial would be complicated since the judge would not be allowed to know what secret the accused was suspected of trying to obtain.

Ask the wrong question, five years in jail. 

And of course, trials about state secrets, would by the nature of the law, also be secret trials and closed to the public.

At this point in time, no one has really claimed authorship of the secrecy bill. The author is a secret. Kafka would seem the most likely scrivener for this perplexing legislation, if he was still alive, but ruling coalition members acknowledge that another famous white man from the past may have provided the real inspiration for the bill and its implementation.

An Upper House member of the Diet said on background to JSRC, “Deputy Prime Minister Aso Taro sort of telegraphed the punches of the administration by expressing his admiration for how the Nazi Party forcefully changed the German constitution this summer.

Two Choices to Deal With "Collective Theft"

The "Detroit Solution"

By Mike "Mish" Shedlock

Public union sap is once again oozing from the mouths of economic illiterates and union supporters who just don't understand reality.

Today's sap is brought to you courtesy of the Bloomberg article Pension Threats in Illinois, Detroit Rattle Government Workers. Here are a few sappy comments.

Bev Johns, a retired 67-year-old retired special-education teacher, sat before Illinois lawmakers and asked why they hated teachers. “You are punishing people who devoted their lives to educating children,” Johns told a committee in Springfield on Dec. 3. “You are harming individuals who have educated children, worked long hours, paid for materials out of their pocket and often fed and clothed children.” 

Randi Weingarten, the president of the American Federation of Teachers, which represents 1.5 million workers, told reporters in Washington yesterday. “The unraveling of that social contract is an unraveling of democracy.” 

Charles Craver, a labor law professor at George Washington University in Washington in a telephone interview, whines “I can’t remember any period when I think workers are so threatened.” 

William Jones, a labor historian at the University of Wisconsin-Madison offers the sappiest sap of them all. "How will municipalities recruit teachers, firefighters and trash collectors if the pensions aren’t secure?"

Spare me the Sap
I am sick of watching taxes go up year in and year out so that overpaid, underworked, public union workers can get taxpayer sponsored pensions and pay well beyond what private industry gets.

That sounds harsh. And it is. But it's also reality.

Reality

1.      Cities are broke

2.    Taxpayers are broke

3.    Public union workers don't care to understand the above two points

As I said before, I sympathize. I do. And I also offered a simple solution.
Before unions drive cities into bankruptcy and states into default on pension obligations, The unions ought to get together with city and state officials and work out a plan. And the plan I have in mind would protect the benefits of the majority of union workers.

Welcome to the digital memory hole

We're watching, in real time, as 1984 turns from a futuristic fantasy long past into an instructional manual

By Peter Van Buren 
What if Edward Snowden was made to disappear? No, I'm not suggesting some future CIA rendition effort or a who-killed-Snowden conspiracy theory of a disappearance, but a more ominous kind.

What if everything a whistleblower had ever exposed could simply be made to go away? What if every National Security Agency (NSA) document Snowden released, every interview he gave, every documented trace of a national security state careening out of control could be made to disappear in real-time? What if the very posting of such revelations could be turned into a fruitless, record-less endeavor? 

Am I suggesting the plot for a novel by some twenty-first century George Orwell? Hardly. As we edge toward a fully digital world, such things may soon be possible, not in science fiction but in our world - and at the push of a button. In fact, the earliest prototypes of a new kind of "disappearance" are already being tested. We are closer to a shocking, dystopian reality that might once have been the stuff of futuristic novels than we imagine. Welcome to the memory hole. 

Even if some future government stepped over one of the last remaining red lines in our world and simply assassinated whistleblowers as they surfaced, others would always emerge. Back in 1948, in his eerie novel 1984, however, Orwell suggested a far more diabolical solution to the problem. He conjured up a technological device for the world of Big Brother that he called "the memory hole". In his dark future, armies of bureaucrats, working in what he sardonically dubbed the Ministry of Truth, spent their lives erasing or altering documents, newspapers, books, and the like in order to create an acceptable version of history. When a person fell out of favor, the Ministry of Truth sent him and all the documentation relating to him down the memory hole. Every story or report in which his life was in any way noted or recorded would be edited to eradicate all traces of him. 

In Orwell's pre-digital world, the memory hole was a vacuum tube into which old documents were physically disappeared forever. Alterations to existing documents and the deep-sixing of others ensured that even the sudden switching of global enemies and alliances would never prove a problem for the guardians of Big Brother. In the world he imagined, thanks to those armies of bureaucrats, the present was what had always been - and there were those altered documents to prove it and nothing but faltering memories to say otherwise. Anyone who expressed doubts about the truth of the present would, under the rubric of "thoughtcrime", be marginalized or eliminated. 

Government and corporate digital censorship
Increasingly, most of us now get our news, books, music, TV, movies, and communications of every sort electronically. These days, Google earns more advertising revenue than all US print media combined. Even the venerable Newsweek no longer publishes a paper edition. And in that digital world, a certain kind of "simplification" is being explored. The Chinese, Iranians, and others are, for instance, already implementing web-filtering strategies to block access to sites and online material of which their governments don't approve. The US government similarly (if somewhat fruitlessly) blocks its employees from viewing Wikileaks and Edward Snowden material (as well as websites like TomDispatch) on their work computers - though not of course at home. Yet. 

Great Britain, however, will soon take a significant step toward deciding what a private citizen can see on the web even while at home. Before the end of the year, almost all Internet users there will be "opted-in" to a system designed to filter out pornography. By default, the controls will also block access to "violent material", "extremist and terrorist related content", "anorexia and eating disorder websites", and "suicide related websites". In addition, the new settings will censor sites mentioning alcohol or smoking. The filter will also block "esoteric material", though a UK-based rights group says the government has yet to make clear what that category will include. 

The Reluctant Revolutionary

On Nelson Mandela’s inspiring achievements and tragic failures

By CHARLES LONGFORD

So it has finally come to pass that Nelson Mandela has succumbed to the inevitable and will be buried like every other mortal being. He is being praised, rightly, for his inspirational ability to rise above the brutal racial prejudices of his time. He is being characterised as the most famous victim of the old Apartheid regime, who, despite his 27 years of imprisonment, never sought vengeance against his oppressors but rather led an historic reconciliation process that transformed South Africa into a relatively peaceful, non-racial democracy.

To many, especially in this era of small politicians obsessed with petty issues, Mandela symbolises something profound: an individual willingness to devote one’s life to a grand and good cause. He has come to symbolise mankind’s desire to take a stand against repression and injustice and to create a freer, more equal world.

Alongside these nods to Mandela’s commitment to the cause of challenging Apartheid, with many news channels now playing the court recording from the early Sixties in which he said racial equality was an ideal ‘for which I am prepared to die’, Mandela is also being discussed as a kind of redeeming victim: the victim who inherited the world - more specifically, South Africa - and who prevented a bloodbath and charted a new moral path based upon reconciliation and compromise.

On one level, it is quite legitimate to describe Mandela as a victim of Apartheid. As we will see below, all blacks living in South Africa in the postwar period were victims of racial prejudice. But victimhood, suffering through oppression, is not the same thing as consciously resisting one’s oppression. To do that, what is needed is not the moral high ground that comes with victimhood, with accepting one’s lot, but rather ideas and politics that are capable of inspiring and mobilising one’s fellow victims to change their lot. We owe it to Mandela to assess his qualities as a politician and leader, and his true impact on South Africa, rather than simply remembering what was done to him by others.

Karl Marx, reflecting on the history-making potential of mankind, famously observed that men make their history but not in circumstances of their choosing. Nothing better sums up the political life of Nelson Mandela. It is useful to start with a brief outline of the conditions in which the young Mandela found himself in the early 1950s, in order to understand the circumstances that shaped his political choices and career.

Apartheid and victimhood

The common understanding of Apartheid is that it was an irrational system of racial discrimination introduced by the newly elected Afrikaner Nationalist Party when it came to power in 1948. But Apartheid was not irrational. It was a very rational response to the conditions the National Party found itself in at the time.

Up to the Second World War, South Africa was a colony of Britain. British influence restricted the development of the South African economy, centring it around the production of things Britain needed: gold, diamonds and other raw materials. This was good for Britain, but it thwarted the ambitions of the emerging indigenous capitalist class in South Africa. The National Party government elected in 1948 was strongly influenced by the independent outlook of the Afrikaners, the descendants of the early Dutch settlers. It was committed to promoting the independent development of the South African economy under the direction of local entrepreneurs. Earlier attempts to wrest control over South Africa’s gold and diamond wealth from Britain, half a century earlier, had led to the Anglo-Boer War, when Britain invaded the then independent Boer Republics of the Transvaal and Orange Free State - but now, in the postwar period, Afrikaner nationalists were in control.

The indigenous white South African capitalists set about creating the conditions in which a carefully controlled labour force might produce wealth on a scale that would allow South Africa to compete on the world market. They inherited a host of racist institutions from the British administration. And they took full advantage of this existing pattern of racial discrimination to streamline the economy and realise their capitalist ambitions. A high rate of exploitation had the added advantage of attracting much-needed foreign capital.

This is what gave rise to Apartheid, the subjection of all aspects of black people’s lives to stringent and discriminatory regulation. In 1952, a new law extended influx controls, making it necessary for every black over the age of 16 to carry a ‘reference book’ – the notorious ‘pass’. Another law proclaimed that blacks had no right to live in urban areas. The tribally based homelands for blacks – covering less than 13 per cent of South Africa’s total land space and based in remote and barren areas (initially established by British colonialism) – were now constituted as the only places where blacks were legally entitled to live and own land. ‘Separate development’ was enshrined in law.

Unarmed Man Goes On Shooting Rampage

If this flies in New York, then there is no law

By Mark Steyn

A mentally disturbed man is wandering through traffic outside New York’s Port Authority Bus Terminal. Naturally, the New York Police open fire. They miss the guy. However, the sidewalks being full of people, they manage to hit two female pedestrians, one of them already using a walker, which comes in handy when the coppers shoot you in the leg.

So the DA charges the guy with assaulting the women:

“The defendant is the one that created the situation that injured innocent bystanders,” said an assistant district attorney, Shannon Lucey.

Ah, yes: the “situation” injured the innocent bystanders. If you outlaw guns, only situations will have guns.

The defendant is looking at 25 years in jail for the crime of provoking law enforcement into shooting random citizens. If this flies in New York, then there is no law. 

The Post-Work Economy

A permanent dependency class means a citizenry deprived of dignity

By Mark Steyn

One consequence of the botched launch of Obamacare is that it has, judging from his plummeting numbers with “Millennials,” diminished Barack Obama’s cool. It’s not merely that the website isn’t state-of-the-art but that the art it’s flailing to be state of is that of the mid-20th-century social program. The emperor has hipster garb, but underneath he’s just another Commissar Squaresville. So, health care being an irredeemable downer for the foreseeable future, this week the president pivoted (as they say) to “economic inequality,” which will be, he assures us, his principal focus for the rest of his term. And what’s his big idea for this new priority? Stand well back: He wants to increase the minimum wage!

Meanwhile, Jeff Bezos of Amazon (a non-government website) is musing about delivering his products to customers across the country (and the planet) within hours by using drones.

Drones! If there’s one thing Obama can do, it’s drones. He’s renowned across Yemen and Waziristan as the Domino’s of drones. If he’d thought to have your health-insurance-cancellation notices dropped by drone, Obamacare might have been a viable business model. Yet, even in Obama’s sole area of expertise and dominant market share, the private sector is already outpacing him.

Who has a greater grasp of the economic contours of the day after tomorrow — Bezos or Obama? My colleague Jonah Goldberg notes that the day before the president’s speech on “inequality,” Applebee’s announced that it was introducing computer “menu tablets” to its restaurants. Automated supermarket checkout, 3D printing, driverless vehicles . . . what has the “minimum wage” to do with any of that? To get your minimum wage increased, you first have to have a minimum-wage job.

In my book (which I shall forbear to plug, but is available at Amazon, and with which Jeff Bezos will be happy to drone your aunt this holiday season), I write:

Once upon a time, millions of Americans worked on farms. Then, as agriculture declined, they moved into the factories. When manufacturing was outsourced, they settled into low-paying service jobs or better-paying cubicle jobs — so-called “professional services” often deriving from the ever swelling accounting and legal administration that now attends almost any activity in America. What comes next?

Or, more to the point, what if there is no “next”?

What do millions of people do in a world in which, in Marxian terms, “capital” no longer needs “labor”? America’s liberal elite seem to enjoy having a domestic-servant class on hand, but, unlike the Downton Abbey crowd, are vaguely uncomfortable with having them drawn from the sturdy yokel stock of the village, and thus favor, to a degree only the Saudis can match, importing their maids and pool-boys from a permanent subordinate class of cheap foreign labor. Hence the fetishization of the “undocumented,” soon to be reflected in the multi-million bipartisan amnesty for those willing to do “the jobs Americans won’t do.”

So what jobs will Americans get to do? We dignify the new age as “the knowledge economy,” although, to the casual observer, it doesn’t seem to require a lot of knowledge. One of the advantages of Obamacare, according to Nancy Pelosi, is that it will liberate the citizenry: “Think of an economy where people could be an artist or a photographer or a writer without worrying about keeping their day job in order to have health insurance.” It’s certainly true that employer-based health coverage distorts the job market, but what’s more likely in a world without work? A new golden age of American sculpture and opera? Or millions more people who live vicariously through celebrity gossip and electronic diversions? One of the differences between government health care in America compared to, say, Sweden is the costs of obesity, heart disease, childhood diabetes, etc. In an ever more sedentary society where fewer and fewer have to get up to go to work in the morning, is it likely that those trends will diminish or increase?

The Rise of an Insecure Giant

China’s rise is fraught with fear and uncertainty

By SHLOMO BEN-AMI

By the time China overtakes the United States as the world’s largest economy sometime in the next few years, it will have cemented its status as a major military power – one whose drive to assert itself strategically already is inspiring serious anxiety among its neighbors. But the truth is that China is a solitary, vulnerable rising power – one that faces potentially crippling domestic challenges.

China is currently encircled by US military installations and allies. While Asian countries are largely willing to maintain and even expand their economic ties with China, none (except North Korea, which depends on Chinese aid) is prepared to accept it as the region’s primary power. In fact, US allies like Indonesia and India have emerged as global players largely in response to China’s rise.

For its part, the US has shifted substantial military power toward Asia – with high-profile military deployments in Australia and the Philippines, and 60% of America’s naval capabilities now deployed in the region – and has enhanced its defense ties with Japan and South Korea. Moreover, it is helping to spearhead the Trans-Pacific Partnership, an economic and trade agreement that excludes China but includes many of its regional neighbors.

Against this background, US claims that its strategic rebalancing is not about containing China are not particularly convincing. Indeed, the US is pursuing a strategy of primacy in Asia, not a partnership between equals, and this, together with China’s own internal tensions, is undermining China’s ability to participate productively in regional and global forums.

As it stands, China lacks the confidence and experience needed to navigate the international arena. For example, it will not consider resolving in an international forum its dispute with Japan in the East China Sea over the Diaoyu Islands (called the Senkaku Islands in Japan). International law, China understands, is a double-edged sword that can be used against China in other territorial disputes, or even in its domestic affairs.

F.A. Hayek On "The Great Utopia"

Fascism is the stage reached after communism has proved an illusion

by F.A. Hayek

There can be no doubt that most of those in the democracies who demand a central direction of all economic activity still believe that socialism and individual freedom can be combined. Yet socialism was early recognized by many thinkers as the gravest threat to freedom.

It is rarely remembered now that socialism in its beginnings was frankly authoritarian. It began quite openly as a reaction against the liberalism of the French Revolution. The French writers who laid its foundation had no doubt that their ideas could be put into practice only by a strong dictatorial government. The first of modern planners, Saint-Simon, predicted that those who did not obey his proposed planning boards would be "treated as cattle."

Nobody saw more clearly than the great political thinker de Tocqueville that democracy stands in an irreconcilable conflict with socialism: "Democracy extends the sphere of individual freedom," he said. "Democracy attaches all possible value to each man," he said in 1848, "while socialism makes each man a mere agent, a mere number. Democracy and socialism have nothing in common but one word: equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude."

To allay these suspicions and to harness to its cart the strongest of all political motives—the craving for freedom — socialists began increasingly to make use of the promise of a "new freedom." Socialism was to bring "economic freedom," without which political freedom was "not worth having."

To make this argument sound plausible, the word "freedom" was subjected to a subtle change in meaning. The word had formerly meant freedom from coercion, from the arbitrary power of other men. Now it was made to mean freedom from necessity, release from the compulsion of the circumstances which inevitably limit the range of choice of all of us. Freedom in this sense is, of course, merely another name for power or wealth. The demand for the new freedom was thus only another name for the old demand for a redistribution of wealth.

The claim that a planned economy would produce a substantially larger output than the competitive system is being progressively abandoned by most students of the problem. Yet it is this false hope as much as anything which drives us along the road to planning.

Although our modern socialists' promise of greater freedom is genuine and sincere, in recent years observer after observer has been impressed by the unforeseen consequences of socialism, the extraordinary similarity in many respects of the conditions under "communism" and "fascism." As the writer Peter Drucker expressed it in 1939, "the complete collapse of the belief in the attainability of freedom and equality through Marxism has forced Russia to travel the same road toward a totalitarian society of un-freedom and inequality which Germany has been following. Not that communism and fascism are essentially the same. Fascism is the stage reached after communism has proved an illusion, and it has proved as much an illusion in Russia as in pre-Hitler Germany."

Fractional Reserve Banking: How to Create and Destroy Money

In sum, bank lending is the primary driver of monetary expansion and contraction

BY MATTHEW KERKHOFF

"The key function of banks is money creation, not intermediation."— Michael Kumhof, Deputy Division Chief, International Monetary Fund

In November 18th's remarks I wrote a piece on Quantitative Easing and its implications regarding the money supply and inflation. I received lots of feedback and would like to say thanks to those who took the time to write in. The additional questions posed were very insightful and show there is substantial interest in understanding these concepts in greater detail.

The following piece delves deeper into bank lending and its function as the primary driver of expansion and contraction of our monetary system.

This is going to sound harsh, but any discussion about economics is pointless without a fundamental understanding of the fractional reserve banking system on which our economy is built. The intricacies of this system have profound implications on everything from the money supply to credit market health to price stability and even whether reversion to a gold standard is possible. We're going to start small and lay a foundation of knowledge from which we can then explore some of the these controversial topics.

Jumping right in, fractional reserve banking is the practice where bank deposits are backed by only a fraction of the total deposits. This system predates the formation of governmental banking authorities and regulations. It originated from the practices of early bankers, after they realized that depositors typically do not all demand payment at the same time.

Fractional reserve banking is thought to have evolved through the observations and actions of goldsmiths. Before the advent of central banks, goldsmiths assumed a role similar to depository institutions. They would accept gold and silver for safekeeping and provide a "note" as proof of deposit. These notes slowly gained acceptance as a medium of exchange, thereby acting as a form of paper money. Goldsmiths soon realized that their outstanding notes would not all be redeemed at one time, and began looking for ways to earn extra income from the deposits. As goldsmiths began investing their deposits, they soon ended up with more issued notes than redeemable gold, and the concept of fractional reserve banking took form.

As we're going to see, money in our modern banking system has the ability to multiply through bank lending. Each time a loan is made, money is created. Out of where, you may ask? Out of thin air. Most people would attribute this feat only to the Federal Reserve, but in actuality, every bank does it with every loan they make.

Who Really Betrayed Detroit?

The pension-system trustees and the municipal unions

by Steven Malanga

A federal judge’s ruling yesterday that Detroit worker pensions can be cut as part of the city’s bankruptcy case has angered city workers and shocked some of their supporters. Workers carrying signs outside the federal bankruptcy court yesterday blamed big banks for Detroit’s fiscal woes and demanded, “No cuts to our pensions.” They carried photos of Michigan governor Rick Snyder, painted to make him look like the devil. But if workers seek a culprit, they might look at the city’s pension-system trustees and the unions that were supposed to have influence over them. For years, the trustees granted annual bonuses to retirees and fattened worker-savings accounts with high guaranteed rates of return, siphoning crucial assets out of the retirement system, even as Detroit’s finances deteriorated. By one estimate, reported in theDetroit Free Press in September, the bonuses and guaranteed-interest programs cost the pension funds nearly $2 billion in contributions and foregone investment returns—money that might have made the pension system well-funded today and allowed retirement benefits to remain untouched.

Most press accounts note that city-worker pensions in Detroit are modest. They rarely mention that, for two decades, the city supplemented those pensions with annual, so-called “13th checks” for retirees—an additional monthly pension payment. Pension-fund trustees—themselves city workers, retirees, city residents, and elected officials—handed out nearly $1 billion in these annual payments to retirees in the city’s general pension fund. The trustees defended the payments as rewards to workers in years when the pension system’s investment returns exceeded projections. In lean years, they justified them as social policy. “Many retirees relied on that check to pay their increased utility bills during the winter,” wrote an attorney for the city’s pension system in 2011. “Also remember that the money would go directly into the local economy.”

Self-fufilling beliefs of the left

Children taught that they’re disadvantaged, fail to achieve

By T. Sowell

Depressing news about black students scoring far below white students on various mental tests has become so familiar that people along different parts of the ideological spectrum have long ago developed their different explanations for why this is so. All may have to do some rethinking, in light of radically different news from England.

The Nov. 9-15 issue of the distinguished British magazine The Economist reported that among children who are eligible for free meals in England’s schools, black children of immigrants from Africa meet the standards of school tests nearly 60 percent of the time — as do immigrant children from Bangladesh and Pakistan. Black children of immigrants from the Caribbean meet the standards less than 50 percent of the time.

At the bottom, among those children who are all from families with low-enough incomes to receive subsidized free meals at school, are white English children, who meet the standards 30 percent of the time.

The Economist points out that in one borough of London, white students scored lower than black students in any London borough.

These data might seem to be some kind of fluke, but they confirm the observations in a book titled “Life at the Bottom” by British physician Theodore Dalrymple. He said among the patients he treated in a hospital near a low-income housing project, he could not recall any white 16-year-old who could multiply nine by seven. Some could not even do three times seven.

The German Scapegoat

Solving the wrong problem may not be productive but it can serve as a useful diversion

By DANIEL GROS

Could Germany, which accounts for 1% of the world’s population and less than 5% of its GDP, actually be responsible for the sorry state of the global economy? The US Treasury Department started the chorus with a report on currency manipulators that criticized Germany’s current-account surplus. The European Commission added its voice last month, when it published its scorecard on macroeconomic imbalances and called for an in-depth analysis of the German surplus.

The emphasis on Germany seems much more justified within the context of Europe. But, even there, Germany represents less than 30% of eurozone GDP (and less than one-quarter of output in the EU as a whole). Germany is important but not dominant.

This focus on Germany also overlooks the fact that the country represents just the tip of a Teutonic iceberg: All northern European countries with a Germanic language are running a current-account surplus. Indeed, the Netherlands, Switzerland, Sweden, and Norway are all running surpluses that are larger as a proportion of GDP than Germany’s.

These small countries’ combined annual external surplus is more than $250 billion, slightly more than that of Germany alone. Moreover, their surpluses have been more persistent than those of Germany: ten years ago, Germany had a current-account deficit, while its linguistic kin were already running surpluses of a similar size as today. Over the last decade, this group of small countries has recorded a cumulative surplus larger than even that of China.

Are all of these countries guilty of mercantilist policies? Have all of them engaged in competitive wage restraint?

Much of the facile policy advice provided to correct the German surplus seems misguided when one examines the persistent surpluses of this diverse group of countries. Some, like Germany, are in the eurozone (the Netherlands); others have pegged their currency to the euro unilaterally (Switzerland), while still others maintain a floating exchange rate (Sweden).

Within the eurozone, the counterpart to the German surpluses used to be the deficits of the peripheral countries (mostly Spain, but also Portugal and Greece). This is no longer the case.

Today, the counterpart to Teutonic excess saving is “Anglo-Saxon” dissaving: most English-language countries are running current-account deficits (and have been doing so for some time). Together, the sum of the current-account deficits of the United States, the United Kingdom, and major Commonwealth countries amounts to more than $800 billion, or roughly 60% of the global total of all external deficits.