Thursday, December 8, 2011

Trial-free, indefinite detention of anyone, including American citizens


The National Defense Authorization Act is the Greatest Threat to Civil Liberties Americans Face
By E.D. Kain
If Obama does one thing for the remainder of his presidency let it be a veto of the National Defense Authorization Act – a law recently passed by the Senate which would place domestic terror investigations and interrogations into the hands of the military and which would open the door for trial-free, indefinite detention of anyone, including American citizens, so long as the government calls them terrorists.
English: United States Senate candidate , at a...So much for innocent until proven guilty. So much for limited government. What Americans are now facing is quite literally the end of the line. We will either uphold the freedoms baked into our Constitutional Republic, or we will scrap the entire project in the name of security as we wage, endlessly, this futile, costly, and ultimately self-defeating War on Terror.
Over at Wired, Spencer Ackerman gives us the long and short of things:
There are still changes swirling around the Senate, but this looks like the basic shape of the 2012 National Defense Authorization Act. Someone the government says is “a member of, or part of, al-Qaida or an associated force” can be held in military custody “without trial until the end of the hostilities authorized by the Authorization for Use of Military Force.” Those hostilities are currently scheduled toend the Wednesday after never. The move would shut down criminal trials for terror suspects.
war on drugsBut far more dramatically, the detention mandate to use indefinite military detention in terrorism cases isn’t limited to foreigners. It’s confusing, because two different sections of the bill seem to contradict each other, but in the judgment of the University of Texas’ Robert Chesney — a nonpartisan authority on military detention — “U.S. citizens are included in the grant of detention authority.”
An amendment that would limit military detentions to people captured overseas failed on Thursday afternoon. The Senate soundly defeated a measure to strip out all the detention provisions on Tuesday.
So despite the Sixth Amendment’s guarantee of a right to trial, the Senate bill would let the government lock up any citizen it swears is a terrorist, without the burden of proving its case to an independent judge, and for the lifespan of an amorphous war that conceivably will never end. And because the Senate is using the bill that authorizes funding for the military as its vehicle for this dramatic constitutional claim, it’s pretty likely to pass.
I seriously don’t care if you’re a liberal or a conservative or a libertarian or a Zen anarchist. So long as you aren’t Carl Levin or John McCain, the bill’s architects, you can join the Civil Liberties Caucus. Spencer writes:
Weirder still, the bill’s chief architect, Sen. Carl Levin (D-Mich.), tried to persuade skeptics that the bill wasn’t so bad. His pitch? “The requirement to detain a person in military custody under this section does not extend to citizens of the United States,” he said on the Senate floor on Monday. The bill would just letthe government detain a citizen in military custody, not force it to do that. Reassured yet?
Civil libertarians aren’t. Sen. Al Franken (D-Minn.) said it “denigrates the very foundations of this country.” Sen. Rand Paul (R-Ky.) added, “it puts every single American citizen at risk.”
This is what I mean: Give me Rand Paul and Al Franken any day of the week over the Levins and McCains of the Senate. We need more elected officials with the sensibility of Ron Wyden or Al Franken* on the left, or Rand Paul on the right. Right and left are such shoddy, ad hoc descriptors these days anyways.
What’s truly at stake when we start talking about Big Government and such is far more dangerous and preposterous than high marginal tax rates.
We’re talking about the stripping away of our most basic freedoms. We’re talking about a potential state that can call me a terrorist for writing this blog post and then lock me up and throw away the key.
What’s the line from Batman? The night is always darkest just before the dawn. I like to think that’s true, because times seem awfully dark these days.
* Update: Actually, Franken voted for the NDAA so never mind. He’s also sponsoring the PROTECT IP Act which would clamp down on free speech online.

The booming business of cronyism


Illinois: State Of Embarrassment
By Joel Kotkin
Most critics of Barack Obama’s desultory performance the past three years trace it to his supposedly leftist ideology, lack of experience and even his personality quirks. But it would perhaps be more useful to look at the geography — of Chicago and the state of Illinois — that nurtured his career and shaped his approach to politics. Like with George W. Bush and Texas, this is a case where you can’t separate the man from the place.
The Chicago imprint on Obama is unmistakable. His closest advisors are almost all products of the Windy City’s machine politic: Consigliere Valerie Jarrett; his first chief of staff, now Chicago Mayor, Rahm Emanuel; and his current chief of staff, longtime Chicago hackster William Daley, scion of the Windy City’s longtime ruling family.
All these figures arose from a Chicago where corruption is so commonplace that it elicits winks, nods and even a kind of admiration. Since 1973, for example, 27 Chicago Aldermen have been convicted by U.S. Attorney of the Northern District of Illinois.
That culture of corruption affects the rest of the state as well. Both Gov. George Ryan (who served from 1999 to 2003 and  and his successor Ron Blagojevich have been convicted a major crimes. So have four of the state’s last eight governors. Blagojevich’s felonies are part and parcel of a political climate that also includes the also newly convicted  Antonin “Tony” Rezko, a real estate speculator and early key Obama backer, sentenced late last month to a ten-year prison sentence.
Crony capitalism constitutes the essential element of what the legendary columnist John Kass of theChicago Tribune has labeled both the “Chicago way” and the “Illinois Combine”, not primarily an ideology-driven movement. The political system, he notes, “knows no party, only appetites.”
Just look at the special favors granted to vested interests while the state has imposed a 65% boost in income taxes for middle class citizens. Companies like Boeing and United, which have  head offices in Chicago, get tax breaks and incentives, while everyone else pays the full fare. This game is still afoot.  Even as the state deficit persists, other big players such as the CME group, which operates the Chicago Mercantile Exchange, the Chicago Board of Options and Sears are threatening to leave unless their taxes are also lowered.
Thus it’s not surprising then that cronyism has become a hallmark of the Obama administration. Wall Street grandees, a key source of Obama campaign funders in 2008 and again now, have been treated to bailouts as well as monetary policies that have assured massive profits to the “too big to fail” crowed while devastating consumers and smaller banks.
The evolving scandal over “green jobs” — with huge loans handed out to faithful campaign contributors — epitomizes the special dealing that has become an art form in the system of Chicago and Illinois politics.  Beneficiaries include longtime Obama backers such as   Goldman Sachs , Morgan Stanley and Google. Another scandal is building up around the telecom company LightSquared. This company, financed largely by key Obama donors,  appears to have gained a leg up for a huge Pentagon contract due to White House pressure.
If the Chicago system had proven an economic success, perhaps we could excuse Obama for bringing it to the rest of us. Most of us would put up with a bit of corruption and special dealing if the results were strong economic and employment growth.
But the bare demographic and economic facts for both Chicago and Illinois reveal a stunning legacy of failure. Over the past decade, Illinois suffered the third highest loss of STEM (science, technology, engineering and math-related) jobs in the nation, barely beating out Delaware and Michigan. The rest of the job picture is also dismal: Over the past ten years, Illinois suffered the third largest loss of jobs of any state, losing over six percent of its employment.

The president sounds more like a Corleone than a Roosevelt.


Obama's Godfather Speech
By DANIEL HENNINGER
Most press accounts of Barack Obama's speech in Osawatomie, Kansas, Tuesday described it as delivered by the "president of the United States." And indeed the person delivering it analogized himself to Presidents Teddy Roosevelt, Franklin Roosevelt, Dwight Eisenhower and Bill Clinton. In fact, the Osawatomie speech was not given by the President of the United States. It was given by the leader of the Democratic Party.
Most of the time, this distinction isn't a problem in the United States because historically people have tended to think that the office of the presidency represents "all the people." This doesn't mean everyone expects to benefit from a president's policies. What it means is that in some informal way no one has to worry that the presidential motorcade, so to speak, will drive off the road so that it can plow into you. That is no longer the case in the U.S.
The Osawatomie speech sounded like what you'd expect to hear in Caracas or Buenos Aires. As in: "The free market has never been a license to take whatever you can from whomever you can." (Applause.) And: "Their philosophy is simple. We are better off when everybody is left to fend for themselves and play by their own rules."
Some will say hearing crude Chavista populism in the Obama speech is an overreaction. That once it's understood the Kansas speech was the work of the party leader, not the president of the United States, it becomes easier to think about it without overreacting to its intense and vivid rhetoric: "Millions of working families in this country . . . are now forced to take their children to food banks for a decent meal."
Mr. Obama, the bloodless political analysis of the speech runs, was just rallying his base. He needs to. Last month, in an election for state offices in Virginia, which Mr. Obama carried in 2008, Democrats turned out poorly, and Republicans won at every level of government, even in "independent" northern Virginia.
Democrats are depressed about the awful economy we've had the past three years. In Mr. Obama's view, this is a coincidence; the bad economy happened during his term because of mistakes someone else made in 2001 and 2003. Lest the base confuse his policies with someone else's, Mr. Obama needs to transform Democratic depression into some form of Democratic energy. This week, and apparently in the election next year, he has chosen a strategy based on fear and loathing of an opposition he identifies simply as, "They." "They argue, even if prosperity doesn't trickle down, well, that's the price of liberty."
About two-thirds through Mr. Obama's Kansas speech, I started to think of "The Godfather." After slapping around the "wealthy" for about a half hour, Mr. Obama said, "This isn't about class warfare." Maybe that's true. In "The Godfather," when awful things are about to be done to people, Michael Corleone or Tom Hagen reassure those about to get hit, "It's not personal; it's strictly business."
But I could be wrong about that. There is that defining moment when Michael Corleone says to Fredo, his brother, "You're nothing to me now." When even as party leader, a president of the United States gives a major speech in which people get singled out repeatedly as basically enemies of "the middle class," one has to wonder if they are nothing to him.
You then have to wonder about the tenor of another Obama term in office. If in fact there are categories of Americans he simply doesn't like, a second Obama term, like the last half of "Godfather II," could be a clinical exercise in hammering the people he singled out in this speech. Metaphorically speaking.
The Kansas speech was built around one concrete policy idea: that the rich and millionaires (officially still defined as families with before-tax income above $250,000) should send him more money so he can "invest" it. This single policy, if we heard correctly, will end high unemployment, raise middle-class incomes, put children through college, make America fair and defeat countries that pollute.
But will it?
Mr. Obama says everyone has to play by his new rules: "Unless you're a financial institution whose business model is built on breaking the law, cheating consumers and making risky bets that could damage the entire economy, you should have nothing to fear from these new rules." Really? Citigroup on Thursday said it will eliminate 4,500 jobs. In the third quarter alone, 2,500 U.S. banks cut 20,332 jobs. Let 'em go. In the coming Obama economy, they can "make wind turbines and . . . high-powered batteries."
What the Democratic base would get out of an Obama re-election is political power, which counts for something. It lets you tell other people what to do. But nothing in that Kansas speech, especially the wealth taxes, will produce real growth in the dry economy America has had for three years. Strong growth is the only solution to the Osawatomie catalog of horrors. If he wins, five years from now, the president's base will be about where it and nearly everyone else is today, trying to stay afloat in Barack Obama's still waters.

A dose of sobriety for every besotted age

The End of the World: H. G. Wells


Wells-01-Wells-at-Writing-Desk.jpg
The End of the World is an apocalyptic myth that first becomes prominent in religious speculation in the period of Late Antiquity. St. John’s Apocalypse, included as the last book of the New Testament, is the best-known item in the genre, with its elaborate visions of Armageddon and the Last Judgment. Persistently, however, since the French Revolution, the myth of the End of the World has secularized itself, expressing its eschatological anxiety in terms of entirely this-worldly events. In the Twentieth Century, the End of the World became a staple of “scientific romance” or science fiction, where it often concerned the perfection of destructive instrumentality. In England beginning in the 1870s, the foreign invasion story became popular. In George Tomkyns Chesney’s many times reprinted Battle of Dorking (1871), Kaiser Wilhelm I, not content with the defeat of France at Sedan, pushes on through Belgium and the Netherlands, crosses the Channel, and reduces Britain to vassalage. Sometimes the invasion involved the so-called Yellow Peril, an onslaught, in some non-specific near future, by militarized hordes of Chinese or Japanese, who overwhelm Europe.

The End of the World typically presents itself in a literalist manner, with the physical obliteration of the globe and humanity. The antecedents in this case go as far back as the first half of the Nineteenth Century, especially to the American writer Edgar Allan Poe (1809 – 1849). Best known as the inventor of the detective story, Poe also established the broad outlines the science fiction story. Poe’s “Conversation of Eiros and Charmion” (1839), the earliest tale of a cosmic collision that destroys humanity, climaxes in a planetary conflagration when, the chemistry of the comet’s tail having removed all nitrogen from earth’s airy mixture, the remaining oxygen-rich atmosphere induces all organic matter to burst into flame. Astronomer and science journalist Camille Flammarion (1842 – 1925) expanded on Poe’s innovation in his novel Le fin du monde (1893) where once again a cosmic interloper brings death to the earth, destroying it in a direct collision. Abel Gance loosely adapted Flammarion’s novel to the silver screen in 1931. Both Poe’s short story and Flammarion’s novel include descriptions of future, decadent civilizations, in thrall to which much of human nature has already gone extinct even before the physical cataclysm occurs.

The greatest interest of the End of the World in fiction comes, in fact, not from the cosmic, but rather from the sociological, political, and civilizational variants of the trope. A world-obliterating impact leaves no survivors and ceases to be pathetic in the instant when it occurs; but social, political, and civilizational catastrophes reserve a few survivors, who attest to their experience and add, perhaps, to humanity’s small store of wisdom. None was better at this type of End-of-the-World story than Herbert George Wells (1866 – 1946). He made an early success of such a tale in The Time Machine (1895) and his very last book, The Mind at the End of its Tether(1946), is the oddest and most disturbing End-of-the-World story of all, except that Wells insists that it is the not a story but the apocalyptic truth.

I. Wells wrote two planetary collision stories, borrowing the idea from Poe’s “Conversation.” These are “The Star”(1897) and In the Days of the Comet (1906). In “The Star” – where Wells achieves an impartial, objectively analytical tone that he would refine in his novel-length catastrophe stories – the real disaster is human complacency, as it would be again in many of the same author’s “scientific romances.” Even in the civilized nations, Wells asserts, people rarely develop their awareness beyond the demands of routine and immediacy; while petty worries eat up its quotient of starveling intelligence, the typical modern mind altogether lacks a cosmic sense. When the astronomer Ogilvy calls attention to a “retardation” in the orbital velocity of the eighth planet, “such a piece of news was scarcely calculated to interest a world the greater portion of whose inhabitants were unaware of the existence of Neptune, nor… did the subsequent discovery of a faint, remote speck of light in the region of the perturbed planet cause any very great excitement.” Even after the interloper, in colliding with Neptune, becomes visible in daylight, effulgent and growing, the putatively educated regard the phenomenon blandly as a stellar novelty without implication for their lives. The most backward and superstitious people, by contrast, invest the “fiery signs” with due portentousness. In Europe and America only the perspicacious few grasp the likelihood that, “Man has lived in vain.” Otherwise, as Wells writes, “shops... opened and closed at the proper hours” and “use and wont still ruled the world.”

The celestial body’s inevitable near-encounter with Earth solicits the full range of cataclysm in massivetsunamis, conflagration of the atmosphere, deluge, and seismic tremor, all of which leave a small stunned nucleus of survivors huddling in the wreckage. Wells hints at “a new brotherhood,” emerging from the shock and ruin of an altered geography, which organizes “the saving of laws and books and machines.” This too would become a standard Wellsian trope. “The Star” ends with a sudden, unexpected shift of perspective. Martian astronomers assess the event as “astonishing” in consideration of “what little damage the earth… has sustained.” “The Star” tells objectively of a catastrophe cosmic on the one hand and intellectual on the other. The intellectual debacle interests Wells more than the cosmic one. The Wellsian brand of Darwinism focuses much less on physiological than it does on psychological, ethical, and technical adaptation, as narrowly biological as Wells could nevertheless sometimes be. Stultified minds fail to grasp either the scale or the peril of universal forces.
Wells-02-Martian-Tripods-Attack.jpg
The magnificent opening paragraph of The War of the Worlds (1897) enjoys notoriety – from its partial rehearsal in the several, filmed versions of the scenario – to the extent that commenting on it strikes the writer as presumptive. Nevertheless, the same opening paragraph develops motifs from “The Star,” particularly “use and wont,” in such a way as to invite a renewal of consideration. Logicians urge that argument from analogy offends against forensic procedure, but Wells would have it that the main ingredient of complacency, which he again condemns, is the failure to consider analogies. The whole of Wells’ paragraph operates analogically. Wells invokes “intelligences greater than man’s,” mentalities “vast, cool and unsympathetic,” by which men have been “scrutinized and studied almost as narrowly as a man with a microscope might scrutinize the transient creatures that swarm and multiply in a drop of water.” That men “with infinite complacency” felt “assurance” in what Wells calls “their empire over matter,” belongs, as the narrator says, to the class of “mental habits… of departed days.”

From the history of the European empires The War’s discourse draws in various items of unavoidable pertinence. The narrator, writing from a vantage point six years after the Martian attempt, details the onslaught’s effects in Britain, but far from wringing his hands in resentful anger he seems actually to mitigate the enemy’s blameworthiness: “Before we judge [the Martians] too harshly we must remember what ruthless and utter destruction our own species has wrought, not only upon animals, such as the vanished bison and the dodo, but upon its own inferior races.” The Tasmanians come under discussion, who, “in spite of their human likeness, were swept out of existence in a war of extermination waged by European immigrants.” Mars being a world “far gone in its cooling” while the earth “is still teaming with life,” and life being everywhere “an incessant struggle for existence,” the Martians acted logically to avoid “the destruction that generation after generation creeps upon them.” The failure of the Martian attempt to wrest earth and its resources prompts the invaders to turn their attention elsewhere. “Lessing has advanced excellent reasons,” writes the narrator in the Epilogue, “for supposing that the Martians have actually succeeded in effecting a landing on Venus.”

The main interest for most readers in The War of the Worlds consists in Wells’ vivid descriptions of mechanized warfare between a British military that fights with the armaments of the Boer and Spanish-American Wars and an attacking force whose weaponry marks a quantum leap in applied science. The “heat ray” anticipates the beam weapons that modern armories still have not perfected, while the “black smoke” uncannily prefigures the poison gas that belligerents would unleash during the trench-warfare of 1914-1918. The Martians dominate the battlefield. Occasionally, a crack British gun crew or an astute dreadnaught commander scores a tactical victory. The fragility of the British social fabric, however, almost as much as Martian technical superiority, supplies the invader with his most effective instrument of war. Once the Martians emerge from their initial “pit” at Horsell Common near Woking, Surrey, panic spreads infectiously. “The most extraordinary thing to my mind,” writes the narrator, “was the dovetailing of the commonplace habits of our social order with the first beginnings of the series of events that was to topple that order headlong.”


Information becomes a casualty. The sudden paucity of news, disrupting use and wont, in turn exacerbates the rising hysteria, which in its own turn propels the disintegration of social order. In London, with trains gone missing and the railway timetables now useless, a great exodus on foot begins, which quickly degenerates into mob-behavior and lawlessness. The narrator’s brother, a medical student in London, witnesses the rapid descent into chaos. He records “a roaring wave of fear that swept through the greatest city in the world… the stream of flight rising swiftly to a torrent, lashing in a foaming tumult around the railway stations, banked up into a horrible struggle about the shipping in the Thames, and hurrying by every available channel northward and eastward.” In the company of two fleeing women, the brother resorts to a revolver to fight off criminal opportunists. Near the suburb of Edgeware, “the main road was a boiling stream of people”; a bit farther, they encounter “a whole population in movement,” whose constituents wear “fear and pain on their faces.” Martian vulnerability to terrestrial infections stops the attack, a kind of secular Providence.

In the Epilogue, the narrator remarks, “Whether we expect another invasion or not, our views of the human future must be greatly modified by these events,” which “have robbed us of that serene confidence in the future which is the most fruitful source of decadence.” Wells is once again playing with analogies. Self-absorption and unfounded certainty prevented humanity from foreseeing the Martian attack; self-absorption and unfounded certainty prevented the Martians from foreseeing their sanitary incompatibility with the earth’s bacterial environment. Humanity found lucky redemption from the mentality of use and wont – ofcomplacency – that made it prey to the Martians in theMartian complacency that prevented the invaders from imagining untoward conditions on a new world.

II. A good academic parlor game would be to pose the question, what English-language novel of the first quarter of the Twentieth Century innovatively takes its plot from Homer’s Odyssey while updating the action in a modern setting? Or one might ask, also of the professoriate during cocktail hour, what thinker first articulated the principle of escalation, usually attributed to Herman Kahn, and who, before 1910, described an aerial terror-attack on New York City? The bafflement of the literature and political science faculties would likely be complete because today almost no one reads one of the most popular British writers of the first half of the just-completed century. These questions implicate Wells’ prophetic vision of global strategic conflict, The War in the Air (1906). Whereas in The War of the Worlds, the hostile agency, actually inhuman, arrives on earth from another planet, in The War in the Air, dear old humanity rises to the role of its own devil. In particular, haphazard adoptions of new technology put unforeseen strains on social, political, and economic arrangements that reflect the folkways of an earlier age. Old habits, stubbornly maintained, prove inadequate to developing circumstances until a type of cultural schizophrenia occurs. “Things fall apart, the center cannot hold,” as a noteworthy Irish poet with a prophetic turn of mind would later write. Wells was quite as vatic and clairvoyant as any poet.
Wells-04-Wells-Playing-An-Indoor-War-Game.jpg
The first sentence of The War in the Air is, “This here progress… it keeps on.” Tom Smallways, the protagonist’s elder brother, mutters the thought, a bit of non-committal, vaguely skeptical commentary from a bewildered soul representing a vestige of feudal mentality that has not, and perhaps cannot, keep up with changes in the mode of life. Bert Smallways, Wells’ working-class substitute for a Homeric hero, grasps his brother’s limitation dimly.

Correlation is not causation


The Accelerator and Say's Law
by William H. Peterson
Economists, like women, are not immune to the dictates of fashion. One such dictate in vogue among post-Keynesians is the accelerator, which enjoyed similar popularity in the early 1920s. At least a partial reason for the renewed popularity of the accelerator is that it forms an integral part of the General Theory.[1]
The acceleration doctrine holds that a temporary increase in consumer demand sets in motion an accelerated "derived demand" for capital goods. This action, according to adherents of the doctrine, explains at least part of the causation of the business cycle. As evidence supporting this theory, accelerationists point to boom-and-bust, feast-and-famine conditions prevalent in capital-goods industries.
A typical illustration of the acceleration principle follows. Assume a "normal" annual demand for a certain consumer good at 500,000 units. Production is accomplished through 1,000 durable units of capital goods; capacity of each capital unit: 500 consumer units per year; life of each unit: 10 years. Then assume a 10 percent increase in consumer demand. Thus:
Annual Consumer
Demand
Capital Goods
Annual Capital-Goods
Demand ("derived")
"normal year"
500,000
1000
100 (replacements)
next yr. + 10%
550,000
1100
200 (replacements plus new)
3rd yr.-new "nor."
550,000
1100
100 (replacements)
Conclusion: 10 percent increase in consumer demand led to 100 percent increase in capital demand in same year but to 50 percent decrease in capital demand in following year.
The argument against the acceleration doctrine simply shows so many unreal assumptions and a vital non sequitur as to nullify any validity in the doctrine whatsoever. An analysis of these objections follows.
1. Rigid Specialization in Capital-Goods Industries
Accelerationists pose their doctrine on the basis of a given capital-goods industry supplying equipment for a given consumer-goods industry and no other. Thus a decrease in consumer demand or even a falling-off in its rate of growth immediately cuts off part of the capital-goods market, and the "famine" phase of the capital-goods industry begins.
Yet where is the capital-goods industry so rigidly specialized as to preclude its serving other markets, with or without some conversion of its facilities? Are we to presume that businessmen under the pressure of overhead and profit maximization will twiddle their thumbs waiting for their consumer demand to "reaccelerate"? It is clear that accelerationists deny or ignore convertibility of facilities and substitutability of markets.
Within many capital-goods industries, trends of diversification and complementarity are evident. Examples: A machine tool manufacturer that has undertaken lines of construction and textile equipment; a basic chemical producer that has engaged in the manufacture of home clotheswasher and dishwasher detergents. These trends break down the "industry" classifications, on which the accelerator is based.
2. No Unutilized Capacity in the Consumer-Goods Industry
Holders of the acceleration doctrine assume the consumer-goods industry is operating at the extensive margin of production and no intensive possibilities for greater production exist.
But very few consumer-goods industries, typically, operate at constant peak capacity. To do so is generally to operate beyond the point of optimum efficiency as well as beyond the point of maximum profit. The usual case then, other than during wartime, is that an industry operates with some unutilized capacity, some "slack." Normally this unutilized capacity is to be found among the marginal and submarginal producers, and it is these producers which could and probably would absorb any increase in consumer demand — without, of course, the purchase of new equipment.
Yet even the successful and efficient producer would likely consider other means of absorbing higher consumer demand before committing himself to more equipment and greater overhead. For example, he could expand the existing labor force, resort to overtime, add one or two additional shifts, subcontract work in overloaded departments, and so on. That such alternatives are feasible without more equipment is evidenced by the experience of even the most efficient firms in the utilization of their capital equipment. Examples: A West Coast airplane manufacturer found his gear-cutting equipment in use only 16 percent of the time; a New York newspaper plant utilized its presses only 11 percent of the time. The concept of 100 percent utilization of all capital equipment is not tenable.
3. Automaton Role for Entrepreneurs
Accelerationists share the danger common to all holistic and macro approaches to economic problems — namely, the submergence of individual and entrepreneurial decisions (human action) to a constant factor within a pat formula. Such treatment implies on the part of entrepreneurs irrationality or sheer impulsiveness. Boulding described this situation thusly:
The picture of the firm on which much of our analysis is built is crude in the extreme, and in spite of recent refinements there remains a vast gap between the elegant curves of the economist and the daily problems of a flesh-and-blood executive.[2]
Accelerationists argue that a temporary rise in consumer demand automatically calls into being additional capital goods. If this were true, it follows that entrepreneurs in capital-goods industries witlessly expand their capacity and thereby commit themselves to greater overhead without regard to future capital-goods demand.
True, entrepreneurs can and do err in gauging future demand. But the concept of automatic response to any rise in demand, on the order of the conditioned-reflex salivation of Pavlov's dogs, is not warranted. Increased capacity is less of a calculated risk in response to increased current demand than it is to anticipated future demand. This anticipation, in turn, is likely to be based on market research, price comparison, population studies, cost analysis, political stability, etc., rather than on impulse.
4. Static Technology
It is not surprising that the accelerator perhaps reached the zenith of its popularity when professional journals were replete with terms like "secular stagnation" and "technological frontier." (Nowadays the term is "automation." Apparently we have moved from the one extreme of too little technology to the opposite extreme of too much.) Such heavy-handed treatment of technology does not coincide with experience. Science and invention do not hibernate during depressions. Du Pont introduced both Nylon and Cellophane during the 1930s.

The desperate quest for real money


Banks Prep for Life After Euro
[PRINTING]
Countries Study Printing Their Own Notes in Case Monetary Union Unravels
By DAVID ENRICH, DEBORAH BALL and ALISTAIR MACDONALD

Some central banks in Europe have started weighing contingency plans to prepare for the possibility that countries leave the euro zone or the currency union breaks apart entirely, according to people familiar with the matter.

The first signs are surfacing that central banks are thinking about how to resuscitate currencies based on bank notes that haven't been printed since the first euros went into circulation in January 2002.

At least one—the Central Bank of Ireland—is evaluating whether it needs to secure additional access to printing presses in case it has to churn out new bank notes to support a reborn national currency, according to people familiar with the matter.

Outside the 17-country euro zone, numerous European central banks are eyeing defensive measures to protect against the possible fallout if the euro zone were to unravel, other people said. Several, including Switzerland, are considering possible replacements for the euro as the external reference point, or peg, they use to try to keep their currencies' values stable.

The central banks' planning is preliminary, according to the people familiar with the matter. It doesn't represent an expectation that the euro zone is headed for dissolution.

But the fact central bankers are even studying the possibility, which until this fall was considered unthinkable, underscores how swiftly conditions have deteriorated. Policy makers, central bankers and investors around the world have pinned their hopes on this week's Brussels summit to forge a long-awaited solution to the Continent's two-year financial crisis, which was ignited by doubts over countries' abilities to pay their debts.

The stakes are high. A failure of Europe's leaders to defuse the crisis would fuel already growing doubts about the viability of the euro zone. Many policy makers, bankers and other experts fear the monetary union's unraveling would not only reverse a decade of economic integration but also would trigger financial chaos.

All eyes are now on the European Central Bank and its rate decision today ahead of a crucial meeting of European Union leaders in Brussels. Dow Jones's Martin Essex discusses market expectations and institutional faultlines.

J.P. Morgan Chase & Co. put out a report Wednesday that advised investors and companies to hedge against a collapse of the euro zone—though the bank said the likelihood of that happening was just 20%. It said many corporate clients were buying currency derivatives to place bets against the euro.

Before the formal launch of the euro in January 2002, an army of planners spent years choreographing the logistics of the currency's debut, including the minting of billions of bank notes and coins and the distribution of the new currency to banks and businesses across the Continent. Disassembling the bloc would be messy at best. Among the many challenges, loans and deposits currently denominated in euros would have to be switched to new currencies. And individual countries would need to decide whether to dust off their old currencies and, if so, how to quickly produce large quantities of paper money.

In Montenegro, which used Germany's Deutsche mark as legal tender before it adopted the euro in 2002, central bank officials are weighing their options for life after the euro. The Balkan country would have "a wide range of possibilities, from using another foreign currency to the introduction of a domestic currency," said Nikola Fabris, chief economist at Montenegro's central bank. One problem with the latter option: Montenegro doesn't have the capacity to print its own money, he said.

Most euro-zone central banks maintain at least limited capacities to print bank notes. While the European Central Bank is responsible for determining the euro zone's supply of bank notes, it doesn't actually print them. The ECB outsources the work to central banks of euro-zone countries. Each year, groups of countries are assigned the task of printing millions of bank notes in specific denominations.

The countries have different arrangements for printing their shares of the notes. Some, like Greece and Ireland, own their printing presses. Others outsource to private companies.

The assignments vary from year to year. Last year, Ireland printed 127.5 million €10 notes, and nothing else, according to its annual report. This year, it was among 11 countries assigned to print a total of 1.71 billion €5 notes.

In recent weeks, officials at Ireland's central bank have held preliminary discussions about whether they might need to acquire additional printing capacity in case the euro zone ruptures or Ireland exits in order to return to its prior currency, the Irish pound, according to people familiar with the matter. Officials have discussed reactivating old printers or enlisting a private company, the people said. "All kinds of things are being looked at that weren't being looked at two months ago," according to a person at one meeting. A spokeswoman for the Irish Central Bank declined to comment.

In Greece, widely regarded as the country most likely to leave the euro zone because of its fiscal problems, the central bank has a bank-note printing facility called IETA. Built in 1941, the Attica plant today is outfitted with "state-of-the-art machinery," according to the Bank of Greece's website. But IETA's printing in recent years has been limited. It has been one of five or six countries responsible for printing batches of €10 notes, according to the ECB.

Athens has buzzed with rumors over the past year that the Bank of Greece was secretly printing drachmas, Greece's pre-euro currency. Widely circulated joke emails featured drachma bank notes bearing the image of then-Prime Minister George Papandreou. The rumors at times have been blamed for triggering waves of withdrawals from Greek retail banks.

A Bank of Greece spokesman said the bank isn't looking for ways to boost its printing capacity. "There has been no talk regarding this issue," he said.

Some euros are currently produced outside the euro zone. In the northern England city of Gateshead, for example, a De La Rue PLC plant prints bank notes on behalf of several euro-zone countries, according to people familiar with the matter.

The Gateshead facility also serves as a backup plant for the Bank of England, which has a separate contract with De La Rue to print British pounds, according to a Bank of England spokesman.

The situation has worried some Bank of England officials, according to a person familiar with the matter. The concern is that if the euro zone unraveled, the Gateshead facility could be overwhelmed with requests from former euro-zone countries to print their national currencies, the person said.

That has prompted the Bank of England to consider steps to ensure that its ability to print British pounds isn't compromised, the person said.

The Bank of England spokesman said the bank isn't looking to "gain additional access to De La Rue's facility in Gateshead." A De La Rue spokeswoman declined to comment.

While some euro-zone countries have their own printing presses, "there might be other opportunities arising from any possible breakup of the euro as many of the smaller countries don't have state printing works," said Tim Cobbold, De La Rue's chief executive, in a statement. He noted that it usually takes about six months to develop a new currency with the necessary security features.

In Switzerland, which like the U.K. isn't part of the euro zone, the central bank has used the euro as its external reference point in its efforts to keep the Swiss franc's value stable.

Now, officials at the Swiss National Bank are considering what currency or basket of currencies would replace the euro as its reference point for the currency ceiling, according to a person familiar with the situation.

Before the advent of the euro, Germany's mark was Switzerland's main point of reference—including a period in the 1970s when the Swiss National Bank pegged the franc against the mark to rein in a surge in the Swiss currency. Today, as in the 1970s, Germany is Switzerland's largest trading partner, so a new Deutsche mark could in theory substitute for the euro, according to this person, although the bank is considering other scenarios, such as the formation of more than one currency bloc within Europe.

Central bank officials in Bosnia and Herzegovina, whose convertible mark is currently pegged to the euro, could switch to whatever hard currency emerges in the case of a breakup of the euro, a spokeswoman said. Before Bosnian officials fixed the national currency against the euro in 2002, they used the Deutsche mark as the peg.

Latvia's currency, the lat, is also pegged to the euro. The country's central bank doesn't expect the euro's demise but "could be expected" to look for a potential new peg among other European countries with "prudent fiscal policies" and with which Latvia already trades heavily, said a spokesman for Latvijas Banka.