Government – Page 144 – artdiamondblog.com

Bush Should Take Lab Coat Off

Decisions about which new technologies to develop should be left to the market, not the government. One reason is that markets generally make the more efficient choice. Another reason is that when technological risks are taken in the market, they are taken with voluntary private money; when risks are taken by the government, they are taken with your money that has been coerced from you through taxation.

With all due respect, President Bush should take the lab coat off.

(p. A16) FRANKLINTON, N.C., Feb. 22 — President Bush put on a white coat and visited a laboratory here Thursday to promote his goals for making alternative fuels from switch grass, woodchips and other plant waste.

After touring the laboratory, which is developing enzymes to make cellulosic ethanol, fuel distilled from plant byproducts, Mr. Bush spoke buoyantly about new technologies that may reduce the nation’s thirst for foreign oil.

For the full story, see:

EDMUND L. ANDREWS. "Bush Makes a Pitch for Amber Waves of Homegrown Fuel." The New York Times (Fri., February 23, 2007): A16.

Instead of Shrugging, Atlas Sometimes Moves to the United States

Source of graphic: online version of the WSJ article quoted and cited below.

(p. A10) CARACAS, Venezuela — Oil-rich Venezuela has experienced the kind of economic boom in recent years that should be flush with job opportunities. But an increasing number of professionals, many of them from the oil industry, are looking abroad for work, driven away by President Hugo Chávez’s effort to extend state control over the economy, and by inflation verging on 20%.

Since his re-election in December, Mr. Chávez has pursued an agenda of "21st Century Socialism," painting a future of "communal cities" and state-run cooperatives dedicated to production, not profit.

. . .

Still, at the U.S. Embassy call center for visas in Caracas, the lines have been jammed since Mr. Chávez announced in early January the nationalization of the electricity industry and Venezuela’s largest telecommunications firm. "It doubled practically overnight," said a U.S. diplomat.

The number of Venezuelans receiving U.S. legal permanent residence more than doubled from 2000 to 2005, when 10,870 got their green cards. In that period the overall number of green cards increased by a third. During that period the number of Venezuelan-born U.S. residents increased 42%, to 151,743, according to the U.S. Census Bureau.

. . .

Any opposition-minded oil workers still left at PdVSA face a difficult environment. During the presidential campaign last year, PdVSA President Rafael Ramirez told company executives to join Mr. Chávez’s political movement or hit the road. In 2003, Mr. Chávez sacked around 20,000 PdVSA staffers — about half the company’s work force — for walking off the job, calling them "terrorists." A majority of them were the managers, accountants and field engineers who turned the state oil venture into a world-class oil company during a period of robust expansion in the 1990s.

Many found work elsewhere, including in Mexico, Canada and Saudi Arabia, at a time of high demand for experienced oil workers.

The lost expertise has taken a toll on PdVSA, the country’s largest single employer. Its share of the global market for crude oil supply is shrinking, and accidents and outages are on the rise. Analysts say the cost to PdVSA of producing a barrel of oil has nearly doubled in the past five years to more than $4.50.

For the full story, see:

PETER MILLARD. "Professionals Exit Venezuela; Chávez’s Grip on Power Drives Out Oil Experts; Support Hugo or You Go." The Wall Street Journal (Thurs., February 15, 2007): A10.

(Note: ellipses added.)

Mugabe Eats Cake As He Ruins Zimbabwe Economy: More on Why Africa is Poor

Tyrant Mugabe eats cake while his slaves starve. Source of photo: online version of the NYT article cited below.

JOHANNESBURG, Feb. 21 — President Robert G. Mugabe of Zimbabwe turned 83 on Wednesday to the strains of the song “God Bless President Mugabe” on state-controlled radio, along with an interview on state television, a 16-page paean to his rule in Harare’s daily newspaper and the prospect of a grand birthday party — costly enough to feed thousands of people for months, his critics argued — on Saturday.

Zimbabwe’s economy is so dire that bread vanished from store shelves across the country on Wednesday after bakeries shut down, saying government price controls were requiring them to sell loaves at a loss. The price controls are supposed to shield consumers from the nation’s rampant inflation, which now averages nearly 1,600 percent annually.

. . .

On Wednesday, The Herald, the state-managed newspaper, included in 16 pages of tributes to Mr. Mugabe an editorial calling him “an unparalleled visionary” and “an international hero among the oppressed and poor.”

. . .

“The guy is insensitive,” John Shiri, 41, a teacher at a primary school, told a local journalist. “There is no bread as we are talking, but he will be feasting and drinking with his family and hangers-on when there is no wheat in the country.”

. . .

Tawanda Mujuru, who runs a vegetable stall on Samora Machel Avenue in downtown Harare, said that she would be working in a factory if not for the failure of Mr. Mugabe’s economic policies.

“He has the guts to eat and drink when we are suffering like this,” she said. “Let him enjoy. Every dog has his day. We shall have our day.”

For the full story, see:

MICHAEL WINES. "Mugabe Gets Ready to Eat Cake While Fellow Zimbabweans Can’t Find Bread on Shelves." The New York Times (Thurs., February 22, 2007): A6.

(Note: ellipses added.)

Would Consumers Be Better Off with No Satellite Radio?

Source of graphic: online version of the NYT article cited below.

It appears as though the market for satellite radio may not be big enough for two firms to profitably survive, although one merged "monopoly" firm might survive. But the antitrust government authorities appear to seriously be considering to forbid the merger.

If they do so, they will be presuming to tell the consumer that she is better off with no satellite radio, than with one merged "monopoly" satellite radio.

Note the secondary issue of whether it’s appropriate to call a merged company a "monopoly." If the "industry" is defined as "satellite radio," then the merged company would be a monopoly. If the "industry" is more broadly defined as "broadcast radio," which would include AM, FM, and internet stations, then the merged firm would be a long way from a monopoly.

But either way, the government should stay out of it.

(NYT, A1) The nation’s two satellite radio services, Sirius and XM, announced plans yesterday to merge, a move that would end their costly competition for radio personalities and subscribers but that is also sure to raise antitrust issues.

The two companies, which report close to 14 million subscribers, hoped to revolutionize the radio industry with a bevy of niche channels offering everything from fishing tips to salsa music, and media personalities like Howard Stern and Oprah Winfrey, with few commercials. But neither has yet turned an annual profit and both have had billions in losses.

. . .

Questioned last month about a possible Sirius-XM merger, the F.C.C. chairman, Kevin J. Martin, initially appeared to be skeptical, but later said that if such a deal were proposed, the agency would consider it.

In a statement yesterday, Mr. Martin acknowledged that the F.C.C. rule could complicate a merger but said the commission would evaluate the proposal. “The hurdle here, however, would be high,” he said.

The proposed merger, first report-(p. C2)ed yesterday by The New York Post, promises to be a test of whether regulators will see a combination of XM and Sirius as a monopoly of satellite radio communications or whether they will consider other audio entertainment, like iPods, Internet radio and HD radio, to be competitors.

“If the only competition to XM is Sirius, then you don’t let the deal through,” said Blair Levin, managing director of Stifel Nicolaus & Company and a former F.C.C. chief of staff. But Mr. Blair said he expected the F.C.C. to approve the merger.

For the full NYT story, see:

RICHARD SIKLOS and ANDREW ROSS SORKIN. "Merger Would End Satellite Radio’s Rivalry." The New York Times (Tues., February 20, 2007): A1 & C2.

(Note: ellipsis added.)

(WSJ, p. A1) But because XM and Sirius are the only two companies licensed by the Federal Communications Commission to offer satellite radio in the (p. A13) U.S., the deal is likely to face significant regulatory obstacles.

Broadcasters said yesterday that they will fight the proposed merger, and FCC Chairman Kevin Martin released an unusually grim statement saying that the two companies will face a "high" hurdle, since the FCC still has a 1997 rule on its books specifically forbidding such a deal which would need to be tossed. The transaction also requires the Justice Department’s blessing.

Indeed, XM and Sirius may be rushing into a deal because they sense the regulatory terrain will only get tougher. People close to the matter said that the two companies acted because the climate is already changing with the election of a Democratic-controlled Congress. Future developments — such as the possibility of a Democratic president — could make it even harder for the proposed merger to pass muster.

In their strategy, the two companies may be subtly acknowledging the risks before them: By conceiving their deal as a merger of equals and declining to say which company name would emerge ascendant, they minimize the business risks should the deal fall through. If, for example, the combined company were to be dubbed Sirius, XM could be vulnerable to a decline in sales during a regulatory review period that could last a year. A person familiar with the negotiations said the two companies have set March 1, 2008, as their "drop-dead date," after which either side can walk away if approval is not granted.

The coming regulatory battle is likely to focus on the definition of satellite radio’s market. The two companies are expected to argue that the rules established a decade ago, which require two satellite rivals to ensure competition, simply don’t apply in today’s entertainment landscape.

Since 1997, a host of new listening options have emerged, making the issue of choice in satellite radio less important for consumers. Executives cite a new digital technology called HD radio, iPod digital music players, Internet radio and music over mobile phones as competitors that didn’t exist when the satellite licenses were first awarded.

For the full WSJ story, see:

SARAH MCBRIDE, DENNIS K. BERMAN and AMY SCHATZ. "Sirius and XM Agree to Merge, Despite Hurdles For Regulators, Deal Pits Competition Concerns Against New Technology." The Wall Street Journal (Tues., February 20, 2007): A1 & A13.

(Note: ellipsis added.)

Source of graphic on left: online version of the NYT article cited above. Source of graphic on right: online version of the WSJ article cited above.

Bush Remembers Steadfast Washington

Bush meets an actor playing the role of Washington at Mount Vernon on President’s Day. Source of photo: online version of the NYT article cited below.

“With the advantage of hindsight, it is easy to take George Washington’s successes for granted,” Mr. Bush said after enumerating Washington’s achievements as commander of the Continental Army and later as president. But “America’s path to freedom was long and it was hard,” he continued, “and the outcome was never really certain.”

. . .

“I’m reading about George Washington still,” the president told reporters at a December news conference where he defended his Iraq policy. “My attitude is, if they’re still analyzing No. 1, 43 ought not to worry about it and just do what he thinks is right, and make the tough choices necessary.”

. . .

Mr. Bush spoke of General Washington’s “many challenges,” noting that the Continental Army “stood on the brink of disaster many times.” And he spoke of Washington’s resolute determination: “His will was unbreakable.”

The president spoke as well of a brief retirement at Mount Vernon between Washington’s return from the Revolutionary War and his presidency. Mr. Bush is already laying the groundwork for his own retirement with plans for a presidential library at Southern Methodist University, Laura Bush’s alma mater.

“All he wanted to do was return here to Mount Vernon and to be with his loving wife, Martha,” the 43rd president said of the first. “As he wrote with satisfaction to his friend Lafayette, ‘I am become a private citizen on the banks of the Potomac, and under the shadow of my own vine and my own fig tree.’ ”

For the full story, see:

SHERYL GAY STOLBERG. "Defending Nation’s Latest War, Bush Recalls Its First." The New York Times (Tues., February 20, 2007): A16.

(Note: ellipses added.)

Europe Plays Fair with Africa by Reducing Sugar Subsidies

Source of graphic: online version of the WSJ article cited below.

For once, Europe bests the United States in consistently practicing free trade:

BRUSSELS — The developing world has been adamant that rich nations abandon farm subsidies in order to get a global trade deal both sides say they want. A flood of investment pouring into Southern Africa’s sugar industry demonstrates why the poor countries won’t back down on this demand.

The hundreds of millions of dollars being spent to ramp up African sugar production is a direct response to European Union plans to slash import duties and subsidies that for years have locked out farmers in developing countries.

The expansion shows how the EU’s gradual opening of its farm sector can boost production in some developing countries, offer cheaper prices to European consumers and force inefficient EU producers to close.

For the full story, see:

JOHN W. MILLER "African Sugar Production Ramps Up EU Plan to Cut Tariffs Shows How Developing Nations Can Benefit." The Wall Street Journal (Sat., February 17, 2007): A4.

Government is a Cause, Not a Cure, for Stranded Air Passengers

JetBlue passengers during the 8 and a half hours that they were stranded on the tarmac without being allowed to leave the plane on Weds., February 14th. Source of photo: online version of the WSJ article cited below.

To avoid stranding passengers for hours on the tarmac is not a ‘passnger bill of rights,’ but more rational (or fewer) FAA government work rules for airline crews:

(p. D3) Duty-time limits . . . can discourage pilots from taking planes back to gates. Federal rules give pilots a total work day of 16 hours, with only eight hours actually at the controls of an airplane. A pilot can’t start a new flight with a scheduled time that would push over eight hours in the cockpit, but the pilot can continue any delayed flight up to the 16-hour limit.

If a flight goes back to the gate, it technically ends. So if the pilot is close to the eight-hour limit, he or she can’t start a new flight to get the plane to its destination. But if the flight sits on the ramp without going back to the gate, the pilot gets the 16-hour window.

For the full story, see:

SCOTT MCCARTNEY. "THE MIDDLE SEAT; Stuck on a Plane: Why Nightmare Delays Happen; FAA Rules, Company Policies Prod Airlines to Wait It Out; Calling in the Red Cross." The Wall Street Journal (Tues., February 20, 2007): D1 & D3.

JetBlue planes on Mon., February 19th at JFK airport. Source of photo: online version of the WSJ article cited above.

Zimbabwe Official Says People Eat Field Mice as a “Delicacy”: More on Why Africa is Poor

Screen capture from CNN report "A Ruined Land," broadcast on December 19, 2006.

(CNN) — Twelve-year-old Beatrice returns from the fields with small animals she’s caught for dinner.

Her mother, Elizabeth, prepares the meat and cooks it on a grill made of three stones supporting a wood fire. It’s just enough food, she says, to feed her starving family of six.

Tonight, they dine on rats.

"Look what we’ve been reduced to eating?" she said. "How can my children eat rats in a country that used to export food? This is a tragedy." . . .

This is a story about how Zimbabwe, once dubbed southern Africa’s bread basket, has in six short years become a basket case. It is about a country that once exported surplus food now apparently falling apart, with many residents scrounging for rodents to survive.

According to the CIA fact book, which profiles the countries of the world, the Zimbabwean economy is crashing — inflation was at least 585 percent by the end of 2005 — and the nation now must import food.

Zimbabwe’s ambassador to United States, Machivenyika Mapuranga, told CNN on Tuesday that reports of people eating rats unfairly represented the situation, adding that at times while he grew up his family ate rodents.

"The eating of the field mice — Zimbabweans do that. It is a delicacy," he said. "It is misleading to portray the eating of field mice as an act of desperation. It is not."

For the full story, see:

Jeff Koinange. "Living off rats to survive in Zimbabwe." CNN POSTED: 3:40 p.m. EST, December 19, 2006.

(Note: ellipsis added.)

Rats for dinner in Zimbabwe. Source: online CNN article cited above.

Mugabe’s Hyperinflation Destroys Zimbabwe Economy: More on Why Africa is Poor

The article excerpted below does a good job of sketching some of the effects of hyperinflation on the people of Zimbabwe. But it does little to illuminate the cause. As Milton Friedman definitively demonstrated, inflation is caused by government printing too much money. Mugabe and other tyrants are motivated to print too much money so they will have more money to spend, without having to raise taxes. The ploy seems to work for a little while sometimes, but in the end it results in inflation.

Gideon Gono is the governor of Zimbabwe’s central bank. Note Mr. Gono’s display of chutzpah in his blaming the people for inflation, and note the wonderful just symbolism of the power black out that cut off Mr. Gono’s speech.

(It almost sounds like an outtake from Atlas Shrugged.)

(p. A1) JOHANNESBURG, Feb. 6 — For close to seven years, Zimbabwe’s economy and quality of life have been in slow, uninterrupted decline. They are still declining this year, people there say, with one notable difference: the pace is no longer so slow.

Indeed, Zimbabwe’s economic descent has picked up so much speed that President Robert G. Mugabe, the nation’s leader for 27 years, is starting to lose support from parts of his own party.

In recent weeks, the national power authority has warned of a collapse of electrical service. A breakdown in water treatment has set off a new outbreak of cholera in the capital, Harare. All public services were cut off in Marondera, a regional capital of 50,000 in eastern Zimbabwe, after the city ran out of money to fix broken equipment. In Chitungwiza, just south of Harare, electricity is supplied only four days a week.

. . .

In the past eight months, “there’s been a huge collapse in living standards,” Iden Wetherell, the editor of the weekly newspaper Zimbabwe Independent said in a telephone interview, “and also a deterioration in the infrastructure — in standards of health care, in education. There’s a sort of sense that things are plunging.”

. . .

(p. A6) The trigger of this crisis — hyperinflation — reached an annual rate of 1,281 percent this month, and has been near or over 1,000 percent since last April. Hyperinflation has bankrupted the government, left 8 in 10 citizens destitute and decimated the country’s factories and farms.

. . .

The central bank’s latest response to these problems, announced this week, was to declare inflation illegal. From March 1 to June 30, anyone who raises prices or wages will be arrested and punished. Only a “firm social contract” to end corruption and restructure the economy will bring an end to the crisis, said the reserve bank governor, Gideon Gono.

The speech by Mr. Gono, a favorite of Mr. Mugabe, was broadcast nationally. In downtown Harare, the last half was blacked out by a power failure.

For the full story, see:

MICHAEL WINES. "As Inflation Soars, Zimbabwe Economy Plunges." The New York Times (Weds., February 7, 2007): A1 & A6.

(Note: ellipses in original.)

For a lot of evidence on what causes inflation, see:

Friedman, Milton, and Anna Jacobson Schwartz. A Monetary History of the United States, 1867-1960. Princeton: Princeton University Press, 1963.

German Brain Drain

Engineer Benedikt Thoma is moving his family to Canada from Germany for a brighter future. Source of photo: online verion of the NYT article cited below.

ESCHBORN, Germany, Feb. 3 — Benedikt Thoma recalls the moment he began to think seriously about leaving Germany. It was in 2004, at a New Year’s Day reception in nearby Frankfurt, and the guest speaker, a prominent politician, was lamenting the fact that every year thousands of educated Germans turn their backs on their homeland.

“That struck me like a bolt of lightning,” said Mr. Thoma, 44, an engineer then running his family’s elevator company. “I asked myself, ‘Why should I stay here when the future is brighter someplace else?’ ”

In December, as his work with the company became an intolerable grind because of labor disputes, Mr. Thoma quit and made plans to move to Canada. In its wide-open spaces he hopes to find the future that he says is dwindling at home. As soon as he lands a job, Mr. Thoma, his wife, Petra, and their two teenage sons will join the ranks of Germany’s emigrants.

There has been a steady exodus over the years, but it has recently become Topic A in a land already saddled with one of the most rapidly aging and shrinking populations of any Western nation. With evidence that more professionals are leaving now than in past years, politicians and business executives warn about the loss of their country’s best and brightest.

. . .

. . . , there is plenty of anecdotal evidence that Germany has become less attractive for people in fields like medicine, academic research and engineering. Those who leave cite chronic unemployment, a rigid labor market, stifling bureaucracy, high taxes and the plodding economy — which, though better recently, still lags behind that of the United States.

. . .

In Mr. Thoma’s view, the root of the problem is [that] . . . Germany, . . . , has a “blockage” in its society.

“Germans are so complacent,” he said, sitting at the dining table in his neat-as-a-pin home here. “They don’t want to change anything. Everything is discussed endlessly without ever reaching a solution.”

As an example he cites the stalemate between his family’s firm and its 89 employees. After the firm became unionized, he said, the two sides began bickering over wages and working conditions.

With much of his 80-hour workweeks eaten up by those disputes, Mr. Thoma said he had developed high blood pressure and other ailments. He told his brothers he was burned out and ready to leave.

For the full story, see:

MARK LANDLER. "Germany Agonizes Over a Brain Drain." The New York Times (Tues., February 6, 2007): A10.

(Note: ellipses added.)

Source of graphic: online verion of the NYT article cited above.

Rock Icon Abandons France Because of High Taxes

French rock icon Johnny Hallyday. Source of photo: http://hosted.ap.org/photos/6/6b7deb53-a318-477d-90b7-fb5abe488774-big.jpg

In the dark of winter, the French rock ‘n’ roll icon Johnny Hallyday has abandoned France to settle in a snow-dusted mountain chalet, joining a scattered flock of superrich tax refugees in serene Switzerland.

Numbering about 3,700, according to Swiss statistics, these millionaire and billionaire exiles are variously coveted and resented in Switzerland, where local governments are competing in what critics scorn as a fierce race to the bottom to lure wealthy foreigners with individually negotiated tax breaks.

”I’m sick of paying, that’s all,” Mr. Hallyday, 63, said in a rebellious outburst to the celebrity magazine Paris Match, which devoted eight pages to his departure. ”I believe that after all the work I have done over nearly 50 years, my family should be able to live in some serenity. But 70 percent of everything I earn goes to taxes.”

The notion of a French symbol decamping to a newly renovated refuge in the town of Gstaad had an incendiary effect on French politics, prompting President Jacques Chirac to express restrained regrets about the rocker’s actions.

For the full story, see:

DOREEN CARVAJAL. "Swiss Tax Deals Lure the Superrich, but Are They Fair?" The New York Times, Section 1 (Sun., January 14, 2007): – B11.

Hallyday’s chalet in Gstaad, Switzerland. Source of photo: http://www.20minutes.fr/articles/2006/12/20/20061220-people-A-Gstaad-le-chalet-de-Johnny-fait-etrique-pour-une-rock-star.php