Friday, December 28, 2001

You can get a lot out of smoking. Cancer. Emphysema. Heart disease. Free net access.
The Bush administration is talking about banning export of American supercomputers. Bob Cringely is talking about building a supercomputer in your garage. The price fits too --- a bit over $40,000, about the same as an SUV, for the 200th most powerful machine on the planet. This miracle of science is really just a few dozen stock PCs wired together. The wiring-up part is no black magic either; all the software, including the "channel bonding" stuff that Cringely refers to, has been around for years and is readily available, as are tips and tricks from other folks who've done it. And even one of these stock PCs has all the power of the Cray-1s of yesteryear. Someone needs a rap with a clue stick.
John Dean claims that Rehnquist lied at his confirmation hearing. You know what they say; consider the source. But still...

Thursday, December 27, 2001

When the Bush administration figured out, in the wake of September 11, that the country had a bit of an image problem in the Arab world, they knew just where to turn --- Madison Avenue. They tapped a veteran ad executive named Charlotte Beers, known for her work for American Express and Uncle Ben's rice. She didn't seem fazed by the transition from huckster to Undersecretary of State; in fact, she didn't seem to recognize there was a transition, saying in interviews,

This is the most elegant brand I've ever had to work with .... President Bush and Secretary Powell are embodying the brand. That's a pretty inspiring place to start."

and informing the Senate, in an address, "you do embody our brand --- the United States."

With that can-do attitude, and clear-eyed appreciation for the situation, what could possibly go wrong?

Remember the Republican fury over Clinton "turning the White House into the nicest Motel-6 around" for the use of his campaign contributors? Bloody hypocrites. George Bush Sr. had already rented it out to Ken Lay, chairman of Enron.
I haven't said much about the shoe-bomber (Richard Reid, Abdel Rahim, Maxwell Dumb, whatever his name is), despite the Boston connection, because after a recital of the facts of the case, which Ken Layne and others have been eager to chase down, there doesn't seem to be much to say. (This may be an indication that I still don't get the whole blogging concept... but I digress).

Still, now that we know who the guy really is, it's worth looking at how a petty thief from Brixton winds up trying to blow himself up with a killer shoe:

Abdul Haqq Baker, chairman of Brixton mosque in south London, has told the BBC that Mr Reid, who is believed to be of Anglo-Jamaican heritage, came to the mosque to learn about Islam but soon fell in with what he called "more extreme elements".

Mr Baker said Mr Reid had converted to Islam while serving time in a British prison for minor offences. He said Mr Reid took the name, Abdel Rahim, and came to the mosque for instruction in mainstream Islam, initially taking a studious approach.

But he said he later became convinced his teachers were too "passive" in the face of perceived Western injustice. He said he came into contact with "more extreme elements" in London's Muslim community, started wearing military gear and talking about fighting a jihad or holy war. Mr Baker said: "He said we had to revolt against the rulers of the Muslim countries, because they were not actually Muslims." He said Mr Reid said Muslims who lived in Western society should make plans to revolt against and undermine it.

These "extreme elements" don't just want to establish Muslim governments, because even the current Muslim governments aren't Muslim enough. They could be catspaws of al-Qaeda (Afghan prisoners say Mr. Dumb looks familiar), but if they're not, then they're beholden to something even worse. Whoever they are, they've got resources and brains --- laugh all you like at the bomb, they still got it past security in the hands (er... feet) of someone whose papers couldn't fail to check because they were, in fact, legit. Quoth the chairman of the mosque, Mr. Baker,

They prey on impressionable youth, those who are new to Islam, those whose understanding of Islam is not that advanced, and those who are quite weak in their character, and have to be led.

He goes on to estimate the size of this crowd at up to 1,000 --- that's 1,000 of these extremists currently residing within the UK, of whom he guessed that at least 100 were serious enough, if that is the word, to go on a suicide mission.

The first question is, what are they waiting for? The second question is, what happens after the wait?

In related news...

It was annoying enough when the evil purple one was coopting the melodies of well-known childrens' songs for its own nefarious purposes. It seems the forces of the evil bearded one are now doing the same thing:

In recent weeks, teachers found children singing: "Osama Bin Laden, the person I most respect. I will become a terrorist when I grow up."

Talk about preying on the impressionable...

Roger Kimball reviews an exhibit at the Whitney:

Its value is educational, not aesthetic. Like a trip to a madhouse or hospital ward, it helps us become better epidemiologists, furnishing examples --- some brutal, some merely pathetic --- of something gone dreadfully wrong.

He didn't much like it.

Wednesday, December 26, 2001

Another notch loose in the belt. Time to lay off using butter cookies from Mike's as breakfast cereal...

Tuesday, December 25, 2001

Argentina is drifting into darkness, under the shadow of the IMF. It's difficult to see how they'll make payments on their loans. In response, the IMF is likely to impose one of its austerity plans, designed as usual to divert every last cent of available revenue towards the creditors, in the hope that if they just squeeze hard enough, cash will appear to make things right for the banks. Steven den Beste argues that when a country has a mountain of debt and an anthill of revenue, the only ethical course of action would be to let it declare bankruptcy, and Ginger Stampley muses out loud that Argentina may wind up descending into anarchy if abolishing the government entirely is the only way to get out from under IMF austerity plans.

If that seems a little extreme, consider Ghana, once called the IMF's "model pupil", where everything is rigged to make money for the IMF pencil-pushers:

Mary Agyekum ... breaks stones for a living. Small flint hammer in hand, she sits on the parched ground under the sun, 12 hours a day, chipping away at boulders. ...

She can only send two of her children to school now, but they are chased home by the teachers if she hasn't paid the fees on time.

Mary begins each day with a trip to the public toilet. If she's run out of money, she begs the woman at the booth to let her children in for free. Then she walks to the nearest borehole where she pays for a bucket of water.

This is what the World Bank calls 'full cost recovery'.

The Agyekum family used to live well. They owned a farm. Then one day a mining company forced them off their farming land and took away their livelihood.

It's a familiar story here. Two thirds of the land in this region has been sold off to multinationals. Compensation is minmal.

These policies surely would be imposed only after careful thought, you'd think. This wouldn't be the work of petrified bureaucrats employing some cookie-cutter formula because the alternative --- considering what was actually right for the country, and taking a stand --- involved too much personal risk for the bureaucrats. You'd think.

So here's what happened, when Joseph Stiglitz, then chief economist for the World Bank, became convinced that the IMF's austerity plans for East Asia risked turning a bad situation into a full-bore calamity:

Convincing people at the World Bank of my analysis proved easy; changing minds at the IMF was virtually impossible. When I talked to senior officials at the IMF--explaining, for instance, how high interest rates might increase bankruptcies, thus making it even harder to restore confidence in East Asian economies--they would at first resist. Then, after failing to come up with an effective counterargument, they would retreat to another response: if only I understood the pressure coming from the IMF board of executive directors--the body, appointed by finance ministers from the advanced industrial countries, that approves all the IMF's loans. Their meaning was clear. The board's inclination was to be even more severe; these people were actually a moderating influence. My friends who were executive directors said they were the ones getting pressured. It was maddening, not just because the IMF's inertia was so hard to stop but because, with everything going on behind closed doors, it was impossible to know who was the real obstacle to change. Was the staff pushing the executive directors, or were the executive directors pushing the staff? I still do not know for certain.

Of course, everybody at the IMF assured me they would be flexible: if their policies really turned out to be overly contractionary, forcing the East Asian economies into deeper recession than necessary, then they would reverse them. This sent shudders down my spine. One of the first lessons economists teach their graduate students is the importance of lags: it takes twelve to 18 months before a change in monetary policy (raising or lowering interest rates) shows its full effects. When I worked in the White House as chairman of the Council of Economic Advisers, we focused all our energy on forecasting where the economy would be in the future, so we could know what policies to recommend today. To play catch-up was the height of folly. And that was precisely what the IMF officials were proposing to do.

In the event, Stiglitz' fears proved absolutely justified; the IMF plans were a disaster, plunging the economies affected into deep depression. And there were other fiascoes, like the time the IMF cut off funds because Ethiopia was following the "unsound" policy of actually spending its foreign aid money on schools and hospitals.

Stiglitz, who has since won the Nobel prize in economics for his studies of market imperfections, seems to basically have his head screwed on. I wish I could say the same for his erstwhile colleagues.

Little Green Footballs joins many other warblogs in trumpeting a UN report to the effect that no hunger-related deaths are expected in Afghanistan. Odd, then, that they're quoting Iranian propaganda, not the UN...

Monday, December 24, 2001

Last summer, the Major League Baseball ownership was looking into what was wrong with their public profile, and after much study, figured out their problem: they just weren't loathsome enough.

That's the only explanation I can come up with for their recent activities. Their "contraction" proposal to buy out two teams came in for immediate, utterly scathing reviews. Commissioner Bud's defense of the plan before Congress was a display of contempt for the Congress more than anything else. The numbers presented to justify it don't pass the smell test. But the behavior of the teams seems to show that they never expected the buyouts to happen, anyway. They just needed the plan to make them look greedy, shortsighted, and incompetent.

All well and good from the loathsomeness perspective. But now, in Boston, they've scored a real coup --- the District Attorney is looking into whether, in the sale of the Red Sox, they defrauded a charitable trust, by arranging the sale of the team (including the trust's majority stake) to a collection of baseball insiders who are widely rumored to have not had the high bid, as the trust rules required. And amazingly, the mostly-reliable Will McDonough's take on the sale makes it sound even worse than that --- spinning a tale replete with secret deals, last-minute rules changes, and backroom interference with the commissioner's office.

Only in Boston --- and only in Major League Baseball!

FuzzyBelly observes that the Arab News' tribute to King Fahd "reads like a press release".

Gee, in the government-controlled Saudi press? Who'da thunk it?

It looks like some libertarians are still in denial about the Enron mess. Even George Will acknowledges that:

Enron's spectacular meltdown demonstrates how capitalism requires strong government to structure markets, and to enforce the transparency to sustain investors' confidence.

Contrast that with this piece from Reason by Michael Lynch on the Enron debacle (link via Brian Linse). Among other things, he says:

So who will ultimately bear the cost of Enron's collapse? The exact two groups who ought to: investors and employees. The first, because they took the risk freely in hopes of future rewards. Those rewards came in the past, and investors were handsomely rewarded. Markets are imperfect, and Enron was certainly another case of analysts failing to do their jobs. ...

That's not Reason; it's Rationalization. The analysts didn't just fail to do their job; they were prevented from doing it by deliberate fraud on the part of the management. The investors were the victims of that fraud. The fraud was enabled by lax securities laws and enforcement; those in turn were enabled by Enron's close ties with politicians of both parties, which went beyond campaign contributions. Sen. Gramm's wife was one of the members of Enron's board of directors, and received tens of thousands of dollars in fees for her services; she joined the board months after helping to get energy futures trading exempted from standard reporting requirements as chairwoman of the Commodity Futures Trading Commission. Quite a few high Bush administration officials (Cheney, Rice, etc., etc.) got consulting fees from Enron, or had very sizable holdings of Enron stock. And fraud is one of the situations where even most libertarians will acknowledge a role for law enforcement.

Oh yes, Lynch mentioned employees. He admits that their case ...

is more troubling, since no one wants to see people thrown out of work. This is worse in Enron case since, at the end of 2000, 62 percent of employees 401(k) account balances were in Enron stock. With the stock collapse, so too did many workers' retirement plans.

But here ... we have established systems, most notably unemployment insurance ...

It seems almost churlish to point out that unemployment insurance is a government program. But there's a deeper disconnect with reality in the Rationa..., er..., make that Reason piece here:

Markets, be they for groceries or microchips, are wonderfully resilient. Failure for one firm provides opportunities for others. Just as the failure of Safeway would not cause anyone to starve for lack of access to food, the failure of Enron has not caused a single factory, office building, or house to lose power.

Well, there may be no power shortages now, but the deregulated California energy market, a year ago, was leading to unprecedented price rises and blackouts in winter, which is a period of low demand (no air conditioners, and not much need for electric heat). That's inconvenient for defenders of deregulation.

So is the evidence that the shortages and blackouts resulted in part from generators deliberately gaming the system --- the S.F. Chronicle reported last may that utilities were deliberately shutting down and ramping up plants so rapidly that it risked damaging the equipment, for no obvious purpose other than running up prices on the spot market:

"What they would do, especially late at night, is if the price tanked, they would undergenerate," an operator said. "Then, mysteriously, the price would go up.

"Then, if the schedule was at 70 (required megawatt hours of output), they'd say, 'Go up to 90.' That would cause the price to tank. And they'd say, 'Bring it down again.' "

These fluctuations occurred within time spans of as little as 10 to 15 minutes, the operators said. But acceptable rates for bringing a unit from minimum to maximum levels when the plant was owned by Southern California Edison were more like 80 minutes, to avoid stressing the machinery, one of the workers said. Moreover, they were typically run at constant levels, which also reduced wear and tear.

"They were basically ramping up as fast as they can, and then slamming the brakes on," said one of the operators. "They were increasing the fatigue on the units."

Here's another story naming names, citing power plants inexplicably ramping down even during declared high-level power alerts, and alleging that workers were ordered to disable equipment. Defenders of deregulation typically deal with this sort of thing, when they do at all, by sneering at the charges and ignoring the evidence

Enron specifically doesn't come up in these sorts of stories, which means that they were either more scrupulous than their competitors, or better at hiding the evidence. Consider their balance sheets and make your bet. But they benefited from the runups in the spot market regardless.

It's worth noting that the California energy market was easier to game than some other deregulated states because of flaws in the California deregulation plan --- particularly, the effective ban on long-term contracts between generators and distributors, which made the market as a whole peculiarly, and unnecessarily, sensitive to spot market fluctuations. But that doesn't absolve parties who deliberatly caused fluctuations for their own benefit from the responsibility for their actions. And it's also worth noting that the energy companies bear a certain responsibility for whatever flaws there may have been in the California law, since it was largely written by their lobbyists. Which is, in its way, a very old story; a few centuries ago now, an astute observer of the operation of markets noted that

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

I sometimes get the feeling that many of libertarians could benefit a great deal from careful study of this guy's meditations on supply, demand, and markets...