Streetwise Professor

April 19, 2013


Filed under: Military,Politics,Russia — The Professor @ 12:26 pm

No, not “What Would Pirrong Do?” but What Will Putin Do?  in the aftermath of the revelation that the Boston Marathon murderers (and cop killers) are Chechens.  I imagine he will express a great deal of sympathy, and offer support in efforts to investigate any connections with Islamists operating in Russia, particularly Chechnya and Dagestan.  The sympathy is pretty much expected, and the support is in his interests, for a variety of reasons, including an opportunity to enlist the US in operations against his arch domestic enemy, and the ability to get a bargaining chip he can use in dealings with the US on other matters.  These efforts will be aided by the likelihood that the attacks-and in particular, their Islamist terrorist nature-will put Obama on the defensive politically.  Especially if there are subsequent revelations that dots weren’t connected.

But there will no doubt be a good deal of schadenfreude and I-told-you-so mixed in.  Putin has always mightily resented the refusal of the West generally and the US in particular (and the UK even more) to consider Russia’s wars in the Caucasus to be another front in, and the moral equivalent of, the West’s and America’s war on Al Qaeda and other Islamist terrorist movements. He will no doubt say something to the effect of: “This is what we are dealing with, and have been dealing with for years.  Now do you get it?  Don’t you dare criticize us for what we do in Chechnya and Dagestan because now you see the kind of animals we have on our doorstep.”

I think he will go further than this, and in a more cynical direction.  Specifically, he will attempt to use the Chechnyan terror threat as a justification for broader authoritarian measures in Russia, including the continued crackdowns on the opposition.  No, Navalny and (the dead) Magnitsky are not Chechen terrorists, but Putin will likely argue that a destabilizing opposition is danger in a country under threat, especially given the impending Winter Olympics on Chechnya’s doorstep.

And I know that he will use the events in Boston to redouble Russian opposition to any support for the rebels in Syria.  Putin has linked the Syrian opposition to Islamists in the Caucasus, and now those connections will resonate much more in the US.  Putin will take advantage of that, surely.

In brief, the bombing and shooting in Boston gives Putin some strategic, political, and rhetorical advantages, and you can have no doubt that he will exploit them to the maximum.

One last thing.  Putin was very outspoken in his criticism of the attacks, calling them “disgusting.”  He also made personal offers to help the US investigate.  At the time, I thought these were merely pro forma actions.  Now I wonder, at least a bit, whether they might suggest that Putin had some information-or at least a sense-that there was Chechen involvement.  I still think it most likely that he was doing the diplomatic thing, but there could be more to it than that.

April 18, 2013

He’s No LBJ

Filed under: Guns,Politics — The Professor @ 8:54 pm

Obama threw a grand mal temper tantrum yesterday in the Rose Garden, lashing out at those he holds responsible for the defeat of the lame, completely symbolic, and utterly ineffectual gun legislation in the Senate.  Such a paradox.   According to Obama, the proposals are wildly popular, not to mention the epitome of “common sense.” (Note: whenever anyone asserts something is “common sense” it’s because they can’t muster a rational argument in its favor.)  Nonetheless, they went down in flames in the Senate.  And they would have had zero chance in the House.  How can that circle be squared?  According to Obama-the malign influence of the gun lobby.

In essence, Obama was admitting that he is no match for Wayne LaPierre.  How pathetic is that?

Obama can’t even get his own party completely on board, let alone Republicans.

Somewhere, probably in hell, LBJ is shaking his head in disbelief.  LBJ knew how to use carrots and sticks to bend the Senate to his will, both as majority leader, and President.  Obama is evidently of the belief that he needn’t deign to engage in such shabby politicking to advance his agenda: the mere expression of his royal desire should suffice to persuade all to fall into line, and implement his will by acclamation.

LBJ made a living out of cajoling recalcitrant legislators  into going along with things that were unpopular in their states and districts: he would have considered it child’s play to persuade them to go along with something as allegedly popular as background checks.  But Obama can’t even manage that.

Primarily because he doesn’t think he should even have to try.

Seriously, I cannot think of a more pathetic confession of political impotence and cluelessness.  Obama truly thinks that making a speech-or speeches-and engaging in agitprop (much of it emotionally exploitive-another indication of the lack of a rational argument) is sufficient to get what he wants.  And when he doesn’t he pitches a public fit.  This is all so revealing.

And I have a sneaking suspicion that there was something more than the defeat of the gun control legislation behind Obama’s foul mood.  That something being Boston.

There is a non-trivial probability-not a certainty, but appreciable odds-that the Marathon bombing was a jihad operation, or jihad inspired.  Which would give the lie to Obama’s assertion that Islamist terror died as a serious problem when a 5.56mm round impacted Osama’s cranium.  Moreover, there would no doubt be a cascade of damaging revelations of intelligence failures, perhaps exacerbated by political correctness, like that which followed the Christmas junk bomber a few years back.  That is, there is a considerable likelihood that there is a sh*tstorm brewing, and that can’t help but aggravate Obama’s already preternatural petulance.

Second terms usually stink.  Early indications are that Obama will exceed all expectations in that regard.  His signature issue down in flames.  A looming controversy over Boston.  The impending Obamacare “train wreck” (in the words of Dem Sen Baucus).  Couldn’t happen to a nicer guy.

Unfortunately, the rest of us are the ones who will really pay the price.

April 16, 2013

On Renewables and Rutabagas

Filed under: Climate Change,Economics,Energy,Politics,Regulation — The Professor @ 7:05 pm

My most recent contributions to the WSJ energy experts have been posted.

What is the most promising renewable? (This is the don’t-sweat-too-much-for-a-fat-girl piece.)

What should governments do to encourage conservation?

SoS John “Kick Me” Kerry Unburdens Himself on Gun Crazed Americans Scaring the Poor Furriners

Filed under: Politics — The Professor @ 6:59 pm

There have been some embarrassing Secretaries of State.  Warren Christopher comes to mind.  But I am hard pressed to name one more embarrassing than John Kerry.  They say he looks French, and damned if he isn’t trying to act the part, with his current World Wide Surrender Tour and all.  He has basically begged the NoKos and the Iranians to play nice, despite threats of launching thermonuclear war, and he and Obama make me cringe with their attempts to pacify Putin over the Magnitsky List.  John “Kick Me” Kerry seems an apt sobriquet.

But he totally topped himself when he blamed dropping numbers of Japanese students in the US on . . . guns.  No.  Seriously:

Students in other countries assessing where to study abroad are increasingly scared of coming to the United States because of gun violence, the nation’s top diplomat said Monday.

Speaking with CNN foreign affairs correspondent Jill Dougherty in Tokyo, Secretary of State John Kerry said he’d discussed the situation with officials there who said students felt unsafe in the United States.

“We had an interesting discussion about why fewer students are coming to, particularly from Japan, to study in the United States, and one of the responses I got from our officials from conversations with parents here is that they’re actually scared. They think they’re not safe in the United States and so they don’t come,” Kerry said.

So the statement about “other countries” is based on one: Japan.  And that is based on “responses I got from our officials from conversations with parents” rather than actual, you know, data.

But note: fewer Japanese are studying abroad overall.  The drop is not confined to the US.  Because, well, there are fewer college-aged Japanese.  Go to Japan-it’s an old, old society.  And because the Japanese economy stinks.

And believe me, the US is crawling with foreign students from just about everywhere in the world.  What, they don’t care about guns?

To pile on: to explain a change in something (e.g., a decline in Japanese students in the US) you need to cite to a change in something else.  Are guns something new in the US?  Hardly?  Has there been a rise in gun crime? No: the change in gun crime has been downwards, meaning that under Kerry’s guns-foreign student theory, enrollments should be up.

Actually, the reasons behind this particular idiocy are painfully transparent.  The Obama administration, for some reason known only to itself, has decided to make guns its second term signature issue.  To the extent that they explain the decision to send no high level representative (e.g., Biden, Michelle) to Margaret Thatcher’s funeral as being driven by the fact that this is a crucial period in domestic politics, due to the impending votes on gun control in the Senate.  No, they actually said that: it’s probably a contributing factor, but Obama’s churlishness about giving props to a conservative titan is probably the real reason.  Little people do little things. And Obama hasn’t the stature to see over the soles of Thatcher’s pumps.

I can see the wheels spinning in the little minds at State: “We have to support the President’s anti-gun efforts.  How? How? How? I got it! Some Japanese mother told some flunky at the embassy that she was afraid of all those scary guns in the US.  Let’s go with that!”  Foreign policy conscripted into the service of a small-ball domestic agenda.

Should I mention that by making a big deal of people “running around with guns” Kerry is validating that ignorant fear?  Yes.  I think I should.

By making a big deal of people “running around with guns” Kerry is validating that ignorant fear.

But it’s all in the service of a cause: advancing Obama’s anti-gun agenda.  Talk about diminishing the prestige of the office of Secretary of State, by enlisting it in the service of a floundering domestic political  agenda.

To which I say: What about pressure cookers?

April 13, 2013

Putin Invites a Woman to a Stagflation Party

Filed under: Economics,Politics,Russia — The Professor @ 9:43 pm

As described in the WSJ, Russia has “slashed” its official 2013 growth forecast by a third to 2.4 percent: this new figure is less than one-half of what Putin had promised during his coronation campaign. And given that the year-on-year growth figure for February was less than 1 percent, 2.4 percent looks rather optimistic: I get the sense that Russia is in the process of revising expectations (A/K/A telling the truth) slowly.  Meanwhile, Russian inflation is running at around 7 percent: that figure for March was considered a victory after the 7.30 percent figure for February.  (Bloomberg seems to live  perpetually up Putin’s rear end, and typically spins things in his favor, so read the link with a grain of salt.)

This puts Putin’s newly appointed central bank head, Elvira (Mistress of the Dark Empire?) Nabiullina, in a difficult situation of being the girl at the stagflation party.  Putin is clearly nervous about Russia’s sputtering growth. He has promised a lot, and a failure to deliver will only further complicate his increasingly fraught political situation.  He has indicated a clear preference for the Russian Central Bank to loosen in order to spur growth.  Deripaska has been outspoken in his advocacy for the bank to reduce interest rates, and I imagine that other oligarchs (particularly in steel and coal, which have reported some rather heavy losses of late) are of like mind.  But bending to oligarchic pressures would likely spark greater inflation that would hit ordinary Russians-most notably low income Russians, especially pensioners, who are Putin’s prime constituency.  The pressures on Nabiullina to loosen Russian monetary policy will be pretty intense.

So what will Putin do?  His economic options are limited, and those that he is likely to try are unlikely to improve growth but will exacerbate inflationary pressures.  Consequently, expect a political response to distract attention, most likely a further intensification of crackdowns on the opposition, and fomenting anti-US sentiment.  He is not quite yet in Hugo Chavez territory, but there are similarities.

Was the Bitcoin Flock Just Sheared?

Filed under: Economics,Regulation — The Professor @ 9:01 pm

The virtual “currency” Bitcoin has been much in the news lately, due to its meteoric rise in price, and even more precipitous drop.  The price rose from approximately $40 in early-March to $266, then plummeted to as low as $54 in the course of a couple of days.

Most of the commentary has been a colloquy between true believers (including anarcho-capitalists, self-styled Austrians, etc.) and more mainstream skeptics.  The true believers say things like “Bitcoin is the most important invention ever” and wax eloquent (and ecstatic) over its liberating potential.  The skeptics point out the various practical limitations, which are quite acute.

Count me as in the skeptic camp, but that’s not what I will address in that post.  Instead, I will focus on the rise and fall in the price over the past month (which has been the second BitBubble-there was also a less severe one in 2011).   What surprises me is that I have yet to see anyone suggest what appear to be an obvious possibility: that the bubble is the result of a pump and dump scheme.

The price movement-a rocketing rise followed by an even more rapid fall-is the classic pump-and-dump pattern.  Moreover, all of the ingredients are there, just like in a penny stock.  An asset traded in a very thin market. A group of cultish true believers in the transformative nature of what they have invested in.  Moreover, this cult has clear doomsday predilections, especially where money is involved, and the events in Cyprus were calculated to stoke paranoia.

All of this is tailor-made for an operator or operators to start a stampede into the currency, and then puke out their Bitcoin at the top.

And there are operators-speculators, if you will-in Bitcoin.  Last week, several stories ran about the Winkelvoss twins’ (of Facebook fame/infamy) speculative investment in Bitcoin.  No, I am not accusing the twins of running a pump-and-dump.  I just bring them up to point out that BTC has attracted a speculative element.  And no doubt some of this type views the bleating Bitcoin flock as primed for shearing.

If it is a pump-and-dump, several questions arise.  One, obviously, is who done it?  Another: where are they located?  Were the laws of any country violated?  (Bitcoin aren’t securities, I don’t think.  Are they commodities, as defined by the Commodity Exchange Act?  That seems quite plausible.)  How much money was lost?  (This would depend on the volume of trade on the various Bitcoin exchanges during the Rise and Fall of the Bitcoin Empire.) I haven’t been able to find any indication that the CFTC has taken interest in this, but given it’s long-running campaign against FX boiler rooms, and bucket shops (to which the various Bitcoin “exchanges” bear more than a passing resemblance) it would seem to be a natural.

To me, the Bitcoin drama of the past weeks seems to be a penny stock manipulation scheme writ large.  What comes of that is quite uncetain, given the virtual nature of Bitcoin and the fact that it is traded at “exchanges” around the world.  These facts mean that it could fall between the regulatory and legal cracks.  To many Bitcoin Believers, that’s a feature not a bug, though one wonders if they will reconsider that if they bought at the top.

Returning to Deep Thinking About Bitcoin, I can’t resist mentioning this Krugman piece.  Paulie Krugnuts appeals to authority, namely Adam Smith, in his critique.  Smith’s analysis of gold and silver is correct, and applicable to Bitcoin, but I find it somewhat amusing that Krugman defers to the Great Scot.  Would that he would  do so more regularly, and on more important matters.  His commentary would improve immeasurably as a result.

This brings to mind a story that George Stigler told.  He used to bet his grandchildren $1 million if they could answer three questions correctly.  (He said something to the effect that eventually the Federal Reserve would make it possible for him to pay off that bet in the event his grandchildren won.  And he may well be right on that, and in the not too distant future.)  The first two questions were trivial, like “what color is the sky?”  The third was the stumper: “Who was Adam Smith’s best friend?”  Then one day his granddaughter said: “You are, grandpa.”  That was probably the correct answer, but it is mind-bending to think of Krugman as vying for that distinction.  Anyways, I hope that Krugman makes a habit of asking “WWASD?” before unburdening himself in the future.  He would be doing the world a favor, and spare himself of much embarrassment.  Assuming, of course, that he is capable of it.

April 9, 2013

Who You Gonna Believe, Gazprom or Your Lyin’ Eyes?

Filed under: Energy,Politics,Russia — The Professor @ 7:46 pm

Putin caused a minor kerfuffle when he ostentatiously order Gazprom’s Alexi Miller to re-start the Yamal 2 gas pipeline through Poland.  Except Poland says, er, we’re not interested.

There’s no viable economic case for the pipeline.  South Stream is not commercially viable.  Nord Stream is operating at 27 percent capacity.   Gazprom’s European sales are stagnant (which is charitably putting it, because they fell 10 percent in 2012), because demand in Europe is stagnant and there are new supplies from Norway.  The potential for new supplies over the longer term means that Gazprom may soon pine for mere stagnation.

No.  This is about trying to squeeze Ukraine even more: Russian and Ukraine are in negotiations over control of Ukraine’s transmission network (Gazprom demands at least 50 percent) and the two sides are battling over billions in payments for gas that Ukraine contracted for under take-or-pay deals but didn’t take.

Poland refuses to play politics:

“Poland won’t participate in these political contexts,” Mr. Tusk [Poland’s prime minister] said. “For us, gas isn’t a tool to conduct politics and we very much want, in agreement with European Union laws, to keep gas issues free of politics.”

But Gazprom is Shocked! Shocked! at the very suggestion that Russia is playing politics:

Gazprom rejected any political overtones. “What politics?” said Gazprom spokesman Sergei Kuprianov, when asked to respond to Mr. Tusk’s statement. “It’s not aimed against anyone.”

And if you believe that . . .

April 7, 2013

Take Care of Our Fine Feathered Friends: Wind Blows (and Ethanol Does Too), or Wind (and Ethanol) are Bat Sh*t Crazy

Filed under: Climate Change,Economics,Politics,Regulation — The Professor @ 4:25 pm

FWIW, I am one of the “experts” on the WSJ’s new “The Experts: Energy” feature.  The first installment was a week ago.  The next one, about renewables, runs next Monday-tax day! Yay!

The question was: “What is the most promising renewable?”  My first instinct was to respond with the punch line from the very non-PC joke Ty Cobb told to a journalist who interviewed him late in life: “I feel like the country boy whose Mama told him to say something nice to his prom date, and he told her: ‘you don’t sweat too much for a fat girl.'” But I resisted the temptation to say that on the WSJ: here, not so much resistance.  But you’ll just have to wait a week to see what I said.  Snarky, but not quite so snarky as that.

It wouldn’t be quite so hard to answer the question: “What is your least favorite renewable?”  Here, we have to have separate categories for electricity generation and motor fuel.

With respect to electricity, the runaway winner is wind.  Economically: a turkey.  Environmentally: it kills turkeys.  Well, maybe not turkeys, but it does slaughter countless winged creatures.  Not that enviros will tell you that.  Rather, they are willing participants in a conspiracy of silence to cover-up the avian and chiropterian holocaust.

First, the economics.  Really.  I don’t have to go find these things.  They find me.

I could go on and on, but let me just point you to Germany.  Germany has made a huge bet on wind.  Huge.  And it is becoming a huge economic albatross (speaking of birds) around Merkel’s neck.  Two articles this weekend point that out, both from sources that are usually pretty enviro-friendly.

The first is from Bloomberg:

With consumer power bills increasing and Merkel facing elections in September, Germany’s energy policy is rising on the political agenda. The cost of developing wind farms in the North Sea has surged following construction glitches and delays in linking turbines to the grid.

“The entire energy switch has derailed,” Marc Nettelbeck, an analyst at DZ Bank AG, said this week by phone from Frankfurt. “The difficulties connecting offshore wind farms to the power grid reduces their profitability and renders the original investment calculations of utilities invalid.”

Merkel has sought to spur development of wind farms at sea — where gusts are typically strong enough to keep turbines generating around the clock — because most renewable sources can’t provide constant, or baseload, power like nuclear plants.

The connection setbacks are “problematic for baseload power capacity and can lead to the failure or delay of the energy switch,” Nettelbeck said.

Spending Reduction

EON, the country’s biggest utility, said last month it will lower clean-energy investments to less than 1 billion euros in 2015 from 1.79 billion euros last year. RWE will cut annual renewables spending in half to about 500 million euros in the next two years.

Read the whole thing.  It gets worse.

The second is from the FT:

The EU’s biggest economy has long been a champion of renewable power, a haven investors could depend on.

This made it a green leader well before it decided to phase out nuclear power after the 2011 Fukushima disaster in Japan, and drive its renewable generation up even further.

Though it is not very sunny nor even that windy, Germany now accounts for nearly half of Europe’s solar power capacity and 30 per cent of its wind power.

Renewable power – mostly wind, solar and biomass – made up a formidable 22 per cent of Germany’s electricity generation last year.

But, with the levy added to German power bills to help pay for this growth nearly doubling to €0.053 per kWh – and an election looming in September – environment minister Peter Altmaier has unveiled plans to freeze renewable subsidies for two years. He has also said future rises would be limited to 2.5 per cent a year after that.

Other proposals to reduce costs include a requirement for renewable generators to sell their electricity to buyers under long- term power purchasing agreements – a far less attractive option than the current system of selling power to the grid and getting paid a set tariff.

These new measures are supposed to take effect from August, but face so much political opposition that nothing may happen before the election.

Still, the consequences have been swift. One big municipal utility with substantial renewable investments, Munich’s Stadtwerke München, has already suspended new clean power projects.

Germany touts that it has made 1.4 billion euros on exporting surplus power (mainly from wind).  It doesn’t tout the fact that it spent 14 billion euros subsidizing wind production.  (H/T Tim Worstall.)

Wind is a diffuse energy source.  Wind production is greatest at night, and smallest when it’s hot.  Meaning that it is there when you don’t need it and isn’t when you do.  Load tends not to be located in windy places, meaning that it requires a substantial investment in transmission.  And wouldn’t you know (a) this is expensive, and (b) people don’t like transmission lines.  Wind is also intermittent, and requires backup traditional generation (fossil fuel or nuclear).

Other than that, it’s great.

But it’s so environmentally friendly, right? Aren’t these small prices to pay?

Why don’t you go ask your fine feathered friends that question?

Wind turbines A/K/A bird cuisinarts, bat blenders.

Master Resource and Watts Up With That? provide chapter and verse about the number of flying creatures killed every year by wind turbines.  The numbers are in the 10s of millions in the US alone, not to mention Europe. Each turbine kills several hundred birds per year.  In some locations, bats are major contributors to the body count.

In contrast: it is estimated that the Exxon Valdez spill killed less than 700,000 birds.

So surely, the enviros are shrieking in their opposition to wind, right? Right?

Hardly.  And as the links above demonstrate, the Federal government is actually complicit in efforts to cover up the bird and bat body counts.  Indeed, the Feds actually give licenses to kill.

To recapitulate.  Wind is economically inane and environmentally dubious.  Other than that, I see no problems whatsoever.

Now ethanol.  Another historically enviro-leaning source, The Economist, takes it apart.  Like wind, it is neither economically efficient nor environmentally friendly:

Moreover, ethanol burned in an engine produces more than twice as much ozone as the equivalent amount of petrol. Ground-level ozone is a big cause of smog. And, while good at boosting a fuel’s octane rating, ethanol packs only two-thirds the energy per gallon of petrol. As a result, motorists get fewer miles per gallon using fuel blended with ethanol than with undiluted petrol. So, even if blended fuel is cheaper per gallon than petrol (thanks to ethanol’s subsidies), the overall cost of using it tends to be higher

Not to mention (which the Economist does) that ethanol mandates are screwing up the gasoline market, and inflating the price of motor fuel in the US.

And definitely not to mention (which the Economist does not, at least in this article), that the subsidy- and mandate-driven demand for ethanol has increased the demand for corn, thereby increasing corn prices, and food prices generally.  The biggest victims of this?  The poor, notably in developing countries, who spend a very large fraction of their income on food.

Wind and ethanol are monstrosities.  Moreover, governments-through subsidies and mandates-are the Frankensteins who created these monsters.  (At least the original Dr. Frankenstein created only one monster.)

To the extent that fossil fuels create externalities, it is best to provide incentives to reduce their consumption, and to encourage the production of substitutes, through taxes (taking into account the heavy tax burden that fossil fuel consumption already incurs).  Then let market participants determine the most efficient way to mitigate these externalities.  Instead, for decades governments have attempted to pick winners, and constructed an elaborate system of subsidies and mandates that have been driven by politics and politicking, and which have led to the massive stimulation of the worst of the non-fossil fuel technologies: wind and (corn-based) ethanol. In so doing, they have picked total losers.

What’s more, the subsidization of inefficient technologies, actually suppresses the incentive to develop more efficient technologies (where efficiency includes the environmental costs).   This unseen impact is arguably as devastating as the seen effects-and those are bad indeed.

April 4, 2013

We Have Met the Enemy, and He is “Us”

Filed under: Economics,Energy,Politics — The Professor @ 9:11 pm

Obama is on a roll.  A roll of idiocy.

I can hear you say: “Uhm, so what else is news?”

Let me tell you.

Item 1: in a political rally in Colorado, Obama offered us this disquisition in political theory:

“You hear some of these quotes: ‘I need a gun to protect myself from the government.’ ‘We can’t do background checks because the government is going to come take my guns away,’ Obama said. “Well, the government is us. These officials are elected by you. They are elected by you. I am elected by you. I am constrained, as they are constrained, by a system that our Founders put in place. It’s a government of and by and for the people.”

This, mind you, was from an alleged Constitutional Law professor.  For one thing, Constitutional Law is frequently abbreviated to “Con Law.”  Well, with Obama, that formulation fits, with an emphasis on the “Con”.  For another, he wasn’t a professor.  A lecturer.  (Read what Richard Epstein has written about Obama’s lack of intellectual engagement at Chicago.  Not a surprise.  He knew-knew-he was a pretender who had no chance of prevailing in an actual intellectual interchange at a Chicago workshop or lunch table.  No chance.  So he distanced himself from it. My ex-boss Dan Fischel offered Obama a professorship.  Which Obama declined.  Fischel obviously made the offer for political and AA reasons.  And by AA I don’t mean “alcoholics anonymous.”)

Where to begin?  This seems to presume that “us” is some monolithic, reified thing.  That there is some “will of the people.”

What about the tyranny of the majority? What about the tyranny of minorities that can occur in any democratic or representative system?

The whole freakin’ reason behind a bill of rights is that even in a democratic (or, more properly, republican) system, individual rights can be trampled and abused by a government responsive to the whims of a majority, or an empowered minority.  That’s why we have a Bill of Rights.

In Obama’s formulation, not only would the 2d Amendment be superfluous, but so would the 1st and 5th (and 3d and 4th etc. etc.) No one need fear the denial of their freedom of speech or worship or assembly or right to a fair trial, because hey, the government is just us, and we would never harm us, would we?

It is hard to overstate the cluelessness-or, more accurately, disingenuousness-of Obama’s formulation.  “We’re from the government, and here to help you, ‘cuz we would never ever hurt us, right?”

So I would ask Obama point blank: OK, Mr. Con Law Poser “Prof”, are you advocating the abolition of amendments 1-10 of the Constitution (or perhaps 1-27)?  Because under your “the government is us” theory, they are completely superfluous.  QED.

Let me state clearly: Too often, the government is not us.  The government is too often the anti-us.  Which is precisely why elections are an insufficient constraint on its predations, and why Constitutional constraints on the legislative and executive branches are imperative.

Obama traveled from Colorado to California to raise money from the Bay Area elite.  Mr. I’m Fighting For the Middle Class sucked up to the very, very small fraction of the 1 percent in order to raise money for the campaign to regain the House in 2014.

Put aside the truly risible things he said, like his remark that Nancy Pelosi never let ideology cloud her judgment: that would presume that she had judgment to begin with, and there is incontrovertible empirical evidence that she has no judgment-or brain-to speak of.

No, let’s look at the spectacle of his abasing himself before the execrable hedge fund billionaire Thomas Steyer, a hard core green, and opponent to the Keystone pipeline:

Appearing at the home of an outspoken critic of the Keystone XL pipelinePresident Obama on Wednesday night told a group of high-dollar donors that the politics of the environment “are tough.”

. . . .

In the face of those pressures, at the fund-raiser on Wednesday — and at a second one at the home of the billionaire philanthropists Ann and Gordon Getty — the president sought to reassure his supporters that he would continue to fight for environmentally friendly policies.

Excuse me while I wipe away the tears.

The Steyers and the Gettys have theirs.  (The Gettys acquired their wealth by oil, ironically.  Not that Gordon actually did jack to create it.) They will live large regardless of whether energy is cheap of expensive.  Large, hell: they’ll live huge.

But I wonder.  Are they “us”?

So indulging enviro fantasies costs them nothing.  They are the very non-apocryphal modern embodiment of the apocryphal Marie “let them eat cake” Antoinette.  “They can’t buy gas?  Let them drive Teslas.”

But this is who Obama panders to, and who lionizes Obama.  They are ones who consider it only natural that they lord over “us”, and who quite openly attempt to buy influence.

Which is exactly why there needs to be constraints-hard, binding limits-on government power.  Contrary to Obama’s Schoolhouse Rock political theorizing, unconstrained democratic institutions are a threat to individual rights and liberties.  Not least because they are vulnerable to the manipulations of oligarchs.  Like Thomas Steyer, and Getty and Goldman spawn.

Connecting Some Dots

Filed under: Economics,Politics,Russia,Uncategorized — The Professor @ 8:21 pm

Several stories converge to tell a single story.

  1. Russian capital outflows totaled $25.8 billion in the first quarter.  Given that the government had forecast between $0 and $10 billion for the year . . . they’re revising their projection.  To $40 billion.  Who wants to quote an over-under for the next revision?
  2. Russian economic growth slowed to .1 percent year-on-year in February.  In other words, barely any growth at all.
  3. Putin gave an order to all state officials to close foreign bank accounts within three months, or be fired.
  4. A deputy chairman of the Russian Central Bank said that Russian officials may be required to invest in domestic securities.
  5. Putin is again mooting the idea of some sort of popular front, and ditching United Russia has his favored political vehicle.  United Russia, of course, being basically the bureaucrats’ political party.
  6. Putin is cracking down on NGOs that have any connection with the West.

1. and 2. are symptomatic of a sputtering economy that cannot generate the growth or the capital necessary to pay for Putin’s promises, or his ambitions.  3., 4., and 5. show that Putin is at war with the bureaucracy-just like the Tsars and Commissars from the beginning of Russian history.  6. reveals Putin’s continued paranoia that NGOs are plotting some sort of Orange venture in Russia.

All suggest that Putin is increasingly beleaguered.  Life was easy when the economy was doing well.  Not so easy when it’s stagnating: given Russia’s presumptions as an emerging market, .1 percent growth is equivalent to a major recession in the US: a far cry from the 6+ percent of the mid-00s, and even the 4-5 percent which Medvedev and Putin have claimed to be expecting.  Standing still is falling back, especially when Putin has promised big increases in both social and military spending.

So where does he turn?  The predations of the bureaucracy are a drag on growth: so attack them, like the Tsars and Commissars before him.  Uhm, good luck with that.  Like cockroaches, the bureaucrats have always survived every attack against them.  Stalin imposed some discipline-but look at what was required.

But outlawing foreign accounts is one knout that he can wield that hits them where it hurts.  It also is a form of financial repression that can offset, in part anyways, the difficulties that Russia faces in attracting and retaining capital, due to its poisonous investment climate.  In essence, Putin is attempting to reassert his power over the bureaucracy and at the same time to recirculate their ill-gotten gains within Russia, rather than without, thereby offsetting the reluctance of foreign investors to risk their capital to the whims of the Russian state and its agents.

But resorting to sticks, rather than carrots (“play along and you can share in the rents”) Putin is betraying some desperation.  Moreover, although the bureaucrats may mulishly submit to the knout, they will resent Putin’s resort to coercion.  They may falsify their preferences, and promise fealty.  But they will be alienated.

This is the classic authoritarian dilemma.  A subservient but resentful class of underlings.  Coordination problems mean that few are willing to declare openly their opposition.  But this equilibrium is quite tenuous.  A shock to the system that weakens the autocrat-a natural disaster handled badly, an overreaction to an isolated act of opposition-can lead to a rapid and uncontrolled chain reaction in which those who suppressed their true feelings stop falsifying their preferences.  This is the dynamic that toppled Mubarek in weeks, and unleashed civil war in Libya.

Stability in autocracy is one equilibrium in a global coordination game: complete collapse is another.  The literature on global games predicts that the stable equilibrium is a fragile one.  A small event can lead to a “run” on the autocratic bank of power.

That’s where Putin is now.  I am not predicting that Putinism will collapse.  I am saying that the risk of such collapse is heightened.  The best evidence for this is Putin’s ratcheting up of oppressive measures, whether they be applied to bureaucrats theoretically subordinate to him, or NGOs.

Look back to posts I wrote in 2007-2008 where I emphasized the brittleness of Putinism.  Putin recognizes this.  His actions demonstrate that clearly.  A confident autocrat would not do what he is doing.

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