RealCurrents

I was reading Jessica Mah’s post on how a lot of her high-school and college-age friends are really scared about global warming. Here in the U.S., it’s often reported that folks in other countries are more concerned than the average American, but little attention has been given to how the issue is impacting younger Americans.

It occurred to me that they need a little perspective on this. I grew up in the 1970s, and for those of us Americans who went through this period when the U.S. was in a severe technophobic angst, and there were constant pronouncements about all the terrible things that were going to happen, I suppose we’re just not so quick to be convinced the world is coming to an end every time scientists start preaching doom and gloom.

This was a very long list of crises that 1960s-70s experts insisted were soon to befall us, most of which I’ve probably (thankfully) forgotten, but which included such calamities as pollution, endangered species, population, overcrowded skies, the San Andreas and yes, even a looming ice age. I guess being terrified of nuclear armageddon just wasn’t enough anymore. The funny thing was, very few of these scientists were talking about an energy crisis.

Of course, even the “energy crisis” didn’t last long, once investors started pouring hundreds of billions into oil, which was $35 when I got out of high school but less than $10 when I got out of college. Jessica titled her post “Scared of Global Warming? Bring in the entrepreneurs!” and so yes, I think she’s right that entrepreneurs and the free market are a lot of the answer to global warming.

In general, though, I think we ought to stop and notice something. It sure seems to me that scientists can get into a negative funk about stuff, and end up focussing too much on the problems rather than the solutions. In fact, I can’t help wondering if it’s sort of the same dynamic as with investment newsletters - negativity and fear apparently sell a lot more newsletters, and a crisis may, sadly, be the only thing that will finally garner a research project any funding.

Now, this is certainly not all the scientists’ fault, nor is the business world off the hook. Just look at the American car industry, one of the most pitiful examples of research budgeting in modern history. Perhaps GM, Ford and Chrysler may be excused for being caught unprepared on fuel economy in the early 70s, since they were already struggling with new emissions restrictions. On the other hand, here we are again thirty years later and, sadly, it seems that only the recent combination of high oil prices, a dropping dollar, and concerns over carbon emissions was finally enough to get them serious again about improving fuel economy.

Amidst all the prognostications, it’s still not clear how global warming is going to play out. Besides the many questions of specific effects in specific places, there’s at least three basic questions involved. First is the question of how fast temperatures will go up. Second, how much will they rise long-term (or is it a runaway increase with no end in sight)? Third, if temperatures can be stabilized, will (can?) they then head back down?

We hear virtually nothing of potentially beneficial effects, but clearly there’s going to be some winners among the many losers from effects of global warming. Interestingly, so far the Russians seem to be the only ones thinking ahead about any positive outcomes from it. As Jessica suggests, entrepreneurs ought to be also. Again, though, we must keep a proper perspective - a long-term perspective.

While there’s a lot we don’t know, we can say that at least for practical purposes, whatever we can do will take place over decades. Realistically, it’s far too late to do anything about changes that may take place within the next decade or so. In other words, whatever research and changes - technological or political - that are to be made must be done consistently over a decades-long time frame.

This is, for example, why I strongly disagree with the basic Kyoto (Treaty) framework. Already China is producing as much carbon emissions as the U.S., and will likely continue to increase. Kyoto might be effective in reducing the emissions of Western industrialized nations, but given these reductions and the continued growth of China, India and other large industrializing countries, within a few years this extremely costly plan will prove ineffective in reducing the bulk of emissions.

We’ve heard from the scientists on global warming, but have yet to hear from the engineers, who are going to be the folks who have to make reductions in carbon emissions actually happen. We need to think about cost/benefit ratios. We also need to think about sustaining research investments over decades, which as the history of NASA indicates, is awfully difficult to do when you start out with crash-program type overbudgeting.

I think it’s a good bet that a lot of these new technologies are going to come from both big American businesses (such as Boeing with its new 787) and American entrepreneurs. This realization may not play well overseas, but any approach such as Kyoto that hobbles the American economy is going to be counterproductive.

Like it or not, the U.S. is still a (if not the) major innovation engine in the world. Companies in Silicon Valley (1, 2, 3) and elsewhere in the U.S. are working on hundreds of different technologies, everything from emission controls to cheap solar to electric cars to wind power and so on. Here in Texas, it’s become common to see the giant parts of wind turbines rolling down the highway on their way west, where hundreds are being put up.

We must remember that innovation, not political decrees, is the only way to solve the problems from global warming, and while we’re at it, let’s not forget to also think about taking advantage of the benefits.

First of all, in case anyone’s looking for it, here’s the official details on the IRS’ reasons for making April 17th the national deadline for filing your personal income taxes this year. It’s certainly also a good time to be thinking about how we could improve the system, something we all agree needs to be done, but can’t seem to agree how.

Of course, when you really get down to details, I’m not sure any of us quite knows quite what kind of tax system we’d prefer, but there are some basic qualities we could probably agree on. We need a system that no longer penalizes American business competitiveness, we need a simpler system (need I say more?), and we need a system that encourages - or at least doesn’t penalize - savings and various forms of investment and capital formation.

While a lot of conservatives might not agree on this last point, I think we also need a system that is modestly progressive, i.e. that gives a break to the poorest members of society. Even if you don’t agree with this philosophically, there is certainly a public interest in seeing these folks succeed financially, rather than linger on welfare rolls.

I don’t know all the specifics of the FairTax Plan, but this morning Houston City Councilman Michael Berry had Americans for Fair Taxation’s David C. Polyansky on, discussing this proposal. Here’s a summary taken from their website:

“The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment.

The FairTax Act (HR 25, S 1025) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.

The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. …”

In other words, the FairTax plan would be based on consumption, not income or savings, so if you made a lot of money but lived frugally, saving and investing what you made - and so creating jobs and wealth - then you wouldn’t get taxed that badly. On the other hand, if you wanted to live like the robber barons, then you’d pay considerable tax - 23% (plus state sales tax, I presume) - but you wouldn’t have to hire an army of accountants and lawyers, nor would you need to worry about estate taxes. That last part alone would probably save wealthy folks enough to where many would gladly pay the 23% on consumption in order to have more financial flexibility.

Of course, I don’t know how they come up with these numbers, but that 23% would apparently include all Social Security and Medicare taxes, and since it’s a straight number, it would be easy to predict the tax impact of any transaction and, like sales taxes, the amount would apparently only be levied on the final purchase, so there wouldn’t be a bunch of “built-in” taxes that add to the cost of goods. While the combined federal and state tax would be about 30%, twice the European VAT, if it had a downward impact on inflation - and interest rates - it might prove a bargain for these reasons as well, without having the regressive characteristics for which value-added taxes have been criticized.

The FairTax Plan, which currently has about 60 mostly Republican co-sponsors in Congress, including Texas Sen. John Cornyn, is reportedly most strongly opposed by Washington lobbyists and some Congressmen in powerful committees, who would lose a lot of influence were it to pass. Perhaps this is the best reason of all for supporting it.

The FairTax would basically be a 23% federal sales tax on everything, that would be balanced by a “prebate” that would rebate the tax burden that would be paid by a family living at the poverty level. So as I understand it, you’d only be paying this consumption tax on purchases above the poverty level.

Moving to a consumption tax is key, because this would put our industries on a much more competitive basis with those of other countries. Right now, in Texas at least (I know some states are different), if you buy a $100,000 home, you have to pay property tax, on the order of 2.5%, every year on that home, which is made in America, of course. On the other hand, if you buy a $100,000 car imported from Germany, England, or wherever, you generally don’t have to pay this tax every year. But if you you buy a $100,000 aircraft made in Wichita, Kansas, you do!

Of course, this is property, not income tax, but it’s just one glaring example of how our system in some many subtle ways (double taxation of overseas earnings is another) rewards importers over domestic industries. A consumption tax would lower the effective cost of our goods overseas and make our manufacturing, agricultural, and other industries more competitive, while at the same time likely doing more to improve conservation of resources and protection of the environment than a lot of other measures would.

I recently ran across a popular discussion of Rick Warren’s concept of a “purpose-driven church” on Tim Challies’ blog, which has prompted me to finally get around to posting some basic background information on this subject that most folks may not have.

I don’t by any means intend for this to be a detailed examination of the subject, but before Christians get to beating each other up over it, which is unfortunately what often happens, we need to know that this whole issue of the tension between “purpose” and “comfort” is very basic to management of any organization, not just churches.

Way back in 1973, Ralph Winter (who co-founded the U.S. Center for World Mission) wrote an article, “The Two Structures of God’s Redemptive Mission” that describes this basic dilemma. For those who have taken the Center’s Perspectives course, the article is also in Perspectives on the World Christian Movement (Ch. 19 in the earlier edition).

The basic tension is between two distinct purposes for the local church, what Winter calls “sodalities” and “modalities”. Sodalities are mission/purpose-driven to accomplish ministry to the outside world. Modalities serve/minister to the members of the organization itself.

This is really a very basic tension that exists in all organizations, not just churches. Andy Grove, co-founder of Intel, discusses this at length in his book High Output Management (Ch. 8). He calls the two types “mission-oriented” and “functional”, and links them to the well-known organizational tension between decentralization (independent project-oriented groups on a mission) and centralization (bureaucratic controls set up to serve the organization itself).

Regarding the basic, inevitable nature of this tension, Grove asserts, “Alfred Sloan summed up decades of experience at General Motors by saying, ‘Good management rests on a reconciliation of centralization and decentralization.’” Grove calls this desired result “a balancing act”.

And indeed it is. Before churches go about splitting over “purpose”, Christians need to understand that both points of view are legitimate. The local church is to minister to congregants, as with the widows in Acts 6, and it is also to minister to the outside community, even to the point of sending missionaries as the church at Antioch did (Acts 13).

Nevertheless, we also need to heed the warnings of many with management experience, that left to their own devices, organizations naturally tend to degenerate into bureaucracy and thus an excessive focus on internal ministry, which is more comfortable than external ministry. Legendary GE Chairman Jack Welch has argued forcefully against bureaucracy, saying it is something that must be constantly battled in order for a company to grow and remain profitable.

Of course, unlike a business, a local church doesn’t exist merely to achieve an external goal such as making a profit. It must care for and disciple its members. Indeed, a failure to emphasize discipleship has been one of the problems with many evangelical growth strategies.

Yet it seems clear that, outside times of major persecution, growth should be a normal outcome of a healthy local church (Acts 2:47). As someone has asserted, perhaps the best measure of any successful entity is that it reproduces capable “offspring” after itself. If this is the case, then the proper measure of a successful church is not the size of the congregation, but whether it is producing other local churches, whether across town, perhaps in a depressed area needing help, or in another country (what is traditionally considered to be a “missions” activity).

The Wall Street Journal article cited in Challies’ post (”Veneration Gap: A Popular Strategy For Church Growth Splits Congregants” by Suzanne Sataline), quotes a “purpose-driven” minister as saying that occasionally leaders have to “play hardball” when certain congregants don’t catch their vision for growth or ministry. Perhaps this is the case, but I certainly hope it is the exception.

Leaders must realize that developing a vision for external ministry, whether evangelization of the immediate community, ministry to local needy, or world missions, is going to be a major paradigm shift for most American Christians.

In other words, this is a necessary change in outlook for most churches, but it’s going to take a long time. In moving back along the continuum from modality/internal ministry toward sodality/external ministry, church leaders should bear in mind that it would probably be easier just to move to the other extreme (even though it might well split a church) than to actually move gradually toward a proper balance, educating members and communicating a vision over time.

Yet this must be the goal for a healthy church - a proper balancing of attention toward both internal needs and discipleship and external needs and evangelization.

Business Week has a disturbing article in the May 29th issue about how Exxon Mobil, flush with earnings larger than the GDPs of many countries, has apparently decided simply not to fund a projected $11.2 billion pension liability. This bothers me for a lot of reasons, but most of all because it’s such an outlandishly large example of a flawed mindset that is found today throughout our society, and even more so in the analytical world of finance.

It seems that setting something aside for a rainy day just isn’t “smart” enough for the highly-trained MBA types. Of course, they want someone to hold reserves, but not them. So instead of taking a small portion of Exxon Mobil’s earnings and getting the pension fund ship-shape, I guess the bean-counters would rather use that money to make money, since that would be the “smart” thing to do. Then, if down the road things don’t go so well, they can let their employees and the government - taxpayers - take the hit.

It used to be that the strong, responsible entities in society were expected to hold reserves, but since there is inevitably an opportunity cost involved, nowadays everyone wants someone else to be the one holding financial reserves, inventory, or whatever. Even many governments (e.g. the U.K.) and the International Monetary Fund seem to be souring on the notion of holding gold reserves. Amazingly, the Clinton administration’s manipulation of U.S. gold holdings in the 1990s still remains largely obscure, whether for lack of curious journalists or lack of public interest, I don’t know.

The point is that in the real world, reserves and margin, i.e. “unused” assets, serve a purpose. They provide stability and buffers that guard against damage. While it’s bad enough that in our instant gratification culture many have lost a grasp of this, it’s particularly disturbing that somewhere in their extensive education, those who ought to know best - highly-analytical financial types - also seem to lose an appreciation for the essential role of reserves.

Besides artificial lights and artificial foods, we also live in a world with a lot of artificial economics. Even folks who work in a factory are generally very removed, economically, from the actual production process. By this I mean that they have become accustomed to getting a paycheck, usually the same amount, every two weeks, which is a total fiction when it comes to how things are produced. Just as we have become used to having light, day or night, we have come to expect income streams to be uniform.

We have also become comfortable with increasingly artificial markets, such as those for complex derivatives transactions. Yet there are real dangers in these artificial markets, as the spectacular failures of Long Term Capital Management and Enron have shown.

While we may take comfort in the broad spreading of risks in the derivatives market or in the Fed’s manipulation of interest rates to bring about a “soft landing”, in the “natural economy”, everything inevitably fluctuates. There are physical cycles of day and night, winter and summer, rain and drought; business (demand) cycles of boom followed by bust; and production cycles of planting & harvest or research & development, cycles that in the latter case can be much longer, e.g. years in automobiles or decades in aerospace. Reserves are essential to manage the uncertainty inherent in these real-world cycles.

Of course, there are still some folks who contend with these natural economy effects on a daily basis. These include farmers, entrepreneurs, and long-suffering managers in the global manufacturing economy. Many of these maintain a deep disdain for the financial types, but what is really needed is for those in charge of managing the money to have one foot firmly planted in each world, i.e. to have an appreciation of the fine points of financial analysis while also maintaining a grasp of natural economy dangers.

As an example, successful entrepreneurs soon learn that Job One is managing cash, not maximizing profits. Without liquidity, a business is bled dry, no matter what the balance sheet or income statement says. Entrepreneurs also soon learn that even when you have a good year, that is no guarantee that the next year will be the same. You learn first to use the receipts from “fat years” to fill holes that were left from the lean years, before presuming to tackle other opportunities.

This is simply prudent management, something understood by millions of small business people, and it really bothers me that a huge business like Exxon Mobil could lose sight of something so basic. Besides this, I can’t help but think of all the companies that have wasted windfalls on imprudent acquisitions. Of course there’s Chrysler, for example, who after emerging from bankruptcy with the help of federal guarantees, plowed many of the profits from the success of its minivans into questionable acquisitions, and ended up back on the brink. Then there was also Mobil’s own purchase of Montgomery Wards, which one employee described to me as a “money disposal project.”

There’s no guarantee that oil prices will be at $70 a year from now, and I hope Exxon Mobil’s employees, directors and shareholders, as well as the PBGC, will put pressure on its executives to do the prudent thing and fully fund its pensions now, while they could just “write a check” to do it. Maybe the company is entitled to its “obscene profits”, as some put it, but it’s not entitled to leave us holding the bag.

I’ve been writing on my AeroGo site about the fundamental problems with NASA and U.S. space R&D policy (calling it a strategy would seem a stretch). Last week at the 2006 International Space Development Conference in Los Angeles, SpaceShipOne designer Burt Rutan ruffled some feathers with several criticisms of NASA and its Crew Exploration Vehicle, as well as FAA space tourism safety policy.

I’ve now posted a fairly lengthy discussion of Rutan’s comments regarding NASA and the CEV, and how they reflect many of the basic problems with U.S. space policy, as well as basic disagreements within the space community about how to make real progress.

There’s a constant tension in NASA space R&D between operational programs and development of advanced technologies, and until we clear up the confusion and systematically address (and invest) in both these areas, NASA will inevitably continue to just reinvent the past, as Rutan charges.

On the other hand, while the agency apparently continues to be guilty of overspending on big manned programs while giving space technology, science, and aeronautics scant resources, I disagree with Rutan’s view that the CEV capsule concept is inherently flawed. Nevertheless, schedule pressures do seem to once again be working their (not so good) magic at NASA.

I was disappointed to read of Wal-Mart’s reversal as it announced it would carry the Plan B “emergency contraception”, aka morning after pill. At least Wal-Mart has confirmed it will continue its conscientious objection program so its pharmacists won’t be required to dispense the drug.

I guess the sun is setting on Sam Walton’s long-held philosophy driving Wal-Mart, that “wherever we’ve been, we’ve always tried to instill in our folks the idea that we at Wal-Mart have our own way of doing things.” [Made in America, p. 66] According to Wal-Mart Vice President of Pharmacy Ron Chomiuk, “We expect more states to require us to sell emergency contraceptives in the months ahead … Because of this, and the fact that this is an FDA-approved product, we feel it is difficult to justify being the country’s only major pharmacy chain not selling it.”

The key word in this latter quote is “only”. Like it or not, being the “only” one is what leaders do, and for a long time Wal-Mart seemed comfortable with this, but their inability in recent years to rise above some of their own problems was already a hint they’ve lost a vision for this. It’s hard to fault companies for abiding by the laws where they operate (Massachusetts and Illinois have required pharmacies to stock Plan B), but it’s annoying when they decide to just knuckle under everywhere else as a foregone conclusion. Plan B is less problematic than RU-486, but is it really so much to hope that at least one company would take a pro-life stand to the fullest extent possible?

Despite this setback, another case points to how there are, nevertheless, many “low-hanging fruit” type opportunities where the pro-life movement could make an impact. It should be easy to find agreement concerning the case of six year old Vietnamese orphan Tuan Van Cao, who needs a visa for emergency surgery in this country. Unfortunately, his condition is urgent, and again bureaucracy has worked its wonders, denying him a visa, even though the costs of his surgery are already covered.

Apparently, his humanitarian parole waiver application was rejected (after two months) by the Parole and Humanitarian Assistance Branch, an office of U.S. Immigration and Customs Enforcement, which is itself now a part of that renowned example of your government in action, the Department of Homeland Security. Those trying to help him were told to pursue adoption, a process that could take a year or more.

According to Pam Cope, who reportedly got involved with Vietnamese orphans through the organization Ventures for Children International, “Tuan’s case is black and white. He needs emergency medical treatment and we can give him free medical treatment here in the United States” The pro-life movement needs to do a better job of identifying opportunities like these where children can be protected and there is likely to be little political opposition.

Changes made to immigration law back in 1997 have made Tuan’s predicament fairly common. Reportedly over 5,000 applications for a humanitarian waiver have been rejected in the 2000-2005 period; only about 20% are approved. Obviously, the law needs to be tweaked so that medically urgent cases are assured of receiving expedited approval, unless there is some compelling reason not to.

In the big picture, this visa problem points to how the pro-life movement needs to broaden the scope of its activity. There are many pro-life issues beyond abortion that impact how society treats children and, just as importantly, how society views and values children.

It is encouraging to see that progress may finally be possible in some of the worst areas of the abortion debate, such as partial-birth abortion, acknowledgement of post-abortion syndrome, and RICO abuses. At the same time, by identifying and becoming an advocate in broader areas where some progress may be relatively easily attainable, the pro-life movement could gain credibility and offer a more compelling argument for the value of life, and of the need for us to make the welfare of children and others who are weak a higher priority.

Among these areas of opportunity are more balanced divorce laws that better protect single mothers and children, extensive liberalization of adoption laws and tax credits, and reform of the foster child system. While the underlying philosophy behind the pro-life position is not well understood, it seems, the driving vision of the pro-life position, of compassion and care for even the weakest in society, will be easier to share with more tangible results.

Since my first post Monday, more has come out about the Dubai Ports World deal to take over operations of six major eastern U.S. ports, plus some additional Texas terminals, apparently, at Beaumont, Corpus Christi, and the Port of Houston.

The UAE has been wise to back off and wait, rather than press to complete the deal immediately. As more facts emerge, it’s starting to look like the sale might not be as bad as it looked at first, but the U.S. is going to have to work through a whole bunch of thorny political issues. It’s amazing how many hot-button issues have managed to be bundled together in this DP World deal.

The most compelling argument in favor of the deal is that the key area for U.S. port security is actually in the overseas ports, rather than stateside. In other words, cooperation with port operations companies and foreign governments on the loading end is critical. The reality is that most ports are near major metropolitan areas, and inspection upon unloading might be too late to catch certain weapons of mass destruction, such as a nuclear device.

The U.S. has cooperative programs such as the Container Security Initiative that are designed to push the threat away from our shores. Nevertheless, it seems pointless to argue that allowing other countries to operate our ports will incur no security risk. Ownership brings access, and a lot of Americans were justifiably shocked to find out operations had already been outsourced to the extent they have.

Obviously, the outrage this sale has generated shows Americans are paying quite a bit of attention to homeland security issues and that the Bush administration’s attempt, once again, to say “simply trust us” isn’t going to work with such a sensitive domestic area.

If cooperation with foreign port operators and governments - so that manifests can be tracked and containers inspected far from our shores - is really key to port security, then the deal may represent an acceptable trade-off. Nevertheless, despite getting pretty much a free pass (and blank check) on Iraq for three years, President Bush is going to have to really make the case for how this will help security. Selling it on the basis of helping the global economy, as Michael Chertoff was reportedly doing this week, isn’t going to cut it.

In all, this is an amazingly complex political situation. Here are some additional factors deserving consideration:

• It’s still not clear exactly what DP World is “buying” in this transaction; obviously the operations of U.S. ports are not at all well understood by the public. Certainly Congress needs to take a new look at the port laws that are on the books and make sure roles and authorities are clearly and perhaps uniformly defined.
• Jimmy Carter’s quick support of the deal was puzzling. It would be easy to simply say the port deal is analogous to Carter’s giving back the Panama Canal, but consideration of Carter’s mindset about foreign affairs may shed some light on the politics. His assertion midway through his term that foreign policy was complex and beyond the understanding of the average American was what really sunk his presidency, and the current administration seems to have slipped into a similar error.

  Americans instinctively grasp there’s a balance to be struck in our political system between the ideals of republic and democracy. We leave most details to elected officials (republican/representative rule) but still must know enough to judge the performance of these officials (democratic elections). When officials start wanting to leave Americans out of the loop entirely, arguing that the issues are just too complex, the people know better, and there can be a swift political backlash as happened with Carter and again this week.

  Because Americans also understand the need for strong military leadership, there is more latitude given in this area to the President, but sometimes politicians presume too much from this. An example was the 1946 congressional election, when many were voted out because the country was fed up with wartime price controls that the government “experts” insisted must continue.

• The accusation that Americans are being xenophopic or even racist is way out of bounds. As long as Muslims insist on regularly blowing each other (and others) up, they’re going to have a real tough time persuading Americans they’re trustworthy. It’s hard to trust someone who seems to enjoy violence. The U.S. has fought a lot of foreign wars in the past century, but there’s always a lot of political pressure to end them and come home. We’ve got better stuff to do.

  Concerning the UAE, specifically, I’m not sure banking links to terrorists mean much, and Bush’s claim of strong military and intelligence cooperation gives support to the deal. On the other hand, to argue that everyone in the UAE supports the U.S., and so can be trusted, seems quite simplistic. According to AP’s Robert Burns, “the relationship is so politically sensitive in the UAE that the Pentagon does not openly discuss details.” It also has been reported that in 2004, the most recent year’s data available, the UAE sided with the U.S. in United Nations votes only 5 times, and opposed the U.S. 67 times.

• The media deserves some of the blame here for its monolithic coverage of the Middle East. This is very frustrating but unlikely to change, so if Muslim countries want to foster understanding in the U.S. and appreciation for Muslim culture, they will probably need to do the job themselves. The fascinating magazine Saudi Aramco World is a bright spot here, providing a glimpse of these cultures that is virtually unobtainable in the U.S.
• As I noted last time, the administration has gotten worse and worse at communicating its message, at a time when clear communication and articulation of strategy is needed more than ever. Obviously, changes in the White House staff are long overdue.

  Beyond that, the President needs to work a lot harder at sharing his vision of democratization of the Middle East, and be more forthcoming about what strategy, if any, he is following to get there. As I noted before, it is long past time for a real debate about our aims in the Middle East to take place in this country. It may be possible for Muslims to gain a glimpse of Western life and leave behind strife and unrest, but I suspect most, at first encounter with our culture, don’t understand its fundamentals any better than we understand theirs.

• Obviously, the failure by the Bush administration to recognize the volatile mix of terror, frustration over Iraq, outsourcing, unions, the $726 billion trade deficit, disgust with Mideast violence, and out-of-control borders, along with the casual approach it took to the deal were major political miscalculations. Bush quickly found Senate Majority Leader Bill Frist, from the landlocked state of Tennessee, opposing him on the port deal.

  Republicans now find themselves in the odd position of needing to avoid appearing outflanked by Democrats on the security issue, and the lax approach taken by the Treasury Dept. in approving deals may well have to go. Most of all, as I emphasized last time, Bush needs to avoid the tendency, or at least appearance, of only half-heartedly fighting a war that is still much too poorly defined.

Over the weekend, I was disturbed by a report from AgapePress that the Bush administration had somehow, incredibly, approved a deal allowing the UAE company Dubai Ports World to acquire six eastern U.S. ports (New York, New Jersey, Philadelphia, Miami, Baltimore, and New Orleans).

My main concern was that this was going to be another one of those outrageous stories that only the conservative press picks up, but this time I needn’t have worried. Despite the federal holiday Monday, Republicans and Democrats alike were quick to condemn the deal. Thankfully, I don’t need to check that “Press Coverage Holes” category this time.

Nevertheless, as RealCurrents is all about trying to highlight what isn’t already being said somewhere else, but that needs to be part of the discussion, there are several points deserving consideration:

First and most mystifying to me (and I’m a conservative Republican, by the way), this ports deal is just one more instance of the Bush administration refusing to demand, or even suggest, some sort of wartime economic/business sacrifice. First it was the insistence that Americans go on spending like crazy in the wake of 9/11, buying more and more gas-guzzling SUVs even as we went to war in Afghanistan, and as the neo-cons in Washington maneuvered to start another war in Iraq.

The inability of the administration to formulate an effective energy conservation strategy to go along with a protracted war in the Middle East is not merely irresponsible, it is strategically stupid. While the U.S. borrows hundreds of billions of dollars to fight the war, Americans are borrowing hundreds of billions more to pay to oil-producing countries that in many cases have been documented sources of terrorists. This is worse than what we did in the Cold War, spending huge amounts on defense procurement while propping up the economies of the Eastern Bloc.

If things get bad enough, will Washington demand a draft, with a lot of hoop-la about how wartime sacrifices must be made? Though relatively small by historical comparison, the casualties already being suffered in Iraq and Afghanistan are substantial and seemingly ongoing.

The administration likes to pull out the “we’re at war” card every time it’s convenient (e.g. reauthorizing the Patriot Act), yet quickly tuck it away when other interests come into play. I think most Americans would agree that if we’re really at war, then there are going to be some strategic assets that are not to be dealt away.

This is the patently obvious second point: most every homeland security study has shown that our ports are some of our most vulnerable infrastructure. That the administration could even consider turning these over to a Mid-East country shows exactly why this must not be allowed, even if the country is our “ally” (whatever that means with Muslim countries) and, oh by the way, extravagantly wealthy.

Whoever analyzed this deal is confident that safeguards will be in place. This is the problem with any bureaucratic organization - it begins to think it’s infallible, and before long will let anything get by it as long as it’s got all the right rubber stamps on it. In other words, bureaucracies excel at straining out gnats but sometimes miss the glaringly obvious. The FBI’s failure, despite repeated requests, to investigate a suspicious student who only wanted to learn to fly 747s, straight and level, is not only now a classic in the annals of bureaucracy, but also a painful warning of what can happen if we place too much confidence in government.

Of course, the Katrina disaster in New Orleans has provided fresh evidence that bureacracies at all levels can fail to handle the obvious, even when it was expected ahead of time. The simple solution is simply not to let this deal happen in the first place, even if global trade suffers a little bit.

Third, as Republican Sen. Lindsay Graham noted, the adminstration’s stance is “unbelievably tone deaf politically at this point in our history”. As such, it provides ample evidence (as if any more was needed) that the White House is just not being well-managed. Either the administration doesn’t have a coherent message in many cases, and/or it’s failing dismally to communicate that message. Even as I write this, Don Wildmon of the conservative AFA has sent out an email alert opposing the deal, noting that “Normally we don’t ask you to participate in issues such as this, but we feel that this one justifies your involvement.”

I used to be impressed with George W. Bush’s ability to be in touch with public sentiment, but there’s a clear disconnect that seems to have worsened ever since the neo-cons gained ascendancy. Bush clearly needs help, and he should start by restoring Karen Hughes to a top White House role. Then he should demand that the neo-cons play by the same rules as everyone else, i.e. they have to actually justify their points of view rather than just use a knee-jerk accusation of the other side.

Anyone who’s been on the net for long knows there are millions of thinking Americans who are totally outraged at the lack of a real debate on the war in Iraq and other key issues, such as federal spending. Most of these are Democrats, but the number of conservative Republicans among these is growing rapidly. Maybe this ports deal will finally get the real debate about the war on terror started.

Pittsburgh Business Times is reporting that the Nuclear Regulatory Commission has approved Westinghouse Electric’s design for its AP1000 pressurized water reactor. This could lead to the building of new reactors in the U.S. by 2010. Westinghouse reportedly already has a contract with Duke Energy for two AP1000s.

Well, it’s about time that nuclear gets another shot in the U.S. When you consider all the health effects from hydrocarbon pollution, plus acid rain and potential greenhouse warming, nuclear can come out looking pretty good. I have long felt that if we were really serious about energy in the U.S., nuclear would be an important part of the picture.

The big problems with nuclear in the U.S. have been management of reactor construction, extensive legal interference by those opposed, and disposal of nuclear waste. Of these, the first is industry’s fault, whereas the latter two are mostly political (and with waste, somewhat technological).

Regarding management, the U.S. historically had a lot of problems because reactor designs were not sufficiently standardized. France took a different approach, developing a standard 900MW reactor. Such standardization brings both economic and safety advantages, and it’s important that the new AP1000 design, which also may be built in China, be managed in this way.

Protests and legal wrangling have been a big problem in the U.S., and I hope that the government and industry (what little is left of it) can somehow educate the public better about the relative safety of nuclear power. While natural gas is pretty clean burning, most places would probably be far better off with a nuclear plant than a coal-burning one. Of course, one of the reasons nuclear is garnering attention now is because of the rapid rises in natural gas prices. A lot of gas power plants have been built here in Texas since deregulation, and their economics are certainly not as attractive as they once were.

Disposal of nuclear waste is really the biggest sticking point. I think a lot of the protesting would really diminish if this issue was satisfactorily resolved. Compared to Western Europe, the U.S. is in a great position for handling wastes, with much dry and virtually unpopulated land, seemingly geologically stable, but politically it’s been difficult to move forward on a permanent site. Of course, the close majorities in the U.S. Senate in recent years increases the power of even a small-population western state to stall the project.

The French developed a vitrification process for containing some waste, which is an example of how technology could provide an extra margin of safety that might make a permanent site more acceptable. I haven’t looked into the French nuclear industry in a number of years, but their approach in the past seemed much more intelligent than ours, and we could probably learn a lot from them.

I guess that’s really the bottom line. An intelligent nuclear policy is what’s needed in the U.S. I just hope it’s politically feasible.

It’s amazing that the bankruptcy bill’s provisions regarding hikes in credit card minimum payments aren’t being covered all over the mainstream press. I’m still not clear on whether credit card issuers are definitely required to double minimums on bills after October 17th, or just being pressured to do so (most reports indicate that it’s mandatory).

I’ve long been annoyed by how the press feeds us constantly news we can’t really do anything about, but ignores stuff we could actually use, or at least need to know about (one reason why blogs are growing in popularity). This sparse coverage of credit card changes would seem to be an extreme example of this. In a year where we’ve seen gas prices double, electric and natural gas rates rise rapidly, etc., it seems like a really bad time for any more abrupt changes.

I still remember the effect of the congressional bounced-check scandal back in 1994. Americans are sensitive about their pocketbooks. When they found out their congressmen were writing hot checks as a matter of course, Newt Gingrich put together the Contract With America and threw a bunch of them out. The Republicans have controlled the House ever since.

If this is true, that minimums are doubling this month, then I can’t help but picture in my mind millions of Americans furiously calling their credit card issuers, only to be told that it wasn’t their doing; Congress passed a law requiring it. I doubt that’s likely to go over too well.

Obviously, any big change ought to be phased in gradually (gradualism is one of the basic tenets of conservatism). As Austrian economist Ludwig von Mises observed, any governmental intervention in the economy is likely to produce opposite of the desired effect. Rather than “helping” Americans to pay off their credit cards faster, such a change is likely just to increase fees and therefore credit card balances, or else some other form of loans.

I don’t want to be alarmist, but I can’t help but wonder if blogger Dana Blankenthorn is right when he writes, “The next U.S. recession will start in earnest on October 17.” In any case, it will be interesting to see if there’s a quick reaction by Congress over this to fix it.

Certainly any hikes in minimum payments ought to be phased in, rather than doubled abruptly, but even if Congress reacts quickly, the holiday shopping season will likely be ruined. Add to that the housing boom and autos, I suppose.

I hope that if there really is a train wreck over this, that the press has to answer for their negligence, as well as the politicians.