"Restore(s) a little sanity into current political debate" - Kenneth Minogue, TLS "Projects a more expansive and optimistic future for Americans than (the analysis of) Huntington" - James R. Kurth, National Interest "One of (the) most important books I have read in recent years" - Lexington Green
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Posted by Kevin Villani on 6th March 2017 (All posts by Kevin Villani)
The current partisan war over the Dodd-Frank Act is just one dispute in a broader ideological divide about the government’s role in industry. This dispute, which has deep historical roots, includes a similar battle over Obamacare. The common disagreement at issue with both laws — now in the cross hairs of a GOP-controlled Washington — is the extent to which politicians should subsidize their constituents indirectly through regulation of private companies.
The Affordable Care Act governing health insurers was about 1,000 pages, and Dodd-Frank governing most other financial institutions was more than twice that. Both stopped short of nationalizing their respective industry, instead generating more than 10 pages of regulation for every one page of legislation, although many view nationalization as an eventual but inevitable consequence, particularly for health care.
The distinction between public control and public ownership is the primary distinction between the competing mid-20th-century ideologies of fascism and communism. In contemporary terminology, this distinction is between crony capitalism and nationalization, neither of which can be reconciled with competition and freedom of choice. Read the rest of this entry »
Posted by Lexington Green on 17th January 2017 (All posts by Lexington Green)
Dominic Cummings explains how the Brexit referendum was won. Cummings was the Campaign Director of Vote Leave. He was in effect the executive director of the Brexit referendum campaign. This article explains how it happened. It is also long and rambling. But read it all anyway.
It is full of many interesting observations and various insightful, epigrammatic comments:
Most of the MPs we dealt with were not highly motivated to win and lacked extreme focus, even those who had been boring everybody about this for decades. They sort of wanted to win but they had other priorities. …
This lack of motivation is connected to another important psychology – the willingness to fail conventionally. Most people in politics are, whether they know it or not, much more comfortable with failing conventionally than risking the social stigma of behaving unconventionally. They did not mind losing so much as being embarrassed, as standing out from the crowd. (The same phenomenon explains why the vast majority of active fund management destroys wealth and nobody learns from this fact repeated every year.)
Russia isn’t governed well. But people don’t rise to power in Russia according to their skill at solving public policy issues. They climb a ladder by how well they can grip the rungs of guns, bribery and deceit. Putin’s “political socialization took place as vice mayor of St. Petersburg in the 1990s, where … one of his key roles was acting as a liaison between the political and criminal authorities. It was the Wild Wild East, a world where duplicity was the norm, rules are for sissies, and only might makes right. It was a world where informal networks ruled and you controlled people by corrupting them.”
Such jungles tend to evolve very capable predators.
Putin, in my opinion, has done a fairly good job with Russia given the serious problems they have as a nation.
Complaints are everywhere heard from our most considerate and virtuous citizens, equally the friends of public and private faith, and of public and personal liberty, that our governments are too unstable, that the public good is disregarded in the conflicts of rival parties, and that measures are too often decided, not according to the rules of justice and the rights of the minor party, but by the superior force of an interested and overbearing majority.
We now are at serious risk of electing the corrupt member of a cabal of self interested manipulators of the public interest for private gain.
Hillary is clever to go after individual companies. If she attacked the pharma industry as a whole, it could unite politically in response and perhaps gain political support from other industries that would reasonably see themselves as similarly vulnerable. But individual companies have no defenses against this kind of attack. By singling out one victim she discourages other industry players from doing anything in response, because any company or industry group that responds risks being targeted in the future.
She has done this kind of thing before. She will probably keep doing it because it’s politically effective. Her attack on Mylan destroyed a large amount of wealth, and probably not just for Mylan’s shareholders. Today Mylan’s CEO is groveling in the media. As with past political attacks by Hillary and others on vaccine manufacturers, yesterday’s attack on Mylan will discourage pharma companies from introducing valuable new products and will reduce the availability of current products. We will probably see more of this kind of extortionate behavior by the federal govt if she is elected, because that’s how the Clintons operate and because a Hillary administration would appoint more lefty judges and DOJ and regulatory officials who would go along with it.
But let’s go even further. Even if you could prove that, on balance, free trade is an unquestionable economic benefit, people might still prefer to be measurably poorer if that’s the price that must be paid to maintain their traditional social and political cultures. (This has even more relevance in the case of the EU, because the EU actually has power. Imagine if NAFTA had an unelected Commission in Ottowa or Mexico City that could impose laws on the United States.) Perhaps people don’t regard their economic interests as important as their national or cultural interests. It doesn’t matter what elite opinion thinks the people’s most important interests are. In a democratic society, ultimately, it only matters what the people think they are. People get to determine their own priorities, and not have them dictated by elites. The people get to answer for themselves the question, “In what kind of country do I want to live?”
Of course, I would argue that we don’t have truly free trade or, increasingly, a free economy in the United States. The Progressives always look at the rising income inequality and maintain that it’s the inevitable result of capitalism. That’s hogwash, of course, and Proggies believe it because they’re dolts. But the problem in this country isn’t free trade—we have precious little of it—or unrestricted capitalism, since we have precious little of that as well. The issue behind rising income inequality isn’t capitalism, it’s cronyism. Income isn’t being redirected to the 1% because capitalism has failed, it’s happening because we abandoned capitalism in favor of the regulatory crony state and its de facto collusion between big business/banking interests and a government that directs capital to favored political clients, who become “too big to fail”. It doesn’t matter, for instance, whether the president is a Democrat or Republican, because we know the Treasury Secretary will be a former—and future—Goldman Sachs executive.
Franks’s post is very well thought through and ties together the main themes that appear to be driving US, British and European politics. It’s worth reading in full if you haven’t yet done so.
Posted by Kevin Villani on 19th March 2016 (All posts by Kevin Villani)
How Economists Facilitated the Transition of Erstwhile “Market” Economies to Fascism
The Left calls Donald Trump a fascist invoking the memory of Hitler and Mussolini, to which Trump might reply: “they were losers; I’m no loser.” Fascism is in essence the political control of the private economy, historically justified by democratically elected leaders to defend against perceived or orchestrated external threats. Progressive war politicians from Presidents Wilson and FDR to Johnson and Obama and now candidate Clinton have pursued this same goal in the US as has the social democratic European Union.
At the recent meeting of the G20 leaders and central bankers political responsibility for and control over their respective economies was assumed, but their Alfred E. Newman “what, me worry” smiling faces belie the fragility of the current global economy. The political distortions to both the financial and real economy have arguably never been greater, to which politicians and their economist enablers prescribe more of the same mostly wasteful public spending financed by money printing, a cure reminiscent of medieval bloodletting.
Having never been of much use to business, economists mostly followed “Say’s Law” that supply creates its own demand (for academic economists). They got their first pervasive shot at political power when President Wilson – an academic who chafed at constitutional constraints – created the Federal Reserve which helped US bankers fund the Allies until he could mobilize a war economy, making the first WW “Great.” The unprecedented death and destruction of the Great War knocked the global economy off kilter and the massive international war debts made stabilization politically difficult. As the creditor and least damaged victor, the US economy boomed in the roaring ’20s, followed by a bust.
Purveyors of the “dismal science” had previously counseled that politicians had to own up to the cost of war until the private economy recovered. While the “arts” of manipulating the value of currency and public spending financed by coercive taxes and often uncollectable debt as well as coercive regulation were as old as politics and war itself, post WW I economists became noticeably less “dismal” and purportedly more “scientific,” believing that such “macroeconomic” interventions could be calibrated to “tame business cycles” in part by transferring or defaulting on war debts. This was complemented by “microeconomic science,” the recent objective of which has been to prove that individuals aren’t always perfectly rational (and by inference in need of paternalistic political protection and direction). Macroeconomists contend that this psychological defect is contagious, conjuring irrational mobs running on banks (or attending Trump rallies).
What we are seeing worldwide, from India to the UK to the US, is the rebellion against the inner circle of no-skin-in-the-game policymaking “clerks” and journalists-insiders, that class of paternalistic semi-intellectual experts with some Ivy league, Oxford-Cambridge, or similar label-driven education who are telling the rest of us 1) what to do, 2) what to eat, 3) how to speak, 4) how to think… and 5) who to vote for.
With psychology papers replicating less than 40%, dietary advice reversing after 30y of fatphobia, macroeconomic analysis working worse than astrology, microeconomic papers wrong 40% of the time, the appointment of Bernanke who was less than clueless of the risks, and pharmaceutical trials replicating only 1/5th of the time, people are perfectly entitled to rely on their own ancestral instinct and listen to their grandmothers with a better track record than these policymaking goons.
Indeed one can see that these academico-bureaucrats wanting to run our lives aren’t even rigorous, whether in medical statistics or policymaking. I have shown that most of what Cass-Sunstein-Richard Thaler types call “rational” or “irrational” comes from misunderstanding of probability theory.
The government policy of promoting long-term profits is bad economics, and even worse, it is engineered to favor incumbent firms and stifle innovation. When the government gets to decide the proper term of your investments, it constitutes the same form of cronyism as when campaign donors are directly given sacks of cash by the government officials they donated to when they were candidates.
A guiding principle in our economy is Joseph Schumpeter’s theory of “creative destruction.” Just as some forests need to burn in order to clear away brush and make way for more robust growth, economic innovation also requires that old and outdated companies be broken up for new replacements to take root. Recently, Americans have received an education in this principle by watching Uber’s challenge to the taxi cab incumbents.
The American capitalist economic system is at its best when guided by the principle that no firm is too big or special to fail. While corporate executives may feel such a jungle atmosphere is harsh and unforgiving, don’t forget that customers who buy products and investors of capital are at the top of the food chain in this jungle. Wall Street banks and corporate executives are the prey! Protecting failing companies and subsidizing politically powerful incumbent firms, under the false guise of promoting long-term value, is simply un-American.
A couple of other points:
-Short-term trading adds market liquidity, which reduces bid/offer spreads. Because of short-term trading, long-term investors pay less to buy and receive more when they sell.
-Liquidity buffers volatility. Wild market swings happen when liquidity dries up. Any trading restriction that reduces market liquidity will increase market volatility.
This stuff is basic. It’s a shame that many people never learn it and are credulous about fairy tales involving evil speculators and high-speed traders in dark alleys. When someone in a position of authority tells you that a particular type of free exchange is bad, it’s usually safe to assume that he has a stake in some crony enterprise that benefits by restricting your choices.
What I’m feeling for the GOP is a kind of disinterested sympathy, punctuated with schadenfreude, the disinterest arising from never having been a Republican, the sympathy from the GOP identification of a plurality of my close friends – uniformly horrified by what is happening – and the schadenfreude from the abrupt collapse of three-plus decades of pharisaical social conservatism. Turns out that eventually enough of the electorate whose resentment you’ve been stoking figures out that it’s a waste of time and fastens on to something else, something that matches their actual resentments a lot more closely. Read the rest of this entry »
Posted by Kevin Villani on 2nd March 2016 (All posts by Kevin Villani)
The G20 leaders recently called upon the leaders of the developed nations to employ more massive amounts of debt financed government spending to ward off the current economic stagnation and in some instances the early stages of recession. That fits Einstein’s definition of insanity: “doing the same thing over and over again but expecting a different result”. The pursuit of so-called “macroeconomic (fiscal and monetary) policies” has produced a quarter century of economic stagnation in Japan, a $30 trillion debt bubble in China with little to show, and stagnation and looming recession in Europe and increasingly in the US.
Einstein was a genius who remains relevant today. Just within the last few weeks evidence was reported of gravitational waves predicted by Einstein almost a century ago. Proving Einstein’s theories has been the focus of physics during the past century, but he maintained that had he been able to get an academic appointment instead of a position at the Swiss patent office he never would have been able to develop and publish his new path-breaking theories.
In his recently released biography The Courage to Act (2015), former Federal Reserve Chairman Ben Bernanke describes how, initially failing physics, he turned to macroeconomics as an outlet for his mathematical skills. This was auspicious. In physics, when your equations don’t fit the reality it is the equations that must be changed unless there is new evidence to change the understanding of reality. Einstein’s biggest error was rather than waiting for better data when his equations predicted an expanding universe, he fudged the equation (introducing the Max Planck constant) to fit the current understanding of a stagnant universe, then disagreed for most of his lifetime with the next generation of quantum physicists who proved he had gotten it right in the first place. Einstein’s one mistake is the modus operandi of modern macroeconomists.
In January 2000, President Bill Clinton boldly promised China’s inclusion in the World Trade Organization (WTO) “is a good deal for America. Our products will gain better access to China’s market, and every sector from agriculture, to telecommunications, to automobiles. But China gains no new market access to the United States.” None of what President Clinton promised came true. Since China joined the WTO, Americans have witnessed the closure of more than 50,000 factories and the loss of tens of millions of jobs. It was not a good deal for America then and it’s a bad deal now. It is a typical example of how politicians in Washington have failed our country.
Central Planning: Central planning, central planning. The history of the abject failure the Soviet Union’s five-year plans should tell you everything. Command and control economies that report to one man (in a nation of 1.3 billion people) are doomed from the start. Top down economic decisions often look bold and start out highly stimulative, but then degenerate into inefficiency, waste, politics and fraud.
Political Corruption: As the command and control economy generates liquidity, the demand and direction of the distributed capital becomes a political tussle. Decisions on how much steel, cement, coal, glass solar panels, high speed trains and shopping malls—in short everything—are not done in China as a cost benefit analysis by risk capital, a job difficult enough in itself. (Witness the capitalist economies’ booms and busts.) In China, this liquidity was allocated by political muscle, massive bribery and kickbacks, rather than economic justifications.
Basic Gangsterism: Counterfeiting, knockoffs, copyright infringement, theft of intellectual property – these were a part of the booster rockets of China’s economic rise. It was all supposed to go away after China joined the WTO in 2001. It didn’t. It just became more institutionalized. Foreign companies needed Chinese “partners” in auto production, healthcare and technology. These “partners” crippled the potential productivity of the investments and led to frequent disputes and even more corruption… as in the GlaxoSmithKline scandals.
There are a total of nine reasons, many addressed in Trump’s piece above.
Posted by Kevin Villani on 11th February 2016 (All posts by Kevin Villani)
Long time Democrat turned Republican Donald Trump, who as a business titan relied more than any of his opponents on “Wall Street” funding, decisively won the Republican primary. In sharp contrast, socialist Bernie Sanders decisively won the New Hampshire Democrat primary by attacking his opponent’s Wall Street ties. Trump supporters apparently believe that the way to deal with Wall Street a**holes is a bigger a**hole who will negotiate much better deals, whereas Sanders supporters believe that “Wall Street (a synonym for the entire US financial system) is a fraud” requiring major extractive surgery.
Most people within the NY financial community including the numerous mid-town asset management firms agree that many Wall Street players were a**holes during the sub-prime lending debacle leading to the 2008 financial crisis, but surely the Sanders pitchfork brigade wouldn’t travel uptown. This may explain why among the thousands of books and articles written in the aftermath of the financial crisis and the Occupy Wall Street movement, Wall Street hasn’t defended itself and has found few defenders willing to go public.
Truth be told, Wall Street has always attracted more than its share of greedy a**holes. But historically they discriminated against the less profitable investments in favor of those that had the highest return potential relative to risk. This represented the brains of a heartless US capitalist system. Defenders of capitalism correctly argue that it is the only economic system at the base of all human economic progress, however unequally distributed. Progressive critics argue for greater equality, the poor made poorer so long as the better off are equally so (although this is not the way it is typically represented).
This strikes me as fear and panic but about what ?
But he is not deserving of conservative support in the caucuses and primaries. Trump is a philosophically unmoored political opportunist who would trash the broad conservative ideological consensus within the GOP in favor of a free-floating populism with strong-man overtones.
Cue pearl clutching. What exactly has “the broad conservative ideological consensus” achieved the past 20 years ? Personally, I think Reagan began the problem by choosing Bush for his VP. Bush was antithesis to Reagan’s message and had ridiculed his economic plans.
Sam Houston State University historian, writing on the Forbes web site, has a very odd blog post this morning. He criticizes MIT economist Simon Johnson for attributing the term “voodoo economics” to George H.W. Bush. Domitrovic calls it a “myth” that the elder Bush ever uttered those words. “You’d think there’d be a scrap of evidence dating from 1980 in support of this claim. In fact there is none,” he says.
Perhaps down in Texas they don’t have access to the Los Angeles Times. If one goes to the April 14, 1980 issue and turns to page 20, one will find an articled by Times staff reporter Robert Shogan, entitled, “Bush Ends His Waiting Game, Attacks Reagan.” Following is the 4th paragraph from that news report:
“He [Bush] signaled the shift [in strategy] in a speech here [in Pittsburgh] last week when he charged that Reagan had made ‘a list of phony promises’ on defense, energy and economic policy. And he labeled Reagan’s tax cut proposal ‘voodoo economic policy’ and ‘economic madness.'”
It’s amusing to see people try to deny facts. Some argue that Bush did not oppose “Supply side” theory. Still, that is what “Voodoo Economic Policy” referred to. What else ?
Bush promised “no new taxes” in 1988 but then raised taxes in 1990 creating or deepening a recession that cost him re-electiion and gave us Bill Clinton.
But in actuality the impetus for moderating political excess often comes from the elites themselves when mismanagement finally becomes so bad it threatens the survival of everyone.
Until things reach the point of failure mismanagement has the effect of leaving voters no alternative but content themselves with the opposition party. Republican voters may have been disappointed and outraged at the perceived sellout by a Paul Ryan-led Congress to the Obama administration. “It was another Republican “compromise” meaning Democrats got every item they asked for,” said the Drudge Report.
Paul Ryan has engineered a “compromise” with Democrats that gives them everything they wanted.
And in divided government you don’t get everything you want. So we fought for as much as we could get. We advanced our priorities and principles. Not every single one of them, but many of them. And then we’re going to pick up next year and pick up where we left off and keep going for more.
A society as huge and complex as the United States can run economically only on the basis of acceptance and trust. This has been true for so long it is no longer noticed, like the air. People accept the rules and generally follow them whether or not there is a policeman in attendance. …. All over the the land people go about their business secure that arrangements will be honored and carried out. A high-trust society is a low-cost society.
Of all that has changed over the last decade in the general culture of the United States, I wonder if a widespread loss of trust in the political, media, intellectual and bureaucratic establishments is the most quietly catastrophic of all the damage done to our society of late. It is axiomatic that once trust in an individual, a friend or a spouse is lost, it can almost never be regained; one of those things which is easily, almost casually done, never to be completely repaired. I suspect that we will discover over the next few decades that the thinking and observing portion of our society will never regain that unthinking trust in our institutions, now that we have seen them become weaponized in open and politically partisan ways. We have observed the national news media become politically partisan, more intent on hiding matters of significance than informing the public about them. What doesn’t appear above the fold, so to speak, or even in the back pages is sometimes more revealing. And the hate for ordinary American citizens in flyover country, frequently expressed by those residents of the wealthy bicoastal enclaves has been mind-boggling. There are personalities who have been so casually offensive in this regard that I have made it a point to avoid patronizing with my pocketbook anything that they have had anything to do with. I suspect that I am not alone in this – it’s another element of that ‘cold anger’ that I wrote about some days ago. How has it come to be that the so-called ruling elite of a nation now appear to hold their fellow-citizens in such deep contempt? (This contempt has begun to be returned with interest of late, although the ruling elites are predictably mystified by such quiet demonstrations as in the Chick-Fil-A appreciation day, the failure of certain lavishly promoted moves and TV shows, and heavily attended Tea Party rallies of a few years ago.)
A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator.
In his essay for Powerline, Codevilla turns his attention to the political phenomenon of the improbable GOP presidential front runner, billionaire and reality TV star, DonaldTrump. Unsurprisingly, Dr. Codevilla is not a huge fan of the bombastic Mr. Trump, but his analysis of why Trump has captured the moment so easily has some astute insights about the decaying state of our political system and the seething anger of the electorate:
“There is an economic war here and this company, Polar, is at the heart of it. They hide products from the population, and inflate their prices!”
The government had first notified the landlord of plans to expropriate the industrial park in 2013, Nestle spokesman Andres Alegrett said by telephone from Caracas on Thursday. Nestle used the facility to dispatch about 10 percent of its products in the country, supplying sweets and drinks to the western side of Greater Caracas, he said.
About ten years ago I went on a junket to Switzerland and attended a talk with the CEO of Nestlé. Listening to him, it became very clear to me that he had little to no interest in free markets or capitalism properly understood. He saw his corporation as a “partner” with governments, NGOs, the U.N., and other massive multinationals. The profit motive was good for efficiency and rewarding talent, but beyond that, he wanted order and predictability and as much planning as he could get. I think that mindset informs the entire class of transnational progressives, the shock troops of what H. G. Wells hoped would lead to his liberal-fascist “world brain.”
Yes, Nestle has a history of cooperation with various do-gooder initiatives although it has kept its eye on profits.
Chanting, “What side are you on, my people, what side are you on?” and “Black lives matter,” the demonstrators moved to the front of the ballroom about 20 minutes into the event as Mr. O’Malley discussed proposed changes to Social Security. They remained there, heckling the candidates and posing questions, until organizers shut down the event, one of the centerpieces of the annual Netroots Nation conference.
The Democrats are going to have serious problems with the black activist movement.
Connecticut state Democrats voted Wednesday to remove the names of former presidents Thomas Jefferson and Andrew Jackson from their annual fundraising dinner, reportedly because of their ties to slavery.
According to the Hartford Courant, it only took two minutes for the Connecticut Democrat State Central Committee to unanimously pass a resolution stripping both names from the title of the Jefferson-Jackson-Bailey Dinner.
Party Chairman Nick Balletto proposed the change. He told the Daily Caller the decision, which apparently came under pressure from the NAACP, was about party identity.
Posted by Ginny on 31st May 2015 (All posts by Ginny)
Arthur Herman, often referred to here, describes in Commentary the context of the pursuit of Scooter Libby. I am curious about how those more knowledgeable than I see the article.
But, aside from his central argument, I was struck by the remarkable picture with which he closes.
On October 11, 2003, when the media witch hunt in the Plame case was at its height, there was a Cabinet meeting at the White House. When reporters were invited in to ask Bush a question about the investigation, Bush said he wanted anyone in his government who knew who had leaked Plame’s name to speak up. Sitting a couple of chairs away was Richard Armitage, the man who had done it. Sitting beside the president was Colin Powell, to whom Armitage had confessed days earlier.
They said nothing—and kept silent for three long years. By the time Armitage admitted publicly that he had been the leaker in September 2006, Patrick Fitzgerald’s monstrously successful and spectacularly dishonest war on Scooter Libby’s job, reputation, finances, and legal innocence was well on its way to its morally depraved triumph.
The soaring [food] prices were actually exacerbated (as the Food and Agriculture Organisation of the UN confirmed) by the diversion of much of the world’s farmland into making motor fuel, in the form of ethanol and biodiesel, for the rich to salve their green consciences. Climate policies were probably a greater contributor to the Arab Spring than climate change itself.
The use of ethanol in motor fuels is an irrational response to “green propaganda. The energy density of biofuel, as ethanol additives are called, is low resulting in the use of more and more ethanol and less and less arable land for food.
Without abundant fuel and power, prosperity is impossible: workers cannot amplify their productivity, doctors cannot preserve vaccines, students cannot learn after dark, goods cannot get to market. Nearly 700 million Africans rely mainly on wood or dung to cook and heat with, and 600 million have no access to electric light. Britain with 60 million people has nearly as much electricity-generating capacity as the whole of sub-Saharan Africa, minus South Africa, with 800 million.
Just to get sub-Saharan electricity consumption up to the levels of South Africa or Bulgaria would mean adding about 1,000 gigawatts of capacity, the installation of which would cost at least £1 trillion. Yet the greens want Africans to hold back on the cheapest form of power: fossil fuels. In 2013 Ed Davey, the energy secretary, announced that British taxpayers will no longer fund coal-fired power stations in developing countries, and that he would put pressure on development banks to ensure that their funding policies rule out coal. (I declare a commercial interest in coal in Northumberland.)
In the same year the US passed a bill prohibiting the Overseas Private Investment Corporation — a federal agency responsible for underwriting American companies that invest in developing countries — from investing in energy projects that involve fossil fuels.
Hillary Clinton’s family’s charities are refiling at least five annual tax returns after a Reuters review found errors in how they reported donations from governments, and said they may audit other Clinton Foundation returns in case of other errors… For three years in a row beginning in 2010, the Clinton Foundation reported to the IRS that it received zero in funds from foreign and U.S. governments, a dramatic fall-off from the tens of millions of dollars in foreign government contributions reported in preceding years.
The article, in January 2013, detailed how the Russian atomic energy agency, Rosatom, had taken over a Canadian company with uranium-mining stakes stretching from Central Asia to the American West. The deal made Rosatom one of the world’s largest uranium producers and brought Mr. Putin closer to his goal of controlling much of the global uranium supply chain.
But the untold story behind that story is one that involves not just the Russian president, but also a former American president and a woman who would like to be the next one.
At the heart of the tale are several men, leaders of the Canadian mining industry, who have been major donors to the charitable endeavors of former President Bill Clinton and his family. Members of that group built, financed and eventually sold off to the Russians a company that would become known as Uranium One.
What’s your reaction to this story?
MR: You know, I’ve got to tell you, I was stunned by it. I mean, it looks like bribery. I mean, there is every appearance that Hillary Clinton was bribed to grease the sale of, what, 20% of America’s uranium production to Russia, and then it was covered up by lying about a meeting at her home with the principals, and by erasing emails. And you know, I presume we might know for sure whether there was or was not bribery if she hadn’t wiped out thousands of emails. But this is a very, very serious series of facts, and it looks like bribery.
Now we know why the e-mails were deleted.
As the Russians gradually assumed control of Uranium One in three separate transactions from 2009 to 2013, Canadian records show, a flow of cash made its way to the Clinton Foundation. Uranium One’s chairman used his family foundation to make four donations totaling $2.35 million. Those contributions were not publicly disclosed by the Clintons, despite an agreement Mrs. Clinton had struck with the Obama White House to publicly identify all donors. Other people with ties to the company made donations as well.
And shortly after the Russians announced their intention to acquire a majority stake in Uranium One, Mr. Clinton received $500,000 for a Moscow speech from a Russian investment bank with links to the Kremlin that was promoting Uranium One stock.
It is my assertion that over the last few decades since the fall of communism a lack of understanding of how markets actually work has become commonplace around the world. When it was capitalism vs. communism (or socialism, or even fascism), you generally knew where you stood. To wit:
Capitalism said that the free market would provide the best outcome for society, while communism / socialism felt that capitalism had to be tempered and / or that key assets should be owned by the state
Capitalism said that government should be small, and stick to a few areas of logical focus such as security and foreign affairs, while socialism / communism celebrated government and government jobs as a way to employ the citizenry and achieve social goals
Subtly, the growing attraction of jobs that were primarily in the government sector (environmental jobs, education jobs, health care jobs, and outright government work) and the basic thought that you could build a nice, steady career there with assured benefits and pensions while “doing right for the world” became commonplace. These jobs were often seen as “nicer” and “better” than the ruthless corporate jobs that are continually vilified or parodied on television (such as “The Office” or virtually any thriller set in business).
On a parallel scale, the idea that “State Owned Enterprises” (SOE) could be a significant part of the world economy, and compete effectively with private sector companies, became widespread. Let’s leave aside the companies that fell into the US governments’ hands during 2008-9 like the banks and car companies; I am focusing on the world wide companies, often country “champions”, that are in our midst and whose performance has now been hit with the usual causes of failure of these sorts of entities, including:
Politically motivated investment
Forced government subsidies or protectionist behavior
The “poster child” for this negative outcome is Petrobras, the Brazilian oil company, which is 64% owned by the state. Petrobras was briefly the 4th most valuable company in the world after their 2010 IPO; now it is barely in the top 100. Petrobras hits all these typical failure points with a vengeance. The government forced them to purchase goods and services from inefficient Brazilian suppliers, subsidized their citizens with Petrobras funds, pushed them to invest in deep offshore finds which were risky relative to the company’s capabilities, and finally just engaged in simple corruption to fund their political party candidates. All of these actions weakened the company and now a downturn in oil prices and a heavy debt load put the company in a seriously bad state.
First: And to those members of Congress who question my authority to make our immigration system work better or question the wisdom of me acting where Congress has failed, I have one answer: Pass a bill. I want to work with both parties to pass a more permanent legislative solution. And the day I sign that bill into law, the actions I take will no longer be necessary.
Obama clearly wanted to make himself look like the compassionate actor in this debate, and Republicans the heartless, cruel nativists. Instead of trying to fight that battle, make Obama own it and bypass it for the real battle the GOP wants to win on border security. Make Democrats vote against a border security bill, and make Obama veto one while his own amnesty remains in place.
When President Obama announces that he will be suspending laws to bless the illegal presence of millions of foreigners in the United States, he will have adopted the most basic philosophy of John C. Calhoun: some laws can be tossed aside because his ends justify the lawlessness.
I don’t trust Obama’s intent but I think he is a fool and did not plan this correctly, or else chickened out. There is more interesting comment at Powerline today.
Procedurally what happens is an undocumented person applies for ‘deferred action’ and then after receiving this ‘quasi-status’ – he/she is eligible for work authorization.
See the last paragraph on page 4 of this key memo: “Applicants must file the requisite applications for deferred action pursuant to the new criteria described above. Applicants must also submit biometrics for USCIS to conduct background checks similar to the background check that is required for DACA applicants. Each person who applies for deferred action pursuant to the criteria above shall also be eligible to apply for work authorization for the period of deferred action, pursuant to my authority to grant such authorization reflected in section 274A(h)(3) of the Immigration and Nationality Act.”
I still think the Republicans can trump this with real reform. Then they can send a bipartisan bill to Obama and see if he vetoes it. That Powerline post also emphasizes that Silicone Valley is pushing this and that explains their support of Obama.
How many Senate Democrats would be willing to sustain that veto before the 2016 election? I’m betting not too many. But Republicans have a perfect opportunity to turn the debate in that direction now and force Obama and his shrinking number of allies on Capitol Hill to go on the record.