"Socialism vs. Capitalism" and the BP Mess

[by Mr.Hengist]

One of my favorite columnist piñatas at the WaPo, E.J. Dionne Jr. (co-king with Eugene Robinson for that title), has written another column that could use a few whacks with the Mr.Hengist stick. Going by the promising title, “Gulf oil spill offers a lesson in capitalism vs. socialism” E.J. sounds a herald of trumpets for his fisk-worthy beclowning. Let’s have at it!

So who is in charge of stopping the oil spill, BP or the federal government?

Ooh! Ooh! I know! British Petroleum, unless and until the federal government takes over. OPA Section 4201 amended Section 311(c) of the Clean Water Act provides the POTUS (delegated to the USCG or EPA) with three options:

- Federalize the spill and perform an immediate cleanup.
- Direct the spiller's cleanup activities.
- Monitor the spiller's cleanup efforts.
Furthermore, the USG determines the level of cleanup required.
[PDF link & H/T Mark Levin]

See? That’ wasn’t so hard. E.J.’s not so sure, though:

The fact that the answer to this question seems as murky as the water around the exploded oil platform in the Gulf of Mexico suggests that this is an excellent moment to recognize that our arguments pitting capitalism against socialism and the government against the private sector muddle far more than they clarify.

That is to say that E.J. Dionne and his liberal readers are muddled because they are ignorant of the federal statutes relevant to this issue, but that's no impediment to their expressing the usual righteous indignation and outrage. In this case, E.J. seems to be suggesting a socialism vs. capitalism cage match. Don’t think his cheerleading of socialism makes it OK to call him a socialist, though. We know how socialists hate to be called socialists. Some kind of hate crime, or racism, or something.

E.J. continues:

Many tragic ironies are bubbling to the surface along with the oil. Consider the situation of Gov. Bobby Jindal of Louisiana, a Republican conservative who devoutly opposes the exertions of big government.
"The strength of America is not found in our government," Jindal declared in his response to President Obama's February 2009 address to Congress. "It is found in the compassionate hearts and the enterprising spirit of our citizens."
But with his state facing an environmental disaster of unknown proportions, Jindal is looking for a little strength from Washington. His beef is that the federal government isn't doing enough to help. "It is clear we don't have the resources we need to protect our coast," he said this week, expressing his frustrations with "the disjointed effort to date that has too often meant too little, too late."
You can't blame Jindal for being mad. But will he ever acknowledge that "compassionate hearts" were not sufficient for coping with this catastrophe?

Here’s a pretty obvious strawman that E.J. offers because, well, he knows his readers are unlikely to spot it. Liberals, who crow about their unique appreciation of nuance, seem to think that the Conservatives are anarchists when they advocate “limited government,” as if to snidely say, “You want Federal disaster relief? Hypocrite wingnuts, whatever happened to ‘getting government off the backs of the people`?”

The quote from Gov. Jindal was hardly ironic, though; it was in response to POTUS Obama’s Feb 24th, 2009 address to Congress, noting that during the Katrina rescue efforts an un-named bureaucrat tried to prohibit a volunteer sea rescue effort for lack of insurance and registration. Sort of like how the EPA tried to block BP from using a dispersant it had already approved. BP was using a lot of it, you see, and the EPA was suddenly concerned that it was toxic, so they ordered BP to find another one. The EPA expressed no advice which one they had in mind, if any, or how to instantly procure it in large volumes. That is to say, the petulant and meddlesome EPA had no alternative to offer but they nevertheless ordered BP to instantly find and apply an alternative. In contrast, little girls only wish for ponies. Gov. Jindal and right-wingers only wish the government would step out of the way when they aren’t being constructive, which was the point he was making a year ago, and that point is just as relevant today.

Did he ever ask BP how prepared it was for something like this? Or was he just counting on the company's "enterprising spirit"?

Gov. Jindal probably didn’t ask BP how prepared it was for something like this because, after all, that was the responsibility of Federal agencies like the EPA and the MMS, which is to say that he had no authority in such matters. Federal authorities did not, of course, leave disaster response preparations entirely up to private corporations, or at least they weren’t supposed to do that, but the BP spill has revealed that both industry and government were woefully unprepared. Dionne would do well to ask, for example, why the Federal government had no fire booms on hand, despite a Federal plan dating back to 1994 that called for their immediate use when dealing with a major Gulf oil spill.

For its part, the Obama administration has not sent a consistent message. On Sunday, Interior Secretary Ken Salazar proclaimed outside of BP's headquarters in Houston: "If we find they're not doing what they're supposed to be doing, we'll push them out of the way appropriately."
Not according to Adm. Thad Allen, the national incident commander. Speaking the next day at the White House, Allen observed: "To push BP out of the way, it would raise a question: Replace them with what?"
Exactly. While Allen may not be a political philosopher, he spoke with the sophistication of one during an interview with CNN.

To say that the Obama administration “has not sent a consistent message” understates the revisionist history in which they’ve been engaged. The Federal government has been relying on the entirety of the oil industry to address this problem, not just BP.

"What makes this an unprecedented anomalous event," he said, "is access to the discharge site is controlled by the technology that was used for the drilling, which is owned by the private sector."
So there you have it: "Do something!" citizens shout to a government charged with protecting the environment in and around a Gulf of Mexico that is nobody's private property. Yet the government, it seems, can't do much of anything because the means of stopping the flow of oil are entirely in the hands of a private company. BP was trusted to know what it was doing with complicated equipment that, it would appear, it either didn't understand very well or was willing to use recklessly.

There is nothing to stop the Federal government from researching and developing drilling and disaster mitigation technologies. The Federal government relies on private industry because that’s where knowledge and expertise are to be found; or, to put it another way, we don’t rely on the Federal government to do much of anything because they don’t know what they’re doing. It’s not true to say that “the means of stopping the flow of oil are entirely in the hands of a private company” because it was not the means, but the responsibility, which was handed off to private industry. There are some early indications that this responsibility was mismanaged by BP, but I trust that the future investigations will shed more light on that.

The technology used is controlled by a private company because they've paid to own or lease it. If we had to rely on the Federal government to provide this technology we'd solve the problem of their not having access to it, but to what end? They don't have the expertise to utilize it in any meaningful way, and more than likely the problem would be moot because the technology simply wouldn't be available for use in the first place. Innovation is not a strong suit of government, to say the least.

Deep water drilling is a relatively new and not well-understood technology. Off-shore drilling is easier and has an excellent safety track record, and drilling on land is easier and safer still, but we are left with deep water drilling because, as Charles Krauthammer sums it up,

Environmental chic has driven us out there. As production from the shallower Gulf of Mexico wells declines, we go deep (1,000 feet and more) and ultra deep (5,000 feet and more), in part because environmentalists have succeeded in rendering the Pacific and nearly all the Atlantic coast off-limits to oil production. (President Obama's tentative, selective opening of some Atlantic and offshore Alaska sites is now dead.) And of course, in the safest of all places, on land, we’ve had a 30-year ban on drilling in the Arctic National Wildlife Refuge.
So we go deep, ultra deep -- to such a technological frontier that no precedent exists for the April 20 blowout in the Gulf of Mexico.

We need energy, period. We get most of our energy from oil, unfortunately. Unfortunately, alternative “green” energy sources are technological toddlers requiring many more years of development to be practical on a large scale, if they can get there at all. That leaves us with oil.

There’s also nuclear power, which is now safe, efficient, and environmentally manageable. Environmental foolishness has kept us from building the nuclear power plants we’d need to dramatically reduce our reliance on oil, and one of the first acts of the Obama Administration was to kill the future American nuclear power generation by closing the best place to safely store the waste: Yucca Mountain.

In short, this environmental mess is the indirect result of environmentalist prohibitions that were supposed to protect the environment. Nice work, greenies!

E.J. goes on,

Belatedly, the Obama administration has realized that citizens can never accept the idea that their government is powerless.

It takes years of brown-nosed shilling for Democrats to be able to write a sentence like that without a trace of embarrassment. As for me, I just threw up a little in my mouth.

"Deregulation" is wonderful until we discover what happens when regulations aren't issued or enforced.

This is an excellent example of rhetorical disingenuousness. E.J. Dionne does not believe that deregulation is wonderful. What’s more, Dionne seems oblivious to the question of how to get effective enforcement of existing regulations. Certainly, it’s not enough just to have regulations, but when Dionne advocates ever more regulations it’s often the case that existing relevant regulations have had lax enforcement, and the solution to that is certainly not more regulations. Perhaps we should put this another way: when regulatory bodies fail, why do Liberals always insist on more regulation instead of questioning their own faith in the regulators?

Everyone is a capitalist until a private company blunders. Then everyone starts talking like a socialist, presuming that the government can put things right because they see it as being just as big and powerful as its Tea Party critics claim it is.

I’m charmed by this line in E.J.’s piece. Here’s a good example of what we call “The Liberal Bubble”. “Everyone starts talking like a socialist” as far as E.J. knows, and that’s a function of his ignorance of what his political opposition has to say. Furthermore, we who want a smaller government also believe that government competence is inversely proportional to its size. The Tea Partiers are right: our government is very powerful, and bigger than it ever has been, but it is neither particularly competent nor efficient.

In this BP debacle, only fools believe that our government can fix the problem, but believe they do and so they cry out for government to “do something.” The government has no solution, and the people with the best shot at fixing it, the oil industry, have pooled resources and are hard at work trying to come up with one. That’s why I don’t begrudge POTUS Obama going golfing and taking vacations while this operation is underway; it’s not as if he could personally do anything or exercise any of his authority in a way that would do any good. What I do resent is his mouthing of platitudes, as in, “We will not rest until this well is shut, the environment is repaired and the cleanup is complete,” because all it amounts to is, “blah, blah, blah.”

But the truth is that we have disempowered government and handed vast responsibilities over to a private sector that will never see protecting the public interest as its primary task. The sludge in the gulf is, finally, the product of our own contradictions.

When I read this kind of sloppiness I’m reminded of how often I think that Liberals live in a make-believe world of their own, dark fantasies. We haven’t “disempowered” government; in fact, government oversight and power has steadily been on the increase over the course of decades. There is no power that government needs which it does not already have which would speed the solution to this mess.

Disappointingly, Dione does not deliver on his “capitalism vs. socialism” promise so I won’t belabor the point, but hard-core socialist countries like the former Soviet Union and present-day China have environmental histories that are unqualified large-scale disasters. I’ll give Europe credit for having a good environmental record in general, generally on a par with our own, but need I remind E.J. Dionne that “BP” stands for British Petroleum?

Crucibles

Via Instapundit, and the newly-bookmarked, likely to be frequently-visited H+ Magazine, I encountered this fascinating article on the role of Israel in the formation of our technological civilization, and in its future development. It begins thusly:

Imagine this sci-fi scenario: A small tribe with unique literature, customs and myths believes they’ve been “chosen” for a glorious destiny. But they’re driven out of their native land, forced to wander the globe for aeons, persecuted and annihilated, until they’re impelled by a utopian novel to return to their homeland. They name their new city after the inspirational book and their country becomes a technological powerhouse... but still, they’re surrounded by enemies. They wage eternal war, they hover between hope and apocalypse… their contributions to humanity are astounding but they continue to fear total extinction.

 The tiny nation of Israel has had a disproportionately huge impact on the states of an astonishing variety of extremely cutting-edge technologies practically since its inception. It is still the world standard on water treatment (its drip irrigation techniques were revolutionary, and allowed it to make the desert bloom in a way which would have made Frank Herbert's mouth...well...). Its contributions to renewable energy technologies, robotics, medical tech, and a host of other highly advanced fields of knowledge have made this nation, though smaller than New Jersey, into a little laboratory for the future. Consider these data:

 The first cell phones were developed at the Israeli branch of Motorola. The majority of Windows NT and XP operating systems were developed by Microsoft Israel. Pentium MMX chip technology was designed at the Israeli Intel. Both the Pentium 4 and Centrino processors were designed by Israelis. Dov Moran, an Israeli, invented the flash disk. Voice mail technology? Israel. AOL Instant Messenger? Israel. Highest percentage of home computers in the world? Israel. Highest ratio of university degrees? Israel. Highest per capita number of scientists and technicians in the workplace? Israel. (145 per 10,000 — second is USA with 85). Techno-progressive President Shimon Peres recently declared, “the future is in nanotechnology.” Israeli universities advance research in cutting edge fields like cognitive neuroscience, cellomics, telomerase, etc. etc.

 Long ago, I read a short story by Theodore Sturgeon, called A Microcosmic God, in which a scientist creates a species of tiny, intelligent, short-lived organisms, and presents them with problems which they must solve, often for the sake of their own survival (for example, he introduces a mechanism which will crush them unless they come up with an impenetrable force field...so they do. After all, they see him as a kind of God figure). In the conclusion of his H+ article, author Hank Hyena links the embattled state of Israel to other fast-growing, innovative societies of the past, stating that:

In my opinion, Israel (like South Korea) will be a tiny giant in the world of the future. Both nations have risen triumphantly from near-nothingness in the last sixty years. Although Israel is miniscule and threatened by opposition, it has used this challenge as motivation for advancement. Israel’s diminutive size and gargantuan progress is reminiscent of the small vibrant city states of history, such as classical Athens (rivaled by Sparta, Thebes and Corinth), medieval Florence (opposed by Venice, Milan, Genoa, Pisa and Siena), the Warring States of China (forward leaps in philosophy, metallurgy, government, law and military strategy), Swahili seaports (Mombasa, Malindi, Kilwa, Sofala, Zanzibar, and Mogadishu competed economically as their cosmopolitan cultures blossomed), plus myriad other mighty dwarfs that performed phenomenally under pressure.

 A central tenet of evolutionary dynamics (at various scales, including genetic algorithms within computers) is the importance of selective pressures to guide the process of blind variation and selective retention which makes evolution such an immensely powerful problem-solving engine. Given such pressures, evolving systems sample the problem space in massively parallel fashion, trying and discarding myriad potential solutions before zeroing in on the one which is nearest-to-optimal.

In the case of Israel, one would be hard-pressed to envision a more demanding problem space in which to sink or swim. Of course, adversity does not invariably lead to brilliance, and the author cites some other factors (e.g., an early influx of highly-educated immigrants from Russia and Europe) which have propelled Israel to its current prominence in the advancement of human civilization. But the fact is that Israel has had to innovate at a breakneck pace in order to preserve its very existence. Operating under relentless existential threats, and with very few allies (at least initially: the US was not a significant supporter till after 1973 or so), the nation of Israel has functioned as a sort of crucible for the emergence of novel approaches to a wide variety of problems.

Say what you will about the primordial standoff between Israel and its neighbors. But this is an indispensable nation with untolled gifts for the future of humanity. Amid all the hue and cry, it is useful to remember this from time to time.

Please do read the whole thing.

Standards and Practices

Andrew Klavan (who, as it turns out, wrote the screenplay to one of my favorite movies that no one has heard about: A Shock to the System), posted an editorial over at the City Journal, in which he talks about the Left's particular genius in demonizing its opposition. The way he lays it out is quite pithy in a way that will make leftists fume and squirm, and conservatives shrug and say "yeah? And?"

Leftists will blacklist you—and then if you complain, they’ll attack you for whining. They will call you a racist and compare your leaders to Hitler—and then if you return the insult, they’ll scream about the decline of civility. They will do everything in their power to cut you off from media and artistic outlets—and then when you create outlets of your own, they will savage them for their bias. Like the mobster in a Raymond Chandler novel, they will beat your teeth out, then kick you in the stomach for mumbling.

The sheer slipperiness of the Left's confiscation of the public discourse would be admirable in its Machiavellian efficiency...if the health of the Republic were not so badly endangered by it. Still, you kind of have to give it to the gifted con man who is able to frame the situation in such a way that no responses outside that frame appear as reasonable or even possible. That is, till you realize that you have just signed away your life's savings.

Nowhere is the dominance of the Left's meme tampering more evident than in the entertainment business, where Conservatives like Jon Voight, Adam Baldwin, Dennis Hopper (!), Janine Turner (!!), Kelsey Grammer, and a smattering of others perform a careful dance, like operatives behind enemy lines, operating by multiple reports athwart plausibly-deniable blacklists (Klavan claims to have the goods on those, but won't spill, because it would violate trusts and pretty much annihilate his ability to make a living. Take his statements accordingly...but do take note of the status of the above-mentioned careers...). At the viewer level, the product is a ceaseless slurry of Liberal blue food, as ideologically diverse as a Womyn's Studies course at Bryn Mawr:

More than a dozen movies attacking the war on terror without shading or nuance, but not one film that said simply “We’re heroically right and they are villainously wrong.” Not one film exposing the lies and excesses of environmentalism. Not one in which, say, a brave radio talker battles the mainstream media on behalf of white boys wrongly accused of raping a black girl. There are some narratives—evil corporations, American military abuse, desperate housewives, victimized minorities—that are acceptable and others—the glories of capitalism, America’s defense of liberty, fulfilled homemakers, race-baiting con men—that are not, despite their truth and the fact that the majority of the audience approves them.

 Klavan's prescription is a wise one: Don't wait around for Liberal Hollywood and the Left-leaning MSM to catch an attack of fairness. To quote Malcolm Reynolds, that's a long wait for a train that never comes. Rather, let the Right and Center-Right...hell let the actual center place a much greater emphasis on the pursuit of a presence in the cultural landscape for their own ideas. Let films and books and TV shows get produced and discussed which reflect something other than the "America's bad, m'kay?" attitude which so pervades the pap leaking from the Hollywood Hills. Don't ape the tactics of the Left by huffing and puffing about their product, but strive to compete in an open marketplace (gods know, the movies could scarcely do more poorly at the box office than pretty much all of the the GWOT-bashing flicks coming out of Hollyweird in the last few years!). Use the free market to promote the free market, in other words!

But, as Klavan entreats, "it would be nice, for purposes of discussion, if we could all begin by acknowledging the obvious."

Sauce: Goose, Gander

Just sat through 11 minutes of video (posted and duly re-posted on the Facebook walls of some friends) in which an Obama-supporting chap interviewed a succession of Tea Partiers, highlighting a certain lack of resolution in their data. Pause for popcorn:



Sorta like if Jay Leno's "Jaywalking" segments were produced at MSNBC, right? Not the most stellar performances of wonkery from the lumpen non-wonkers.

But it reminded me of something. Let's see....



Oh yeah! That was it.

So, what's the take-away from this little exercise in compare-and-contrast? Well, that would kinda depend on  your chosen set of goggles, now wouldn't it? Is it an indication of how much more [insidiously] effective Right-Wing media outlets are in promoting a set of talking points? Is it a sign of the Left-Wing Media's emphasis on emotionally salient but factually-unfurnished memes? Is it a simple matter of (Camera One) Tea partiers' brainwashed vacuity? (Camera Two) Obama supporters' blinkered adherence to the cult of their Dear Leader's personality?

Is it an indication of how the granularity of much-needed data gets sand-blasted in an environment of entrenched partisanship, such that individuals on  both sides (not to mention all the other possible "sides") are deprived of the means (or even the vague sense that there is a need) to flesh out their wafer-thin comprehension of Very Important Stuff?

And where in this process might we situate the act of promulgating one of these clips in the absence of the other?

Two In The Hand

I've sat on this report all day, watching updates and waiting for confirmation ("fool me once...").

By now, I'm reasonably satisfied that this is legit. Bill Roggio over at the Long War Journal reports:

Iraq's Prime Minister and the US military confirmed that al Qaeda in Iraq's top two leaders have been killed during a raid in a remote region in the western province of Anbar.

"Abu Ayyub al Masri, also known as Abu Hamza al Muhajir, Abu Omar al Baghdadi and a number of al Qaeda leaders in Iraq were killed during a security operation in al Thar Thar region in Anbar," Prime Minister Nouri al Maliki told reporters at a press conference in Baghdad, according to Voices of Iraq.

US Forces Iraq, the US military command in Baghdad, confirmed the report in a press release.

"A series of Iraqi led joint operations conducted over the last week resulted in the Iraqi Forces with US support executing a nighttime raid on the AQI [al Qaeda in Iraq] leaders’ safehouse," the press release stated. "The joint security team identified both AQI members, and the terrorists were killed after engaging the security team. Additionally, Masri’s assistant along with the son of al-Baghdadi who were also involved in terrorist activities were killed."

During the operation, one US soldier was killed in a helicopter crash, and 16 al Qaeda associates were detained. (emph. added)

My heart goes out to the buddies and family of the helo pilot who lost his life in this highly significant raid. It was surely not lost in vain, as this is otherwise all kinds of good news. First of all, it was predominantly Iraqi security forces, with support from US forces, that executed the raid, which again underscores the success the COIN portion of OIF has enjoyed in training and fielding an increasingly effective and professional Iraqi military (to say nothing of the assets among the indigenous population which it was able to utilize in obtaining the intel that guided the strike, intel which a cowed and cynical pre-Surge population would never have dreamed of providing).

Second, this strike has essentially decapitated AQI, demonstrating that even the highest of the high in that organization is vulnerable. The psychological impact of such a blow cannot be overestimated. You can say "Whack-a-Mole" till you're blue in the face...but it doesn't change the fact that these miscreants' prospective replacements, in addition to being less experienced and possessing less street cred, will slink about with the full expectation that the slightest misstep will leave them...well...blue in the face.

Which brings me to the last point (see bolded text above): Those "16 al Qaeda associates [who] were detained" were sufficiently high in the food chain that they were kicking it in the same safe-house as the two Top (mangy, flea-bitten) Dogs in the AQI hierarchy. The degree of detailed operational and organizational intelligence which can be wrung from these "associates" represents a veritable treasure trove of actionable information which will ripple outward to the lowliest torture chambers and bomb-making shacks. Even in the unlikely event that they are not singing like canaries inside of a Mosul Minute, the mere possibility that they'll make like a Muezzin  will force every Talib, Da'ud, and Hanif to scramble for new procedures to throw off the Pimp Hand of Justice. They'll get panicky. They'll get sloppy. And more and more of their thermal signatures will fade to ambient.

And, lest all this talk of strategic significance obscure it, two Very Bad Dudes have been shuffled off before they had a chance to wreak more bloody mayhem on the poor mother's sons and daughters who would have been shredded in the demonic dervish-dance of their demented demolitions.

High Fives all around for our brave and competent forces and their stalwart Iraqi allies.

Man Bites Dog: Honest Reporting From WaPo on Tea Parties

And the title is where the snark will end. It was refreshing in the extreme to see this editorial by the Washington Post's Robert McCartney on his personal investigation of a Tea Party rally.

I went to the "tea party" rally at the Washington Monument on Thursday to check out just how reactionary and potentially violent the movement truly was. 

Answer: Not very. 

Based on what I saw and heard, tea party members are not seething, ready-to-explode racists, as some liberal commentators have caricatured them. 

Some are extremists and bigots, sure. The crowd was almost entirely white. I differ strenuously with the protesters on about 95 percent of the issues. 

Nevertheless, on the whole, they struck me as passionate conservatives dedicated to working within the system rather than dangerous militia types or a revival of the Ku Klux Klan. 

Although shrinking government is their primary goal, many conceded that the country should keep Medicare and even Social Security. None was clamoring for civil disobedience, much less armed revolt.

Clearly, the author has differences with the Tea Partiers. This is not a problem; dialog on the issues does not require complete agreement (that's why they call it 'dialog!'). What is most edifying about this piece is how it openly looks at the degree to which the worst stereotypes put forth about the movement hold up to scrutiny. McCartney shows the ability to disagree with the Tea Partiers on the issues without the need to marginalize and misrepresent them. Instead, he went and found out for himself. He talked to people. He questioned them on the issues, but he also soaked up their vibe. Then he reported honestly on what he found, without shady selective emphases or narrative-supporting innuendo.

Not much more to say on this: it was just nice to see a journalist in the MSM do his job with the integrity and forthrightness which enables his readers to engage in genuinely critical thinking. He does not take it upon himself to villanize or slander, in order to preemptively foreclose on people's access to the variables which will guide their thinking on the matter, just because he might not like some of the conclusions to which they might come.  We could do with quite a bit more of this. Please do read the whole thing.

David Emerges

Check out this article about a 5-axis milling rig which uses sophisticated 3-D design software to carve a helmet out of a solid block of aluminum.


Information technology meets precision robotics, and achieves something resembling kinetic poetry. Form emerges from brute matter in a gleaming spray of metal shavings, a marriage of genius and machinery which would make Michaelangelo weep (with joy? with grief?). 


Don't miss the extraordinary video. 

Belated H/T to Mr. Hengist who, I now recall, sent me the vid months ago.

NYTimes on Microlenders: Slaking a Thirst for Profit with the Blood of the Poor!

[by Mr.Hengist]

A couple of days ago the NYTimes published an article by Neil MacFarquhar (“Banks Making Big Profits From Tiny Loans”, 2010-04-14) on microloans in undeveloped countries.

It’s written in the typical NYTimes style of understated indignation and offence at what he characterizes as exploitation of the poor. Microloans, you see, were supposed to be “the long elusive formula to propel even the most destitute into better lives.” That’s the setup, anyway, but let’s face it: Liberals don’t actually think that business lending is the solution to poverty, but they do believe that anything that puts more money into the hands of the poor at least has that going for it.

MacFarquhar lets Nobel Peace Price winner Muhammad Yunis, “the economist who pioneered the practice”, state the thrust of the piece:

“We created microcredit to fight the loan sharks; we didn’t create microcredit to encourage new loan sharks,” Mr. Yunus recently said at a gathering of financial officials at the United Nations. “Microcredit should be seen as an opportunity to help people get out of poverty in a business way, but not as an opportunity to make money out of poor people.”

… and by that same token I guess you could say that the printing press was invented for making bibles, yet look how the NYTimes has debased it by publishing fishwrap. Having “created” the idea of making very small loans to very small businesses (not quite the Nobel Prizeworthy breakthrough, that), Yunus apparently believes he owns the idea and how it should be used. How dare other people use his unique idea in ways he hasn’t approved! The nerve of some people.

Some banks and financial institutions, ace reporter MacFarquhar informs us, have been charging interest rates of up to 100% - or more! Some of them! Up to 100%! And some of them more than that! … and some of them less than that. The article doesn’t actually provide much by way of numbers, but it does provide a breadcrumb trail by way of reference to the Microfinance Information Exchange (“The Mix”) and in doing so provided what’s probably the most salient piece of information in the whole article. It's contained in a single sentence, orphaned in the middle of the article, and in it is a key fact which is succinctly provided and subsequently completely ignored:

“Adrian Gonzalez, lead researcher at the Mix […] found that much of the money from interest rates was used to cover operating expenses, and argued that tackling costs, as opposed to profits, could prove the most efficient way to lower interest rates.”

It’s a forehead slapping revelation which undercuts the whole thrust of the article. The interest rates charged are irrelevant so long as the microloan enterprise is to be considered a self-sustaining business, as opposed to a money-losing charity. Charities can and do throw money at social problems with the expectation that their outlays will not be repaid, whereas for a business to continue as a going concern the balance sheet can’t stay negative for long before it goes tits-up.

The interest rate charged is therefore irrelevant because banks and financial institutions are not charities and can’t expect donors to replenish the institution as they bleed red ink. If progressives are going to ride their hobby horse of outraged indignation over greed in this business sector then the relevant metric is the profit margin, not the interest rate. As revealed in this quote, while the interest rates are high, so are the expenses.

That’s to be expected in a business of this nature. The low interest rates to which we’re accustomed in the developed world are possible in part because of our business environment. For example, we have the infrastructure to make informational contact and money transfers between parties simple and quick. Lenders can phone, send letters, or even dispatch a representative if necessary, and vice versa for borrowers – although, for microloans, the very nature of the small loans makes for small profits to begin with, and every added expense therefore will loom disproportionately large; it's cheaper to make one loan of $10K versus a thousand loans of $100.

Furthermore, we can also rely on our judicial institutions for recourse in the event of a dispute, whereas in the developing world judicial recourse is often not an option. Considering that the risk is borne by the lender. The lack of a venue in which to sue the borrower in the event of default makes it easy for a scammer to simply take the money and run.

That would be the worst-case scenario for the lender, but even excluding those whose sole object is thievery, the majority of the target-market of lenders are going to be poorly-educated and unable to make even simple business calculations. Consider the example provided in the article of Maria Vargas of Mexico City, who “has borrowed larger and larger amounts from Compartamos over 20 years to expand her T-shirt factory to 25 sewing machines from 5. She is hazy about what interest rate she actually pays, though she considers it high.” She considers it high, but the truth is that if there were a more competitive rate she would have taken it. In a competitive market the invisible hand will find the true rate, and it's higher for borrowers like Ms.Vargas than for better credit risks in a market backed by an effective judiciary. Note that it’s her factory, and she’s borrowing the money, but she doesn’t quite know what it’s costing her. I’m not blaming her for her poor education, but consider that she’s probably a typical borrower. She simply does not know how to figure out the costs of this business transaction, so the prospects of her paying back the money she’s borrowed are considerably diminished when neither she nor her bank can say for sure whether the transaction makes business-sense in the first place.

The Mix has a detailed Excel spreadsheet for Y’08 which has some interesting information. Since I’m not a financial analyst it’s a bit difficult for me to make heads or tails of the wealth of information provided in it, but the profit margin for For-Profit lenders had a median of 7.3%, whereas the “profit” for Not-For-Profit lenders was 3.3%. So much for the outrageousness coin these loan sharks are skimming from the poor, eh?

The article also has a cautionary tale for progressives:

"In Nicaragua, President Daniel Ortega, outraged that interest rates there were hovering around 35 percent in 2008, announced that he would back a microfinance institution that would charge 8 to 10 percent, using Venezuelan money.
"There were scattered episodes of setting aflame microfinance branches before a national “We’re not paying” campaign erupted, which was widely believed to be mounted secretly by the Sandinista government. After the courts stopped forcing small borrowers to repay, making international financial institutions hesitant to work with Nicaragua, the campaign evaporated.”

That’s right: when the Leftists encouraged default the private capital took flight. With losses all but guaranteed, no sane businessperson would do that kind of business there. Profits are what motivate people to invest. No profit, no money from private enterprise. One way or another it’s got to pay off or they’ll take a hike and put their money to work elsewhere. Just as importantly, the rewards must be commensurate with the risks or capital will seek equally low returns on investments of comparably lower risk. This isn't opinion: this is basic economics and it's completely lost on these Socialists.

Socialists and charities are free to make low-interest loans to poor credit risks but they’ll require a regular influx of capital to replace their inevitable losses. When these social engineers create an untenable business environment, free capital walks – the lenders won’t profit, and (pay attention, you progressives) the entrepreneurial poor don’t get loans. Nobody wins – happy now?

The article continues with this threat:

“The fracas over preserving the field’s saintly aura centers on the question of how much interest and profit is acceptable, and what constitutes exploitation. The noisy interest rate fight has even attracted Congressional scrutiny, with the House Financial Services Committee holding hearings this year focused in part on whether some microcredit institutions are scamming the poor.”

Oh, yay! Congress will hold hearings. This will surely end well.

… and finally, the article closes with this:

“You can make money from the poorest people in the world — is that a bad thing, or is that just a business?” asked Mr. Waterfield of mftransparency.org. “At what point do we say we have gone too far?”

Answer: Since it’s not your money that’s being loaned out you have no business asking.

Leaker Plugged? UPDATED

Via Ed Morrissey over at Hot Air, comes this WaPo story on what appears to be the identification and indictment of an NSA staffer who may have been a source of the leaks which enabled certain unnamed major news outlets (cough--NewYorkTimes--cough) to blow the cover of two successful tools for the monitoring of terrorist activities against the US. Quoth Ed:

The indictment doesn’t name the paper or identify the subject matter, but it also doesn’t appear too difficult to connect dots in this case.  The Times produced most of the original reporting on these secret programs, including the Terrorist Surveillance Program (TSP) that eventually got retroactive cover in a rewriting of FISA laws.  They also exposed the secret bank-tracking program Swift that turned out to be both completely legal and extraordinarily effective — before the Times blew its cover.

This is another one of those issues which, in even a reasonably sane political climate, should transcend partisan politics. This staffer was sworn to protect this Nation from all threats, both foreign and domestic. If he had a problem with the Administration's use of its Constitutionally delineated powers, then the course of action was to seek redress within the scope of his role as a defender of that Constitution. The fact that he (i.e., the leaker, whether or not this particular individual turns out to be guilty) felt that he was empowered to sabotage the mechanism of National Security by going to the fracking press with classified programs (leaving aside what I feel about the NYT for running the stories...might generate content warnings if I let myself go there) makes him an enemy of the state, an outlaw in the most literal sense. Similarly we as citizens need to look at this sort of behavior as wholly unacceptable, whether we agree with its motivations or not. It is yet another subversion of the processes of rule-of-law governance by arrogant individuals with a greater regard for their own feelings than for the consequences of their little tantrums on the safety of their fellow citizens.

Kudos to the Obama DOJ for going after this. I don't care what side of the political spectrum you live on; this kind of vindictive political vigilantism endangers us all, and constitutes the skinny end of a wedge toward anarchy.

UPDATE: Powerline's John Hinderaker appears to have read the article more closely than I, finding (in plain sight) that:

Unfortunately, Drake's leaks don't appear to be the ones that threatened national security. Rather, they put NSA's bureaucracy in an unflattering light:

Gorman's coverage of NSA often placed an unflattering focus on NSA administrators. An August 2006 story quoted intelligence officials as showing that the NSA eavesdropping facilities in Fort Meade were at risk of paralysis because of electrical overload and potential failure of the power supply.

Dang. Still, though far less critical than finding the wanker(s) who spilled the beans on the specific programs whose beans were spilled, this is nonetheless not entirely insignificant an indictment. Not only does this guy's alleged misbehavior violate the lawful processes by which such things ought to be handled, but it did reveal potential sources of vulnerability in the infrastructure which subtends our intelligence-gathering operations. One can easily imagine some inventive enemies were looking very carefully at ways to overtax certain electrical sub-grids...

Still a generous helping of just desserts, even if it's not the top banana split I would've liked.

Up, Up and Away!

In the annals of Kool, this thing is cleared for some considerable altitude. Have a look:

Ever since the Solotrek company went belly-up in 2003, I'd been sadly resigned to the demise of the personal flying vehicle (though there may yet be some life in the old girl). Naturally, I was plenty stoked to see this mentioned in the comments of a long-forgotten tech-blog post.

The recon and Special Forces insertion possibilities of this thing are obvious, the civilian uses (beyond the Just Plain Rad factor, of course) are rather less so.

But it's the kind of thing I just feel a little cooler for sharing a world with, anyway.