Tuesday, 31 July 2012

Privatise rail

I see complaints from the chattering classes that plans to sell TranzScenic or to partner with another company “would be privatisation by stealth.”

Who are they kidding?

The true value of KiwiFail has already been found on the open market: zero.  Even the Finance Minister knows this. It is a company that absorbs more value than it produces, generating insufficient business even to pay for its capital; a “business” only able to survive by sucking off the state tit.

That said, there are around seven lines in the KiwiRail portfolio that could turn a profit, according to Liberty Scott, lines with real value that could be sold off.

Let’s hope they will be.  Soon.

Is there a Darryl Kerrigan in Christchurch? [updated]

After the release yesterday of the government’s CGI fantasy for Christchurch, comes the plan to acquire the land on which the governments’ slick CGI creations are planned. Because virtually all of that land is privately owned, you know. (Something planners always overlook.)

So Gerry Brownlee is now getting out the big stick:

Earthquake Recovery Minister Gerry Brownlee expects most of the land needed for rebuilding central Christchurch will be obtained by negotiation, but some could be compulsorily acquired.

A “negotiation” with a big stick at the door.  The sort of “negotiation” that Al Capone used to undertake with his “clients.”  A negotiation not with one hand tied behind your back, but with it twisted up your back until it hurts.

The sort of compulsory acquisition that Daryl Kerrigan from the hilarious film The Castle would understand.

Naturally, in such a forced negotiation—especially if the land is simply taken—the big, big question is: what are land owners going to be paid for their land.   Brownlee again:

Most of the land in the affected area has very low value and it won't have any value until there is a plan to put things back into that part of Christchurch that creates that value.

So that answers that. “It’s

So much for property rights.

Time for a screening of The Castle in Hagley Park.

UPDATE:  Bill English has revealed this morning he intends to “help pay for the rebuild” by buying land cheap from property owners (“most of the land in the affected area has very low value”) and selling dear later on.

“It’s worked for us with Red Zone land,” says English, unconcerned with how it’s worked for Red Zone property owners.

Government buying land cheap and selling dear to finance their double dealings has a long history in New Zealand. You might recall it was the foundation of Wakefield’s original plan to colonise the place—a setup at a stroke fleecing both iwi and colonists, one quickly enshrined in the second half of the Treaty of Waitangi’s Second Clause banning land being bought and sold by anyone but the government.

A colony built on a government land shark. And we know how well that worked.

No customers please, we’re Telecom

Telecom were once the country’s largest company. They’ve been nobbled several times by big government, but their slow slide has also been due to manifest incompetence.

Take the way they’ve chosen to end their CDMA Network—a directive to 600,000 subscribers that as of tomorrow their expensive phones will no longer work, so get on and sign up for a new plan on their XT network.

Why would you stick with a company that treated you like that?

It’s not the first time. They’ve done it before. It’s an exact parallel to their decision a decade ago to end their 025 network—handled exactly the same, and then as now a direct invitation for all those customers to stampede (as I did) towards Telecom’s competitors. 

Who, naturally, are waiting with open arms.

Sometimes, you have to wonder whether there’s a brain upstairs at Telecom at all.  Or any interest in looking after their customers.

Monday, 30 July 2012

Is it any wonder investment is leaving Christchurch? [updated]

A new "plan" for the rebuilding of central Christchurch is to be announced at 6pm today.

This will be (hold on, let me count) the sixth different plan for rebuilding the central city to be announced by govt or local govt since the first earthquake.

No wonder property owners haven't got on and started rebuilding themselves.

First, they were barred from their own property. Then, with the release of each plan, they've been told their property will be confiscated if the planners deem it necessary.

The radio story announcing the new plan was accompanied by the hand wringing of Mayor Parker, bewailing the flight of investment capital out of Christchurch. Is it any wonder?

It’s still not too late to turn Christchurch into an Enterprise Zone. It could be done overnight.

No, we won’t know how Christchurch would look if that were to happen. There’d be no grand plan about which to trumpet—no great monuments for politicians to unveil; but there’d be rebuilding, you can be sure of that; the rebuilding would start, carried out by people using their own property, their own money, and expecting to turn a profit on it.

In other words: rebuilding the way this city and every great city* was built in the first place.

A simple fact forgotten by those who harbour a fetish for grand plans and a wish to keep Christchurch on welfare.

UPDATE: The citizens of Christchurch deserve more respect than to have  inflicted on them more infantile boosterism, says Hugh Pavletich, Coordinator of Cantabrians Unite.

Later today an announcement will be made on the proposed central public projects. All these proposed projects will likely be loss makers, requiring on going ratepayer / taxpayer subsidies.
National and international research also illustrates the wider economic and social benefits are minimal ...- at best. Indeed - comprehensive and robust research often illustrates there are wide economic and social costs.
The focus should be on how best to provide these loss making services in whole or in part, at the lowest possible ongoing cost to ratepayers and taxpayers.
It is to be hoped the media makes a point of communicating with people both nationally and internationally, with credibility and expertise in these public projects.
In very general terms, if at the outset the development cost estimates are in the order of $800 million and because these projects appear to be rushed, it will be likely there will be substantial costs blowouts. The promoters need to be asked ( based on reputable international evidence and research ) what provision at this stage have they made for likely cost blowouts.
By rushing in to these projects, the promoters will be forced to pay excessive land costs. Going forward, central area land values are expected to fall dramatically. The public deserves to be fully informed of the additional land costs involved with these proposed rushed projects.
Even based on the initial costs estimates of around $800 million, when the ongoing costs of capital and operating losses (including insurances, maintenance, depreciation, staffing etc. etc.) are factored in, it seems likely these could be in the order of at least some 10% or $80 million a year of ongoing losses.
With a little over 150,000 households, this is in the order of $533 per household - more if there are cost blowouts.
While of course the commercial / industrial sector pay a substantial proportion of the Local Authority rates - the losses are still a cost to us all as citizens. The commercial / industrial sector will simply pass on these increased rates costs in the prices they charge for the goods and services they provide. Business is simply an intermediary.
And in the broader sense - have we got our priorities right - with people first - housing second - and business third.
Quality decisions can only be made if the citizens of Christchurch are provided with honest and credible information.
The citizens of Christchurch most certainly deserve to be treated with respect. They deserve much better than to be inflicted with infantile boosterism.

An affordable Auckland even further away

Aucklanders were sold the Super-Sized City on the basis of promised "efficiencies" and putative cost savings. With the arrival in their letter boxes this week of their rates bills, Aucklanders will for the first time see for themselves how effective these "cost savings" have been.

Fact is, there have been no savings. The costs have all been the other way.

For some Aucklanders, their rates increase will be more than ten percent—and with the promises doled out in the Super-Sized Council's super-sized Ten Year Plan, it's clear this will be a year-on-year increase.

Ten percent this year.

Ten percent next year.

Ten percent the year after, and every year thereafter for the foreseeable future...

For this disaster, there are several people to thank:

  • Mayor Brown for having an ego the size of the super-sized city, with plans to match.
  • Rodney Hide, for pushing through the farce.
  • John Key, for making him.

Aucklanders should vent their rage in whatever way they can.

If Auckland is ever to be an affordable city, one place to start is with the size of their rates bill. A simple fact of which those responsible for this super-sized debacle are still wholly ignorant.

Thursday, 26 July 2012

Lions eat Black Swans

There was a period there after the crashes of 20o7 when everyone started talking about “Black Swan events.” These were random events happening out of the blue that take everyone by surprise.

It was suddenly all the rage to talk about Black Swans. According to the hype, we were now living through one of these Black Swan events . (Even ACT's Heather Roy got caught up in the hype, before one came up and nipped her in the arse.)

But guess what, people. The crash, the recession, the credit crisis … none of these were Black Swans. A Black Swan event is something truly random and unable to be foreseen.  And plenty of people did foresee the crash; they just weren’t listened to.  Then, or now.

Commentator John Mauldin reckons a more apt analogy is Lions in the Grass—dangers apparently unseen but which with sufficient foresight can be foreseen.

It is natural to the human condition to focus on the apparent dangers in front of us. That is part of our evolutionary heritage from the time when humans were first dodging lions and chasing antelopes on the African savannah. But we soon learned that if we were to survive it was not enough to walk away from and around the lions we could see. We also had to make sure we didn’t walk into a lion hidden in the grass. It is the hidden lions that can spring on us suddenly and take an arm or a leg.

imageWhile most may not spot them, a hunter or an antelope grows adept at spotting the lions hidden in the grass. * So too do those trained in more rational economics than is doled out at most universities.

As Frederic Bastiat noted, it is the skilled economist who looks for the effects that are hidden, the surprises that are unseen. It should be a habit to look at the potential second- and third-order consequences of what we can see happening before our eyes. That way, we not only avoid the lurking lions, we also turn what would hunt us and do us harm into the hunted. Sometimes, the dangers themselves can be turned into a very nice trophy indeed, if you can see and respond in time…

Everyone now knows that there are lions roaming all over Europe… but the lion that lies hidden in the
European grass is France…

France is the imminently sick man of Europe, even without Hollande at the helm—and arms and legs (ad fortunes) are going to be lost betting against it, reckons Mauldin.

Mauldin has another analogy too. One he reserves for disasters so imminent only folk with “the economic understanding that God gave a goose” could fail to see them. And he reserves this analogy for Japan.

Japan is a bug in search of a windshield – but it keeps dodging. Japan has a debt-to-GDP ratio that is approaching 230% (at a rate of increase of 8-10% a year!). The savings rate is declining rapidly and will soon go negative. At that point, the thought is, Japan will need to seek out foreign investors to buy its bonds. And who will buy a Japanese bond at 1% for ten years? If rates rise only 2%, then Japan would be spending almost 80% of tax revenues on just the interest on its bonds. I would submit that that is not a workable business model.

The question with Japan is not, “will this bug hit the windshield?” That disaster is unavoidable. The real question now is “what happens when it does?”  This (to really mix metaphors now) is the real Lion in the Grass.

Because at this point you need more than just economic nous—you need historical knowledge.

What will happen when Japan melts down—a resource-poor country in a world in which borders are being closed and resources are more difficult to buy?  Will it hunker down and accept the fate it has delivered itself. Or will it do, or try to do, what it’s done before?  Historian Scott Powell puts the question:

As its economy falters and its demographic situation becomes desperate in the 21st century, how will its bankrupt government and people react? A distinct possibility exists that Japan will return to being one of America’s [and NZ’s]greatest enemies.

These are questions that can only be answered with knowledge of what’s gone before. Which is why I’d encourage you to look at signing up to Scott Powell’s online Japanese History course—for which Mauldin’s newsletter quoted above is assigned reading.

* * * * 

* Can you see the “hidden lion” in the photograph above? Give up?  Then head to John Mauldin’s newsletter for the answer.

The Shift to a New Global Currency Alters International Relations

The present economic depression has been going five years, with no sign of abating. We now that in times of worldwide economic depression, one thing to suffer is worldwide free trade—and without being able to freely trade for energy and resources, some nation states will be worse off than others.
Which is why they’re making a grab for resources now…

imageGUEST POST by Marin Katusa of the Casey Daily Dispatch 

Last week I wrote about how Israel's newfound natural gas wealth is catalyzing a shift in Middle-Eastern relations. It was a topic that generated much discussion in our office - we knew that the Mediterranean Sea resource is highly significant for the Jewish state, which has long struggled with energy insecurity, but the deeper we delved into the issue the more we realized that Israel's new resource is already having wide global implications. In particular, we were very intrigued to realize just how cozy Russia and Israel are becoming - this being the same Russia that usually supports Iran and Syria, Israel's sworn enemies.

The article generated a fair bit of feedback from our readers as well, including several good questions. In answering the questions and in continuing to discuss the issues among ourselves, we placed Russia's advances on Israel as but one part of a shifting global web, wherein old allegiances are being dropped in favor of new friends with benefits. Those benefits are energy resources, and the race to control them is changing the way the world turns.

Dozens of countries are slowly altering their international allegiances because of energy considerations. Here I will shine a light on a few of the more significant transitions and how they might impact US and EU energy security.

Russia's Strategic Steps Toward Israel

I discussed this at some length last week, so rather than repeat myself I will just summarize the situation in order to address some questions that arose following that Dispatch. The gist of it is this: The Middle East has long been informally divided into two camps, with US allies such as Saudi Arabia, Egypt, and Qatar making up the camp that can get along with Israel, while Iran and Syria lead the group that cannot befriend the Jewish state. In a holdover from the Cold War, Russia has long backed the anti-Israel group, providing arms to Syria and support to the increasingly isolated Islamic Republic.

Now Israel, long the oil- and gas-poor brother in the squabbling Middle-Eastern family, has delineated trillions of cubic feet of offshore natural gas. It is hard to overstate the significance of this discovery. Instead of having to rely on a strained peace with Egypt for its natural gas, Israel now has far more natural gas than it can use - the country will be self-sufficient in terms of gas to generate electricity and will be able to fill its coffers with export revenues.

Israel's transition from a nation constantly in need of resources to one that could well play a major role in the global gas trade is earning it new respect. Greece and Cyprus are discussing paths for potential pipelines to Europe. Turkish leaders are likely kicking themselves for having destroyed what was a close friendship with Israel in recent years; now Turkey will have to sit on the sidelines and watch as Israel, Greece, and Cyprus work together to develop these gas riches. Egypt's Islamists, finally in power after decades of having to abide their nation's peace accord with Israel, have been stripped of the opportunity to cut off Israel's gas supplies - the Jewish state doesn't need Egyptian gas anymore. Syria and Lebanon, among others, are considering how to stake their claims on the gas bounty, which sits in waters laced with international boundaries.

And then there's Russia. Vladimir Putin's third official international trip after retaking the Russian presidency in May was to Israel. The two nations now share $3 billion in annual trade and considerable immigration. Arching over all those ties is the fact that, in the wake of the Arab Spring, Russia and Israel share an interest in preventing the rising tide of radical Islam.

The Russia just described sure doesn't sound like a very good friend to Iran, does it? But why the shift - is Russia that concerned about radical Islam? No, Putin has never cared much about religion; his decisions are always far more strategic than that. The reason is simple: Israeli gas.

That brings us to the most common question we were asked following last week's energy Dispatch: Why does Russia, a natural gas giant in its own right, want Israeli gas? To our questioners, you are absolutely right: Russia does not need any more gas for itself. Russia is home to one-quarter of the world's known natural gas resources, roughly 1,600 trillion cubic feet (TCF) according to the EIA. And that doesn't count potential reserves of unconventional gas. We think that all told, Russia may control as much as one-third of the world's natural gas.

Russia has gas. What Putin desperately wants is to maintain his country's stranglehold over European natural gas supplies.

Putin loves using control over resources to enhance Russia's power, and natural gas is a key part of his scheme - we dedicated an entire issue of the Casey Energy Report to this topic recently. It was only a few years ago that Russia cut off gas supplies to Europe for a few days in the middle of winter in order to punish Ukraine for siphoning fuel from Russian lines. Europe relies on Russia for 34% of its natural gas; Putin wants to increase that reliance. To that end, he has spent years building new pipelines to Europe that avoid transiting troublesome countries (i.e., Ukraine). As if controlling Europe weren't enough, Putin is also developing Russia's ability to sell gas to Asia by jumping into the liquefied natural gas (LNG) scene with new facilities in the Far East. And he's several steps ahead of the United States in this LNG game.

How does Israel factor in? Israeli gas could join the world market in two ways: through a pipeline to Europe running under the Mediterranean Sea (with a stopover in Cyprus); and/or as LNG, which would be sold to Europe and beyond. Both would turn the Jewish state into an unexpected competitor in Putin's plan to continue controlling European natural gas supplies. Since he can't prevent Israeli gas from flowing, Putin is trying to control where it flows and siphon off some of the profits.

That control is so important, it seems that Putin is considering coming out as a full-fledged friend of Israel. Such a move would almost certainly sever those long-time ties between Russia and Iran, but when the currency in question is energy then alliances formed over decades can change overnight. If Russia does take that strategic step away from Iran and toward Israel, it will rock the ever-delicate Sunni-Shiite balance in the Middle East... to what end is anyone's guess. As for whether Israel will reciprocate Russia's advances: never forget that Israel is a pragmatist nation, its very survival dependent on making strategic decisions. We would not be surprised to see the Jewish state playing both sides of the ex-Cold War game, if that's what makes sense for them.

Africa's New Best Friend: China

Late last week the news broke that China will lend $20 billion to African governments over the next three years. The funds will be directed at infrastructure and agriculture projects, but to anyone who views the world with an eye out for strategic resource relationships, the growing friendship between China and Africa is all about energy and minerals.

Specifically, China is cultivating the relationship very carefully in order to cement its role as Africa's best friend and top ally. Caring for Africa's needs puts China in a perfect place to negotiate resource deals with countries across the African continent - after all, aren't sharing and caring the first rules of friendship?

This isn't a new tactic - Chinese involvement in Africa has increased dramatically over the past decade. Today annual trade between the African continent and the People's Republic is worth more than $166 billion, a threefold increase since 2006. What is new in the relationship is China's new breadth and depth of caring. Until recently, most Chinese aid to Africa went to projects that were clearly designed to primarily benefit China's extractive industries on the continent, not Africa's people. To boot, Chinese laborers were brought to work on the projects, reducing the number of jobs available for Africans. The result: China was accused - by Africans and by international observers alike - of being dastardly self-serving in its African endeavors.

This has become particularly problematic in Angola, which has received more Chinese money than any other African nation. Angola is rich in oil, diamonds, gold, and copper, but a devastating 27-year civil war destroyed most of the country's infrastructure. China has been helping Angola rebuild by providing infrastructure-related loans in exchange for oil; bilateral trade between the countries topped $25 billion in 2010. But the projects, such as rebuilding the 840-mile Benguela Railway, are all designed to make it faster and easier for China to access Angola's resource wealth, and Chinese laborers are now a common sight in Angola. With jobs and resources ending up in Chinese hands, Angolans in recent years have started questioning whether China has their interests in mind at all.

Lopsided relationships like this are nothing new for Africa. From colonialism to aid dependency, Africa has been in a lopsided relationship with Europe for decades. However, it seems the continent has learned from the past and now wants to try to craft a deeper relationship with China... one that would hopefully result in a more sustainable partnership.

"Africa's past economic experience with Europe dictates a need to be cautious when entering into partnerships with other economies," said South African President Jacob Zuma at the recent Forum on China-Africa Cooperation in Beijing. He continued to say that China has demonstrated its commitment to Africa with investment and development aid and that Africans are generally pleased that they are treated as "equals" in the relationship. However, he cautioned that the trade balance "... is unsustainable in the long term."

It was seemingly in response to that worry that Chinese President Hu Jintao promised $20 billion in loans aimed at projects specifically not related to mining or oil. Instead, the money is earmarked for agriculture, manufacturing, education, safe drinking water, protected lands, and the development of small businesses.

Has the Chinese leadership suddenly taken to caring for the health, welfare, and economic prospects for the people of Africa? It might be nice to think so, but the truth is much more strategic: China realized that it needs to improve its standing in the hearts and minds of Africans if it wants to continue securing access to African oil, gas, and minerals. And it did so with a bang - the $20 billion pledged for the next three years is twice what China pledged for the last three-year period.

With a show of renewed friendship and caring, China will now go about seeking new resource deals to add to the plethora of extractive deals it has signed with African countries in recent years. In Nigeria, China is spending $23 billion to build three oil refineries and a fuel complex; the two countries are also building one of Africa's largest free-trade zones near Lagos, a $5-billion, 16,000-hectare project. In Sudan, where Darfur-related sanctions bar American companies from investing, China has invested billions in oil ventures and buys 90% of the country's oil exports. A billion dollars in bilateral trade between China and Mauritania revolve around oil; the magnitude of China's investment in the country has carried Sino-Mauritanian relations through two military coups in the last decade. In Botswana the expansion of the Morupule coal-fired power station is being funded through an $825-million Chinese loan, but that is only one of 28 infrastructure projects that China is b acking in the country.

China has money, Africa has resources, and both have tainted views of many other global powers. It's a match made in heaven.

Asia Stakes a Claim on Canada

They came only a month apart: two multibillion-dollar offers from Asian energy giants to buy up Canadian oil and gas companies. The first was in late June, when Malaysian state energy company Petronas offered $5.5 billion in cash for Canadian natural gas producer Progress Energy Resources. The offer represented a 77% premium over Progress' closing price the day before the deal was announced and is the biggest deal to date for Petronas. Why did the Malaysian firm play such a huge hand? Because Progress has 1.9 trillion cubic feet of proved and probable gas reserves in British Columbia's Montney shale region, a massive resource that Petronas hopes to export to Asia asLNG.

News of the second deal broke just yesterday; the dollar size of the deal sent it reeling across business headlines around the world. China National Offshore Oil Company (CNOOC) is buying Canadian oil and gas producer Nexen (T.NXY) for $15 billion in cash. It is the largest investment China has ever made into Canada - its previous Canadian investments total $23 billion - and the offer represents a 66% premium to Nexen's 20-day volume-weighted average share price.

CNOOC wants Nexen for its diverse project portfolio - the company has operations in Colombia, Yemen, the North Sea, and the United States - but it is the company's Canadian projects that hold the vast reserves that China seeks. Nexen is only a mid-sized player in the Canadian oil sands, but it has 900 million barrels in proven oil reserves plus another 5.6 billion barrels of less-certain contingent resources. In addition, Nexen is on the cusp of producing from its significant shale gas reserves in BC. Between those two forays - oil sands and shale gas - Nexen has major exposure to two of the world's most rapidly growing, major energy sources.

New, fast-growing supplies are exactly what Asian energy giants need. In the race to secure oil and gas resources for the future, importers have to look beyond historic suppliers to new frontiers. Big oil reserves in historic producing countries are generally either state-owned and therefore closed to investment - examples include Saudi Arabia, Iran, Mexico, and Venezuela - or have already been staked out and carved up among domestic and international partners who aren't likely to give up an inch of their claim.

That means nations looking to buy up international oil and gas reserves have to look at newer regions - the oil sands, the Arctic, the shale fields of North America, the sub-salt oil riches off Brazil's coast, and the like. The risks and costs may be higher, but at least these regions still offer the opportunity to stake a claim on a massive resource. When it comes to the oil sands and the shale fields of British Columbia and Alberta, the fact that these massive resources are in western Canada - pretty darn close to the Pacific Ocean - makes the opportunity almost picture-perfect.

That is precisely why Asian energy giants are moving on Canadian oil and gas companies... though to be fair, they were invited to do so. Led by Prime Minister Stephen Harper, the Canadian government has been actively courting Asian investment for its energy riches; these two multibillion-dollar deals are the first fruits of that labor.

The growing, energy-based relationship between Asia and Canada represents a seismic shift for Canada, which until now relied on the United States market to buy almost all of its oil and gas. Today, southbound oil pipelines are almost at capacity and political theater is slowing the approval process for new lines to a snail's pace, just as production in the oil sands is set to ramp up. Similarly, shale gas discoveries across western Canada have delineated vast new reserves that are begging for new buyers.

Canada needs to diversify its export list if it wants to capitalize on its unconventional energy resource wealth. Asian nations, led by China, are racing to put down payments on the oil and gas deposits that will fuel their futures. Sure, Canada and Asia are in the honeymoon stage of a new relationship, with multibillion-dollar deals keeping things new and exciting. When CNOOC, Petronas, PetroChina, Mitsubishi, Korea Gas, and the other Asian energy firms pressing Canada to permit oil and gas pipelines to the west coast come up against regulatory roadblocks and popular opposition, the new relationship will get a real test.

For now, however, it looks like the United States is losing a race that it has always led - the competition for Canadian energy resources (it's especially losing out to China, whose purchases of North-American energy resources include a stake in a Texas oil shale project). Interestingly, this is happening a few short years after the army of oil refineries along the Gulf Coast spent billions upgrading their facilities to process heavy oil in preparation for an onslaught of Canadian oil sands bitumen. If Asia beats out the US for access to Canadian oil, US refiners will be left paying a premium for heavy oil from other suppliers - not an ideal situation.

It's also interesting that this is happening just as the US seems to be at risk of finding itself distanced from two of its strongest Middle Eastern energy allies - Egypt under its new Islamist government and Israel, which might move gently away from the US in order to secure strategic ties to Russia. Is a hegemonic outlook still clouding US views on the security of its relationships and energy supplies, leaving the nation complacent while its competitors race to lock up new resources and secure new friends?

It's a very interesting thought, but the details of that discussion are best saved for another day. The point for today is that increasing desperation from resource-needy nations to secure oil and gas for their futures is putting the world's complex web of relations under incredible pressure. Longstanding allegiances are being tested, and any nation that assumes its historic friends and suppliers will simply stay by its side risks losing precious supply streams. Lubricated with money and the potential for future profits, new friendships are being forged that could alter the global balance of power.

Energy security underlies every country's abilities for today and prospects for tomorrow. Without secure access to the resources that power buildings, move vehicles, connect people, and enable growth, a country's economy will stagnate and its global influence dwindle. From that perspective it is easier to understand why Russia is considering a 180-degree shift in its Middle-Eastern relations, why China is willing to spend tens of billions of dollars on schools, wells, and hospitals in Africa, and why Asia is offering fat premiums to take over Canadian energy producers in a down market.

Energy is the new global currency, and its influence is starting to change the rules of the global diplomatic game. China is playing, Russia is working its hand, and countries with resources from the Black Sea to the Horn of Africa are placing their bets. As for the United States, it seems to be a couple of steps behind and had better figure out a game plan before new allegiances solidify and the US finds itself alone.

Marin Katusa is the chief investment strategist, Energy Division, of Casey Research, publishers of the Casey Energy Speculator and Casey Energy Confidential Alert Service.

Solar panels only a tepid option

Fascinating finding from Parliamentary Commissioner from the Environment Jan Wright that solar panels are not all they’re cracked up to be.

Turns out that if you’re putting solar panels on your home for water heating—their primary use—you’re doing to more to show your friends you’re “right on” than you are to reduce environmental costs.

The reason?  In the New Zealand climate at least, most of the power load occurs in winter when solar water heating is less effective and back-up power is generated largely by coal and gas stations, whereas in the summer solar heating is more effective but far less useful—and any backup power needed is generated mostly by renewable hydro power.

RADIO NZ: Solar water panels are generally lauded by the green movement because they use the rays of the sun, rather than electricity or gas, to heat water.
    But in a new report, the commissioner says solar panels do little to reduce the demand for new power stations or new transmission lines.
    Jan Wright's report says solar panels work best in summer, or on sunny days, when renewable electricity is already plentiful.
    They are less effective in winter, or on cloudy days, because the water they heat starts off colder and the rays of the sun are weaker.
    That coincides with times when fossil fuel plants are used most and the environmental costs of electricity are greatest, but solar panels are least able to help out.
    The report quotes figures showing solar panels use one kilowatt of back-up electricity a day in summer, and seven kilowatts of electricity a day in winter.

The most effective thing you can do to limit emissions and save yourself money, says Wright, is to install a ripple switch so your water can be heated with cheap off-peak power.

Not very sexy.

And if you have a pool, one which you’d like to warm up by a few degrees, I’d imagine solar tubing—simple back rubber tubing arrayed across your roof—would still be a good option.

Otherwise, it seems they’re not worth the candle.

Wednesday, 25 July 2012

Who’s responsible? You ****ing are.

Blunt has the answer:


“Fracking Amazing”

Councils around the country are declaring themselves “Frack Free Zones.”

What the hell?

The declarations by councils from Hawkes Bay, Waimakariri, Kaikoura, Selwyn and Christchurch (don’t they have more important things to do in Christchurch?)—now joined by one from Dunedin—comes ahead of a report on fracking by Parliamentary Commissioner for the Environment Jan Wright which the cardiganned councillors hope will … do something.

So what is fracking, and why all the controversy?

Fracking is a means of extracting oil and gas by injecting high-pressure quantities of water, steam and sand into deep wells, creating sufficient hydraulic pressure to fracture the rock and release the hydrocarbons stored within. Writing seventy years ago in Atlas Shrugged, Ayn Rand describes her fictional oil tycoon Ellis Wyatt, who had discovered how to produce oil from shale:

It was as if somebody had given a shot of adrenalin to the heart of the mountain, the heart had started pumping, the black blood had burst through the rocks… because blood is supposed to feed, to give life, and that is what Wyatt Oil had done.

The oil and gas produced is the lifeblood of productive activity. Shale gas production across the US for example, where it was first developed, has in the last six years begun extracting a Saudi Arabia’s worth of gas, now accounting for at least 14 percent of U.S. natural gas supply—doing all sorts of good things for total gas supply and gas prices. And since it’s obvious you can’t run cars, home heating and air-conditioning on just smiles and sunshine, and we have plenty of the stuff in the ground here in NZ that could produce both ample gas and abundant jobs ("Washington County, south of Pittsburgh, for example, is currently the third-fastest job creator in the US as a result of the Marcellus Shale development”), you’ d think the technology would be universally embraced. But it’s not.

So why is it so controversial?

Well, it’s supposed to risk contaminating water aquifers and causing minor earthquakes.  This graph below gives you an idea of the distance between aquifers and induced hydraulic fractures derived from field images.


The evidence for earthquakes is equally distant.  Drilling at best will only go 2km deep. Hard to see how this could affect tectonic plates that are around 6km to 200km in thickness. Little wonder then that Bill Ellsworth, lead author of a study by the U.S. Geological Survey, has said on the record

he is confident that hydraulic fracturing — a process in use since 1947 — is not responsible for earthquake trends that his team has observed….
    [Further, the US] National Research Council's report unequivocally states that "the process of hydraulic fracturing a well as presently implemented for shale gas recovery does not pose a high risk for inducing felt seismic events."

So why the protests?  Why are the new anti-fracking badges worn next to the enviro-left’s faded CND badges?


Well, it’s not just the enviro-left who’ve been protesting this one.


But the enviro-left protests have been less about science and causality than they have been about something else—a failure to acknowledge that human survival and flourishing is utterly dependent on our ability to produce; to recognise that with any new form of production there are risks, and caution needed, but new technology is needed more.


The protests in short would be about any new technology that allowed energy to be created in the vast quantities needed to keep our industrial civilisation flourishing. What could motivate such opposition to new technology? Ayn Rand had the answer forty years ago in her analysis of the green movement back then:

The dinosaur and its fellow-creatures vanished from this earth long before there were any industrialists or any men . . . . But this did not end life on earth. Contrary to the ecologists, nature does not stand still and does not maintain the kind of “equilibrium” that guarantees the survival of any particular species—least of all the survival of her greatest and most fragile product: man.
Now observe that in all the propaganda of the ecologists—amidst all their appeals to nature and pleas for “harmony with nature”—there is no discussion of man’s needs and the requirements of his survival. Man is treated as if he were an unnatural phenomenon. Man cannot survive in the kind of state of nature that the ecologists envision—i.e., on the level of sea urchins or polar bears . . . .
In order to survive, man has to discover and produce everything he needs, which means that he has to alter his background and adapt it to his needs. Nature has not equipped him for adapting himself to his background in the manner of animals. From the most primitive cultures to the most advanced civilizations, man has had to manufacture things; his well-being depends on his success at production. The lowest human tribe cannot survive without that alleged source of pollution: fire. It is not merely symbolic that fire was the property of the gods which Prometheus brought to man. The ecologists are the new vultures swarming to extinguish that fire.
Without machines and technology, the task of mere survival is a terrible, mind-and-body-wrecking ordeal. In “nature,” the struggle for food, clothing and shelter consumes all of a man’s energy and spirit; it is a losing struggle—the winner is any flood, earthquake or swarm of locusts. (Consider the 500,000 bodies left in the wake of a single flood in Pakistan; they had been men who lived without technology.) To work only for bare necessities is a luxury that mankind cannot afford.
City smog and filthy rivers are not good for men (though they are not the kind of danger that the ecological panic-mongers proclaim them to be). This is a scientific, technological problem—not a political one—and it can be solved only by technology. Even if smog were a risk to human life, we must remember that life in nature, without technology, is wholesale death.
An Asian peasant who labors through all of his waking hours, with tools created in Biblical times—a South American aborigine who is devoured by piranha in a jungle stream—an African who is bitten by the tsetse fly—an Arab whose teeth are green with decay in his mouth—these do live with their “natural environment,” but are scarcely able to appreciate its beauty. Try to tell a Chinese mother, whose child is dying of cholera: “Should one do everything one can? Of course not.” Try to tell a Russian housewife, who trudges miles on foot in sub-zero weather in order to spend hours standing in line at a state store dispensing food rations, that America is defiled by shopping centers, expressways and family cars.
In Western Europe, in the preindustrial Middle Ages, man’s life expectancy was 30 years. In the nineteenth century, Europe’s population grew by 300 percent—which is the best proof of the fact that for the first time in human history, industry gave the great masses of people a chance to survive.
If it were true that a heavy concentration of industry is destructive to human life, one would find life expectancy declining in the more advanced countries. But it has been rising steadily. Here are the figures on life expectancy in the United States (from the Metropolitan Life Insurance Company):

    1900 47.3 years
    1920 53 years
    1940 60 years
    1968 70.2 years (the latest figures compiled)

Anyone over 30 years of age today, give a silent “Thank you” to the nearest, grimiest, sootiest smokestacks you can find.

If you consider, not merely the length, but the kind of life men have to lead in the undeveloped parts of the world—“the quality of life,” to borrow, with full meaning, the ecologists’ meaningless catch phrase—if you consider the squalor, the misery, the helplessness, the fear, the unspeakably hard labor, the festering diseases, the plagues, the starvation, you will begin to appreciate the role of technology in man’s existence.
Make no mistake about it: it is technology and progress that the nature-lovers are out to destroy. To quote again from the Newsweek survey: “What worries ecologists is that people now upset about the environment may ultimately look to technology to solve everything . . . .” This is repeated over and over again; technological solutions, they claim, will merely create new problems.
Whom and what are [the ecological crusaders] attacking? It is not the luxuries of the “idle rich,” but the availability of “luxuries” to the broad masses of people. They are denouncing the fact that automobiles, air conditioners and television sets are no longer toys of the rich, but are within the means of an average American worker—a beneficence that does not exist and is not fully believed anywhere else on earth.
What do they regard as the proper life for working people? A life of unrelieved drudgery, of endless, gray toil, with no rest, no travel, no pleasure—above all, no pleasure. Those drugged, fornicating hedonists do not know that man cannot live by toil alone, that pleasure is a necessity, and that television has brought more enjoyment into more lives than all the public parks and settlement houses combined.
What do they regard as luxury? Anything above the “bare necessities” of physical survival—with the explanation that men would not have to labor so hard if it were not for the “artificial needs” created by “commercialism” and “materialism.” In reality, the opposite is true: the less the return on your labor, the harder the labor. It is much easier to acquire an automobile in New York City than a meal in the jungle.

The only fundamental change in her discussion is the vast improvements in the last four decades in most of Asia, some of Africa, and parts of the Middle East—i..e, in the places that have embraced or begun to embrace the science, technology and freedom the fashionable west is now imploring us to abandon—that have pulled people out of the misery she describes.

But the fashionable west would rather ignore that, as it wishes to ignore most of the facts that underpin their own survival and flourishing.  Here’s Sean and Yoko Lennon, for example—“an old woman, whose longevity has been extended by oil-and-gas-based agriculture and oil-derived medicine, whose appearance is preserved by oil-based makeup, wearing plastic (oil) glasses, a shiny (oil-coated) hat, and clothes grown using natural gas fertilizers and oil-powered farm equipment, holding a plastic (oil-based) globe…performing in an extravagant building and auditorium could only be built by oil-powered machinery, the building’s massive power consumption likely powered by a natural gas power plant, as is the subway that brought some of the guests to the New York show; the rest certainly got there by oil-based vehicles”—completely dependent for their own lavish lifestyles, just like the members of their audience, on the technology they’re there to protest.

What wallies.  Fracking IS your mother, darlings.

In fact, as Alex Epstein of the Center for Industrial Progress explains to a class of students, fracking is Fracking Amazing.

I’m sure, like me, Alex is looking forward with delight to the new film by Phelim McAleer and Anne McElhinney, Frack Nation:

History passed the coroner by [updated]

Look, call me simple (go on, I know you want to) but I just don’t understand how a coroner could take six years to issue a report damning a suspect in a murder trial that is now long over.

Coroner Garry Evans [now concludes] the twins were injured in the same manner at the same time at the hands of the same person. They died from brain injuries sustained while in the sole custody of Mr Kahui at their home in South Auckland. Mr Evans dismissed claims the twins could have been killed by their mother Macsyna King or her brother Stuart King…

Six years? To come to that conclusion?  With evidence prosecutors presumably would have or could have used?

Either the coroner has been dragging his feet or the prosecutors were incompetent—or the police failed to provide the evidence necessary for the prosecution to be successful. I can’t begin to understand any other reason it’s taken so long for this conclusion to emerge.

Either way, it seems to highlight yet another failure of our failing justice system. Or am I missing something?

[Listen to this issue being discussed on “Nine to Noon.”]

UPDATE: Yes, there’s something very strange here, as Lindsay Mitchell notes:

Coroner Gary Evans found Macsyna King "had no involvement in the death of her twins."
Contrast that to a coroner's report last week that found two good Samaritans had contributed to the death of Iraena Asher.
I am going on media hearsay, but these findings seem utterly incongruous.

Tuesday, 24 July 2012

3 Great Myths of the Great Depression and Roosevelt’s New Deal

Historian Stephen Davies ably punctures three persistent myths about the Great Depression.

Myth #1: Herbert Hoover was a laissez-faire president, and it was his lack of action that lead to an economic collapse. Davies argues that in fact, Hoover was a very interventionist president, and it was his intervening in the economy that made matters worse.

Myth #2: The New Deal ended the Great Depression. Davies argues that the New Deal actually made matters worse. In other countries, the Great Depression ended much sooner and more quickly than it did in the United States.

Myth #3: World War II ended the Great Depression. Davies explains that military production is not real wealth.; wars destroy wealth, they do not create wealth. In fact, examination of the historical data reveals that the U.S. economy did not really start to recover until after WWII was over.  

Shot [update 2]

My sympathies to those whose friends and relatives died or were injured in the cinema shooting in Aurora, Colorado.

Turns out there was another shooting in Aurora back in April that we never heard about. Why? Because someone with a gun stopped it.

CBS DENVER (22 April): Police said two vehicles ended up in the church parking lot after some sort of argument between the drivers. Police said one vehicle was chasing the other. The man who was being chased got out of his vehicle and entered the church and told people to take cover. A woman came out of the church to see what was happening in the parking lot and got shot.
    Police said an off-duty officer was at a service and went outside and shot the man who shot the woman.
    “We do have two people shot,” Frank Fania with Aurora police said. “An off-duty officer was in the congregation and was involved in the shooting, but he is okay.”

How tragic the more recent shooter couldn’t have been ended the same way.

Now, you might object it’s too early to have this discussion. And yes, you’re right, it is. But the discussion has already been started by those opposed to the right to self defence. Writing at Forbes, Adam Ozimek observes:

First, as someone who is generally pro gun rights, it’s not my first instinct to write anything in the wake of tragedies involving firearms, but rather remain respectfully silent. But I also understand the motivation of those who want stricter gun laws to take this time to discuss policy. And we cannot both discuss gun laws and also insist on silence from everyone on one side of the discussion.
    One question to ask is, in the presence of stronger gun laws what would the shooter have done? The IEDs and explosives that filled his apartment suggest that strong illegality wouldn’t have stopped him, as explosives like this are obviously very illegal. This also tells us that even if all guns were
somehow kept out of his hands he would still have had extremely dangerous killing tools at his disposal. But realistically I am skeptical that laws could keep guns out of the hands of those determined to get them.

Pass as many laws as you like, but shooters are criminals—who by definition don’t respect laws.

So laws against guns don’t stop criminals. But they do disarm everyone else.

PS: Coloradans Ari Armstrong and his father Linn offer tips on how can you might safely respond  if you’re ever unlucky enough to find yourself in a mass-shooting incident—and can keep a sufficiently cool head.

[Hat tips Ezra Levant, Whale Oil and Geek Press]

UPDATE 1:  Yes, there’s a reason you rarely hear about it when a law-abiding gun owner is the hero. Not because it rarely happens, but because the mainstream media rarely if ever reports it. [Hat tip Julian P.]

Meanwhile, back in Switzerland…


UPDATE 2: Blaming tragedies like the ‘Batman’ cinema shootings on the availability of guns is plain wrong. Gun-control laws don’t stop massacres says Kevin Yuill at Spiked Online.

Whenever a senseless mass killing occurs – like the shootings in Colorado last weekend – pundits seem determined to make sense of it. A plethora of causes and hobbyhorses are wheeled out, closely following the ambulances that attended the harrowing scene. Precisely because the event is senseless, anyone can speculate on the causes. Some have branded the Colorado massacre a product of a sick society. Cultural explanations abound, too. One Congressman has pinned the blame on long-term national cultural decline. But most fingers were pointed at America’s ‘gun-crazy’ culture….British commentators, removed from the immediacy of the tragedy [were no exception]...
    But this reaction is wrongheaded. First, crime rate and the availability of weapons are not correlated in any meaningful way. It is true that firearms-related homicides are much higher in the United States compared with Britain, the country with the most onerous gun controls in Europe. The US has the highest gun ownership rate in the world – an average of 88 per 100 people. That puts it first in the world for gun ownership. But Mexico has a much higher murder rate than the US, yet rates only twenty-eighth in the world for firearms deaths. Places like St Kitts in the Caribbean have a gun-homicide rate 10 times that of the US.
    Moreover, Colorado has half the murder rate of Illinois, as adjusted for population. Idaho, Utah, Wyoming and New Hampshire, all full of guns, have far lower murder rates than gun-control states like New York, California and Illinois. The possession of guns simply does not correlate with the number of murders.
    But we must also question whether any laws could possibly prevent such massacres. Colorado governor John Hickenlooper made the point that any individual as determined as James Holmes would be able to circumvent whatever laws or checks that were implemented. There was nothing in the 24-year-old’s past that would have alerted anyone looking for a potential maniac (though, of course, tales of ‘creepy’ phone messages soon made the news). As John McCain pointed out last year, Anders Breivik managed to kill 77 people in Norway, a country with far stricter gun controls than the US.
    What almost [none of the British commentators] has mentioned – a particularly curious absence within those hectoring British commentaries so anxious to enlighten the colonies – was the deadly shootings at Whitehaven in the UK in 2010. Why have there been no comparisons between
Derrick Bird’s atrocity in 2010, which also killed 12 people, and the massacre in Aurora? Perhaps it is because the Whitehaven shootings show that Britain’s draconian laws were absolutely worthless in preventing massacres.
    And that is certainly off-message among most of the liberal elite.


Now here’s a government stimulus programme I could easily get behind.

5 great sentences


Xmas in July!


Hi everyone. I’ve been away. Did you miss me?

I headed to Melbourne for the round of footy they were calling “Xmas in July” –nearly every team playing at the top of their game, and everyone playing an opponent whose throat they had good reason to cut.

It was a cracker!  Four games of live footy in three days, several other games of various descriptions—starting Friday night with Geelong hammering Essendon into the ground (Go the Cats!); a beautiful Saturday afternoon at the MCG watching Collingwood get their beans from Hawthorn, and a Sunday avo at “The G” one day later (bring back  afternoon games) watching North Melbourne just edge out Richmond in the dying seconds for the chance to play finals footy in September.


A thrilling weekend of footy. Accompanied by a tour around Victorian craft beer (best on ground was a Mornington Peninsula IPA consumed at the Cherry Tree Hotel just before the Tigers/Kangaroos game). A meeting with Prodos in which we plotted world domination. Topped off by a visit to the great National Gallery of Victoria for the Napoleon and Empire exhibition, where I got to stand and stare for over an hour at Jacques-Louis David’s iconic painting of Napoleon.

So you can see I had a great time (and thanks for asking).


Oh, and by the way, if you’re flying into Melbourne with a group and you want to book an inexpensive and friendly cab, give the On Time Chauffered Car company a call. Cheaper than a shuttle! (And despite being a Collingwood supporter, their driver Muzi proved a genuine gentleman yesterday in saving my bacon after I left my bag behind in his cab, zooming back to the airport with it and refusing any extra payment for it “’cos that’s what mates do.” Onya Muzi.)

Thursday, 19 July 2012

“You didn’t build that.”

Obama’s disgusting public dismissal of enterprise and entrepreneurship--“If you’ve got a business, you didn’t build that; somebody else made that happen"—has spawned derision. Rich Lowry describes it as a "statist" attack on the "self-made man."

The Obama theory of entrepreneurship is that behind every successful businessman, there is a successful government. Everyone is helpless without the state, the great protector, builder, and innovator. Everything is ultimately a collective enterprise. Individual initiative is only an ingredient in the more important work when 'we do things together.'... 
    For that most American figure of the self-made man, exemplified most famously by Benjamin Franklin and Abraham Lincoln, President Obama wants to substitute the figure of the guy who happened to get lucky while not paying his fair share in taxes. What a dreary and pinched view of human endeavor. What a telling insight into his animating philosophy.
    The Obama formulation goes something like this: Steve Jobs couldn't get to work every day without roads; he couldn't drive safely on those roads without a well-regulated system of driver's licenses; ergo, the San Jose, Calif., Department of Motor Vehicles practically built Apple.

Yes, of course they did.

And there’s satire, and plenty of it:










[Hat tip Robert Tracinski at RealClearPolitics]

Wednesday, 18 July 2012

No catastrophic warming, no “consensus” … no worries? [updated]

imageThe tattered fabric of  the global warming industry continues to fray.

First, after re-examining temperature records for the last century to remove homegenisation errors, scientists Steirou and Koutsoyiannis have determined the global temperature rise over the past century was only about one-half [0.42°C] of that claimed by the IPCC [0.7-0.8°C].

The “homogenisation errors” consist essentially of more upward adjustments to raw data than can possibly be justified by experiments, “and are rarely supported by metadata” say the scientists in their recently presented paper at the European Geosciences Union meeting.   As Bill quick says, it’s yet more proof that Global Warming is man-made.  Just not because of carbon emissions.

Second, you know that scientific consensus on global warming you’ve heard so much about?

There isn’t one.

'That “98% all scientists” figure refers to a laughably puny number of 75 of those 77 who answered 'yes' to a doctored survey.

So where did that famous “consensus” claim that “98% of all scientists believe in global warming” come from? It originated from an endlessly reported 2009 American Geophysical Union (AGU) survey consisting of an intentionally brief two-minute, two question online survey sent to 10,257 earth scientists by two researchers at the University of Illinois. Of the about 3.000 who responded, 82% answered “yes” to the second question, which like the first, most people I know would also have agreed with.
    Then of those, only a small subset, just 77 who had been successful in getting more than half of their papers recently accepted by peer-reviewed climate science journals, were considered in their survey statistic. That “98% all scientists” referred to a laughably puny number of 75 of those 77 who answered “yes.”
    That anything-but-scientific survey asked two questions. The first: “When compared with pre-1800s levels, do you think that mean global temperatures have generally risen, fallen, or remained relatively constant?”  Few would be expected to dispute this…the planet began thawing out of the “Little Ice Age” in the middle 19th century, predating the Industrial Revolution. (That was the coldest period since the last real Ice Age ended roughly 10,000 years ago.)
    The second question asked: “Do you think human activity is a significant contributing factor in changing mean global temperatures?” So what constitutes “significant”? Does “changing” include both cooling and warming… and for both “better” and “worse”? And which contributions…does this include land use changes, such as agriculture and deforestation?
    No one has ever been able to measure human contributions to climate. Don’t even think about buying a used car from anyone who claims they can.As Senator James Inhofe, Ranking Member of the Senate Committee on Environment and Public Works has observed: “The notion of a ‘consensus’ is carefully manufactured for political and ideological purposes. Its proponents never explain what ‘consensus’ they are referring to. Is it a ‘consensus’ that future computer models will turn out correct? Is it a ‘consensus’ that the Earth has warmed? Proving that parts of the Earth have warmed does not prove that humans are responsible.”

So it turns out the science behind the survey claiming “consensus” is as threadbare as what the IPCC reports have been found to contain. [UPDATE: Indeed, by its own recent actions, the IPCC admits its past reports were unreliable.]

So does anyone know how many legitimate climate scientists do support the consensus of catastrophism? There seem to be a lot of them about.

Senator Inhofe also points out, “While it may appear to the casual observer that scientists promoting climate fears are in the majority, the evidence continues to reveal that this is an illusion. Climate skeptics…receive much smaller shares of university research funds, foundation funds and government grants and they are not plugged into the well-heeled environmental special interest lobby.” Accordingly, those who do receive support typically get more time free of teaching responsibilities, providing more time available for publishing activities.

So while the number of scientists supporting a claim is not firm proof of anything at all—as Einstein famously pointed out, one scientist with the right evidence is all you need to prove a hypothesis—is there any polling at all that can be relied on to answer the question at issue?

    While real polling of climate scientists and organization memberships is rare, there are a few examples. A 2008 international survey of climate scientists conducted by German scientists Dennis Bray and Hans von Storch revealed deep disagreement regarding two-thirds of the 54 questions asked about their professional views. Responses to about half of those areas were skewed on the “skeptic” side, with no consensus to support any alarm. The majority did not believe that atmospheric models can deal with important influences of clouds, precipitation, atmospheric convection, ocean convection, or turbulence. Most also did not believe that climate models can predict precipitation, sea level rise, extreme weather events, or temperature values for the next 50 years…

Tell the politicians.

Comrade Clark’s Clanger

Confirmed anti-smoking zealot Helen Clark has embarrassed herself, with an award given by the UN development agency she now heads to an Indian tobacco company.

Lindsay Perigo enjoys the deliciousness.

Markets Tell the Truth [updated]


You probably saw that Republicans and others are making hay out of President Obama's statement: "If you've got a business, you didn't build that." Defenders of the president immediately cried foul: Read the sentence in the context of his entire speech.

That's what I did. You know what? It is far worse in context. If an American president has ever before said something so insulting and disparaging toward an essential American idea (free enterprise), I've not heard it. It's an absolutely chilling speech.

imageUnderneath his speech was a profound loathing of private initiative. No matter what you have done in life, the president thinks the government should get the credit. And why? Because the government built the Hoover Dam (in 1935!), the Golden Gate Bridge (in 1937, built and funded by private funds!), went to the moon (43 years ago!) and invented the Internet (it was privatized in 1995, and only then became mainstream!).

People say that I shouldn't be shocked at this rhetoric. I can't help it. The whole world as we know it is built by human hands operating in a market, yet this guy can't see it. To say the government is the source of prosperity is like saying that the ticks are keeping the dog alive.

Regardless, the market isn't going anywhere. It responds to whatever the reality is, whether distorted by government interventions or not. What will be the end result of the incredible and relentless interventions over the last five years? Whatever it is, it will not be good.

Jeffrey Tucker is the publisher and executive editor of Laissez-Faire Books, the Primus inter pares of the Laissez Faire Club, and the author of Bourbon for Breakfast: Living Outside the Statist Quo and It's a Jetsons World: Private Miracles and Public Crimes, among thousands of articles


Ayn Rand, in 1965:

"It is morally obscene to regard wealth as an anonymous, tribal product and to talk about 'redistributing' it. The view that wealth is the result of some undifferentiated, collective, process, that we all did something and it's impossible to tell who did what, therefore some sort of equalitarian 'distribution' is necessary--might have been appropriate in a primordial jungle with a savage horde moving boulders by crude physical labor (though even there someone had to initiate and organize the moving).
    "To hold that view in an industrial society--where individual achievements are a matter of public record--is so crass an evasion that even to give it the benefit of the doubt is an obscenity... Mistakes of this size are not made innocently."

            - "What is Capitalism?" in Capitalism the Unknown Ideal

[Hat tip Joe Maurone]