The Second American Century?

One meme that has taken hold in the last decade or so is that the People’s Republic of China is poised to take over America’s role as the world’s leading nation. China’s economy has been growing at a fantastic rate and its GDP is expected to surpass America’s within ten years, probably sooner. Pundits have warned us that we are in danger of being left behind in the new Chinese Century, unless perhaps we adopt some of China’s authoritarian politics. Personally,  I have been rather skeptical of these claims. China has some serious structural problems that will need to be resolved soon or their economic growth will not be sustainable. Not least of these problems is a closed, authoritarian government that neither represents nor is accountable to the people of China. Until the Chinese government opens up and grants its people more freedom, China will not prosper.

With this in mind, I was very interested to read an article in the Telegraph that suggests that the Chinese miracle may be ending.

The world’s tallest tower should have been built by now. Officials said last year that the great edifice with 220 floors would be erected in three months flat in China’s inland city of Changsha by March, snatching the crown from Dubai’s Burj Khalifa.

The deadline has come and gone, yet the wasteland sits untouched. It now looks as if the fin d’époque project – using prefab blocs – may never be approved. Even China knows its limits.

Prime minister Li Keqiang has asked the State Council to clamp down on the excesses of the regions. Not before time. A top regulator says local government finances are “out of control”.

Mr Li aims to cut China’s economic growth to a safe speed limit of 7pc next year and rein in rampant investment – still a world record 49pc of GDP – before it traps the country in a boom-bust dynamic of frightening scale.

Vested interests are conspiring to stop him, launching a counter-attack from their power-base in the $6 trillion state industries. Even so, uber-growth is surely over.

One of the problems of planned economies is that resources are distributed according to the whims of political leaders rather than being subject to the kind of transparency and accountability that a free market provides. Somehow the pundits who worship authoritarian regimes are blissfully unaware of the corruption and misallocation of resources that are endemic to such regimes. They also tend to be not very honest or efficient when collecting economic statistics.

Mr Li complained in a US diplomatic cable released on WikiLeaks that Chinese GDP statistics are “man-made”, confiding to a US diplomat that he tracked electricity use, rail cargo, and bank loans to gauge growth. For a while, analysts use electricity data as a proxy for GDP but the commissars kept a step ahead by ordering power utilities to fiddle the figures.

The National Bureau of Statistics has since revealed that data collected by the regions overstates GDP by 10pc, though they have not acted on the insight. It is well-known why this goes on. The reward system of the Communist hierarchy has been geared to talking up growth, and officials gain kudos by lowering the stated “energy intensity” of their zone.

China’s Development Research Council (DRC) expects growth to drop to 6pc by 2020. It could be much lower. The US Conference Board says it will average 3.7pc from 2019-2025 as the ageing crisis hits. Michael Pettis from Beijing University thinks it is likely to slow to 3pc to 4pc over the next decade, deeming this entirely desirable if it comes from taming the runaway state enterprises.

If so, China’s growth may not be much higher than the new consensus estimate of 3pc for a reborn America, powered by its energy boom and the revival of the chemical, steel, glass, and paper industries.

All those charts showing China’s economy surging past the US by 2030, or 2025, or even 2017, will look very credulous. China may not surpass the US this century.

This is not good news for either China or the United States. We do not lose if China becomes wealthy. We do not win if China collapses. Worldwide economic liberalization and the prosperity it brings is in our long term interests.

As of last year US GDP was roughly $15.7 trillion, compared to $8 trillion for China on a nominal exchange rate basis, the measure that matters for gauging economic power.

China’s output is 75pc of US levels on a purchasing power parity (PPP) basis but even on this measure the Chinese `sorpasso’ is looking less certain. Clyde Prestowitz, an arch US `declinist’ who has just thrown in the towel, says China may “never” catch the US on any relevant measure. That is a stretch, but not impossible on a forecastable horizon.

“Keep in mind the next time you are in China and find yourself choking on the foul air that the things making the air foul are counted as positives for GDP. If you adjust Chinese GDP for environmental degradation and for over-investment in things that will never be used, it falls in size by 30-50 per cent. Much of this would show up as non-performing loans in most economies but since such loans are never recognised in China, it will show up as slower growth in future years,” he said.

Environmental degradation is a serious problem in China. If they have anti-pollution laws, they are not being enforced.  China’s government seems to not care about the enormous costs in healthcare that the polluted environment will create. Meanwhile, while America has many problems, we seem to be doing quite well for a nation that is supposed to be in decline, despite the efforts of the current administration.

A new view is taking hold in elite circles that the banking crash in 2008 was a nasty shock for the US, but not a crippling blow to America’s creative enterprise. US governing institutions rose to the challenge. It was however a crippling blow to Europe, and a more subtle blow to China in all kinds of ways.

Richard Haass, president of the US Council of Foreign Relations, says the world may already be in the “second decade of another American century” without realising it.

On almost every key measure, including the fertility rate and high science, there is no credible challenger. Core US defence spending is still greater than that of the next 10 countries combined. “The American qualitative military edge will be around for a long, long time,” he said.

Mr Haass says America has managed its dominance in such a way that it has not brought about a containment alliance against it by threatened powers, and that is no small achievement. Like Wagner’s music, US diplomacy is better than it seems.

Yes, the US faces a debt hangover, but so does China after the state banks let rip with private loans keep the boom going through the downturn. Fitch Ratings has just downgraded China’s debt, warning that credit has jumped from 125pc to 200pc of GDP over the last four years, with mounting reliance on shadow banking that lets banks circumvent loan-to-deposit curbs. This is why George Soros has been warning that there could be a “run” on China’s state banking system akin to the Lehman bust.

Total credit has jumped from $9 trillion to $23 trillion in four years, an increase equal to the entire US banking system.

America has moved in the opposite direction. Its banks now have loan-to-deposit ratio of around 0.7, and the biggest safety buffers in three decades. The Congressional Budget Office says US Treasury debt held by the public has jumped from 40pc to 73pc. This is the sort of damage normally seen in wars, but the US has recovered from bigger wars before, and from much higher debt levels. The CBO thinks the budget deficit will fall to 2.4pc by 2015. Growth will then whittle away the debt ratio for a few years.

There seems to be some sort of ceiling for developing countries that stops rapid economic growth once they have reached a certain size. It is as if the transition from a rapidly growing economy to a mature economy that continues to grow but at a reduced rate is a difficult one to achieve.

China’s premier Li is fighting a battle against those in the Politburo who delude themselves that the Lehman crisis validates China’s top down control. He gave his “unwavering report” last year to a joint DRC and World Bank report on the dangers of the “middle income trap”.

Dozens of states in Latin America, Asia, and the Middle East have hit an invisible ceiling over the last fifty years, languishing in the trap with per capita incomes far behind the rare “breakout” stars, Japan, Korea, and Taiwan. The trap is the norm.

The report warned that China’s 30-year miracle is nearing exhaustion. The low-hanging fruit of state-driven industrialisation and reliance on cheap exports has already been picked. Stagnation looms unless Beijing embraces the free market and relaxes its suffocating grip over the economy. “Innovation at the technology frontier is quite different in nature from catching up technologically. It is not something that can be achieved through government planning,” it said.

Demographics are going to be a serious problem for China. Because of the one child policy, China is undergoing the sort of demographic transition usually seen in more developed countries, such as in Europe. The problem is that Europe may be able to afford to care for its aging population (but then again, they may not), but China’s aging population is going to be a significant burden for China over the remainder of this century.

Even if Mr Li succeeds in pulling off this second economic revolution – and we should salute him for trying – China’s growth rate is going to slow drastically. Demography will see to that.

The work force began to contract in absolute numbers last year, falling by 3.5 million. The International Monetary Fund says it will now go into “precipitous” decline, and much earlier than thought.

If you are wondering why police are still seizing pregnant women in Chinese cities and delivering them to clinics for forced abortions when they cannot pay the fine for breaching the one-child policy, you are not alone.

The IMF says the reserve army of peasants looking for work peaked at around 150m in 2010. The surplus will evaporate soon after 2020, the so-called Lewis Point. A decade later China will face a shortage of almost 140m workers. “This will have far-reaching implications for both China and the rest of the world.”

China’s ageing crisis is tracking Japan’s tale with a 20-year delay. China can expect to see the same decline in “marginal productivity” that has afflicted every other facing a rise in the old-age dependency ratio.

The authorities can of course keep the game going if they wish with another burst of credit, but risks are rising and the potency of debt is wearing off. The extra output created by each yuan of lending has halved in four years. Mr Li knows the game is turning dangerous.

A 2010 book by People’s Army Colonel Liu Mingfu – “China Dream: Great Power Thinking and Strategic Posture in the Post-American Era” – is still selling like hot cakes in China. Yet it already has a dated feel, a throwback to peak hubris.

China has everything to play for. With skill and a blast of freedom, it can take its rightful place at the forefront of world affairs. But nothing is foreordained.

I can only add to this that a more democratic and responsive government would have ended the one child policy years ago. Freedom is what China needs most. Unfortunately, freedom is what the Communist Party is least likely to give it.

Related articles

• China May Not Overtake America This Century After All (patdollard.com)
• UK Telegraph article China may not overtake America this century and other China articles (nextbigfuture.com)
• Some Doubt China Will Pass America as World’s Biggest Economy This Century (blackchristiannews.com)
• Let’s Let Asia Have This Century (salem-news.com)
• Could China Trigger New Economic Crisis? – OpEd (albanytribune.com) Yes.
• China MAY NOT overtake America this century… (telegraph.co.uk)
• Has China’s Economy Hit A Dead End? (amresolution.com)

Fusion Breakthrough

 

If we had anything like a reasonable energy policy in this country, the government would be doing its best to remove regulatory obstacles and excessive costs to building nuclear power plants. Most people think of nuclear power as being much more dangerous than other forms of producing energy and incidents at places like Chernobyl and Fukushima have not helped nuclear power’s image. Still nuclear power is cleaner than any fossil fuel in terms of pollution and waste products and safer in terms of lives lost at all stages of production. In the United States alone, over 100,000 coal miners have been killed in accidents in the past century. The worst nuclear accident in history, at Chernobyl, may have been responsible for 4000 deaths. Even some environmentalists are coming around to the idea that nuclear power is not so bad.

 

Still, nuclear power is not without its drawbacks. So far, when we have spoken of nuclear power, we have meant power obtained by nuclear fission, that is power obtained from the breakup of radioactive atoms, usually uranium. Nuclear fission reactions can yield millions of times more energy than any chemical reaction, which includes burning fossil fuels. There is another type of nuclear reaction which yields even more energy than fission and does not leave any radioactive waste. This is nuclear fusion. Nuclear fusion is the opposite of fission. Instead of a relatively large atomic nucleus breaking apart, fusion occurs when smaller nuclei smash together, forming a larger nucleus, the most common reaction would be hydrogen atoms fusing together to create helium. The actual steps involved are a little more complicated than that, but the details are not important.

 

Every star in the universe is powered by fusion power. We have managed to produce fusion reactions here on Earth in the form of hydrogen or thermonuclear bombs. While these weapons are very destructive, they are not very useful in production the power we need. For that, we need to learn how to produce a controlled fusion reaction. The trouble is that atomic nuclei, being positively charged, are mutually repelled by the electro-magnetic force. Protons and neutrons inside a nucleus are held together by the strong nuclear force, which is far stronger than the electromagnetic force but has an extremely short range.

In order for nuclei to to pushed close enough for the strong force to work, the temperature has to be very high, the core of the Sun is 15.7 million Kelvin or 28 million degrees Fahrenheit. This is a problem.

We can get temperatures that high on Earth, in a nuclear explosion.

 

We can even get temperatures that high in the lab. The problem is that the plasma heated to such a high temperature must be contained, somehow, or it will disperse before any useful reactions take place. There is no substance on Earth that would not be instantly vaporized at that temperature.

 

Which leads me at last to the article in the Independent on the latest progress in making fusion power a reality.

 

An idyllic hilltop setting in the Cadarache forest of Provence in the south of France has become the site of an ambitious attempt to harness the nuclear power of the sun and stars.

It is the place where 34 nations representing more than half the world’s population have joined forces in the biggest scientific collaboration on the planet – only the International Space Station is bigger.

The international nuclear fusion project – known as Iter, meaning “the way” in Latin – is designed to demonstrate a new kind of nuclear reactor capable of producing unlimited supplies of cheap, clean, safe and sustainable electricity from atomic fusion.

If Iter demonstrates that it is possible to build commercially-viable fusion reactors then it could become the experiment that saved the world in a century threatened by climate change and an expected three-fold increase in global energy demand.

 

Nothing is left to chance in a project that has defied potential Babel-like misunderstandings between the collaborating nations. The design, development and construction of a machine that will attempt to emulate the nuclear fusion reactions of the Sun is proving to be a triumph of diplomacy, as well as science and engineering.

“It is the largest scientific collaboration in the world. In fact, the project is so complex we even had to invent our own currency – known as the Iter Unit of Account – to decide how each country pays its share,” says Carlos Alejaldre, Iter’s deputy director responsible for safety.

“We’ve passed from the design stage to being a construction project. We will have to show it is safe. If we cannot convince the public that this is safe, I don’t think nuclear fusion will be developed anywhere in the world,” Dr Alejaldre said.

“A Fukushima-like accident is impossible at Iter because the fusion reaction is fundamentally safe. Any disturbance from ideal conditions and the reaction will stop. A runaway nuclear reaction and a core meltdown are simply not possible,” he said.

Conventional nuclear power produces energy by atomic fission – the splitting of the heavy atoms of uranium fuel. This experimental reactor attempts to fuse together the light atoms of hydrogen isotopes and, in the process, to liberate virtually unlimited supplies of clean, safe and sustainable energy.

Nuclear fusion has been a dream since the start of the atomic age. Unlike conventional nuclear-fission power plants, fusion reactors do not produce high-level radioactive waste, cannot be used for military purposes and essentially burn non-toxic fuel derived from water.

 

The roots of the Iter project go back to 1985 when Mikhail Gorbachev, General Secretary of the former Soviet Union, offered his country’s prowess in nuclear fusion as a bargaining chip in the nuclear disarmament talks with the US, which at that time was pursuing its “Stars Wars” defence system.

Gorbachev and President Reagan, with the support of Margaret Thatcher and French President François Mitterand, signed an agreement to cooperate on nuclear fusion using the Russian “tokamak” reactor. This was a revolutionary device that could hold the super-hot fusion fuel by creating a “magnetic bottle” within the reactor’s doughnut-shaped vacuum vessel.

Several experimental tokamak reactors around the world, including one at the Culham Centre for Fusion Energy in Oxfordshire, have shown nuclear fusion is theoretically possible, but the giant tokamak at Iter will be the first to generate more power than it needs to attain the very high temperatures required for nuclear fusion.

The Iter tokamak machine, which is twice the linear size and 10 times the volume of its nearest rival at Culham, will produce temperatures of well over 100 million C – many times hotter than the centre of the Sun.

It is the first experimental fusion reactor to receive a nuclear operating licence because of its power-generating capacity. For every 50 megawatts of electricity it uses, it should generate up to 500mw of power output in the form of heat.

 

A critical phase of the project will be the injection of plasma – the superhot, electrically-charged gases of the atomic fuel – into the reactor’s vacuum chamber. This plasma, a mix of the hydrogen isotopes deuterium and tritium, will drive the nuclear-fusion reaction.

The plasma will be heated to temperatures as high as 300 million C to force the atomic nuclei close enough together to cause them to fuse into helium, a harmless and inert waste product that could be recycled as an important industrial raw material. Giant electromagnets powerful enough to trap an aircraft carrier will contain the plasma within a spinning vortex held by the magnetic bottle of the tokamak reactor.

 

There is more to read there. All I can say is hurry up, the sooner fusion power is practical for the large scale production of electricity, the better.

 

 

Related articles

 

• Project Makes NUCLEAR FUSION BREAKTHROUGH! [W/ VIDEO] (secretsofthefed.com)
• One giant leap for mankind: £13bn Iter project makes breakthrough in quest for nuclear fusion, a solution to climate change and an age of clean, unlimited energy – Independent (independent.co.uk)
• Will Humanity ever stop getting an “F” on Nuclear Fusion? (ctg2012alk.wordpress.com)
• Fusion: it’s really hard (mqallen.com)
• Bad science writing 101 (breitbart.com) Well yes, I think there is some sort of regulation to mention climate change in every science article.
• Atomic Structure (onlinechemistry.wordpress.com)

 

Advice from Rand Paul

Rand Paul has written a column for rare.us which I think is full of good advice for the Republicans, that is if they would like to start winning elections again.

 Many are saying that the Republican Party must change if we want to remain a viable national party. The advice from some is to become less conservative. These critics believe that the GOP will somehow do better if we become more like the Democratic Party. But why would anyone vote for a lesser version of the Democrats when you can vote for the real thing? It doesn’t make sense and defeats the entire purpose of having two parties.

It is true that Republicans will continue to lose if changes are not made. But some of those changes will require us to become more conservative, especially when it comes to economics. Other changes might not neatly fit into what we currently think of as left or right.

The Republicans will never be able to outspend or outpander the Democrats and they shouldn’t even try. One party, at least, ought to stand for fiscal sanity and keeping the country together instead of trying to divide Americans along racial and class lines.

The GOP is supposed to be the party of limited government but it has not done a very good job of proving it. If Republicans can become the party of balanced budgets and fiscal responsibility, we can appeal to millions from all walks of life who genuinely fear for the burden we’re placing on our children.

“Limited government” doesn’t mean no government. It means $2.6 trillion worth of government—the amount of revenue we currently bring in. Over the past number of years, Americans have had to learn to live within their means. Government must do the same and Republicans should be the party that shows how it can be done.

The Republicans have talked a lot about limited government and balanced budgets but have certainly not acted on these beliefs whenever they have had control of the government in recent years. I hope that with the rise of the Tea Party this will change.

We need a strong national defense, but perhaps this does not mean having an overly aggressive foreign policy that puts American troops all over the globe, all the time. After nearly a decade in Iraq and well over a decade in Afghanistan, no one wants to now see a misguided intervention in Syria or Iran, as some from both parties have suggested. A foreign policy that does not try to police the world, does not try to dole out welfare to the world through foreign aid, and that recognizes fiscal limits will be better for our military, our national security and the Republican Party.

The problem here is that somebody is going to have to act as the world’s policeman and like it or not, we are the only ones with the capacity to do so. Besides, would anyone prefer to live in a world dominated by China, or Russia, or the UN? Of course, we do not have to intervene everywhere there is a problem. We can and should pick our battles and there are some situations we should just stay out of. The civil war in Syria is a good example. We probably are going to have to intervene to keep Iran from obtaining nuclear weapons. It would have been a whole lot easier, and cheaper to take determined (not necessarily military) action against the Iranians years ago, but our leaders have just kept putting the problem off until it has grown.

We need to recognize that the rising generation does not want people put in jail for unduly long sentences for non-violent offenses. No one supports the use of drugs or encourages that kind of behavior, but too many lives have been ruined due to our unfair and unjust mandatory minimum laws. It doesn’t make sense to put someone who has made one mistake in prison with rapists and murderers—sometimes for sentences longer than rapists and murderers. Under our current laws, both George W. Bush and Barack Obama could have been served jail time due to their youthful drug use, and once released from jail, these two men wouldn’t have been employable, much less capable of winning the presidency.

Mandatory minimum sentencing also disproportionately affects those lacking the means to fight back, particularly minorities. This needs to change and Republicans should lead the way.

I am not for legalizing drugs but I think it is obvious to everyone that the War on Drugs has not been very effective. There is a real opportunity for the Republicans to develop effective and just policies here. I should add that many of the more egregious government violations of civil rights have been done in the name of the war on drugs and perhaps we need to seek a better balance between minimizing drug use and respecting civil liberties.

The GOP needs to be the party that embraces immigration while also demanding strong border security. Nobody wants a party that is perceived as wanting to round-up people. We can move the ball forward by offering an immigration policy that humanely deals with the 12 million undocumented immigrants already in the country, but puts the proper security measures in place so that we don’t have to keep revisiting this issue every few decades.

The problem I have with illegal immigrants is that they are here illegally. I do not like the idea of rewarding people who break the law with citizenship. A lot of the discussion on this issue seems to be fairly muddled on that one point. You may call these people “undocumented” but the simple fact of the matter is that they are in violation of the law. If immigration laws are too harsh or if they are unjust, than the laws should be changed, by an act of Congress. As long as the present laws are in place they should be enforced, and the Executive does not, or ought not, have the options of simply deciding not to enforce laws it finds inconvenient.

Fiscal conservatism, a more prudent foreign policy, ending mandatory minimums and immigration reform coupled with border security are but a few issues Republicans can lead on if we want to build the necessary coalitions that will allow us to remain a governing national party.

If we’re going to start winning on the West Coast and in New England, and if we’re going to attract the young, we must change. If we don’t evolve and adapt, the Republican Party will die.

The GOP of old, stale and moss-covered, is largely responsible for our party’s current quandary. Only a new breed of Republican—bold, innovative and dedicated to liberty—can get us out of it.

I hope the Republicans will listen to what Senator Paul has to say. Being the stupid party, they likely will not.

Related articles

• Sen. Rand Paul says he’s “considering” running for president in 2016 (redalertpolitics.com)
• Is Rand Paul Really Considering a Presidential Run in 2016? (repressedpress.com)
• Rand Paul Pitches GOP Version of Minimalist Government to African-Americans (usnews.com)
• Rand Paul: GOP faces ‘daunting task’ with black voters (thegrio.com)
• Rand Paul lands TIME’s ’100 Most Influential’ cover (theblaze.com)
• Inroads: How Rand Paul Represents a Libertarian Opportunity (define-liberty.com)

Children of the Commons

MSNBC commentator Melissa Harris-Perry‘s recent comment that we need to move away from the idea that our children are ours to the idea that children belong to the community has  proved to be more controversial than she, or anyone else at MSNBC, have anticipated, which shows that there is something terribly wrong at MSNBC.

Most conservative commentators have focused on the rather fascistic overtones of her remarks or have noted that public education is not, in fact, underfunded. I would like to tackle this subject from a different angle. I wonder if Melissa Harris-Perry is familiar with the concept of the tragedy of the commons.

The tragedy of the commons is a concept developed by Garrett Hardin in 1968. Put simply, it works something like this. Suppose there is a village in which every farmer has one cow which he grazes in the village commons. The number of cows that graze on the field is limited and the field is able to feed the cows. Now, suppose that one farmer decides to get another cow and let it graze on the common ground. He gets two cows to milk so he benefits more than his neighbors but two cows cost him no more than one. The presence of one more cow doesn’t hurt the green all that much. Then, other farmers decide to get another cow and put it on the green to graze. They get the benefits of having more cows to milk but their cost is no greater. However, as more cows are left to graze on the common field, at some point the field starts to become overgrazed and eventually what was once a fertile field becomes a barren, dusty wasteland.

The reason this happens is that while all of the farmers in the village benefit from the common field, it is no one person’s responsibility to maintain it. Each farmer gains the benefit of feeding his cows, whether he limits his number of cows or works to maintain the pasture and no one gains any extra benefit from doing the work of maintaining the field. Thus what is beneficial to each farmer individually, eventually ruins all the farmers in the village.

Garrett Hardin was an ecologist who was concerned about the problems associated with overpopulation and over use of natural resources. It is not easy to place him on any political or economic spectrum although he did favor government regulation as a means to resolve the tragedy and coercion to limit population. Environmentalists have used his analysis to justify restricting property rights for the common good. On the other hand, advocates of private property and the free market have pointed out that property and responsibility that belongs to everyone, really belongs to no one, and the best way to resolve the tragedy is through privatization of the commons. Human nature, being what it is, people are far more responsible for things that they feel personal ownership for, while common ownership property or a thing  means that no one person really feels they own it and so no one person feels really responsible for it, especially if they benefit from the use of it without the trouble of being responsible for it.

This is one of the reasons Communism didn’t work out so well. Consider Ivan, the worker at the collective farm. He didn’t own the farm, the fields or anything else at the farm. He did not benefit from the harvest and it made no difference to him if the crops rotted in the fields while he got drunk on vodka every afternoon. They weren’t his crops. They belonged to the people of the Soviet Union, so they really didn’t belong to anyone. Extend this sort of thinking over an entire national economy and you can see why there would be trouble.

With all of this in mind, we can revisit Melissa Harris-Parry’s statement that we need to get away from the idea that we personally own our children and are responsible for them and move toward an idea of community ownership of and responsibility for our children. If we make our children the responsibility of the village or the community rather than the responsibility of their parents, then the children will really be no one’s responsibility. Consider, as an extreme example to clarify matters, that there were a dystopian state that took children from their mothers at birth and raised them in institutions with trained caregivers attending to them. Does anyone truly believe that the children would be better off than if they were raised by their own parents? Melissa Harris-Perry has it backward. Children are more likely to be properly raised by parents who feel a sense of ownership and responsibility for them than by a village in which no one feels responsible for any one child. Indeed, it may be that part of the problem with public schools is precisely because they are public. No one really owns the public schools so no one is really responsible for the results of a public school education and no one feels any responsibility for spending the funding for public schools wisely.

The answer to the failure of the commons is not to create more commons but to privatize the commons as far as it is possible. If people have a stake in maintaining a continuing supply of a resource, they will see to it that the use of that resource is sustainable. It may be that the answer to the commons in education is greater privatization as a means of having the parents feel more that they are directly responsible for the state of their children’s education. In other words, we need to have more of a feeling of ownership of our children not less.

 

Related articles

• The Tragedy of The Commons, Children’s Edition (nooneofanyimport.wordpress.com)
• Melissa Harris-Perry Dismisses The ‘Haters’ And ‘Welcomes’ More Debate On MSNBC Promo (mediaite.com) A “hater” is someone who disagrees with a liberal.
• MSNBC’s Melissa Harris-Perry: “We Need To Impinge On Individual Freedoms” For “The Common Good”… (redflagnews.com)
• Melissa Harris-Perry Reaffirms “…children are not our private property.” (curmudgeons.net)
• MSNBC: Your Kids Belong to the State (rushlimbaugh.com)
• Melissa Harris-Perry Doubles Down on Her Marxist, Anti-Family MSNBC Ad (pjmedia.com)
• Elinor Ostrom Debunks the Tragedy of the Commons (ourcommonfutureblog.wordpress.com)
• MSNBC host: Kids do not belong to their parents; they are owned by the collective (dprogram.net)

Senator Warren and the Minimum Wage

May God protect us from politicians who are completely ignorant of economics. Here is video from Foxnews in which Senator Warren wonders why the increase in worker productivity since 1960 hasn’t translated to a corresponding increase in the  minimum wage to $22 per hour.

She actually has a point, however you have to consider that a lot of that increase in productivity has been the result of increasing automation. We simply do not require as many people, whether on a factory floor or in an office, to get a job done. This allows resources,  including human resources to be allocated more efficiently but it doesn’t necessarily mean that each person’s labor is worth more and thus deserving of a higher wage. The other point to consider is beyond the actual numerical amount of a person’s salary is what that salary can actually purchase. A person making minimum wage today is, in many ways, far more prosperous than a comparable person in 1960 if you consider the advances in technology, etc. Consider that the laptop that I am writing this on costs about $300, an amount that is affordable enough to anyone who is in the middle class and even many people considered poor. How much would a computer have cost in 1960? A computer in 1960 was a device that filled a room and cost thousands of dollars. What about televisions? Even someone making minimum wage probably has a color television. I don’t think they even make black and white televisions anymore. Yet, that was all they had in 1960. A television in 2013 is of better quality in almost any way conceivable and yet is cheaper in terms of cost measured by the work needed to earn the amount to buy it (I know there is an economic term for this but I forgot what it is.) compared to a television in 1960. I could go on and on but you get the point.

So, what would happen if we did raise the minimum wage to $22 per hour. To start with, it wouldn’t be only people on minimum wage who would be getting an increase in pay. Normally when the minimum wage is increased, it doesn’t have much of an affect, as the one man noted, simply because not that many people actually make minimum wage. Even so there is a sort of rippling effect on wage scales, especially in unionized labor, which is why unions generally support increasing the minimum wage, even though their members may earn far more than that wage. An increase to $22 per hour would set the minimum wage above that of most hourly workers and the effects of such an increase would be more obvious and profound.

What are the effects of raising the minimum wage? Any increase in wages, whether voluntary or not, is an increase in the cost of labor. the money to pay for that increase has to come from somewhere. Either employers must increase the price of their products, or they may choose to make do with fewer employees, either letting some workers go, or simply not hiring. Either way, the long term result is an increase in prices or unemployment, or both.

As I said, since not many people actually work for minimum wage, these effects may not be noticeable, except perhaps in long term trends. Still, the people most likely to be affected are unskilled laborers and young people just entering the job market. By making their labor more expensive and thus less attractive, any minimum wage tends to increase unemployment among precisely those people it is intended to help. An increase in the minimum wage to $22 per hour would probably increase unemployment to depression levels, and cause a temporary surge in inflation.

I hope that answers Senator Warren’s questions, not that she is ever likely to read this, or pay attention to anything I have to say, even if by chance she stumbles across this blog. I wonder if it would be possible to amend the constitution to require that every member of Congress be required to take Economics 101. But then, no Democrat could ever be elected to Congress.

Related articles

• A $22 an Hour Minimum Wage (slog.thestranger.com) Dumb. It doesn’t matter how hard you work. Your wage depends on what you labor is worth.
• Elizabeth Warren Asks: Why isn’t the Minimum Wage $22 an Hour? (nationalreview.com)
• Nobody Told Sen. Elizabeth Warren that There Would Be Math in Politics (pjmedia.com)
• Elizabeth Warren Debunks GOP Talking Points on Minimum Wage (truthdig.com)This person must be almost as ignorant as the Senator.
• Big wampum: Sen. Elizabeth Warren asks why the minimum wage isn’t $22 per hour (twitchy.com)
• Watch Elizabeth Warren Dismantle Right-Wing Talking Points About The Minimum Wage (boldprogressives.org)Watch these people demonstrate how ignorant Progressives are about basic economics.
• Elizabeth Warren: Hey, why isn’t the minimum wage $22/hour? (hotair.com)

Sarah Palin is Not an Idiot

 

The conventional wisdom about Sarah Palin is that she is an ignorant snowbilly, too stupid to be trusted with any responsible position. John McCain’s choice of her as his running mate was such an obvious blunder that it cost him the election.

Well, if Sarah Palin is really so stupid, how is it that she understands the necessity of the federal government putting its fiscal house in order better than anyone who is actually in Washington D.C. ?

          D.C.: Cut the Drama. Do Your Job.Americans are sick and tired of yet another ginned-up crisis. D.C. needs to grow up, get to work, and live within its means. The real economic Armageddon looming before us is our runaway debt, not the sequester, which the President advocated for and signed into law and is now running around denouncing because he never had any genuine intention of reining in his reckless spending.

Remember that this sequestration deal came about because of the long debt ceiling standoff in the summer of 2011. It wasn’t the ideal outcome for anyone, but it did at least include real deficit reduction of about $110 billion per year for 10 years, which is still nowhere near enough to close our massive deficit. Keep in mind that since the sequester passed, the President has already hit American families and small business owners with his tax increases, or “more revenue” as he likes to call it. The American public doesn’t want tax increases; we want government to rein in its overspending.

If we can’t stomach modest cuts that would lower federal spending by a mere 0.3% per year out of a current federal budget of $3.6 trillion, then we might as well signal to the whole world that we have no serious intention of dealing with our debt problem.

If we are going to wet our proverbial pants over 0.3% in annual spending cuts when we’re running up trillion dollar annual deficits, then we’re done. Put a fork in us. We’re finished. We’re going to default eventually and that’s why the feds are stockpiling bullets in case of civil unrest.

If we ARE serious about putting our fiscal house in order, then let’s stop the hysterics, tighten our belts, and take our medicine.

- Sarah Palin

I have to make one small correction here. The 0.3% spending cuts are not cuts at all, at least not in the way that normal people would understand cuts, they are simply cuts in rate of growth.

 

I guess that Sarah Palin lacks the superior intelligence and budgetary management skills of Joe Biden.

 

 

 

 

Thanks to Samizdata for posting Sarah Palin’s comments first.

 

Related articles

 

• Remind me again why Sarah Palin is considered to be stupid (samizdata.net)
• Palin: ‘We’re finished’ (politico.com)
• Sarah Palin’s new conspiracy theory: ‘They’re coming for us!’ (dangerousminds.net) He doesn’t bother to refute her comments regarding the debt. It wouldn’t surprise me if law enforcement agencies are indeed stockpiling ammunition. It doesn’t take a Nostadamus to consider the possibility that continued inaction by the government towards restoring fiscal sanity could cause an economic collapse and civil disorder which will need to be surpressed.

Emigration to Mexico

One of the more contentious issues of our time is immigration, particularly illegal immigration from Mexico. Many conservatives fear an ever growing tide of immigrants who refuse to assimilate or become productive citizens and so become reliable Democratic voters. Many liberals hope for an ever growing tide of immigrants who refuse to assimilate or become productive citizens and so become reliable Democratic voters. Yet, there are signs that this debate is starting to become somewhat anachronistic as Mexico begins to develop economically and its birthrates decline. It may well be that in the not too distant future that Mexico will become the sort of country that people want to move to rather than leave. Walter Russell Mead writes about this in a couple of posts.

Mexicans don’t want to leave their native country any more than Americans do theirs, according to a new Gallup Poll. Only 11 percent of Mexicans said they would emigrate if given the chance, down from 21 percent in 2007 and equal to the 11 percent of Americans who would do the same.

Fears that America will be overrun by a mass of poor workers from Latin America are looking more and more like yesterday’s news. Birthrates in Mexico are falling, and the economic situation continues to improve. At 5 percent, Mexico’s unemployment rate is nearly three points below ours. In 2012, its GDP grew by nearly 4 percent, and foreign investors, encouraged by the turnaround, poured $57 billion into stocks and bonds in the first nine months. Forthcoming reforms in the telecommunications and energy sectors may also help those industries to boom. The country’s economic forecasts are so promising that the Financial Times has dubbed it the “Aztec tiger.”

This is good news. As the Mexican economy improves, immigration pressures will continue to abate. Who knows? If the trends continue, maybe we’ll even see southbound migrants outnumbering northbound ones.

Another four years of Obama may well turn America into the sort of third world sewer that people risk their lives trying to escape. What of the Mexicans already in this country? Will they fail to assimilate, remain trapped in low paying jobs or government relief and so become Democratic voters forever? Maybe, but maybe not. Mead talks about some interesting changes.

There’s a lotof talk these days that the GOP has lost American Hispanics “forever.” A recent poll by Gallup suggests the picture may be a litte more complex. After the November Presidential election, some Dems hoped and Gopers fretted that the Republican Party face imminent death unless it attracted more Hispanic voters by changing it’s immigration position. But if Gallup is right, some other factors might be at work.

The poll doesn’t look all that political on its face. The survey found that 60 percent of Hispanic Protestants are very religious—measured by weekly service attendance and how important the respondents said religion was to them—compared to only 43 percent of Hispanic Catholics. In addition, the number of Hispanic Catholics has declined over time, while the number of Hispanic Protestants has stayed steady:

Overall, the finding that younger Hispanics are proportionately more Protestant and that all Hispanics are becoming proportionately more Protestant over time suggest that the percentage of Hispanics who are Catholic may continue to slip in the years to come…This will be particularly true if today’s young Hispanics maintain their proportionally higher Protestant identification.

Mead discusses the possible future of the Catholic Church in America, and the institutional changes which have made it less helpful to new immigrants, and so less likely to command their long term loyalty. I am more interested in the political implications.

But the most startling implications of the trends reported by the survey are political. Being religiously observant in any faith correlates strongly with voting Republican; this goes double for evangelical Protestantism. There are exceptions to this trend, of course. Many Black Christians who theologically and culturally fit in the evangelical tradition are reliable Democratic voters. But overall the correlation holds: evangelical Protestants who spend a lot of time in church are among the most reliably Republican voters in the country.

If a lot of Hispanics are picking up their Bibles and heading off to church, this suggests that over time the GOP share of the Hispanic vote will grow.  Over the decades, another trend will likely reinforce that one: as immigrant groups become better established in the United States, their economic interests and their issue priorities often change in ways that benefit the GOP.

Take immigration. This is a burning issue with serious personal stakes in many Hispanic households in America today. But Polish-American and Italian-American households don’t necessarily feel the same way. On the one hand, each succeeding American generation is a little farther from the homeland and the family ties are a little more attenuated; on the other, as other countries develop and their demography changes, there is less interest in the old country in coming to the new.

We will have to see what happens. I would caution anyone who is predicting the long term dominance of either political party not to be too certain. I seriously doubt that we will see again a forty year period of time in which one party is in complete, or near complete control of the government, predictions of demographic changes notwithstanding.

The Republicans really ought to do more to peel away some African-American voters from the Democrats. The fact that 90% of the Black vote Democrat these days has been an absolute disaster for them, witness Detroit.

 

Related articles

• Will Hispanics Ultimately Lean GOP? (blogs.the-american-interest.com)
• Mexicans as reluctant as Americans to leave home (nbclatino.com)
• WALTER RUSSELL MEAD ON HISPANIC IMMIGRATION’S IMPACT: Catholic boosters clinging to the hope that… (pjmedia.com)
• Time to Emigrate to Mexico? (blogs.the-american-interest.com)
• WALTER RUSSELL MEAD: Time To Emigrate To Mexico? Fears that America will be overrun by a mass of… (pjmedia.com)
• Why millions more Mexicans won’t be coming to America (aei-ideas.org)
• GOP splits even as illegal immigration plummets (dailykos.com)

Meat Cleaver

According to the Democrats, the round of mandatory spending cuts required by the sequester are like a meat cleaver slashing away at needed programs.

David –

If you didn’t do your job, you’d be fired.

But when Eric Cantor and John Boehner don’t do their jobs, two million Americans get handed pink slips.

Right now, House Republicans are refusing to even vote on the sequester. If they do nothing, a meat-cleaver will chop away, almost indiscriminately, at essential domestic programs and make life even harder for millions of Americans.

We can’t let that happen.

If we go over the sequester cliff on March 1st, two million jobs could be lost — including law enforcement, first responders and teachers. Essential programs for pregnant women, children and domestic abuse victims could shut their doors. And the economy could be thrown back into a recession.

President Obama made it clear: “This is not an abstraction — people will lose their jobs.”

Join the DCCC, Democratic Governors, and proud Democrats all across the country calling out Boehner and Cantor before the sequester deadline:

http://dccc.org/Stop-The-Sequester

Thanks,

Brandon

Brandon English
DCCC Digital Director

I only wish they were using a meat cleaver to cut the budget. We badly need to take a cleaver to cut spending. As it happens, the deep sequester cuts are really only cuts in the rate of spending, not actual cuts in spending. Even so, the cuts are hardly deep at all, as Veronique de Rugy explains.

Changes in spending from sequestration result in new budget projections below the CBO’s baseline projection of spending based on current law. The federal government would spend $3.62 trillion in the first year with sequestration versus the $3.69 trillion projected by CBO. By 2021, the government would spend $5.26 trillion versus the $5.41 trillion projected. Overall, without a sequester, federal spending would increase $1.7 trillion (blue line). With a sequester, federal spending would increase by $1.6 trillion (red line).

A further breakdown of the percentage of budget programs reveals that sequestration provides relatively small reductions in spending rates across the board. With sequestration, defense increases 18% (vs. 20%); nondefense discretionary increases 12% (vs. 14%); Medicare roughly increases at the same rate; and net interest increases 136% (vs. 152%).

While the sequester projections are nominal spending increases, most budget plans count them as cuts. Referring to decreases in the rate of growth of spending as “cuts” influences public perceptions about the budget. When the public hears “cut,” it thinks that spending has been significantly reduced below current levels, not that spending has increased. Thus, calling a reduced growth rate of projected spending a “cut” leads to confusion, a growing deficit, and an ever-larger burden for future generations.

Here is the graph that went with that article.

The so-called deep cuts that will endanger the country and put millions out of work are hardly more than a statistical error. It wouldn’t be an exaggeration to say that Obama and the Democrats are simply lying when they describe the spending cuts as indiscriminate. If anything they are not nearly deep enough. There seems to be a certain unreality in both parties of our political class. The Republicans know there is a problem and that we cannot continue to run up astronomical deficits every single year. They are so afraid of being cast as the villains who want to cut the budget to hurt the poor and provide their rich friends with tax cuts that they are afraid to make anything more than symbolic cuts in the rate of increase of spending. They are right to be wary since that is precisely what the Democrats, with their allies in the media will do, regardless of the Republican position. The Democrats, for their part, refuse to admit that there is any problem with spending that raising taxes on the 1% won’t solve. President Obama is not in the least interested in cutting spending. He seems to be more interested in redistributing the wealth of the country in ways that he considers fair than in maximizing revenue. In fact, it may not be too cynical to imagine that Obama has been deliberately increasing the deficit in order to justify the higher, fairer taxes he craves.

Since no one in Washington cares to do their job, managing the resources of the government in a responsible fashion, then I think the best bet is simply to let the sequestration cuts go ahead. There may well be people hurt by the “cuts” but we have to start cutting the budget sometime. There will be a lot more people hurt if the federal government has to start defaulting on its debts or the dollar loses its value. As far as I am concerned the blame for anyone being hurt by spending cuts lies on the people who encouraged dependency with no regard for how unsustainable this sort of spending would be in the long, or even medium term.

Related articles

• Boehner Fires Back at Obama on Sequester: You Created It, You Fix It… (redflagnews.com)
• What Is the Sequester? (whitehouse.gov)
• Obama to GOP: Put away the “meat cleaver” (cbsnews.com)

 

Let Them Die and Decrease the Surplus Population

If there is anyone today who would echo Scrooge’s callous dismissal of the poor who wanted better lives, it might be the contemporary Green movement. I have long believed that the more radical environmentalists are motivated more by misanthropy than by any abstract desire to save the planet. You really don’t have to read too much of their literature before you encounter their anti-American, anti-capitalist, anti-technological, and ultimately anti-human ideology.

Robert Zubrin knows this better than most. Last year he wrote a book titled Merchants of Despair, which tells of the excesses of the environmental movement. Yesterday, he had a column in National Review Online, rebutting an editorial in the Denver Post, written by Phillip Cafaro. Cafaro writes of the link between illegal immigration and climate change. Robert Zubrin’s answer is worth reading but I want to examine how Cafaro’s editorial shows the anti-human bias of the Greens. Here are some excerpts.

According to U.S. Sen. Michael Bennet’s website, reforming immigration policy and combatting climate change are two of his key legislative goals.

But there is no evidence that the senator sees any connection between them, despite the fact that the U.N.’s Intergovernmental Panel on Climate Change has identified population growth as one of the two key drivers of global warming, and that most of the increase in U.S. greenhouse gas emissions in the past two decades has occurred due to population growth, while per capita emissions have remained relatively flat.

As can readily be seen, even at present immigration rates, the U.S. is on track for huge population increases during the 21st century, from a current population of 315 million to 524 million people by 2100. It is not clear how such increases can be accommodated in an ecologically sustainable manner.

Further increasing America’s already generous immigration rates, as proposed by Sen. Bennet, could add another 145 million people to our population. That increase itself is equal to almost half our current population. It would ensure that the U.S. more than doubles its total population by 2100, to 669 million people.

And make no mistake: Immigrants are not coming to the United States to remain poor. Those hundreds of millions of new citizens will want to live as well and consume energy at the same rates as other Americans.

All this suggests some obvious questions: What climate change mitigation measures does Sen. Bennet plan to put forward that could possibly equal the increased greenhouse gas emissions we would lock in by adding 145 million more new citizens to our population?

Now, my major concerns regarding immigration are assimilation and legality. I oppose illegal immigration simply because it is illegal. I bear no particular ill will for the immigrants but they are in violation of our immigration laws. I do not think it is wise to simply not enforce these laws. If there is a need for more immigrants in this country, than the laws should be changed. I oppose any sort of amnesty simply because I feel that it would be essentially rewarding people for breaking the law.

Having said all that, I have no problem at all with legal immigrants coming here and making a better life for themselves. It is my sincere desire that they do live as well and consume energy as much as other Americans. In fact, I wish that for higher standards of living all over the world. It shouldn’t be necessary to leave your home in the hope of having a decent life.

Cafaro feels otherwise. He wants the immigrants to stay home and stay poor. It’s necessary for them to stay poor and hungry in order to save the Earth. In fact, since there are really too many people, it might be best if they were to starve.

Related articles

• Green Anti-Humanism (nationalreview.com)
• Has Sen. Bennet really thought about immigration? (denverpost.com)
• An ugly nativist narrative (politico.com)
• 30 Population Control Quotes That Show That The Elite Truly Believe That Humans Are A Plague Upon The Earth (blacklistednews.com)
• Malthus and Scrooge: How Charles Dickens Put Holly Branch Through The Heart Of The Worst Economics Ever (forbes.com)
• The Deep Misanthropy Movement (nationalreview.com)

 

The Washington Post and the Carbon Tax

The Washington Post has published an opinion piece in favor of wrecking the economy. Well, not really of course, but they do want President Obama to address climate change by putting into place a slowly rising carbon tax.

PRESIDENT OBAMA will deliver his 2013 State of the Union address on Tuesday, and expectations are high that he will devote significant time to climate change. We hope that he adopts a different approach to explaining the need for action than he did in much of his first term.

In past addresses, talking about green jobs didn’t work, nor did talking about energy independence. The credible way to justify fighting climate change is to discuss the science, the real reason to cut carbon emissions. There is overwhelming evidence that the planet is warming. The widespread burning of fossil fuels, meanwhile, pumps heat-trapping greenhouse gases into the atmosphere every second. There is still uncertainty about exactly how sensitive the climate system is to a given increase in carbon dioxide concentrations — but not enough uncertainty to justify ignoring the risks of rising temperatures.

Well, the evidence that the planet is warming may not be so overwhelming as they contend. I would say that there is not enough certainty to justify levying a tax that would permanently slow down the economy and put the US at a competitive disadvantage with China and India.

Here is their proposal.

Putting a slowly rising, significant price on carbon emissions would encourage people to burn less fossil fuel without micromanaging by Congress or the Energy Department. This approach would enlist market forces to green the energy sector. It would also allow for similar policies in other nations to connect with America’s, creating a bigger, global market for carbon.

Anything like carbon pricing must get lawmakers’ approval, though, which is the first reason Mr. Obama should make reaching out to them on climate policy a priority. True, a coalition of anti-regulation Republicans and coal-state Democrats killed the last major effort to price emissions, a 2010 cap-and-trade bill. But, in the big budget reform politicians have been promising, they will need new revenue from somewhere. A carbon tax would be an ideal source.

Even second- and third-best alternatives would need Congress’s say-so. These include establishing a national clean energy standard requiring that a defined and rising amount of electricity come from sources cleaner than coal, the top climate villain. Sen. Lisa Murkowski of Alaska, the Energy Committee’s lead Republican and a voice of reason within her party, just released a 121-page plan with other ideas that could serve as a basis for some congressional action, such as paying for energy technology research, reforming subsidies for green power, advancing hydropower and promoting energy efficiency.

Since almost every industrial process emits some carbon dioxide, especially in energy and transportation, a tax on carbon dioxide emissions would be a tax on just about every industry and business in America. These costs will be passed on to consumers and the cost of living will increase. It is true that a new tax would be a bonanza of the federal government, at least until they squander the increased revenues on subsidies for green power.

It’s nice that they refer to coal as the top climate villain. How an inanimate substance could be a villain is not clear to me, but at this time, coal is also our cheapest source of energy and the one that is most abundant in North America. Requiring that a defined and rising amount of energy come from cleaner than coal would raise the cost of energy over time and again raise the cost of living. I begin to think that the editors of the Washington Post don’t like the poor and middle class very much, or perhaps they love the poor so much, they want to make more people poor.

And, they finish with a threat.

The president should also remind Congress that, without ambitious action from lawmakers, the Environmental Protection Agency (EPA) can and will act on its own. The EPA has already established or is in the process of establishing a range of new air pollution rules. These rules will ensure than no new conventional coal plants are built in the United States, and they will force the closure of some particularly awful, ancient coal-fired facilities. More regulations are likely in store in Mr. Obama’s second term. The EPA, for example, has not yet set rules regulating the carbon emissions of major, existing sources of greenhouse gases. Using the EPA’s top-down approach, though, is not the best way to reduce carbon emissions. Mr. Obama should invite Congress to work with him on a better alternative.

So, do what the president wants, or he’ll have the EPA do it anyway. Why bother with a Congress at all, if that is the way we are going to do things? It seems to me that this is the best argument ever for reining in, or even abolishing the EPA. They have clearly become a rogue agency, seeing themselves as above the law and even common sense. Maybe, Congress should abolish the agency and replace it with something more responsible.

Related articles

• WaPo: EPA ‘not the best way to reduce carbon emissions’ (junkscience.com)
• Paul Ryan, go bold with carbon tax (jsonline.com) No Paul Ryan. We want to reduce the tax burden.
• Can Congress ever agree on climate change? An interview with Henry Waxman (washingtonpost.com) Waxman is the most anti-business man in Congress and that is saying a lot.
• Greenhouse-Gas Emissions Fall in U.S. Power Plants on Coal Cuts – Bloomberg (bloomberg.com)
• For world’s biggest climate polluters, it’s still business as usual (miamiherald.com)
• Why All the Fuss? U.S. Carbon Emissions Lowest Since ’94 (dickmorris.com)
• A U.S. Carbon Tax Wouldn’t Slow Down Global Climate Change (usnews.com) Obviously the Chinese are not going to cripple their economy since a major recession there could cause the government to be overthrown.