The Power and the Money

Nicaragua dreaming

Somehow I just don't think that this is going to happen.  I mean, it's nice that Managua recognized South Ossetia and Abkhazia, but Russia just doesn't have the money right now.  No, if you're going to reward your faraway friend (although I'm at a loss as to why Moscow would want to) this seems like the way to do it.

And much as Nicaragua is a full-up member of the Alternativa Bolivariana, Venezuela doesn't have the money to toss away on such a megaproject right now.  Astoundingly enough, Caracas is going to have to cut back spending if oil goes below $90, a level of fiscal irresponsibility to rival Washington. 

Still, for a guy who proposes transcontinental railways and really likes to build stuff, I'm surprised that a Nicaraguan canal hasn't caught his eye. 

A thought on the politics of inequality

Something occurred to me while I was driving on I-595 earlier today, right after the bailout package failed in Congress.  Might it have been easier to pass had we not seen the massive increase in income inequality over the past few decades?  After all, when income differences between financiers and the average worker loom gigantic, it becomes very difficult to sell people on the idea that the financial system needs an infusion of government money.  On the other hand, if the banks were smaller and their executives poorer, people might feel more of an emotional connection to them, making a bailout easier to sell.

The real effect of a bailout wouldn't change, of course.  Executives would have been hosed under the Dodd-Frank plan, and the average person would have benefited hugely from keeping the financial system afloat.  But the emotional politics are all different in a world where the financiers have pulled away into a different economic universe from the person on the Port Everglades Expressway.

Does this make sense? 

Uh oh

It appears we are experiencing a wonderfully bipartisan effort from Congress to test the predictions of modern macroeconomic theory. 

We're in for a ride.  I am not looking forward to it, and neither should you.

A new constitution

Rafael Correa is the president of Ecuador.  He has a Ph.D. in economics from the University of Illinois.  Anti-Chávez well-educated high-earning professional Venezuelan women told me on multiple occasions that they consider him very attractive.

That, however, is not why he's in the news.  He's in the news because Ecuadorean voters approved a new constitution today.  Opponents call it “Bolivarian.”  Even non-opponents have called it “socialist.” Both are silly.  Correa is far from Bolivarian.  (Update:  It has been pointed out in comments that he declared himself Bolivarian in 2006, although he is generally considered to have distanced himself from Venezuela.)  Those same professionals who called Correa handsome also called him sensible, and I tend to agree.  Correa is relatively radical.  But he's also sensible and clearly a democrat. 

Which doesn't mean that the new constitution is a good thing for Ecuador.  More below.   

Missing post

This is weird.  I could have sworn that I had a post up here where I discussed Charlie Stross and science fiction.  But I can't find it.  It's gone, pffft.  Anyone out there who can help me figure out where and how I misplaced an entire post?

Lincoln-Douglas redux

In my continuing attempt to keep all twelve of my readers (or at least 11 of them) clicking here when I don't have the time to write anything substantive (well, at least here), I figure that you would all enjoy this abridged six-minute version of the presidential debate.

Meanwhile, Jussi Jalonen tells us that Sarah Palin's interview performance would not have been considered dismal or disasterous in Finland.  That makes me feel very worried for the future of Finland, where, by definition, all of the citizenry are experts in foreign policy. 

Fourth part of the Palin interview below the fold.

Even more humorless, I am

I'm losing my sense of humor about the election.  (Yes, I know that some of my readers believe that I never had any.  They're probably correct.)  I could handle the lying, that's what Republicans do, and anyway, we've hit back.  (McCain doesn't really oppose stem cell research and McCain isn't really anti-immigrant, although he really doesn't like Social Security and won't say how much he'd like to cut it.) 

But this crap is too much.  Senator McCain lies about suspending his campaign.  Then he flies to Washington for a big meeting.  At which he takes no stance.  The congressional GOP procedes to propose a plan which makes absolutely no sense.  Viz, as far as I can understand it:

(1)  Insure all mortgages.  Charge premiums high enough to make the insurance self-financing.  Okay ... but the mortgages currently in default never paid any insurance premiums in the past.  So how are you going to pay to insure existing mortgages?  Magic?  Brazilian foreign aid?  I think Brazil might have enough foreign reserves to do that, and they owe us ... oh, wait, no, they don't owe us.

(2)  Cut taxes to get private money to recapitalize the banks.  Uh, okay ... but y'all aware that people who have underwater assets are currently subsidized by the tax code?  Cut taxes, and you cut those subsidies.  They want to cut capital gains taxes on assets that are already underwater to encourage financial institutions to sell them?  Huh? 

Besides which, why is raising expected returns from 4% to 4.6%, or 10% to 11.5%, or whatever, going to enough to persuade that tidal wave of capital to unlock itself and pour into financial institutions?  Spreads are already huge and nobody wants to lend. 
                        
(3)  Require that Fannie and Freddie no longer securitize unsound mortgages.  Wait, didn't you just call for the federal government to insure said mortgages?  Oh.

Now, normally this nonsense wouldn't mean anything.  Nancy Pelosi controls the House; with Bush in office, she wants Republicans to sign on for political cover.  Meanwhile, over in the Senate, they only need to peel off nine Republicans to pass the Dodd plan.  But now McCain is refusing to commit himself and has made positive noises about the above bit of gobbledygook, meaning that nothing will get done for forty days.  At least.  Okay ... but why all the sturm-und-drang from McCain then? 

The political logic escapes me.  The economic logic escapes me.  John McCain appears to have escaped the bounds of gravity.      

Intellectual heroism

Here.

I'll admit that I am still probably more of what he calls a Greenspanist.  A lot of things had to go wrong to produce this particular bubble and crash, a toxic combination of deregulated banking, caveat emptor lending practices, securitization, and a tidal wave of foreign savings crashing down upon our shores. 

I could easily be wrong.  And that's not the point.  The point is that Brad Delong marks his opinions to market, and changes them when the facts change.  Intellectual heroism.   

Postmodern commentary

Here is some excellent commentary on recent commentary on the events in Bolivia:

Two different takes on Bolivia’s political crisis, one from Larry Birns and Jessica Bryant, and the other from Marcela Sánchez. The first argues that the escalating tension is a result of a pattern of American disrespect to Latin American democracy. The second argues that Latin America showed a great deal of maturity in resolving the problem themselves, neither waiting for Washington nor using the crisis as a pretext to take pot shots at the Bush administration. I find Sánchez’s argument about ten million times more convincing.

Not everyone who blames the U.S. at every moment should be accused of blaming America first, but Birns and Bryant certainly seem predisposed to pointing the finger at Washington. Evo Morales kicks Ambassador Philip Goldberg out of La Paz, and its Goldberg’s own fault because “he failed to be helpful.” That’s a pretty high standard. Why is it in incumbent on a foreign ambassador to help in an internal political crisis? Any time there is a crisis in a foreign capital, should the American ambassador be tossed if he fails to be helpful? Also, how could the U.S. help by inserting itself into a complex and longstanding local political issue? Hasn’t that usually been a recipe for problems? Short of endorsing Morales, what could Washington do to satisfy Birns and Bryant? It essentially avoided stepping on Morales’ toes publically, which shows admirable restraint, given the number of times Morales has thumbed Washington in the eye, and that Washington is ideologically more closely aligned with the opposition than with Morales. At the risk of supporting W, it seems like the U.S. played this one right. It’s better to let Latin America solve its own problems without U.S. mediation.

The Birns-Bryant piece is also needlessly (and bizarrely) wordy. For instance, the phrase “the baleful consequences of the inherent disrespect the U.S. historically has exhibited toward the region” has about a third more words than necessary. Later, they refer to the need to “architect a new relationship with the region that can be deemed credible.” Architect as a verb? Why, when the Queen’s English offers us build, construct, create, develop, erect, carve out, and many other possibilities that are, in fact, verbs?

By the way, after the scare from the marches, it looks like things are calming down in Bolivia.  Evo deserves props for putting his constitution on the table and agreeing to sit down and talk with the opposition governors about the new constitution. 

(Semantic note:  the Bolivian title is in fact “prefect.”  A symbol of the crisis was, in fact, the self-promotion of the Santa Cruz “prefect” to “governor.”  That said, they've already got more power than the English “prefect” implies, so I'll be sticking with “governor” as my translation of “prefecto” until convinced otherwise.  I'll also stick with “province” as my translation of “departamento” because it sounds way way better and less confusing than “departament” in American English.)            

I'll get back to ya

I, I, I ... I just had to post this.  I know a lot of non-Americans come here (well, three or four) and you've got some interest in our elections.  Since the McCain campaign is now proposing that the vice-presidential debates be scrapped, I figure you might want to get a look at (perhaps) why.

Watch CBS Videos Online

I'm sure she will.  Well, whaddaya think?

Staredown

Looks like one guy will be showing up to the debate.  Probably a better strategy than calling the Palin bluff. 

“Presidents are going to have to deal with more than one thing at a time.  It’s not necessary for us to think that we can do only one thing, and suspend everything else.”

Obama also conveyed a bit of irritation that McCain had gone public this afternoon, soon after the two men talked about a joint statement.

“The only possible miscommunication might have been how quickly there was an announcement and somebody was on television.  My assumption was that the joint statement would go out – initially.”

McCain is still a strong candidate, even with his continuing decline into incoherence and dissimulation, which is sad to watch.  After all, I supported the man in 2000.  I wouldn't vote for that John McCain in 2008, because the world has changed and so have my opinions.  But this new guy, well, it's sad.

Or amusing, if you're Letterman.

But McCain could still win.  Please donate.  It's crunch time. 

Inconceivable!

I don't know why Senator McCain wants to postpone Friday's debate.  My guess is that he has no idea what to do about the economic crisis, having over the last few days taken pretty much every position that it is possible to take.  He needs the time to sort it out.  The fact that his duties as a confused Senator dovetail with his political needs as a confused Presidential candidate is a happy coincidence.

How should Senator Obama respond?  Well, he has to agree with his opponent about the importance of the crisis and agree to suspend the debate.  Of course, three debates are still necessary.  So the vice-presidential debate will just have to be moved up to Friday, right, Senator McCain? 

And campaigning should not be suspended, not for those who can walk and chew gum at the same time.

Going south?

Cooler heads may not have prevailed in Bolivia.  I'm not sure what to make of this report from Pronto, but is sounds doubleplusungood:

From email from my parents (who live in Santa Cruz): Evo has just announced an alleged a coup plot between Goldberg (the US ambassador expelled a few days ago), Costas (the Santa Cruz prefect), and a number of high-ranking military officers. Meanwhile, reports from Pando suggest that five of the bodies were Venezuelan soldiers, who are being repatriated. Costas has also asked Evo to call of the MAS protests who are still marching towards the city of Santa Cruz; he’s also called for a suspension of labor & a public assembly in the main plaza for a cabildo (a “popular assembly”) to decide what to do. (FYI: The last Santa Cruz cabildo proclaimed Costas “governor” & demanded regional autonomy.) Also, as of now, the 24 de Septiembre celebrations are cancelled — the first time that has happened in more than 50 years. This doesn’t look good at all.

The part about “Venezuelan soldiers” is particularly perplexing.

   

The good news is that it seems as though Evo agreed with Costas and got the marchers to stop.  So sanity still might prevail.      

Yankee go home

Human Rights Watch published an unflattering report about civil liberty under President Chávez.  As these things go, the report isn't all that damning.  It basically accuses him of, well, setting up a political machine:  (1) using the executive power of the state to go after political opponents; (2) undercutting the independence of the judiciary; and (3) denying resources to independent or opposition organizations.  It doesn't accuse him of tossing opponents in jail or ending freedom of expression. 

The reaction of the Bolivarian Republic?  Expel the authors.  The irony needs no comment.

Here is an English-language response to the report from the Venezuela government.  Here is an explanation of the expulsion.  Let me point out that the expulsion is entirely legal under Venezuelan law, and that many fully-democratic nations have similar (if seldom used) provisions. 

The HRW report is an interesting read, if you have the time.   

Old news from Santa Cruz

So Hugo declared on September 12th that he was prepared to intervene militarily if Bolivia's constitutional government came under threat.  The reaction in Santa Cruz?

As a patriotic American, I can't tell you how much it warms my heart to see demonstrators burn somebody else's flag.

UPDATE:  It gets better!  When the commander of the Bolivan troops sent to Pando arrived at the Cobija airport, he had to insist to an angry mob that he was not heading a Venezuelan invasion force.

No, it gets much better.  Chile's foreign minister, Alejando Foxley, publicly complained that President Chávez's antics nearly wrecked the Unasur summit.

Thankfully, Evo realized that Caracas wasn't helping him, albeit belatedly, and told his defense minister to reject Venezuelan overtures.  (It obviously would have been a bad idea for Evo to have done it himself.)  So far, negotiations with the Media Luna provinces seem to be going well.  Here's hoping. 

Soy Barack Obama, y yo apruebo este mensaje

Ross Douthat says that this ad is as bad as the McCain ads accusing Barack Obama of teaching little kids how to have sex, or the ones accusing him of supporting infanticide, or the ones that falsely state that Obama's tax plan will raise taxes on people making less than $250,000 per year, or the continual statements by Sarah Palin's that she rejected federal money that she actually accepted. 

I kind of like Douthat's stuff, he's a man with whom I can agree to disagree, but I'm not seeing it.  Is this ad confabulatory?  Or does it just represent the position that McCain fli ... er, adopted during his primary campaign? 

Northern exposure

Here is your daily mental health break.  For lasting effects, avoid any news involving numbers for at least a day.

A friend sent me these photos.  It's a rally in Anchorage, Alaska.  The funny thing is that the organizers of the rally intended it to be a tiny little thing on the steps of the main library.  But then right-wing radio got into the act.  Eddie Burke announced the rally, called the people who planned to attend “a bunch of socialist baby-killing maggots,” and read the home phone numbers of the organizers.

Result:

and

But the best is below the fold ...

Another public service message

Remember, folks, Barack Obama can't debate.  Terrible at 'em.  Barely can form a complete sentence.  Can't keep track of an argument.  Heck, can't even form consonants.  He is outmatched, and John McCain is going to massacre him.  Massacre him, I say, complete and total destruction, no contest.  No contest at all.

Be sure to warn all your friends, enemies, frenemies, friends with benefits, friends without benefits, spouses, ex-spouses, random strangers, and household pets:  Barack Obama is going to get crushed in the debates.   

Mashed like potatos.  Prepare yourself now.  And prepare others.

Cooler heads prevail

  An agreement has been reached to settle the conflict in Bolivia, at least for the time being.  The “Great National Agreement” is, IMHO, a thing of great beauty.  Basically, everyone involved realized that they were all going to lose if the violence escalated and decided to take a deep breath and calm down. 

Judge for yourself.  The text is below the fold.

A public service message

Health care.  Health care.  Healthcare.  Health care healthcare health care.  Healthcare healthcare healthcarehealthcarehealthcare get you insurance healthcarehealthcare save your insurance healthcarehealthcare healthcare healthcare worried about insurance?  Health care.

Bank regulation.  Barn door, yes, on their watch, not again.

Health care.  Healthcare.  Healthcare healthcare healthcare.  Cut your taxes!  Healthcare.

Bankruptcy change, let judges cut your mortgage payments if you're in trouble.  Health care.  Did I mention health care?  And tuition.  But health care.  Stimulus package, keep state governments working!  Health care.

Healthcare healthcare healthcare.

See you tomorrow.

Full moon rising?

Cooler heads may be prevailing in Bolivia.  The Army has taken control of Cobija, the capital of Pando province.  Governor Leopoldo Fernández has fled, accused of masterminding a massacre of government supporters.  Meanwhile, the National Democratic Council, which consists of the five governors of the Media Luna provinces (including Chuquisaca), announced that it will call off the roadblocks, although their supporters still occupy government offices outside Pando. 

Council representatives met throughout last night with Vice-President Álvaro García and the Vice-minister for Decentralization, Fabián Yaksic.  They seem to have arrived at an accord, which while not a resolution of the dispute, is at least an agreement to sit down and talk about it. 

Hugo Chávez, unfortunately, is being his own typically helpful self.  He's declared that Venezuela will intervene if Morales falls.  He's hurled accusations of treason at the head of the Bolivian armed forces, General Luis Trigo.  “I am willing to die for Bolivia,” said the President of the Bolivarian Republic. 

The president of Uruguay, Luis Alberto Lacalle, had an interesting response.  “Careful.  We've got Chávez, who suffers from verbal incontinence.  It could occur to him tomorrow to send a soldier to Bolivia, and that could cause a horrible conflict in the region.” 

Half moon at bay

The consequences of persistent inequality are with us today.  They appear to be pushing Bolivia towards civil war in slow motion.  Today there was a brief flutter of news about the situation because Evo expelled the American ambassador, and the U.S. followed suit, but in general you've got media silence in America.  The split is between the central government and “autonomists” in the “Media Luna,” which is marked off in dark green in this map taken from Mark Weisbrot: 

Things are bad.  How bad?  American Airlines just stopped flying to the country.  Autonomists in Santa Cruz have seized control of most federal offices in the province.  Tarija — which produces 60% of Bolivia's natural gas — experienced bloody riots yesterday, where autonomists seized the customshouses and airport and federalistas (my term, not a Bolivian one) blew up the governor's parking garage.  Meanwhile, the nightmare that my Brazilian and Bolivian colleagues discussed in Venezuela?  Well, it came true for about 12 hours. 

Brasilia is reacting in a manner that could best be described as confused, but understandably so.  On Tuesday, the Brazilian foreign minister committed a Kinsley, when he stated that if Morales can't secure the pipeline, then his government will be forced to open relations with the Media Luna.  Today, however, the Brazilian national security advisor reiterated Brazil's position that Bolivia has but one government and intimated that his government might send troops to support Evo. 

So what's it all about?  I'm sure you all can guess, but a rough overview is below the fold. 

Inequality and history

I present to you new never-before-known knowledge about Latin America:

This simple chart masks a heroic effort at data collection that took the author to at least seven different countries and ate up a year of her life tirelessly searching through badly-organized archives.  We now have systematic data on nominal wages and land rents in Latin America where before we had just conjecture and guesswork.  More importantly, we now have more understanding as to why Latin America developed such high and persistent levels of inequality.   

More here.  Questions and comments?  The author reads this blog.

Carpetbagging

I'll admit it.  I give money to this guy, who's running for office in a state that I've never been to.  (I've been to Illinois, I've been to Iowa ... boyoboy have I been to Iowa ... but never north.)  I'm even attending a fundraiser he'll be throwing in Cambridge next week.

But his opponent, well, that dude has a thicker Brooklyn accent than I do, so I feel okay about it.  And as you'd expect, my guy's advertisements are, like, totally awesome.

Policy of Attraction, part 2

  The Philippines came under American military rule in 1898.  In 1902, Congress authorized a civilian government known as the Philippine Commission, which ruled the place until the Philippine Autonomy Act of 1916. 

 

By the admittedly low standards of colonial governments, the Philippine Commission ran the islands rather well.  It spent heavily on infrastructure and education.  It purchased rice overseas during shortages and sold it at subsidized prices.  It ran a wide array of public enterprises, including a credit system.  It even ran an agricultural research program that managed to double crop yields. 

How did it pay for this?  By taxing the Philippines quite highly by contemporary standards.  Strangely, an entire literature has developed around the idea that the Commission government undertaxed the Philippines.  That literature simply happens to be wrong.    

Doug leaves Burundi

Doug should be back in Germany by now.  He spent his last day in Burundi by the shores of Lake Tanganyika, thinking about tourist potential and the mind-boggling idiocy of the Belgian empire.

I wish him an easy trip home and a wonderful time with his growing family.

Oh boy

This was not good.  Not good at all.

Am I overestimating the GOP?

The GOP has been trying to keep Sarah Palin away from the press ever since her selection.  The McCain campaign went so far as to say that there will be no interviews “until the point in time when she'll be treated with respect and deference.”

Ridiculous?  Of course.  Playing badly with the electorate?  No doubt. 

So today the campaign reverses course, and says that she will sit down with Charlie “Lots of Americans make $200,000 a year” Gibson.  The standard Democratic take on this is that the McCain campaign has been forced into realizing that they'd made a bad decision to keep her away from the press.

Possible.  Or perhaps the campaign is just yet again lowering expectations.  “If we make everyone think that we're afraid she can't handle an interview, then they'll be all wowed when she goes on and merely fails to throw up over herself!”

Then again, I might be overestimating the GOP's electoral savvy.  It's possible, I suppose.

Clever fake movie trailers

I really liked 28 Days Later, dumb as the concept was.  (I give all horror/thriller/sci-fi movies one silly Macguffin.  I give action flicks several.)  I seriously hated 28 Weeks Later.  The latter fell into not one but two traps of the bad horror movies:  not only one but several characters suffered sudden attack of the stupids, and not only one but umpty-scrump random events had to go wrong for the horror to unfold correctly.  That kind of killed the last half for me:  the aerial shots of fuel-air explosives devastating London didn't make up for it.

So I really didn't care that Danny Boyle had dropped hints that he was going to make 28 Months Later and set it in Russia.  Until the following utterly-unofficial fake trailer came to my attention:

Yes, it's silly, but I like this kind of silliness.  And, who knows?  Maybe it will be set in Russia, and maybe Boyle will get the Russia setting right.  The chances of me seeing 28 Months Later just jumped from zero to something, well, greater than zero.

Doug in Burundi, Part 9

Doug discusses three separate Burundian issues in his penultimate post in the Burundian series.  The first topic concerns the country's ethnic divide.  It's pervasive, but considering recent history the story is remarkably positive. 

The second topic concerns customs duties.  Burundi, like many African countries (and a few Central American ones) relies heavily on trade taxes for a quarter of its government revenues.  This is the unheralded elephant in the room during free trade discussions.  These countries have a pressing need for more public revenue, to build infrastructure and pay judges and carry out very basic state functions.  Yet they lack the administrative capacity to collect high levels of internal taxes.  Borrowing to build a state could square that circle, in theory; in practice, that hasn't worked out so well.  So what to do?

One possibility is to make like Angola or Mozambique, both of which have effectively handed control over their customs administration to foreigners.  (British foreigners, at that.  Crown Agents, whose flag is pictured above, specializes in running revenue collection in other countries.) 

That sort of empire-by-invitation doesn't seem to be on the table in Burundi, however, although one might think that the French government might be able to play a more pro-active role, if it wanted to.

The third and final topic concerns an issue I find fascinating:  how do banks function in an environment where the politics is unstable and the rule-of-law close to nonexistant?  I wrote my first book about that, and it's fascinating to watch a Togolese (or is it Nigerian?) bank and Burundian politicos deal with the same issues today.  Ecobank is an institution that bears further watching.   

Doug in Burundi, part 8

Here Doug discusses what cheap labor really means on the ground.  And he means cheap labor.  According to the U.S. State Department, workers in Burundi received on average 1,500 francs per day, or $1.40.  Since a 12-hour day wouldn't surprise me, Doug's estimate of 20 cents per hour might even be high.

You don't need to go to Western Europe to see just how poor that is.  To give an example with which Americans are familiar, production workers in Mexican maquiladoras cost US$2.64 per hour in 2006.  Production workers in all Mexican manufacturing cost US$2.75.  Total hourly direct pay for all employees (including benefits but not taxes and other social charges) averaged US$3.32 per hour.  (That'd be 5,752 pesos per month.)  Even farmworkers in the country's northern states make about US$1.50 an hour.  In short, Burundi is impoverished compared to Mexico.

Anyone who spends time in Latin America can see some of the effects of cheap labor, but nothing on the scale of what Doug describes.

Who cares about Georgia? Not the markets.

There has been a lot of talk recently about how the markets are punishing the Russian Federation for its actions in Georgia.  Dan Drezner, for example, writes:  “An estimated $21 billion left Russia last month, and the RTS Index has declined by more than seven percent this month ... this is a pretty high price to Russia to pay for creating two unrecognized buffer states.” 

It isn't just political scientists.  Investors also believe that the markets punish aggressors on their own.

I am not so sure.  No, let me be stronger.  I am almost positive that Dan Drezner is wrong about the economic damage that Russia is taking from its actions, even if I agree with his assessment of Russia’s weak political position. 

Markets do not punish successful aggressors.  Other countries can impose sanctions that punish aggressors, and that will hurt the markets.  That logic, however, runs exactly the other way from the sanguine belief that our brave new world of globalized markets contains automatic mechanisms that contain interstate war.

This chart shows the evolution of four different Russian equity indices.  The RTS-1 that Dan referred to in his post is in dark red.  The date that the Georgians started the war (August 8th) is represented by the bright red vertical bar.

Russian indices were in decline well before the war started.  If anything has happened since, it is that the decline has slowed.  This is not consistent with the hypothesis that the markets are punishing Russia for the war.

Below the fold is a closer look at the same data.  The closer look makes it even clearer that the markets are not punishing Russia for invading and carving off chunks of Georgia.

Observatorio Argentino 6: a not-crazy Argentine megaproject

Angry Argentine commuters in the B.A. suburbs of Merlo and Morón burned trains and occupied the tracks yesterday.  They got angry when a train conked out right in front of them.

I mean really angry.   

 

The good thing?  This incident might finally kill the Tren Bala.  The mayor of Buenos Aires, Mauricio Macri, has now come out in clear opposition, as did a congressperson allied with President Fernández, Martín Sabbatella.  “It remains clear that this country’s priority cannot be the Tren Bala.”  Better still, the head of a major trade union also allied with the President, Hugo Yasky, also came out against the project, calling instead for more investment in the collapsing commuter rail system.

But not all Argentine megaprojects are dead.  The day before the riots in Castelar and Merlo, President Fernández declared her support for a 13-mile train tunnel through the Andes to Chile, at an estimated cost of US$3 billion.  Unlike the Tren Bala, a cargo link between Chile and Argentina is an excellent idea.  Most of the financing will be private, the current road link (which I've driven) is clearly inadequate, and the economic benefits are clear.  It won't be as cool as a bullet train, but it will help generate jobs and raise incomes. 

Plus, the Buenos Aires rail system desperately needs to be fixed.  Upgrading commuter rail isn't a marginal wouldn't-it-be-nice project, the way it would be in New York or the Netherlands.  Rather, upgrading commuter rail is something absolutely necessary if Buenos Aires is to remain a functioning metropolis in the future.

So while I don't generally approve of burning public property, sacking offices, or overturning cars, this particular angry outburst may have done the country some good. 

That poor man

I really feel sorry for John McCain.  I honestly do.

That was a good speech.  No, "speech" isn't right.  That was a good talk.  Other than one (maybe more, I don't remember) strange blurt about lower taxes, and a couple of scary statements about his foreign policy views, it was patriotic, communitarian, and American. 

If John McCain had given that same speech to a group of Democrats, without the tax-cut tic and the terror-war goofiness (and, yes, the lies about Barack Obama's tax plan) they would be on their feet cheering.  Without saying "community organizer," he praised community organizers.  There were no specifics, there was nothing concrete, there was just patriotism.

And he got nothing from his crowd.  Worse yet, he'll get nothing from Democrats, because he opened by praising "the President," and he has spent the last four years running away from all of his liberal progressive positions, reinforcing his crazy conservative ones, and adopting even crazier and more conservative ones from the most selfish and unpatriotic wing of the Republican Party.  In other words, he's been weak, and he's been wrong.  And he's still weak.

He wasn't weak in a prison run by the Democratic Republic of Vietnam, but he has been pathetically weak in the prison that the Republican Party of America has become.  So I still don't respect him.

(I have to add here that his foreign policy instincts are and have always been crazy.)

But I like him now, and I feel very sorry for him.  Why?  Because if he had truly put his beliefs ahead of his ambition in 2002 or 2004 and switched parties, he would be a conservative Democrat today.  As a conservative Democrat, he'd probably be a sitting Vice-President running for re-election.  And if he weren't a sitting Veep running for re-election, there's a good chance that he would be the Democratic nominee for President, with the McCain-Obama ticket cruising towards a landslide.

Instead he's prostituted himself, and given into the worst of his impulsiveness, a rare and awful combination. 

I won't vote for him, because he does not deserve my vote.  But for all ten people who read this, I would like to echo the call he made in the middle of his speech.  Become a teacher, join the armed forces, work in the federal bureaucracy, organize your community, be a good American.  Or, heck, a good Canadian. 

P.S.  I think I live in a different universe from the commentariat, because Sarah Palin's speech just seemed, well, nasty and juvenile.  And that's even before the two blatant lies, in addition to the multiple misrepresentations.  So why all the vapors, I dunno. 

I'm sure you've seen this, but ...

... it is still worth showing.

MSNBC at the Republican National Convention. Chuck Todd, Mike Murphy, and Peggy Noonan commenting. An open mike was on during the commercial break.

Mike Murphy, talking about Sarah Palin:  You know, because, I come out of the blue-swing-state-governor world. Engler, Whitman, Tommy Thompson, Mitt Romney, Jeb Bush. I mean, and these guys, this is all like how you win a Texas race, you know, just run it up, and it's not gonna work.

Peggy Noonan: It's over.

Mike Murphy: Still, McCain can give a version of the Lieberman speech and do himself some good.

Chuck Todd:  Don't you think the Palin pick is insulting to Kay Bailey Hutchison?

Peggy Noonan: I saw Kay this morning.

Chuck Todd:   She's never looked comfortable up there.

Mike Murphy: They're all bummed out.

Chuck Todd:   I mean, is she really the most qualified woman they can obtain?

Peggy Noonan: The most qualified? No. I think they went for this, excuse me, political bullshit about narratives.

Chuck Todd:   Yeah, but what's the narrative?

Mike Murphy: I totally agree.

Peggy Noonan: Every time Republicans do that, because that's not where they live and it's not what they're good at, they blow it.

Mike Murphy: You know what's the worst thing about it, the greatest of McCain is no cynicism, and...

Chuck Todd:   This is cynical, and as you called it, gimmicky.

El Hugo del extremo norte

In a previous post, I wrote that total taxes as percentage of revenues on hydrocarbon extraction in Alaska were 25 percent.  Well, I've just had a chance to play with the data, and it turns out that my estimate was flawed.  (It failed to take into account that profit margins in Alaska are substantially higher than the overall profit margins in hydrocarbon extraction across the United States.)  Direct taxes on Alaskan oil & gas actually turn out to be 32 percent of gross revenues ... 33 after Governor Palin's tax hikes. 

One-third of revenues is a nice round number that you can use to put hydrocarbon tax burdens in other countries into perspective.  Bolivian taxes, for example, had fallen impressively low by the time Evo Morales assumed office, and some revision was almost certainly in order.  Time will tell whether he found the right level, and the means by which he raised taxes caused unnecessary uncertainty, but a substantial tax hike on the industry was the right thing to do by the people of Bolivia.  Regardless of whether you're a Bolivarian.

I almost feel sorry for this guy.

Almost.  But not quite.  Watch a GOP apparatchik try to defend Sarah Palin's experience and readiness to be President of the United States.

Alaska is American!

I just want to say, unequivocally, that I oppose the independence of Alaska, and should a minority of that state impose secession, I will rejoin the Army and risk my life, fortune, and sacred honor to keep it part of the United States.

Reason to fear

I worry about Venezuelan government spending.  I just don't believe that oil prices are going to stay this high for long.

I could be wrong, but one of the things I learned in Venezuela was that Belize started producing oil in 2006.  They quite literally found oil on some dude's farm.  Production is now up to 3,000 barrels per day.  That's about 15 trips per day for a typical tanker truck.

Even more strangely, Venezuela gives Belize money through Petrocaribe.  Chávez, I would think, gets even less out of his spending there than in the rest of the Caribbean. He is, in essence, giving away money to up global oil production with only a very small claim on the corresponding returns. 

So, nothing in the global scheme.  But when prices are so high that Belize gets into the oil industry, you've got a tidal wave of other producers waiting in the wings.  They'll be high-cost, of course, so given the increase in global demand the days of $20-per-barrel oil are over.  In fact, I'd bet that the days of $40 oil are over.  But I wouldn't bet on triple-digit prices being with us for much longer.

Strangely enough, I'd like to be wrong.  For the planet.   

This is just wrong

Carlos will remember my tales of the disturbing town of San Juan Chamula, Chiapas.  The misshapen crosses, the angry children, the dirty market, the uprooted tree, the church in the plaza, the candles, and the offerings of the holy Coca-Cola to the water god.

You do not want to go there.  Go infiltrate the FARC instead. 

Mérida, Yucatán, is several hundred miles away, and a very pleasant town.  Or so I thought when I last visited the place, which must of been 2000 or thereabouts.  I mean, ritual decapitations by death-worshipping criminal gangs?   

Maybe I should have watched the X-Files more closely.

There really was a revolution

My previous post on the Bolivian hydrocarbon nationalization of 2006 made it seem like nothing changed.  And in terms of the security of supply (in price or quantity), not much did.  Ditto, the industry wasn't really nationalized.  Rather, the decree gave Bolivia's state hydrocarbon company, YPFB, a mandated 32% share of the output of the San Alberto and San Antonio fields, on top of a 2005 law that cancelled the preferential tax treatment the previous law had granted new gasfields.  Thus, Brazil's equanimity in the face of “nationalization.”

In other words, the nationalization was in fact a tax hike, and a rather large one.  According to work by Luis Carlos Jemio, the state's take of gross revenues jumped from 28% in 2004 to 41% in 2005 and 65% in 2006. 

How high is that?  Well, I just spent more time than I should have estimating the total value of taxes (including corporate income taxes) paid to the federal and state governments by oil and gas companies operating in Alaska.  The result?  In 2006, they paid 25% of their gross revenues (or 50% of their declared profits) in taxes and royalties.  Now, these estimates do not include gasoline taxes, or any other taxes on refined products ... because the Bolivian figures don't either.  They also do not include the tax hikes that the Palin administration just pushed through, but those hikes will only up the figure on gross revenues to 26%.

In other words, Bolivian tax revenues went from around the level found in Alaska to almost 2½ times that level.  There really was a revolution.  (And now you understand why the gas-producing provinces in the east are so damn upset.)

Was it a good idea?  I'm undecided.  Investment in exploration boomed in 1996, with the passage of the law favoring new fields, but started declining in 1999 and was down two-thirds by the time 2005 rolled around.  If one makes the assumption that geology drove that decline, then Morales hiked taxes at just about the right time.  If no more investment is coming anyway, why worry about discouraging it?

To be fair, foreign direct investment in exploitation (not exploration) did collapse in 2006.  That said, Bolivia could potentially make up for that via service contracts and the like.

The reason that I'm undecided is that I don't know how much of the exploration decline was due to geology, and how much was due to the increasing political instability in Bolivia.

But I'm not that undecided.  In this case, I think a massive tax hike on the industry was fully justified, and probably the best thing for the people of Bolivia.  Now if only they can figure out how to divvy up the new revenues without blockading roads or shooting at each other ...   

Doug in Burundi, part 7, time for some coffee

Doug discusses the Burundian coffee economy here. 

A decade ago (or thereabouts) I got involved with an NGO that advised Chiapan villagers in the area off Mexico-199 between Paleque and Ocosingo. To get there, you had to leave the paved road, travelling along dirt paths maintained (and unofficially tolled) by the locals.  The agricultural areas were served by little "towns" barely worthy of the name, usually consisting of a church (often Protestant — there had been a great deal of religious fighting in the area, and towns tended to be segregated) and a general store.  Electricity was scarce, although cellphones worked fine in some surprising places — the Mexican army made sure of that.

The chief cash crops were cacao and coffee.  More below the fold.