The Power and the Money

Calling for suggestions on day-trips from Manila

 John Nye and I just gave a joint presentation at the University of the Philippines in Quezon City.  The title was “Will Elites Permit Reform?” although neither of us talked about that exactly.  John presented a big picture view of economic growth and the development of limited governments in the West over the past half-millennium, while I talked about land reforms in the Philippines during the first two decades of American rule.  The audience was great, with a lot of very good questions, including one from a graduate student who pushed me on the ambiguousness of our results — he generously called them only “slightly” ambiguous — and another from a fellow at the law school who quite brilliantly suggested that we look at local government tax deeds.  I’ll get into the details of the suggestion whenever I get around to actually talking about the paper itself, and explain why it was such a good one, but that’ll wait for later.

Right now I just want to know if anybody has advice on an interesting half-day trip from Manila.  I’ve been to Batangas and Tagaytay, but that’s it for places within a three hour drive.  Tomorrow’s my free day, and I’d like to get out of the metropolis and see someplace I never have before.  Any suggestions?

An idle thought from Pasig City

  Proposition:  As traditional written science fiction fades away as a popular genre, it becomes increasingly acceptable to cite it in intellectual and academic circles.

Proximate inspiration from Brad Delong, with secondary impetus from this event with Charlie Stross and Paul Krugman.  (What the hell did happen to my post about Charlie?  I swear, he has magically erased it from the internets.) 

I'm not sure this rises to the level of a great debate attempt.

Was conquering the Philippines worth it?

  When you're a recreational blogger (procrastinational is more accurate) every so often an issue that you know a lot about is raised among the Big Dogs of the blogosphere, and for a moment you're annoyed that they didn't bother to check you out.

That's universal, I'm sure.  In my case, though, it's immediately followed by relief.  I don't want this place to be well known.  I mostly use it to establish a public record of my ideas, most of which will go into the book(s) I'm working on.  I've had a few bad experiences with tossing out such ideas sans public record.  Truth is, most of them are between silly and wrong, but every so often there's something good buried in there.

This applies to links to other people's ideas.  The linking makes me think about them, and how they apply to the stuff I work on.  It's why I don't see the point in link dumps, as opposed to specific links.

Which is why I'll link here to Matt Yglesias's question:  “Was conquering the Philippines worth it?”  In it, he suggests the following:

I mean, suppose the Philippines had obtained independence from the United States in the 1890s rather than the 1940s. How would my life be worse? How would any American’s life be worse? What “long-term benefits” actually accrued to us as a result of the counterinsurgency effort?  It seems to me that unless you look at victory and conquest as being their own reward, it’s hard to see any. Anti-American rebels lost, but we didn’t really win anything of note. We spent a lot of money, suffered some casualties, killed a lot of people and in exchange got some military bases that were overrun by the Japanese as soon as it looked like they might be strategically useful.

I have my own opinion, of course.  I might even give it later, although some of my thinking can be found here and here.  And I do think that one should take into account a counterfactual view of the Philippines before issuing judgment.  “Fifty years of Hollywood” might have improved the lot of the Filipinos, and it seems reasonable for a retrospective to seriously examine that possibility rather than reject it out of hand.   

So, before I give my own opinion (which is, as so often, changeable), what are your thoughts?

Magnanimidade para Paraguai

  Brazil just renegotiated its energy relationship with Paraguay, to the tune of $240 million per year.  The Paraguayans will now be able to sell the excess capacity from the Itaipú dam at something “close” to the Brazilian market rates.  (The concept of a “market rate” for electricity isn't as simple as it sounds.)  The deal also cuts out the Brazilian middleman.  In concrete terms, the price they receive will triple.  Moreover, the Paraguayans will get a new $400 million transmission line, financed by Itaipú revenues.  In other words, the Paraguayans will pay for only half the cost.  Symbolically, Itaipú’s financial offices will now be opened to Paraguayan nationals, at least in theory, and the Paraguayan government will get to look at the books.  The agreement punts on Paraguay’s right to sell electricity to consumers in third countries.

$240 million is a substantial number for Paraguay.  It’s about 2% of the country's total GDP in 2007, 4% of its exports, and 11% of its government revenue.  That ain’t nothing.  On the other hand, it is pretty close to nothing for the Brazilian government. 

And what does Brazil get in return?  Well, Paraguay is has long been to Brazil what northern Mexico has recently become for the United States:  a source of lawlessness and smuggling.  

Given the new administration is friendly to Brazil, and about as trustworthy as any Paraguayan government in decades (heck, since Francia) more resources for it means more to be spent on, say, customs enforcement or law and order ... and yes, Brazil has and will continue to pressure Paraguay regarding law enforcement.  At some point in the future, the Brazilian government may want and need to turn Mercopol into a serious organization capable of operating inside Paraguay, and it will be extremely useful if Brazil is viewed as a helpful neighbor and not an imperialist aggrandizer. 

Plus, it gives Brazil an ally in its continuing attempts to turn Mercosur into a de facto Brazilian empire.  After all, Brazil wants to give the Parlasur more power, and Brazil plus Paraguay would have an incontestable majority in that body.

And it sends a signal to Bolivia:  last time, we warned you that we had a very big stick, and would peel away half your country if you got too obstreperous.  Now, we say there are benefits for cooperation.  Play nice, Evo.  In the inestimable words of Porfirio Díaz, “pan y palo.”

Canada, I tell you, if American governments were half as smart, y’all could kiss your sovereignty goodbye. Finland, aren’t you glad the Russians ain’t nowhere as slick?

Chinese oil expansion

  What are Chinese state firms doing in Africa?  Among other deals, last year the CNPC agreed to get the right to the Agadem oil field in Niger in return for the construction of a 20,000 bbd oil refinery in the country.  It will also build a pipeline to export whatever it finds, although the route is still unclear.  And now the Chinese government has announced that it might start to subsidize the acquisition of natural resources even more.  Well, there are economic reasons to think that such subsidies don't make all that much sense.  So what is China doing?

I think there is an answer.  In reverse order:

(1)  Price hedging.  China wants to hedge against another oil spike.  Inasmuch as the Chinese will be able to push around African states, and keep them from expropriating the surplus, this would work.  And China might be able to do it.  States aren't unitary actors.  Bribing individuals within them brings value; recently the Chinese were involved in a bribery scandal in Namibia.  That one wasn't energy-related, but leaders can be bought, and so can influential actors within weak states.

(2)  Mad Max insurance.  What if the global trading system collapses?  Well, if the Chinese government has control of the marketing tools,and can plausibly threaten to destroy or interdict them, then it may have the ability to insure that its consumers have access to oil.  Moreover, it may be assuming that foreign states won't have the ability to find alternate markets in the event of such a collapse.  The rub?  I'm trying to picture such a collapse, short of a third world war.  It isn't coming to me.  Maybe a war that China isn't involved in?  I don't know.    

(3)  Production.  Maybe Chinese officials believe that oil investment won't increase as much as they need it to.  Oil companies sell project management skills more than anything else, but are subject to political risk.  Perhaps (1) is wrong, and the Chinese assume that African governments will hose them in the event of oil price spikes ... and perhaps they don't care, because the more oil that Chinese state firms can bring on line, the less likely such spikes will be.  If rational private actors won't make the investments, then the Chinese government will.

I'm leaning towards (3), but I don't know.  Thoughts?

Cha cha con ass

  On my one trip to the Philippines, the nation suffered an attempted coup just as I deplaned.  In Mindanao, On another, Abu Sayyaf started chopping off heads right before I got to Mindanao.  And then there was this.  So the country should maybe be worried about the fact that I just returned. 

In fact, the papers just announced that the city would be shutting down for tomorrow’s “SONA,” or “State of the Nation Address” from President Arroyo.  Mass demonstrations have been called, and the military in Manila has been placed on “red alert.” 

Why the fuss?  Well, you can sum it up in four short syllables:  cha-cha con-ass.  “Cha-cha” stands for “charter change,” or constitutional reform.  The reform in question concerns Article 12, Section 7, which prohibits foreigners from owning land.   H.R. 1109 calls for convening Congress as a constitutional assembly in which 3/4ths of all members would be needed to pass an amendment.  In effect, this would neuter the Senate, since there are only 24 senators against 242 representatives. 

The fuss, however, is not really because foreigners might be permitted to own land.  Rather, the fuss is over the possibility that the Con-ass might vote to switch the Philippine government to a parliamentary system, which many see as a way for President Arroyo to remain in power as prime minister, instead of stepping down as the current constitution requires.   It hasn’t helped that the National Security Advisor, Norberto Gonzalez, breached the idea of a “transitional government” headed by the Chief Justice of the Supreme Court, during which a new constitution would be drafted in time for the May 2010 elections. 

So we will see what the President has to say tomorrow.  It seems as though I’ll get another day to work in my hotel room, which is not a bad thing.

The economic history blog

  Some interesting stuff, some boring stuff, according to taste, but all good stuff.  Found here.

Waterloo on the Choluteca?

  This is not helpful.  It isn't that I'd expect thoughtful foreign policy analysis from Senator DeMint, but holding up our ambassador to Brazil in order to try to get the Administration to oppose the policy supported by entire rest of the hemisphere does nothing for anybody.  Is there really a domestic return to this sort of posturing?

In my own fair and balanced way, however, I'll add that the absolutist stance recently taken by the Brazilian foreign minister is also not helpful.  Like Senator DeMint's calls to have the U.S. back Micheletti, Celso Amorim's demand for “the unconditional return of the deposed Honduran to the presidency” is also aimed at some domestic audience.  I suppose that the Brazilians should enjoy their ability to make such statements unworried about their international consequences; with the country's relative power growing, and the U.S. slowly withdrawing, they won't have that freedom much longer.

The Honduran government just expelled Venezuelan diplomats.  It's sort of funny, in a way, since those diplomats didn't recognize the Honduran government to begin with.  That, at least, is comic opera.  What is more worrisome is the recent statement by said diplomats that they aren't leaving.  Meanwhile, Zelaya is in Nicaragua making vague threats and stirring up some anger on the part of that country's beleaguered opposition. 

I think the pressure is going to get ratcheted up.  One possible sanction that the U.S. could quietly impose without tanking the Honduran economy would be to suspend business and tourist visas.  Of course, what we don't know is whether the block to a compromise is on Micheletti's side or on Zelaya's ... and without that knowledge, it's hard to figure out the best way forward.

UPDATE, JULY 22:  The recent compromise talks have collapsed.  The Supreme Court appears to have rejected a proposal put forward by a representative of the Micheletti government.  Then again, the attorney-general has issued a 16-page indictment against Manuel “Mel” Zelaya.  Congress has approved a budget of $5.9 billion, eight percent lower than last year.  It counts on $554 million in foreign financing; it isn't clear how the sanctions on Honduras by multilateral lending institutions will affect that, since they seem to be counting on around $100 million in such financing, and access to other private funds is often contingent on lending by the multilaterals. 

For those of you who want a run-down on what to read:  El Heraldo is the conservative newspaper.  Consider these two simultaneous headlines:    “People’s bloc opts for neighborhood protests” versus “Today, great march for patriotism and valor.”  No points for guessing which favors what.  La Tribuna is a little more fair and balanced, although it is also fairly conservative by American standards.  El Tiempo is okay, I'm not thrilled by its coverage. 

How Canada works

  Want to know more?  I'm not sure that everything in the series is correct, but it's a good place to start learning more about how the country formerly known as a “Dominion” regulates its economy.

Speaking of which, y'all really do need a name.  Just plain “Canada,” well, it lacks dignity.  Get a “Commonwealth” up in here, or maybe a “Federation.”  Something, people. 

The Philippine legislature, corrected

  I while back, I ran a post about upper legislative houses in the Americas, including the Philippines, and a later one on Bolivia.  It turns out that I got the history of the Philippine legislature wrong.

The Constitution of 1935 established a unicameral National Assembly.  The reason was not that the drafters wanted a unicameral legislature.  (Although I'll be damned to understand why they didn't want one.)  Rather, the drafters wanted an upper house, but couldn’t decide on how it should be apportioned.  Delegates from underpopulated provinces wanted equal representation for each province.  Progressives proposed a Senate elected by proportional representation.  Conservatives wanted to keep the existing 12 senate districts, each with equal representation.  Each proposal lost in a vote.  Unicameralism emerged by default.  (See here, p. 144.) 

In 1937, President Quezon started to raise the bicameralism issue.  Publicly, he claimed that he feared that a unicameral legislature could create an “oligarchy.”  Privately ... well, who knows?  Ricardo Jose of the University of the Philippines believes that Quezon worried that a unicameral legislature could more easily challenge presidential authority, especially if a political enemy controlled it. 

Whatever the reason, Quezon got the Assembly to approve the change to bicameralism on September 15th, 1939.  (The amendment also changed the presidential term from six years to four and allowed re-election.)  How was the new chamber to be elected?  Article 4, Section 2:  “The Senate shall be composed of 24 Senators who shall be chosen at large by the qualified electors of the Philippines, as may be provided by law.” 

In other words, every three years Filipinos picked twelve names off a list of Senate candidates.  The top twelve vote-getters became Senators.  Sort of like proportional representation, only not.  The amendment passed the required popular referendum on June 18th, and President Roosevelt approved them on December 2nd.

As so often, however, the devil is in the details.  The 1941 election introduced “block voting,” in which a voter could check a box next to the name of a party, thereby automatically giving each of that party’s candidates one vote.  Under that system, a party that could muster a plurality would sweep all the Senate seats.  Unsurprisingly, Quezon’s Nacionalista Party managed to pull off just such a feat. 

For reasons unknown, the Philippine senate is still selected by at-large elections.  Yet another inexplicable upper house, out of so many that America has given the world.

Happy Moon Landing Day!

  That is all.  Oh, and Brian Kilmeade apologized. 

OK, that isn't all.  The truth is that while I can see absolutely no good reason for there to be a permanent human presence on the Moon, a small irrational part of me finds it both depressing and ridiculous that there isn't one four decades after humanity first set foot on its surface.  Where's my Pan Am ticket?  It's 2009 already, for crying out loud!

So I'd be happy if somebody could figure out a reason to settle the Moon.  Which I kinda doubt they will.  I mean, you'd have to live in a tube or a cave or something unpleasant like that.  And what would you sell to the people back on Earth to get the money to pay off the other people back on Earth who put up the cash to build that tube you're living in? 

But you never know.  Something might turn up.

That is all.

Ain’t gonna study war no more?

  John Mueller repeats in this month’s Political Science Quarterly an argument that he’s made before:  war is becoming rare.  Developed countries no longer fight.  Underdeveloped countries rarely fight.  Imperial wars have disappeared with empires.  And civil wars are becoming rarer. 

Even if you want to quibble with Mueller’s typology (maybe Gulf War 2 and Chechnya are imperial wars, the Rwanda-Congo interventions could be called interstate wars instead of civil ones, perhaps you want to call the Caucasian countries developed), the data are pretty incontrovertible. 

The world has become steadily more peaceful since 1989, probably since the mid-1960s.  Mueller has some ideas about the causes of this decline in bellicosity.  I hope Mueller is right.  For while honesty compels me to admit that I would like to add a third (and fourth and fifth) picture to the sequence shown above, I must also admit that I do not want any of those additions to see anything even resembling combat. 

Therefore I ask you:  in the case of war, does the performance of the past two decades predict future results?

Sotomayor, soccer, and all that

  I’m all for ethnic solidarity and all that, but Senator Jeff Sessions is taking it to a whole ‘nother level at the Sotomayor hearings.

Anyway, interesting as the linked story is, I just wanted to post a picture of me in this shirt, which I wore to the World Baseball Classic games in Mexico City.  (The picture above is at my favorite bistro in the D.F.)  I will not be wearing it to the U.S.-Mexico World Cup qualifier in Azteca Stadium on August 12th.  In fact, while I will be rooting for the U.S. team, I also want to live, and so will dress in green and red. 

Patrick, Mike, Carlos, what think you?  Am I wimping out?

National health care, updated

  Megan McArdle, whom I respect, linked to a piece by Glenn Reynolds that basically says that his wife and father would be dead while his daughter and mother would have a much-impaired quality of life under socialized medicine.

But I have a question.  Two, actually.

(1)  The treatments for Reynolds' mother (hip replacement) and father (radioactive prostate cancer implants) were developed for a patient pool that is mostly subject to Medicare.  Which is socialized medicine by most definitions.  Why doesn't that fact show that the argument is fallacious?

(2)  If other countries generally force healthy young women to die or live impaired lives, why doesn't that show up in any of the comparative quality-of-life studies?

A third, fourth, and fifth might be:  Does Ms. McArdle really believe this argument?  If so, why?  And what does it have to do with any of the actual health care reforms that are on the table?

Meanwhile, Matt Yglesias points out why I have trouble staying friends with doctrinnaire libertarians.  This one's for you, Guy.

UPDATE:  Matt Miller has an interesting column in today's Financial Times.  He points out that save for the public option, the current reform plan essentially extends coverage using a basic template designed by Mitt Romney in Massachusetts.  In addition, one of the financing plans on the table (not my preferred one, I must admit, nor the President's) was basically proposed by John McCain.  Finally, the eye-popping cost is propaganda, caused by people's emotional reaction to the t-word; the right way to think about the cost is that it is 0.5% of GDP or 3% of total healthcare spending.  In short, the way to a compromise that should attract lots of Republican votes is obvious.

But I will add that since we aren't going to get any Republican votes, I will be very annoyed at my party and President should we get a bill that does not include a public option and that is not financed by a surtax on high earners like, uh ... really? ... my wife and me.

Demography matters, and a music video

  There is an interesting (if rarely updated) blog called “Demography Matters.” It's hit a few interesting topics lately.  Randy McDonald is the driving force behind it.  For those of you who don't know him, he wrote the defining takedown of the whole “Eurabia” nonsense, aka the idea that immigration and differential birthrates will eventually give Europe a Muslim majority.  But the blog is a lot more than that.

Here is a discussion of Greenland.  Short version:  considering the country's dependence on Danish expats for skilled labor, even a non-independence independence of the sort negotiated by other microstates could lead to disaster.  The population is shrinking despite high birthrates.  Maybe they'll get lucky and find oil.  More likely they will remain a dependency of Denmark forever, most likely de jure but definitely de facto.

The blog also recently discussed Iran.  Short version:  looks like Europe!  Crashing birthrates could fuel an economic boom if only the place could get the policies right.  In comments there is an interesting discussion of the fact that American birthrates have stayed above replacement ... and that much of that difference is because urban birthrates in the U.S. aren't appreciably different from their suburban or rural equivalents.  The really weird fact?  Canadian birthrates are crazy lower than U.S. ones, even in such similar places as Washington and British Columbia. 

Finally, it presents a scary version of Cuba's future, in which the country enters a demographic death spiral.  All it lacks is a projection of the worst case scenario: what would Cuba's population and age pyramid look like in 2050 if it goes the way of Ukraine and stays there?

Below the fold is a music video.  It is for Randy, for reasons he understands.  Essentially, while not my cup of tea, it shows what can be accomplished in his preferred genre in both aural and visual terms when attempted by two rather accomplished artists.  Enjoy.

Speculation in world oil markets?

  I report; you decide.

Now, these figures don't include stocks of refined oil products.  Perhaps speculation is easier in final products linked to the price of crude, rather than crude?

These figures don't include Chinese stocks, which are available but are also a bear to download and input.  They do include stocks held overseas, or on tankers.

Of course, Chinese stocks aren't the only missing figure.  Oil producers can speculate by leaving oil stocks in the ground:  e.g., cutting production.  That said, I'm not sure that's interesting; we already know that production declines will drive prices up.  

So can we see evidence for or against speculation in these graphs alone, or do we need more data?  I'm sure I was sending a signal to the Saudi photographer who took this picture; I'm just not sure what.

Great debate attempt #5

  Childless households making $200,000 a year in expensive Northeastern cities are undertaxed, and the acquaintance mentioned here gets no sympathy from me.  He is getting all bent out of shape about a tax rise of a couple hundred dollars:  4 percent of his income above $200,000.  Maybe.  And I lived in New York, I have friends living in New York, and no, it isn't that much more incomprehensibly expensive than Boston. 

My wife and I are in that category.  We are undertaxed. 

Sometimes the attitudes of my fellow citizens can be very depressing.

Great debate attempt #4: Some behavior really is random

  A few years ago, me and a friend scribbled down something we called “A pure theory of relationships,” based on a simple game-theory-based hostage model that we developed for this book. It was a joke, not meant for prime time or to be taken seriously.

And now I find that people are in fact using their time to seriously develop such models.  Me, I agree with James Kwak.  People are complicated, often driven by desires they don't understand, and small events can lead to behavior that is effectively random.  There are human situations in which people with the exact same set of outwardly observable characteristics will behave completely differently, and human situations in which a small unobservable change will cause the exact same person to behave entirely out of character.  Then add in the fact that some behavior (like, say, smoking) is addictive for some people but not for others, and exposure to the addictive trigger by the susceptible is a stochastic process. Trying to come up with a reduced-form model to predict such behavior strikes me as nuts.  Sure, you can come up with some sort of probalistic model for large populations, which is useful ... but not what the new modellers are trying to accomplish.

But what do I know? 

Finns marry other Finns? Uh, I guess so.

  Hmm.  I am somewhat ashamed to live in a country where the below is not a firing offense at a major television news network.  No matter how dumb the show may be.  I mean, in a decent country shouldn’t displays like the one below cost you so many viewers that the network simply has to let you go?  For the bottom line, of course.  (Hat tip:  Salon.) 

Apparently not in America.  That said, my wife doesn’t think Brian Kilmeade is being serious.  “He looks like he’s African, Italian, Moroccan, totally mixed up,” she says.  “Clearly a joke.”

Uh, I hope so. 

Empire versus hegemony

  Here's a working definition of the difference between empire and hegemony, abstracting from the veil of Westphalian sovereignty.  An imperial power tells its satraps, “Run your societies the way we want you to, or we will run it for you.”  An hegemonic power tells its subordinates, “Run your societies the way we want you to, or we will f--k you up.”

Working hypothesis:  for reasons of domestic politics, the destruction of the sovereign bond market in the Great Depression turned America’s foreign regime in the Circum-Caribbean from an empire into a hegemony. 

Explanation forthcoming.  The book is in progress.  In the meantime, I recommend the collected works of Suresh Naidu, a great Canadian.

How can financial speculation affect oil prices?

  The Obama Administration just announced that they may limit the ability of financial companies to engage in speculative trading in oil futures.  The reason is the recent run-up in oil prices.  I don’thave a problem with the idea.  After all, I am a conservative of a sort, in the sense that I like to limit the animal spirits of those crazy market types on principle. 

But still, I don’t understand the point.  The reason why I don’t understand the point is that I don't understand how futures trading can drive up the spot price.  That doesn't mean that it can’t; that just means I don’t understand how it might in the absence of a rise in actual oil inventories. 

What’s a futures contract?  Simply put, it’s an agreement to sell a given quantity of oil at a given price at a given date in the future.  So let’s say you and I strike up a contract that says that I will sell a barrel of oil to you at $100 in a year.  How do I make good on that contract?  One way is to run out into the market, buy a barrel of oil, and sit on it.  That will drive up the price of oil, got it, very clear.  When a year rolls around, I sell you that barrel for $100. 

A second way is to wait around until the contract is due, buy oil at whatever the market price happens to be, and then sell it to you for $100.  I do not understand how doing so could possibly drive up the price of oil.  I can vaguely sort of see how it might increase volatility:  trading on the futures market presumably reveals information (if only information about the neuroses of futures traders) and that information will be used by traders on the spot market.  When they use that new information, prices will move.  More information revelation, more price volatility. 

But seriously, people aren't worried about short-term volatility.  They'’e worried about big run ups and sudden falls.  I don't see how you can blame the speculators for those, absent big swings in inventories. 

In fact, inventory changes in the oil market tend to run against price swings.  During the recent price plunge, unsold oil piled up in stockpiles and supertankers all over the planet.  Those stockpilers were going long on oil, but in the context of falling prices.  Now that the price has risen, those stockpiles are shrinking ... and some analysts (not entirely coherently) blame the price rise on the inventory fall.

Am I missing something, or is this whole speculation story nonsensical?

An admonition to Micheletti supporters and an admonition to his opponents

  In a previous post, I mentioned Mexico in 1936 and Argentina in 1945 as possible parallels for what the Honduran military was thinking when it exiled President Zelaya instead of simply arresting him.  Steven Taylor mentions a third parallel, a cautionary tale:  Colombia in 1953. 

He raises a good point:  breaking the law in order to save it is always risky and often stupid.  But the specific parallel doesn't apply.  General Gustavo Rojas Pinilla took power in 1953 and established a dictatorship that lasted four years; Roberto Micheletti ascended to the interim presidency with a vote of Congress and seems to be waiting until the November election to hand over power to either Elvin Santos or Porfirio Lobo. 

In other words, the typical historical parallels really don't apply in this situation.  An inability to recognize that is the main reason why the OAS is botching the diplomacy.  (As opposed to the U.S., which is playing it very well ...  but very much in the national interests of the United States and nothing else.)  They keep seeing Pinochet when what they've really got is an unelected Liberal government marking time until they can hand over to an elected government ... preferably also Liberal.  If the OAS diplomats can recognize that, then they can get inside the other guy's head (and his decision loop) and start brokering compromises that will allow everyone to win.

But I have my doubts that insisting on constitutional purity and making absolute demands will accomplish anything.  Demanding that some soldiers be punished, or agreeing that Zelaya should be tried while remaining titular president, those could get somewhere.  But so far that isn't the tack the OAS is taking. 

See also my comment and Steven's response here.  The short version below the fold.

Helicopters are cool!

  Okay, so you're an accidental small businessman, who started an air-conditioning company in South Florida that did much better than you ever expected.  You save your money and set up a good life for your wife and daughter.  Then what do you do?

It's obvious.  You buy a helicopter.  Of course, that's predicated on knowing how to fly one, but that's why God created the U.S. Army.  Or barring that, flight school.

They are a lot of fun.

Here's my cousin helping my wife into her seat.

If you have $120,000 to spare, your house is paid off, and your kids' college education is provided for, I can't think of a better purchase than a used four-seat helicopter. Recommended. My wife approves.

Bad politics at the OAS, updated

  It strikes me that the diplomats trying to reinstall President Zelaya, particularly Secretary General José Miguel Insulza of the Organization of American States, are employing a lousy strategy.  The problem is that Honduras is a still a democracy.  The new government is conducting everything with an eye to the November elections, and unless the diplomats recognize that, they won't succeed.

You can't understand the coup in the context of a military takeover, because the military has not taken over and does not appear to be calling the shots.

The interim government needs to be persuaded that any compromise or backdown on their part will be a vote-winner.  There are a number of ways that could be accomplished.  The government could agree that Zelaya's expulsion was unconstitutional, give one of the military leaders a slap-on-the-wrist, and invite Zelaya back to reassume the presidency while facing trial.  (The same way, say, President Clinton faced trial.)  They could have Zelaya reassume the presidency after issuing a public apology for violating the Supreme Court order.  They could sit down and hammer out a third compromise.

The problem right now is that the OAS seems to have only sticks.  Getting hit with sticks, however, might just increase Liberal support at the polls in November; nationalist sentiment tends to work that way.  Delegitimization is a good prod, but Micheletti can't only be offered a choice between admitting his party is undemocratic and running out the clock, because he'll choose the latter.

Instead, we have Insulza in Tegucigalpa refusing to negotiate with anyone.  The military has admitted that it screwed up in banishing the President, and the OAS can't figure out a way to broker a compromise.  Instead, we've got a tragedy:  the death of an innocent. 

The great recession

  This weekend, my wife and I made our way up to Fort Lauderdale Executive Airport to grab a helicopter ride above ground zero for the real estate collapse.  It isn't just in marginal neighborhoods, as some observers have suggested.  Spot the foreclosure in this photograph.

In fact, if you look closely, you can spot a second distressed property in the picture. 

Nor is it only individual single-family houses.  South Florida is dotted with what Mexicans used to call “obras negras”:  stopped construction projects left to rot.  And in the South Florida humidity, they will rot:  unsealed foundations will flood and unprotected fixtures will erode.  They are calling them “ghost towers” down here. 

It was a Sunday, but note the lack of construction machinery around the site.

In fact, readers of this blog have already had contact with what became a pair of ghost towers.  Last year, we spotted my brother working on a high-rise located on the border of the Everglades, far out on the urban edge, near nothing but a ginormous shopping mall.  Now it is an infamously distressed complex in which, as far as the local papers can figure, no one lives.

Of course, the recession is also visible at ground level:

Anatomy of a coup

  The op-ed for Forbes is up. 

 I co-authored it with Steve Haber of Stanford University.  When I say we co-authored, I really mean co-authored:  Steve and I write by continuously tossing ideas past each other, dissecting them to death (and usually rejecting them) scribbling and re-scribbling versions, reading out loud to each other, and then finally finishing.  It's a lot of fun.  

The more expanded analysis is below the fold.  It takes into account some (surprisingly heated!) discussions with colleagues, Steven Taylor's blogging, and several of the comments on this blog.  I don't think I'll be dropping this issue anytime soon, so more comments and questions are highly welcome.

The new math

  I have a friend who is a professor of economics at Oxford. One of his students appears to have discovered an astounding new property of natural logs on an exam. It revolutionizes our understanding of, well, everything. 

I want one!

  Yes, it is an environmental atrocity.  Sure, the purported safety of all the extra power exists only in my imagination.  Indeed, while quite comfortable, the cupholders are in a weird place and the dashboard looks kind of cheap.  And it's noisy as hell.

But it is fun to drive, and that growl makes up for any and all inadequacies you might have.  Would it really be a problem to get a child-safety-seat in and out of the back?  The front seats fold way forward.  Hell, people, I'm under forty, recently married, and we don't drive enough for it to cause an appreciable increase in our gasoline consumption over, say, the Fusion hybrid or a Prius.  And it isn't a convertible.  Plus, my wife loved driving it around Maine last weekend.  So it wouldn't be that pathetic.  Would it?

I really am wondering about those child safety seats in a two-seater.  Hmm.

The importance of form

  The heat is turning up on Honduras’s new government.  Ambassadors are leaving, the borders are closed, World Bank money is gone, as are the U.S. military’s training programs.  Meanwhile, the hemisphere is united against the new government.

There would seem to be three lessons here.  (Note my weasel phrasing!  It isn’t accidental, as all three regular readers know by now.)  First, form matters.  Steven Taylor alluded to this point, and I think he’s correct.  Now, I don’t think that he’s correct about the underlying legality.  The Honduran constitution makes no provision for calling a second constitutional convention.  The Supreme Court, therefore, was completely within reason to tell Zelaya to knock it off with the referendum. 

Nor (given the facts so far) am I sure that Taylor is right as a matter of domestic political strategy.  If it was simply a matter of domestic calculus, a Supreme Court order followed by a quick bundling of the president out of the country might have been the best way to avoid worse conflict.

But Professor Taylor is completely right that hustling the President out of bed at 3am looks terrible. In retrospect, it was certain to produce a bad international reaction, even though I wouldn’t’ve predicted how bad beforehand.  (Hey, I was wrong.  Yes Bernard, I’ll get to Ecuador one of these days.) 

What the Honduran military and Supreme Court and I missed was the reverse Chávez effect.  Once Hugo (inevitably) started tub-thumping and threatening war, the best way for the United States to undercut him was to walk back its initial position and bandwagon on the international opprobrium.  And man, has the United States been successful.  Nobody seems to note that Washington was behind the international curve. 

In short, Honduras has gotten itself into a pickle.  The Supreme Court and military should have thought more about the politics.  The confused messages about resignations and drug-dealing and all the rest did not help; it was propaganda aimed at five-year olds, people who watch Glen Beck, not serious observers.  Now, it would have been damned risky for the Court to issue an order removing and arresting the President, but it would have been much better to have done that (preferably with a concurring Congressional vote ) and hope that Zelaya would be a little slow in mobilizing support, giving you time to bundle him off to Costa Rica after having crossed all the constitutional T’s ... or at least having seemed to. 

Form matters, even when the substance is uncertain and impossible to determine.  Perhaps especially so.  And that goes double in a hemisphere where electoral democracy enjoys the contradictory status of being simultaneously hegemonic and fragile.