The Power and the Money

One of the things that is wrong with America is ...

... that people can actually stop the construction of high density apartments in Little Havana in the name of historic preservation.

Preserving “historic residences, including bungalows and small apartment buildings”? In Little Havana?? Are you kidding me?? Words fail. Seriously, folks, if the market wants to tear this crap down and build anything else, especially high-rises, we should let it.

He would agree were he still with us. And that is actually Coral Gables, which would also be well-served by being rebuilt from scratch. The construction bubble in Miami did many things, but destroying stuff worth preserving was not one of them. People, there is no place in this city that would not be improved by plonking a 30-story high rise on top of it. Caray.

Matt Yglesias is wrong!

I like Matt’s work a lot, which is why I am getting frustrated at his continual repitition of the incorrect claim that energy independence is meaningless. This is just plain wrong.

First, he ignores natural gas completely. He needs to stop and state that he is talking about oil independence. Natural gas is extremely difficult to transport across continents, which is why it is so much cheaper in North America than elsewhere. We have already seen big and positive effects from energy independence in natural gas!

So let us focus on oil.

Oil is not some super-fungible instantaneously-transportable commodity. It is much more like lobsters than it is like ... uh ... well, the mythical conception of oil as some super-fungible instantaneously-transportable commodity. Oil prices vary by geography and by quality. There is something called the realization spread, which is the difference between the Brent benchmark oil price and the price actually received by oil producers. In 2011, it was $45 per barrel.

Infrastructure bottlenecks create all sorts of odd overland pricing differentials. (Ocean transport is different: the cost of shipping from Venezuela to China is not much more than shipping to the Gulf coast of the United States.) A Kinder-Morgan report, for example, estimates that if the Northern Gateway pipeline from Alberta to the west coast is built, then the price of crude oil in Canada will rise. (Canadian Western Special fetches a higher price in Asia than it does it North America, where it sells for about $20 less than West Texas Intermediate.) In total, the firm estimates that the pipeline will cost Canadian refiners $432 million a year. If the refiners pass that on to consumers, then it will raise prices by 6¢ per gallon. The converse, of course, is that preventing the pipeline will save Canadian consumers 6¢ a gallon. That is from one pipeline. One unpopular pipeline.

Third, it is completely legal for the United States to stop exports.

Now, in a perfect world, it is true that limiting oil exports would not make economic sense. Why not? Well, a government could limit exports, thereby lowering domestic prices ... or it could sell the stuff overseas and use the profits to subsidize domestic consumers. The problem is that the United States does not practice the sort of socialist resource nationalism that would make the second option feasible. The government does not own the subsoil rights, nor are confiscatory windfall taxes particularly likely. That leaves export restraints as the only way to transfer rents from producers to consumers.

Now if Matt wants to attack the idea that oil independence will do any good, he has many solid arguments:

1. North America (e.g., the U.S. and Canada) will never become oil independent;
2. North America might become oil independent but domestic production costs will be so high that it won’t mean anything;
3. North America might become oil independent but (2) will apply and domestic supply and demand shocks will produce significant price volatility;
4. North America might become oil independent but refiners will capture any and all benefits (there is some evidence that refiners are already capturing the benefits from the price differentials between the central United States and the coasts);
5. The idea that a U.S. administration will use its authority to limit exports is a political fantasy;
6. Limiting exports is a bad idea for other reasons. For example, high oil prices at home help phase out a fuel that is wrecking the planet, and it would be stupid to try to lower them.

In short, Matt Yglesias is wrong! Energy independence will have economic impacts: it already has in natural gas. Even oil independence will have economic impacts. It will (to a small extent) even if we do nothing because oil is not a free-to-transport completely-fungible product. But it will to a very large extent if we do what other oil-producing countries regularly do, which is restrict exports.

What he should do is rephrase . Right now, his arguments are akin to the Republicans who claim that Obamacare will raise the deficit, when what they really mean is that they do not believe that the Medicare reimbursement cuts will actually happen. He claims that energy independence is meaningless, when what he really means is that doing what you would need to do to make oil independence meaningful is a bad idea.

If that is his argument, then I wish he would make it. The conflation of oil and natural gas combined with the silly rhetorical flourish that energy independence is a myth strikes me as most unbecoming.

Ethiopia, North Korea, and Some Half-Formed Thoughts on Dictatorship

North Korean dictator Kim Jong-Il died late last year. He was promptly succeeded by his twentysomething son. Some observers questioned whether the son would be able to take over and impose effective personal rule, but nearly a year has passed and he seems to be doing just fine.

Ethiopian dictator Meles Zenawi died last month. He hasn’t been succeeded by anyone yet. (Formally, officially, the Deputy Prime Minister has stepped up. But nobody seems to be taking him too seriously. He’s a mild-mannered guy, not a member of the revolutionary generation, and the wrong ethnicity to boot.) Zenawi was a “slash the tallest flowers” kind of guy; years of life on the run as a guerrilla in the bush seem to have rendered him permanently paranoid. Anyone who seemed too popular or too competent got demoted. At best demoted. So there’s no obvious successor.

I think the odds of Ethiopia staying a dictatorship are pretty good. It’s a country that has never known democratic rule or any sort of pluralism. Since the Emperor Haile Selassie consolidated his rule in the late 1920s, Ethiopia has had exactly three rulers: Selassie himself, Stalinist dictator Haile Meriam Mengistu, and the recently deceased Mr. Zenawi. That’s just three guys in almost 90 years, all of them absolute rulers with little or no tolerance for dissent. The country has almost no liberal traditions. Civil society does exist — there are NGOs and labor unions and even a few lawyers who are willing to sue the government — but it’s young and small and weak. It won’t be too surprising if a new strongman emerges. But it may take a while, and Ethiopia may go through a period of oligarchic rule and jockeying for power before things sort out.

Regimes with clear lines of succession are generally stronger regimes. Part of the reason is that they’re slightly harder targets — you not only have to take out the top guy, you have to get rid of his designated successors as well. But I think the bigger reason is that everyone knows what’s coming next after the dictator. Even if the successor is a dubious character, he’s likely to seem better than chaos and uncertainty.

Traditional monarchs have known this for millenia. But the lesson applies to dictatorships as well. We currently have at least five extant examples of non-royal dictatorships that have been successfully transferred to a son or brother of the dictator: Azerbaijan, Congo, Cuba, Syria, and North Korea (twice). Gabon and Togo are authoritarian regimes run by sons of former dictators; if we include them, the club expands to seven.

Examples of transfer to a non-relative are much much rarer. There have been a couple in the past. (Ataturk hand-picked his successor; Mexico in 1934-94 had an extremely powerful president who chose his successor from the party leadership, but they did not meet the definition of dictator. After all, they had to leave after six years in office.) But not a single extant dictatorship fits this pattern! (Burma’s dictator chose a successor who is still in power, but the successor seems to prefer being primus inter pares to being a true lone ruler.)

Now, it’s a long established principle that old age is a dangerous time for a dictator. All three of the dictators picked off by the Arab Spring were in their golden years. (Porfirio Díaz in Mexico and Juan Velasco in Peru also went down in their dotage.) More generally, an old dictator with no clear successor is pretty clearly putting himself at risk. That said, some dictators do run the course and die, more or less peacefully, in office.

So what happens when a dictator manages to pull this off — grows old and dies without first being overthrown or losing an election or whatever? Well, we can sketch out a tentative typology.

1. A son or other close relative steps up. (Several extant examples, see above.)
2. A hand-picked successor takes over. (Rare; no extant examples.)
3. There is a party or other system independent of the dictator that chooses a new dictator. (Rare outside of the Communist world; Mexico in 1934-94 comes closest. No extant examples, though we might see one soon in Cuba.)
4. After a period of uncertainty, brief or prolonged, a new dictator takes over. (A couple of extant examples — Turkmenistan, South Sudan.)
5. There’s a shift to authoritarian but non-dictatorial rule, either by a single ruler, an oligarchy or junta, or a party system. (China, Vietnam, Ivory Coast.)  This seems to be the single most common outcome in the last decade or two.
6. There’s a relatively rapid shift to relatively liberal or democratic rule. (Portugal, Spain. In the former, it took six years and revolution to get democracy.) This happens, but it’s less common than we might like to think. A shift in the direction of liberalism is much more likely when the dictator has been overthrown, or has voluntarily stepped down (Indonesia, Tanzania, Singapore), or agreed to elections (Chile, Zambia, Senegal). A system that lets the dictator die in office seems less likely to produce democracy at first go.

Numbers 2 through 6 include the possibility of foreign intervention; the United States, France and the Soviet Union have all intervened in this manner at one time or another. We may call these 3a (party picks a new dictator, foreign approval makes the difference: the Eastern European model, 1945-1990), 4a (new dictator takes power subject to foreign approval) and so forth. There aren’t really any extant examples of these at the moment — the U.S. seems to have lost interest in installing dictators in Central America and the Caribbean — but I would not be surprised if Russia’s “near abroad” in Central Asia were to throw up a 4a or 5a in the next little while.

6a is damnably rare, actually nonexistant: Panama would be one of the rather few cases since WW2 in which foreign intervention replaced a dictatorship with a democracy. Iraq sort of maybe kinda if you squint really hard. The jury is out (to be charitable) in Libya. And all of those interventions happened when the dictator in question was very much still alive and in power.

Anyway. There are enough elderly dictators out there that we should expect to see some more examples in the next few years. I expect that (5) “a shift to authoritarian but non-dictatorial rule,” will continue be the most common outcome. Which means that some countries that are currently dictatorships will drop off the list! If the number of dictatorships is to remain constant, then new ones will have to emerge. How likely this is ... well, this post is long enough. In a bit.

Oh, well, that’s all right, then

I am trying not to comment about the presidential race. In this case, though, I am perplexed. After all that noise and yelling, we now have the GOP nominee saying that:

1. He is going to replace Obamacare with Obamneycare! No, really. He wants to insure that people with pre-existing conditions can get coverage. “I say we’re going to replace Obamacare. And I’m replacing it with my own plan. And even in Massachusetts when I was governor, our plan there deals with pre-existing conditions and with young people.” 
2. He is not going to cut taxes on rich people. “I want to make sure people understand, despite what the Democrats said at their convention, I am not reducing taxes on high-income taxpayers.”
3. He is not going to alter Medicare, not even the way it reimburses providers. “No change,” he says. Of course, that last applies only if you are over 55, but still. And us younger folk will still have traditional Medicare as an option.
4. He won’t repeal the immigration order, he will supercede it.

Etch-a-sketch, indeed. Or perhaps just actual small-c conservatism? Maybe confusion. Or confabulation. (See #3.) Still, I would imagine it all makes it very confusing for a Republican voter to know exactly what it is they are supporting when they check the (R) box.

Syrian September

Four days ago, I wrote this:

Foreign military intervention is (for reasons I’ve discussed) unlikely, though not out of the question; watch for Turkish agitation to create a “safe haven” in northern Syria or rebel attacks on Syrian Air Force bases and other assets. (That Turkish plane that got shot down a few weeks ago? Very probably a probe of Syria’s air defenses. As long as those are still working, military intervention will be hard and expensive. So if the rebels suddenly start going after bases and air defense batteries, then that’ll be suggestive.)

This morning comes the news that Syrian rebels have attacked and looted an air defense base in Eastern Syria. In fact, it looks like this may be part of a sudden shift towards attacking air defense facilities; there was another, separate attack on an airbase yesterday, and one last week that went unnoticed until now.

Now, there are other reasons for the rebels to be attacking airbases. The Air Force is widely and particularly hated — traditionally because it’s long been a stronghold of Alawite influence, more recently because of indiscriminate bombings of civilian neighborhoods. And air defense bases have surface-to-air missiles, which the rebels will be delighted to get their hands on. But multiple attacks on bases and air defense sites in a few days? Yeah, that looks a lot like someone has been whispering in the rebels’ ears.How this plays out... well, I doubt the rebels can severely damage Syria’s air defense capability. But they can definitely degrade it. A lesson going back for decades, to Algeria and Vietnam, is that it’s damnably hard to maintain air bases in the midst of a hostile countryside. (I’m writing this post in Belgrade, Serbia. Belgrade has a fascinating Air Museum out at the airport. It includes half a dozen German and Italian aircraft, captured during WWII when the Yugoslav Partisans launched surprise attacks on Axis airbases in occupied Yugoslavia. The Partisans didn’t capture that many aircraft, of course — most, they just blew up.) It’s not impossible, by any means — that’s another lesson from Vietnam — but the regime will have to allocate money (in short supply) and loyal soldiers (in dangerously short supply) to garrisoning its air bases. Over time, it will probably have to consolidate its air defenses in fewer sites and bases, making it strategically more vulnerable. So, definitely an ominous development.

Now, since this is the Middle East, it’s also possible that there’s a second game. The attacks on airbases may be a signal that someone — the Turks, the West — is getting serious about intervention. A signal to who, though? The regime is probably past caring. The Russians?

Three charities

First things first: John Quiggin wants to know where to make his donation to charity. I’ll give him three choices! And I’ll make a post of it, in case anyone else is looking to throw a few dollars at a worthy cause somewhere.

One, he can make a donation to Kiva, which funds microfinance loans to the poorest of the poor. (Kiva also allows you to put money forward to be lent. You get an e-mail telling you to whom it has been lent — we funded a wheel for a potter in Peru — and then another telling you when the loan has been repaid.)

Kiva has a positive evaluation from Charity Navigator — it’s transparent, largely independent of outside influence, and spends relatively little on administration. Here’s how Kiva works and here’s the loan page. (When you make a loan, they ask if you want to make an additional donation to help cover administrative expenses. Interestingly, you can’t make a donation unless you first make a loan.)

Second option: ANERA, the American Near East Refugee Aid. Founded after the 1967 war, it focuses on Palestinian refugees around the Middle East. It gets an A+ for transparency and accountability from CharityWatch.  ANERA’s “about us” page is here (click through to donate). 

Third: the White Ribbon Alliance for Safe Motherhood. It’s exactly what it sounds like — an umbrella group devoted to supporting maternal and child health around the world. You can donate to them directly, or click through to one of the various groups that they support. Their website is here. 

(For the record, while I work in development, I have no professional connection to any of these charities. I recommend them because I’ve seen their work in the field and/or have researched them and think they’re good.)