Monday, September 24, 2007

The Golden Rule

Throughout the centuries, philosophers have put forth their interpretation of "the golden rule." Perhaps the best known is "do unto others as you would have them do unto you." In the global economy of the twenty-first century, a more relevant interpretation is "he who has the gold rules." The best comment I encountered this past weekend (September 21-23) was stated by Hugh Young, a money manager in Singapore. "Asia has the cash and the west the debt." In contrast with the Asian financial crisis of a decade ago, the risk now appears to be greater in the West. The huge trade and budget deficits of the United States during the past few years has made the U.S. a large debtor nation, in which foreign claims are piling up at some $800 billion dollars a year. The cash is in the hands of Asian and Middle East central banks and sovereign wealth funds, with the debts issued by U.S. government agencies and enterprises. Something to worry about?

Speaking of Debt

In a speech on September 24, 2007, President Bush again threatened to veto Congressional appropriations bills that exceed his budget request for fiscal year 2008 (October 1, 2007, to September 30, 2008). Congressional spending bills propose $22 billion in expenditures beyond the president’s budget.

It is interesting to place the costs of continued operations in Iraq and Afghanistan against Bush’s veto threat. The Congress has appropriated $147 billion for military activities in Iraq and Afghanistan for fiscal year 2008. Defense Secretary Robert Gates proposes to request an additional $45 billion, bringing supplemental defense expenditures to $192 billion. This is an increase over fiscal year 2007s total of $165 billion. There is no immediate end in sight.

This is not to say that the $22 billion would be well spent. But one can raise similar doubts about the $192 billion achieving its objective of stability in Iraq and Afghanistan, or the total of $500 billion thus far spent with little to show for the cost in lives and treasure.

Saving the Planet

As apart of opening of the United National General Assembly, member states are holding a summit on greenhouse gas emissions in order to fight global warming. Melting glaciers and shrinking Arctic ice have pushed the issue to the forefront of global diplomacy. There is a growing scientific consensus, though not yet universal, that man-made emissions are a primary source of global warming. Some fifteen countries, the major industrial nations along with Indonesia, Brazil, China, and India, are responsible for the bulk of emissions.

Reducing emissions is a worthwhile objective. However, it is hard to see how the level of investment in research on alternate energy sources will have much impact on the near- and medium-term growth of emissions. Here are some trends that are unlikely to be slowed or halted, much less reversed. China, India, Brazil, Indonesia, and other fast-developing countries are adding several million polluting vehicles each year on their roads. Airline expansion will fill the skies with hundreds of additional polluting planes each year. China alone is adding one coal-fired power plant to its stock of generating plants each week. Each new house, filled with a wide variety of electronic appliances and entertainment features, consumes more electricity that must be generated from non-nuclear sources. If global warming is a serious problem, the U.N. summit is barely a baby’s first step in the solution. Only a precipitous decline in the use of petroleum can achieve a significant reduction in emissions. To date, the world continues to increase, not decrease, its appetite for petroleum.

Why it is so Difficult to Reduce Emissions

The American Council for an Energy Efficient Economy has compiled a list of the top 12 "green" cars. To increase fuel economy, the Department of Health and Human Services advised its 67,000 employees to purchase one of these "green" cars. The problem with this recommendation, which appeared in the department’s newsletter, is that all 12 are Japanese or Korean models. Following complaints from Detroit’s big three, HHS issued a statement saying that it regretted offending anyone. So much for this one small step to reduce oil consumption.

Negotiating with Syria

Mitchell Reiss, President Bush’s director of policy planning at the U.S. State Department during 2003-05, is advising in the September 24, 2007, issue of the Financial Times that President Bush attempt to achieve a diplomatic breakthrough with Syria. Citing the administration’s success with Libya, which agreed to abandon its nuclear program, a successful engagement with Syria would counter Iran’s growing influence in the region, reduce its interference in Lebanon, slow the movement of suicide bombers into Iraq, strengthen the Palestinian authority against Hamas, and reduce its support of Hezbollah.

Reiss cites secret talks held between Israel and Syria during the past summer in pursuit of some of these goals. If the talks went well, why did Israel bomb a Syrian target that some believe represented an early stage of nuclear weapons development with the cooperation of North Korea. Moreover, the Syrians have seemingly assassinated another anti-Syrian Lebanese politician. These are not encouraging events.

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