Monday, November 23, 2009

Saving Birds or Saving the Environment?

The Endangered Species Act was passed in 1973 to halt the extermination of species. The U.S. Fish and Wildlife Service reported in 1996 that 185 bird species were on the international endangered list and 93 species on the domestic U,S. List.

The International Union for the Conservation of Nature (IUCN) red list for birds in 2008 identified 1,227 threatened bird species (12 percent of the total), with another 838 near threatened. Of the 1,227 threatened, 192 are defined as critically endangered. (An estimated 133 species have gone extinct since 1500.)

Renewable energy is at the forefront of political efforts to reduce greenhouse gases in order to mitigate climate change (although the effect of greenhouse emissions is in dispute). To the extent that wind turbines become a major source of alternate energy in future years, some bird populations may be severely diminished and species that migrate through fields of wind turbines could become extinct. Large numbers of birds are being chopped to pieces by wind turbines.

If Dr. Seuss were still alive, he would ask "Who cares for the birds?"

Thursday, November 19, 2009

China, Interest, and Taxes

China’s central bank, the China Investment Corporation, and other Chinese entities hold well over a trillion dollars in securities of U.S. federal debt and U.S. government sponsored enterprises. What is not widely understood is that the tens of billions of dollars of interest earned on these holdings are tax free. China piles up billions more simply collecting tax-free interest.

Democrats are proposing new taxes at an unprecedented rate to finance the extension of health insurance, new job creation, deficit reduction, and who knows what else. They include higher taxes on medicare and income and a transaction tax on financial instruments. Democrats say that all revenue options must be on the table. To this end, and to accommodate still other taxes, they have ordered two bigger tables to be delivered to the Senate Finance Committee and House Ways and Means Committee meeting rooms.

Tuesday, November 17, 2009

Obama in China: Learn from China

Analysts, pundits, and numerous China experts keep naysaying China’s economic growth. Sooner or later, they say, China will undergo a financial and economic implosion that hit Western economies in 2008-09.

They are wrong because they underestimate China. Chinese laborers work six-day, sixty-hour weeks, which compensates for a raft of other problems. Hard work is a key to China’s success.

Many of the pundit-analyst-experts lack long-term vision. I first saw Shenzhen in 1963 from the hills above the Lok Ma Chau lookout in Hong Kong. Shenzhen then was a small village consisting of a few huts. The urban region encompassing Zhenzhen now totals nineteen million. I first saw Shanghai in 1981. I wandered the city using a 1935 tour guide that remained accurate. Mao’s economic policies had frozen progress dead in its tracks. Shanghai now has more than double the number of skyscrapers in New York and a much better airport, to name just a few points of comparison. So on for the rest of the country, as urbanization moves westward.

China has successfully managed its transformation through property bubbles, busts, SARS, and the Asian financial crisis. Western methods of macroeconomic analysis, which exclude the propensity to hard work, are inapplicable to China.

I’m from Missouri, the "Show Me" state. Seeing is believing. I have been seeing for the better part of five decades and I believe.

Monday, November 16, 2009

Confucius Redux: Obama in China

Obama’s travels in China are a good time to take in some Chinese history and culture.

When the Communists took over China and established the People’s Republic of China on October 1, 1949, an early goal was to increase literacy. To that end, Chinese linguists introduced "simplified characters," which reduced the number of strokes needed to memorize more complex traditional characters. Despite this massive national undertaking, Shanghai-based China Eastern Airlines, which provided the ramp on which Obama descended from Air Force One, still uses the traditional form of the character for country, guo, rather than the simplified form. (Canton-based China Southern Airlines uses the simplified form.)

China has established hundreds of Confucian institutes around the world to teach traditional Chinese ideals. Confucian ideals are set forth in his "sayings," the Analects. One of my favorites is "Rarely do I meet a man who studies for three years without thinking of a post in government." In traditional China, a post in government conferred status and a relatively large income.

In the U.S. we have a different variant. "Rarely do I meet a man or woman who works in government for three years without thinking of lucrative consulting, speaking, and writing opportunities afterwards."

Finally, we should learn from China, which has managed its economy extremely well in the midst of the global financial crisis. Every business school and economics department in U.S. universities should have visiting professorships for Chinese planners and scholars who can teach Americans about China’s success.