September 2007

Joe Biden has been betting it all on Iraq for some time now and today his horse came in. A Biden-sponsored amendment to a defense bill that calls for a significant policy change in Iraq passed the Senate today with a wide margin.The amendment requires the United States to work to support the division of Iraq into three semi-autonomous regions, each governed locally by its dominant ethnic and religious factions, the Shiites, Sunnis, and Kurds. The regions would have dominion over police protection, jobs, utilities and other municipal functions, supported by a weaker federal government in Baghdad. All three regions would share in the country’s oil revenues.

Full article here.

It’s not binding, but it’s a start. As you know, I’ve already endorsed the idea of partitioning Iraq.


Think of the geology beneath the Great Basin as a giant sponge. Mother Nature drizzles water into it in the form of rain and snow. The water creeps below ground from valley to valley in a huge regional aquifer that extends from Salt Lake City to Death Valley. This ground water sometimes comes to the surface in springs that quench desert ecosystems that are many millennia old.

Las Vegas, one of the fastest growing cities in the United States, wants to withdraw a large portion of this ground water to slake its burgeoning thirst and fill its swimming pools. It wants to drill wells in east central Nevada and pipe the water 275 miles south to the gambling palaces and golf courses of Vegas.

But this scheme is an ecological crap shoot, something Nevada would know about.

Allocation of Nevada’s water is certainly Nevada’s business, not Utah’s, except for the fact that one of the areas whose ground water would be drained is Snake Valley, which straddles the Utah/Nevada state line and lies 70 percent in Utah. The Utah ranchers there are rightly afraid that the ground water tables will drop and their springs will dry up. Ultimately, this water mining could affect the springs elsewhere in Utah’s portion of the Great Basin as well.

Now comes word from a Nevada biologist that this whole pipe dream would be a nightmare. James E. Deacon and his colleagues argue in the journal BioScience that “large-scale ground water withdrawal in Nevada, the most arid state in the United States, poses a major underappreciated threat to biodiversity.”

Basically, they say that the huge aquifer is in equilibrium now, and if Vegas withdraws huge quantities of water that can’t be recharged by Mother Nature, the consequences for endangered plants and animals would be catastrophic.

See full article here. NBC Nightly News had a good package on the battle over the Snake Valley last night — check it out here.

… so we can make them look silly and vulnerable. If tyrants are allowed to remain safely ensconced within their fortresses, away from the jagged elbows of the marketplace of ideas, they only grow stronger.

From The Australian:

Sitting alone under a spotlight on the darkened stage, Ahmadinejad looked silly, vulnerable and under arrest as Bollinger coldly and methodically demanded the Iranian leader explain his Holocaust denial, his support for terrorism, his crackdown on academic dissent and his threats against Israel, the country he wants “wiped off the map”.

As much accusation as inquiry, the questions seemed to go on forever, before ending with a putdown that was the verbal equivalent of being beaten with a baseball bat.

“Frankly, and in all candour, Mr President, I doubt that you will have the intellectual courage to answer these questions,” Bollinger said.

“But your avoiding them will itself be meaningful to us. I do expect you to exhibit the fanatical mindset that characterises so much of what you say and do.

“I feel all the weight of the modern civilised world yearning to express the revulsion at what you stand for. I only wish I could do better.”

Bollinger had promised to open Ahmadinejad’s appearance with “a series of sharp challenges” and had been adamant that a critical premise of free speech was that the dishonourable could not be made honourable simply by allowing it to be heard.

Sometimes the truth hurts.

If there is any impulse to feel sorry for Ahmadinejad (and surprisingly, some commentators seem to), we should only remember that Ahmadinjead has been notoriously evasive when it comes to exchanges with the Western media. That kind of behavior from an American political leader usually produces tougher questioning — and just as we see fit to go after our own leaders with this kind of zeal, so must we show the world that we are willing to raise tough questions with leaders who come to our shores. It’s part of our tradition.

POSTSCRIPT:  Joe Klein, speaking moments ago on MSNBC, gives us the salient point about Ahmadinejad’s appearance at Columbia University:  “… We learned that the ultimate expression, the ultimate music of freedom, which is laughter, can be disastrous for a dictator.”

ALONG COMMONWEALTH CENTRE PARKWAY, MIDLOTHIAN, VIRGINIA — I want to talk with you today about economic development.

With all due respect, though, not the sort of economic development that the good people over at the Chesterfield County Economic Development Office do. Or the kind of economic development they do at the Richmond Department of Economic Development or, at the Virginia Economic Development Partnership.

It is fashionable these days in metropolitan armchairs to second-guess the work of such agencies, but, generally speaking, my experience is that to the extent that they stick to their charters, they do their work fairly well. Their aim is to bring businesses to town with a portfolio of incentives and homegrown advantages – perhaps the availability of skilled labor, capital, tax breaks — and to find them adequate space. There’s nothing wrong with that kind of work, but its impact on you, the average resident around here, is bound to be fairly limited.

Different forces, however, have converged to create what you have along here on the Parkway. Right here, almost within earshot were it not for the traffic, we have Target, Stein Mart, Pier 1 Imports, Kohl’s, Best Buy, TJ Maxx, Old Navy, and of course, the big behemoth over there, a Wal-Mart Supercenter. Around the corner, to the East, you have K-Mart and Costco, and off to the West, we have a number of places to eat. I saw a Papa John’s Pizza, Outback Steakhouse, Hardee’s, Taco Bell and Little Caesar. All this, not to mention a couple of Starbucks’, the Home Depot and the Lowe’s, and the Walgreen’s, the CVS and the Rite-Aid. All with brightly-colored signs, all with ample parking.

Is there anything that you want right now that you can’t find at one of those places, or in any of the other national chains that you can get to within 5 minutes of here? To a time-traveler from the 1950s, it would be as if he had stumbled upon the crossroads of paradise, right here at Hull Street Road and the Parkway. It’s the final act of the old Disney attraction, the GE Carousel of Progress, come to life – seemingly unlimited product choice and availability; “space age” technology making life easier and more efficient both in industry and the home; climate-controlled environments in which to live, shop and work; transportation that seamlessly connects people with goods; and relatively stable wages and easy credit to make it all accessible to the average American.

Within 6 hours to the West of us, however, we see the flipside of this phenomenon. Go to the Western part of this state and visit towns like Grundy or Clintwood, and you can see what happens to a community when the local economy is no longer sustainable. The five and dime and the corner drug store close down. Downtowns become ghost towns. When we take a look, we cluck our tongues and say, it’s a shame that the coal industry died there – but that’s what happens when you put all your eggs in one basket. Lack of economic diversity is just bad business for a community, especially when it all hinges on a shaky business model. With the rise of concerns about acid rain and coal pollution, it turned out that the coal industry – as it operated in the 1970s — was an inherently unsustainable business model. Clean coal technologies might turn that around – in fact, they might ultimately contribute to our nation’s energy independence if appropriately fostered — but it is perhaps too late for towns like Grundy or Clintwood to really come back to life.

It begs the question, though: is there anything shaky about the business models underlying a suburb like this one? Is there a sense in which this suburb is not appropriately diversified? Is there anything in the business model of a Wal-Mart that might threaten the paradise at Midlothian’s crossroads?

Just look at the issue of fuel costs for a moment. Wal-Mart’s much-vaunted business model relies upon its efficient supply chain management – “just-in-time inventory,” much of it being transported to our shores on merchant ships from half-way around the world, that is making its way on trucks to a Wal-Mart near you even as you are taking your purchases out to the parking lot. In support of this system of supply chain management, Wal-Mart’s trucks drive about 900 million miles a year transporting goods to about 4,000 U.S. stores, spending in excess of $100 million a year in fuel costs. And that figure doesn’t even count the amount of fuel burned to bring goods to North America from plants in China. Now, to its credit, Wal-Mart is rolling out a so-called “green initiative” that will double the fuel efficiency of its truck fleet by 2015, with a combination of improvements to its existing trucks and the introduction of hybrid light-duty trucks, but they still need to do something about their corporate habit of starting up diesel trucks and keeping them warm and idling at distribution centers in the service of its “just-in-time inventory” strategy. Fuel prices hit Wal-Mart’s bottom line in another way: prices at the pump affect the driving habits of Wal-Mart’s customers, leading Wal-Mart’s CEO to caution stock analysts a couple of months ago that sales might decrease as a result of less traffic to the stores.

So, let’s suppose, for a moment, that I’m one of the Waltons, running Wal-Mart. Let’s say that, even compared to today, fuel prices are going through the roof, and that, despite our Wal-Mart sustainability program, I am seeing that the cost of transporting goods to each one of my 12 locations in Virginia is beginning to outweigh the benefit of having 12 locations in Virginia. So I send my analysts off to do some spreadsheets, and we calculate how much we could save in fuel costs if we closed this location or that one. We can assume, today, that the Wal-Mart Supercenter in Midlothian is a gold mine and that I’d rather close three other locations just to save this one – but who knows? I could just as easily, however, decide it’s not worth the trouble. So let’s say I close down the Midlothian Supercenter.

So – what happens next? Well, of course, everyone employed there is out of a job. We have a vacant space on the highway, a shuttered building. I’m going to try and sell it, but while I’m waiting, I’m certainly not going to be putting much money into keeping it up. So it becomes a blight on the highway. And now you have to find some other place to shop – perhaps somewhere further away from your homes, which will add to your personal fuel costs. Will other businesses follow suit? As business traffic diminishes, sometimes that happens. At the very least, it knocks the wind out of a suburb when a high-profile retail outlet leaves. You are well aware of what happens to a suburban commercial area when one or two anchor tenants clears out – those are the dingier, less fashionable suburbs of Richmond, right?

Notice that I, as a Walton in charge of Wal-Mart, didn’t figure anything about the health and welfare of Midlothian into my calculus. Heck, I’m a Walton living in Arkansas – what do I even know about your health and welfare, except in so far as it relates to my store’s monthly financials?

Let’s suppose that Midlothian becomes a dingy, less fashionable suburb. Well, you could just move to another suburb, right? The bursting of the housing bubble and the uncertainties about the future of mortgage rates and even the availability of mortgage loans now serve to complicate, at the very least, our ability to simply pick up and move to the next suburb, however.

Let’s assume, though, that conditions are such that it won’t be that difficult for you to move to the next paradise. How do you intend to mark your time on this planet? What kind of legacy do you want to leave? It is possible that your children and grandchildren will treasure the stability of a community and a sustainable way of life as a greater heirloom of your existence than the suburban home, the mutual fund, and the transient way of life that you’re intending to leave them.

I don’t mean to diminish your accomplishments – they’re virtually the same as mine, and I’m proud of mine. But you and I, as members of the top tier of the global economic pyramid – we also pride ourselves on taking measure of and understanding the changes that are going on around us, and having that combination of courage, an education, some capital and some smarts to adjust and take advantage of change. That’s who we are – and these are among the qualities people are always talking about when they talk about the resilience of the American people.

A Cornell economist named Stuart Hart has written an interesting book called Capitalism at the Crossroads. In it, he talks about the next great opportunity for multinational corporations in a world of finite resources, global environmental concerns and over-saturation in Western first-world consumer markets: green, sustainable industry oriented toward the needs the 4,000,000,000 people at the bottom of the global economic pyramid. About half-way through the book, he talks about the people of Ladakh in the Himalayas as a model of how a Western economy, without trying to conform to local structures, can ruin a local way of life. Up until the late 1970s, according to Hart and to anthropologist Helena Norberg-Hodge, protected by regulations that limited travel to the region, Ladakhis grew crops and utilized water in a sustainable fashion; they operated their community in a way that minimized waste and encouraged a sense of responsibility for one’s neighbors and one’s environment; and crime was nonexistent. In the late 1970s, the Indian national government threw Ladakh open to tourism. Traffic increased, contributing to congestion and air pollution; the introduction of Western notions of wealth and luxury, and a cash economy, led Ladakhis to see their way of life as inferior; local self-reliance eroded, slums grew up in the place of farms, and crime rose. As Hart puts it, “In effect, the ‘development’ of the region led to the systematic dismantling of Ladakhi culture and a growing economic dependence, cultural rejection, and environmental degradation.”

There is a sense in which all of us, even those of us living in relative affluence out here in the American suburbs, are at the bottom of a pyramid. Out here on the trail, I’ve talked about the many habits of our daily life that conspire to diminish a sense of community among us, perhaps giving us a false sense of autonomy as we go about our business in relative isolation. Just as we have lost our political autonomy to the rise of a synthetic federal giant and the pathology of Washington politicians … just as we have lost our ability to control the moral and ethical tone of our communities to the seductive charms of consumerist isolation … so, too, have our communities lost the power to control their own economic destinies. We have put all of our eggs in one basket, and that basket is the one being toted by a group of national and multinational corporations.

The triumph of the 1950s dream of unlimited product choice, seamless transportation, stable wages and easy credit, has a dark side, and that is that our local economy is very much at the mercy of absentee investors, national or multinational corporations who have figured out a way to market their brands to an entire nation and who have set up their pop stands, or rather their big boxes, just down the road from where we live. They’ve really been brilliant and should be lauded for their ability to tap into that gradual transformation of our habits that has resulted in suburban living – and my point is not to criticize them or organize a boycott.

I don’t want to take down the big boxes. In fact, I’m hoping that, for example, the Lowe’s and Home Depots of the world heed the advice of Stuart Hart, and find ways of reaching out to emerging needs in our suburbs — in a world of finite resources, global environmental concerns and consumer over-saturation — rolling out product lines to make the craft of home energy production easier, and to perhaps encourage the growth of the community food greenhouses through other product lines. Such corporations have great resources at their disposal to ready themselves for the next wave in American consumer activity – they have access to regulated capital markets, and they have bargaining power, both for labor and for goods. It is only up to them to try and do it.

But, as I said, they can leave town any time they want. So I want to see towns like Midlothian have the ability to develop local suppliers, sustainable local manufacturing and locally-owned and operated retail establishments — to achieve a balance between the somewhat fragile, potentially mercurial paradise at the crossroads, and an economy that is invested in the future of towns like Midlothian and its residents. To do so, you and the community of Midlothian need to be structurally empowered to carry on activities beyond the light duty of the Chesterfield County Economic Development Office. We need changes in the way that the federal government and federal regulations currently inhibit the development of small, local businesses. In short, we need to balance the natural advantages available to multinational corporations with a set of natural advantages that can be available to a community attempting to achieve economic self-reliance and sustainability.

Here, I’ve only begun to scratch the surface of showing you a weakness in our system, and a growing problem on our economic horizon. At my next stop, I hope to shed some light on some ways in which the federal government can begin to delegate some of its authority in such a way as to help communities develop through local capitalism, and can empower them to avoid the tragic Ladakhi result of “economic dependence, cultural rejection and environmental degradation.”

I thank you for listening, and I’ll be seeing you along the trail.

MOSCOW (Reuters) – Samples of earth taken by Russians who planted a flag on the seabed below the North Pole last month show beyond doubt the Arctic is Russian, its natural resources ministry said on Thursday. The Arctic 2007 expedition was the first to plant a flag on the seabed directly below the North Pole and it symbolically claimed the area, which geologists believe is rich in minerals and energy deposits, for the Kremlin. Now Russia says the scientific evidence cements their claims and they will present it to the United Nations. Other countries aspiring to own the Arctic seabed have rushed to reiterate their own claims before a May 2009 deadline.

“We have received preliminary data from an analysis of models of the earth’s crust from Arctic 2007 which confirms that the Lomonosov Ridge … is part of the adjoining continental shelf of the Russian Federation,” the statement said.

Full article here.

Iran threatened to fire long-range missiles at American targets in the Middle East yesterday as the war of words between Teheran and the West continued to escalate.

A senior commander of the Revolutionary Guard, the largest component of the Islamic republic’s armed forces, chose this moment to outline the capability of his country’s ballistic missiles.

The Shahab-3 rocket has a range of 1,250 miles, allowing it to strike an array of Western targets across the Middle East.

“Today the Americans are around our country but this does not mean that they are encircling us. They are encircled themselves and are within our range,” said Gen Mohammed Hassan Koussechi.

“If the United States is saying that they have identified 2,000 targets in Iran, then what is certain is that it is the Americans who are all around Iran and are equally our targets,” he told the official IRNA news agency.

Gen Koussechi added: “We have reached capacities that allow us to hit the enemy at a range of 2,000 kilometres.”

A wide array of possible targets faces Iran across the Gulf. Dubai, filled with Western companies, tourists and expatriates, is only 105 miles away.

Full article here.

All eyes are watching the Fed, with thousands of American homeowners hoping for a small break in interest rates. Perhaps not so coincidentally, former Fed guru Alan Greenspan, after years as a great American sphinx, has become a great American chatterbox with the publication of his new memoir, The Age of Turbulence: Adventures in a New World. And Greenspan, who made his reputation as a rate cutter, is saying that he might not be cutting rates today if he were still at the Fed:

Most people think that if Alan Greenspan were still chairman of the Federal Reserve, the US central bank would have cut interest rates more quickly and aggressively in response to the turmoil in financial markets.

Not so, Mr Greenspan says. Over the course of three hours of interviews in his office on Washington, DC’s Connecticut Avenue, the former Fed chairman argues that times have changed.

“We are in a period now when it is far more difficult than it was when I was chairman,” Mr Greenspan says. “We were not worried about inflationary resurgence but now you have to be.” He adds: “You have got to be a lot more careful in lowering rates in response to crises.”

… Mr Greenspan says: “I am basically saying that the trade-off between unemployment and inflation has shifted.”

There are two planks to his argument. The less controversial one is that the US is entering a period of more subdued productivity growth. The former Fed chairman says companies would not be returning vast amounts of cash to their shareholders if they saw good opportunities for productivity-enhancing investment. “Innovation opportunities are, for the time being, somewhat saturated, whereas they were extraordinary in the 1990s,” he says.

The more controversial one is that the disinflationary effect of globalisation will soon start to ebb. “The rate of change of prices – or the degree of disinflation – is related to the rate of change of globalisation,” he argues.

The integration of a billion workers from the once centrally-planned economies of China and the former Soviet bloc into the global market system had a profoundly disinflationary effect on prices worldwide. But once all these workers are connected to the world economy, he says, “the rate of change goes to zero.”

“In the intermediate period, the disinflationary pressures I was fortunate to operate under are gradually disappearing.”

Interesting article from Krishna Guha at the Financial Times here.

Next Page »