Much Ado About Nothing

As predicted, at around 2230 hours [EDT] on Saturday, DPRK launched its Taepodong 2 ICBM that had been poised on a pad for two weeks.  Despite Kim Jung-Il’s triumphant announcement of a satellite being placed in orbit, playing patriotic music, NORAD tracked the 2nd and 3rd stages – unseparated – as they splashed in the Pacific, ~2,000 miles down-range.  There is team of Iranian technicians on-site to monitor the launch (and presumably purchase the technology – had it been successful).

Remember the “serious consequences” if Pyongyang launched?  Well, the silk suits got together in an “emergency” session at Turtle Bay and began bickering over the language.

That’ll show ‘em!

“It’s not our fault!” cry the free Members of the Security Council, “China and Russia won’t cooperate.”  We knew that going in, making all the posturing before-hand just so much empty rhetoric.  DPRK knew that going in, making the launch inevitable.  The silver lining, of course, is that Pyongyang still can’t operate a 3-stage missile; the dark cloud is that they are getting closer, and have customers lined up.  The even darker cloud is that someone in Washington thought that the UN was even on the list of “serious consequences”.  Consider: DPRK is in possession of as many as six UN-prohibited nuclear explosive devices, which they are weaponizing to mate to UN-prohibited ICBMs, one of which they fired in a UN-prohibited test.  Somehow, I don’t think yet another UN resolution would matter much to Mr Kim and his minions (or anybody else, for that matter).

Baseless threats and empty blustering show weakness, not resolve, “international” or otherwise.

Russia we can discount.  They are not going to cooperate with the West because they want to regain World Power status, and sees the quickest way to do that as at the expense of the United States.  Beijing is touchy about destabilizing Pyongyang, causing a tsunami of refugees into PRC and chaos on the Korean Peninsula.  DPRK gets 80% of its energy and most of its imported food stuffs from PRC. Beijing is the only power on Earth that can non-kinetically make Pyongyang do anything.

We need to convince Beijing that our real-world options are two: shoot the next one down or freeze their offshore bank accounts next time they stand an ICBM up on the pad.  If the Chinese believe that the Obama administration would actually do either, I think they would welcome it.  If they could convince Kim that it was America (and not PRC) that would punish DPRK if they do it again, they could leverage that pressure into influence over events without toppling the regime.  I don’t think Beijing wants Pyongyang with a deliverable nuclear weapon, but hesitates to threaten Kim, afraid that it will throw DPRK into chaos.

This would be a constructive opportunity for Obama to “work with others” without selling us out or making us look weak.

If he’s interested.

Individuals are Fools, the Species is Wise

Nanos gigantum humeris insidentes (standing on the shoulders of giants) is the metaphoric cognitive advantage. When the first hominid intentionally shaped a rock for a specific task, Neil Armstrong’s walk on the Moon became inevitable, and that’s due to our proclivity for sharing knowledge, that others need not “re-invent the wheel”. It is this beginning from a cumulative base of previously gleaned knowledge that allows me to write this on a computer, and you to read it on one, after the message has beamed up to a satellite some 18,000 miles overhead and traveled back to Earth. By standing on the shoulders of Newton, Einstein, Lavoisier, Goddard, and the like, we were able to see the paths to semiconductors, liquid crystals, orbital mechanics, liquid fueled rockets, transponders, and so forth.

Civilizations are distinguishable by their shared ideals, common knowledge-base and their sociopolitical institutions. Western Civilization, for example, could be defined as Judeo-Christian Greco-Romanism. There is an unbroken line between the American Constitution and the Platonic Doctrine (the ability to solve abstract problems infers free will, which infers self-rule); between Talmudic justice and market economics. The point is that we are smart by our ability to learn, we are wise by the accumulated fruits of our learning.

Recall that our 1776-1783 separation from Britain wasn’t a revolution, it was a … well, a separation from Britain. A war of independence, not a throwing off of all things Anglo-European. The statesmen of Massachusetts and Virginia had no desire to turn society upside down. In their writings, especially in the works of Adams, Hamilton and Madison, we find a sober and tested reverence for the institutions of Anglo-Europeanism, faulting their hereditary and nepotistic staffing of those institutions. What they crafted, these statesmen, was less an “ideal” society than an algorithm for operating one. Law is how society works; the Constitution is how government works.

Our Founders designed, and the Constitution describes, a minimal federal government which would provide shelter to otherwise sovereign states, which in turn, were to establish market-republics to provide shelter for otherwise sovereign people. And just in case we missed it, they restated the proposition in isolation as the 10th Amendment:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

It doesn’t get plainer than this – “If the power in question isn’t described in this document, it doesn’t belong to the federal government.”

They didn’t take this position lightly nor out of arrogance. A republic, like any organization, always seeks to expand its influence, and to negate this tendency the Authors supplied two devices – they spelled-out the rights and duties of government in government’s enabling legislation, and they made it amendable, but difficult to do (requiring a super-majority of the states to ratify). The Constitution is a social contract between the people and their government – the legitimacy and portfolio of the governors, as agreed to by the people. Its main purpose is to legitimize and protect the states, whose managers work for the people. Governance was envisioned as an onionskin of jurisdictia, each adjudicating only that which the next lowest level couldn’t, the grand total of which was to form a protective arch over a free people. Minimal government, maximal liberty.

In this manner, the American Constitution represents the current pinnacle of Western Civilization – the culmination of the combined wisdom of our ancestors. If adhered to – if we are smart enough to take advantage of the wisdom of our ancestors – this is a way to operate a society free of the dominance of a ruling class (something mankind hasn’t yet been able to do outside of market-republicanism). The continual diddling with the balance of power between branches, the continual passage of self-serving and knowingly counter-constitutional laws, shameless influence-peddling, and an arrogant ruling class that holds the citizen in contempt … these are all things that happen when we ignore the wisdom of the species in favor of the foolish whims of our contemporaries.

Why We All Love New York

New York Times Executive Editor Bill Keller, while dedicating a new Stanford University building for the campus newspaper (an event he likened to a “ribbon-cutting for a Pontiac dealership”),  equated the keep-the-Times-alive movement to the cause of starving Africans, saying, “Saving the New York Times now ranks with saving Darfur as a high-minded cause.”

Gee, what’s not to love about New Yorkers?

Energetic Disassembly

While at Department of Energy, I watched a panel briefing Congress on the explosion of an electrical generator at the Hanford reactor that took the life of a Sailor.  While testifying, it became apparent that the nuclear engineer was avoiding using the word “explosion”.  DoE had evidently told him that nothing good comes from a sentence that contains both the words “nuclear” and “explosion”.

A senator, either picking up on this or just striving for a non-circuitous answer, kept asking variations of “so, there was an explosion in the reactor’s power room, right?”  Becoming frustrated with growing tension between them, the engineer blurted out, “Number two generator underwent spontaneous energetic disassembly, yes”. You gotta love bureaucratese.

We’ve now done this with the wars in which we’re involved and the zero-valued assets weighing down banks’ books.  We now have two “Overseas Contingency Operations” going on while we are struggling to find suckers buyers for “Legacy Assets”.  Can you say “spontaneous energetic disassembly”?

They are products of different momenta, the first of political correctness and the second of disingenuousness, but they share an inside-the-beltway conventional wisdom: for God’s sake don’t ever call what we are doing by its actual name.  This is how you get the Old Testament of our current recession calling itself the Neighborhood Revitalization Act, instead of the Blackmailing of Banks Act, or whatever.  Secretary of Homeland Don’t-Worry-Be-Happy, Janet Napolitano, now wants us to think of people who wrap their children in explosives as instigators of “Man-Made Disasters”.

“What’s the difference?”, I hear you cry, “You can put a pig behind some lipstick, but it’s still lipstick.” The difference (thank you for asking) is misdirection.

Ask David Copperfield.

Thus we take less notice when Secretary of Attention-Deficit-Disorder, Tim Geithner, soberly tells Congress that in order to prevent future AIG’s he needs new sweeping powers to interdict in the marketplace before disaster ensues.  Really?  What was it again that brought AIG down?

Their Financial Products Division figured out a way to dilute the risk on a highly speculative class of investment – a way to localize profits while socializing losses.  They could make a market for trading bundles of these risky assets.  For a while traders were largely arbitraging these contracts against the daily price, accumulating profit small slices at a time, but it became obvious that it was turning into a game of “don’t be holding the grenade when the music stops”, so they decided it was smarter to hold them and leverage (borrow against) the associated costs (momentarily forgetting that it’s a grenade).  Well … the music stopped and everybody was caught holding.  So the lesson we get from all this is that we should give the Department of Drunken Sailors even more power?!  Regulators all along the way slept through the whole self-inflicted Ponzi scheme. 

How about just requiring that financial institutions having investment arms carry a cash reserve commensurate with the ratio of capital-at-risk to market capitalization?  If you’re going to bet the farm, at least self-insure.  This would both attenuate the appetite and mitigate potential failure.  Do the same for industrial insurers.  If a single insurer can hold the solvency of a dangerously large number of influential firms in its hands, and the insurance industry can’t/won’t move to set prudent parameters to the practice, then make them carry a cash reserve reflecting the analogous amount-underwritten to market cap ratio.  The lesson we should learn from all this is that “Too Big to Fail” is an embarrassingly sophomoric monkey trap within which to find one’s hand.  The heads of these companies, the heads of these credentialing professional associations, the Members themselves, all are highly-educated adults that were blindsided by the inevitable results of compounding high-risk behaviors – over-leveraging the industry of your clients, betting multiples of your market cap on high-risk ventures, while setting in motion a an inertia that will either pay surreal dividends or zero-out your high-risk ventures.  Gee, what could go wrong?

If it’s indeed true that, given enough time, automata will also exhibit every irrational permutation, then we should put delimiters in the path of dangerous permutations.  Make increasingly growing companies increasingly maintain a “clean-up” fund for their increasing clumsiness.  Make pure profit-centers pay for the privilege of risking the financial base of the parent firm.  The lesson we should learn from all of this is that the odds of hurting yourself while playing Russian Roulette with an automatic has a lot of 9s in it.