Boeing and its Discontents

Hong Kong Airlines Limited is going to buy ten Airbus A380 superjumbo jet airliners, at a catalogue value of $4 billion, business (and exports) that could have gone to Boeing’s 787 Dreamliner, if it weren’t for the Obama administration’s demand that they be made in Everett Washington, wasting Boeing’s shiny new billion-dollar plant in South Carolina – and costing that state over a thousand high-tech, high-paying jobs (while the administration is “doing everything it can” to create jobs).

It’s not that Boeing was taking jobs away from Washington – they’ve hired over 3,000 new union members in the state since the 2008 strike that cost the company over $2 billion, and the Everett plant will produce seven Dreamliner airframes a month. But the delays caused by that strike has thrown 787 production behind, and in order to satisfy customers (mostly foreign), Boeing wanted to add production capacity that wouldn’t be threatened by a repeat of 2008. The North Charleston plant, and their 1,000 new hires, would have produced three airframes a month.

The union/NLRB isn’t worried about Washington state losing jobs anyway, it’s worried about unions not being included in Boeing’s new plant – never mind that they’re the reason for the decision in the first place. The International Association of Machinists and Aerospace Workers – the same enlightened body that forbad industrial robots to enter aircraft production for close to a decade – doesn’t care about the health of the host companies that hire their members. Never mind that Boeing is America’s largest exporter (by value), that it employs nearly twice as many people as Microsoft (that other Washington state behemoth), or that the passenger jet business is viciously competitive. If the union thinks some other American may get a job, it will stomp its feet and hold its breath until it gets its way.

We’ll all be lucky if Boeing doesn’t sell its Charleston plant to the state of South Carolina for a dollar and build an assembly plant in Japan, where they’re appreciative of jobs and seem to realize that wealth-creation is a good thing. Of course then Boeing would be accused of exporting jobs, after being denied the ability to create them in South Carolina.

Icosakaiheptagon[1] on the Senne?

After its pathetic performance in Libya, it may be time for Washington to suggest to Brussels that NATO become Europe’s defense agency, and gently bow out of the counter-Soviet alliance. NATO, divided among its own members, has proven unable to engage in a limited military action against a poorly-armed and lightly populated desert nation for ten weeks without American munitions and other assets. The members would rather prop up their decaying welfare states than contribute to their own security, and, as Robert Gates told them, “there will be dwindling appetite and patience in America for expending increasingly precious funds on behalf of nations that are apparently unwilling to devote the necessary resources or make the necessary changes to be serious and capable partners in their own defense.”

The creation of NATO in 1949 was an American deployment under a false flag. Everyone knew that. It was a deterrent to a Soviet thrust through the Fulda Gap into Western Europe. It was a good faith alliance that was to phase-in increasing European systems and assets as their economies gained traction and Europe, again, gained the capacity for self defense. A strong American presence was always anticipated, but the bulk of the walking infantry, and armored-, naval- and close air-support was to come from a revitalized Europe.

This never happened.

NATO’s International Security Assistance Force command in Afghanistan – with only select members condescending to provide any assets at all, and those come with caveats as to what types of missions they may conduct, and whether or not they will operate at night under any circumstances – is only marginally better than the United Nations’ Potemkin “peacekeeping” forces overseeing untold slaughters all over the world. US officers in Afghanistan refer to ISAF as “I Saw Americans Fighting.”

The descent of Europe into flaccid welfare states, dependent upon someone else for their defense is an understandable devolution of public attitudes, and is jointly the fault of serial American administrations for not correcting the situation. With Europe in ashes from the Urals to the Atlantic, and a now-militarized Soviet Union devouring the continent to the Rhine, it was necessary to protect Western Europe and nurture its economic recovery or lose it to a ravenous, expanding Soviet sphere. NATO and the Marshall Plan did just that, but Europe has never fulfilled its part of the bargain.

There is still room for a robust trans-Atlantic military alliance in today’s world, but not merely as an extension of the Pentagon with none of the policy authority. As I commented at the outset of the Libyan adventure, running a war by committee is guaranteed to be messy – even for the inherently messy undertaking of combat operations. It’s a recipe for exploiting American capabilities for European interests that may or may not be congruent with ours.

Even a re-militarized Europe would require American strategic support – as do ROK and Japan, among others – but none are even capable of self-defense as it is. That must change, and NATO is a ready-built multinational defense force for a supranational European Union. The problem, of course, is that Europe shows no evidence whatsoever of the political will to be responsible for its own defense, and even if it did, it would take years to ramp up production of the necessary platforms and to recruit and train the necessary soldiers, sailors, marines and airmen.

This phenomenon is not unique to these three examples, rather a feature of international institutions and agreements. Various nations enter into these things for a variety of reasons – all local to each nation. The universal proclamations always turn out to be unenforceable and sparsely obeyed, again for purely local political reasons. The vision of enmeshing the world’s powers in a “normative web” of international agreements, treaties and organizations was always an illusion, and always yields to realpolitik when a signatory’s interests run counter to such obligations.

The real decision that pragmatism demands is to chose between the fiscal costs of retaining memberships in such façades and the PR costs of foregoing the Kabuki altogether.

27-sided figure, reflecting the 27-member (after American withdrawal) EU’s equivalent of our five-service Pentagon.

Ian Traynor, NATO faces “dim future”, warns Pentagon chief, in The Guradian [London], June 10 2011.

George F Will, Libya Should Force Rethinking of US Policy, role of NATO, in Tallahassee Democrat, June 19 2011, p. OPINION6.

It’s Obama’s Economy Now

It’s been Obama’s economy since January 21 2009, but he can’t pretend that his policies aren’t driving events any more. In the end, he has probably done future generations a favor by discrediting Keynesian theory in the hands of politicians, once and for all. President Obama threw the whole pot of spaghetti against the wall and nothing stuck. He’s now out of bookkeeping slight-of-hand to fight the recession with neoliberalism. There is no more money to throw at the problem.

To refresh, Lord Keynes said that deficit spending needed to be targeted, timely and temporary. That pretty much describes the bank bailouts at the beginning of official recognition of a systemic problem – the credit markets were seizing because of banks’ exposure to extraordinary losses tied to the housing collapse. TARP might have worked – but it was never used to buy up “toxic” assets, so we don’t know – but the specter of taking a one-time-only $1.7 trillion write-down proved unthinkable to politicians, which now looks paltry compared to the $1.2 trillion annual deficits currently budgeted. The stimulus packages, as structured, were nothing more than political payback, and were, predictably, transparent to actual systemic economic recovery. By bypassing classical bankruptcy procedures with the automakers, the administration institutionalized the distortions that drove the companies into insolvency in the first place. On top of all of this, they then insisted on regurgitating an enormous new entitlement program.

The magazine is now empty, and none of it has worked.

One last flailing was tried by monetizing the debt – selling Treasury Bonds to pay down debt (“quantitative easing”). Borrowing to get out of debt. While administration officials will tell you it was a last resort, it shouldn’t be a resort at all. Monetizing debt has never worked, and in fact tends to exacerbate the credit-worthiness problem of governments who try it. And sure enough, Standards & Poor’s has warned the administration (twice now) that it needs to get serious about deficit/debt reduction or suffer lower bond ratings (credit-worthiness).

Banks and businesses are sitting on roughly a trillion dollars worth of liquidity because they don’t trust the Obama administration to get its economic act together. They are out of the hackneyed liberal “solutions”, and clearly don’t have a clue as to how business works. Businessmen see the only palatable option left to liberals as being tax increases and fee-generation through regulators. They aren’t investing or hiring because they feel they will need the capital just to survive the remainder of President Obama’s term.

Freedom and innovation are stubborn and resilient, meaning that President Obama’s main problem is that he may not have enough time to create a depression to save us from.

Removing the Check on Congressional Power

Finally, in the US Court of Appeals for the Sixth Circuit [Cincinnati], someone asked the central question regarding the constitutionality of the public mandate aspect of ObamaCare – does the Commerce Clause of the Constitution give the State the power to command people to commit commerce? It’s own language only speaks to “regulating” commerce, presumably already occurring.

Judge Jeffrey Sutton asked Neal Kumar Katyal, the [Acting] Solicitor General of the United States – the government’s highest-ranking litigator – if he could “name one Supreme Court case which considered the same question as the one posed by the mandate, in which Congress used the Commerce Clause of the US Constitution as a tool to compel action.” Mr Kaytal conceded that SCOTUS had “never been confronted directly” with the question, but cited Heart of Atlanta Motel as a relevant example. In that landmark 1964 civil rights case, the Court ruled that Congress could use its Commerce Clause power to bar discrimination by private businesses such as hotels and restaurants[1]. “They’re in the business,” Sutton pushed back. “They’re told if you’re going to be in the business, this is what you have to do. In response to that law, they could have said, ‘We now exit the business.’ Individuals don’t have that option.” The hotel is committing commerce, and the Court said that if commerce comes to you, you do not have the right to reject it on grounds of the race of the consumer. Here, Judge Sutton is saying, you are using the Commerce Clause to cause commerce, not regulate it.

Mr Kaytal’s answer? “[T]he minimum coverage provision only kicks in after people have earned a minimum amount of income. So it’s a penalty on earning a certain amount of income and self insuring. It’s not just on self insuring on its own. So I guess one could say, just as the restaurant owner could depart the market in Heart of Atlanta Motel, someone doesn’t need to earn that much income.” If you don’t like the mandate, earn less money! Incredible.

That’s the American spirit – whatever the problem, government dependency is the answer!

The actual legal argument made by Mr Kaytal is that the healthcare market is “unique” because everybody will eventually participate. With the mandate, Kaytal said, “What Congress is regulating is not the failure to buy something. But failure to secure financing for something everyone is going to buy.” Judge Sutton responded by saying that “the problem with the ‘healthcare is unique’ argument is that it just creates an opening for future Congresses to regulate all sorts of things by either a) arguing that a particular market is also special or b) finding a way to tie a given regulation to healthcare.” The constitutional problem, as seen by Judge Sutton, is that affirming the mandate effectively removes limits to what Congress can do, because an equally compelling argument can be made that all markets are unique – nuclear power, automobiles and broccoli farming markets are each unique unto themselves, and everyone will eventually partake of energy, transportation and food.

And that brought the judge to the other side of the argument: once government is responsible for healthcare, there is no activity that can’t be tied into potential health repercussions, and in the inevitable quest to reduce federal healthcare costs, there is no activity that wouldn’t be subject of Commerce Clause scrutiny, in the name of healthcare’s now codified “unique market” status.

This is a dangerous course that the mandate charts for us. Make no mistake, I don’t like ObamaCare on many grounds, but this argument is separate from anything to do with healthcare. Such power to compel Americans to buy something is an open-ended invitation for Congress to compel Americans to do anything at their whim. It removes a profound constitutional check on Congressional power.

[1] See Philip Klein, Obama solicitor general: If you don’t like mandate, earn less money, in Washington Examiner, June 2 2011.

the Arab Spring

I have a folder containing sixty-eight country sheets, documenting the fallout from events sweeping North Africa and the Levant – the so-called Arab Spring. We have witnessed two major democratization waves: the post-colonial period and the post-Soviet period. The Arab Spring is not likely to join that club.

We have two shaky converts (Iraq and Tunisia), one that was more a coup than a revolution (Egypt), three civil wars (Libya, Syria and Yemen), and one (Bahrain) instigated by one outside force (Iran) and put down by another (Saudi Arabia). The rest are unrelated (but using the uprisings as justification for general lawlessness), or having to change or initiate policy in reaction to the uprisings, and one (Japan) that suffered a game-changing disaster concurrently with the uprisings (and I have included its country sheet because daily FLASH reports made it easier to update if kept in the common folder).

The longer these events stretch out, the more likely that any genuine populist movements involved will be shoved aside by more thuggish elements within the resistance. Given the region of the world where this is happening, more likely than not these thuggish elements will be Islamist. I will predict that any uprisings over, say, three that succeed in ousting a sitting government will result in Shari’ah-driven theocracies that will be more brutal on human rights and tolerance that the regimes they replace.

Part of the problem is that of the world’s 192 nations, most are led by despicable people who, literally, grow rich over the bodies of their own people. Great swaths of sub-Saharan Africa are in continual unrest because of this, and most of those conflicts are coincidental to what’s happening in North Africa, let alone the Levant.

The shakeout from the Arab Spring will affect many nations, most adversely. Those at most risk include Israel (instability along all its borders), Egypt (the specter of the Muslim Brotherhood entering into legitimate politics – think Hizbollah in Lebanon or Hamas in Gaza), Saudi Arabia (Yemen is in danger of being taken over by al Qaeda-in-the-Arabian-Peninsula (AQAP), and Bahrain could stir unrest among the Saudi’s own Shi’ite population), and the treaty organization NATO (there are schisms developing over Libyan involvement, and this is bound to intensify the debate over admission for Turkey and Baltic states).

As we have seen from the previous spasms of democratization, of those who achieve self-determination, few are capable of actually establishing stable democracies – India and chaos out of the post-colonial era, and Poland and chaos out of the post-Soviet period. The Arab Spring, what of it there really is, should prove no different.