Radical Reason

"Nil sine ratione."

Thursday, May 11, 2006

May 12, 2006

Oil once again dominates the headlines, as consumers feel the pain of high prices at the pump and oil tops $75/barrel. But the issue goes much deeper than these highly publicized news items. Oil exerts an incredible amount of influence over global geopolitics – the foreign policies of all advanced industrial nations are dependent to a large degree upon the whims of oil-producing nations. A steady oil supply is crucial to the stability of the global economy.

And yet, the 21st century thus far has been marked by continuing concerns about the oil supply. The majority of global reserves are controlled by the cartel of OPEC nations. The easiest oil to access at this point lies below the territory of some of the world’s most unstable and corrupt states. A number of books have recently been written detailing the unique geopolitics of oil and heralding and “end to oil” at some point in the future.

These doomsday Cassandras raise many interesting points about the challenges faced by the global economy in depending on a resource with such an unpredictable nature, but it is premature to ring oil’s death knell as the primary motivating factor of the global economy. First, there is a great deal of disagreement over the actual levels of oil left in the world. Some scientists have been proclaiming for the past twenty years that the ground would dry up the following day – so far, they’ve all been wrong. New technologies, like deep-sea drilling and innovative techniques to wrest the oil from tar sands and shale have allowed companies to produce hydrocarbons from previously unsalvageable fields. And despite today’s uncertainty, the most reasonable arguments attribute the spike in oil prices to such novel factors as supply and demand and nervousness associated with political unrest in oil-producing nations like Iran, Iraq, Venezuela, and Nigeria – four countries that rank in the top eight of oil production, and all members of OPEC.

It is this instability that poses the greatest threat to oil production and the global economy, not the typical twin scapegoats of over-consumption and the drying up of the wells. South America continues to be a scion of bad news for the global energy market and the principles of market economies as a whole. First, Hugo Chavez has continued his autocratic, demagogic rule of Venezuela, declaring himself as the populist leader of a new type of socialism while falling prey to the temptations of good old-fashioned socialism, enriching himself and his allies in a web of corruption while allowing his people to languish in poverty despite staggeringly high oil revenues. He has a disciple in Evo Morales, the new leader of Bolivia, who speaks the populist language of the new socialism as well.

Both leaders have used their newfound power to nationalize hydrocarbon production, revoking the contracts of foreign oil and gas firms and imposing new finance schemes that amount to taxes of 80% on the private firms that operate these facilities. To be fair, multinational firms do have a responsibility to compensate the people of oil- and gas-rich nations for the profit they derive from the sale of those resources, but this partnership flows both ways. Just as multinational energy companies need the consent of the people and the governments in which they operate, those Bolivians and Venezuelans need the expertise of foreign firms to effectively exploit the natural resources on which they sit. Nationalization not only aggravates relationships between countries as the assets of companies are forcibly appropriated, it ushers in an era of economic inefficiency whereby no one derives the full benefit of resource riches. And there’s always the chance, albeit a slim one, that those with the knowledge will refuse to “pay to play” in the Bolivias and Venezuelas of the world.

In a perverse way, high oil prices may be good for the United States economy in the long run because they create powerful incentives for our nation to come up with alternatives to the unstable hydrocarbon-producing nations in the Middle East and South America on which we’ve been so dependent for the past twenty years. Greens have been proclaiming the coming of alternative fuels for years, but these alternatives will not be viable until it become economically prudent and beneficial to produce and use them. High gas prices make alternative fuels look a lot more attractive. The high price environment also creates incentives to increase domestic production through the approval of new drilling projects, like in the Alaskan National Wildlife Refuge, and the construction of new refineries to process oil into gasoline. Ironically, the populist politicians who continuously decry high oil prices stand in strongest opposition to these most apt of solutions.

Oil truly does reach into every sector of American society – from the economy to foreign affairs. Look to the Iranian crisis. To be sure, nuclear proliferation is a serious threat to American national security, particularly when those weapons could be in the hands of avowed enemies or leaders of questionable sanity. But the fact that Iran is a leader in oil production adds a huge wrinkle to the global strategy of preventing nuclear weapons from being developed by the mullahs.

So next time you gas up, consider why that gas is $3/gallon. It’s not price-gouging, it’s not greedy corporations – it’s economics and geopolitics.
April 21, 2006

The last two weeks in Washington, DC, have been quiet, as Congress has been off on a two-week recess. Some may say that Congress is on permanent recess, but that’s debatable.

In any case, Congress has a full plate as they return to work – immigration reform, the budget, healthcare, tax cuts, gas prices, and a host of other issues. It’s difficult to assess whether any of this will be accomplished, however, as the elections this fall will prevent anyone in Congress from taking the initiative necessary for passing legislation. The Democrats have a vested interest in blocking any legislative effort made by the Republicans in order to brand the Republicans as incompetent in the fall elections. The Republicans, by contrast, are divided on many major issues, not the least of which is immigration, and compromise appears far away, particularly with the President at the nadir of his popularity and therefore unable to unite the party sufficiently.

Things indeed look bleak for any major policy breakthroughs. What can be done? Although Congress appears to have the most at stake with the upcoming elections, it is in fact President Bush who must take the most drastic action in order to salvage the legislative year and the last two years of his presidency. With the President’s political authority at an all-time low and status as a lame duck on the horizon, he must act quickly to prevent the complete unraveling of his presidency.

The President has already set things in motion for this second-term overhaul, sacking his chief-of-staff Andy Card in favor of Josh Bolten, his former budget director. The most recent casualty was Scott McClellan, the White House Press Secretary. His replacement, Fox News commentator Tony Snow, is a bold choice that will certainly improve the public face of the White House. Fresh blood must be one part of President Bush’s strategy, but until the Bush team fundamentally revises its communications strategy and renews its agenda, the deadlock on both ends of Pennsylvania Avenue will remain.

First, the Bush team must meaningfully engage the press. Republicans have tended to reflexively distrust the media, and in some cases with good reason. But the warfare that has often broken out between the press and the White House only disrupts the workings of the executive branch. Scott McClellan was known for saying precious little in each of his daily briefings, at the behest of a controlling White House. This is understandable, but the press is a valuable tool for advancing the President’s agenda and for pronouncing the good news about the economy. The President must exploit his control over the news cycle both for his own political life and the good of his party in the Capitol. It appears that this is on the horizon with Tony Snow, but only time will tell.

Second, the Bush team must renew its focus on policy. Many political mistakes have been made over the past few months – Dubai Ports World, the immigration debacle – but it is imperative that the Bush team continue to pursue its policy agenda. That means holding the line on immigration and resisting the temptation on the right wing of the party to pass a punitive immigration bill. The nativists in the party could destroy the GOP if they prevail. Not only does a majority of Americans support some sort of temporary worker program but the bulk of Republicans supports such a program. The punishment-only crowd may be loud, but they do not speak for the bulk of Americans or the bulk of Republicans. Border security must be addressed, but any border security bill that does not address the root causes of immigration and the millions of people already here illegally will be an insufficient and uninspired solution.

The added bonus of the Bush position on immigration is that it preserves Republican political gains made over the past few years. A hard-line immigration position will confine the Republicans to electoral oblivion among Hispanic voters for the foreseeable future – not unlike the purgatory in which they find themselves with the majority of black voters. Hispanic voters tend to identify themselves as more conservative than the average voter does, and this fast-growing block represents the best prospect for Republican electoral gains in the years to come.

President Bush must also begin to speak more candidly about Iraq. Republicans still enjoy a slight advantage in poll numbers on terrorism, but they are slipping in Iraq. The President’s leadership is critical to the success of the Iraq war, and he must continue to exert pressure on all parties involved in the conflict to move toward a unity government. Iraq is still the dominant political issue in America, and the fates of all those in power rest on a speedy end to this dangerous conflict. A huge victory has been reached with the resignation of Ibrahim al-Jaafari as prime minister, and now a new government must take root.

Finally, the President must continue to argue in favor of open economics. Free trade has taken a partisan beating thanks to the daily unraveling of the American auto industry, but it is free trade that has made this country as prosperous as it is today. Protectionism only harms American consumers and lulls domestic industries into economic complacency and ruin. The President has worked hard to open ties to China and India, and he must resist the calls to engage in trade war with China over its currency. Not only would revaluation of the Chinese currency do nothing to rebalance the trade deficit with China, it would hurt consumers by raising the costs of all goods and would give China renewed purchasing power to take control of American assets – something that was tantamount to nuclear proliferation just a few months ago.

It is in fact the President who holds the linchpin to the 2006 Congressional elections. Lucky for the party in power that the opposition is so utterly clueless that they appear incapable of capitalizing on numerous Republican mistakes. But if the President does not reverse course quickly and take control of his party, November could be a tense month for the Republican majority.
April 7, 2006

The current hot topic in Washington is immigration. Political tempers on both sides of the aisle have flared at this emotional issue, and massive demonstrations in cities across the country have been an almost nightly component of the evening news. There’s a great deal of rhetoric and misinformation being hurled around, so let’s take a moment to highlight the facts of the issue.

By most estimates, there are between 11 and 12 million illegal immigrants in America right now. According to the Pew Hispanic Center, legal immigration has stayed relatively steady, at approximately 600,000 new immigrants each year, dating back to the 1980s. Illegal immigration, on the other hand, has spiked since 1995, averaging around 700,000 new illegal immigrants through 2004, as compared with only about 200,000 per year in the 1980s. The bulk of these immigrants are from Mexico and the vast majority is Spanish-speaking. This undocumented and illegal immigration is obviously a problem, as state and local governments face new strains like meeting the emergency health needs of generally uninsured illegal immigrants and the educational needs of new, primarily Spanish-speaking children.

The topic becomes especially sensitive because it is an election year, and all the legislative proposals are imbued with political as well as policy considerations. Conservative House Republicans are pushing a bill that emphasizes enforcement – more guards on the border, deportations of those here illegally, fines for businesses that hire illegals, and no path to citizenship for illegal immigrants. Senate Majority Leader Bill Frist has a similar bill in the Senate, emphasizing border control. Competing bills in the Senate include that of Senators McCain and Kennedy, which attempts to beef up border security while introducing a guest worker plan for those illegal immigrants who are already here and a defined path to attaining citizenship. There appears to be little hope of compromise, as conservative House Republicans see anything beyond enforcement to be amnesty for lawbreakers, while many other Republicans are split on what to do and Democrats are happy to block legislation in the Senate for political gain in the fall.

So what does this all mean? For starters, given the competing proposals and the political infighting on Capitol Hill, it appears that it will be impossible to pass the type of comprehensive package demanded by the public. 63% of Americans think that illegal immigration is an extremely or very serious problem, according to a recent poll. 71% of Americans say that they are more likely to vote for a candidate who favors tighter controls on immigration. Politicians are attempting to respond to these sentiments, but their efforts may not meet with much success.

But let’s look a little deeper at the immigration issue. Why are people coming here in the first place, even illegally? For the same reasons they always have – the twin ideals of economic and political freedom.

As long as the minimum wage in America is five times that in Mexico, Mexicans will continue to risk their lives for economic gain in the United States. It’s intellectually dishonest to say that illegal immigrants do jobs that Americans won’t do – it’s just that illegal immigrants are willing to do most low-skill jobs for wages lower than native-born citizens demand. So not only is there a demand for labor by employers because of the low unemployment rate, but there is also a large supply of people willing to do that labor cheaply because it’s so much better than the offer they have in their country of origin. America is still the land of opportunity to millions worldwide, and we’ve done nothing of note to stop people from responding to these simple economic forces.

The immigration debate takes on a new tone in our post September 11th environment, as border security is a necessarily hot topic. And 41% of the American public think that illegal immigration is actually a security issue. In order to address these concerns, obviously border security must be tightened. There are only 11,000 border patrol agents for our 2000 mile-long border. To put this in perspective, the New York City police is four times as large. It’s impractical to think that a force one-quarter the size of the NYPD can police a border 150 times the length of Manhattan.

So, what to do? I think any immigration legislation must take into account both the economic and security issues raised by illegal immigration. Conservatives are right to highlight border security – but hardliners are wrong to stop there. We must increase the number of border agents and the technology used to safeguard the border. This will be costly, but it is necessary if we are to tide the flow of illegal border crossings, which everyone is eager to do. As for those already here illegally, it is simply laughable to think that we will be able to expect them to leave voluntarily or to be deported. Most of these illegal immigrants have jobs and roots in their adopted communities. They are personally better off, and a move back to their country of origin – typically Mexico – would be tantamount to suicide. Plus, deporting 12 million people – 4% of the total U.S. population – would be logistically impossible. That number would fill buses stretched along the west coast from Tijuana to Alaska.

For a variety of reasons, we must find a way to integrate these immigrants into society. Economically, they contribute to society by and large by paying taxes. America has always fashioned itself as a country of immigrants, and even if this history is little more than national mythology, it is a powerful notion. Immigration is an intensely personal issue, largely because most of us came here from somewhere else. Philosophically, America has had trouble defining what it means to be an American citizen, but our national myth seems to dictate that all who want to be here are welcome. No one is entitled to anything, but whatever the benefits of citizenship, they are available to all who will reach for them.

We must, therefore, find a way to manage the flow of immigrants. The economic and social incentives are present for people to come here. Moderate proposals call for long waiting periods approaching 10 years for those petitioning for citizenship and payment of fines and back taxes. I far prefer this to any call for a guest worker program, which amounts to a giveaway to business of serf-like labor and a semi-permanent underclass of non-citizens. And furthermore, unskilled native-born workers are at a disadvantage when competing for jobs with these guest workers, who will generally work for lower wages. Finally, guest workers will have no incentives to assimilate into American society, because they have no hope of ever being Americans. The important thing is to integrate these immigrants into society and the economy – the free flow of labor is critical to the growth and prosperity of a global economy, just like the free flow of capital and ideas.

Which brings us to the 800-pound gorilla that no one addresses – the cultural transformation effected by immigrants. American history shows that we are primarily an Anglo-Protestant country, with our system of government and culture based on broad principles derived from the Anglo-Protestant tradition. Immigrants threaten that history and that culture, primarily through language. Any cultural transformation is unnerving to the native-born, and much of the sensitivity of the immigration issue is based upon a fear of cultural transformation caused by the massive influx of Hispanic immigrants. But I firmly believe that American culture and traditions are strong and sufficiently broad-based to withstand any potential cultural threat. Outcries over immigration have been a part of American history forever – whether the newcomers be Irish, Italian, Swedish, Russian, Jewish, Polish, or any other ethnicity. And the general Anglo-Protestant ethos of American society and culture has survived. Part of the reason that immigrants choose to come here is that culture of opportunity. Thus, I would hope that Congress and the public at-large will reflect on these issues and conduct the immigration debate with reason and temperance, avoiding the temptations of nativism and fear-mongering. Instead, we must respond to the economic and social realities of migration and address them in a constructive manner – all too often an impossible task in a world of political reality.
At long last, I've summoned the courage to post some thoughts.

I've been recording podcasts for a friend of mine for the past few weeks. My contribution to each of these podcasts has been a combination of news and commentary on contemporary political issues.

I'll post each of these pieces, and if you'd like to listen to the full podcast, check out skinnycorp.com.

Enjoy!