Saturday, December 27, 2008

Examining China's Role in the US's Economic Woes: The Times Takes the Lead

BOSTON, Mass. -- The New York Times today published a piece on the Faustian Bargain of our day: the tacit agreement between China and the US for China to produce most of what US consumers buy for their various quotidian needs while US buyers act as an easy market for China.

The piece, by Mark Landler (view it here), is a good summary of something that is both so obvious and so significant that it almost doesn't need to be reported, yet it is appalling that it's reported so seldom: China's role in the easy-money, cheap-credit binge the US economy has been hydrophobic on since ... the 80s ... Clinton introduced PNTR with China in 1999 ... the tech boom crashed ... OK, there are many starting points. The reporting here is decent, though it's more like a synposis than anything indicative of the scope of the subject. But, significantly, I hope it's a first step to understanding in much greater detail the root of a collapsing American -- and global -- economy. There were many factors that went into the housing -- and general consumer -- bubble that continues today, and from which we'll still be seeing much worse effects for another year or more. The mess was caused by banks pushing up profits via off-balance sheet credit default swaps and sketchy investments; homeowners and consumers who forgot that they need to have money to finance exorbitant purchases; a weak Congress totally ignorant of what was going on; and Alan Greenspan.

You boys BOTH deserve a medal for that one!

But the overvalued dollar and macroeconomic factors allowing Americans to obtain credit without any connection to their income didn't come from banks or consumers themselves. And Greenspan couldn't just keep rates suppressed at 1% from June 03 to June 04 when the US was at war without fearing major repercussions for the dollar and investment if he didn't know there was a major, major buyer out there ready to purchase US bonds and T-notes no matter the interest rates.

For years, the Chinese government has carried out a carefully calibrated policy to essentially appropriate from exporters $.50 on every dollar entering China from export purchases. The Chinese government invested the majority of the unprecedented amount of money that accumulated in US treasury notes and other bonds, including US mortgage bonds. That was intentionally done to keep the yuan/renminbi low, the dollar strong (if they held those reserves in yuan, the opposite effect would have been achieved, e.g.), and interest rates low in the US. That fueled the credit binge that allowed homeowners and consumers to seemingly defy economic law (until they no longer did) and banks to have 35-to-1 leverage rates (i.e., for every dollar of capital a bank actually had, it controlled $35 in assets, many of them tied to mortgages and consumer debt, bought with borrowed money).

Keep interest rates low so we can sell our products and be employed and not demand our rights, all of which serves the good of lucky scientifically harmonious society

While American society and the media have rightfully chewed out the US government and banks for being complicit in the credit fiasco, the larger, underlying problem remains China -- and for reasons I do not understand (is it fear of retribution, that China will dump its dollars and create a run on the US dollar? is it unwilingness to open this Pandora's Box and see how bad things really are? is it lobbying pressure applied by US businesses invested in China or Chinese state/economic interest lobbies?) we still have not addressed the structural problems stemming from our addiction to Chinese government investment and cheap Chinese goods -- or China's addiction to the US consumer.

This is a slow economic bleed for the US, and if we don't address this, we'll be absolutely toast in the long term. We need to use some teeth to get China to adhere to the WTO rules it's agreed to follow and "normalize" its trade regime. Given that China is a leading economic heavyweight, it needs to stop being classified as a "poor" country not subject to everyone else's rules in the WTO. It needs to abandon protectionism, end its illegal subsidies and VAT rebates to exporters, float the yuan on world markets to end its long period of undervaluation, and allow foreign companies to operate normally (without 100%-Chinese incorporated JVs with local state companies) on its territory. Failing all of these things, the US government needs to finally stick up for the interests of the US with coordinated action with Japan and the EU including WTO lawsuits and potential tariffs. Yet guess what? US Treasury Secretary Henry Paulson continues to play the fool, calling the biggest problem of the day "hopelessly academic" and glibly saying that it takes a "crisis" to bring about change. Mr Secretary, you've got your crisis, now when are you reversing gear on the policy you yourself admit is a dud?

You're a hell of a guy, Phil Knight

But more importantly, US executives, consumers and government officials need to recognize the importance of investing in competitiveness in the domestic market to ensure their long-term success. That means doing what the Germans, Japanese, Finns, Koreans and French do: investing in advanced manufacturing techniques to make production cost- and quality-efficient at home, rather than investing in new facilities in China to exploit cheap labor. The latter route may be good in the short run, but long term it will do nothing but hollow out the US operations of a company: Like telecoms company 3Com, when your production is all in China and most other US companies also have their production there, soon your operations are all their as are your customers. At that point, there's no reason to continue as a US company, while it makes more sense to sell to a Chinese competitor. And those competitors come about via local workers leaving your factories to take government offers to create Chinese-owned competitors. So you sell for cheap to a competitor who beats you on cost and connections in China that never would've existed had you and your fellows not gone for the cheap-labor move. In short, exploiting cheap labor is long-term bad for your company, destroys shareholder value -- and it screws over your kids' economic future.

I have lived in the former Soviet Union. It's ugly. And I can see the US heading in that direction if we too allow our economy and production base to be hollowed out -- as the USSR did by growing dependent on oil, gas and a generally BS castle-in-the-sky economic system. I increasingly am inclined to describe our economy as just that -- a castle in the sky, built on Chinese government investments fueled by Chinese government-subsidized production of goods to Americans living and losing their jobs amid decaying, unused old factories and who wouldn't be able to afford the goods were it not for the Chinese government investments fueled by ... (it's the song that doesn't end -- till it does!).

What you really don't want. Trust me

Thanks to the Times for finally opening up this issue -- but what the hell took you people so long? Three WTFs to Congress for still refusing to address this, the biggest systemic threat to the country at a time when it's proved insane not to address our systemic failures in time.

(Side note: Try using your post-Christmas sale shopping to buy exclusively non-Chinese things. It's really, really hard -- and leaves you feeling satisfied when you can find a non-Chinese product. Moreover, it gives you an appreciation for how addicted to Chinese goods we are. And, if any other overly robust market -- tech stocks, houses -- must come down, then it seems there's something akin to a bubble in Chinese products. They're inescapable, omnipresent, and seem too good to be true. And, given our dependence on them, they probably are. I have no idea how this bubble could fall apart, but they always do, and this one will too. What happens if Taiwan declares independence and the US supports it? We'd be without boots, shower curtains, mops, TVs, computers, sunglasses, watches, auto parts and -- increasingly -- certain food and medicine until we gave in to China's demands. Reliance on one trade partner -- no matter how closely geopolitically aligned your interests are -- and they aren't here -- is dangerous. Chinese goods could well be the next great bubble.)

Ah, symbolism

Tuesday, December 23, 2008

Merry Christmas from Walter Duranty

QUECHEE, Vermont -- Come back, Woody Guthrie. Come back to us now.

Merry Christmas and happy holidays. We hope the new year will bring more hopeful times and a brighter future for America.

16 Connecticut Papers Close, 21 Journalists Laid Off

QUECHEE, Vermont -- The Journal Register Company, which operates the New Haven Register as well as several other papers across the northeast and midwest, announced last week that it would be closing 16 of its weekly community papers in Connecticut.

The company will be closing eight papers along the Connecticut shoreline and eight in its Elm City division, including my hometown Hamden Chronicle. In total, 21 journalists lost their jobs as a result of the closures.

Said one laid-off employee: "It's like, 'Merry Fucking Christmas,' you know?" the New Haven Independent reported. Editor Paul Bass had these comments for his weekly video blog:

We at the Walter Duranty Report would like to extend our sincerest condolences to these reporters and their families who, like many Americans, are facing these difficult changes at the worst possible time of the year. We wish you all happy holidays, and we hope that you can all find a way to return to doing the important work of your profession.

Friday, December 19, 2008

From the Dept. of Things That Sound Totally Illegitimate

New York, NY -- Um, right, so the Chinese Communist Party is now telling Bank of America it can't sell its stake in China Construction Bank, one of China's biggest lenders. The CCP, in other words, has effectively frozen BoA's assets.

That's great. That doesn't sound sketchy in the least. I see a bright future for us all, given that the management of a bank deemed "way the hell too big to fail" is run by people with the decision-making capabilities to allow a significant amount of their assets to be held by the CCP.

(On a side note, I'm beginning to understand how it is that the dumbest lacrosse players managed to get jobs after college with the biggest banks: Because banks aren't morally lacking; they're lacking in brains and sense. Finance, like a Wal-Mart, is full of half-witted, low-skilled salespeople who aren't allowed to unionize.)
Heckuva job, Kenny!

Anyone know of any good Icelandic banks?

And now for your moment of zen: The FT reports the following:

BofA shelves $3bn plan to cut CCB stake

By Sundeep Tucker in Hong Kong and Jamil Anderlini in Beijing

Published: December 18 2008 23:32 | Last updated: December 18 2008 23:32

Bank of America has shelved a $3bn (€2.1bn) sale of China Construction Bank stock following objections from Beijing, igniting fears that some cash-strapped overseas investors could struggle to offload their lucrative holdings in the country’s banks.

The US bank, which in 2005 was part of a wave of foreign investment into Chinese banks, last week hired UBS to help sell a chunk of Hong Kong-listed shares to reduce its overall ­holding in CCB to less than 17 per cent.

The offer was priced at a discount of 15 per cent to CCB’s current share price and was quickly covered by US and European institutional investors, said people familiar with the matter.

However, only hours before it was due to be unveiled on ­Monday morning, the share sale was pulled on the instructions of Ken Lewis, BofA chairman and chief executive, following a phone call with Guo Shuqing, his CCB counterpart, according to people familiar with the situation.

The precise reason for the 11th-hour abandonment remains unclear, but dealmakers in the region believe that the Chinese government was unhappy about the timing of the share sale, the first such attempted divestment by a foreign investor following the expiry of a lock-in period.

The share sale could have triggered a fall in CCB’s share price just as Beijing is trying to garner support for its largest banks and arrest a stock market slide.

Foreign financial institutions, including Goldman Sachs, Dresdner Bank, Temasek and Royal Bank of Scotland, hold shares in China’s leading banks worth billions of dollars and analysts say they could be tempted to sell down stakes to raise capital when their three-year lock-in periods start to expire from next month.

“Bank of America cancelling those trades has made the other foreigners realise they don’t exit at their discretion; they exit at the discretion of the Chinese government,” said one Asian dealmaker who asked not to be identified.

The Chinese government cannot prevent trading of Hong Kong-listed shares, but deal­makers said it was likely that BofA was warned of repercussions to its future business on the mainland if it carried out the sale.

Thursday, December 18, 2008

Train Pulling Out of Station for Obama's Cabinet to Bring Real Reform

New York, NY -- President-elect Obama is  to announce today the nomination of Illinois Representative Ray LaHood as Secretary of Transportation, the New York Times reports

The Department of Transportation has been notable during President George W. Bush's eight years term for its astounding failures. The agency has overseen an unprecedented decline in the nation's infrastructure, best typified by the collapse of a major bridge in downtown Minneapolis; at a time when rising oil prices and growing recognition of the harm fossil fuels cause the environment, it has greeted the only nationwide passenger railroad with budget cuts and an ideological contempt; and its disembowelment of FEMA allowed New Orleans to fall apart while its lack of any vision or clout has prevented that major city from putting itself back together. Moreover, as anyone who's ridden a plane in the last year (almost anyone), our airports are antiquated and falling apart; and outdated logistics systems and lack of any expansion of runways (thanks, DoT, for pushing for that funding!) in recent years make flight delays the norm, not the exception -- an appalling circumstance.

The Lower Ninth: Brad Pitt has done more to rebuild infrastructure than the DoT.

Not only will the DoT have to fix those problems to restore itself to its pre-Bush functionality, but a sweeping set of new social, economic and environmental phenomena are facing it: In order to maximize our economic potential and reinvigorate our towns and cities across the country, we need to reconfigure our cities with light rail to make mass transit again feasible (as it was before the postwar Era of the Automobile); connect our dying Midwestern cities to one another with high-speed trains to allow for improved commerce and business (and social) interaction; and stamp out sprawl and reinvigorate the country toward dense, ecologically friendly and socially/culturally progressive transit-oriented development hubs, as David Brooks and others are fast realizing.

Perhaps most importantly, we need to stand with the rest of the world in making oil use a valued good, not a cheap commodity. That means increasing taxes on it to discourage its use (as we do with luxuries, cigarettes, etc.) and account for the damage and effects oil use has (on roads that need repairs due to car use, on the environment, on people's health, etc.). The best way to do that is via a (substantial) increase in the gasoline tax. The gas tax was increased consistently through the 60s, but then the Goldwater Republican Revolution and its acolytes put a stop to that. So for years we've stagnated in that regard. To move us from oil and toward high-tech sustainable solutions -- and to come up with funding for our roads and bridges so they don't collapse and kill us -- we need to tax gasoline like the rest of the world does.

None of these phenomena crept up on us overnight. They're all long-term trends. It's just that America has been utterly stagnant the last eight years and has failed to embrace -- or even acknowledge them. These things are not news for the rest of the world, and we, unfortunately, now need to play catch-up.

Moreover, these represent truly great opportunities to improve our short- and long-term economic prospects; to improve quality of life for millions; to instill people with a newfound civic spirit through mass transit; and to inspire smart kids to become engineers and scientists to work on grand projects -- rather than Wall Street turds. Though these agencies have historically been neglected, there is now, finally, an opportunity and impetus for them to take a world-leading role in advancing new technologies and changing the way we live.

Will LaHood be able to remake the country's infrastructure, transit networks and mode of living?

That said, you have to ask, Is a Republican representative who sat by idly during our infrastructure decline as a 14-year veteran of the House Appropriations Committee the man to do this? Of the articles that major newspapers have published about him, only the WSJ even mentions LaHood's transit creds, noting that his "resume on transport matters was seen as thin." Should it fall to someone who for years lacked the vision, political fortitude or just plain common sense to increase funding for infrastructure or to push for better (or just functional) mass transit to now be the person who remakes our transit system from scratch? Someone with no experience managing a large agency, no vision regarding the work before us, and no common sense to have pushed for any change the last 14 years?

This is a great, great disappointment coming after a day of disappointments. Senator Obama was elected with a mandate to change, open, modernize and liberalize the country after our 8 years of cultural, moral, economic and geopolitical stagnation; there is a great amount of work to do. There's work to be done at the Interior Dept, where destroying our national parks for the sake of drilling (which hasn't yielded any oil yet and only keeps us addicted to a fuel that's bad for us geopolitically, economically and environmentally) and engaging in drug-and-sex binges with the companies the agency is supposed to be regulated are the norm; and at the USDA, which acts as a clearinghouse for subsidies for billion-dollar food-production conglomerates and has seen the FDA turned to a shell of itself. 

Yet Obama inexplicably appointed fairly weak, status quo figures to these departments yesterday. Is a rancher whose claim to fame is that he wears a kitschy cowboy hat the man to stamp out a corrupt Interior Dept, preserve our parks and environment, and stand up to Big Oil and resources companies to drag us into a sustainable, high-tech 21st century? Are we likely to see a shakeup of the USDA to orient it, as Nicholas Kristof suggested, toward sustainable food production and higher standards and help farmers (not farming conglomerates)?  

"Delicious," piped Warren after eating yet another gay for brunch

No. Similarly, I thought we'd finally turn a corner on THIS century's civil rights struggle -- equal rights for gays and lesbians -- while defanging America's Hamas, the fundamentalist Evangelical movement, of unfortunate political clout. But it looks like Obama is setting the stage for an indefinite extension of confusion of Church and State by embracing a latter-day "Agent of Intolerance," Rick Warren. Shame on Mr Obama for having his presidency blessed by a man whose political beliefs are more Pat Buchanan than Pat Moynihan. Given that, I would've been much happier with the Rev. Wright saying "goddamn America" and pushing us to better ourselves and cast racism aside, than with a bigoted mega-church telecaster who may say he loves America -- but doesn't love its rights or freedom so much as to see them extended to all our countrymen.

I don't know what's happening to Obama, but I'm beginning to wonder if Cheney the Evil Wizard's baleful prophesy is coming true. 
Is Obama convinced when Charles Krauthammer intone that "America is STILL a center-right nation. Bwahahaha!" Those are crass lies, and Obama should know that: America is nothing but a country of people who want to do best for themselves, whether that means being "right" or "left." Our problems are abundantly clear now, and the solutions are also fairly obvious. Obama has mostly done well in his Cabinet choices, I think, but his recent appointments -- to agencies that, while usually low-profile, now demand vision and leadership to make up for our failings and take advantage of great opportunities -- seem a missed chance. America to Obama: WTF?

Cheney: still hanging out?

Buddy Cianci Continues to Make Rhode Island Comically Corrupt

WICKFORD, Rhode Island -- One thing I really enjoy about coming back to New England periodically is to witness the outrageous corruption that reigns here, particularly in the three southern states of the region.

My home state does have a formidable cast of criminals that have duped the electorate, raided the public treasury, and even committed crimes of unspeakable horror. In Massachusetts, Boston's Tom Menino may never have been convicted of a felony, but the four-term mayor does frequently abuse his power, tries to steal money from the library, and in most states, he would probably be disqualified from public office for being an imbecile or mentally deranged. But few of these public service terrorists can compare to former Providence mayor Vincent "Buddy" Cianci in term of sheer audacity and shamelessness.

Buddy served seven terms as mayor, and he only had to resign in disgrace twice. The first time was in 1984, after being convicted of assault. He returned to city hall in 1991, but in 2002, he ran afoul of a federal investigation, codenamed "Plunder Dome," and was indicted on charges of racketeering, conspiracy, witness tampering, and mail fraud. Buddy recently served a four-and-a-half year stint in federal prison on a single count of conspiracy to run a corrupt criminal enterprise; he managed to beat the other 26 counts of the indictment.

Buddy remains a popular radio talk show host, but I was dismayed to see that he has a new title: "chief political analyst" for Providence's local ABC affiliate. Here you can watch him offer up his massively stupid opinions about Caroline Kennedy's bid for the vacant US Senate seat in New York.

So, let's see: being convicted of a felony disqualifies you from joining the army, or becoming a police officer, or joining almost every branch of the civil service, but you can still run for public office, and get a lucrative job in television.

Monday, December 15, 2008

Why SNL Is Pissing Away Their Political Capital Faster Than Pres. Bush c. 9/12/01

BOULDER, Colorado -- This election season, Saturday Night Live managed to position itself as a must-see program with its smart, topical humor. They had a solid cast to play the election's principals, and the show even added an extra half hour a week with their Weekend Update Thursday segment in the weeks leading up to the election.

The show appeared to be going through a renaissance, but the question remained: how would they handle the post-election hangover?

Well, the past few episodes have shown that the show kind of sucks.

Their first week back after the election clearly illustrated that with a bigger audience, the show was ready to go down market in a big way. Nearly every skit in the Paul Rudd episode was premised on lazy, uninventive gay jokes. I didn't realize dudes kissing was such comedy gold.

Then this past week, there was this travesty:

This isn't an awful impression of New York Gov. David Paterson, who is a very witty, self-deprecating man. He has also been very frank about his checkered past, and I thought the Richard Pryor joke was hilarious. But making fun of the blind? Holding a chart upside down? Wandering in front of the camera? They have done this joke at least three times in recent weeks - once with the crazy woman at a McCain rally who called Obama "an Arab," once with John McCain during the town hall debate, which actually happened in real life, and now this; this time it seems much cheaper and mean-spirited. Apparently all blind people act like Mr. Magoo. I was half expecting him to wander off into a construction site and almost walk off the edge of a metal girder.

Gov. Paterson himself is pretty pissed, and rightly so. His spokesman told the New York Post, "This particular Saturday Night Live skit unfortunately chose to ridicule people with physical disabilities and imply that disabled people are incapable of having jobs with serious responsibilities."

For all of his flashes of genius (Nicholas Fehn comes to mind), Fred Armisen also seems to be the cast member most likely to engage in this sort of uninspired, lowest-common-denominator humor. And why are we supposed to put up with him in blackface? Because he is vaguely "ethnic," or something? Why is that okay, especially when portraying the president?

Since the election, SNL has taken on such difficult subjects as the gays and the blind. What is next for this bold program, Polish jokes? How about they do some skits about various members of the clergy or people of different nationalities walking into bars? Perhaps they could tackle the controversial subject of bathroom-related humor?

Sunday, December 14, 2008

Russian Government Violently Suppresses Dissenters March

BOULDER, Colorado -- Video evidence has emerged of the ghastly incident over the weekend at an opposition political conference outside Moscow involving a number of mutilated sheep. This video comes from Oleg Kozlovsky, a leader of the liberal youth movement Defense (Оборона).

According to other sources who were at this event, many of the animals still had needles sticking out of them, clear evidence that they had been drugged in addition to having their legs broken. The sheep were also smeared in shit, and the ones that were still alive were vomiting up blood. The conference participants spent a long time rounding up the live ones and clearing the dead from the road, and it took several hours for the police to arrive after they had been called. When they did show up, they directed more of their attention towards the opposition activists, briefly detaining them and checking their documents, than at the men chucking sheep in the road.

This same source reported that the location of the Solidarity event was a closely-guarded secret, and participants were told to go to the Dynamo metro station, where they would be met by buses to take them to Khimki. Some of the buses were in fact decoys, sent perhaps by political opponents or the security services, that took several dozen people out into the middle of nowhere and dumped them.

It wasn't until today that the English-language press finally picked up on this story. Over the weekend, most papers and wires had been reporting on the Solidarity conference, but they did not mention the detentions or the sheep. After Sunday's Dissenters March in Moscow and St. Petersburg was violently suppressed by police - according to most reports, roughly 90 people were arrested in Moscow and another 60 in St. Petersburg - this detail began to appear in English stories.

The Union of Soviet Officers, a group of retired officers that lobbies for the rights of retired soldiers, tried to organize a rally Sunday in Moscow, but they too were violently dispersed by police, and several were arrested, among them retired generals and admirals. Ten activists from the opposition group We (Мы) were preemptively arrested coming out of a Moscow McDonald's before they could participate in the march. Among those arrested was Roman Dobrokhotov, who had been detained earlier in the week for speaking out during a speech by President Dmitry Medvedev.

The Dissenters March is a political demonstration involving a broad-based coalition of anti-government groups, ranging from moderate established parties like Yabloko to radical groups like the National Bolshevik Party. The first such march was held in Moscow in December 2006, and several others have since been held across Russia. Nearly all of the demonstrations have been brutally suppressed by government security forces.

Here is a translation of the text commentary in the video (thanks to Itchy for finding this):
Provocation against the conference of the opposition political movement Solidarity, December 12, 2008.

Before the beginning of the conference, an unknown person began throwing live sheep onto the road from a bus that had pulled up.

Some of the sheep that were thrown out of the bus died. Inside the bus there was another dead sheep.

The provocateurs hide their faces from the camera, but they don't panic. Obviously, they are confident if their immunity.

Next to the bus are two young men. They don't deny that these are their sheep, but they also hide their faces.

One of the conference participants recognizes the young men.

(Cameraman: Who are those young men?
Participant: They are from the Young Guards [a pro-Kremlin youth group])

The activists from the Young Guards hurry to hide themselves.

Actually, this story is not about sheep.

It is about those, who because of their selfish goals, are ready to do anything.

Saturday, December 13, 2008

Russia Celebrates Constitution Day with Arrests, Dead Sheep

BOULDER, Colorado -- Friday marked the 15th anniversary of the ratification of Russia's constitution, and the celebrations varied from the depressing to the bizarre to the macabre.

The most notable incident took place inside the Kremlin, when President Dmitry Medvedev delivered a speech to 5,000 invited guests outlining proposed amendments to the constitution. During his speech, an opposition activist and journalist named Roman Dobrokhotov stood up and began shouting at the president.

"Shame on these amendments!" he shouted. The president continued speaking, but was again interrupted. "Why are you listening to him? He has violated all the rights and freedoms of the people and citizens. The constitution has been violated, there are no elections, and he goes on about the constitution."

Dobrokhotov was immediately removed from the hall by agents of the Federal Guard Service (ФСО) and was briefly detained. He will be charged with an administrative, not criminal, violation, which usually carries a fine. Here is a video of the incident from Russia's Channel 5:

Dobrokhotov is reporter for the newspaper Private Correspondent (Частный корреспондент) and a member of the liberal opposition youth group We (Мы). After the incident he claimed that he attended the speech in his role as a political activist, not as a journalist.

He also hosts a weekly radio show on a local Moscow station. After his return from the Kremlin, he was immediately informed that he had been fired, though the station manager claimed that all non-staff presenters were being fired (technically, Dobrokhotov has been hosting his show every week for the past two years as an "invited guest host"), and his termination had nothing to do with his outburst at the Kremlin.

Among the proposed changes to the constitution are extensions of terms for the president and members of parliament to six and five years, respectively, from the current four. The amendments, which will be the first ever made to the Russian constitution, have already been approved by both houses of parliament and now require the approval of two-thirds of the regional legislatures to be ratified.

To illustrate just how much the constitution really matters in Russia under the leadership of Vladimir Putin, since 2006 Constitution Day has not been a national holiday. Instead, it has been superseded by such nationalist flag-waving days as Peoples Solidarity Day, which celebrates how much Poland sucks for joining NATO (or it has something to do with driving the Poles out of Russia in 1612. I can never remember.)

Just next door to the Kremlin on Vasilievsky Spusk, pro-Kremlin activists were celebrating with a Miss Constitution pageant. The event, organized by the nationalist youth group Nashi, had young women traipsing around an outdoor stage in skimpy dresses and swimsuits in the middle of a Russian winter while they answered inane questions about how awesome the government is. The Los Angeles Times has a story on this absurdity (the photo is from that story).

Finally, in the nearby city of Khimki, opposition activists gathered for a conference to form a new political coalition they are calling "Solidarity." When conference delegates arrived at the site on Friday, however, they were met by a bus filled with sheep wearing hats adorned with the Solidarity logo. The sheep had been mutilated, and many of them were already dead. The animals stumbled out of the bus in a bloody heap.

Police arrived at the scene and detained the driver of the bus, who claimed he didn't know why he was asked to transport these animals or who was responsible for the stunt. Police also briefly detained some 150 delegates, ostensibly to check their documents. The delegates were subjected to a number of other dirty tricks, including anonymous phone calls giving them incorrect directions to the conference, and they had their cell phones jammed.

The conference finally got underway Saturday, and organizers Boris Nemtsov and Garry Kasparov announced the formation the group, which was approved unanimously by the delegates. Outside the meeting, a number of members of Nashi protested the event. They showed their disdain by dressing as monkeys and hurling flaming bananas at the building, a maneuver they usually reserve for commtting racially-motivated hate crimes or for soccer games to mock black players.

Friday, December 12, 2008

Auto Bailouts: Global Companies Need Them Too

NEW YORK, New York -- Running counter to the propaganda line that US automakers need government money not because of the global economic crisis that is plunging car sales but because they are not viable businesses and deserve to be taken over by foreign competitors, the NY Times reports today that European and Asian companies are increasingly seeking bailouts. 

Only where the US plan recently punted by the Senate would have provided a $14 billion loan, the European companies are looking for nearly $55 billion. 

And, as Dennis DesRosiers, an auto analyst, said:
"“It’s a foregone conclusion that governments around the world are going to aid these companies. It’s just a matter of working through the politics.”

Note to Republican Senators: If the US automakers don't get guaranteed loans soon, they won't necessarily be taken over by "better" companies, but by ones whose governments realize the importance of not letting a huge industry collapse on the rocks.

Thursday, December 11, 2008

Goodness Gracious, Great Balls of Economic Suicide

NEW YORK, New York
-- Jesus. The unthinkable happened. Senate Republicans refused to offer a bridge loan to the Detroit Three (formerly the Big Three). Apparently it violated their "principles."

Unless some extra-congressional funding is found, GM and Chrysler could go bankrupt. Normally, they'd be able to get loans from banks to restructure after filing Chapter 11, but given that otherwise-healthy companies can't even get short-term loans to pay employee wages, there's little chance of that happening now. An inability to restructure after going bankrupt would mean liquidation. The evaporation of the auto industry. And if Chrysler and GM go, so would their parts suppliers. Meaning Ford and the "healthy auto industry in the US" -- foreign makers' US plants -- would probably be in deep trouble. The aftershocks would go well past the US.


The Senate's outright failure to exercise common sense may not spell doom. Hank Paulson probably doesn't want to be the guy who fiddled while both the financial system and the manufacturing sector fell apart, and the Treasury can potentially find some money or persuade the Energy Dept to use the $25 billion earmarked (that merely means it's directed at a certain purpose -- outside of John McCain's head it isn't a four-letter word) for "greening" the auto industry to keep it alive. 

But the facts are what they are: We're on the brink of depression. Every .1% rise in the employment rate sends stocks plummeting and investment running. Losing 1.5 million to 5 million auto-related jobs would have a huge knock-on effect on every other sector of the economy, as if it wasn't hurting enough already. But at least the Southern Republican senators (who have the Toyota, Nissan, etc. plants in their states) didn't have to violate their "Milton Friedman free-market" principles.

Senator Richard "Smug Dick" Shelby: If you see him, kick him in the head.

As if there wasn't a lesson to be learned about letting massive companies fall apart after Lehman... Allowing the companies to undergo managed bankrupty would be one thing. It'd probably be a good solution for the government to agree right now to offer restructuring loans should the companies go bankrupt. Then they could restructure and be guaranteed funding. 

But Congress is doing nothing like that. Not offering any guarantee creates doubt in people's mind about the arbitrariness of the system -- whom will the government bail out? Whom not? There are no ground rules being put in place, and that's going to freeze credit and scare off investment just as it did after Sept. 15. Do the Southern Republicans not realize the sh%$ hit the fan after that date? Don't they know why? Or are they too busy barbequeing and seeking campaign donations from the Toyota and Nissan plants in their states?

But, regarding those plants, it should be noted: Republican congressmen love to say that the US auto industry is doomed because its workers are overpaid, but David Leonhardt did a good job bursting that myth in the Times this week. The Detroit companies have actually aggressively improved the quality of their cars in recent years. In particular, Ford (most popular foreign car in Russia) and GM (Buick is the top foreign maker in China) have become world-beating operations overseas, where they can't rely on cheap oil and undiscerning customers to buy high-margin SUVs. If you want to look at an American product that can compete and be sold internationally today and in the future, it is -- strange to say -- US cars.

Now, in the truest Southern Republican spirit of capitalism (a weird, zealous brand of capitalism that is not really informed by economic thought or data the way an academic or banker's capitalism is, but is vaguely inspired by Christianity, which itself is a strangely socialist religion) , shouldn't any business be expected to want to sell its highest margin products? Can you blame Detroit for selling high-margin SUVs and trucks if they were able to? It's the fault of Congress for not raising the gas tax for years or increase fuel economy standards and forcing them to make the kind of cars Japanese rivals were making for their home market, which had fuel and emissions standards with teeth. Of course, senators faced pressure from Detroit not to adopt those standards, but the buck should stop with the lawmaker, not the lobbyist. Lobbyists will always do what they do; lawmakers should rise above their venal interests.

Milton Friedman died for Rick Wagoner's sins

But even in North America, Detroit has been restructuring and building better, non-SUV cars; Ford and GM (Chrysler's another story, largely because it was bought by a private equity fund with no interest in anything but its financing arm) were on track to profitability before the Lehman-induced meltdown. The Chevy Malibu and Cadillac CTS were the top two cars in North America, respectively, in 2008, leaving only third place to a foreign car (Honda Accord). And Detroit's sales in the battered US market are little worse off (GM, at 40% down) or better off (Ford, at 30%) than Toyota & Co's (35%) this year.

2008: Best car in North America. 2009: Headed to the trash bin?

Should liquidation occur, or a chaotic restructuring where government continues to muddle about with no clear rules, we'll potentially see millions lose their jobs, an unspeakable chain effect of other lost jobs and collapsed companies, and a depression worse than the one in the 30s. All because somebody once told Richard Shelby about a halfway-cracked economist who died a few years ago at the age of Six Hundred and Yoda. And maybe, just maybe, Shelby and his cronies are also influenced by the fact the "healthy auto industry" they keep praising -- Honda and other foreign automakers with plants in Alabama -- donate to his campaigns. Good job, America. I encourage everyone to beat the tar out of anyone still dumb enough to call themselves a Republican if the Big Three are liquidated.

P.S. Senate Republicans and any American who thinks they have any credibility may yet taste a sweet, sweet irony: Given that companies across the world, from Volkswagen to Chinese makers like Chery, are in need of government loans, in allowing US companies to fail in order to let the free market, economic evolution, creative destruction, etc., etc., do their magic, the "naturally selected" winners in this game will be companies lucky enough to be based in countries whose governments aren't ideologues. Sure, let GM fail. But the only reason Volkswagen will be around to gain is because the German government and people have the sense not to let their biggest companies and employers fall apart during a once-in-a-lifetime economic maelstrom.

P.P.S. As the WSJ reports Republicans balked at any loan because of a
sharp partisan dispute over the wages paid to workers at the manufacturing giants.
So the Republican senators are going to let the economy tank because they think US workers don't deserve their salaries. How can these people EVER expect anyone to vote for them again? And yet, in the US, alone among nations, they still will get votes from the very people they want to be poorer. Bravo.

Tuesday, December 9, 2008

Illinois "Most Corrupt State"? Connecticut, Rhode Island Protest

BOULDER, Colorado -- Illinois Governor Rod Blagojevich is likely on his way to prison for his brazen attempt to outright sell Barack Obama's US senate seat.

During the press conference after the governor's arrest Tuesday, Robert Grant, the chief of the FBI's Chicago office, said, "If Illinois isn't the most corrupt state in the United States, it sure is one hell of a competitor."

It looks like the crooked old Chicago political machine is alive and well, but as a proud New Englander, I would like to make the case for my home state of Connecticut being the most corrupt in the country. We too have had a governor carted off to prison, as well as many, many mayors of some of our largest cities. Here are some of the latest and greatest betrayers of the public trust:
  • Phil Giordano, former mayor of the "Brass City," Waterbury, CT, currently serving a 37-year prison term for corruption and various horrid sex crimes, has had his appeals denied, though he did try to recover, while in prison, $61,000 he said the city owed him for unpaid vacation and sick days. Now that takes some brass ones. Giordano was the fourth mayor of Waterbury to be sent to prison.
  • In other Waterbury news, former Governor John Rowland, released in 2006 from federal prison, where he had been serving a one-year sentence for corruption - he handed out lucrative state road construction contracts in exchange for free renovations to his summer home - has been named head of the Waterbury Development Corporation by the mayor.
  • Former state treasurer Paul Silvester pleaded guilty to taking kickbacks in the form of campaign contributions in 1999 and later became a star witness in other corruption trials. He served four years in prison.
  • Joe Ganim, the former mayor of Connecticut's largest city, Bridgeport, was convicted in 2003 of 16 felony counts of racketeering, bribery and corruption and setenced to nine years in prison. As Ganim's inevitable indictment approached, the cousin of a friend of mine had to take "an extended vacation to Italy" until things blew over - he worked for a construction company that didn't exactly make a bid to get some city contracts.
  • Connecticut state senate minority leader Louis DeLuca was forced to resign last year after he pled guilty to a misdemeanor charge of criminal threatening. He had solicited the services of known mobster ("waste disposal entrepreneur") James Galante, of Danbury, to rough up his granddaughter's husband, who had been abusing her (sort of like when Sonny roughs up Connie's husband for beating her in The Godfather - of course, he eventually got garotted for plotting Sonny's assissination).
  • Finally moving to another fine competitor for the title of most corrupt state, Rhode Island, Providence's former mayor Buddy Cianci - recently released after serving four and a half years in the federal clink - is now a popular radio show host, and he likes to make a lot of jokes about how the current mayor is gay. What a rube!
UPDATE: The New York Times has chronicled Illinois' political corruption in a fancy infographic. Connecticut deserves the same.

Monday, December 8, 2008

Ohio Jumps On the Railroad Bandwagon

BOULDER, Colorado -- Ohio has plans to complete a passenger rail network connecting its three largest cities - Cleveland, Columbus and Cincinnati - by 2010, the Cleveland Plain Dealer reported last week.

The Ohio Railroad Development Commission, an independent body within the state Department of Transportation, has appealed to the federal government for $100 million to fund the scheme. The service would be operated by Amtrak on already-existing track owned by a private freight company.

The ORDC is still optimistic about opening a state-wide rail system in the future. The project, known as the Ohio Hub, would require an additional $200 million in federal funds, and would take approximately seven years to plan and construct once implemented. While not a true high-speed network, planners hope to achieve regular speeds of 110 mph (read a summary of the project here).

Ohio is woefully underserved by the current passenger rail lines, but the Ohio Hub plan would integrate the state into existing networks in New York, Pennsylvania, Ontario and the rest of the Midwest. The state is jumping on the incoming administration's enthusiasm for infrastructure and mass transit projects, and it should be an embarrassment that this three-city line doesn't already exist.

Thanks to Tyler for the link.

Beleaguered Workers Turn to Sit-Down Strikes

BOULDER, Colorado -- The laid-off employees of the Republic Doors and Windows factory in Chicago's North End are refusing to leave the factory. The company laid off 250 workers, and the former employees are claiming that Republic failed to properly notify them of the impending layoffs, the New York Times reported Monday. The workers have occupied the building since Friday, and they have no intention of leaving any time soon.

As the Times noted, the sit-in is vaguely reminiscent of the strikes in Michigan in the 1930's that led to the creation of the United Auto Workers union. One of the most important of these was the strike at the General Motors Fisher Body Plant No. 1 in Flint in 1936-37, when workers occupied the plant for 44 days before management caved to their demands. Here's an article from the Detroit News chronicling those events, which were also mentioned in Michael Moore's documentary Roger & Me:

Close to 1,000 workers were holed up in Plant No. 1, surrounded by 4,000 National Guardsmen, and there were a number of violent clashes during the long siege; the action was part of a nationwide strike at GM plants that involved 135,000 workers in 35 plants in 14 states. That's a far cry from these 250 window assemblers, but in these tough times, someone has got to stand up (or sit down) to save their jobs.

The Republic employees are members of Local 1110 of the United Electrical, Radio and Machine Workers of America, or UE - check out their website to see what you can do to help these workers.

Another party implicated in these layoffs is Bank of America, which is well on its way to becoming exactly that - the only bank in America. Republic claims it had to cut vacation and severance pay because BoA had revoked their line of credit; this came not long after the bank had received billions in taxpayer dollars to restore its ability to lend money to customers.

New England residents learned not to trust Bank of America years ago. In 2004, after acquiring FleetBoston bank, BoA laid off more than 1,000 workers in Massachusetts after making repeated promises that they would maintain Fleet's current levels of employment as a condition of the merger. I don't know how implicated they are in this Republic deal, but basically, they can go to hell, and I will never, ever bank with them.

Mapping Sounds

BOULDER, Colorado -- The blog Making Maps: DIY Cartography is an excellent resource for cartographers or anyone interested in making maps. Cartography is a little-understood art, even among people who make maps regularly (the same could be said of many other graphic arts, like typography, which is a critical aspect of cartography). The blog is produced by J.B. Krygier, a professor in the Department of Geology and Geography at Ohio Wesleyan University, and he recently posted an article he wrote in 1994 about mapping sounds titled "Sound and Geographic Visualization."

The interface between sound and maps raises a few different possibilities. Are you trying to display sounds with visual symbols (like in the graphic on the left), display visual features with sounds, or incorporate actual sounds to represent themselves in the map? Or can we use sound to include additional data and expand the range of information that is displayed to the reader, through the use of tools like audio narrations? Data is not always static, and sound can be an especially important tool for displaying temporal information.

In the case of people with visual impairments, using sound to represent spatial information can greatly expand the accessibility of maps. Sound, as well as other sensory information, may help mapmakers move beyond the tactile map, which is for many blind people the only cartographic resource available to them. In most cases, people require a great deal of training or assistance from a sighted person to properly orient these types of maps. They are essentially flat paper maps with the features turned into raised lines, and without any meaningful representation of the many other inputs that blind people (and sighted people) use to navigate the world. Finding a way to map these inputs may help people develop what the geographer Dan Jacobson refers to as a Personal Guidance System to enable them to move more freely in their environment (for a brief bibliography on this topic, see the end of this post.)

I was inspired to write about this because I have come across a few things of late that make intriguing use of sound in maps. My girlfriend also teaches elementary schoolchildren with visual impairments, so I have been trying to read up on the subject. She teaches them about the history and geography of New York City, so she is always looking for new ways to display geographic features and improve their spatial cognition.

The first item I will point to is a map produced for the Lower East Side Tenement Museum in New York City. The project is called Folk Songs for the Five Points, and the map links locations to sounds recorded at the particular site. The sounds are also categorized into four different types - field recordings, spoken word, music, and folk songs - and the visitor can mix them to create their own song that captures the cacophony of the Lower East Side.

The second was an episode of This American Life that aired earlier this year that explored mapping with different senses. The second act considered hearing, and the contributor attempted to isolate all the ambient sounds of his environment, and then figure out what mood they conveyed when in harmonic combination. The first segment of this program features the work of geographer Denis Wood, who co-authored with Krygier the book Making Maps: A Visual Guide to Map Design for GIS. The project that is mentioned in the piece can be seen here.

Most of these intriguing developments in mapmaking and visualization require the use of digital resources, so the possibilities for online multi-sensory cartography are immense. People encounter maps most often in the news media, and increasingly they get their news online. So let's hope that the massive layoffs that are sweeping through the press won't hamper these fascinating new possibilities in mapmaking, or the cartographic profession in general - you know things are bad when even National Geographic is laying off cartographers.


Dransch, Doris (2000). "The Use of Different Data in Visualizing Spatial Data." Computers and Geosciences 26(1): 5-9.

Jacobson, R. Dan (1994). "Navigation for the Visually Handicapped: Going Beyond Tactile Cartography." Swansea Geographer 31(1): 78-85.

Krygier, J.B. (1994). "Sound and Geographic Visualization." In Taylor, D. and A. MacEachren, eds. Visualization in Modern Cartography. New York: Pergammon.

Saturday, December 6, 2008

Russia's Economic Crisis: Who Got the Story Right?

BOULDER, Colorado -- The Moscow Times seems to be taking an overly sunny view of Russia's economic prospects. Take a look at this story, by Ethan Wilensky-Lanford from the December 1 issue:

"IT Minds Expecting The Next E-Boom"

Now compare this with a story from the New York Times by Ellen Barry back on November 16:

"Russia's High-Tech Sector Reels"

Despite the collapsing stock market, disappearing credit, and a faltering banking sector, Mr. Wilenksy-Lanford expects a "boom" in e-commerce in Russia. He rightly identifies the serious obstacles to doing business on the internet there - low penetration rates, an abysmal postal service, and minescule credit card use, despite a few years of robust growth - but somehow, the rosy predictions of a few online entrepreneurs is enough to qualify a coming boom. The story of wireless networking supply company MeshNetics chronicled in the Times - huge layoffs and no new investment capital - is probably more indicative of the situation in Russia.

Earlier this week I mentioned a story by Miriam Elder for The Independent about Moscow's Millionaire's fair, which described how this year's event has seen fewer visitors and decreased sales amidst the downturn. Mr. Wilensky-Lanford had this headline in the Moscow Times:

"Crisis Fails To Dull Lustre of Millionaire Fair"

The story relies on event organizers and boosters. Russian horse-faced celebutant Ksenia Sobchak is quoted as saying, "Welcome to our anti-crisis event." A yacht salesman argues that people aren't too poor these days to buy luxury items, but they're just too busy to shop. The argument throughout seems to be that these super-rich are recession-proof. I am sure that the likes of Vekselberg and Potanin won't be headed to the poor house any time soon, but I doubt they are shrugging off the quarter-trillion dollars in personal wealth they have lost this past year.

It makes me wonder - has the Moscow Times adopted the policy of Russia's state-owned press, which is required to have at least 50% of their stories be "positive" about Russia?

Online Journalists Face Heavy State Oppression

BOULDER, Colorado -- The Committee to Protect Journalists released their annual report on imprisoned journalists Thursday, and online reporters now make up the largest segment of those behind bars.

As of December 1, there are 125 journalists in prison across the world, and 45% of them work online; print media was close behind with 42%. The total figure is an increase of two over last year's number. China tops the list with 28 journalists languishing in prison, followed by Cuba with 21, Burma with 14 and Eritrea with 13.

Russia currently has only two journalists in prison, but this hardly reflects their poor record on press freedom. Boris Stomakhin, the former editor of the newspaper Radikalnaya Politika, has been in prison since March 2006, charged with inciting ethnic hatred and extremism. Anatoly Sardayev, editor of the now-defuct Mordovia Segodnya, was arrested in June 2007 for fraud and allegedly misusing the paper's funds, though the prosecution is thought to be linked to his outspoken criticism of the Mordovian president, Nikolai Merkushkin.

Journalists in Russia face a variety of threats and challenges in addition to imprisonment. Detentions and beatings are common, and the government has resurrected the old Soviet practice of committing dissident reporters to psychiatric hospitals against their will. All media outlets face heavy pressure from the state to run stories supporting the ruling party and keep opposition voices out of the press.

They also face the threat of death, either at the hands of government or private interests. Since 2000, the CPJ reports that 17 journalists have been murdered in Russia, while Reporters Without Borders puts the number at 21. Only Iraq is a more dangerous environment for reporters. So far this year, at least four journalists have been killed, and all of them had ties to the increasingly violent North Caucasus region, particularly Ingushetia and Dagestan.

The most high-profile case this year involved an online journalist, Ingushetian opposition writer Magomed Yevloyev, who operated the news website On August 31, Yevloyev was met at the airport in the Ingushetian capital, Nazran, by a police escort after returning from a trip to Moscow. While being transported in a police vehicle, he was shot in the head by an officer, and his body was dumped on the doorstep of a local hospital.

Like most cases involving the murder of journalists in Russia, prosecutors are dragging their feet on investigating this case, and the official version of events remains that Yevloyev was shot when he tried to grab the gun of an officer riding in the vehicle with him.

Patriarch Aleksii II Dies, Russia Loses Prominent Nationalist Voice

BOULDER, Colorado -- The Patriarch of the Russian Orthodox Church Aleksii II passed away in Moscow Friday at the age of 79. Aleksii had been in the post since 1990 and oversaw a resurgence in the church's popularity and political influence.

Since the rise of Vladimir Putin to the presidency in 2000, the patriarch was a reliable ally of the Kremlin, especially on issues related to foreign policy. Nationalism and religion have always been closely paired in Russia, as Orthodoxy is seen as part of the bedrock of Russian national identity. Despite the current regime's communist pedigree, Putin and his cronies have always voiced strong support for the church, and the church has returned the favor.

Despite this newfound prominence for the church, Russia remains a largely secular country. More and more people claim to be believers in the Orthodox church - estimates range from a third to a half of the population - but regular church attendance hovers around eight percent.

Under Aleksii, the church espoused a rather narrow political agenda, preferring to perform a more social function, at least officially, and efforts to introduce church doctrine into state policies, such as in schools, remain hotly contested. Abroad, however, the church has actively promoted Kremlin policy. Here is a quote from a speech the patriarch made in 2005 echoing Russia's staunch opposition to an independent Kosovo and its affinity with Serbia. He drew direct parallels between Serbia’s foundational myth – the Battle of Kosovo, fought against the Turks in 1389 – and Russia’s, the Battle of Kulikovo Field in 1380 against the Golden Horde:
Many peoples hold sacred memories of their great battles and of events that led to the formation of their states, nations, and cultures. We recall how in Serbia they revere the Battle of Kosovo, which, regardless of the difficulties they faced in that period, became the spiritual foundation of the unification of the Serbian people.
Just as Russia would never surrender Kulikovo, the Serbs should never be asked to leave the land on which their nation was supposedly formed. Thus, Kosovar separatism threatens all of Orthodoxy because it threatens the foundational myth of Serbian nationalism. If the bond between church, nation and state is broken there, it can be broken elsewhere.

The Moscow Patriarch was in many ways actively engaged in contemporary political discussions, while at the same time found his position overwhelmed by other voices both within his church and in the wider arena of Russian politics. The relationship between the church and the state has been characterized by cooperation, confrontation, and co-option, stripping the patriarch of his ability to become of voice for political change and leaving him with a largely symbolic role.

Clearly the church leadership is willing to live with this compromise. Not only does the Russian Orthodox Church lend its image and symbols to the state – Orthodox religious ceremonies have become an important component of civic political events, like presidential inaugurations – but in exchange it receives a host of benefits, such as a privileged and protected status as the recognized official church of Russia, often to the detriment of other religious groups.

It remains unclear who will succeed him as patriarch, but the Kremlin will likely have a hand in the decision. This is not without precedence - Aleksii II was supposedly elected without the interference of Soviet authorities as the first patriarch since the Bolshevik Revolution, but he never fully answered accusations that he had colluded with the KGB throughout his career. The likely leading candidates are Metropolitan Kirill Gundiaev of Smolensk, who is known for his support of a strong church authority and anti-ecumenical views, and the more centrist Metropolitan Kliment Kapalin of Kaluga and Borovsk.

Friday, December 5, 2008

Connecticut Residents Can Breathe Easier, Plum Island To Close

BOULDER, Colorado -- The Department of Homeland Security will be opening a new $450 million laboratory in Manhattan, Kansas to study biological threats and animal diseases. The new laboratory, to be called the National Bio and Agro-Defense Facility and located at Kansas State University, will replace the facility currently located on New York's Plum Island in Long Island Sound.

The Kansas bid beat out several other competitors, including sites in Georgia, Texas, Mississippi and North Carolina. The department's decision is not final and is still open to public comment and review; several of the losing bidders are considering challenging the DHS choice.

DHS has been considering moving the lab to the mainland since it took over Plum Island from the Department of Agriculture in 2003. But there are serious concerns about locating the lab, which studies diseases such as foot and mouth disease and anthrax, in the heart of cattle country. If the safety record in New York is any indication, the potential for serious outbreaks is troubling indeed.

The Plum Island Animal Disease Center, also known as Lab 257, is located just two miles from Long Island's Orient Point and six miles from the Connecticut coast. The research facility there was opened in 1954 to study foot and mouth, and access has been highly restricted ever since; it is currently the only lab in the country permitted to study the disease.

Due to its high security and rather unsavory reputation - the lab conducted research on biological warfare - it has been regarded with deep suspicion by local residents. In his book Lab 257: The Disturbing Story of the Government's Secret Germ Laboratory, Michael C. Carroll charges that at least two major disease outbreaks among humans originated on the island - West Nile virus in 1999 and the ongoing Lyme disease epidemic. His case for the latter is quite compelling.

Lyme disease is transmitted by ticks, and though it was likely described by doctors as early as the late 19th century, the full syndrome was not isolated and identified until 1975, when three patients contracted the disease in southeastern Connecticut - in the town of Lyme, to be precise, from whence the disease derives its name.

By no coincidence, Lyme happens to be in the area of coastal Connecticut closest to Plum Island. The island is also a nesting ground for many migratory birds. Birds are common carriers of ticks, and their usual next stop on their way northward is the mouth of the Connecticut River, where Lyme is located. If you look at any map of the spread of the disease, you can clearly see its origin on the Connecticut coast.

The government has denied that any research on ticks was conducted on Plum Island, but efforts to turn the bugs into biological weapons were explored at Ft. Detrick, Maryland. This research dates back to the Second World War, when several countries, including the United States, Great Britain, the Soviet Union, and Japan, tried to develop ways to spread ticks infected with diseases like encephalitis over enemy territory. It only stands to reason that due to the close relationship between Lab 257 and Ft. Detrick, some research on ticks was done on Plum Island; the government also denied studying anthrax there, but that has since been proven untrue. And due to their less than stellar safety record, there is a high probability that the Lyme disease outbreak is the fault of this facility.

I have several family members and friends who have contracted Lyme disease, and it is a very unpleasant - and potentially deadly - ordeal. I will most certainly say good riddance to the lab, and I caution to the people of Kansas to to be skeptical of the government's claims and make sure this project receives full public scrutiny before the first brick is laid in place.

[Maps:; Centers for Disease Control]

Thursday, December 4, 2008

Leapfrog Technology and the Auto Industry

BOULDER, Colorado -- Much has been made in international development circles of the idea of "leapfrog" technology - that is, countries can skip over earlier generations of a particular technology and immediately adopt the latest and greatest, thus avoiding the costs of building outdated infrastructure that will inevitably have to be replaced.

This idea has been illustrated most effectively in the telephone business. Many third world countries have chosen to forgo building a land-line system, with miles and miles of costly copper wire and thousands of switchboards; instead, they have gone straight to mobile phones. The infrastructure is cheaper, and it can be easily erected in the most remote locations. Mobile phones are also cheap to own, and they allow the world's poor to gain access to many other important services, like banking, without the need for a fixed, legal address.

But is the model applicable to other technologies? Oft-touted efforts to distribute laptops to the poor have been dismal failures, and poorer countries invariably opt to build older, dirtier power plants instead of adopting expensive, cutting-edge green technologies.

As the Economist reports, the leapfrog phenomenon may be quite unique. Thanks to increased global flows of trade, capital, and people, advanced technologies are easily spread across the world. According to a World Bank study, in industrialized countries, once a technology - items like cell phones or PCs - is adopted, it takes only a short time to reach a market penetration of 25%-50%. In emerging markets, the Bank found penetration rarely broke the 5% barrier, meaning poorer countries can get access to the technology, but rarely can they put it into broad use. This is largely due to the fact that these countries have high levels of income inequality, meaning this technology rarely makes its way from the urban elites to the rural poor.

I should add that there is a great deal of variation across countries and with different technologies, but the basic point stands - it is overly optimistic to think that leapfrogging can happen everywhere with everything, as the evidence for it remains largely anecdotal.

Which brings us to an interesting example related to cars. In the past, poorer countries adopted older technology first when it came to cars. Car makers took their older models and exported them or manufactured them in emerging markets where safety and pollution standards were lower - think of the VW Beetle in Latin America. These countries also had large markets for second-hand cars from the rich world - think of all the right-hand drive Japanese cars in Russia - and these two sources made up the bulk of their fleets.

But rich world car makers don't operate that way any more. They are making more cars specifically designed for emerging markets, and they are introducing cleaner technologies as the cost of producing these higher-tech cars falls, the price of oil remains high (believe me - it will be going up again soon), and concerns about pollution and climate change become more widespread. Nissan-Renault has made grandiose statements that all car makers must aim to make their fleets zero-emissions, GM is hoping its plug-in Chevy Volt will beat out hybrid technology and become a big seller worldwide, and even local manufacturers in China and India are poised to launch alternative fuel vehicles.

So, this is where the leapfrogging comes in. Most developing countries, including places like China and India, do not have the infrastructure to support mass automobile ownership - things like gas stations, auto parts stores and mechanics. What this means is that electric or alternative fuel vehicles are not at an immediate disadvantage when breaking into the market; the infrastructure to support them can be built as they gain popularity, and it won't have to compete with gasoline filling stations, because they are not there. In the US, for example, the lack of these alternative resources - as well as the lack of an adequate power grid to support the widespread ownership of electric cars - can dissuade buyers and has allowed gasoline-powered hybrids to be the become the preeminent lower-emissions vehicle technology.

So, the potential is there for cleaner cars to fill the roads of the developing world as the global automobile fleet swells - it is slated to reach 2.9 billion cars by 2050, up from 600 million in 2005. The mighty automobile may join the modest cell phone among technologies that have successfully made the leap.

[Photos: Brazil's first car, the three-wheeled Romi; the Chevy Volt]