Archive for October, 2012

“Failure: Why We Need It”

Posted by on Oct 30 2012 | Growth of Government, Paternalism, Russia

That was the provocative title of a seminar earlier this month organized by the Istituto Bruno Leoni, Italy’s free market think tank. The event was the IBL’s 9th annual Mises Seminar. As is common at multinational seminars in Europe, the event and the papers were in English, which is today’s lingua franca among well-educated Europeans.

My favorite paper was presented by Kaetana Leontjeva, who is a Senior Policy Analyst at the Lithuanian Free Market Institute. Her paper, Old-age state social insurance: may its failure be averted?, examines the history of old-age pension systems throughout Europe, with a special focus on the USSR, Lithuania and Georgia. She shows how these programs, initially of modest size, grew to an unustainable  level that is financed by borrowing. She argues that there are only two realistic alternatives:

1. Continuing the present systems, with only “technical” reforms. This will eventually lead to complete failure of the old-age pension system, as occurred in the USSR. “ This would lead to a sudden and dramatic change in conditions of the elderly, bringing about poverty and chronic insecurity.” OR

2. “managed failure.” This means starting to shrinking the existing pension systems, by requiring that they operate on a balanced budget. Young people should not be told to depend on the current system, but should be encouraged to start making plans for their own retirement, by setting aside some of their current income to provide for their retirement. “For the ‘managed failure’ approach to work, one generation has to concede and make a sacrifice by paying for the pensions of the current retirees and for their own. In the absence of such a consent and solidarity, the generation to make the sacrifice would emerge spontaneously, and the process of an unexpected old-age social insurance failure would be much more painful.”

Another interesting paper came from Peter J. Boettke (Mercatus Center, George Mason University) and Daniel J. Smith (Manual H. Johnson Center for Political Economy, Troy University). “Monetary Policy and the Quest for Robust Political Economy” examines the failures of economists in thinking about the Federal Reserve. It is possible to imagine a Federal Reserve which conducts its affairs in an economically sound and apolitical fashion. But in practice, the Fed has often been a pump-priming engine of inflation, for political reasons. In other words, “Technical optima are nonoperational in a contemporary democratic setting.” In the wake of the Great Recession, the economics profession has been busy dissecting recent technical mistakes by Fed. Boettke and Smith argue that economists instead ought to be analyzing the only solutions which can put an end to a century of Federal Reserve failures: the adoption of a monetary policy (e.g., based on an external standard, such as a commodities bundle) which removes Fed discretion to promote inflation. While such a policy might not be politically feasible in the short run, it is the only constructive alternative, and would become more politically feasible if economists did not self-censor their recommendations based on short-term political viability.

In “Bankruptcy: Why are Banks Treated Differently Anyway?,” Mathieu Bédard (Ph.D. candidate in economics, Aix-Marseille Université, and a Fellow at the Institute for Humane Studies) classifies and analyzes the 29 different forms of government intervention into bank failures. He argues that ordinary bankruptcy is often superior to liquidations managed by the Federal Deposit Insurance Corporation.

Even if you don’t agree with the policy recommendations in these papers, they are worth reading for their thoughtful analysis.

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How Syria is Iran’s route to the sea

Posted by on Oct 24 2012 | Counter-Terrorism Policy, Iran, Israel, National Security, Presidency, Press, Terrorism

“Syria is Iran’s only ally in the Arab world. It’s their route to the sea.” So said Mitt Romney at the Monday debate. The Associated PressThe GuardianThe Telegraph, New York, U.S. News,  Brad DeLong, Rachel Maddow’s Maddowblog,  Comedy Central, and The Daily Kos promptly seized the opportunity to show off their superior geographical knowledge, pointing out that Iran has a coastline. The explicit or implicit explanation was that Romney does not even know basic geography. “Romney Flubs Geography” announced the A.P. headline on the Washington Post website. Readers in search of more sophisticated coverage  might have turned to Yahoo! Answers:

Q. Why did Romney say that Syria is Iran’s “route to the sea”? …when 1) Iraq stands between Syria and Iran, and 2) Iran already has the Persian Gulf, not to mention the Indian Sea?

A. Romney was speaking in the context of the debate topic on foreign policy and the sanctions restricting the finances and trade of Iran. Although Iran is indeed located on the seacoast of the Indian Ocean and the Persian Gulf, the international trade sanctions have restricted and impeded its ability to transport armaments and other goods through its own seaports. To defeat these trade sanctions, Iran has resorted to using its air transportation to transport goods through an air corridor in Iraqi airspace into Syria and its seaports, such as Latakia.

Fact-checkers who actually investigate the facts might have started with expert websites such as StrategyPage. A 2006 article titled Syrian Delivery System for Iranian Nukes details the extensive seaborne smuggling operations carried out by Syrian companies operating out of Syrian ports. The article concludes:

Iran was generous with its “foreign aid” because Syria provided support for terrorists Iran backed. Now Iran is keen on getting nuclear weapons. The first ones Iran will get will be large and delicate. The only feasible intercontinental delivery system will be a ship. A ship that is accustomed to moving illicit goods.

Stratfor, which is an outstanding site for the collection and analysis open source intelligence, has the following reports involving Syria/Iran sea-related collaboration: An Iranian ship at the Syrian port of Tartus (also spelled “Tartous”) picked up Syrian oil for delivery to China, to evade the economic sanctions on Syria (Mar. 30, 2012). Iran warships docked at the port of Latakia in early 2012 (Feb. 18, 2012), and in early 2011 (Feb. 22, 2011; Feb. 24, 2011). During the 2011 visit, the Iranian navy’s commander, Admiral Habibollah Sayyari, announced that Iran was ready to help Syria improve its port facilities, and to collaborate on technical projects with Syria. (Feb. 26, 2011). (All the Stratfor articles are behind a paywall.)

So in short, Syria is Iran’s route for the projection into the Mediterranean Sea (and from there, the Atlantic Ocean) of conventional naval power, and, perhaps soon, of nuclear weaponry.

Post-debate, the Washington Post‘s Glenn Kessler at least made a start towards a serious factcheck of the Romney quote. He published an updated and condensed version of a longer piece he had written last April about Romney’s repeated use of the phrase.

In the April piece, Kessler wondered what difference Syria made, since Iranian ships can enter the Mediterranean via the Suez Canal. True, but anyone with even a mild knowledge of naval affairs could explain the utility of a Mediterranean port, as a opposed to a Persian Gulf port, for ships operating in the Mediterranean. In April and in October, Kessler wrote:

We also checked with other experts, many of whom confessed to being puzzled by Romney’s comments.  [DK: Kessler should have named all the "other" experts, and should also have included the explanation of at least one of the experts who was not among the "many" were were confused.] Tehran certainly uses Syria to supply the militant groups Hezbollah and Hamas, but that has little to do with the water. The relationship with Syria could also effectively allow Iran to project its power to the Mediterranean and the border with Israel. But does that really mean, “a route to the sea”?

The last two sentences are really the buried lede of the story: Romney is raising a very important issue (Syria as the base for the projection of Iranian naval power), but Romney is not explaining himself in a manner which the less well-informed members of the public (e.g., the sources linked in the 1st paragraph of this post) can understand. If Romney were a better communicator, he would have laid out the facts in greater detail, as Ronald Reagan and Winston Churchill did in their own time, when warning their countrymen about the military dangers of aggressive totalitarian regimes. As Kessler wrote in April, “If Romney is elected president, he will quickly learn that words have consequences. Precision in language is especially important in diplomacy, and here Romney used a phrase that left people befuddled as to his intent and meaning, especially since he did not even make a distinction between the Mediterranean and Arabian seas.”

If you’re a journalist or a commentator, there’s no reason be ashamed just because a Washington Post writer reported a story much better than you did. But when you find yourself being outclassed by Yahoo! Answers, perhaps it’s time to rethink your assumptions that you’re much smarter and better informed than Mitt Romney.

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Newsflash: Denver Post Reports News

Posted by on Oct 23 2012 | energy, Media, PPC

After months of frustration with the Denver Post refusing to cover the explosive Abound Solar debacle, last week we put up these billboards around the Denver Post:

Yesterday the Denver Post’s front page, top-of-the-fold story was on the failures of the new energy industry, writing, “The Weld County district attorney’s office is investigating the failure of Colorado solar-panel manufacturer Abound Solar, and congressional Republicans are asking tough questions about Abound’s federal loan guarantees.” Full story here: http://www.denverpost.com/business/ci_21825181/layoffs-failures-test-colorados-new-energy-economy

Thanks to the Post for reporting the story.

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VIDEO: Tom Tancredo vs. Ken Buck on Pot Legalization

Posted by on Oct 23 2012 | Idiot Box (TV Show), PPC

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Join Us for a Special Brown Bag Lunch Thursday

Posted by on Oct 22 2012 | education, Events, PPC

You’re Invited to Special Brown Bag Lunch on October 25!

Progressive ideology has fueled the massive growth of the federal government, while progressives argue heavily for the fairness of equal outcomes. Do the two hold a deeper connection than first meets the eye? Why do those who argue most loudly for “equality” always seem to think that bigger government is the answer?

The ideas of 19th century French political thinker Alexis de Tocqueville–most famous for his insightful Democracy in America–provide some interesting answers to these questions. How did Tocqueville see this problem, and what might it mean for liberty? Please join us at the Independence Institute Freedom Embassy (727 E 16th Avenue, Denver, CO 80203) on Thursday, October 25, to hear from our special guest speaker, Steven Pittz, Ph.D. candidate in Political Theory at the University of Texas at Austin.

Doors open at 11:30 AM, with the presentation running promptly from noon to 1 PM. The event will be a Brown Bag Lunch, so you are welcome to bring your own food along with some thoughtful questions for our guest speaker. You may RSVP for this free event by sending an email to RSVP@i2i.org.

Limited free parking is available adjacent to the building and in the lot west of the building across the alleyway. Additional street parking and paid lots are available nearby. The meeting room is on the lower level of the building, with no access by elevator. We apologize for any inconvenience this may cause.

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The Denver Post Needs an Intervention

Posted by on Oct 19 2012 | Economics, Economy, energy, Environment, Media, obama, PPC, Taxes

Why is this Billboard now across the street from the Denver Post building?

I don’t want anyone to get the wrong idea, so let me explain. I really miss the days of Denver being a two newspaper town. The Denver Post and the Rocky Mountain News for a century had a competition which gave Coloradans superior news coverage of state and local issues. Those days are gone. The Rocky went under a few years ago and sadly, the Post is a frail shadow of what it once was.

Much of this demise is not the fault of the Post. Younger people don’t buy papers, they get their news for free online. Online classified ads like Craigslist took away the paper’s largest steady income source. The Post is also straddled with crippling debt.

But the Denver Post is still the paper of record for Colorado. And it needs to act like it.

I want to see the Post survive and thrive. The state needs a trusted news source. But just like when a friend needs an intervention, the Post needs to hear the truth no matter how painful.

To the good and extremely overworked people at the Post, we have to tell you that you are failing to cover news. My guess is you know this. We understand your staff has been slashed to a fraction of what it was and how this economy has hurt your industry. But we rely on you for actual reporting, and you are failing to do that job. Rerunning Associated Press stories and writing about gardening tips and Bronco games are fine. However, you have a responsibility to report the news.

When Denver Public Schools changed their evaluation for teachers, judging them on how well they got our children to get involved in “social justice,” there was no news coverage from the Post. 9News did the story. When DPS reversed this politically-driven policy, there was again no coverage. You could read about it in the Washington Times, however.

When it was found that the co-chair of President Obama’s reelection committee, Denver’s former mayor Federico Pena, was a venture capitalist just like Mitt Romney, laying off a thousand workers and closing three domestic factories, there was no coverage. Rush Limbaugh did a better job informing Coloradans about this story than the Post did.

But hiding from the Abound Solar story is beyond excusable.

In our own backyard is Solyndra on steroids, and not a peep from the Denver Post. A politically-connected solar company gets a $400 million guarantee of government loans. And we learn of the Pat Stryker connection from Complete Colorado. http://completecolorado.com/stories/markey-stryker-pay-to-play.html

When the firm went belly-up the company execs told a Congressional committee it was because of cheap Chinese competition. But when whistle blowers show that the product was so faulty it would catch fire, it was the Daily Caller that told the story http://dailycaller.com/2012/10/02/sources-documents-suggest-government-subsidized-abound-solar-was-selling-faulty-product/. As one worker said – it was a fine product, so long as you didn’t put it in the sun.

When documents were found suggesting Abound falsified its books to secure funding, there was no story in the Post. You had to go to Fox News http://nation.foxnews.com/abound-solar-inc/2012/10/08/congress-local-authorities-investigate-doe-loan-recipient-abound-solar

When the District Attorney of Weld County opened a full investigation into Abound, you could find the story on Channel 7 http://www.thedenverchannel.com/news/local-news/abound-solar-under-investigation-by-weld-county-district-attorney-received-68-million-stimulus but not in the Post.

When the US House Energy and Commerce Committee announced a further investigation into Abound, http://energycommerce.house.gov/press-release/committee-leaders-probe-does-knowledge-loan-recipients-faulty-solar-panels – now the story made it to Reuters, but not the Post.

We put a billboard across the street from the Denver Post to remind them that they are STILL the paper of record in Colorado. And it’s time they stopped turning a blind eye to news that matters. We want the Post to succeed.

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The Denver Post’s Cry for Help

Posted by on Oct 18 2012 | energy, Media

Billboard: Post Hides from Abound Solar Investigations

Ad Near Post Building Highlights Failure to Cover Prominent Local Stories


DENVER, Colo — A new Independence Institute billboard sends a message directly to Colorado’s largest newspaper, taking it to task for failing to cover prominent local stories.

Placed right across from the Denver Post building at Court Place and 15th Street, the billboard highlights a recent major story ignored by the daily publication: “Solar Panels Fry. Abound Solar Lies. Jobs Died. The Denver Post Hides.” The message also has been placed near Lincoln Street and 18th Avenue.

Abound Solar, touted by President Obama and bankrolled by federal stimulus dollars, now faces both a Congressional inquiry and local criminal investigation. Stories have revealed the Colorado-based renewable energy company’s product consistently fell short of commercial expectations and occasionally caught fire, causing many of their installations to suffer catastrophic failure rates.

“Our solar modules worked as long as you didn’t put them in the sun,” an ex-Abound employee told the Daily Caller. Whistleblowers also have alleged substantial use of accounting fraud to secure both private and federal loan guarantees.

“We’re calling for an intervention,” said Independence Institute president Jon Caldara. “We’re trying to help stop the state’s only major newspaper from speeding off a cliff.”

The Abound Solar scandal represents one in a series of major local stories with significant political and cultural impact that the Post‘s news coverage has neglected, which also includes:

  • Former Denver mayor and Obama campaign co-chair Federico Pena’s venture capitalist role, after the President made Gov. Romney’s work at Bain Capital a central campaign issue
  • Controversial language in Denver Public Schools’ evaluation system, rewarding teachers for encouraging students to “challenge the dominant culture” and participate in social activism
  • Congressman Jared Polis’ potential conflict of interest, taking a financial stake in a medical tourism company while voting to pass ObamaCare
  • Each of these stories was brought to light by local TV or alternative online media.

    “Competition from the Internet and sites like Craigslist has definitely made it challenging for newspapers to adapt,” Caldara said. “But the Post could help itself by giving some print to major stories in its backyard.”

    More information on the Abound Solar story is available at Complete Colorado.

    Listen to Caldara and investigative reporter Todd Shepherd on this morning’s Peter Boyles Show (630 KHOW).

    The Independence Institute is a non-partisan, non-profit public policy research organization based in Denver, Colo.

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    *** PS – Billboards will be unveiled tomorrow ***

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    The Great Marijuana Debate On Devil’s Advocate

    Posted by on Oct 18 2012 | Drug Policy, Idiot Box (TV Show), PPC, War on Drugs

    Put fresh water in your favorite bong, stock up on Cheetos and get ready to rumble this Friday night as host Jon Caldara moderates a debate between conservatives over Colorado Amendment 64, the marijuana legalization amendment, on the Independence Institute’s public affairs tv show, Devil’s Advocate.

    In the pro-64 corner is former Colorado Congressman and gubernatorial candidate Tom “The Tank” Tancredo. In the anti-64 corner, Weld County District Attorney and former U.S. Senate Candidate Ken “Cowboy Boots” Buck.

    Don’t miss this one. That’s this Friday at 8:30PM on Colorado Television 12.

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    The Economy Won’t Give You Groceries or Gas, But We Will!

    Posted by on Oct 16 2012 | Economy, energy, Events, PPC


    Bad economy got you down? Feeling like you can use a break from the “economy tax?” Well, the Independence Institute is here to provide relief! Come party with us this Friday, October 19th, 5-8 pm at the Freedom Embassy (727 E. 16th Avenue, Denver, Colorado)

    We will be providing relief in the form of hot dogs, chips and lemonade (for the first 200 people), and FUN! FUN! FUN! (yes, we’re going to have a big bouncy house). We will have a drawing for gift certificates for BOTH groceries and gas! After all, the economy won’t give you groceries or gas…. but we will! RSVP for FREE with Mary MacFarlane at 303-279-6536, ext. 102 or mary@i2i.org

    For more information, visit our “Groceries or Gas” Facebook page.

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    AUDIO: Women Debate Minivans vs. Smart Cars

    Posted by on Oct 15 2012 | energy, Environment, Events, PPC, Regulation

    Last week our Energy Policy Center put on the third in a series of women-only energy debates. This one focused on vehicle regulations (like CAFE standards) and was titled, “Minivans vs. Smart Cars.” As always, it was a great output of high powered intellectual forces, with both sides making excellent points and engaging in an entertaining style. If you’re like me and unable to attend these debates because of your testosterone, then don’t worry. Here is the audio file from the debate. ENJOY!

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