June 2007 – artdiamondblog.com

Burned Up Over Gas Rationing in Iran

"Protesters burned at least two gas stations in Tehran after the Oil Ministry announced gas rationing would begin Wednesday just after midnight." Source of caption and photo: online version of the NYT article cited below.

TEHRAN, June 27 — Angry drivers set fire to at least two gas stations overnight in Tehran after the government announced that gasoline rationing would begin Wednesday just after midnight.

The state television news said Wednesday that “several gas stations and public places had been attacked by vandals.” While there were some reports that a large number of gas stations had been set on fire, only two fires were confirmed.

. . .

Under the new regulations announced by the Oil Ministry on Tuesday evening, private cars will be able to buy a maximum of 26 gallons of gasoline a month at the subsidized price of 34 cents per gallon. Taxis will be allowed 211 gallons a month. Parliament would have to determine whether individuals would be allowed to buy more at market rates.

There were long lines at gas stations in Tehran on Wednesday, causing traffic jams, and the police moved in to control the lines.

Iran is OPEC’s second-largest exporter of oil. But it needs to import half of its gasoline — at a cost of $5 billion a year — because of high consumption and low refining capabilities.

Inflation in Iran had already been high, as a result of a combination of economic factors and government decisions. The price of dairy products like milk, butter and yogurt increased this week by at least 20 percent.

For the full story, see:

NAZILA FATHI. "2 Iranian Gas Stations Burned Over Rationing." The New York Times (Thurs., June 28, 2007): A8.

(Note: ellipsis added.)

“Not that Everyone Has Been Intimidated”

It is common to ridicule economists–sometimes with some good reason. But the 50 brave economists in Iran who refused to be intimidated, have made us proud.

(p. 1) Iran is in the throes of one of its most ferocious crackdowns on dissent in years, with the government focusing on labor leaders, universities, the press, women’s rights advocates, a former nuclear negotiator and Iranian-Americans, three of whom have been in prison for more than six weeks.

The shift is occurring against the backdrop of an economy so stressed that although Iran is the world’s second-largest oil exporter, it is on the verge of rationing gasoline. At the same time, the nuclear standoff with the West threatens to bring new sanctions.

The hard-line administration of President Mahmoud Ahmadinejad, analysts say, faces rising pressure for failing to deliver on promises of greater prosperity from soaring oil revenue. It has been using American support for a change in government as well as a possible military attack as a pretext to hound his opposition and its sympathizers.

. . .

(p. 9) Not that everyone has been intimidated. More than 50 leading economists published a harshly worded, open letter to the president saying his policies were bringing economic ruin. High unemployment persists, there has been little foreign investment and inflation is galloping, with gasoline alone jumping 25 percent this spring.

Gasoline rationing is expected within a month, with consumers so anxious about it, reported the Web site Ruz, financed by the Dutch government, that skirmishes broke out in long lines at some pumps on June 17.

For the full story, see;

NEIL MacFARQUHAR. "Iran Cracks Down on Dissent, Parading Examples in Streets." The New York Times, Section 1 (Sun., June 24, 2007): 1 & 9.

(Note: the online version of the article is entitled "Iran Cracks Down on Dissent," and is accompanied by a disclaimer that the latest evidence is ambiguous on the original claim in the print article that dissenters were being paraded in the streets.)

(Note: ellipsis added.)

Sometimes “A Strongly Worded Letter” Is in Order

The Titanic sinks. Source of drawing: http://commons.wikimedia.org/wiki/Image:St%C3%B6wer_Titanic.jpg

Here is one of my favorite lines from the "Titanic" movie. It is spoken by the hero, as the Titanic sinks:

Jack Dawson: I don’t know about you, but I intend to go write a strongly worded letter to the White Star Line about all this.

Source:

"Titanic" movie (1997), as recorded in: http://en.wikiquote.org/wiki/Titanic

Obama Advised by Market-Oriented Chicago Economist Goolsbee

(p. C1) The Democrats, besides talking about a broader range of subjects, also have the freshest face among the top campaign advisers — Barack Obama’s lead economist, Austan Goolsbee, a 37-year-old star professor at the University of Chicago (who writes a monthly column for The New York Times). The two men met when Mr. Obama was teaching at the law school there, and they both seem to favor achieving Democratic goals through market-oriented policies. As Mr. Goolsbee has written: “Moral (p. C9) exhortation doesn’t change people’s behavior. Prices do.” Given their respective professions, the two are also more irreverent than you may expect: Mr. Goolsbee was once a member of an improvisational comedy group.

. . .

Both the Clinton and Obama campaigns are now playing catch-up on policy ideas. John Edwards, who’s running third in fund-raising and the early polls, has tried to grab attention by releasing a series of specific proposals. Rather than bringing economists into his campaign, he is relying on a network of former aides from Capitol Hill to help him sort through ideas. (One Edwards proposal — on tax simplification — was originally Mr. Goolsbee’s, in fact.)

For the full commentary, see:

DAVID LEONHARDT. "ECONOMIX; The Advisers Are Writing Our Future." The New York Times (Weds., April 18, 2007): C1 & C9.

(Note: ellipsis added.)

I have never met Goolsbee, or heard him speak, but I have read a couple of his articles on the economics of the internet, and other subjects, and regularly read his economics articles in the New York Times. He often writes interesting, creative stuff that is fun to read.

I had assumed that Obama was a standard big-government Democrat, although I liked what I read about what he was reported to be saying in Africa. Maybe his economic policies would be more promising than I assumed.

On the other hand, I am convinced that the fight against terrorism is the crucial issue of our time, and I haven’t heard much from Senator Obama on that, besides hopping on the bandwagon of Bush-bashers. What would he constructively do to protect us from the bad guys?

“Roosevelt Warned us of Fearing Fear Itself; Now We Fear Life Itself”

Source of book image: http://ec1.images-amazon.com/images/P/159523005X.01._SCLZZZZZZZ_V46468787_SS500_.jpg

I saw Todd Buchholz on C-Span and on CNBC, and I enjoyed hearing his views, so I decided to buy his Bringing the Jobs Home. I don’t like the title, because it sort of implies that the job market is a zero-sum-game, in which one country’s gain implies another country’s loss. Us true-blue free marketers believe that the market is a non-zero-sum game in which everyone everywhere can have jobs, and have better ones over time.

But Buchholz’s little book is fun to read, and says much that is plausible about how the government hurts the worker and reduces the efficiency of the labor market.

Read the following excerpt for part of his rousing conclusion to the book.

(And, Aaron, I agree with you that Buchholz is wrong to say the American spirit is "innate.")

(p. 177) . . . : Since the 1960s, each year we’ve lost a little nerve, gained another bureaucrat, another lawyer, another layer of protection against life’s uncertainties. We have gotten used to a government that aims to coddle us but ends up both preventing us from growing and dampening the innate American spirit. The spirit still stirs but gets buried under the weight of the nanny state.

. . .

(p. 178) American government officials today cannot put our standard of living in a lockbox to preserve, protect and defend us. Franklin D. Roosevelt warned us of fearing fear itself; now we fear life itself.

. . .

(p. 179) To paraphrase Churchill, Americans did not sail the perilous Atlantic, scale the Appalachians and struggle past the Rockies because we were made of cotton candy.

Source:

Buchholz, Todd G. Bringing the Jobs Home: How the Left Created the Outsourcing Crisis–and How We Can Fix It. New York: Sentinel, 2004.

Investor Wally Weitz Defends Wal-Mart

(p. 1D) Weitz was able to deliver good news to about 200 shareholders in his investment company, Wallace R. Weitz & Co., at the firm’s annual meeting at the Scott Conference Center in Omaha.

The flagship Value Fund grew 18.3 percent in the fiscal year ended March 31, compared with the Standard & Poor’s 500’s 11.8 percent. The Value Fund accounts for more than $3 billion of Weitz & Co.’s $6.5 billion in assets.

. . .

(p. 2D) Wal-Mart Stores Inc. is among the companies Weitz has invested in, and one investor asked about controversy that company has faced in recent years. Weitz said a lot of negative publicity has resulted from Wal-Mart’s huge scale, its ability to obtain less expensive products overseas, its efficient use of technology and its low prices driving competitors out of business.

Low prices that discount stores offered years ago brought them similar criticism, he said.

"It’s one of those progress things," Weitz said.

For the full story, see:

Joe Ruff. "Weitz not interested in Buffett position." Omaha World-Herald (Wednesday, May 23, 2007): 1D-2D.

(Note: ellipsis added.)

The Mexicans Are Not What Is Wrong with Mexico

Gerardo on the left; me in the middle; and Jenny in the right lower corner. Photo by Jeanette (who you can just barely see in the mirror over Gerardo’s shoulder).

In downtown Cancun we dined at a wonderful restaurant called Labná. The food was authentic, varied, and delicious. The service, from Gerardo (above) was attentive and replete with gracious good-will.

The restaurant itself was an oasis of order in a milieu of disorder and decay.

As one tours Mexico, one has the sense of an enormous waste of human time and talent. The incentive to act and the ability to get things done, is sucked away by an enormous cadre of parasitical rent-seeking hangers-on, who are either part of the government or who are privileged by government rules and regulations.

When the roof of our home in Nebraska was damaged by hail several years ago, it was replaced by a crew of Mexican workers.

Our retired neighbor Howard had the habit of carefully monitoring all of our outdoor contractors. Old, reliable, helpful, curmudgeony Howard (may he rest in peace) was much more likely to offer complaint than praise. But Howard told me, with genuine respect and admiration in his voice, how impressed he was with how hard the Mexican crew had worked, especially through the oppressive heat of the summer days.

The Mexicans are not what is wrong with Mexico. What is wrong with Mexico is the Mexican government.

In most areas of government activity, the Mexicans would benefit from a lot more of what Edmund Burke called "salutary neglect."

(Note: Leonard Liggio reminded me of the wonderful phrase "salutary neglect" at the April 2007 meetings of the Association of Private Enterprise Education in Cancun.)

(Another note: The address of the Labná restaurant is Margaritas 29. It is near a run-down park, where I purchased an OK cup of flan from a vendor for 10 pesos–the best flan I ever had for less than a dollar!)

Bjorn Lomborg’s Copenhagen Consensus Against Kyoto

(p. 8) Bjorn Lomborg, a Danish statistician who recently led the Copenhagen Consensus, an economic analysis of global environment and development issues , said that while global warming was a serious problem, Kyoto-style limits would have little impact and would divert resources better spent on alleviating poverty.

He said one element missing from most climate discussions was the need for a more vigorous effort to improve climate-friendly energy technologies like solar power and carbon capture, in which greenhouse emissions are trapped and pumped underground before they can escape into the atmosphere.

While many advocates have proposed an emissions tax, Dr. Lomborg said a much smaller investment in research and development on such technologies would be more likely to help in the long run.

For the full story, see:

ANDREW C. REVKIN. "Talks to Start On Climate Amid Split On Warming." The New York Times, Section 1 (Sun., November 5, 2006): 8.

“Unlikely Collection of French Socialists” Liberated Global Capital Flows?

Source of book graphic: http://www.hup.harvard.edu/catalog/ADBCAP.html

Rawi Abdelal, a Harvard Business School professor, has advanced a novel theory in "Capital Rules: The Construction of Global Finance." Drawing on extensive documentary evidence, as well as dozens of interviews with high-level finance officials and midlevel bureaucrats, he tells a fascinating (and largely unknown) tale: how a clutch of French socialists helped to upend economic orthodoxy and lead the charge for lifting restrictions on capital flows within Europe and throughout the world.

. . .

Mr. Abdelal’s story heats up with the election of Francois Mitterrand in 1981. The new president, together with his majority Socialist Party, set out to storm the Bastille of the economy. He announced plans to nationalize the banks and restrict cross-border capital flows to such a degree that French citizens could take the equivalent of only $427 with them for leisure travel outside France (and were prohibited from using credit cards during such travel). Rather than create a socialist Shangri-La, the moves led to economic chaos. The French had to devalue the franc three times in two short years. Mitterrand then made what the French would elegantly refer to as a tournant but we may bluntly call a U-turn.

This painful episode provided a powerful lesson to a number of senior French officials. Said one: "We recognized, at last, that in an age of interdependence capital would find a way to free itself, and we were obliged to liberate the rest." And so in a Nixon-goes-to-China move, an unlikely collection of French socialists set out to liberalize the country’s controls on cross-border capital flows with a determination that gave new meaning to laissez-faire.

. . .

Mr. Abdelal is unequivocal about the value of Europe’s action: "Global financial markets are global primarily because the process of European financial integration became open and uniformly liberal." He also highlights how free capital flows got a boost from the two primary credit-rating agencies, Standard & Poor’s and Moody’s. In the 1990s, both began to give higher ratings to government-backed debt when the country in question had an open capital account.

For the full review, see:

MATTHEW REES. "Business Bookshelf: Why Money Can Now Make Its Way Around the World." The Wall Street Journal (Weds., February 14, 2007): D12.

(Note: ellipses added.)

Boof reference:

Rawi Abdelal. CAPITAL RULES. Harvard University Press, 304 pages, $49.95.

Even France Recognizes English as the Language of Business

The story below provides further evidence that those who are working hard to make English the mandatory language of the United States, should find themselves a real problem to worry about.

PARIS, April 7 — When economics students returned this winter to the elite École Normale Supérieure here, copies of a simple one-page petition were posted in the corridors demanding an unlikely privilege: French as a teaching language.

“We understand that economics is a discipline, like most scientific fields, where the research is published in English,” the petition read, in apologetic tones. But it declared that it was unacceptable for a native French professor to teach standard courses to French-speaking students in the adopted tongue of English.

In the shifting universe of global academia, English is becoming as commonplace as creeping ivy and mortarboards. In the last five years, the world’s top business schools and universities have been pushing to make English the teaching tongue in a calculated strategy to raise revenues by attracting more international students and as a way to respond to globalization.

Business universities are driving the trend, partly because changes in international accreditation standards in the late 1990s required them to include English-language components. But English is also spreading to the undergraduate level, with some South Korean universities offering up to 30 percent of their courses in the language. The former president of Korea University in Seoul sought to raise that share to 60 percent, but ultimately was not re-elected to his post in December.

In Madrid, business students can take their admissions test in English for the elite Instituto de Empresa and enroll in core courses for a master’s degree in business administration in the same language. The Lille School of Management in France stopped considering English a foreign language in 1999, and now half the postgraduate programs are taught in English to accommodate a rising number of international students.

Over the last three years, the number of master’s programs offered in English at universities with another host language has more than doubled, to 3,300 programs at 1,700 universities, according to David A. Wilson, chief executive of the Graduate Management Admission Council, an international organization of leading business schools that is based in McLean, Va.

“We are shifting to English. Why?” said Laurent Bibard, the dean of M.B.A. programs at Essec, a top French business school in a suburb of Paris that is a fertile breeding ground for chief executives.

“It’s the language for international teaching,” he said. “English allows students to be able to come from anyplace in the world and for our students — the French ones — to go everywhere.”

For the full story, see:

DOREEN CARVAJAL. "English as Language of Global Education." The New York Times (Weds., April 11, 2007): A21.