Relevant and even prescient commentary on news, politics and the economy.

Trans Pacific Partnership: A new Constitution

Update: Application, clarification of “New world Order”.
I have put this update at the beginning of the post for I believe it is an aspect of my post on the Trans Pacific Partnership (TPP)  that should not be dismissed by myself nor by a reader of the post.
Now that I have had the day to contemplate J. Goodwin’s comment and after googling “new world order” 
I can appreciate his concern and response. I assure everyone, that last thing on my mind with the writing of that phrase was: a conspiracy theory in which a secret elite is conspiring to rule the world via world government and globalization.
The TPP is not being written by a secret elite looking to rule the world. On the contrary, the document is being written in secret such that we do not know the specific persons involved, but everyone knows the class or groups represented. The authors/parties feeling of need for secrecy only speaks to their understanding of the potential opposition and not to a devious plot of mad scientist. It’s not a James Bond story.
This TPP is not about ruling the world. I very much doubt those involved want such a responsibility. This document is about reducing the regulation a sovereign entity may apply to an investment to the point that any investment is almost certain to pay out whether by actually carrying out the investment or through reimbursement for not being able to carryout the investment. Heads you lose, tails I win. This is accomplished in many ways (kind of covering all bases) but mostly by giving a representative of an investment equality to a nation in the eyes of the “law”. It is the elevation of an entity created solely for the purpose of profit (though there is some language toward nonprofit) all the rights and liberties that a nation of people reserve for themselves. There is one thing the investment entity receives that the nation entity (“party” as used in the document) does not: A guarantee against loss. This guarantee comes in the form of insurance. The insurance is the full faith and credit of the nation…it is the ability to tax it’s citizens.
That is a new world order as in: any period of history evidencing a dramatic change in world political thought and the balance of power.
Thank you for reading. 

This past week the Trans Pacific Partnership agreement has been post worthy on a couple of the more read blogs. There are specific groups working to get the public up to speed on this treaty. One is the Citizens Trade Campaign.  Crooks and Liars posted Lee Camps Moment of Clarity episode regarding the treaty.  Common Dreams posted a video by Friends of the Earth.  This potential treaty has direct bearing on the subject of innovation, production and infrastructure as discussed in the posts regarding Richard Elkus’s thesis in his book Winner Take All and MIT’s latest report on the subject.

Basically this is being referred to as NAFTA on steroids. It is an agreement being negotiated in complete secrecy with only those considered to be a direct player called “clear trade advisers”(600 in the US) having access. Direct players are not you and me, nor congress (you thought the drone unitary executive stuff is tough to get? Ha!) nor that fourth branch known as the press. Yes, Obama is up on this in that he is pushing it.
I’ll let Citizens Trade Campaign sum it up: 
“The TPP is poised to become the largest free trade agreement in the world, potentially impacting jobs, wages, agriculture, migration, the environment, consumer safety, financial regulations, Internet protocols, government procurement and more.
The pact is currently under negotiation between the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam, but is being specifically written as a “docking agreement” that other countries can join over time. Canada, Japan and Mexico are currently pressing to do so. The thirteenth major round of TPP negotiations will be held at the Hilton San Diego Bayfront Hotel from July 2 – 10.”
Recently a portion of this document was leaked. It is called the “Investment Chapter”. Public Citizens has a review of it here.
I have read the first 17 pages of the Investment Chapter. It is these pages that provide the definitions and the cans and can nots for the signatories. The remainder of the document provides the means for achieving satisfaction. (Do read at least the definitions of what is considered “investment”.)
What struck me in Public Citizens review was that the system being setup as the arbiter of the trade agreement is following the US’ fascination with “extra judicial” proceedings as a viable means of following the ideals of our Constitution. It’s those same thought processes that gave us rendition, enhanced interrogation, military tribunals, unitary executive. You can’t help but see our past 35 years of leadership in the realm of pioneering new concepts in equality, fairness, justice, and processes to achieve such. Concepts of “free market”, “invisible hand”, and process of deregulation, economies of scale, etc. How else do you explain the use of rotating corporate tied lawyers as judges? Where is the separation of the judge and the plaintiff? This is right out of the current US play book on how to better your nation with the social institution known as “revolving door”?
You can see in this document the culmination of work performed over the last 40 years (yes Carter started the deregulation) by the conservative (internationally known as neoliberal) ideology merged with Milton Friedman’s economics and Ayn Rand’s objectivism. Dare I say, the TPP is to capitalism what our Constitution was to democracy?
And that is where I really started thinking. This document is not just about the particulars. It’s not just about how trade will or will not happen, or whether a company will be able to privatize the gains and socialize the risks and losses, or whether people will be harmed. All those things will be the result of the document.
Nope, this document is much more. 

This document is the constitution of a new world order. It is an order that has been the dream of many for ages upon ages that until this time in humanity was not possible do to the limits of the technology of the time. This is the document of what I coined a few years ago as The United Corporations of Global. It is this aspect of the document that the people of the world should be most fearful of. It is not a trade agreement as I believe the common man (as in the court concept of the “common man”) would think of the phrase “trade agreement”. This is a constitution that is coming prepackaged with the rules and regulations already written. Only, there is no need for ratification to be a part of the creative process. This document comes pre-ratified in that all a nation has to do is say “I’m in”. It does not take a majority of the worlds nations or a super majority like the original 13 colonies for this document to have power. It has power because those writing it already agree to follow it. Passing it in the US? Can you say “fast track”?
The documents greatest power is what I alluded to when I mentioned rendition, unitary executive, enhanced interrogation, military tribunals. Rationalization. This document codifies the use of rationalization as a viable thought process for achieving the advancement of humanity. It reinstates the fallibility of human thinking, turning on it’s head the enlightenment age because this document believes it is of enlightened thought. It rationalizes as enlightenment the freeing of people to trade to the greatest level of monetary efficiency. Such a thought is putting a human creation ahead of humanity. It is totally antithetical to the goal of enlightenment. ( I have to say, at this point our fellow Angry Bear Bruce Webb I hope will add to the discussion as our resident historian.)
What follows below are specific excerpts from the document. It is legal speak. But it is not hard to understand. I feel it is important that people read these excerpts as this is how you will know the thinking and overall goal of the document beyond the obvious selfish power grab by any particular player or industry. This is a document written by people who envision the world structured far differently than how we are taught to view our social organization based on the US Constitution and it’s meaning to the world. It does not matter if you believe our national identity is a lot of myth, that we don’t hold up well to our constitutional ideals. The fact is, the myths and ideals have influence and they are not the myths and ideals held by those writing the TPP at worst or are considered not applicable nor appropriate for their desired structure at least.
This document is not just about how nations will relate to each other, it also gives the same rights and privileges to individual investor entities as representative of a nation. Thus, keep in mind that anything you read here also means a rich person or a business entity is treated as if they are the nation. However, citizens are not at anytime mentioned as being a “party” of any type other than when it comes to citizens potentially creating a loss for a “party” or it’s investor representative. In other words, “citizens” are at all times considered to have lesser status such that citizens have no claim to inalienable rights and the resultant rule of law. It is less than slavery for in this document, the only recognized covered entities are “party” which means a nation of signature and it’s participants in the sector of said parties social interaction referred to as “investment”. In fact, there is a defined party entity specifically that is not of the party:
investor of a non-Party means, with respect to a Party, an investor that attempts to make, is making, or has made an investment in the territory of that Party, that is not an investor of a Party
There is nothing in the list of definitions that suggest or implies “citizen”. The only entities covered and regulated by the TPP are those entities that are creations of man.  Man is of no consideration regarding the benefits of the relationships developed in this new constitution. Man is only mentioned as a consequence of potential harm to the “parties” in the form of financial loss. That’s it.
WE HAVE TO COME TO KNOW THE MIND OF THE DOCUMENT! Even if we can prevent this document from taking effect, we will not put an end to the ideology behind the document if we only defeat the document based on it’s ability to do material harm. We have to come to know the mind of this document so that we can be certain to identify the thought within the new words that will be written and spoken when those behind this document make their new attempt at forming the world according to their ideology. We need to know the mind so that we can educate those who will certainly face the next attempt to implement such an ideology. This is why the document is being created in such secrecy. We have learned from NAFTA et al and those that are the mind of the document are aware of our knowledge.
Thus I present the sections as they relate to what I believe is the thinking of this new constitution so that we can be aware of the overriding concepts that ultimately reorder societies and would require a new thinking regarding who and what we are, what our purpose is and where we are going as a species on this planet. The TPP is presenting a new ideal of social order. It is one I that find represents the worst of humanity.
This is where the sovereignty breaks down and the new social order is created:

Article 12.4: National Treatment
1. Each Party shall accord to investors of another Party treatment no less favourable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.
2. Each Party shall accord to covered investments treatment no less favourable than that it accords, in like circumstances, to investments in its territory of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.
The treatment to be accorded by a Party under paragraphs 1 and 2 means, with respect to a regional level of government, treatment no less favourable than the most favourable treatment accorded, in like circumstances, by that regional level of government to investors, and to investments of investors, of the Party of which it forms a part.]
Article 12.5: Most-Favoured Nation Treatment
1. Each Party shall accord to investors of another Party treatment no less favourable than that it accords, in like circumstances, to investors of any other Party or of any non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.
2. Each Party shall accord to covered investments treatment no less favourable than that it accords, in like circumstances, to investments in its territory of investors of any other Party or of any non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.
This is where the responsibility is defined for achieving “favorable treatment”. The “Party” is obliged to:

Article 12.6: Minimum Standard of Treatmentll
1. Each Party shall accord to covered investments treatment in accordance with customary international law, including fair and equitable treatment and full protection and security.
2. For greater certainty, paragraph 1 prescribes the [applicable rules of] customary international law [minimum] standard of treatment of aliens as the [minimum] [general] standard of treatment to be afforded to covered investments. The concepts of “fair and equitable treatment” and “full protection and security” do not require treatment in addition to or beyond that which is required by that standard, and do not create additional substantive rights. The obligations in paragraph 1 to provide:
(a) “Fair and equitable treatment” includes the obligation not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world; and
(b) “Full protection and security” requires each Party to provide the level of police protection required under customary international law.
Who determines which party’s law is part of the “principle legal systems of the world”? What is “customary”. These are the phrases of those who are trying to hedge. People agree to such language when they believe they have a hidden advantage. This is not language of certainty.
Here is where the citizens of the world become hog tied:

Article 12.6bis: Treatment in Case of Armed Conflict or Civil Strife
1. Notwithstanding Article 12.9.5(b) (Non-Conforming Measures, subsidies and grants carveout), each Party shall accord to investors of another Party, and to covered investments, non-discriminatory treatment with respect to measures it adopts or maintains relating to losses suffered by investments in its territory owing to armed conflict or civil strife.
2. Notwithstanding paragraph 1, if an investor of a Party, in the situations referred to in paragraph 1, suffers a loss in the territory of another Party resulting from:
(a) requisitioning of its covered investment or part thereof by the latter’s forces or authorities; or
(b) destruction of its covered investment or part thereof by the latter’s forces or authorities, which was not required by the necessity of the situation, the latter Party shall provide the investor restitution, compensation, or both, as appropriate, for such loss. Any compensation shall be prompt, adequate, and effective in accordance with Article 12.12.2 through 12.12.4 (Expropriation and Compensation, paragraphs 2 through 4), mutatis mutandis.)
Consider the XL pipe line protests. With this agreement, the protestors will have put the citizens of our nation in jeopardy of having to pay for the losses. In other words, a nations taxing apparatus is now bound as insurance against an investor’s loss. Capitalism? Read about Excelaron and San LuisObispo County’s Huasna Valley. 
This clause also pits a nation’s government against it’s people and pits it’s people against each other in that civil protest, maybe even strikes become compensatory offenses if a loss in incurred by an investor.  So, just how will a nation respond to assure it’s citizens “behave themselves” such that the other Party’s investor does not suffer a loss by means of social unrest?
This is where loss of sovereignty is further accomplished as it relates to a nation determining how best to structure it’s economy.

Article 12.7: Performance Requirements
1. No Party may, in connection with the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment of an investor of a Party [or of a non-Party] in its territory, impose or enforce any requirement or enforce any commitment or undertaking: 12
(a) to export a given level or percentage of goods [or services] ;
(b) to achieve a given level or percentage of domestic content;
(c) to purchase, use or accord a preference to goods produced in its territory, or to purchase goods from persons in its territory;
(d) to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such investment;
( e) to restrict sales of goods [or services] in its territory that such investment produces [or supplies] by relating such sales in any way to the volume or value of its exports or foreign exchange earnings; [
(f) to transfer a particular technology, a production process or other proprietary knowledge to a person in its territory;] [or]
(g) to supply exclusively from the territory of the Party the goods that such investment procedures [or the services that it supplies] to a specific regional market or to the world market [; or
(h) (i) to purchase, use, or accord a preference to, in its territory, technology of the Party or persons of the Party13 ; or
(ii) that prevents the purchase or use of, or the according of a preference to, in its territory, particular technology, so as to afford protection on the basis of nationality to its own investors or investments or to technology of the Party or of persons of the Party] .
2. No Party may condition the receipt or continued receipt of an advantage, in connection with the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment in its territory of an investor of a Party [or of a non-Party,] on compliance with any requirement:
(a) to achieve a given level or percentage of domestic content;
(b) to purchase, use, or accord a preference to goods produced in its territory, or to purchase goods from persons in its territory;
(c) to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such investment; or
(d) to restrict sales of goods [or services] in its territory that such investment produces [or supplies] by relating such sales in any way to the volume or value of its exports or foreign exchange earnings.
3. (a) Nothing in paragraph 2 shall be construed to prevent a Party from conditioning the receipt or continued receipt of an advantage, in connection with an investment in its territory of an investor of a Party [or of a non-Party,] on compliance with a requirement to locate production, supply a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its territory.
Again in the above section 12:7 we see the continuation of the individual/citizen carved out from the money. Sure, a nation can make some demands, but those only refer to the citizen as work done within the investment and not as a beneficiary of the work done. The benefits and results of the work done shall not be restricted by the host party of the investment.
Section 12:7 does allow a nation to protect it’s natural resources and the environment by adopting laws however, they cannot be inconsistent with the TPP: (i) necessary to secure compliance with laws and regulations that are not inconsistent with this Agreement;
Understand that what is consistent with the agreement is that the investment is protected at all times against not being fulfilled.
Lastly we see the final severing of a nations sovereignty; the loss of the right to have the host party represented within the investment entity.

Article 12.8: Senior Management and Boards of Directors
1. No Party may require that an enterprise of that Party that is a covered investment appoint to senior management positions natural persons of any particular nationality.
2. A Party may require that a majority of the board of directors, or any committee thereof, of an enterprise of that Party that is a covered investment, be of a particular nationality, or resident in the territory of the Party, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.
Thus, you can put some people in positions that theoretically may have power to prevent the investing entity from harming your nation, but not so much as the hedge phrase is: materially impair. This is another example of using “common man” language to hide the uncommon results. Personally, this language sounds like a ripe area has been created for the allowance of corruption.
Consequently, what we have here is an agreement that the investing entity is protected via insurance in the form of the host nation’s taxing ability that becomes a mechanism for “encouraging” shall we say, a host nation to take measures to assure it’s citizens remain compliant. This is the new social order. This is the corporate model of relationships.
Yes, there is a section concerning the protection of the environment and in general — health.

Article 12.15: Investment and Environment] [ ,Health Safety and Labour] [ Article 12.15: Health Safety and Environmental Measures][
1. Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental [ , health, safety, or labour] [ , health or safety] concerns.]
2. The Parties recognize that it is inappropriate to encourage investment by relaxing its health safety or environmental measures. Accordingly, a Party should not waive or otherwise derogate from or offer to waive or otherwise derogate from, such measures as an encouragement for the establishment, acquisition, expansion, or retention in its territory of an investment of an investor.]
It even talks about “Social Responsibility”. But…it’s voluntary.

Article 12.15 his: Corporate Social Responsibility
[ Each Party should encourage][ nothing in this Chapter shall be construed to prevent a Party from encouraging] enterprises operating within its territory or subject to its jurisdiction to voluntarily incorporate internationally recognized standards of corporate social responsibility in their internal policies, such as statements of principle that have been endorsed or are supported by the Parties. [ These principles address issues such as labor, the environment, human rights, community relations and anti-corruption. The Parties remind those enterprises of the importance of incorporating such corporate social responsibility standards in their internal policies.]]
Well isn’t that a fine one. How do you encourage social responsibility when a nation can not dictate what is to happen to the resultant product of it’s citizens’ work nor can their representatives on the board of the investment entity effect the management of the investment. Most importantly how do you encourage such voluntary “responsible” activity when the host nation is on the hook for any loss of money that may result from the investment entity’s not so socially responsible actions that result in civil protest? Remember, “civil strife” is specifically stated as a compensable event if it produces a loss for the investor.
What will this agreement do to the effort to get this world to wake up to the planet warming up? How does this agreement prevent the furtherance of a naturally human trend of selfishness resulting in further policies of exclusivity and extraction of wealth (see: Why Nations Fail)? It doesn’t.
That is what the ideals of our Constitution are supposedly about. The recognition of the human mind’s frailties and a governance structure to assure such frailties do the least amount of harm.
The further we go with implementing these types of agreements the further removed we are from the enlightenment concepts that resulted in a group of people writing prose such as our Constitution. You can forget about the ideal bound in our Declaration of Independence. And, the further we are moved toward the model of business organization as the dominate model for structuring a society. It is too accepted that the purpose of business is to make money. There is no longer any talk of “social responsibility” within today’s business model. Business no longer is a means for creating wealth that society then puts to work in reducing life’s risks. Business is simply about making money…stop. The declaration for the TTP would simply read: We hold this truth to be self-evident, the purpose of business is to make money.
Isn’t it ironic that in science fiction, a common theme is the threat of man creating an artificial entity that ultimately comes to dominate it’s creator. It’s a robot, a computer, some kind of machine even biological or any combination or all 3. We obtained the power of the creator only to realize our ignorance toward the full potential of all there is to know. The theme is always dismissed as artistic fun. One thing always is consistent with such stories and dreams. At no time is this entity ever not recognized as nonhuman.
Yet, in truth we have created and are willingly moving our self into such a living situation: the corporate structure for managing human relationships. The corporate structure is a creation of man (I don’t think a woman is credited with this considering the position of women in centuries past). It is a creation that we have been investing with human social stature and traits. We made this thing. We have given it “personhood”. (Personhood is the status of being a person.)  With that birth we have also given it standing within the circle of human relations. It is the physics of two entities occupying the same space in that the corporation is both human in action and representative of human action. And, we have given it one thing that humans do not have and the one thing that is the singular moment of all human endeavor: the real potential of eternal life. The corporation has the ability to do what we can’t: defy death.
The science fiction writers had it correct as to our drive, they were just looking at the wrong sciences. It’s not the material life that will do us in. It is the cognitive life that has the most potential to do us in.
The Trans Pacific Partnership agreement is the realization of our self destruction potential.

Tags: , , , , , , Comments (15) | |

Is the President Reading Angry Bear?

AB, late Thursday:

If you want to stop a dictator from killing his people, freeze any of his personal assets that are held out of the country.

In cases where the dictator is likely to fall, it sends a clear signal to other countries. (In cases where the dictator is likely to succeed, the worst case scenario is that banking relationships will be damaged, a consideration that the domestic government would have considered before making the decision to freeze the assets in the first place.)

The purpose of financial in lieu of military intervention is to balance the tradeoff. A dictator whose funds will remain unencumbered no matter how many of his people he kills will not change his behavior. A dictator who stands to lose a large (and increasing) portion of $70 billion faces a scenario where extending his time in office may well appear too costly.

Treasury, Friday night:

On Friday evening, President Obama took decisive steps to hold the Qadhafi regime accountable for its continued use of violence against unarmed civilians and its human rights abuses and to safeguard the assets of the people of Libya.

The President issued an Executive Order freezing the assets of Muammar Qadhafi and four of his children, as well as the Government of Libya and its agencies, including the Central Bank of Libya and the Libyan Investment Authority – the country’s sovereign wealth fund.

I report. You decide.

Tags: , , , , Comments (10) | |

What IR can learn from the NHL

Both Gary and Rebecca cited Marc Lynch recommending “intervening” in Libya:

The appropriate comparison is Bosnia or Kosovo, or even Rwanda where a massacre is unfolding on live television and the world is challenged to act. It is time for the United States, NATO, the United Nations and the Arab League to act forcefully to try to prevent the already bloody situation from degenerating into something much worse.

I petulantly asked whether Mark Lynch had ever seen an intervention he didn’t like.

The answer, of course, is yes, which a moment’s thought about pseudonyms would have made clear. My social radar remains a perfect contraindicator.

But that leaves several questions, not the least of which is “with what Army”? Certainly not the U.S. one, which is overextended in battles of—let us be polite&dubious optimal cost.

NATO and The United Nations suffer similar issues, along with “institutional inertia” (unlike the U.S., they do not jump into wars without a strategy, a purpose, and a plan).


This leaves the Arab League, which has several members—Egypt, Lebanon, Somalia, Bahrain, Iraq, Libya (being the issue at hand), Yemen, the Sudan, Tunisia, and possibly Saudi Arabia and Jordan come immediately to mind—that are rather preoccupied themselves.

It’s not just that the very sharp Mr. Lynch conflates genocides with civil war; it’s that he chooses the wrong strategy for ending the process.

Watch NHL fights. Here’s a good example (fight starts ca. 0:55):

Note that the fight isn’t ended until half a minute later. The referees (especially the one on the left side of the screen) are paying attention the entire time—fallen gloves get picked up or kicked out of the way—but they don’t even attempt an intervention until the players are on the ice.

The corrolary is that as soon as a player falls to the ice, they intervene.

The question for those advocating military action should be seen in that light: how can we quickly and efficiently get the battle to the point where intervention does not involve getting in the middle of two moving targets.

This is an economics blog, so, yes, you can bet that my answer will be economics-related.

If you want to stop a dictator from killing his people, freeze any of his personal assets that are held out of the country.

In cases where the dictator is likely to fall, it sends a clear signal to other countries. (In cases where the dictator is likely to succeed, the worst case scenario is that banking relationships will be damaged, a consideration that the domestic government would have considered before making the decision to freeze the assets in the first place.)

The purpose of financial in lieu of military intervention is to balance the tradeoff. A dictator whose funds will remain unencumbered no matter how many of his people he kills will not change his behavior. A dictator who stands to lose a large (and increasing) portion of $70 billion faces a scenario where extending his time in office may well appear too costly.

(There is the added signalling benefit of the proliferation of asset-freezings that occur. Since each country and institution that freezes the assets is weighing their decision based on political outcomes, the more places that freeze his assets, the more clear it becomes that his efforts are not expected to succeed.)

Again, I premise this on the idea that Tom Friedman’s basic premise is correct: that economic activity mitigates the chance of military activity. But the idea here is much easier to implement uni-, bi-, or multilaterally than managing the logistics of moving soldiers, machinery, and rations to an area that may have ended activities by the time you can start to have an effect. (Even ignoring if the effect will be negative.)

IR recommendations should follow the lead of NHL referees: make it as easy as possible for the fighters to be separated, but don’t put your body between them until then.

Tags: , , , , , Comments (9) | |

Wonder why we can’t solve problems? Consider BP’s latest ad, what you heard and the word “risk”.

By Daniel Becker

An ad I’ve been seeing recently aired by BP is promoting how much work they are doing to clean up the oil spill. It is designed to leave you feeling comforted that they are on top of it, they are cleaning it up in a massive effort. Say, 29 million gallons of oil and water sucked up. Wow. 29 million gallons.

Ever think about how big that is? Every stop to get out the calculator and crunch a few simple numbers to see how big 29 million is? Did you ask: I wonder how much that is in relation to the guesstimated barrels of oil spilled? Do you even think you need to know? Did it occur to you that maybe, in order to make an informed voting decision, you should see just how big a mess the oil spill is by comparing it to the 29 million gallons BP is impressing people with? You know, figuring it out because there is the possibility that this oil spill thing really is more than you might think as it relates to catastrophes to tell your grand kids about.

No? Yes? Maybe? I don’t know?


June 10th estimates were 25K to 30K barrels per day. June 15th estimates were 35K to 60K barrels per day. Gallons per barrel: 42. 29 million / 42 = 690,476.19 barrels / 25K barrels = 27.62 days of spill.

690,476.19 / 35K = 19.73 days of spill. 690,476.19 / 60K = 11.5 days of spill.

Total number of days of spill: 94 (by my count, can’t get google to answer the question). 27.62 days is 29% of the spill days. 19.73 days is 21% of the spill days. 11.5 days is 12% of the spill days.

But, here’s the rub, not all of the 29 million gallons captured is oil. It is water and oil. Thus, the total amount of oil recovered as presented in number of days of spill is something less. Are you still impressed with BP’s results? Does this make you reconsider your estimate of the risk of oil drilling as it is currently performed?

At 35K barrels per day, there are 3,255,000 barrels of oil spilled. At 60k barrels there are 5,580,000 barrels of oil spilled. Roughly. That is 136,710,000 to 234,360,000 gallons of oil. At 29 million gallons of liquid sucked up, we are talking about 4.7 to 8.1 times the number of days it has taken BP to reach that 29 million mark. Assuming that all 29 million gallons was only oil. But, it was not.

Can you relate the need to do such a simple calculation to the concept of risk? “Yeah, there’s a risk” you may say in response. Are you thinking physical risk? How about the concept of risk as exemplified in the concepts of hedging, credit default swaps and derivatives? Or the economic profession’s use of the word risk? Because if you are only thinking about the physical risk, then BP succeeded in it’s messaging. They succeeded by diverting your mind away from their concern and thus their means, modeling and reference for interpreting life and thus formulating and implementing their intentions. This means the chances of you making the voting decision that best benefits you are slim. Why? Because you failed to walk in their shoes because you listened as if you were the only one in the conversation. Yes, the empathetic concept of walking in someone else shoes does not only serve your ability to help another and sooth your soul, it also protects you from one who would use you.

Still want to know why we can’t solve anything in this nation any more such that your life gets easier or do you get it as to your roll in this democracy now? Our roll is not to just take in the message and see if it fits our individual language of how life works. It is to also understand the messenger and their interpretation of how life works.  In BP’s case, life works based on economics.  Their reference for words comes from economics.  Their understanding of democracy is economic based.  Freedom/free market.  Liberty/more choices.  Fiduciary responsibility/make money.  Justice/market clearing price.  Free speech/advertizing.  One vote/one unit of currency.  Rights/market power.  Social conscience/consumer reseach.  

Want another example of where we have failed as citizens in a democracy? Lets consider the relationship of the fed’s recently reported medicare fraud case involving 94 people and $251 million in false billings (fact, really happened) and the message that private insurance will reduce our costs, that a private insurance system is the best way to go. Or, how about the economic message behind the “private insurance is best” message that the free market is always best. Go ahead. Meld those two thoughts. One that is real, $251 million in fraud found by your government and one that is what? I already have tried and thus wonder: How is it that the private market with all it’s cost controls and managed care systems did not catch $251 million dollars in false payout? You know, considering “market clearing price”, “rational consumer”, “perfect knowledge”, etc, etc, etc. Haven’t heard these terms? I assure you BP et al have ’cause it’s all economic democracy to them.

Tags: , , , , Comments (20) | |

The Kennedy-Webb Colloquoy on Liberty and Private Property: Want to make it a Seminar?

by Bruce Webb

Scottish Professor Gavin Kennedy is the blog-proprietor of ADAM SMITH’S LOST LEGACY and a new (and continuing?) contributer to Angry Bear, most recently with Spare Us From the Invisible Hand. In an earlier post by Gavin Adam Smith in a Broader Legacy I responded to one of our regular Angry Bear glibertarians and rather than disrupting Prof. Kennedy’s thread further took it to my own post at the Bruce Web Adam Smith and Glibertarianism which in turn led to some back and forth between Prof. Kennedy and me on ASLL and the Bruce Web with two posts from Gavin and two from me including Marx, Smith and the Ages of Man.

The discussion was initially about the development of private property and its relation to both liberty and rising consumption/population levels as that is seen developed in the works of Adam Smith. In the course of the discussion it appears that Prof. Kennedy and I have radically diverging views not only on the underlying nature of pre-historic, ancient and some current economic modes of production but also on how those resolve themselves in the conceptual conflict of ‘liberty’ vs ‘democracy’.

It is all rather a departure from the more numeric analysis typical of Angry Bear, but for those interested in history, economic history in relation to modes of production, the economic and philosophical thought of Adam Smith feel free to jump in at either or both sites. In an upcoming post I am going to add some discussion of ‘democracy’ as it relates to the development of English Land Law, where the latter was marked in large part by its suppression of the former. Hints so far are that Prof. Kennedy and I are coming at this last question from totally different perspectives. Which may reflect fundamental differences between the British historical view of democracy and that expressed in the American Declaration of Independence. We’ll have to see how it goes.

Got ideas to share?

Tags: , , Comments (0) | |

Health Care billing examples. The "public option" can’t work.

by Divorced one like Bush

For your consideration here are some real numbers from a Medicare Advantage policy via United Health Care

Cat Scan billed $1042.00
Not Covered $ 831.68
That means the contracted charge for this service with UHC is $210.32.
Copay $ 42.06
UHC payment $ 168.26

The “copay” is 20%.

Same plan has a “Deductible/Copay” individual combined limit of $3800.00/yr.

Ok, lets look at this. Eye Exam.
This is for my dad in the nursing home.
Service code 92004 $217.00. Medicare paid Zero.
Same code, 92004 via the doc my daughter saw was $160. This was discounted to $40.00and my share was zero.

Here is the issue, rational consumer and all that, how can we expect to get costs under control if the billed amounts and the paid/contracted amounts are so far apart? The consumer does not know the contracted rates, so the consumer can not purchase the insurance that pays the least. Thus, the consumer can not be “rational” when choosing health care. (Like we’re rational at anytime with this!) Basically, there is nothing in our current approach to the issue that economic theory would suggest is viable. Or maybe economic theory doesn’t apply?

At the same time, how do we know that these contracted prices are the correct price such that the market is “clearing” properly or in “equilibrium” of some sorts such that there is a reasonable profit for the providers and payers with reasonable cost for the consumer while producing the product of highest quality (as in it did not harm you and did actually help you)? These prices could be distressed prices in that the provider accepts them so that they can capture some of the patients planning to make up the difference in cash patients or other higher contracted fees. For the lawyers that read this blog, we are talking about “contracts of adhesion”. That is a contract signed where one party has most of the power. But then, what would you expect when you exempt a type of business from the anti-monopoly laws. In the past they were public utilities.

This leads to the question of just how can congress and Obama believe (and it is a belief because all examples of what is being proposed have failed in the past, MA being the most recent) their “public plan” is going to ultimately produce the savings that will allow coverage of 50 million more people, better product quality and happy, smiling Americans? After all, if the contracted rates are all over the map, then there will be massive cost shifting either by insured selection or subscriber (patient) deductible manipulation. And, there will still be a need for all the administration to “manage” the care which is in actuality a paper chase game.

We talk about pricing. Medicare wants to reduce the rates and that will just shift the burden onto the privates is the complaint. Well, I got news for all of you. The privates use the medicare fee schedules all the time and then start cutting from there. So, this is a bogus complaint by the privates/non-profits.

I assure you, though you may disagree, there is no way to fix health care via market theory when the approach is to believe that the market is with the middle man; the insurers. Private, public or non-profit, the problem with health care cost and all that leads to can not be found there because that is not the real market.

How much more and for how long do we continue to pay the privates more via Medicare Advantage before congress gets this message that the issue can not be fixed by focusing on a false market? From 2004.

Note this report on Nick Skala presentation of June 4, 2009 in front of the “Progressive Caucus”.

“Bill Gould emailed me after reading my testimony and materials I was going to present to tell me that they were not acceptable and that there could be no comparison between single payer and the public option with side by side comparison,” Skala told Single Payer Action. “Darcy Burner told me that they would construe talking about the public option — even comparing it to single payer — as an attack on the members of the Progressive Caucus.”

Darcy Burner; the candidate that Blue America backed. Head of the American Progressive Caucus Policy Foundation whose tag line is:

organization whose mission is to bring together the collective wisdom of progressives inside and outside of Congress to promote
* the health and economic well-being of us all.

Both are caucus’ that should be aware that the people want a medicare like program. The numbers are landslide size. The numbers should completely put to bed the meme of “not politically possible” if this nation actually worked it’s Constitution. And, if there is a caucus that should be working the Constitution as the normal course of it’s function, it should be a caucus that titles it’s self “Progressive”. Certainly a person who was a candidate for Blue America should get it!

Talking about a single payer system to the congress people who are part of a caucus FOUNDED by Senator Bernie Sanders, a “self described socialist” who is promoting single payer every chance he can, is to be construed as “an attack on the members”? ARE YOU FUCKING KIDDING ME! What! Prgressive suddenly do not like to learn about stuff…factually?

“During the presentation it was very nasty,” Skala said. “I got some very dirty looks from Darcy Burner. During the question period and once during the testimony, I was interrupted, told that the Progressive Caucus had taken a position on this issue and unless I had something positive to contribute, then there wasn’t really much point to answering my questions.

Here is Nick Skala’s actual presentation.

So, what does it say about a nation that states it is a democracy and yet the very organizations who should understand the implications of naming one self such, is unwilling to do the peoples bidding? This is not hard folks. A caucus’ job is not to do what is politically simple, it is to make the perceived politically impossible a social reality based on that caucus’ ideals. Well, if your ideals are “progressive”, if you are a part of a group founded by a socialist, and 65 to 70%of the people want something that by all Fox News reports is progressive and socialist then: How much easier can it get?

Tags: , , , , Comments (0) | |

If You Think I Believe it’s 1931 Again, You Should Ask the Greek Guy

Via Robert’s Twitter Feed, and to avoid ranting about 401(k)s before the end of May, here’s a Rant Well Worth Reading. (Warning: PG-13 or R rating; D. Aritophanes channels The Rude Pundit).

Clean Excerpt:

What’s the catch? That’s the beautiful thing … there is none! It’s all totally risk-free for you from start to finish! You’re last in, first out! The rubes front 97 percent of the buy-in with their taxes! And for their troubles, they get 100 percent of the exposure!

In this context, Brad DeLong’s “I trust my friends more than I do George Voinovich” post does not exactly warm the cockles of my heart.

Tags: , , Comments (0) | |

Income distribution and GDP, it matters

I should title this: Yeah, it is just like 1929 you freak’n see, hear and speak no inequality monkeys.

I have this pile of income data sorted out from Saez’s work (the GDP is BEA). My thoughts regarding our economy is that income inequality (or equality) matters. It matters so much, that it is the all defining focus of government in a democracy. Every policy made should be judged against this goal of ever greater equality as we use the tool called “economy” for the betterment of our lives.

For most (even the tippy-top earners), the biggest share of income is not earned from money, but from labor, whether physical or cognitive. Because of this, there must be effort as reflected in our policy toward regulation and initiatives that continually work to equalize the share of income. I am confident, that just as Cactus showed there is a low and high to top marginal rates correlating with GDP growth rates, the same is true for share of income. That’s my thoughts.

I sorted out the share of income in dollars and percentages in the past and have posted them. This time I look at per capita income and compare them to GDP.

Starting at the low point for both groups in 1933, we see $6142/person (16.46% of the total personal income) for the top 1% and $315/person for the rest. The following chart shows the years of income and GDP doubling along with the top’s percentage share. I took the starting income and kept doubling it to find the year closest. A + or – means the actual income is before or after the year (between 2 years).

Income, GDP doubling chart

For the top, the number of years to double are: 9,19, 12, 7, 5, 11, 9
For the bottom 99 the number of years to double are: 8, 7, 17, 9, 7, 15,
For GDP the number of years to double are: 8, 5, 11, 11, 8, 7, 12, 13
The bold number is the last doubling before 1976.

If we look at 2005 incomes, it is clear the trend for years to income doubling was increasing for the 99%. For this group, 9 years past the last doubling, there has only been a 34.5% increase where as the top has doubled. It appears that the best income percentage for both the top and the rest is around 10 to 12%. Based on my prior posting, I will say with confidence that once the 1%’ers increase their share to 16% of the income we are screwed. That is because, it was as the 1%’ers passed through the 16% mark as their share declined (the income low point in 1933) that the post 1929 economy started its turn upward. On the other end of this time span, it was 1996 that the 1%’ers passed through the 16% point as their share increased. 1996is the year that the 99%ers income fell below the personal consumption line and has stayed there since. Can you say deficit spending? Another funny thing about the 30’s, the second recession, the top 1% hit 19.26% of the income in 1936. The WW2 turn around? The top 1%’ers share finally went below 16% in 1941 and never turned back.

However, here is the meat. Using 1976 as the center point of the range because it is the low point of the share of income for the top 1%, there are 5 times that GDP doubled for an average of 8.6 years per doubling. This during the time that income share was becoming more equal. As income became less equal over the next 32 years, there are only 3 doublings of GDP or once every 10.6 years. Also, the time between doubling is increasing to more than during the prior 43 years.

Now, for the class war aspect. In the first 43 years, the top 1% saw their income double only 3 times (1 every 14.3 yrs) compared to the bottom 99% seeing theirs double 4 times (1 every 10.75 yrs). During the next 32 years, the top 1% has experienced 4 doublings, one every 8 years compared to the 99% experiencing this only twice, one every 11 years.

Here is the graph that illustrates the relationship of shifting income share and GDP growth. Following Spencer’s past suggestion, the graph is a logarithmic scale.

Income per capita vs GDP graph 12-28-08

Basically, increasing of income was more equal and the economy grew more as the top was losing share. The post 1976 economic policy we have been following has quite frankly been killing our economy. Yeah, it sure benefited the top 1%, they got their’s. But, it could not last because, you can not have one group taking more out of the economic growth faster than it can grow. That, boy’s and girls is the lesson of the first 43 year compared to the last 32 years. For the first 43 years, GDP doubling was always ahead of the income. For the next 32 years, GDP growth was always behind the income which was do to the top 1%’s share. Their’s is the only income that increased faster than the economy. In chart form it looks like this:

First 43 years doubling: GDP 8.6 yrs,  99%’ers 10.75 yrs,  1%’ers 14.3 yrs.
Next 32 years doubling: GDP 10.6 yrs,  99%’ers 11 yrs,  1%’ers 8 yrs.

You know what else this is? It is the difference between reducing debt or increasing debt: Saving or spending tomorrow’s money. Unified budget (illegal) or general budget.

So, what should economic policy in a democracy strive to do? Promote more equality in the nation’s income which everyone helps to produce thus giving everybody a more equitable rise in their standard of living or promote the top 1%’s growth and the hell with all the rest? The rest being 99% of the population, the overall economic growth, the deficit, quality of life (retirement, health care, free time, better life for future generations) and just plain happier people who don’t find a need to fight with everyone else on the planet.

Personally, between this info and my post titled “It’s the big one honey, I know it…”, I think it’s rather clear exactly what needs to be promoted with policy. In case it’s not clear, there is this post “In the Beginning there was Income”.

Such policy if implemented will also act as the stop gap for this current downward trend better than anything proposed so far because it will be returning to the true purpose of an economy in a democracy like ours. Or, we can keep talking in quintiles hiding the truth and pretending that it’s just a housing bubble, and people spending to much, and a credit freeze and bad regulation and oil and lack of stimulus spending and it is not really like 1929 and…

Tags: , , , Comments (0) | |