Friday, November 15, 2002

Lets Trade

It is reasons like this that I want to increase immigration to the US. A better idea would be to establish trade with countries like North Korea, Cuba, Belorussia, Ukraine, etc.. We can send them our f**king-dilletant-a**holes, the product of so much fine US edumacation, and we will get back people that know what is right, pure and simple. If we can get this kind of business going we would make a mint.
Yes, she went on, bread is now a 50 stultinki, and bananas are now 150 stultinki a kilo, but now you can buy as much as you want, any time. Fresh bread, for everyone, with no lines.
She's spent most her life as a non-Communist, but she still said the last part with a hint of awe.
He sat there for a moment, mulling, then said this:
"But it's still a lot more expensive, isn't it."

Thanks to Glenn Reynolds for this link.

Gold Standard

We may soon see gold used again as a standard for currency. Something the world has not seen since Tricky Dick closed the gold-window in the US, and arguably even earlier than that. Who is considering this? Is it the US, no. Is it the UK, no. Is it Malaysia, YES! That's right, surprise, surprise. The minions of Mohammad are considering moving the Malay dinar to be backed by gold, possibly by early next year. The idea definitely has merit.

The motivation stems from the a desire to stabilize their currency. Currently, they are pegged to the dollar so any monetary errors made by the US impact them as well. But since the USD is a reserve currency and the US economy is much larger these errors have an higher impact on smaller economies like Malaysia than on the US proper. Gold has the most stable exchange-ratio of any commodity and far more stable than fiat currencies. So if its stability you want it would be hard to do better.

They are not going to mint gold money, rather the dinar becomes a claim on gold deposited at the central bank. They plan to use the gold dinar for external trade only, so it is not clear what is the internal dinar going to mean. Which means the holders of dinars will have to have faith the central bank will settle their claim in gold at the price specified. As far as the mechanics of this arrangement it does not sound much different than the USD backed Dinar. Malaysia may still suffer from currency crises, like the Asian crisis of 1997. Contributing factors to those crises were the governments expansion of Dinars beyond a sustainable ratio to USD reserves. So if the Malay gov't tries to use some sort of fractional-reserves justifications to expand its Dinar versus its available gold reserves they will find themselves in the same situation as 1997. And ultimately if your trading partners do not trust your claims the currency will suffer, sometimes very badly.

The smart folks at Malaysia's central bank know all this of course. So it is very encouraging if you plan to do business in Malaysia. It is a good sign of their commitment to opening their country and economy. Surprisingly, they plan set up their first gold settlement arrangements with Iran, the anti-"Great Satan".

The world is becoming less boring everyday.

Thursday, November 14, 2002

Not Good

This is some scary shite. The thought police are coming.
Yesterday the Prime Minister made a speech (after the Queen's opening of Parliament). The Prime Minister explained to us that Britain is stuck in the past with a silly devotion to 19th century concepts of civil liberties - such things as trial by jury obstruct the modern state and must be further 'limited'.

Homeland Insecurity

Glenn Reynolds catalogues many of the potential problems of the Dept of Homeland Security. In the past Glenn has written about the role citizens can and do play in our collective defense. His views have been validated by the actions of Ronald Lantz. I am no fan of federal bureaucracy, generally speaking it is dangerous and inefficient. There is a lot to be worried about with this agency, but that does not mean that overall things will be worse.

The Bush Admin is a very tight group and does not let its argument's spill over into the media. Its approach on some issues have been pretty opaque, even though their goals have been public (although vague). It should be instinctual to he hyper-critical of the Admin, and silence makes their intentions hard to discern, their actions have been yielding results. On national security issues the Admin is comprised of Cheney, Rumsfeld, Rice, and Powell. Personally, I don't put a lot of weight on blabber about rifts in the cabinet between Powell and Rumsfeld, when this administration is out of office and books are written about it, you will likely find it was much more focused, and debate was encouraged. If you look at these players they are not career bureaucrats. But they are all familiar with how a bureaucracy functions, the difficulties of managing it, its strengths and weaknesses. I should add that I am mostly talking about Cheney, Rumsfeld and Powell, I don't know much about Rice and Bush is a wild card to me.

An example of this group's governing principles can be found in the 18 lessons Powell distilled from his career in the US Army.
1. Being responsible sometimes means pissing people off.
2. The day that soldiers stop bringing problems to you is the day you have stopped leading them. They have either lost confidence that you can help them, or concluded that you do not care. Either case is failure.
3. Don't be buffaloed by experts. Experts often possess more data than judgement, and can be completely removed for the real world.
4. Don't be afraid to challenge the pros, even in their backyard.
5. Never neglect details. When everyone's mind is dulled or distracted, the leader must be doubly vigilant.
6. You don't know what you can get away with until you try.
7. Keep looking below surface appearances. Don't shrink because of what you might find.
8. Endeavors succeed or fail because of the people involved. Only by attracting the best people will you accomplish great deeds.
9. Fancy titles count for nothing.
10. Never let your ego get so close to your position that when your position goes, your ego goes.
11. Fit no stereotypes. Don't chase the latest management fads. Listen to the situation.
12. Perpetual optimism is a force multiplier.
13. To pick people, look for: intelligence, judgment, capacity to anticipate, loyalty, high energy drive, balanced ego, and the drive to get things done.
14. Great leaders are always great simplifiers, who can cut through arguments, debate, and doubt, to offer a solution that everyone can understand.
15. When the probability for success is between 40% and 70%, go with your gut.
16. The commander in the field is always right, and the rear echelon is always wrong, unless proven otherwise.
17.Have fun in your command. Spend time with your families. Surround yourself with people who take their work seriously, but not themselves. People who work hard and play hard.
18. Command is lonely.
That the group fought relentlessly for the right to keep union's out of the legislation is telling. If the Admin wanted just another a bureaucracy, negotiating this single point would have earned passage of the legislation long ago. Than we would undeniably have another CIA and FBI. The presence of unions in the CIA and FBI does not guarantee failure or preclude success, but bureaucracies must be most vigilant to the sloth they engender, and the Admin's focus on issues like this suggests that they are somewhat focused on it.

Why a new department? Reforming an existing bureaucracy is impossible. The many existing interests reinforcing each other's positions and roles making changes fractious and inefficient. The solution is often to invest in a new bureaucracy governed by better rules. Success is not guaranteed and there are lots of big IFs. There are bureaucracies in large corporations as well as government, and the large companies do a decent job, mainly because of the pressures of competition. While it seems the new department seeks to model itself after the large corporation, what worries me is where is the incentive/competition coming from? How are they going to compete, this is where many of government's failing stem from. Maybe the new department will be able to hire private contractors to perform some of its work?

Another positive sign regarding the new department are the critics and what they are saying. Senator Byrd is concerned about how fast the department is being formed, something so big should be phased in. Just because Senator Byrd is an unpleasant person does not mean his criticism is invalid. But a slow buildup will allow plenty of time for Congress to insert their little bits and pieces into it and for the other agencies to protect their fiefdoms. So quicker is better.

Ultimately, we will have a different law enforcement landscape. The FBI will lose its counter-intelligence mission to the new department. Maybe the ATF and FBI will swap some "territory", the CIA will probably keep much of itself intact. It will be a while before we see if the new department is better than the FBI and CIA. But if it is more successful than many of the existing agencies, they may be remade based on the same principles, especially if Bush wins reelection in 2004. As always the Devil is in the details.

UPDATE: Val suggested they hire Gorbachev as a consultant. "The guy transformed the biggest bureaucracy in the world and survived." 

Wednesday, November 13, 2002


Here we go. Look at Ireland, Estonia and New Zealand, by the way.

This Feels Right


You know I knew it, but couldn't put my finger on it. But Ben Stein sure has (from the WSJ).
The election is over, and Mr. Bush has a majority, however slim, in both houses of Congress. Thanks to close pals within the Bush team, I can now reveal what he has in mind for the second part of his term and for the new Congress. (Hint: Some people may not like it.)

Drill for oil in Malibu.

Drill for oil in Central Park, New York.

Drill for oil in Barbra Streisand's living room.

Knock down historic Georgetown east of Wisconsin Avenue and put in a stock car raceway.

Close the Boston MTA at Harvard Square and turn it into a nucular ( yes, "nucular") waste processing facility.

Drill for oil in Berkeley.

Eliminate green leafy vegetables from federally funded school lunches. Substitute chewing tobacco.

Drill for oil in Aspen.

Require pheasant hunting proficiency as a condition of getting a driver's license.

Drill for oil on Riverside Drive, New York.
I think there must be more of a list than this, but it's certainly a start to the kind of America that will make Barbra finally keep her promise and leave the country.

So will someone make sure she reads this?

Euro Opinion

No not the Euro opinion of Americans, an American's opinion of Europe (minus UK) . Short and sweet.
"You want to know what I really think of the Europeans?" asked the senior State Department official. "I think they have been wrong on just about every major international issue for the past 20 years."
I think he is being generous. George Will summed it up very well, once he said, why does everybody care what the Europeans think? What are the great thinkers they have given the world in the past century, Hitler, Stalin, Mussolini.

Tuesday, November 12, 2002

God Willing

Mike Ledeen seems to be one of the only people writing about what is going on in Iran (oh wait, Reuters mentioned something about protests. That was very noble of them). I hope he is right and for everybody's sake hopefully it finishes soon.
Both the regime and its opponents are rapidly reaching a point of no return, and the odds certainly favor the people. The mullahs are hopelessly outnumbered, and the forces of freedom in Iran are getting braver all the time. Late last week a commander from the Revolutionary Guards announced he would not order his men to fire on student demonstrators, and was immediately replaced, but this sort of thing can be contagious, as General Jaruselski and Slobodan Milosovic found to their doom. The mullahs are constantly firing and hiring new thugs to protect them against the wrath of the people, and the question is whether or not there is a sufficient supply of killers to forestall the end of this hated regime.
There is no shortage of idiots in the world, but thankfully there is a finite supply of thugs (I know its hard to believe, but it is a fact; I'll try to find the Labor Department statistics later).

UPDATE: Val sent me a link of other news outlets mentioning Iran, particularly Pravda on the Hudson.


Well whoopty-doo, Matt Drudge's web-site (no link necessary, you know what it is) has reached a billion page hits. Apparently, its not enough that every idiot in all the world (last count there were 10 billion of them) uses Matt's site for news, but he has also rented a barge of fireworks in New York harbor to celebrate it. Freaking show off. Plus he is ugly
And much more annoying on the radio than the web. Allegiance Telecom hosts his site, lucky bastards.

Russian Visitor

We recently had a family friend from Russia stay with my mom. He stayed for a week, touring NYC and left to see family in San Fran. Inevitably we talked about life in Russia. This gent is a successful small businessman. In the last few years he has opened several stores that sell god-knows-what. This is quite an accomplishment over there. In the last couple of years doing business has gotten easier for him.

To open a store in Moscow you have to register your business with some office, and pay a nominal fee. Piece of cake. Once you have a store front, or office, set up the local police will stop buy and require that you pay ~$4,000. You don't have an option in this matter. The policeman may come back later and ask for another installment, so it is often a good idea to pay him more than he asked, as goodwill. Of course, you still have all the usual expenses, bodyguard for you and your family, "delivery" people who demand you pay cash for goods before they have arrived. All in all its an interesting place to do business.

I mentioned that the current situation is an improvement, and it is. There seems to be emerging a type of "order", it may involve corrupt officials, gangsters, bribery, etc.. But at least there seems to have emerged a balance, between criminal and government gangs. A couple years back there would have been several visits from different gangs all demanding tribute, complete confiscation of your business, or simply murder.

My mother, who is not very sanguine about the future of Russia, asked our friend why he wouldn't move to the States. Someone who is able to make money in such an environ should do well here and not worry about bodyguards. His was reply was no way! "In the US everything is open, it is much harder to hide your income".

For us here it is hard to comprehend this mentality and as Ayn Rand once said it is good that we do not. The idea that the government and all sorts of other semi-official organs are out to steal from you is a unassailable fact, not just a paranoid rant. The black economy in Russia is not peripheral, the whole country is involved in hiding money from one another, usually in foreign banks. There are Russian software companies that sell accounting systems which keep two sets of books, one for the government and one for yourself. And this is all a normal, everyday, fact of life.

Some estimate that Russia's black economy is 70% of GDP. Why is it this so big and bad? The only reason you need to hide income is to avoid confiscation by the government via taxation. Hiding income from thugs is easier to do in banks and why pay all the extra costs/risks of hiding money from officials that can shake you down, or imprison you, unless the risk is worth it. And for millions of Russians it is definitely worth it.

For the government this 70% meant they could not fund the military, pensions, etc. without printing money. Amazingly, they did something completely rational and moral. In Jan 1 2001 they imposed a flat tax, 13%. So far tax revenues have gone up 30%. Tax revenues have gone up in a country where paranoia is a prerequisite for survival. Tax revenue before the tax reform were 9% of GDP. By November 2001 tax revenue where 16% of GDP.

I am cynical about the prospects for a country like Russia. But one has to wonder, how such a god-forsaken place implements these ideas. It must be the utter desperation that forces the mind to focus and ignore political compromises. Or it might be an enlightened ruler, Czar Putin. Countries based on enlightened rulers will eventually have to deal with the issue of succession. But in the mean time it will be very interesting to see how these changes impact Russia's society.