Thursday, December 22, 2005

Energy Prices

Price controls do damage and cost us more than just allowing normal supply and demand laws to operate.

Thomas DiLorenzo in his "Four Thousand Years of Price Control" article http://www.mises.org/story/1962 provides some historical perspective. He states, "for more than four thousand years the results have been exactly the same: shortages, sometimes of catastrophic consequence; deterioration of product quality; the proliferation of black markets on which prices are actually higher and bribery is rampant; destruction of a nation's productive capacity in the industries where prices are controlled; gross distortions of markets; the creation of oppressive and tyrannical price control bureaucracies; and a dangerous concentration of political power in the hands of the price controllers."

We all have a choice to buy or not to buy. The problem is that we do not like the alternatives. This is a key element of the economic equation--at what point will we not pay the price being asked? We can walk, bike, take public transportation, used most cost-efficient vehicles, put on extra closing, turn down the thermostat, etc. The supplier knows this. At some point, an equilibrium is reach. This fluxuates over time.

Market factors always win out of forced measures. Governmental mandates do the wrong thing and the wrong time and have no lasting value. They are seat-of-the-pants reactions. One thing we never want to hear or see is government holding hearing on the topic. They will only create bigger messes.

Politicians are posers. They react for selfish reasons. The less government involvement the better. The more involved it is, the more it will cost the supplier and the buyer. Government is not the solution to economies travesties, free markets are.

Tuesday, December 20, 2005

Dangers of Arab Democracies?

The question is bantered around...do the positives of Arab democracies outweigh the negatives. The positives are that in most cases, democracies promote freedom, open dialogue, and opportunities; see Turkey. The negative is that terrorists organizations can (and do) get elected; see the Palestinian Authority. (Jordan and Egypt are examples of pseudo-democracies.)

If a terrorist organization gets a legitimate voice, does that mean they will take over? Does it mean that if they get control they will squash the democratic principles they used to get power, to create state sponsored terrorism? Maybe. Their uniqueness is they have private "armies" (which tends to violate the definition of a democracy. However a terrorist-based platform will only carry them so far. It will be a losing proposition in the long term. The pain is in the short term.

If allowed to operate, the democratic process will work out for the best of the nation, as they define themselves. Let the world community and economics drive their acceptance. Economics drives all disaffection. With job creation, prosperity will eliminate most descent. It gives hope. And hope is what the terrorists recruits lack.

Non-democratic nations last for a while; eventually they fail, especially in today's world. With the communications available, it makes it difficult to hold everyone down for long. Most Arab nations are run by individuals very aware of the value of global business practices. They get rich by participating. They create their stability by helping those that surround them.

The real concern it seems is creating a religious state via the democratic process. Do I really care? Do I care that Saudi Arabia is a Muslim state? No. They participate in the world as they see fit. Doesn't mean I want to live there but I will do business with them without blinking an eye.

The postitives of Arab democracies outweigh the negatives. Give hope and what happens. It does not happen as fast as we'd like but it will over time.

Friday, December 09, 2005

Seeing The Job Through

12/12/05 - Mortimer B. Zuckerman

President Bush arrived a little late with the 7th Cavalry. Until he rode up last week with an arsenal of powerful arguments for fighting on in Iraq, his policy had been dangerously enfiladed by hostile fire, some of it wild but all of it taking a toll on public confidence.

The ambush by Rep. John Murtha was a critical moment, his record as a defender of America in blood and word suddenly legitimizing the argument for pulling U.S. troops out of Iraq. A new CNN/ USA Today /Gallup poll found that a majority of Americans want the troops withdrawn within the next 12 months. That's strikingly similar to the numbers who wanted America out of Vietnam in the pivotal year of 1970.

Two developments have brought public confidence to this low ebb, and it's important to distinguish between them so that we can confront the central issue. The first is the incontrovertible evidence that sound plans for dealing with post-invasion Iraq were recklessly disregarded. This is by far a more relevant issue than the red herring that Bush lied about the prewar intelligence and misled the nation. Anybody who spoke to him before the invasion, as I did, knows that the president truly believed the intelligence on weapons of mass destruction, as did British Prime Minister Tony Blair, former President Bill Clinton, ambassadors at the United Nations, and so many others, as I documented recently.

"Greatest battle." The Big Lie campaign by the Democrats is a cheap cop-out for those who voted for the war. These two strands of criticism about the Iraq venture--flawed intelligence and the execution of the occupation--are important and must be thoroughly examined--but not now. As the president has said, the challenge in Iraq is about whether we win the war on terrorism or quit the field before victory is achieved. Iraq is the central front of the American defense against Islamic terrorism around the world. Osama bin Laden, in whatever cave he's skulking, and Abu Musab Zarqawi, scurrying from hidy-hole to hidy-hole across Iraq like a furtive rat, both know this. We should, too, for there is grave danger for us if we don't.

Zarqawi's aspirations in Iraq could not be more clear. In a letter to bin Laden, he called Iraq the "land of jihad," the new Afghanistan. Bin Laden's deputy, Ayman al-Zawahiri, wrote that al Qaeda views Iraq as "the place for the greatest battle" and vowed that control of Iraq would help "extend the jihad wave to the secular countries neighboring Iraq," principally Turkey and Jordan.

The consequences of leaving Iraq prematurely could be a radical Islamic regime funded with oil revenues, an unfettered platform for terrorist attacks, destabilizing the Middle East and threatening America itself. Know the enemy. Zarqawi has a long history of terrorist activities. He organized the assassination of Lawrence Foley, a U.S. Agency for International Development official, in Amman in 2002, he planned terrorist attacks in Germany a year later, and he plotted last year to attack Jordan's intelligence service and prime minister's office, as well as the U.S. and Israeli embassies there. Three al Qaeda operators crossed from Iraq into Jordan, smuggling seven Katyusha missiles in the underbelly of an aging Mercedes with a hidden second gas tank. Moreover, Jordanians discovered a warehouse of chemical substances and 20 tons of explosives. The 71 types of chemical substances included nerve gas and substances that cause third-degree burns and asphyxiation. Ultimately, the terrorists were diverted, but this is the kind of mayhem we can expect if al Qaeda is permitted to establish paramountcy in Iraq. This year, of course, it was Zarqawi who masterminded the suicide attacks on the three tourist hotels in Amman in which dozens died.

We should contemplate the prospect of a jihadist Iraq because it puts our struggles there in the proper perspective. We are fighting a guerrilla war while trying to reconstruct a broken society, so there will inevitably be ebbs and flows in violence, civil amenities, and oil flow. A straight line of progress is harder to measure than in a conventional war, in which claiming territorial gains is the mark of success. The news media's instinct, naturally, is to focus on the violence. The large majority of the Iraqi-related news reports on the three main U.S. TV networks, in the six months after the June 2004 handover of sovereignty, were dedicated to daily violence; there was barely a mention of the step-by-step reconstruction successes. There will no doubt be another upswing in violence before the December 15 voting, but we know, too, that the number of suicide bombings in November was the lowest in seven months. The assaults are the work of a few, not the many. The Sunni insurgency does not even enjoy the support of the 20 percent of the population who are Sunnis--who are not even a majority in Baghdad--and certainly not of the Shiites and the Kurds, the overwhelming majority in Iraq.

Zarqawi is focused on attacking Iraq's Shiite population, who he believes are the foes of the revolution. From his perspective, they are apostates, heretics, and historic collaborators with the enemies of Islam--that is, Sunni Islam. So Zarqawi, a Sunni, refers to them as "the lurking snakes and the crafty scorpions, the spying enemy," and "the most evil of mankind." His program is to provoke the Shiite community to act against the Sunnis, but the Shiites have ignored the bait and turned against the jihadist rank whose suicide murders have alienated them and many other ordinary Muslims.

Of course, this doesn't mean they wish to embrace us, for all the good we did in ridding them of Saddam Hussein. An army of liberation that becomes an army of occupation is never going to be wildly popular. That was one of the most cogent points in Murtha's recantation. In the short term, however, most Iraqis want American forces to remain until enough indigenous troops and police are recruited and trained. They know that the American presence is a major deterrent to an all-out civil war, with Shiites storming Sunni villages while the insurgents would focus their attacks on those who collaborated with the Americans. Think of what it would do to our credibility and moral stature if our allies in Iraq were to be massacred.

Courage. President Bush did well to spell out the progress being made to train the Iraqis to take over. "There are over 120 Iraqi Army and police combat battalions," he declared. "Of these, about 80 Iraqi battalions are fighting side by side with coalition forces, and about 40 others are taking the lead in the fight. Most of these 40 battalions are controlling their own battle spaces and conducting their own operations." The president's judgment is supported by that of Democratic Sen. Joseph Lieberman, just returned from his fourth visit to Iraq. This progress cannot be maintained, however, if we continue to sow doubts about our willingness to persevere. That can only create mistrust and insecurity among Iraqis, causing many to look the other way regarding guerrilla and terrorist activities. Their reasoning is simple: fear of retaliation when the Americans leave. Let us remember that after Desert Storm, America left the Shiites and the Kurds to Saddam. That was a betrayal that still lingers in the minds of the victims--and if we flee again, moderates in Iraq and all across the Middle East, which accounts for some 60 percent of the world's oil reserves, will never again believe America's assurances of support for reform.

In short, we must stay. What may have been originally a war of choice is now a war of necessity. So we must stop all this destabilizing talk about withdrawal. To withdraw to some timetable divorced from reality on the ground would grant militant Islam a huge victory, and Arabs who want to democratize and modernize would know they could not count on America to stand by its friends. Whatever the cost of our staying may be, the cost of retreat would be much higher. It would hardly persuade Zarqawi and his fellow terrorists to stop pursuing Americans around the globe. For those who think it was a big mistake to go in, it would be a bigger mistake to quit now.

Indeed, a withdrawal would be presented across the Arab world as a defeat of the American infidels by the jihadists who would inflate the glory of victory and attract many new followers. It would also undermine our strategy of hitting terrorists hard abroad, while loyal allies and new friends around the world would find themselves leaderless in the global struggle against Islamist radicalism. A loss of nerve and a humiliating retreat would seriously undermine America's role in the world. Indeed, what a foolish time to talk of getting out, just when we are getting our act together with the accelerated and improved training of Iraqi troops, and just before an election when Shiites and Sunnis are working to form the sort of institutions required to build a nation and quell the low-level civil war. After all, the insurgency is not destined to succeed. They are not fighting for a clear ideology; they lack any great power backing; they lack a positive agenda; they lack a charismatic leader; they have no territory of their own; they lack the support of the Shiites and the Kurds, as well as a significant portion of the Sunni population.

When America has prevailed in foreign ventures, it has been in the places where it stayed--in places like Bosnia, Kosovo, East Timor, Afghanistan, never mind Germany, Japan, and South Korea; in the places where America left too soon--Haiti, Somalia, and Vietnam--the results speak for themselves.

But this raises a question. Is the Democrats' priority for the country to win in Iraq or for the party to win next year's midterm elections? A defeated Iraq is not just a defeat to the Bush administration. It would be a defeat for the entire country. The good news is that many Democrats in Congress agree with the principal elements of the president's strategy for victory, mainly to build up a representative government and the security forces to defend it over the next few months, while gradually shrinking the numbers and duties of U.S. troops. This includes Sens. Joseph Biden, Hillary Rodham Clinton, and Barak Obama, and especially Lieberman, who had it exactly right when he wrote that the Iraqi people are within reach of a modern, self-governing, self-securing nationhood, unless the American military is prematurely withdrawn. As he said, it would be "a colossal mistake" for America "to lose its will and . . . seize defeat from the jaws of the coming victory."

The vigor of the president's address last week should give heart to wobbly Republicans and pause to querulous Democrats. But he must now hammer home the theme that he is following a strategy for victory, not a strategy for retreat. In doing so, he is sure to rally a nation that always responds to straight talk and courage.