Sunday, February 27, 2011

Zoning in Oriental

And now for some local news.

Last Tuesday evening, at the request of the Oriental Town Board of Commissioners, the town Planning Board recommended some changes to the Growth Management Ordinance, Article XV, Sections 230 - 237 (Amendments).

Some of their recommendations, if adopted, will fix things that need to be fixed.

Some won't. Accordingly, I oppose the present draft.

The proposed draft is on line at the Town of Oriental web site. The agenda packet can be found here. Click on "proposed amendments."

The impetus for amending the GMO was last year's application by developer Sylvan Friedman to change the zoning of a residential (R-3) parcel he owns on Midyette Street to MU. The public hearing (required by law) and action by the Town Board were delayed three times (twice at the request of the applicant). The application was opposed by neighbors during the public hearing. The neighbors submitted a formal petition opposing the measure, thus establishing a requirement for an affirmative vote by three fourths of the Board.

Because of the delays, the Board failed to act within the 65 days required by the GMO, thus effectively denying the Friedmans' request. Some Board members expressed the view that the failure to act should be deemed an approval.

The planning Board recommends extending the period to 95 days from first consideration of the request and changing the rule to stipulate that failure of the Board to act constitutes approval.

There are some who believe the applicant deserves a timely response from the Board. This misses the main point. It's about the public, not the applicant. As the GMO explains: "The Town Commissioners shall not regard the advantages or disadvantages to the individual requesting the change, but shall consider the impact of the proposed change on the public at large."

Other than requiring a public hearing before any amendment is adopted and requiring a three-fourths vote in event of a valid petition opposing an amendment, North Carolina General Statutes do not require the town to act in accordance with the opinions of the public voiced at the hearing. This is a political process - a legislative process, not a quasi-judicial proceding. That means it is not only proper but strongly advisable for Town Commissioners to seek the advice of residents before making a decision.

The public should expect Commissioners to take their views seriously. Accordingly, I believe any action deadline should be tied to the public hearing. For example, it makes sense to require that the Commissioners act within thirty-five days following the required public hearing. That way, the views of the public will be fresh in the minds of the commissioners.

Should the Commissioners be unable or disinclined to act within a deadline, the default position should be to maintain the status quo.

The public should not be penalized for inaction by a Town Board.

A One-Armed Economist

President Truman once complained about his economic advisers.

"They come in," he said, "and tell me 'on the one hand, this,' and 'on the other hand, that.'"

"What I need," he lamented, "are some one-armed economists."

Friday, February 25, 2011

Starving the Beast

So why did President Reagan and both Bushes follow a "borrow and spend" fiscal policy instead of making sure the national expenditures were paid for, as they could easily have done?

Because they didn't want to balance the budget. They wanted to follow the policy of "starving the beast."

Don't take my word for it - read the analysis by Bruce Bartlett, writing for

Here is how economist Paul Krugman describes the scheme in the Pittsburg Post-Gazette.

Although the Republican Party has complained about deficit spending ever since the Great Depression, this was never previously a big deal with the GOP, with their predecessors the Whig Party, or with their original predecessors, the Federalist Party. In fact, President Washington, on advice of his Treasury Secretary Alexander Hamilton, began his administration with an enormous deficit.

This came about when the Federal Government under the new constitution purchased at face value revolutionary war bonds issued by the states. This represented an enormous windfall for speculators who had purchased the bonds from original investors at pennies on the dollar.

The rule: millions to subsidize financial speculators, but not one cent for ordinary people.

This continues to be the policy of the GOP.

What offended Republicans about the New Deal was not the deficit financing, but to whose benefit the money was spent.

Democrats, on the other hand, have from the time of the Anti-Federalists and especially from the Andrew Jackson administration, opposed deficit financing. The reasons:
1. Government borrowing drives up the cost of credit for ordinary people;
2. Paying off government debt takes money from the pockets of the poor and transfers it to the rich;
3. Driving up the cost of money increases the cost of American products and reduces exports;
4. Government borrowing from foreign lenders makes us vulnerable to foreign interests;
5. Etc.

Only in truly extraordinary circumstances do Democrats support extensive deficit financing: the Great Depression and World War II are the clearest examples.

Six years ago, Paul Krugman exposed the whole Starve the Beast bait and switch scam.

Now they have extended the scam from the Federal level to the State level by making it impossible for Washington to provide enough stimulus money to counteract the reduction in state expenditures resulting from state constitution requirements to balance the budget. Earlier, Krugman described the dilemma facing the states and the implications for the national economy in his article Fifty Herbert Hoovers. The article is worth reading again.

They Hired the Money, Didn't They?

Commenting in 1925 on a proposal to restructure European war debt, President Calvin Coolidge said, "they hired the money, didn't they?"

The same might be said of New Jersey and, indeed, of other states, who negotiated labor agreements without setting aside sufficient funds to meet their obligations.

The details set forth in today's New York Times article, "How Chris Christie Did His Homework," makes it clear that for seventeen years, New Jersey did not set aside enough funds to meet the pension obligations to which the state had agreed. In the case of health care obligations, they set aside no funds at all.

This is hardly the fault of the unions.

In many cases, pension and health care agreements were negotiated in lieu of salary increases. In other words, the state said "you provide work for us now in return for future compensation" and signed on the dotted line.

They hired the money.

Did the state negotiate in good faith? If so, the failure to set aside sufficient funds reveals sustained incompetence. If not, what do we call it? A confidence game?

Thursday, February 24, 2011

If You Lived Here, You'd be Home by now

Years ago, when we lived in the big city, downtown developers tried to lure home buyers with signs for commuters that said, "If You Lived Here, You'd Already Be Home."

I think of that every time some pundit talks about how urgent it is to reduce the deficit. The last President to successfully reduce the deficit was Bill Clinton.

In fact, according to CBO projections, if G.W. Bush had continued the Clinton policies, we would have not only reduced the deficit, we would have paid off our national debt by now.

The last previous presidents who reduced the deficit were Jimmy Carter and Lyndon Johnson.

Ronald Reagan tripled the national debt during his tenure. By the end of George Herbert Walker Bush's administration, the debt was four times as great as at the beginning of Reagan's term. At the end of Bush I's term, the debt equaled 66% of the Gross Domestic Product. By the end of Clinton's term, it was down to 56% of GDP.

How would you like for the country to have zero debt right now? We'd have much better fiscal options, wouldn't we?

Instead, by the end of George W. Bush's term, our debt had risen to 83% of GDP, and we were in the midst of the greatest recession since the Great Depression. In fact, had it not been for the safety nets put in place after the Great Depression, we could easily have had an even greater depression.

But let's get one thing straight - the national debt didn't cause unemployment. Nor did it cause the great recession - mishandling of private debt and financial misfeasance did that. And so far, the national debt hasn't caused any inflation.

Now is absolutely the wrong time to balance the federal budget, thus reducing aggregate demand and stifling what little recovery we have going.

Once we get back to near full employment, though, we need to pay down the public debt and drastically reduce private debt. We won't be able to do that without getting back to making things instead of just making deals.

To get there, we need to reward the thing makers and take away special rewards for financial manipulators.

Tuesday, February 15, 2011

Why Rush to Reduce Deficits?

A good article in Slate Magazine calls for politicians to do a better job of explaining why deficit reduction is so important.

The author, John Dickerson, repeatedly points out that the public is more interested in jobs. He says neither party has explained how reducing the deficit will get them jobs.

There's a really good reason for that.

It won't.

In fact, reducing the deficit, which is a good idea in the long run, will kill jobs in the short run.

If so, John Boehner said today, "so be it."

Let them eat cake.

A Well Regulated Militia - the Regulations

In case you wondered what a "well-regulated militia" looked like, here is the governing law and regulation, passed by the Congress May 2, 1792 and amended in 1795.

The Militia Act of 1792 required all white males of the age of 18 to the age of 45 years to serve in their respective state militias. Detailed regulations passed May 8, 1792 stipulated the organizational and rank structure and spelled out what equipment was to be provided by each member of the militia at his own expense.

It makes interesting reading.

Those of you anxious to exercise your Second Amendment rights - this is what it was about.

Monday, February 14, 2011

Robotics and Economics

Ninety years ago, the Czech journalist and author Karel Capek introduced the word "Robot" to the world in his play, "R.U.R. (Rossum's Universal Robots)." Isaac Asimov expanded the concept in his I, Robot books.

A staple of science fiction of the forties and fifties was the question of how society might cope with the circumstance created if robots with a wide range of capabilities were to replace humans in routine or even challenging jobs (as did HAL in "2001, Space Odyssey").

We are now there. We get our money from robots (ATM's), we send robots in to fight fires where no human could survive, we use robots to do surgery, dispatch software robots to search the internet, and even use robots to fight our wars.

This is just the beginning.

This Wednesday, IBM will pit its artificial intelligence system named Watson against two of the world's best Jeopardy players. Experts expect that Watson will win the contest. If so, it would be a demonstration of the amazing progress in artificial intelligence. To succeed, Watson will have to deal with puns, homonyms, and contextual ambiguities. (Update as of Tuesday morning: The first round of Jeopardy ended with Watson in a tie for the lead. Stay tuned.)

A different but also successful approach to use of computers to assist human intelligence is known as Intelligence Augmentation (IA). Google searches are a successful implementation of IA.

Economists have always held that increased automation creates as many new jobs as it destroys. That may no longer be the case (if ever it was). For the past few recessions, we seem to have had a "jobless recovery."

The usual suspect for loss of jobs is offshore outsourcing. It may be that another factor is increasing use of computers to perform tasks formerly done by humans. An additional influence is that high speed broad band internet makes it possible to transmit any information that can be digitized to offshore sites for processing. This is already done for widely diverse fields including accounting, law and radiology. Combining offshore outsourcing, robotics and high speed internet could be creating a perfect storm of economic restructuring.

The volume of such outsourcing is said to be small compared to the economy as a whole, but it probably already influences salaries by establishing marginal salaries above which companies will seek offshore solutions, thus keeping labor rates down.

Possible consequences include the fact that twenty-six percent of recent college graduates not going on to postgraduate education are unemployed. For that matter, many of those pursuing graduate degrees may be doing so because they couldn't find a job.

Saturday, February 12, 2011

Fork in the Road

"When you come to a fork in the road, take it."
-Attributed to Yogi Berra

We at the height are ready to decline.
There is a tide in the affairs of men
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.
-Brutus speaking in Shakespeare, Julius Caesar (IV.ii.269–276)

Today's New York Times reports that the Obama administration had an internal struggle over how to respond to events in Egypt. Should they emphasize the need for an orderly transition (thus appearing to prop up an increasingly reviled dictator), openly push Mubarak out the door, or support the demonstrators by emphasizing the need for democratic reforms and for Egyptians to find their own solutions.

As always, the cautious old foreign policy hands emphasize stability. Don't rock the boat. Give him time. Orderly transition. Democracy is hard.

The problem is, the tide was already running. We were at the fork in the road. We had to "take the current when it serves" the cause of democracy.

There are always risks in international affairs. But when the tide is running, we have to navigate between Scylla and Charybdis. Jumping overboard is not an option. Even if the rudder is smaller than we wish and the wind is fickle.

Twenty-one years ago, a series of events similar to the past three weeks led to the dismantling of the Berlin Wall. Old hands (I was one) worried that German reunification might be bad for the rest of Europe and NATO. It could destabilize Europe. Despite decades of lip service to German reunification, the dirty secret is that none of NATO's member states wanted it to actually happen. But it soon became apparent it was impossible to prevent. Best get on with it.

In a similar vein, in the long run we're better off with Mubarak gone.

Do we believe in democracy or not? If we do, then let's support it wholeheartedly.

Be not afraid.

Friday, February 11, 2011

Egyptians: Not Subjects, but Sovereign

Today Egyptians took control of their own country.

This is as big as the day the Berlin Wall fell. A day to celebrate!

Tomorrow the work begins.

Thursday, February 10, 2011

The Price of Civilization

An anonymous reader commented on my report on Pamlico County Economic Development as follows: "Just remember that government grants are other peoples taxes and they represent the forced redistribution of wealth."

I do.

I also remember Justice Oliver Wendell Holmes, Jr.'s comment that "Taxes are the price we pay for civilization."

Contrary to popular opinion, wealth is not just an individual creation. It is also a creation of society. Those who would create wealth need social goods such as: roads, harbors, monetary system, collective defense, police, educated employees, banking, transportation, communications, protection for intellectual property, standard measurements, a level playing field (law and regulation), assistance in navigating through legal and regulatory requirements, and on and on. In short, they need the activities of government. These activities are funded through taxes. Tax collection is always coercive.

Our Revolutionary War forebears decried taxation without representation, not taxes in general. In fact, they had been governing themselves and collecting taxes for their own government activities for a century and a half before the Revolution.

There are those who believe the only proper functions of government are defense and public safety. The rest can be handled by the magic of the marketplace. Alexander Hamilton and George Washington (among others) knew better.

In the present case, the issue facing Pamlico County is whether modest support for a project to meet an important national military requirement, expand economic activity in the county and employ up to 1,000 of our citizens is a proper public purpose.

It is.

Egypt - the Abyss?

This afternoon we saw and listened to President Mubarak of Egypt talking down to the demonstrators as though they were children.

This is clearly not the case. Whatever happens in Egypt in the short run, Mubarak has the look of being on his last legs.

The times aren't favorable to dictators. The crowds gathering in the square in Cairo were reminiscent of the Orange Revolution in Ukraine, the Velvet Revolution in Prague, the Rose Revolution in the former Soviet Republic of Georgia, the Solidarity uprisings in Poland, the Serbian ouster of Milosevich, the Green Revolution in Iran and countless other democratic movements of recent years, both successful and unsuccessful.

Winston Churchill once observed, "Democracy is the worst form of government, except for all those other forms that have been tried from time to time." (from a House of Commons speech on Nov. 11, 1947) Mubarak has demonstrated to all and sundry the inherent weakness of authoritarian governments: there is no mechanism for making orderly adjustments to changed circumstances.

Egypt has changed greatly in the past thirty years. The government hasn't.

Whether they win this time or not, the demonstrators are right.

Tuesday, February 8, 2011

Pamlico County Economic Development

Last night the Pamlico County Board of Commissioners approved by a narrow 4-3 vote a request by the county's Economic Developer, Jayne Robb, to apply for a flex grant in the amount of $13,900. The grant would not cost the County a dime. The purpose is to fund a feasibility study to determine the suitability of certain land in the county for an algae-based biofuels production facility. The land in question is not suitable for other uses. The proposed project is envisioned to produce up to 80,000 gallons per day of diesel and jet fuel, and to provide employment for up to 1,000 persons.

The first public hint of the project was provided last month in the report to the commissioners of current activities of the Military Growth Task Force. Not explained in detail at either session was why the Military Growth Task Force would be interested.

In October of 2009, Secretary of the Navy Ray Mabus committed the Department of the Navy (which includes the Marine Corps) to energy reform. A major goal is to aggressively reduce the Navy Department's reliance on fossil fuels. Marines deployed to Afghanistan are already using alternate energy sources, including solar. Here is the Secretary's strategic approach to energy: /5EFD428CFEB0412391CC321DCAF67138.ashx

One of the first measures the Secretary of the Navy took to put the policy in effect was to conclude a memorandum of understanding with the Secretary of Agriculture:

The use of algae to produce fuel has the following advantages:
a. It can use land not suitable for agriculture;
b. Does not affect fresh water resources;
c. Can be produced using ocean or brackish water or wastewater (BRMSD take note);
d. Algae are biodegradable and relatively harmless if spilled;
e. Can yield 10 to 100 times more energy per unit area than other biofuels;
f. USDOE estimates enough algal fuel to replace all petroleum fuel can be generated using less than 1/7 of the area currently planted in corn;
g. No net generation of carbon dioxide.

Here is a Scientific American article explaining some of the issues and possibilities:

Why Pamlico County? One measure the Navy and Marine Corps are taking is to identify as many local sources as possible for everything they need, including fuel. This not only reduces transportation cost in general, it reduces the use of fossil fuels. Using a local source of algal fuel for jets would therefore kill two birds with one stone.

The projected output is modest compared to petroleum refineries. It would take about 25 similar algal oil production facilities to equal the fuel output of a small refinery. Even so, the facility would provide enough fuel every day to support 80 sorties of fully-loaded combat fighters. That would make a big dent in Cherry Point's fossil fuel usage.

This is a project that deserves our support.

Saturday, February 5, 2011

Remember the Soviet Union?

In the past few days there have been a number of comments criticizing our intelligence community for not predicting the events in Tunisia and Egypt.

The criticism is unfair. As Yogi Berra once said, "it's difficult to make predictions, especially about the future."

More to the point, we have excellent technical means to collect some kinds of intelligence, but we lack a mind reading capability. Even if we had a machine to read minds, it would be of doubtful use against people who have not yet decided what to do.

There is also a fundamental, unresolved conflict between the intelligence community and decision makers. The conflict: who gets to evaluate the intelligence?

The arrangement: policymakers get to evaluate intelligence. They are the consumers. They get to tell intelligence professionals what to look for (collection requirements). The professionals are producers. Because there is so much raw information, professionals have a role in selecting and editing what they present to decision-makers, but evaluation is in the final analysis done by those responsible for plans and policy.

This became a problem in December, 1941, when the Navy's Director of Plans and Policy, RADM Richmond Kelly Turner, overruled the Director of Naval Intelligence over what information to provide to the Fleet Commander at Pearl Harbor, RADM Husband E. Kimmel.

After the attack, Kimmel was fired and Turner was promoted.

The world isn't always fair.

Since then, the list of "intelligence failures" is a long one. One of the largest was the failure to anticipate the demise of the Soviet Union.

No heads rolled.

On Bearing Arms

Yesterday's New York Times entry in its "Disunion" series looking at events 150 years ago leading to the Civil War is based on diary entries by a Virginia slave owning farmer, Daniel W. Cobb.

Cobb, a barely literate secessionist, seems to have had misgivings about what was to come. Though he supported secession, one of his main concerns was personal: “I am with in a fiew months of 50 Years of age, they cant make me Bare [sic] armes.”

In 1861, this barely literate Virginia farmer clearly understood what present day elected officials and Supreme Court justices have forgotten: soldiers bear arms, not civilians.