The Specter Of Greed

There is a specter haunting America. Like many apparitions, it is also sometimes an object of religious devotion.

It is the specter of greed.

This specter is said by some to be in our own self interest. The reason why we are in the best of all possible worlds. It is why, we are told, we must exalt the "makers" (and facilitate their greed) and demean the "takers."

More than a century ago, the wealthy justified their greed by the authority of Darwinian evolution - the survival of the fittest. Now it is often justified by the revelations of Ayn Rand and her acolytes. But always there is a genuflection in the direction of Adam Smith and the "invisible hand," where "self interest" results in the greatest good for the greatest number.

What could be better than that?

But that isn't what Smith means, at all. What he really means is that the bargains that put dinner on the table, clothes on our backs and roofs over our heads, must be in the interest of everyone involved. Not a one-way bargain, "red in tooth and claw," but mutual bargains. Smith explains: “Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer, and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of” (WN I.ii.2: p 26)

Gavin Kennedy provides a fuller explanation here.

Bottom line: cooperation works better than compulsion.

Seventy Years Ago: Eleanor Roosevelt's Diary

January 22, 1943, Eleanor Roosevelt travels from Washington to Christen the new USS Yorktown. She christened the first one in 1936 at Newport News Shipbuilding and Drydock. As Mrs. Roosevelt explained, Yorktown (CV-5) gave a good account of herself in the war, but was lost at the battle of Midway. Now she was to christen the second one, USS Yorktown (CV-10), the second new large aircraft carrier of the Essex class, also built at Newport News. Here are Mrs. Roosevelt's thoughts on that occasion about the US shipbuilders.

The second Yorktown  had a distinguished record in World War II, Korea, Viet Nam and in the Apollo program. She is still afloat, having been decommissioned in 1970 and in 1975 becoming a museum ship at Patriot's Point, Mount Pleasant, South Carolina. She is a National Historic Landmark.

Seventy Years Ago: New Guinea

January 19, 1942, the Charlotte (NC) News reports news from New Guinea that MacArthur's forces have captured the Japanese stronghold of Sanananda on the north coast of Papua.

The report was only slightly premature. It was to take the Allied armies of the United States and Australia two more days to finally capture Sanananda, Buna and Gona. This effectively ended any imminent Japanese threat to Port Moresby, where the 27th Air Depot Group was hacking out a major aircraft repair facility from the jungle.

Casualties were more than twice as high as for American forces on Guadalcanal. One in eleven troops fighting in New Guinea died, compared to one in 37 on Guadalcanal.

Gnomes Of Frankfurt

The Deutsche Bundesbank wants its gold back. At least they want back half of their gold reserves presently held by the New York Fed.

Will we soon be talking about the "gnomes of Frankfurt" instead of the "gnomes of Zurich?"

Do I hear echos of The Hobbit? "My precioussss!"

What is the Bundesbank up to? Economist Antonio Fatas wonders.

"I am really curious," Fatas writes,  "about what (doomsday) scenarios [Bundesbank Board member Thiele]...has in mind"  when he explains:"to hold gold as a central bank creates confidence. We build trust at home and have the possibility to exchange gold at short notice into foreign currency abroad."  Fatas asks what circumstances the Germans fear "where the gold reserves of the Bundesbank would become crucial to restore confidence. By the way, the gold reserves of the Bundesbank which at 130 Billion Euros are large compared to other central banks seem small compared to many other magnitudes that matter in financial markets, more so during crisis time. And I am assuming that these scenarios are catastrophic, otherwise why would gold be needed to buy foreign currency. And given that they are thinking that those scenarios are likely, is there anything that they are planning to deal with them?"

John Maynard Keynes is supposed to have observed ninety or so years ago, that "gold is a barbarous relic."

The "gold bugs" of his day and of our own have never forgiven him.

The Washington Post offers one possible explanation for the Bundesbank's action. The Post article also explains why such a move is quite rare. It turns out to be much easier to move some gold bars from one nation's cage to another cage to keep track of transactions than to ship the bars across oceans.

So the actual gold bars are used much like poker chips or other tokens.

The natives of Yap figured out a similar scheme long ago:

 

It turns out that stone tokens work just as well as gold bars.

How To Return To Full Employment (And Why It Matters)

I've been blogging on the subject of austerity and why it is a bad idea right now for a long time. It's hard to explain in ten words or less.

Now economist Robert Pollin has provided a pretty digestible explanation. Complete with illuminating graphs.

Worth a read.

Everyone in the political class, both US and European, should read it.

And act on it.

Now, now, now!

Debt Ceiling: Economic Experts View

What do economic experts say about the debt ceiling? IGM recently polled a panel of economists.

The question:  "Because all federal spending and taxes must be approved by both houses of Congress and the executive branch, a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes."

Eighty-four percent of the panel either agreed or strongly agreed. When the responses were weighted by economists' confidence in their responses, the outcome was ninety-seven percent.

In other words, economists overwhelmingly believe the debt ceiling makes no sense.

I agree.

Do We Want Outsiders Running The Town?

The question comes up because last Tuesday, with no advance notice and without including the change on the published agenda, Oriental's Town Board amended the Parks and Rec ordinance to allow non-residents to serve on the advisory committee. The amended ordinance also provided that the Town Board's liaison to the Parks and Rec Committee could vote in case of a tie. Previously, only the Tourism Board allowed non residents to serve.

You can read about the entire meeting here. Town Dock reported the Parks and Rec issue: "Parks & Rec Board and Residency
The Town Board approved appointing Pat Stockwell to the Town’s Parks and Recreation Board after changing that Board’s rules so that those who live out of Town can serve on the panel. The rules before this were that board members had to be residents or business owners in Oriental. Three of the five members will still have to be Oriental residents. Commissioner Barbara Venturi, the Board’s liaison to the Parks and Rec Board also asked that the rules change so that the liaison can cast a tie-breaking vote at Parks and Rec meetings. The Town Board approved that change as well."

I bring this up, because I have problems with the Town relying on advice of people who don't actually live here. I have heard rumblings in some quarters that we should not allow non-residents to serve on the Tourism Board. This change appears to go in the opposite direction and caught local citizens unprepared to consider and address the implications.

I know it is hard to recruit citizens to serve on advisory boards. We might want to make an effort to find out why this is so hard and what we can do about it before going outside the Town to find recruits.

I have reviewed North Carolina General Statutes and learned that we have the right to appoint non residents. Still, I think it is not good public policy.

I would prefer requiring appointees to all of our boards be qualified voters in municipal elections. 

Panama Canal Expansion

During a senate debate on the Panama Canal Treaty in 1978, United States Senator S. I. Hayakawa of California argued, "We should keep the Panama Canal. After all, we stole it fair and square."

One argument opponents of the treaty used was the claim that Panama would never be able to manage the canal effectively.

That was then. Now, under the auspices of Panama, a massive project to triple the cargo capacity of the original canal is halfway completed. It is scheduled to open in 2015.

The project is truly international. "The 16 lock gates," The Washington Post reports,  "some weighing 4,000 tons, were designed by the Dutch and built by Italians. Beginning next month, they will be lifted onto a barge by Belgians and shipped by South Koreans to Panama in a project managed by the French."

The United States is almost nowhere to be seen. Which doesn't mean we will be unaffected. Ports on the US East Coast, including New York City, Baltimore, Norfolk and possibly Savannah and Miami are being modernized to handle the larger ship sizes allowed by the expansion.

The modernization may even improve mobility of the U.S. Navy. Since completion of the USS Essex class of aircraft carriers at the end of WWII, aircraft carriers have been too wide to transit the canal. This will no longer be a problem after adding new channels 180 feet wide.

The expanded canal is expected to open in April 2015, The original canal opened in 1914, a bit more than a century earlier.