A Second Hand Conjecture

(NYT)

The New York Times has a fascinating little chart today, illustrating the primary sources of nuclear weapons proliferation over time. In looking at the diagram, one cannot escape the overall impression that until recently the West has been the main and long-enduring source for most of the world’s nuclear proliferation. Given our traditional focus on authoritarian rouge states when it comes to proliferation threats –and our obsession with Russia and the former Soviet republics as potential proliferating agents– this might prompt us to reexamine some basic assumptions about where the sources of danger lie in technology transfer.

When considered, it shouldn’t really be surprising that the West is or was the top proliferator. There are several factors we could readily identify which would have made getting nuclear secrets in a Western democracy far easier than within the USSR. Among them might be:

1. Unregulated communications make it easy to operate covert networks with little fear of detection.
2. Relatively open borders facilitate easy transportation of personnel and material.
3. Integrated trade alliances dedicated to industrial products make the shipment of advanced technology between countries relatively unremarkable.
4. A cosmopolitan scientific community which publishes and socializes in a consolidated cross-cultural milieu, in which technical information exchange between countries is also unremarkable.
5. An educational experience and civic culture that encourages individualism which can create rogue actors more easily.
6. A shared lingua franca among an international scientific elite that makes it easy for them to converse and exchange ideas one-to-one, without need of translation services.
7. Being the focal point for scientific and technology origination attracts attention from foreign intelligence services and black market operators.

Closed off and regimented societies prohibit or severely curtail most of these facilitating characteristics, and this fact might represent the disqualifying criteria that made a country like the USSR a virtual non-proliferator. Conditions more commonly associated with proliferation risk in policy debates such as malicious government, poverty and political repression, do not historically appear to be the primary risk points. Indeed, such characteristics might lead us to target the wrong societies for technology transfer such as Russia and North Korea.

But if the above list better reveals vulnerability points to proliferation, the country most likely to proliferate inadvertently or intentionally outside of the West would have to be China, with targets being her integrated East Asian and African alliance states. Increasingly China satisfies almost all of the requirements. Her massive communications architecture is becoming increasingly unmonitorable (even if the government tries), she is expanding her transportation links with the world at a rapid pace and making it easier to come and go, she has a large and increasingly cosmopolitan scientific community that is English speaking and mobile, she is a major commercial technology exporter and an origination point of primary scientific research.

Perhaps it should therefore not be surprising that the most recent proliferation vectors in the diagram above emanate from the PRC. Something to consider.

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Russ Roberts:”Oh Please-President Bush has lost the right to say this.”

Also, he has a great Mea Culpa on why he missed this, and a discussion that fits right into my theme about how many missed this meltdown, and advice for those of us who did and might think too much of ourselves:

I should mention first that the few people who did see it coming were not necessarily any wiser than anyone else. Some of them had predicted nine of the last five recessions. A stopped clock is right twice a day. Even those who claim to have foreseen this mess couldn’t make the case well enough to alarm very many other people. And if you want to know if they were really wise or just selling a different story because the market was less crowded on the pessimistic side, you’d have to look at their bank accounts. Did they put their money where their mouth was?

Wall Street and economics are littered with the figurative corpses of those who got a big call right and got lots of attention and then became a joke as their prescience proved to be just luck.

By the way, in answer to the last question, yes I did, on behalf of myself and our clients.

Oh heck, two other gems from Cafe Hayek’s Don Boudreaux:

As Milton Friedman wisely pointed out, “If you cut taxes and revenues go up, you haven’t cut taxes enough.”

Revenues have gone up.  So tax cuts have been inadequate.

Also:

Popular sentiment has it backward: the bigger the unproductive firm, the more vital it is to let it fail.

Megan McCardle gives a touching and heartfelt explanation of why opportunity cost has to be considered in regards to GM in “Save the Rustbelt.”

Speaking of Megan, she has inspired a true decining institution to ask for a bailout:

But Megan McArdle at The Atlantic came up with a compelling argument:

“The news business is special. Without us, you wouldn’t know anything. Besides, it provides millions of low-paying, insecure jobs to overeducated yuppies who are going to move back home, into your basement, if you don’t do something, quick.

“And the news business is the other industry that can, all by itself, send the real economy into a tailspin. You think you’re worried about a depression now? We could make you really depressed. I’m not threatening, or anything; I’m just saying, it’s a nice country you’ve got here. It would be a real shame if someone convinced consumers to stop buying Blu-Ray players and shift their savings into canned guns and ammunition.”

Her colleague Ross Douthat added this:

“And remember — as a wise man once said, what’s good for The Atlantic is good for America.”

If it’s good for The Atlantic, it’s even better for Playboy. At least, that’s what we think.

Heck, I can get behind that!

Of course Glenn Reynolds has a similar theme with political partisanship:

FINALLY, A THIRD PARTY that I could get behind.

Meanwhile Hormel is betting that the present economic situation is a bullish sign for Spam! Fascinating stuff really, as Spam has a number of devotee’s. My wife spent time in Hawaii this summer studying Pearl Harbor, and came back and marveled at the many uses Spam is put to there, including in faux Sushi.

Unfortunately some of the latest data is really disturbing for everything else.

For those who commented on my two previous posts at QandO, thanks. I think the comments had more information than my posts, and gave me a good chance to flesh out a number of ideas.

Worried about what is in store for banks in Europe? You should be, and past history says it could be pretty ugly.

Finally, are stocks cheap? Is now a good time to be buying US stocks? Maybe so. Here are some things to think about.

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A couple of days into Russian-declared, universally unrecognized independence (excluding Hamas and Belarus), South Ossetian officials have expressed their desire to be annexed by Russia. The brave new defenders of Russian imperialism on the American Left have thus suddenly found their arguments for fake Ossetian self-determination on Georgian soil dealt a sudden blow.

Apologizing for Russian foreign policy ventures is historically always a tricky business. The sensibility of which is perhaps now restricted to the brief thaw of Yeltsin’s dream of a benign commonwealth of trade and friendship. A dream now sustaining an excruciatingly painful death on the world stage.

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IBD
He got it right – trade with Columbia.

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Colombian flower farms (photo: Mike Freedman-Schnapp)

Colombia’s flower farm workers have for some time been benefiting mightily from industrial support communities, which practice heavy nongovernmental social investment in workforce collectives. Many of the workers in these communities outside Bogota and Medellin are essentially resettled refugees from the war in the countryside. The community support in the form of daycare, retraining, and counseling have rescued many workers lives.

But they’re in trouble, as the Colombia Free Trade Agreement with the US –which congress is holding up on grounds of Colombian worker rights– can have profound implications if unsigned. The effects:

“If tariff exemptions are canceled on account of not signing the Free Trade Agreement, we would immediately be leveraged between six and seven percent to enter the U.S. market,” said flower consultant Felipe Arango.

“We’d disappear.”
(Reuters)

But there is an alternative view on that. As Democratic Senator Sherrod Brown might put it, Colombian flower workers need to understand that in order to avoid “shortchanging” them, their jobs and communities have to be destroyed:

“For the sake of both of our nations, the United States should not sign a trade deal with Columbia that shortchanges workers, that rewards polluters, and that gives businesses the same power as sovereign governments. And we should absolutely not sign a trade deal that forgives treachery toward labor leaders,”
(Teamsters)

I can only recoil from that argument, given the suffering it would induce as policy, and echo Fausta:

The USA needs to show its support of this progress, and must approve the free trade agreement with Colombia. As Ambassador Shapiro said, it’s good for Colombia, good for the US, and good for our national security.
(Fausta’s Blog)

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(photo: William Bedzrah)

One of the traditional problems of economic development in sub-Saharan Africa is that internal African investment dollars tend to be spent outside the continent. Thus it’s interesting to see Nigerian investment in Ghana has now reached $580 million. Something that has sparked quick calls for a Nigeria-Ghana Chamber of Commerce and further liberalization of trade laws.

[George Kumi, Ghana’s High Commissioner to Nigeria] noted that what Nigeria and Ghana need is increase in trade investment and not foreign aids, said the business cooperation between the two countries would go along way in alleviating poverty.

“We need to move away from the old way of over protecting our internal trade. There should be free flow of goods from Ghana to Nigeria and vice versa.”
(BusinessDay)

Good stuff, to be sure.

One of the factors that makes these two countries compatible investors in each other is monetary policy and the (new) tendency of their currencies to retain value. Nigeria’s inflation rate which was as high as 16% in 2005, fell to 6.5% this year (comparable to Chile). Ghana has been experiencing an equally dramatic fall in inflation, from an astronomical 26.7% in 2004, to 11% in 2008 (better than Russia).

With falling inflation of this kind, the temptation to send your profits to Switzerland as soon as you make them is substantially reduced.

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Over at Econ Talk, William Bernstein talks with EconTalk host Russ Roberts about the history of trade:

Drawing on the insights from his recent book, A Splendid Exchange: How Trade Shaped the World, Bernstein talks about the magic of spices, how trade in sugar explain why Jews ended up in Manhattan, the real political economy of the Boston Tea Party and the demise of the Corn Laws in England. The discussion closes with the political economy of trade today and the interaction between trade and income inequality.

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The sin of omission that Hillary is committing with the re-telling of the Indiana plant moving to China (while not mentioning that it was sold to China during her husbands tenure,) is starting to gather some light. The following story was linked by the DrudgeReport today.

http://www.mcclatchydc.com/election2008/story/35337.html

It’s a story Hillary Clinton loves to tell, about how the Chinese government bought a good American company in Indiana, laid off all its workers and moved its critical defense technology work to China.

And it’s a story with a dramatic, political ending. Republican President George W. Bush could have stopped it, but didn’t.

If she were president, she says, she’d fight to protect those jobs. It’s just the kind of talk that’s helping her win support form working-class Democrats worried about jobs and paychecks, not to mention their country’s security.

What Clinton never tells in the oft-repeated tale is the role prominent Democrats played in selling the company and its technology to the Chinese. She never mentions that big-time Democratic contributor George Soros helped put together the deal to sell the company, or that the sale was approved by the administration of her husband.

I’ve been following this since the 24th when I finally got around doing some investigation of the claims she made in her ad. And even noted that Senator Bayh of Indiana is complicit in her sin of omission.

And what is their excuse for not being concerned with the purchase in 1995…

Because “there were assurances made that production would stay in the United States,”

In other words, they promised not to move production out of the US.

Update:

Instapundit linked to the same story also.

And the story made the Special Report w/ Brit Hume last night on Fox News.

The Rollin’ Rollin’ Rollin, keep this wagon rollin’ Update:

More coverage,

http://nwitimes.com/articles/2008/05/01//news/top_news/doc7832950a3328e7fb8625743c0004a528.txt

Kevin Griffis, Indiana spokesman for U.S. Sen. Barack Obama, said Hillary Clinton’s comments about Magnequench were part of “Washington game-playing” in which “people are willing to say anything to win an election.”

http://www.msnbc.msn.com/id/24315615/ < -- includes some push back from the Clinton campaign...

http://abcnews.go.com/Politics/Vote2008/story?id=4757257&page=1

http://www.huffingtonpost.com/david-sirota/abc-digs-into-clinton-tra_b_99473.html

“In 1995, when this group bought Magnequench, there were assurances made that production would stay in the United States.” But as ABC recounts, the Congressional Research Service reports that the state-owned Chinese company that Clinton allowed to purchase Magnequench “promised to keep those Anderson, Ind., jobs in the U.S. only until 2005.”

http://www.slate.com/blogs/blogs/trailhead/archive/2008/04/29/hoosier-daddy.aspx

Hillary’s chutzpah in flagging this issue is compounded by her criticism of the sale on national-security grounds (“They’re building up their military. They want to compete with us every step of the way. And we’re basically helping them.”) In the late 1990s, Republicans in Congress decided that U.S.-approved technology transfers to China under Clinton were creating a disastrous national-security breach, and conservatives tried to stir anxieties about imminent U.S. surrender to the Middle Kingdom to defeat presidential candidate Al Gore in 2000. Now, to win Indiana, Hillary Clinton seems to be saying that the wingers were right all along about that no-good husband of hers.

http://newsbusters.org/blogs/brent-baker/2008/05/01/abc-corrects-clintons-indiana-tale-blaming-bush-closed-factory

Interestingly, the hometown paper did carry this on the 17th of last month. But it hasn’t received national attention until now. Hmmm, wonder if the email to the Obama campaign had anything to do with it???

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photo: Simón Pais-Thomas

Mick at Uncorrelated has another lovely post on the essentially vile character and politics of Mike Huckabee. Toward the end of his remarks he briefly hits Huckabee’s proposed Fair Tax:

…and politically DOA policy planks like the fair tax.
(Uncorrelated)

Politically DOA we must hope, because Huckabee’s tax plan would do more than “eliminate the IRS.” It would probably eliminate the US economy along with it.

(more…)

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Megan McCardle looks at some silly arguments at Max Sawickey’s old place on trade. Read the whole thing, but she hits the nail on the head here:

There are three possibilities for what will happen if we liberalize trade:

1) We will sell more stuff to foreigners than they sell to us. Since we can’t use all those funny banknotes, we will essentially be giving them free stuff.

2) Over the long run, we will sell about as much stuff to foreigners as they sell to us.

3) Over the long run, foreigners will sell us more stuff than we sell to them. Since they can’t use all those funny banknotes, they will essentially be giving us free stuff.

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If you didn’t read this when you saw it on Instapundit, please do. And then follow the link as well, and the link there too. It is important.

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(Cross posted at Risk and Return)

Cafe Hayek fans take note, it is finally out. Short review from Tyler Cowen:

This is the best popular book explaining the benefits of international trade. Imagine Bastiat for 2008, or a Cajun updating of Henry George’s Protection or Free Trade. Sadly it is expensive but I’d sooner give a student this book than say Henry Hazlitt’s Economics in One Lesson.

High praise. Here is Amazon’s description:

The contemporary era of globalization demonstrates that the local and global aspects of business and government are increasingly intertwined. Over the past fifty years, international business has evolved from the realm of the largest multinational corporations to the base scenario; every business and every citizen who participates in economic activity–by creating, buying, and selling products and services–is now a member of the global economy. But moving our thinking and actions beyond the local sphere is both challenging and problematic; the international domain is more complex, and introduces a new dimension of risks and uncertainties. Yet it it also ripe for business opportunity and wealth creation for those who learn how to navigate in it. Globalization defines and makes sense of the workings of the global economy–and how it influences businesses and individuals on a local scale. Each chapter identifies common questions and issues that have gained exposure in the popular media–such as outsourcing, the high cost of international travel, and the impact of a fast-growing China–to illustrate underlying drivers and mechanisms at work. Covering international trade, national wealth disparities (the haves vs. the have-nots), foreign investment, and geographical and cultural issues, and supported with illustrations, maps, charts, a glossary and timeline of key events, this volume illuminates the dynamics of the global economy and informs readers of its profound impact on our daily lives.

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