The US EPA Just Proposed New Emission Standards That Would in Effect Rule Out Any New Coal Fired Plants – Still, With Natural Gas So Cheap Because Of Huge Supplies, Coal Was Doomed Anyway

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By Paolo von Schirach

March 28, 2012

WASHINGTON – The US Environmental Agency, (EPA), just proposed new emission regulations that would forbid construction of future power generation plants producing more than 1000 pounds of carbon dioxide per megawatt hour. According to all the analysts, if enacted, this provision would essentially rule out new coal fired plants in America. For a coal industry that employs 86,000 people, while supplying the fuel that generates 40% of all US electricity, this proposed rule means the end of the road. No more growth. While this stringent regulation would not apply to existing coal fired plants or to those already authorized and about to be built, after these, for all practical purposes, no more.

Carbon capture is too expensive

Sure enough, if equipped with state of the art carbon capture technologies, coal fired electrical generation plants could meet the new emission standards. But the costs for this equipment are still too high, and it would be next to impossible to recover them within a reasonable time.

These new stringent regulations would be a tremendous blow for the US coal mining industry. Of course, it would still be possible to export coal. Both China and India would be great customers for US coal. But the coal industry would have to resolve severe logistical constraints in order to make it easy and economical to send their coal to ports equipped with coal handling facilities.

Coal doomed even without EPA regulations

That said, whatever the EPA wants to do, coal was doomed anyway. And this is due to the spectacular natural gas revolution now underway in America. Due to “hydrofracking” and horizontal drilling that allow getting natural gas from shale formations, all projections about US natural gas production and prices made just a few years ago are out the window. America has more natural gas than Russia due to the second largest shale gas deposits in the world. This revolution came so fast that it took everybody by surprise.

Recent projections about gas production decline totally wrong

Consider this analysis prepared in April 2008, a mere 4 years ago, for the Department of Energy. Right at the start it stated that: “[US] natural gas prices continue their recent upward trend. High natural gas prices hurt all natural gas consumers, especially household and natural gas intensive industries…Domestic production is projected to decline steadily…”

Amazingly wrong! Only 4 years ago experts were projecting production decline, and now we are in the midst of a historic natural gas revolution, with reserves estimated to last at least 100 years. And here is why coal is doomed. As a result of new supplies, natural gas prices have collapsed. From almost $ 9 per million BTU in 2008, (the time of the study cited above), they are down to $ 2.20 per million BTU just now. Adjusted for inflation this is the lowest price since 1995, almost 17 years ago. Now the US enjoy by far the lowest natural gas prices in the entire developed world.

Price swings?

In the most disingenuous way, the coal industry people and all their Senators and Congressmen supporting them, claim that historically US natural gas prices have had huge swings, and so today’s low prices will be followed by another rise that will hurt all those who switched to gas. So, better stick with old, reliable coal. While it is true that there used to be natural gas price swings in the past, the difference between then and now is this incredible new supply. There is so much new gas now that many energy companies had to suspend operations in order to prevent a further price collapse.

Natural gas cheaper and much cleaner than coal

With full sympathy for the US coal industry now facing inevitable decline, this incredible abundance of a much cleaner domestic fossil fuel is cause for celebration. Given the low cost of natural gas, even if the EPA had done nothing regarding regulating emissions for future power generation plants, in this totally new energy scenario it would be hard to make an economic case for more coal fired electrical generation plants in America. US natural gas is cheap and destined to stay cheap.

Health Care Law Examined By US Supreme Court – But This Is A Side Show – The Real Health Care Solution Is To Introduce Prevention As The Best Tool To Keep People Healthy – Less Demand, Lower Costs

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By Paolo von Schirach

March 27, 2012

WASHINGTON – Let’s say the US Supreme Court strikes down the “individual mandate” provision within the land mark health care law passed two years ago. Or suppose the Justices will declare the entire law unconstitutional. Such a decision, so close to the elections, will have huge political ramifications. By the same token, if the Supreme Court will uphold the law there will be rejoicing in the Democratic camp and consternation among Republicansw ho labeled th law an attcak against liberty. Either way, these would be significant political consequences that would however have zero impact on improving the health care outlook for America.

Health care law is about covering the uninsured

Whatever its fate, this law does little to address the real issues affecting the absurdly high cost of health care in the United States. The 2010 health care reform legislation tried to solve the problem of millions of Americans with no health insurance. And this is important, of course. However, the new law takes the cost of health care as a given and it tries to spread it around.

Sick Americans and eager doctors

But the only solution is in reducing costs, thus changing the debate. And, while difficult, it is entirely possible to reduce cost, not by rationing health care; but by teaching people how to stay healthy. Indeed, the real problems affecting US health care are lack of any serious education effort about prevention, millions of sick people who could be healthy and thus in no need of care, and a ”fee for services” system that rewards doctors only when they perform some procedure.

Add the two and you have created the perfect combination for cost explosion: lots of sick people, (many with chronic diseases that require constant treatment), and doctors who make money only when they treat. We have an increasingly unhealthy population and doctors who are extremely happy to treat and over treat people, prescribing any possible procedure and drug under the sun, knowing that in most cases the insurance will pick up the cost and so the patients will have little or no objection to over treatment, since they will not pay out of pocket.

A prevention focused system

In contrast, picture this totally opposite scenario. Through a complete and comprehensive national education effort, all Americans are taught that regular nutrition rich in vegetables, legumes and fruits combined with regular exercise, adopted not as a temporary regime but as life style, are the keys to stay healthy. Doctors and all others involved in health care are moved away from the old “fee for service” system and are instead rewarded financially for keeping people healthy. And so doctors, instead of being the equivalent of auto mechanics or body shops that will fix your car after it had a breakdown or an accident, will be in large part teachers and educators, helping and enabling the general population to adopt and follow a “wellness” regime.

Dramatic change

What would be the result of such a radical transformation? Very dramatic. You would see the rapid decline of the obesity epidemic and all its consequences. There would be a drastic decline of most cardiovascular diseases and all the various heart complications and premature deaths due to heart attacks. You would see the end of diet related type 2 diabetes. You would see a much healthier and more productive population. You would see seniors in their 70s and 80s in good health, capable of carrying on on their own, instead of having to pay the cost of nursing homes or other assisted living solutions.

Prevention will not eliminate disease; but it will reduce it

Of course, there will still be diseases, and cancer and trauma victims due to car or industrial accidents and what not. Good diet and exercise alone will not immunize everybody from everything. Of course, America would continue to need highly trained doctors and surgeons. But the demand for medical services would be drastically diminished, because overall people would be much healthier, due to life time choices regarding nutrition, prevention and exercise.

Give people a choice, and most likely they will opt for a healthy life style

And this is not about forcing people into any regime that they would rather not follow, citing individual freedom of choice. This is about teaching, in most cases for the first time ever, that good diet and exercise are among the best possible medications people can get. While there will be exceptions, most people, if given a choice, would prefer a healthy diet rather than the high probability of needing coronary bypass surgery or worse down the line. What is more appealing, a good diet, or dealing with the consequences of type two diabetes? Is it better to drink 4 or 5 sugary sodas a day along with junk food and become obese, or drink green tea and have a better shot at a healthy and long life?

War against tobacco was a success

Years ago, the US Government went out of its way to do battle against the tobacco companies and their disingenuous claims that tobacco is really neither harmful nor addictive. The heroic effort undertaken by policy makers was aimed at reducing the health impact of cigarette smoking. And it worked.

So, let’s follow that example. Given a new national consensus on the basic notion that it is better to learn how to stay healthy than to spend time and resources to treat preventable disease after it has occurred, we should be able to redefine the function of health care. We would move away from a heavy emphasis on treatment to focus instead on prevention and wellness education.

I am sure that most people, once they have the appropriate information in their hands, will make the right choices. This would make Americans healthy, happier and much better off, because, if we take all savings together, we would spare at least 7 or 8% of GDP. This is roughly what we pay now for treatments that will become unnecessary.

Let’s change the focus: from treatment to prevention

The current US health care debate is still tackling the issue from the wrong end: “Given sky high costs, let’s make sure that everybody is covered and that we agree on who pays what”.

Instead, let’s turn this around. “On account of good prevention, our demand for health care services is drastically reduced, our aggregate costs are down, insurance costs less and therefore insurance affordability and coverage expansion are non issues”. As you can see, good health has also significant economic benefits, for each person and for society.

Extracting Shale Oil Increased US Domestic Production – This Is About Private Sector Efforts, Nothing To Do With Government Policies, Says The Financial Times

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By Paolo von Schirach

March 25, 2012

WASHINGTON– The following is an excerpt from a The Financial Times article, (Once more over a barrel, March 24-25, 2012), that discusses in detail the economic impact of higher oil prices and what governments can do and have done about them.

Quote from the FT:

“….In the US, Mr. Obama has been this week on a two-day “energy tour”, visiting sites for the production ob both fossil fuels and renewable power. Under pressure over fuel prices, and criticized for decisions such as the six-month moratorium on deep water drilling in the Gulf of Mexico after the BP spill in 2010, he has been highlighting the fact that US output is at its highest for eight years, and import volumes have fallen to below half of consumption for the first time in more than a decade.

However, that is primarily the result of a surge in production of oil from shale rock, made possible by advances in the techniques of hydraulic fracturing and horizontal drilling, and has little to do with any government policy…. ” [bold added]

Obama administration silent on US fossil fuels revolution

That’s right. In fact, increased US oil production, (think of the Bakken field in North Dakota), is taking place despite a clear Obama administration bias in favor of renewable energy and against fossil fuels. There is no doubt that at some point renewable energy will be needed in America and around the world. But fossil fuels is what we have and need right now, and the US happens to have a lot more oil and gas than what we previously thought.

And yet, for three years President Obama has been essentially silent on the fossil fuels revolution underway, (shale oil but also the spectacular rise in shale gas production). But now, with the elections coming up, he is trying to take full credit for it, as if this were the happy result of policies he pushed and got implemented. This is disingenuous and frankly dishonest. A the FT correctly put it, increased US oil output is the result of private sector driven new technologies “and has little to do with any government policy” .

Chinese Magazine Caixin Advocates “Political Reform” – A Small Sign Of Big Changes To Come?

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By Paolo von Schirach

March 23, 2012

WASHINGTON – There is a new ferment in China as the country is in a political transition leading to the establishment of a new leadership, with Xi Jimping as new president. While the whole process of changes at the top is meticulously choreographed and airbrushed, (the March 15 purging of Bo Xilao, Chongquin party boss, is big news; but no public discussion preceded it or followed it), within the broader Chinese society something new is happening.

More protests

There are more and more public protests across China, (some 180,000 according to some accounts) and they are not always suppressed. Many episodes of popular grievances are aired publicly (the Wukan village lengthy rebellion was broadcast around the world) and talked about incessantly in the vast Chinese blogosphere and social media outlets like Sina Weibo. All this would indicate both choppy seas ahead but also more tolerance for dissent and more openness about debate. Still, where all this may lead is still a mystery.

Political reforms?

In this new context, an interesting example of frank requests for deeper and wider reforms comes from the magazine Caixin. Its on line English language edition carries a March 23, 2012 editorial titled “The Age of Political Reform”. Note this: “Political Reform“, not “Economic Reform“.

We all know that China has undergone spectacular economic changes, most of them made possible because the political leadership allowed and indeed engouraged the growth and flourishing of private enterprise. But this fantastic revolution and the ensuing 30 years of 10% growth a year happened under the umbrella of political orthodoxy. The whole process has been orchestrated and directed by the Communist Party. No free lancing. Making money alright in China; but talking about other changes has been forbidden.

Until now, only economic reforms

Which is to say that, until now at least, economic change has had political blessing; but political change has been totally off limits. Well, may be something is changing. Granted, an editorial advocating reform in the English language, on line edition, of an interesting Chinese news magazine is not an explosive event. Still, it is worth noting it, as it may be the harbinger of bigger things to come.

Change in the air?

Should China really engage in a process leading to real political and institutional transformations, these changes will have tremendous reverberations throughout the country, Asia and the whole world. Here are excerpts from the March 23, 2012 Caixin piece:

“The Age Of Political Reform”

“Recent events make one thing crystal clear: It is time to change China’s system of government”

“China has made astounding strides since reforms began, but problems, too, abound. In particular, corruption, unfair wealth distribution and a loss of trust in society have created deep resentment. Solving these fundamental problems requires comprehensive reforms that have proved painful. Thus, some people mislead others by blaming reform for the problems, compounding the difficulty of progress…

…Today, the multiple frustrations of daily life are feeding into public discontent, which can easily turn into mob rage…

…For the past 30 years, China has been tough on reforms in some areas, but lax in others. Today, the lack of progress on political reform is stalling the entire project. Thus, many vocal advocates of market reforms, including the economist Wu Jinglian, have in recent years begun urging leaders to prioritize political reform…[bold added]

But far too many people oppose change, and our biggest problem today is an irresolute leadershipOur leaders waver because they are afraid political reform will cause instability. [bold added]. But reality has proved them wrong. The unrest that erupted last year in the Guangdong village of Wukan was eventually pacified when the party leadership worked with the villagers to reach a solution stressing people’s autonomy, and fair and open elections were held. This is an example of successful political reform that improves, rather than disrupts, harmony…

The Communist Party will soon hold its 18th party congress, where some progress on promoting intra-party democracy is expected, including competitive elections. The recent political events underline the urgency of political reform. It is time for a responsible government to act.” [bold added]

On World Water Day Secretary Clinton Tells Us That Water Scarcity Is A National Security Concern – The Challenges Of Conservation And Purification – Can We Have Enough For 7 Billion?

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By Paolo von Schirach

March 22, 2012

WASHINGTON – It is World Water Day. Let’s think for a moment about lots of people and not enough water. The world population just passed the symbolic 7 billion mark. Many of these earth inhabitants are poor or very poor. And a large number, approximately 783 million, have no access to safe drinking water. For many, especially in Africa, walking for hours to get to the one place that has clean water, is a daily routine. Instead of engaging in other productive activities, very poor people have to go and get water. Children do not go to school because they have to go and fetch water.

Water is precious

Abundant, clean, and affordable water is at the foundation of all life, of all societies and all economic activities. More people on this planet unfortunately mean more stress on existing fresh water supplies. More humans and more economic activities, from industry to agriculture, mean fast depletion of existing aquifers, as more water is used. It also means more water contaminated by fertilizers, chemical byproducts and other waste, industrial and human. Every day millions of people drink contaminated water. They do not boil it in order to save precious fuel. Hence water born diseases and often death.

Water as a cause for conflict

But it gets worse. More demands on existing water supplies mean scarcity and therefore possible conflicts to control access to vital water supplies. The conflict over water issues is not explosive today, but a National Intelligence Estimate, (NIE), requested by Hillary Clinton, US Secretary of State, predicts that there may be serious tensions caused by water scarcity beginning in 2020, only ten years from now.

In Clinton’s words

Celebrating Water Day, Secretary Clinton summarized some of the key findings of the NIE that was produced last fall and whose unclassified version has just been made public:

At this rate, nearly 700 million people will lack access to safe drinking water in 2015. And many countries still are not making enough progress reaching their most vulnerable populations, and those conditions will only deteriorate as populations grow and crowd into already overcrowded cities without adequate infrastructure…

…Today, the National Intelligence Council released the unclassified version of its report on Global Water Security. You can go online, read it for yourself, see how imperative clean water and access to water is to future peace, security, and prosperity, globally. I think it’s fair to say the intelligence community’s findings are sobering.

As the world’s population continues to grow, demand for water will go up, but our freshwater supplies will not keep pace. In some places, the water tables are already more depleted than we had thought. In northern India, for example, over-extraction of groundwater could impact food security and access to water for millions of people. Some countries will face severe shortages within decades or even sooner. And some hydrologists predict that many wells in Yemen will run dry in as little as 10 years.

The assessment also highlights the potential threat that water resources could be targeted by terrorists or manipulated as a political tool. These difficulties will all increase the risk of instability within and between states. Within states, they could cause some states to fail outright. And between and among states, you could see regional conflicts among states that share water basins be exacerbated and even lead to violence. So these threats are real and they do raise serious security concerns.

This assessment is a landmark document that puts water security in its rightful place as part of national security, and I’d like to thank everyone involved in helping to produce it. [bold added]. It is also a call for American leadership in this area. Our domestic experiences with water and our technical expertise are valued around the world. And as countries become more water stressed or nations face water-related crises, they are increasingly turning to the United States for assistance. We hear this all the time at embassies everywhere. Local leaders meet with our ambassadors and ask, “What did you do in the United States? How did you do it? Can you help us?”

Well, today, we are launching a new public-private partnership to help answer that call for leadership and to expand the impact of America’s work on water. The U.S. Water Partnership exemplifies the unity of effort and expertise we will need to address these challenges over the coming years, and it advances our work in critical ways. [bold added]….

Scary picture: water scarcity may yield wars, terrorism

This long excerpt gives you a rather worrisome picture. The world is running out of clean water, while we have made a mess of whatever is left by polluting it. Secretary Clinton did not mention a recent Chinese government report warning the country that China’s clean water supplies are rapidly diminishing, while much of the existing water is too polluted for human consumption. Remember that there are 1. 3 billion people in China. Imagine millions of them with no access, or restricted access to clean water. This could get quite explosive.

Down the line, it is very realistic to assume that thirsty people may actually fight and kill one another to secure water access, as it is possible to contemplate that terrorists may target water infrastructure to inflict maximum damage to vulnerable societies. This is no joke.

Interesting to note this new US Water Partnership the Secretary unveiled aimed at pooling resources and supplying American know how to needy societies. Let’s see how that will work out.

Purification, conservation

In all this there are at least two key issues: how to purify dirty water, and how to conserve water. These are huge challenges. Water purification is possible, but current technologies are expensive. Serious conservation will require imaginative new solutions.

I have discussed elsewhere “vertical urban farming”. If successful, this revolutionary way to grow food in cities could make a huge difference. Urban farming means locating right in the middle of cities stacked greenhouses (skyscrapers inhabited by broccoli and onions) in which a variety of agricultural products will be grown. Using hydroponic and now aeroponic systems it is possible to grow plants in an enclosed environment with little or no water.

Vertical urban farming would reduce stress on existing water supplies

I know this sounds like science fiction. But it is not. The first commercially driven urban farming enterprises are underway in different continents. If we could grow food in cities around the world relying on methods that use little or no water, the stress on this valuable and dwindling resource would be greatly reduced. (There would also be other big advantages: no more soil erosion, huge energy savings, reduced logistics, no warehousing, no waste from farm to market, and more.)

Cheaper purification will come

As for water purification, there are new technologies coming on line that would allow easier and cheaper treatment that will turn sewage or otherwise polluted water into potable water at a modest cost. This is not possible today; but it will be sooner than we think. That said, the water scarcity issue is urgent. This is a time to invest in solutions and deploy them fast.

House Budget Committe Chairman Paul Ryan Produced A Budget Proposal That Would Cut Spending – Sadly, In This Climate, It Will Go Nowhere – Not Even Fellow Republicans Running For President Want To Talk About Serious Cuts – This Is Political Suicide, Voters Do Not Want Bad News

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By Paolo von Schirach

March 21, 2012

WASHINGTON – House Budget Committee Chairman Paul Ryan is a courageous man. He came forth with a Republican budget proposal that would actually do something substantive about entitlement and tax reform. He already did this with his 2011 “Path to Prosperity” budget proposal. But that got nowhere because the Democrats in Congress and the White House managed to successfully misrepresent needed spending reforms as mean spirited anti-seniors and anti-poor proposals meant to hurt the weak, while the mean spirited Republicans push for more tax cuts for their wealthy supporters.

“Path to Prosperity”

So, we did not even get started on the “Path to Prosperity”. The following acrimonious debate on raising the debt ceiling proved that it would be politically impossible to have a decent agreement on any sensible mix of welfare reforms and some tax increases. The ”Super Committee” that was tasked to find some compromise on further spending cuts got stuck on the same issues and did not produce anything at all in the fall of 2011. This way all was postponed until January 2013, conveniently after the November 2012 elections.

A campaign is a bad time to propose spending cuts

And now we are in the middle of a campaign, a supremely bad time for anybody to come forth with bold plans that would include entitlement cuts. Even if the cuts envisaged are for later, and even if they will not affect the current beneficiaries, any talk about seriously cutting Washington-delivered goodies is political suicide for anybody seeking election.

Tea Party people just as unserious

And, yes, this applies to those seeking the votes of the die hard, anti-spending Tea Party people. Fact is that the Tea Party people want spending cuts –but only in principle. Indeed, when you ask them what would they cut, they become very uncomfortable and they usually retreat behind worn examples of egregious misspending on this and that. They try to argue that by eliminating “waste, fraud and abuse” we could take care of the deficit and the debt.

But this is totally silly. The Tea Party people know or should know that the real money (60% of the federal budget) is in entitlement spending. Are they willing to take less for themselves for the fiscal health of America? I doubt it. And so, no Republican is seriously talking about serious spending cuts, even when talking to the supposedly “conservative” base.

No real proposals on fiscal reform from the Republicans running for president

And this is why in this contentious and unpleasant Republican primary season we may hear a lot of shouting about totally peripheral issues like contraception and threatened religious freedoms, but almost nothing about what to do about the looming fiscal crisis. (Remember that the US last year already got the stain of a debt downgrade by Standard & Poor’s. How many more can we take, before creditors will start asking for higher interest rates?)

Neither Rick Santorum nor Mitt Romney have articulated solid plans to transform and reduce public spending. They say that they will know how to fix the economy. But we do not hear much about how they plan to fix Washington. And this is because nobody wants to be targeted by the Democrats as the one who wants to destroy Medicare and throw sick seniors in the snow in the middle of winter.

Ryan has a real plan

And this is why Congressman Paul Ryan deserves credit for having the political courage to at least introduce a budget aimed at changing the status quo. His blueprint does provide for an alternative to the current Medicare system that is on an unsustainable path. His budget also proposes serious tax reform consisting in simplification and closing most loopholes. There would be only to rates, 25% and 10%, while corporate tax rates would go down to 25%, roughly the international average, this way making America more attractive as a place to do business.

Details aside, Ryan’s budget is something that in better times would have been regarded as a good basis for a serious debate. But we are in bad times. So, it will go nowhere in the US Congress. While serious debates on spending are taking place at the state level, at the national level we mostly have posturing, demagoguery and cheap populism. Obama wants to tax the rich in the name of “fairness”. Santorum wants to go back to religion inspired ethics as a way to revitalize America. Gingrich wants to give you $ 2.50 a gallon gasoline. Ron Paul wants to abolish the Federal Reserve. And finally, front runner Mitt Romney wants your vote because he has credentials as a business manager. What a crew!

Ryan is serious, the others are not

Paul Ryan’s budget is an attempt to get serious about real and tangible problems before they really turn into fiscal emergencies. But I see no appetite for seriousness elsewhere. Voters want comforting messages, and not cold showers. They do not want bad news, and they would rather shoot the messenger than reflect on what they are told.

Sadly, in this political context, this budget is a symbolic act by a serious man who probably wishes that his colleagues, on both sides of the aisle, would have the guts to be statesmen and carry the unpleasant but real message to the people:

Fellow Americans, we are already borrowing 41 cents for every dollar we spend. The percentage keeps growing, along with our annual deficits and national debt. Time to get serious and start cutting spending. And most of the money Washington spends –sorry to tell you– goes to you. So you will have to take less. Vote for me, and I’ll get this done”.

“Buffett Rule” To Make Rich People Pay More Taxes Is Good Politics, But It Would Raise Only $ 31 Billion Over 11 Years – US National Debt Will Grow By About $ 7 Trillion In the Same Period – Better Find Something Else To Get Revenue

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By Paolo von Schirach

Related story:

March 20, 2012

WASHINGTON – I wrote a while ago (see link above) that the “Buffett rule” is just feel good populism. The ”Buffett rule” is a proposed tax code change that would require the few very wealthy Americans who are taxed at a low rate because their money comes from capital gains and not from regular earning to pay more.

All about fairness

Obama likes to talk about “fairness” and supposedly this is the biggest fairness issue. Paying taxes at a low rate became a political liability for presidential candidate Mitt Romney, a multi millionaire, when he disclosed his tax returns indicating that he pays taxes at a low rate, because most of his money comes from capital gains.

And so the Democrats have ground to insist that this horrible injustice should be rectified. Warren Buffett should not pay taxes at a rate that is lower than his secretary. Fine. Let’s do it. Let’s wipe this stain.

How much extra money by taxing the rich?

And, by the way, how much extra money will the Treasury raise by having rich capitalists pay “their fair share”, at the same rates as everybody else? Well, according to official calculations, reported by the AP, not that much. These new taxes on the wealthy will generate about $ 31 billion over the next 11 years. Very little indeed, if you think that in the same period the national debt will grow by about $ 7 trillion.

Any brighter ideas?

Taxing the rich may be good politics; but it is not very effective public policy. How about trying something else, like serious tax reform and entitlement spending reform?

According To The Pundits The Elections Boils Down To The Unemployment Rate And Gas Prices: Upward Trend Obama Loses, Downward He Wins – Apparently Nothing Else Matters In America – This Is A Dangerous Impoverishment Of The National Conversation

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By Paolo von Schirach

March 14, 2012

WASHINGTON – Listening to the pundits debating the upcoming presidential elections, the consensus boils down to this: if the unemployment rate stays as is (8,3%) or trends down between now and November, president Obama gets re-elected. If it goes higher, then he is in trouble and may not make it. Likewise, if gasoline prices go down he is alright. If they keep going up and they stay past the symbolic $ 4 a gallon before the vote, then Obama’s chances are diminished.

More than just jobs and gas?

Granted, these are important issues that are proxies for the overall health of the economy. But is there perhaps more? Could it be that the national political debate might include the reform of the welfare state, tax reform, foreign and security policy priorities, including this bad war in Afghanistan, science and technology issues, competitiveness, energy, infrastructure, China, relations with Europe, education? Well, not really. This stuff is mostly background noise.

Of course, all these topics are covered somewhere in speeches and policy papers posted on campaign websites. But they do not make the headlines. They do not energize the base and do not motivate Republican primary voters today and voters in the general election tomorrow to go one way or the other.

Narrow down to the essentials

As the pundits tell you, it is all very simple: with more jobs and cheap gasoline Obama gets the nod. If the opposite happens, then it is Romney, (assuming that he gets as far as getting the nomination, no longer a sure thing). In a way, it is good to see that, according to the analysts, Americans look at politics in a very practical way whereby political favor goes to whoever shows tangible results. But narrowing down the debate to a couple of metrics, as if they were the true condensation of everything else, represents a dangerous impoverishment of the national political conversation.

What about mixed scenarios?

I do agree that if a president is not even able to foster policies that will promote growth and jobs then he may not be a good steward for others policies either.

But what about a situation like the present one in which the economy is not awful but is instead mediocre, in which some jobs are created but not enough, in which the unemployment rate declined but is still extremely high by any historical standard? How do you evaluate an incumbent when trends are not terrible but hardly inspiring? And what about the impact of gigantic topics now ignored, such as the looming fiscal crisis? And equally important, how do you evaluate a challenger who has different ideas, but not a clearly discernible record?

Keep it simple

This is when serious debate (unlike the silly shows we have seen so far) and better understanding become important. But this is discouraged. In their efforts to boil down very complicated issues to a bumper sticker, the pundits have given their guidance to the voters: a few more jobs between now and November, Obama wins. Got that, American voter? You are hereby openly discouraged to delve more deploy on other policies. If under this sitting president the unemployment rate goes down, he gets the credit and you should really vote for him.

But, wait a minute –asks the voter– what if jobs growth has really nothing to do with government’s policies?”

No, no, my friend. Stick with the guidance, and keep it simple. Jobs up: Obama in. Jobs down: Obama out“.

Impossible for the average voter to become an expert

Look, it is true that it is impossible to fill the huge gap between the horrible complexity of so many public policy issues and the average voter’s time to begin to understand arcane problems that often generate hundreds of pages of legislation. We cannot expect Americans to turn into all knowing, free lancing Washington policy wonks. This will never happen.

Possible to explain without dumbing down

Still, there is nothing good in keeping the debates on complex issues within the confines of a Washington DC, “inside the Beltway”, coterie of politicians, advisers and super experts, while the general public is in the dark, because no one takes the trouble to provide simplified, yet credible summaries of the big issues the Nation is facing. No, Mr. And Mrs. America; it is not just about jobs and gas prices. There is a lot more. But nobody from high up will make it their mission to tell you. And this knowledge gap is no small thing. Remember Thomas Jefferson warnings about the impossibility of being both ignorant and free.

Deranged US Soldier Shooting Civilians In Afghanistan Is Another Public Relations Blow – Americans Are Not Wanted, Relationship Weak – More To The Point, Large Military Presence Makes No Sense

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By Paolo von Schirach

March 13, 2012

WASHINGTON – Talk about the success of asymmetric warfare. Except that this is asymmetric warfare by America against itself in Afghanistan. Hard to imagine better planned self-inflicted wounds that destroyed in a few instances years of hard work aimed at building trust and good will between American occupiers and Afghans. First we had the sad video of US soldiers urinating on Taliban corpses. This was followed by the stupid Quran burning incident with all its consequences, including US soldiers killed by supposedly friendly Afghans. And now there is a deranged Sargent who wanders off his base at night and starts murdering Afghan civilians. The Taliban could not have plotted this any better, if they were to think of ways in which to place the Americans in a bad light.

Unfortunate incidents

Of course, we all know that, as bad they are, these are all extremely unfortunate, isolated acts. We know about the US desire to help Afghans against the Taliban. But in this context, as in most others, perception is reality. After all these incidents the perception more than ever before is that the Americans are hostile occupiers, and not precious allies in the fight against the Taliban.

Shooting spree

Go explain to the villagers that the army Sargent who went on in his private shooting spree, killing 16 civilians, is most likely a mentally disturbed person. (If so, though,what is he doing serving in Afghanistan? And, as we are at it, can anybody explain how a soldier can just wander off his base, all by himself, undetected and carry on a shooting expedition? These are separate but quite pertinent questions that probably would open painful subjects on how active duty soldiers are screened or not screened for mental conditions in the US armed forces, and on how security is maintained in forward operating areas).

Urinating on corpses, Quran burning

And going back to the list of the other incidents, go explain that the Quran burning was totally accidental. Go explain that the other soldiers urinating on corpses are just a small group of uncivilized people, while the vast majority of all US servicemen observe all codes and laws of warfare.

Among true allies all this would have been looked at differently

But the fact is that, in the context of a friendly and trusting relationship, these unfortunate incidents would have been treated for what they really are: isolated events caused by a few individuals; and not as part of some sinister plot concocted by the Americans to hurt and humiliate Afghans. And yet, the very fact that the sinister plot interpretation finds plenty of angry followers is another indication of how weak the foundations of this relationship really are. Whatever good the Americans are trying to do in Afghanistan, it is not working very well.

Opportunity for rethinking the whole operation

More broadly, incidents aside, Washington should rethink the entire scope and objectives of the whole operation. The official explanation routinely offered whereby we are in Afghanistan because this is where the 9/11 attacks were planned in 2001 is patently absurd. 9/11 occurred more than 10 years ago. Al Qaeda is a diminished force and it moved on to other countries. Osama bin Laden is dead. We can and should prevent plans to re-establish training camps in Afghanistan by disrupting al Qaeda and Taliban operations. Yet this is mostly about using good intelligence assets and special operations units. We do not need to occupy the entire country to pursue these goals.

Reduce US foot print

This does not mean “abandoning Afghanistan”. But it means that our presence there has to be adjusted to our basic national security objectives. Certainly we do not want Afghanistan in chaos. But this large US foot print is not necessary. We should be after the pro-al Qaeda Taliban and al Qaeda itself. Leave the rest out. Adopt a low profile.

Fukushima Dealt a Huge Blow To US Nuclear Energy – Plans To Build Many New Reactors Now Face An Uncertain Future

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By Paolo von Schirach

March 11, 2012

WASHINGTON – Until last year it appeared that America was on the verge of a nuclear energy renaissance. Given the bad publicity for all carbon based energy, coal in particular, and given the yet to be proven cost effectiveness of renewables such as solar and wind, nuclear had gotten a second look –and it appeared favorable. Of course it helped that more than 30 years had elapsed since the 1979 Three Mile accident that caused a national scare. Even if there were no casualties or other appreciable adverse effects due to radiation release in the Three Mile Island area, it took thirty years to absorb that accident and to start thinking again about nuclear without heart palpitations.

After Three Mile Island, Chernobyl

Of course, after Three Mile Island we had the much more devastating 1986 Chernobyl disaster in Ukraine, with real consequences in terms of lives lost and damaged health for lots of people exposed to radiation. But in that case it could be argued that the Chernobyl reactor was based on an old Soviet era design and that, after all, you could expect bad oversight and poor nuclear safety within a decomposing Soviet Union.

With disasters forgotten, new plans for nuclear

And so, with the big radiation scare behind us, and banking on new designs for better and safer reactors, the US utilities rediscovered interest for this form of electric power generation. Besides, the fact that nuclear has zero emissions had broadened its political constituency. Nuclear had gained new favor even among environmentalists deeply concerned about greenhouse gases released by carbon based fuels. They started appreciating that a nuclear power plant has zero emissions.

Fukushima and the emotional reactions

But then the March 11, 2011 earthquake and tsunami came along in Japan and with that the Fukushima Daiichi disaster that showed the vulnerability of nuclear power plants. And Fukushina happened in a modern, industrialized country with a vast nuclear power sector, supposedly overseen through quite sophisticated safety procedures. The fact that such a disaster could take place in a country similar to the US made an impression. Because of that accident, notwithstanding the rather unique circumstance of a a major earthquake and a tsunami, the re-emerging US nuclear industry was dealt another powerful body blow.

Indeed, whatever the technical and scientific analysis about what happened at Fukushima, let’s keep in mind that a nuclear accident provokes strong emotional reactions. Fear of contamination from radiation is based in part on science and in part on totally irrational reactions. In the case of Fukushima, despite the horrible natural disaster, despite the antiquated design, the poor planning and the confusion in the aftermath of that epic tsunami, to date it is not clear what damage if any the exposure to small amount of radiation may have caused to the many people in the area.

Argument not rational, but powerful nonetheless

But it does not matter. Any talk of a nuclear accident evokes images of Hiroshima, disaster, mutations and cancer caused by radiation. There is no point in saying that any new reactor that will be built in the US would be based on much more modern designs that would make it next to impossible to have the overheating caused by lack of electrical power, as in the case of Fukushima.

The experts can talk rationally abouts risks. But for most people this is an emotional issue. Now nuclear is perceived as inherently dangerous, no matter how you present it. And it is all about the ineffable fear of the invisible power of radiation.

Dream that failed

And so, on the first anniversary of Fukushima, the cover story of The Economist, a publication not known for playing on emotions, is “Nuclear energy, the dream that failed“, (March 10 – 16, 2012). The argument against nuclear is quite simple. Try as we may, we cannot make a case that to date nuclear power is 100% safe. On top of that it is very, very expensive. While a nuclear reactor is cost effective in the long run, it costs a large amount of money and it takes years to build it. And this creates huge financing obstacles that restrict its marketability. Finally, in the US now we are right in the middle of a natural gas revolution. With record low natural gas prices, it is harder to make an economic case for investing billions over many years to build a new nuclear reactor when it is much cheaper to have a gas fired plant.

Hard to make a case for nuclear

So, if you take it all together, today it has gotten really tough to make a good case for electricity generated by nuclear power. We have very high costs which complicate financing, long lead time between planning, permitting and construction, and now strong competition from relatively clean natural gas.

But now the real deciding factor is widespread fear of another Fukushima. As unlikely as such an event may be, considering new reactors based on totally different and much safer designs, the “radiation fear” is there and it will be the strongest political obstacle against nuclear power. Even the most compelling arguments will not convince people motivated by intense anti nuclear emotions.