In Defense of $4.5 million Super Bowl Ads

 

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So this meme is going around (as memes tend to). And it’s got things exactly wrong (as memes tend to). It was shared by the Other 98%, a “grassroots network of folks committed to kicking greedy corporate asses for the harder working classes. And we have fun doing it.” Naturally. Yea Socialism! Let’s burn some s*** down!

There’s so much irony here. Off the top of my head I can name several “greedy corporations” that made this meme possible. (Because, you know, “you didn’t build that.”) Someone took the photo with their Android, Windows or Apple smartphone (or perhaps a Nikon or Canon SLR). Someone used software and hardware created by Windows or Apple or some other tech giant to create the meme. She posted it to Facebook using an internet connection provided by Verizon, Comcast or some other communications corporation. And I’d be willing to bet that she was doing all this while sipping a latte at Starbucks and listening to Beyonce rail against the very people who protect her wealth.

But irony aside, this meme goes to the heart of what is wrong with our society and the key difference between socialism and capitalism.

Let’s assume for a moment that the creator of this meme is genuine in her concern for hungry children and the homeless. She is assuming that, because $4.5 million was spent on Super Bowl ads (depending on when it was run, this is actually less than the cost of a single :30-second ad) that it won’t go to “feeding the foodless and housing the houseless.” But again, that’s exactly wrong. The money spent on advertising in conjunction with the Super Bowl helps multiple times more than that same dollar amount could put to directly helping the poor (i.e. giving them a “hand out”). Now don’t get me wrong, I think everyone should help the poor directly, especially those who are the eluded to “2%”. With great wealth comes great responsibility and all that and some folks, naturally, are in a hard place because of little or no fault of their own. But a poor man never gave another man a job.

Socialism assumes that the pie is only one size and can never grow. Peyton Manning earned $2,051,000 just for winning the Super Bowl (and, yes, he did earn it). But that doesn’t mean someone else went without that money. In fact, because Peyton earned that extra bonus, lots of people other than he are going to benefit. There’s his family, of course, and his agent. Those are a given and they, undoubtedly, contributed to his success through their support. But there are the advertisers too, especially those in Denver. And here’s the real kicker; because their local boy made good, these advertisers are going to pay for the privilege. Some local car dealer or plumbing company or mortgage broker is actually going to give Peyton another big pay out just to drive around their cars or refinance his mansion with their mortgage company. Why? Because they’re making the safe bet that the $100,000 they’re paying him on top of the $1 million dollars they’re paying the commercial producers, TV stations, and newspapers, is going to translate into $10 million in added sales. And it doesn’t stop with the advertisers. There’ll be a parade. There’ll be lots of Peyton Manning jerseys sold by people making minimum wage (but, hopefully, just happy to have a job) and on and on.

Capitalism has lifted more people out of poverty than any other force in history. And that’s not just a side effect but by design because not only has a poor man never given another man a job; a poor man has never plopped down $100,000 for a new Mercedes. Capitalism wants people to be wealthy. Capitalism wants people to “waste” money on heated seats, tickets to the Super Bowl, and $5 lattes. If it didn’t, the guy installing that heated seat that feeds his family on the $70,000 a year he makes; the gal selling peanuts at the Super Bowl for, well, peanuts; and the barista, who is working her way through college so she can get a job doing what she really wants, providing free health care to poverty stricken children in Sudan; they’d all be the ones in need. And not only is that a horrible thing tangibly, but it’s a horrible thing, a much more horrible thing, mentally, because when you rob a man of his job you rob him of his dignity.

So who really cares more about the poor? Is it the socialist who doesn’t really care about the outcome as long as he “feels” he’s doing something (or even the socialist who does care about the outcome, even if he is blind to the reason for his failure)? Or is the capitalist, who, even if he is the greedy S.O.B. the “other 98%” like to chastise and just wants to make his next million, is giving not just the barista a job when he walks in to buy his latte every morning; but the farmer who grew and harvested the beans; the deckhand who worked on the ship that transported the beans to Los Angeles and the trucker who took them the rest of the way to Denver; the biology professor who is teaching the barista the anatomy she’ll need to save a child’s life; and the biology professor’s dry cleaner, who came to this country from North Korea with nothing but a $20 bill sewn into his sock and a dream that he couldn’t achieve in his homeland because someone was too concerned with “equality” and the “poor” to realize that there’s no virtue in everyone being equally poor?

Socialist caveman cartoon
“What, Ug? You want to paint some wildebeests using the berries we picked today? What a waste! Those berries could have fed someone! Go out and kill a mammoth!”

And, finally, the other great benefit of “wasting money on needless things”, is
that the needless things of yesterday become the necessities of today and help make our lives so much better. After all, what is absolutely necessary but the few berries and maybe a fish or a deer our cave-dwelling ancestors were able to scrounge up and the cave they dwelled in. And even if they aren’t the necessities of today, we, as humans (and even most animals), realize that there is much more to life than subsistence living. There’s even much more to life than the benefit of being able to call a tow truck from the side of the road in rural Montana during a snowstorm because you have that “needless luxury” called a cell phone. There’s the joy come from enjoying a movie with friends or a decadent chocolate cake with your wife (or by yourself). So the next time you watch a few million dollars go up in fireworks, or learn that some internet billionaire spent the equivalent of your life’s wages on a painting by someone you’ve never heard of, rejoice! It means capitalism is working and it means more and more people are living a better life today than everyone who came before them.

 

The Simple Senator Tax Plan

2012-tax-law-keeps-piling-up-cchRight now millions of people are sitting on hold with the IRS and millions more are griping about taxes more than they usual do. Seeing a big chunk of change disappear out of your bank account is never fun, especially when you know it’s going to fund snail porn. But besides that, doing taxes makes one’s head hurt. Even with the invention of software and the proliferation of H&R Blocks, it still takes a ridiculous amount of time. I just did my mother’s taxes. She made no money last year yet it still took me over and hour. My own taxes took a full day and my tax situation, while probably more complicated than the average American’s, is far from what some folks face. In fact, the tax code is so complicated and ever-changing that even the Secretary of the Treasury doesn’t understand it. And while I blame Tim Geithner for a lot of things, his ignorance of the tax code is not one of them. If there’s anything that could stump God, the U.S. tax code is probably it. After all, He gave us His complete outline for humanity in a scant 2000 pages or so and last year’s tax code weighs in at over 73,000!

So what is the solution? I’ll start with the ultimate “simple senator plan”: no taxes. Yes, none. Zero. Zilch. Everything is voluntary. “You’re a crazy anarchist that probably has a bunker full of grenades in his back yard!” you say? No, not even close (and if I did have a bunker full of grenades I wouldn’t be stupid enough to put it in my back yard). The government does have a role to play in society, a fairly sizable one in fact (although just a tiny fraction of what it currently is), but most things that government does today, especially the federal government, should be done, at least in large part, by the private sector: transportation, education, parks, marriage. In fact, the complete list of what the government, at any level, should do is so short here it is:

1. Provide for the national defense. (And help prevent war through diplomacy.)
2. Provide for a common means of exchange, e.g. the almighty dollar.
3. Protect and uphold the rights of the citizens, e.g. the police. (This is best done by state and local government. It’s corollary is administration of justice. Things like forcing BP to clean up Gulf Coast beaches would also be included under this category since, if you dump a big mess on my property, you’re taking away my right to enjoyment of it.)

There are a few other things that are probably best done in consort with local government, i.e. large transportation projects, but even these can be mostly carried out by private industry and can be funded through user fees (i.e, toll roads).

Some other examples. The postal system? Privatize it. Theoretically it’s supposed to be self-sufficient. If it wants to give gold-plated pensions then raise the price of a stamp to $2 and try competing with UPS and FedEx. (Good luck with that.)

Parks? Nice things, parks. So nice I’d bet the budget of the National Parks Service that there are enough good-hearted souls out there who could raise the money to take care of Yosemite and the National Mall that “we, the people”, should just turn those things over to a private charity. In fact, from a preservation standpoint, it’s better. Who’s going to care more about a particular piece of land? People who are voluntarily giving their time and treasure for its protection and upkeep, or a bunch of bureaucrats and congressmen who may decide to sell off drilling rights to the “evil oil companies” in exchange for a sizable campaign donation? And if I’m wrong (which I’m not), then obviously “the people” value a strip mall more than Old Faithful and that’s the way it ought to be. (More probable is that “the people” value cheap oil more than they value a tiny fraction of a large expanse of barren land in North Dakota that’s been set aside for a reasons only members of VHEMT and Al Gore can explain.)

Education? Privatize it. I suppose I’d be okay with some sort of government grant system, at least in the short-term, to help fund any gap between charitable donations and need, although, what are government grants but nothing more than “forced charity”? (How’s that for an oxymoron?)

So what we’re really left with; the only things that shouldn’t be put in private hands because of the propensity of abuse; are the military, the police and the courts. But even these can be run on a charitable basis. In fact, many police departments in the country take part of their budget from charitable donations. This will work. It’s logical because everything funded by the government either is or should be supported by at least 50%+1 of the population (or, at least, the voting population and if you didn’t vote you don’t have a right to complain about the outcome.)

Let’s take the Iraq War. Support in the days leading up to U.S. involvement and during the early days of the war was well above 60%. Now, I’m sure a big chunk of that 60% supported the war only in theory and probably wouldn’t have coughed up a bunch of money to send troops over there, but if anti-war types are always complaining about how it’s all a vast conspiracy by Halliburton then they should really be the first to support a donation-based military. We have an all volunteer force so it’s really their choice whether they want to go over there (and considering the number of personnel that extended their deployments, it’s safe to say the Iraq War was popular with them), so why not have all volunteer funding? If 60% really did support the Iraq War there should be no problem raising the money from them to fund it. And if it really is some “blood-for-oil” scheme then let Halliburton pay for their own war.  And no need for endless debates in the Senate over extending funding. As soon as the war becomes too unpopular the funding will dry up and the war will end.

The other necessary functions of government can be funded the same way. The president’s salary and his cushy Air Force One budget? Well, if he’s not doing a good job then he’s not going to be able to afford that golf game this week. This would also eliminate the conundrum of incumbents using the power of the office to campaign. Is the president using Air Force One for official business or is his trip out to California really just a campaign stop? Doesn’t matter as all the money being spent is being donated by his supporters. (And, for the record, as much as I don’t like the current inhabitant of the White House, if all taxes were voluntary I’d gladly give a buck so that he can have a roof over his head. (I’m guessing this is probably considerably more than the percentage of my taxes that actually go to White House upkeep, Secret Service protection and green fees for POTUS.)

This plan would work especially well at the federal level as there is so little the federal government should be doing anyway, but it would work at state and local levels as well.

But, okay, okay. I’ll admit, voluntary funding of government programs is a little out there so maybe we need something a bit less extreme for now. So here’s the slightly less simple “simple senator tax plan.”

Taxes aren’t voluntary but are only collected at the state level. The federal government’s budget comes from taxing the states 10% of their tax revenue. Simple. Instead of having 300 million taxpayers there are only 55.

As for individual states, the best system would be a flat sales tax, no deductions. I’ll repeat that: no deductions. Not for charities. It would make things less complicated for them come tax time and eliminates the conundrum of whether a pastor is teaching the Word of God or proclaiming his “hate-filled, right-wing political agenda” from the pulpit and therefore unworthy of tax-exempt status). Not for mortgages. They artificially increase the cost of housing anyway. And not for businesses. This last one is a bit controversial but if the tax rate is low enough then I’d bet most businesses owners wouldn’t mind paying the sales tax as just another business expense (at least not any more than they currently mind paying taxes). This would also reduce the possibilities for abuse of the tax system through questionable deductions.

So there you have it. Government would have to slim down quite a bit for this to happen. They’d certainly have to do away with forced charitable donations for snail porn and Big Bird (who shouldn’t need a dime of public support if his popularity at Toys R Us is any indication) but if it actually was doing what it was supposed to be doing and only that (see above list) then collecting enough to fund these things should be a piece of cake.

Why We Invested in Belize

Friends,

My wife, Rosie, son, Andrew, and I just returned from a trip to Belize where we visited some investment/vacation property we purchased a year and a half ago in a development called Kanantik Belize. We knew it was a smart investment when we made it but after touring the development and seeing, first hand, the progress the developers continue to make on their first development, Sanctuary Belize, located adjacent to Kanantik, we’re even more confident in our decision; so confident, in fact, had we not just purchased a home here in Renton, we would have purchased a third lot in Kanantik.

I’m writing to let you know about this because I know you share some of my reservations about where this nation is headed financially and may, like I was, be looking for another place to invest some of your assets. Of course, this opportunity isn’t for everyone and I certainly wouldn’t advise you to invest everything in Belize – we still hold the majority of our investments here in the U.S. – but if you believe that not putting all your eggs in one basket is a wise investment strategy then this might be for you.

If, after reading, you’d like to know more, please don’t hesitate to contact me.

WHY WE INVESTED IN KANANTIK

The Financial Crisis Hits

Before investing in Kanantik Belize I did extensive research. In the fall of 2008, when many of us began to see the writing on the wall what with the financial crisis and such, I knew it was time to explore other investment options outside the U.S., a place that, should the U.S. banking system continue to falter as it has, would be a safe haven for at least some of our assets.

A Wonderful Nation Called Belize

Without a doubt, Belize rose to the top. It has been a stable nation since gaining a peaceful independence from the U.K. in 1981; it has a low crime rate; it still maintains banking confidentiality (something we can no longer say for Switzerland); it’s just a few hours’ flight from the southern U.S.; and, oh, it has a beautiful climate, maintaining 75-85 degrees year round!

A Wonderful Development Called Kanantik Belize

After settling on Belize I began researching real estate opportunities there and came across Sanctuary Belize, a development of Eco-Futures Belize Limited, a partnership headed by Americans, Belizeans and Australians, that has already won several awards and been recognized by the Belizean government for its care for the environment and wise development strategies. In fact, the Belizean government recently gave the development an US$80 million tax and duty concession!

When a friend of mine who is an investment adviser here in Washington purchased in Sanctuary Belize, raved about it, and then invited me to meet with the developers in August 2011, Rosie and I were sold.

A Low Risk Development Strategy

Sanctuary and Kanantik stand out for many reasons. They operate on a no-debt model meaning that there is not risk that the developers are going to skip out and leave investors holding a worthless piece of land and, as I mentioned above, some of the developers are locals, including the Chairman and Managing Director of Sanctuary Belize, a jovial and welcoming man who has many years of experience in business and real estate development, Johnny Usher. If something were to happen he and the other locals would  have no place to go so they’re more committed than anyone to its success. And Sanctuary Belize, the largest development in Belize at 14,000 acres, continues to remain on track with its development goals. Last fall it flooded the 250 slip marina and many owners have begun building on their lots. At least one couple has already moved there full-time.

First-Class Development Plan

Sanctuary and Kanantik are also doing things first class. Although Belize is a safe nation, none of us would ever think of leaving our homes unattended for a long period of time so one of the most important things about the development is that it will have full-time security. And for those people looking to use their property as a vacation rental when they’re not in residence, the developers have recently acquired the Caldwell Bank Real Estate franchise for the nation of Belize and will be able to provide rental as well as resale services to owners.

Amenities

Sanctuary and Kanantik will have some of the greatest amenities in the whole country. The 250 slip marina I mentioned above will be the only deep water marina in the nation, meaning that sailors from around the Caribbean will come to moor, making it a vibrant place to visit.

The Sanctuary development is situated on 14,000 acres of savanna, jungle, river and beach. Only 4000 acres has been set aside for development though meaning that the area will remain lush and beautiful, an important feature that draws many people to this beautiful nation.

The Marina Village in Sanctuary will feature a hotel, condos, a restaurant as well as other shops. Including some of the best gelato this side of Milan, which we sampled on a day trip to Placencia where the current gelato shop, which is owned by a Milanese woman, is located. It will move or expand to Sanctuary Belize once development of the Marina Village is complete.)

Sanctuary Belize also owns a private caye about 20 miles off shore (water taxi service will be provided for those who don’t own a boat). Our day out there was postcard perfect.

Twenty miles off shore, Sanctuary Belize’s private island, Sanctuary Caye

A golf course and many other amenities are also either under construction or are planned for development during the next few years.

Kanantik

Sanctuary Belize is wonderful but because its development is well underway and it has been so popular, many of the less expensive lots have already been snatched up. While there is still great opportunity there, the developers realized the growing demand and recently began a second development, Kanantik. This is where Rosie and I chose to purchase two lots simply because we were able to get in on the ground floor (we’re investor number 16 in this development). The developers haven’t yet opened up Kanantik to more investors but they will soon and I have no doubt it will follow the same trend as Sanctuary Belize.

Kanantik borders Sanctuary Belize to the south. Originally it was planned as a much smaller, 400 acre development with few amenities but the developers were able to purchase another 5400 acres and add amenities rivaling, if not surpassing those in Sanctuary, including a golf course, restaurants, and private cay.

Belize is a beautiful nation full of friendly and vibrant people and a wealth of opportunity. Sanctuary Belize and Kanantik Belize are Belize’s premier developments. I’d love to share more about this opportunity and maybe even count you as a neighbor there in the future. If this interests you or you have any questions, please don’t hesitate to call or email me. If enough people are interested, the developers have agreed to make another visit up to the Seattle area to go over things in more detail and answer questions that I may not be able to.

Keeping it simple

“They say we offer simple answers to complex problems. Well, perhaps there is a simple answer- not an easy answer- but simple.”

– A Time for ChoosingOct 27, 1964, Ronald Reagan, 40th President of the United States (1911-2011)

President Reagan made this particular statement in reference to the conflict in Vietnam. He knew the simple answer was to do the right thing and fight the ever-growing threat of Communist expansion in Southeast Asia (and Eastern Europe). It’s never easy to go to war, risking life and limb in defense of liberty, but once the decision is made it is quite a simple proposition, especially with right on our side not to mention a superior arsenal. This simple strategy of war is best summed up in another quote from Reagan, “Here’s my strategy on the Cold War: We win, they lose.” Until the day the Berlin Wall fell and greater freedom was granted to millions of people living behind the Iron Curtain there were plenty of critics of this simplistic philosophy, but on November 9, 1989 Reagan was vindicated and totalitarianism was largely relegated to the ash heap of history. (Or so many thought but no, to answer Francis Fukuyama, there is never an end of history, for, as the quote erroneously attributed to Scottish Historian Alexander Tytler states,

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasury. From that moment on the majority always vote for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship. The average age of the world’s great civilizations has been two hundred years. These nations have progressed through the following sequence: from bondage to spiritual faith, from spiritual faith to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependency, from dependency back to bondage.”)

And just as the strategy for winning the Cold War was one of simplicity so, too, is the strategy for addressing all other problems that we face as a society. Contrary to what ivory towered intellectuals would like us to believe, Occam’s razor (lex parsimoniae) is correct; things are black & white. It may appear that the solution lies in that grey area for it may be difficult for some to discern the answer but in all probability this difficulty arises out of an over-complication of the problem.

In general, the solution to most of the problems being addressed by public policy is to do the exact opposite: make it private policy, eliminate the government program created to “solve” it and let the private sector take over. Privatize education. Privatize health care. Privatize welfare. As Albert Einstein said, “The only justifiable purpose of political institutions is to assure the unhindered development of the individual.” In other words, the government’s only job is to protect our right to life, liberty and the pursuit of happiness (also known as property); to ensure equal access, not equal results. Beyond that it is up to the charity of the community to ensure that the poor and enfeebled not go hungry, for the government cannot give assistance to one citizen without first taking it from another (and skimming a fairly sizable portion off the top in the form of bureaucratic inefficiency).

To this philosophy I devote the majority of this blog. These are my rants and ramblings on public policy, politics and pop-culture. And because I am a devoted Christian I will, from time to time, weigh in on matters of faith and religion as the Spirit leads me. I may throw in the occasional post on food, travel or some other truly enjoyable pastime, for as John Adams wrote in a letter to his wife Abigail,

“I must study politics and war, that our sons may have liberty to study mathematics and philosophy. Our sons ought to study mathematics and philosophy, geography, natural history and naval architecture, navigation, commerce and agriculture in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry and porcelain.”


Brought to you by the free market

I joined some friends for dinner in Seattle on Saturday evening. Afterwards, the sun having decided to make an appearance, I decided to take a stroll around Downtown and was drawn to Westlake Park by the boisterous sounds of Seattle’s own Titanium Sporkestra, who bill themselves as a renegade marching band playing anything from Black Sabbath to gypsy anthems. They had attracted quite the crowd and young and old alike were having a great time.

I make it a habit of not giving money to people on the street (I prefer to give food) but I gladly make exceptions for street performers as I did on Saturday. I don’t know whether they had a permit to play (considering the size of their band I assume they did), but I really don’t care. I see performers like the Titanium Sporkestra, the a capella group, A Moment in Time, who perform in front of the original Starbucks, or the sadly passed “Tuba Man” as performing a service in the free market. I was able to stand there and listen to a few songs all for the bargain price of a couple bucks (or even free, had I so chosen) and they were able to rake in hundreds of bucks (I even spotted a $100 bill in the jar they passed around to great reception after each song) to pay for their jaunts to events like Austin’s SXSW, their latte’s or maybe even Obama’s re-election campaign. (I suspect, despite their capitalist pursuits, a fair number of them probably aren’t Republicans.) Even better, their performance was brought to you by the free-market (and, yes, you can argue that the park was provided by government and it’s possible they’ve even received a government grant in their day, but just go with me on this). Nick Licata didn’t have to direct several thousand dollars of taxes to a program to get them to play. Sally Clark didn’t have to go around town handing out flyers and putting up posters announcing the event. It all just happened thanks to the independent and entrepreneurial spirit that exists even here and would, no doubt, exist in an even greater capacity if government would just get out of the way. There’s absolutely zero need for a government appointed Arts Commission or Office of Cultural Affairs. Not only is it not necessary, but by relegating some of the arts to the purview of the bureaucracy, a strong argument can be made that the creativity of the artists is being stifled.

As a juxtaposition, on the other side of Pine Street, Key Bank has set up a nice little area with tables and chairs for people to enjoy the rare sunny weekend. Again, this brought to you by the free market.

And the wonders of the free market don’t stop there. Also gracing the intersection of Fourth & Pine were two wildly different religious groups, a Christian Evangelical handing out tracts about the love of Christ and a group of Black “Hebrews” spreading a racist message (think “Nation of Islam” except they’re wearing Stars of David). At least they were doing it passively. Neither group was state mandated or forcing their ideology on anyone. The free market will direct people toward the best ideology.

I’ll Have a McGinn and Tonic

The Seattle Times reports today that the City of Seattle, led by Mayor McGinn, City Attorney Pete Holmes, and a few members of the city council, are beginning the process of lobbying the state to amend liquor laws to allow local jurisdictions to allow bars to serve alcohol past 2 a.m. The cynics, of course, point to the fact that the nightlife industry was a big supporter of both the McGinn and the Holmes campaigns but regardless, this is a great decision (and the second one in less than a week). It appears that, quite possibly, Seattle’s freshman mayor has begun to find his stride and I’ll drink to that.

Allowing bars to serve past 2 a.m., proponents state, would actually cut down on the crime rate and general tomfoolery that occurs when throngs pour out onto the streets of Belltown and Pioneer Square by allowing bars to stagger their closing hours or even remain open all night as they do in places like Las Vegas and New Orleans.

After a quick search of the internet I couldn’t find any hard facts on whether this is true. I did find one website that states just the opposite but considering it’s not exactly an unbiased group, while I don’t question their numbers, I wouldn’t be surprised if, after a more extensive search I could find alternate statistics to refute their claims; especially since the idea of extended hours leading to reduced crime actually does pass the smell test. (I invite readers to find statistical evidence, either for or against extending last call and post your links in the comments.)

Stupid people are going to drink and drive or act belligerent no matter what time you stop serving alcohol. They can always go to the liquor store and drink elsewhere past the 2 a.m. cutoff. At least by allowing them to drink in a somewhat controlled environment and not forcing all of them on to the streets and behind the wheel at the exact same time it’s easier to mitigate the damage they cause.

And the other side benefit: increased tax revenue for the ever hungry state. Bars will inevitably stay open later and make more sales. Of course, the case could be made that the extended hours will also require greater enforcement and cancel out any increase in revenue. Again, though, I don’t have the statistics to back up either claim although my guess is, even with an increase in enforcement, revenues will still outweigh costs.

In the end, it’s really all about freedom. The libertarian will argue that the state has no business telling private citizens when they may engage in legal commerce. And if alcohol is so dangerous then maybe we should just ban in outright because, you know, that worked so well back in the Roaring 20s.

The Welfare of Capitalism

This is one of the most brilliant commentaries I’ve seen on the inherent benefits of capitalism. The money quote: “Capitalism has its own built in welfare transfer system.”

This is cleverly explained through the example of the cell phone, which cost around $4000 when if first came out in its now much lampooned “grey brick” form in the mid-80s (ironically, the rise of “80s” parties have now driven those same phones from the Goodwill bargain bin and on to ebay for $49 or more.) but can now be purchased it in its much more advanced form, the iPhone 3G, for as little as $39. And this, like many things we take for granted, was only possible because the much maligned “rich” decided to take a bath on a relative piece of garbage. (We all know that waiting even a few months will usually result in not only a cheaper version of a product but also one with many of the “beta bugs” worked out.) This same benefit of capitalism also crushes the incorrect but often argued point that we have more poverty today than, say, in the 50s even though “the poor” among us have access to better health care, housing, transportation and entertainment than even those who were “middle class” just a half-century ago.

Think about this, my more capitalist weary readers, the next time you find yourself excoriating “the rich” or advocating for government-run health care. No competition means no innovation and losers all around.

 

The Tax Boat

(To the tune of The Love Boat theme)

Tax, we’re creating some new.
Come aboard, we’re expecting you.
And tax, our sweetest reward.
Let it flow, it won’t float back to you.
The tax boat,
Soon we’ll be making another run.
The tax boat,
Promises nothing for mostly no one.
Set a course for high taxes,
Our minds on a new romance,
And tax, we won’t hurt anymore.
Give ’em an open smile
At treas’ry’s door.
It’s tax.
Welcome aboard, it’s tax.

Seattle, we’d love to tax you.
Come aboard, our debt needs you to.
And tax, our only way out.
Give us cash. We’ll spend it for you.
Seattle, soon we’ll be asking you for more tax.
Seattle, we are run by lots of no good hacks.
Bring plenty of money.
It will go to worthless things.
And tax, we don’t care if you’re poor.
We need an open bank.
We’ll always need more.
It’s tax.
Welcome aboard, it’s tax.

The Failure of the UN Oil-For-Food Program

UN Emblem "Oil-for-Food" — Office of...

Following the U.S.-led coalition’s liberation of Iraq and the fall of Saddam Hussein’s Ba’athist government, a wealth of information into the dictator’s plans and methods became available. In addition to this valuable information on Iraq, much information on the U.N.’s Oil-for-Food program, which many people had long suspected was not all it was purported to be, was also discovered. This paper will explore what evidence came to light and how it has and will continue to affect the UN’s reputation as well as the reputation of some member states.

The Oil-for-Food Program (OFP), was started by the UN in 1995 as a way of allowing Iraq to sell its oil and use the profits to purchase food, medicine and other humanitarian supplies. It continued until 2003 when the U.S.-led coalition liberated Iraq.

According to US Ambassador to the UN and United States Representative for UN Management and Reform Patrick Kennedy, OFP grew out of the sanctions imposed on Iraq immediately following Saddam Hussein’s invasion of Kuwait in August 1990.  These sanctions, established through UN Security Council Resolution 661, began to lose unanimous support amongst Council members almost immediately as they became increasingly concerned over the apparent humanitarian devastation the sanctions caused and news of the crisis spread throughout the world.

What followed in 1991 were resolutions 706 and 712, aimed at alleviating the suffering by paying for humanitarian aid through the strictly supervised sale of Iraqi oil.  These two resolutions weren’t all that dissimilar to what OFP turned out to be except that protocols managing the program were much more stringent in terms of who Saddam could sell oil to and purchase humanitarian aid from. Likely for this reason, these were never enacted due to the lack of cooperation by Saddam’s regime. In 1995 the Council passed resolution 986, which laid the framework for OFP.

Under the agreement, the Iraqi government maintained authority over much of the program, specifically over contract negotiations with buyers of oil and sellers of humanitarian supplies as well as the disbursement of the humanitarian supplies to the Iraqi population. This portion of the agreement was, not surprisingly, unpopular with many of the UN Security Council member states, including the U.S. and the UK, but was insisted upon by Saddam and supported by other Council members, including France.  The one exception to this was the purchasing and disbursement of humanitarian supplies in the three Northern Governorates of Iraq (an area popularly known as Kurdistan), where the UN carried out these functions.

The Sanctions Committee, created under resolution 661, (a watered down version of 706 and 712 and one that Saddam ultimately agreed to), also known as the 661 Committee, oversaw the implementation of this new program and monitored program member states’ compliance. Decisions were made on a consensual basis. All members of the committee having to agree on actions taken, which often led to problems. When the U.S. became aware of non-compliance and manipulation of the OFP by Saddam as well as other parties, for instance Syria and their lack of control over the Syrian-Iraqi border, which led to a high amount of smuggling of goods banned from entrance under OFP; it raised its concerns before the committee, often with the support of the UK; and although lengthy discussion and debate took place and outside briefings by members of the Multilateral Interception Force (the enforcement arm of the OFP made up of member nation’s military forces) were made, willingness from other member nations, including France, to take action was often absent. Not only were other member nations unwilling to investigate and enforce the stipulations of the OFP, they often advocated for a reduction of the sanctions that were present. These member states’ reluctance to enforce the OFP and their advocating for reduced sanctions is thought to be tied to their “self-serving national economic objectives.”

In short, the OFP was ripe for corruption because of an extreme lack of oversight by the UN, not necessarily through its incompetence but simply because of the way the OFP was set up. Unfortunately, it is unlikely that more oversight could have been built in to the program because of Saddam’s unwillingness to comply. In fact, the first two resolutions aimed at relieving the humanitarian crisis in Iraq, 706 and 712, would have had those added safeguards in place to monitor the program and they were rejected by Saddam’s regime. As it was, after resolution 986, which implemented OFP, was passed, it took over a year of negotiations before Saddam finally agreed, while all the while his people continued to suffer. In addition, following that resolution, nearly all subsequent resolutions dealing with Iraq aimed at reaffirming and strengthening its sovereignty. It would not have been possible to pass any resolutions to the contrary; resolutions strengthening the protocols used to enforce OFP, because of the lack of support by other member nations on the Council, including France.

Some blame for the manipulation and corruption within OFP has also been placed on the companies contracted to carry out OFP operations; among them Lloyd’s Registry of London, Cotecna of Switzerland and Saybolt Oil of the Netherlands. BNP Paribas, the French bank that maintained the OFP accounts has also been questioned. However, this is not necessarily warranted as these companies were only allowed to operate as their mandates from the 661 Committee allowed. They were only authorized to inspect humanitarian supplies ordered through OFP and did not serve as customs officials or border guards. These duties were left up to the Iraqi government. Saybolt was tasked with inspecting outgoing oil shipments, however, again, only shipments authorized under OFP.  They could not seek out oil smuggling operations.

Most of the blame is being placed on the Saddam regime. This, of course, is no surprise. What is surprising is that an almost equal number of accusations have been thrown at the UN, from Secretary-General Kofi Annan on down. One such accusation toward Annan specifically has to do with his apparent questionable ties to the Swiss company Cotecna. His son, Kojo, worked for the company on contract from 1999 onward. What makes this so intriguing is that from the onset of the allegations toward the UN, Kofi Annan has denied any wrongdoing stating that he and his staff were not aware of Saddam using the program to, in essence, launder money made through OFP and use it to purchase goods banned by the program as well as influence those in power in countries like France, Russia and China in hopes of getting those nations’ support in lifting the sanctions passed as part of OFP. This may be the case. What is less likely, however, is Kojo Annan’s statement (and one that would have been altogether unnecessary had he truly not played a role in Conecta’s OFP dealings) that his father had nothing to do with the contract process but that these decisions were made by the contract committee. This is simply false. The OFP was run out of the General Secretariat and Kofi Annan himself signed off on each six-month phase, including the contracts filled. Perhaps Kojo’s involvement with Cotecna was not fraudulent in the sense that he has never been named as one of the people receiving oil vouchers or money from Saddam’s government either directly or as a beneficiary of a company that did, but the alternative is that Kofi was negligent, not reviewing the contracts he was signing off on. Making his lack of involvement even more unlikely is the fact that, not only was he in charge of the program due to his position as Secretary-General, he had also been involved with OFP from its infancy, doing much of the work in meeting with the Iraqi government and setting it up, shortly before he was made Secretary-General.

Allegations of misdeeds do not end with the Kojo-Cotecna tie however. During the final months of OFP it is blindingly obvious that the UN knew of Saddam’s exploitation of the program and only decided to do something about it when it knew its oversight of the program was nearing an end.

In May 2003, shortly before the fall of the Saddam regime, the Security Council voted to end OFP and have all contracts related to the program turned over to the U.S. Coalition Provisional Authority. It gave the Secretariat six months to put everything in order. By the end of its renegotiation with supplier companies of billions of dollars worth of contracts, the Secretariat had cancelled a quarter of them. On its website it listed reasons for many of these cancellations. Examples include the Lebanese welding-machine contractor “unwilling to accept the 10% deduction.” Belgian and Jordanian medical suppliers also refused a “10% reduction.” Sometimes the reasons are not even as clear as that as was the case with the Russian backhoe supplier, who “refused to accept extra fee deduction” or the supplier of “fork lift and spares” who “stated that the supply of remaining parts cannot be cost-effective under the current circumstances.”

In total, the UN cancelled 728 contracts from the OFP due to the companies’ lack of cooperation or simply their non-existence. Some of these were perfectly legitimate but had already been fulfilled. However, most were rejected because the contractors had disappeared, no doubt realizing that the cash cow many of them had been enjoying for the past seven years was now out of milk and that the angry farmer may be closing in on the barn. Examples of these contracts include the Jordanian school-furniture supplier who “does not exist and the person in charge moved to Egypt” or the “vehicle spare parts” supplier from Russia that “could not be contacted despite all efforts.”

In addition to these 728 contracts, another 762 were postponed indefinitely by the UN’s Office of the Iraq Programme because of their “questionable utility.” At first glance, these contracts seem to be useful for humanitarian purposes: medicine from China, medical equipment from France, wheat from Russia; which leads one to wonder if it was not the utility of the items in question but the terms of these contracts negotiated by Saddam and the supplier companies and subsequently allowed by the UN. These cases may seem rather innocuous but they are still not the only evidence of wrong doing by the UN. Perhaps most grievous is the allegation that Benon Sevan, the Executive Director of OFP, received oil vouchers from Saddam, allowing him to purchase oil from Iraq at reduced prices; something similar to a stock option. (Duelfer Report) Given his position and authority over the program it begs the question of what Sevan may have done in return.

So what has all this apparent corruption led to? According to the General Accounting Office, Saddam was able to acquire over $10 billion through manipulation of OFP itself as well as the related lack of enforcement of sanctions. Specifically, he was able to collect $4.4 billion through kickbacks and surcharges and another $5.7 billion through smuggling. In turn, with this money he was able to slowly dig himself out of the military finance hole he had gotten himself into with, first, the Iran-Iraq War of the early 80s, then the invasion of Kuwait in 1990. These two operations cost Saddam a great deal more than he had expected, both in terms of cash spent and troop casualties. After coalition forces pushed him back into relative submission during the first Gulf War his forces were devastated. If he was going to achieve his goals of dominance in the area he needed desperately to regain his military power. If not, Iraq would be at the mercy of many of its neighbors, especially Iran.

According to the Duelfer Report, Saddam had always been concerned about how history would view him and was obsessed with his legacy. He believed that Iraq was the natural and historical leader of the Arab world and he was the next in line of its great leaders like Hammurabi and Nebuchadnezzar. He even ordered the restoration of the ancient city of Babylon and had all the bricks being used imprinted with the phrase “made in the era of Saddam Hussein,” thinking he would be remembered long into the future.

But bricks alone would not build his legacy. To fend off his real and perceived threats, he needed real military hardware in the form of chemical, biological and even nuclear weapons. The much-debated WMDs were never technically found and the search has now been halted. This is simply a technicality though as mountains of evidence of the will and especially the ability, both in the form of facilities and the scientists needed to start the program, were found, according to the Duelfer Report.

One thing to consider in relation to the apparent lack of WMDs is that, while not many Westerners were studying in Baghdad in the 90s, thousands of Iraqis studied in the West. This gave those within Saddam’s regime a leg up on the competition, so to speak.  His scientists and lieutenants could more easily predict how weapons inspectors would operate than the other way around. In addition, the longer searches went on the better at concealing evidence Saddam got. For the UN inspectors it was like playing a game of hide and seek where not only did they not know exactly what they were looking for, the location of it was apt to change frequently.

A specific example of this, according to the Duelfer Report, was the UN’s investigation of the Saddam Regime’s hierarchy and how it related to the delivery of orders regarding the concealment of WMD evidence. Since the inspectors were basing their investigations on Western assumptions they only looked at government bureaus that were directly tied to Saddam (the Republican Guard, the Special Security Organization, etc.) because, to them, it made sense that Saddam would have been giving the orders for concealment. The Saddam Regime did not necessarily operate like this in all circumstances, and even in the cases in which it did, it was able to quickly change that after watching the inspectors work so that they would not uncover any further information, like changing the path of a maze after the inspectors had already entered it.

But the UN cannot take all the blame for OFP.  After all, the UN is only as strong as its member countries and, more specifically, the permanent members of the Security Council. Therefore, much of the blame can be placed on those nations that did not do what they should have as part of the Council to ensure that resolutions, including OFP, were enforced.

Most of this blame rests on France, China and Russia. During Congressional hearings last October, investigators stated that, according to UN Security Council subcommittee minutes, these three nations “continually refused to support the U.S. and U.K. efforts to maintain the integrity” of OFP.  The investigators went on to quote the minutes as stating that companies within these nations “had much to gain from maintaining” the status quo. “Their businesses made billions of dollars through their involvement with the Hussein regime and O.F.F.P.”

Among these companies were such giants as French oil companies Total and SOCAP and the Iraqi-French Friendship Society.

According to former Iraqi deputy prime-minister Tariq Aziz, several French individuals were given oil vouchers in exchange for efforts to lift UN sanctions and oppose US initiatives within the Security Council. (Duelfer Report)

Not only were several businesses allegedly involved in questionable dealings with the Iraqi government, some high-ranking officials were also fingered. According to the Duelfer Report, former French Interior Minister Charles Pasqua reportedly received 11 million barrels in exchange for promoting pro-Iraqi policies within the French government. He publicly denied the allegations but did mention that others within the French government may have been involved.

The connections between the Saddam Regime and the French government may even extend all the way to President Jacque Chirac. Indeed, Saddam and Chirac have had a long relationship. In the 1970s, it was then Premier Chirac who sold Saddam two nuclear power plants, the “first concrete step towards production of the Arab atomic bomb,” according to Saddam himself. In terms of OFP, there are no direct connections between Saddam and Chirac, but the two are tied together through other individuals.  For example, the Duelfer Report cites “a former Iraqi official” as claiming that Iraq gave 14 million barrels of oil to French businessman Patrick Maugein, whom it considered “a conduit to French President Chirac.”

In addition, Iraqi Intelligence Service (IIS) documents recovered by coalition forces state that the Saddam Regime, through the IIS, attempted to influence Chirac through other connected businessmen as well as the official spokesman for President Chirac’s re-election campaign and two of his advisors.

France’s questionable involvement with Iraq doesn’t stop with OFP, however.  Even today the French are marginally assisting the former regime by supporting the Ba’athist Party in exile, which has set up its operations in Paris and is calling itself the resistance in hopes of eliciting a favorable response from French who remember their own “resistance” movement against the Nazis. French Foreign Minister, Michel Barnier has proposed that the Ba’athist Party, which has been outlawed in Iraq, be allowed to participate in any future conferences discussing the future of Iraq.

Investigations into this corruption continue, in particular one being conducted separate from, but authorized by the UN and headed up by former Federal Reserve Chairman Paul Volcker.  Despite any conclusive findings thus far from that commission there are still many things that were uncovered through the House investigation and, especially, the report written for the CIA by Charles Duelfer. From these it is apparent that the UN, at the very least, was clearly not up to the task of managing OFP.

The UN collected a 2.2% commission on every barrel of oil. Not a considerable amount but considering that this money was supposed to be used to fund the monitoring operations, it seems that it was a poorly spent. This is just the beginning and the least of the UN’s failures. Perhaps the biggest failure of OFP was in its inception, the terms under which it would be enforced. These were perfunctory at best, but to be fair, the UN claims that had it been for more stringent oversight, Saddam would never have agreed to OFP (Hearing before House Subcommittee on NSETIR, 10/5/04). This does appear to be true, for even the plan that did end up being administered took nearly a year’s worth of negotiation with Saddam to begin. However, OFP was still a failure and was always destined to be. The UN turned over too much of its power in running OFP to Saddam and the companies and national leaders he dealt with. It failed to perform necessary audits and then, to cover itself from more public scrutiny, kept most of the records – prices and quantity of oil and relief supplies, identities of those buying the oil (who were selected by Saddam, not the UN), bank statements and financial transactions – secret (Duelfer Report).

One of the biggest problems the UN has always had is enforcement power.  Now, unfortunately, corruption can be added to that list and both have chilling examples in OFP.  Perhaps this failure can be viewed as a blessing in disguise however. Hopefully it will lead to reforms within the world body. If not, it is unlikely the UN will survive to see its centennial.

Griswold for Representative – Statement on the Economy

Washington state ranks 48th in the nation in unemployment, 48!  There are still too many people who are without jobs and many more who have given up and moved elsewhere to find work.  We live in such a beautiful part of this country, surrounded by mountains and water.  We are the portal to the Pacific and trade with Asia to the west and Canada to the north. We are not living during the Great Depression and this is not the Dust Bowl.  People should not have to leave their homes to find work in another state.  Businesses should not be driven away by countless regulations, taking many of those much-needed jobs with them.  Something needs to be done and it needs to be done now.