Saturday, August 30, 2008

Olympic frivolity

Sports stadiums, in addition to being costly propositions rarely built with private money, are urban planning killjoys. They're huge, usually in relatively well-used areas, necessitate large amounts of parking, and use a lot of land around the edges for landscaping. They choke off all street life in the immediate vicinity – though the place might be packed in the evenings for games, during the rest of the day, it just takes of the most valuable resource a city has: space. I thought about all of this when I saw the blueprints for London's 2012 Olympic stadiums. They're beautiful pieces of architecture, for sure, but they create these huge voids, and take up what could be very valuable real estate.

Wednesday, August 27, 2008

Russian propaganda vs. truth: a lesson in technique

As an excellent example of a standard Soviet/Russian disinformation campaign, the state-owned RIA Novosti published an article claiming that it was the Georgians who had planned the war a year ago. This is a standard technique to counter criticism of your own misdeeds: manufacture some evidence claiming the same thing of your enemy. It doesn't need to be very credible, but it's enough to create the illusion that the region and conflict are too complicated for you to possibly be able to sort out.

In this case, the disinformation campaign seeks to discredit media reports (such as these two I blogged about earlier) that claim that Russia had every intention of attacking since at least the beginning of the year, and that the Georgian occupation of South Ossetia was just a pretext. The Russia disinformation – that the Georgians were the ones who'd planned the war – is not nearly as credible as the non-propaganda versions, as it's based on information from within the Russian government. The one verified piece of evidence it uses is to mention NATO exercises in the region that were planned a year ago, claiming that this indicates that the war was planned a year ago. This doesn't logically follow since there was no NATO involvement in the war, and Georgians in fact feel that NATO betrayed them. It seems unlike that a war that NATO – with about two-thirds of global military spending – had planned for a year would go so horribly wrong.

Interstate protectionism strangles wind power

The NYT has an article about a large impediment to more widespread wind power adoption: an outmoded and overloaded transmission system. Energy transmission, like just about every other step in the energy chain, is a highly regulated industry in the US, with state governments taking the lead in deciding how the transmission systems should work. Surprise surprise, the states act in irrational ways, and essentially enact protectionist policies, aimed at keeping energy within the state. One consequence of this is that the infrastructure needed to get wind power from producer (the Great Plains region, and especially the Dakotas) to consumer (the densely-populated coasts) isn't getting built:

The cost would be high, $60 billion or more, but in theory could be spread across many years and tens of millions of electrical customers. However, in most states, rules used by public service commissions to evaluate transmission investments discourage multistate projects of this sort. In some states with low electric rates, elected officials fear that new lines will simply export their cheap power and drive rates up.

The problem of interstate protectionism became so bad that Congress stepped in, but with the inevitable backlash:

In a 2005 energy law, Congress gave the Energy Department the authority to step in to approve transmission if states refused to act. The department designated two areas, one in the Middle Atlantic States and one in the Southwest, as national priorities where it might do so; 14 United States senators then signed a letter saying the department was being too aggressive.

I can't find anything about the letter online, but I'd be curious to see how many of those 14 senators are from Great Plains states.

Tuesday, August 26, 2008

Biden on drugs

In continuing with our "on Biden" series, today we look at Joe Biden's views on drugs. All are from except where otherwise linked. First, the good:

  • Supported eliminating the disparity in sentencing between crack and powder cocaine.
  • Supports the idea of drug courts and focus on treatment, and theoretically opposes increased penalties for drug crimes.
  • Recognizes the fact that America's gun problem is largely a drug problem (though he doesn't recognize that it's a drug law problem, not a drug problem).
And the ugly:
  • Coined the term "drug czar" while championing the new office.
  • Against lowering the drinking age from 21.
  • Is proud of having enacted legislation that increases penalties for those caught dealing drugs within 1000 feet from a school.
  • Championed the RAVE Act and its identical eventually-passed boringly-named version, which he snuck through without debate. This anti-ecstasy law (broad enough to be used to persecute NORML) was perhaps spurred by the infamous "holes in the brain" article which alleged that MDMA was highly neurotoxic – i.e., really bad. Only, it turns out the research was bad and the authors had to retract it. Oddly enough, I don't remember Joe Biden ever reconsidering his vote in light of the evidence. Funny how that works.

They follow the standard Democrat line – support specific marginal changes to the way we process criminals, emphasize the treatment part, but leave the bigger picture unchanged.

Monday, August 25, 2008

Fun blog facts

The single largest persistent source of viewers (other than feed readers, of which at the moment I have a grand total of 16) are Google searches for things like "world's largest pot bust." They get this post about the 287 ton hash bust. The largest single source of viewers, though it wasn't persistent, was this site – I'm not entirely sure what it is, but I think its an aggregator about the medicine industry. They get this post about the wonders of medical tourism.

Biden on intellectual property and technology

The more I learn about Joe Biden, the more I see what a stereotypical politician he is. CNET has a piece on Biden's voting record, in which we find out that Biden's been a reliable lackey of the music industry lobbyists. He's urged the Justice Department itself to go after file sharers (as opposed to the music industry footing the court costs), supported legislation making life difficult for internet and satellite radio broadcasters, and was one of four senators invited by the RIAA to its "champagne reception in celebration of the Digital Millennium Copyright Act." In fact, we also learn that Biden was a key supporter of legislation that inspired the creation of the encryption software PGP, whose creator said that it was his legislation "that led me to publish PGP electronically for free that year." On P2P networks he has also shown himself to be a reliable shill, having held hearings in the Senate on the issue and inviting "the Justice Department, RIAA, MPAA, and Microsoft to speak," but not a single ISP or P2P firm.

On net neutrality he's a little more sane (though I don't for a second think the decision was made on its merits – more likely he was just lobbied by the right people), opting not to prohibit ISPs from discriminating between different types of data. Though rather than opposing the idea because of his faith in consumers to pick ISPs with policies that they demand, he is opposing the measure on the grounds that the threat of legislation is enough to keep companies from picking through consumers' content. The correct response to the question would be to point out that the only company to try to throttle content is Comcast, and that they've experienced a huge backlash and have since stopped, and there are no companies that have chosen to emulate Comcast.

Both of these positions are in opposition to Obama's. Obama has hinted that he he's in favor of copyright reform in favor of lessened IP rights for copyright holders, and he's also come out in favor of mandatory net neutrality legislation.

Sunday, August 24, 2008

The folly of Obamanomics

The NYT Magazine this week has a feature article on Obama's economic vision, and the article is a lot less interesting or novel than the author himself imagines. Basically, it rehashes the standard narrative of Obamanomics: acknowledge the good in markets, raise taxes for the richest quintile and lower them for the rest, and then spend massive amounts of money on infrastructure and energy-efficient technology. The author reveals, from the beginning, that this is going to be a standard liberal narrative, and that he isn't going to question the central tenets which underpin American liberal economic thinking:

In its more extreme forms, the Chicago School’s ideas have some obvious flaws. History has shown that free markets aren’t so good at, say, preventing pollution or the issuance of fantastically unrealistic mortgages.

Really?! It's "obvious" that the free market has failed us when it comes to pollution and the mortgage market? Because last I checked, one of the biggest determinants of energy use – transportation – is an almost entirely nationalized industry in the US, its closely-related cousins of land use and construction are highly regulated and 25% nationalized, and the field of energy generation is regulated to the point where efficiency is punished by bureaucracy. And then there is the American mortgage market, which since the middle of the 20th century has been used as a public policy tool, up until today when 40% of all mortgages go through the decidedly anti-market institutions of Fannie Mae and Freddie Mac, including many that turned toxic when the mortgage market collapsed last year.

Admittedly, this is the NYT's David Leonhardt speaking, not Obama. But in the world of American politics and economics, they might as well be one in the same – there are few who will try to refute Leonhardt's statement; even conservatives and liberatarians, whose economic ideas are being attacked, are more likely to try to convince you that everything's not as bad as it seems, rather than try to explain how these supposed market failures are actually failures of the government.

Saturday, August 23, 2008

Romney's VP stock skyrockets

To continue with the other day's topic of prediction markets and what they have to say about the veepstakes, Mitt Romney's stock just recently shot up to way over 50 cents on the dollar. Right before Obama's announcement, Romney was trading on Intrade at about 25. At the moment, the last trade was at 62.2. Considering there's nothing in the news about Romney to propel his stock, it must have been something about Obama's pick that made the markets all of the sudden go crazy over Romney.

Russian journalists await war

As if we need any more proof that the South Ossetian conflict was expected and welcomed by Russia, Radio Free Europe has an article in which a freelance reporter with Reuters notices an odd build-up of Russian journalists in Tskhinvali before the outbreak of hostilities:

Said Tsarnayev stumbled into a war.

A Chechen freelance photographer with the Reuters news agency, Tsarnayev arrived in the South Ossetian capital, Tskhinvali, during the day on August 7. Traveling together with a colleague, Tsarnayev said he planned to take photographs of the environment and natural surroundings in the area for a project he was working on.

Once in Tskhinvali, he discovered a virtual army of Russian journalists at his hotel.

Speaking to RFE/RL's North Caucasus Service, Tsarnayev, a resident of the Chechen capital, Grozny, said the Moscow-based reporters had been sent from various Russian media outlets days earlier, and were preparing to cover something big.

"At the hotel we discovered that there were already 48 Russian journalists there. Together with us, there were 50 people," Tsarnayev said. "I was the only one representing a foreign news agency. The rest were from Russian media and they arrived three days before we did, as if they knew that something was going to happen. Earlier at the border crossing, we met one man who was taking his wife and children from Tskhinvali."

Late that night, armed conflict broke out between Russia and Georgia.

Friday, August 22, 2008

An orgy fit for an Olympian

Every four years, the Olympics happen. But more importantly, every four years there are stories in the press about the notorious orgy-like atmosphere in the Olympic Village. This Olympic season's story (or, at least, the best I've seen) goes to the Times of London. It's long, detailed, has tons of sexual puns and erotic imagery, and even sports a list of hot 2008 Olympians at the end, sorted by medal. But this one also includes an interesting sociological observation:

Before we get to that, however, it is worth noting an intriguing dichotomy between the sexes in respect of all this coupling. The chaps who win gold medals - even those as geeky as Michael Phelps - are the principal objects of desire for many female athletes. There is something about sporting success that makes a certain type of woman go crazy - smiling, flirting and sometimes even grabbing at the chaps who have done the business in the pool or on the track. An Olympic gold medal is not merely a route to fame and fortune; it is also a surefire ticket to writhe.

But - and this is the thing - success does not work both ways. Gold-medal winning female athletes are not looked upon by male athletes with any more desire than those who flunked out in the first round. It is sometimes even considered a defect, as if there is something downright unfeminine about all that striving, fist pumping and incontinent sweating. Sport, in this respect, is a reflection of wider society, where male success is a universal desirable whereas female success is sexually ambiguous. I do not condone this phenomenon, merely note it.

"Locked in an almost permanent attitude of anxiety" vs. "[not] genuine" and "emotionless"

The Guardian has a hilarious article about the facial expressions of the candidates for US president. Obama's face is apparently "locked in an almost permanent attitude of anxiety," but the things they have to say about McCain's are downright creepy:

The verdict on McCain was harsh. The acoustic analysis noted that the Republican's voice was pitched slightly high, and that it remained flat, or emotionless, even while he was talking about sad subjects.

McCain's range of facial expression was just as unvaried. "McCain's facial repertory is very poor," the analysis said. "His smile is often not fully developed, ie his cheek-raising muscles do not participate enough in the expression of positive affect [to be perceived as genuine]."

McBrien put it in terms that were even more stark. "He has a poker face," he said. The problem with the lack of expression, according to McBrien, is that it makes it difficult for an audience to trust the speaker. [...]

The Vox researchers also picked up on one of McCain's tics. The candidate, who made a campaign slogan of his plainspeaking in the Straight Talk Express, has a habit of completely shutting his eyes and slightly smiling immediately before coming out with one of his signature sarcastic comments.

Thursday, August 21, 2008

What do the prediction markets know that pollsters don't?

Sorry to bring up something as profane and childish as electoral politics here (normally I try to hold myself above the usual CNN Airport Network fare), but I've noticed that despite the fact that the polls are showing Obama and McCain in a statistical dead heat, the prediction markets are still betting on Obama by a fairly wide margin. National polls show Obama's lead over McCain narrowing to between 2 and 5 percentage points, but contracts that pay $1.00 if Obama wins are going for about $0.60 on Intrade. It's possible that the polls show the individual state contests playing out so that Obama is way over McCain in the electoral college vote, but I doubt it – seems more likely that the bettors think they know better than the pollsters. And though the polls were taken before McCain's statement about not knowing how many houses he owns, the prediction markets have been at 60% for Obama for a while now. And before you blame immature and small markets for the discrepancy, note that betting volumes are much higher than they were in 2004.

And for those interested in what the markets have to say about Obama's vice presidential pick, Joe Biden's contract is trading at 41.4, Evan Bayh's at 24.2, Tim Kaine's at 12.0, Wesley Clark's at 8.7, and Senator Clinton's at a lowly 12.0. On the Republican side, Pawlenty and Romney are tied at about 25 each.

Wednesday, August 20, 2008

Anarchy on the airwaves

Google has recently launced a campaign to lobby the FCC to free up radio spectrum currently used as whitespace between channels. The main opponents of the move seem to be high-end audio equipment manufacturers, who say that interference would be much more common and difficult to deal with if the space were free to be used by any device.

Ultimately, though, the problem is not insurmountable – technological solutions do exist:

Meanwhile, companies are preparing for the worst. For instance, Lectrosonics is now offering a wider range of frequencies for its wireless microphones.

Until last year, the company's wireless microphones spanned a range of 537 MHz to 768 MHz. Now that a part of that band has been auctioned off, the company has reworked its devices to operate in the 470 MHz to 691 MHz spectrum. It has also added another band, the 944 MHz to 952 MHz spectrum, to the mix.

Those changes haven’t been easy. Over the course of a year, Lectrosonics reallocated engineering resources and spent "several thousand dollars" getting each new product certified by the FCC.

"We have a limited amount of engineering resources and there are hard costs such as FCC licenses that we have had to get," says Winkler.

It's interesting how one of the big costs – FCC licenses – are not reflective of inherent technological issues, but rather the bureaucratic process for allocating spectrum.

Of course, the spectrum itself has no hard limit on use, and can theoretically be divided infinitely. Someone at Intel rebuts broadcasters' claims that allowing the whitespace between channels to be used would damage reception of existing channels by pointing out that the aforementioned audio devices already use the spectrum in question (though broadcasters obviously have bigger reasons to fear competition). The infinite divisibility argument and the idea that individuals can successfully defend their airspace using technology without resorting to top-down allocation are the rationales behind the open spectrum movement.

Google has reason to advocate such a policy, since they are very strong on content but are choked by the monopoly on wireless delivery in America and abroad. Obviously they believe that small amounts of the existing bandwidth, if left free to anyone to use, could be successfully developed and eventually used by Google to push content to consumers while bypassing the traditional wireless gatekeepers. Many hardware companies supports open spectrum, as increasing the ubiquity of wireless communications would increase demand for wireless devices and software.

Saturday, August 16, 2008

BTC pipeline is "dead," says Russian

From the increasingly interesting Turkish daily Hürriyet, an oddly candid admission of Russia's intentions with the BTC pipeline:

An adviser to the Russian parliament also claimed the closed pipeline would not be opened again and declared the line is "dead."

"The world and countries in the region have seen that not NATO, but Russia is the only one who could secure the energy routes," Alexander Dugin, international politics advisor to the Russia's Duma, told Turkish Cumhuriyet daily.

"In this context, regarding Turkey's energy politics, it should be said that the BTC is not running at the moment and it will not run again."

Friday, August 15, 2008

Russia planned attack well before Georgians entered South Ossetia

From Radio Free Europe comes an article entitled "Did Russia Plan Its War In Georgia?" in which the author cites a Russian military analyst with purported links to the Russian military as saying that Russia had planned the incursion into Georgia since April, when Georgia and Ukraine were denied entry into NATO at the summit in Bucharest:

Before the guns of August, there were the maneuvers of July.

Less than one month before Russia's armed forces entered Georgia on August 8, they held massive military training exercises in the North Caucasus involving 8,000 servicemen and 700 pieces of military hardware. [...]

"A decision was made for the war to start in August. The war would have happened regardless of what the Georgians did. Whether they responded to the provocations or not, there would have been an invasion of Georgia," Felgenhauer says. "The goal was to destroy Georgia's central government, defeat the Georgian army, and prevent Georgia from joining NATO." [...]

April – the month in which Felgenhauer claims Russia made its decision to invade – was also the month when the NATO military alliance declined to offer outright a Membership Action Plan (MAP) to Georgia and Ukraine at its annual summit in Bucharest.

And Felgenhauer isn't just speaking retrospectively – a month ago, he warned that something like this might happen:

"I am afraid that there is a very strong possibility that military activity will happen this year, probably in the next month," Felgenhauer told RFE/RL's North Caucasus Service. "We could have a full-scale military conflict."

Andrei Illarionov, former Putin adviser turned critic, echoed the same thoughts, saying that the invasion "had been long prepared and successfully executed."

A diplomatic move that took place over a year ago also provides evidence that Russia was up to no good:

For now, there is no smoking gun to prove Russia methodically plotted its incursion into Georgia. But the first sign that Russia might seek a military advance on Georgia came more than a year ago – in July 2007, when Moscow withdrew from the Conventional Forces in Europe treaty, an amended Cold War-era document setting limitations on troops and military hardware between the Atlantic and the Ural Mountains.

There are some who are so reflexively anti-American in the foreign policy realm (a subset which, unfortunately, includes a lot of anti-interventionist libertarians) that they uncritically accept the Russians' narrative, and don't question the Russians' own interventionist stance. But for those who consider the facts, it seems obvious that Russia very much wanted this conflict, and that South Ossetia was nothing more than a pretext. Georgian malfeasance notwithstanding (though Russia's number of 2000 South Ossetian citizens dead seems highly exaggerated), Russia didn't give two shits about the South Ossetians or the Abkhazians, but was more than willing to capitalize on their plight to achieve its ultimate goal of scaring the West out of the Georgian pipeline business.

Medical tourism and its benefits

The Economist this week has a pretty long article on medical tourism – its increasing popularity and quality, benefits for both rich and poor nations, and possible objections people have raised. The premise behind medical tourism is like that of all globally-traded goods: since poor nations can offer qualified doctors at lower prices than in Western nations, consumers should choose their services.

While in the past consumers of treatment overseas were the uninsured looking for bargains, nowadays institutes and insurance companies are getting in on the game. The Economist cites two companies – including one with 27,000 workers – that are starting to offer overseas treatment options to cut costs. And it also talks of two insurance companies – Aetna and Blue Cross and Blue Shield of South Carolina – that are offering customers the choice to go to first-class medical centers in Singapore and Thailand, respectively. And the growth for the industry is expected to be big: whereas last year 750,000 Americans traveled abroad for medical services, that number could reach 10 million by 2012.

And though some fear that this sort of medical segragation in poorer countries (wealthy capitalist trading city-state Singapore not withstanding) will lead to a sort of internal brain drain, the network benefits of having more skilled workers within the country are also worth taking into account. As is the possibility of native doctors returning from working in the West, and bringing their money and expertise back with them.

And then there are the benefits to Western countries seeing the flight of the "medical refugees." Western medical establishments will be more exposed to the sort of competition they lack at home, spurring them to lower prices and raise the quality of their service. That is, if government regulation of insurance providers doesn't overpower the desire of consumers and insurance companies to save money without necessarily sacrificing quality.

Mass. citizens almost certain to decriminalize marijuana

Here's something you don't see every day: Massachusetts residents, according to a poll, are poised in November to vote 72% in favor of decriminalizing marijuana. What this is entails is removing criminal penalties as a punishment for being caught with less than an ounce of pot, and making instead making it a civil matter and fining the possessor $100, in addition to seizing the weed.

A similar measure proposed by Mass. Democrat Rep. Barney Frank and Texas Republican Rep. Ron Paul will be put to a vote in the US House of Representatives, but is almost certain to die without much support. Interesting how outcomes differ when you put issues to a direct vote, and when you use elected representatives as a proxy will of the people. Makes you wonder how representative our representative democracy really is.

Stratfor on the not-so-PKK bombing

Right before the outbreak of the war in South Ossetia, a respectable private intelligence agency, Stratfor*, wrote about the PKK's attack on the Baku-Tbilisi-Ceyhan oil pipeline earlier that day. It notes all the reasons why it seems unlikely that the PKK ordered and carried out the attack by themselves (emphasis mine):

Although the PKK has explicitly threatened attacks on the pipeline since 2005, the group has focused its attacks instead on a natural gas pipeline between Iran and Turkey that runs straight through some of southeastern Turkey’s most volatile areas, making it far more vulnerable to attacks than the BTC pipeline. For the PKK to carry out an attack on the BTC, the group would have to expand beyond its usual area of operations. That could prove difficult at the present time, however, considering the amount of pressure the militant group has been facing since Iraq’s Kurdistan Regional Government began cooperating with Turkey and the United States in early 2008 in uprooting PKK safe havens in northern Iraq. But the PKK also has a desire to make a strong comeback after spending the last several months under pressure from Turkish forces, and striking the BTC pipeline would certainly be a coup for the group. The PKK also might look to its former allies in Moscow for support at a time when Russia is seizing upon every opportunity to use energy resources to apply political pressure on Europe.

Such attacks would not come without risks, however. A “success” would likely be immediately followed by a military crackdown the likes of which the Kurds have not suffered since the height of Turkish-PKK clashes in the 1990s.

This article was published before anyone knew how the Russian-Georgian conflict was going to play out. But in retrospect, it happened right when Moscow would have wanted it to happen. Two crisis events – the PKK bombing and a Russian invasion of Georgia – would stick in Western investors minds, and make them seriously think twice about the risk inherent in building new pipelines through Georgia to bypass Russia. And by using the PKK (which had ties with the USSR) as a "subcontractor" Russia doesn't risk raising the ire of the West.

* The site is subscription-only, but it allows you to see articles if you click a link from Google. So, do a search for the title of the article and click on the link from Google's search results page. Sorry, Stratfor!

Thursday, August 14, 2008

Georgian pipeline deathwatch

This morning I wrote about Western oil firms fleeing from Georgia, and now, the Nabucco natural gas pipeline is in jeopardy, according to the Christian Science Monitor. Though the pipeline doesn't go through Georgia, it is a westward expansion through Turkey of the Baku-Tbilisi-Erzurum pipeline (BTE, not to be confused with its oil counterpart, the BTC pipeline), which is already built and flows through Georgia, and so would be vulnerable if the BTE pipeline were interrupted.

Russia Today (a state-owned Russian news organization) reports, citing industry analysts, that "Europe and America will drop Georgia from a new oil and gas project" after the recent scuffle in Georgia. And who, conveniently enough, is ready to fill in the void left by the likely cancellation of the Nabucco pipeline? Russia, of course:

Rival Russian gas pipeline projects South Stream and Pre-Caspian are ready to fill the gap. Konstantin Batunin, Oil and Gas Analyst at Alfa-Bank says they are more certain than the alternatives.

"Those projects being pursued by Russia they have a future. But all those projects involving Georgia they used to be kind of vague in the past, now they're getting even more vague."

Being from a biased state news organization, the author of the article says that "President Saakashvili's erratic behaviour is wiping out Tbilisi's strategic and geographic advantages." But it's quite obvious that this is Russia's desire and Russia's doing, as they've been trying to provoke a Georgian invasion of South Ossetia or Abkhazia for months.

The West flees from Georgia, Russians achieve their goal

There are two major energy pipelines owned by non-Russian foreign consortia running through Georgian territory: the Baku-Tbilisi-Ceyhan pipeline, and the Baku-Supsa pipeline. While the former pipeline had been shut down coincidentally a few weeks before the recent fighting began (supposedly because of sabotage by Kurdish separatists, but I have my doubts), the Baku-Supsa pipeline was still operational. And though the pipeline was not damaged in the fighting, BP (the operator) has shut down the line as a "security precaution."

From the NYT, analysts and oil bosses believe the incident has destroyed any chance of more energy pipelines in Georgia:

“It is hard to see through the fog of this war another pipeline through Georgia,” said Cliff Kupchan, a political risk analyst at Eurasia Group and a State Department official during the Clinton administration. “Moving forward, multinationals and Central Asian and Caspian governments may think twice about building new lines through this corridor. It may even call into question the reliability of moving existing volumes through that corridor.” [...]

But Mr. Verrastro, a former senior executive with Pennzoil, said it would be very hard now to build a new Western [natural gas] pipeline.

This was Russia's intention from the start: to destabilize Georgia and make foreigners think twice before investing money in Georgia, an alternative route for directing oil and natural gas across the Caspian Sea without going through Russian territory. Russia didn't need to damage actual infrastructure (though it looks like they might have at least tried in both Poti and the crucial BTC pipeline) – all they needed to do was increase the risk premium that investors saw in Georgia, and their goal is achieved – to channel all the oil and natural gas they can through their own territory.

This is all part of the New Great Game, a fight between Russia and the West over control of Central Asia's increasingly important energy reserves. Russia has been quite active in the Caucasus, fomenting tension that will scare off Western investors, such as its recent antics in Nagorno-Karabakh – arming and encouraging both the Armenians and Azerbaijanis, hoping that they'll eventually go to war over the disputed territory. Such a war, like the current one in Georgia, would surely set back Western energy companies' plans to use the countries as energy conduits to avoid Russia.

Wednesday, August 13, 2008

Russia, the PKK, and the South Ossetian energy war

Apparently I'm not the only one who has doubts about the supposed PKK sabotage of a Turkish section of the Baku-Tbilisi-Ceyhan pipeline a few weeks ago. Enis Berberoğlu, in the high-circulation Turkish daily Hürriyet, writes (through a terrible translator) of his own suspicions that the PKK – supposed attackers of the pipeline – is a "subcontractor" of Russia, working to destabilize the BTC pipeline. Though the article's light on evidence (not uncommon in east-of-Western-Europe news organizations), it recalls a 1998 press conference, when the military wing of the PKK declared its opposition to the BTC pipeline project, then in the planning stages. Also joining Berberoğlu in his accusations of Russian involvement in the PKK's anti-pipeline actions is Hürriyet's editor-in-chief Fatih Çekirge, who also believes that the pipeline sabotage was not "a simple terror attack," but rather "a by-product of an international war on energy security," undertaken by Russia with the PKK as a mere proxy.

Massive construction socialism in the US?

Over at RealClearMarkets, Steven Malanga has an article up about the declining fate of unions and their lack of hope in an Obama presidency. The article is all fine and good, but this one sentence struck me (emphasis mine):

Even though government controls about 25 percent of all construction in the country, in the last 30 years, according to research by economists David Macpherson and Barry Hirsch, unionization in the construction industry has declined by nearly two-thirds to just 14 percent of all workers, from 38 percent.

The government controls a quarter of all new construction?? Wow! Since RCM obviously isn't a fan of web 2.0-style willy-nilly linking and citation (unlike, say,, which cites as fastidiously as Wikipedia), there is no source in the article. There is also no contact information for the author, either on or the page of his other employer, the Manhattan Institute. I've e-mailed the editors at RCM asking for a source, and if I get an answer back, I'm sure I'll write more about this – I knew that the construction industry is highly regulated by the government (in rather prosaic but influential ways, like zoning laws and minimum parking regulations), but I had no idea that they had such a direct role. Unless I'm misunderstanding what the author means by "controls."

Empty seats and hotels in Beijing

According to the Washington Post, there are plenty of empty seats at the events in Beijing, despite the mad rush to acquire them in the first place. Also, more startlingly, even the hotels are empty:

Others said the more strict visa restrictions in place this year could be keeping foreign ticket holders away. Across Beijing, hotels and tourist sites are reporting below-average attendance for August. Many of the foreigners in Tiananmen Square, under tight security for the Games, are not individual tourists but part of Olympic delegations.

"Business is worse than at this time last year," said a receptionist at a 22-room hotel in Beijing's Chongwen district, where rooms cost $28 a night. "It's the season for traveling and last year the hotel was full. The Olympics should have brought business to Beijing, but the reality is too far from the expectation."

What d'ya know – people don't like putting up with police states!

More on not-so-economically-stimulating Olympic games here, with the complete Olympics archive here.

Tuesday, August 12, 2008

British anti-drug director for legalization

Sorry for the slew of drug-related posts, but this one was just too good to ignore. From the Guardian:

A former senior civil servant who was responsible for coordinating the government's anti-drugs policy now believes that legalisation would be less harmful than the current strategy. Julian Critchley, the former director of the Cabinet Office's anti-drugs unit, also said that his views were shared by the "overwhelming majority" of professionals in the field, including police officers, health workers and members of the government.

He also claimed that New Labour's policy on drugs was based on what was thought would play well with the Daily Mail readership [ed. note: like Fox News in the US], regardless of evidence of what worked. Downing Street policy advisers were said to have suggested stunts such as sending boats down the Thames to catch smugglers to coincide with policy announcements. [...]

He said that his views were widely held in the government but rarely expressed in public. "I think what was truly depressing about my time in UKADCU was that the overwhelming majority of professionals I met, including those from the police, the health service, the government and voluntary sectors held the same view: the illegality of drugs causes far more problems for society and the individual than it solves. Yet publicly, all those intelligent, knowledgeable people were forced to repeat the nonsensical mantra that the government would be 'tough on drugs', even though they all knew the government's policy was actually causing harm."

Russian-instigated cyberwarfare

Aside from the actual war in Georgia, Georgian servers have been subjected to a denial of service attacks which have taken them offline. While DOS attacks are difficult to trace, there is one hint that the attacks came from hackers associated with the Russian government: they started well in advance of the hostilities. According to the NYT, the attacks began as early as July 20, whereas the on-the-ground hostilities didn't start until earlier this month. While it would have been conceivable that the hackers were unaffiliated with the government if the attacks merely coincided with the hostilities, the fact that they predated them leads me to believe that someone with foreknowledge of the fighting orchestrated them. While Georgia and Russia have been facing off for months know, and hostilities have been escalating all year, it seems like a very strange coincidence that the cyberattacks stated so shortly before the start of actual war.

The cyberattacks on Georgian governmental and nongovernmental websites are the second major coordinated incidents, the first being the attacks last year on Estonian servers coinciding with the relocation of a monument to Soviet troops in Tallinn. The Russian government was also blamed by some during that incident, and this revelation about the attacks on Georgian servers makes it seem more likely that the Estonian attacks were also triggered by the Russian government.

Tripping with cancer

The Guardian has an article on recent experiments with hallucinogenic drugs being conducted by scientists, basically the first since the 1970s. LSD for some reason had a very negative reception when it first because popularized, as did MDMA (ecstasy) later on. But what's striking about the trials is not what they're studying, but that they're studying the exact same things that were being studied over three decades ago. That is, because of the restrictions placed on researchers and the government's quasi-monopsony power over scientists through research grants, this promising area was left untouched for a very long time. The ailments that hallucinogens might help are mainly in the psychological field – the article focuses on the post-trip clearness that terminal patients feel after being given a dose of either LSD (acid) or psilocybin (magic mushrooms). It's pathetic that the drug scare has taken this long to get over among the medical establishment, let alone among politicians and voters.

Monday, August 11, 2008

Thoughts on the conflict in Georgia...

So I'm sure you've all heard about it and read about it, but I thought I'd boil it down to a few essential points, sorting out blame and teasing out the causes of the war.

  • South Ossetians and Abkhazians definitely do want to secede from Georgia, without a doubt. If it came down to being with Georgia or being with Russia, and independence weren't an option, they'd take Russia in a heartbeat. Apparently bitterness over what Stalin (a Georgian native of Gori) did to the place is placed on the Georgians, not the Russians.
  • It's debatable who made the first "move," but it seems pretty obvious that Russia set a trap for Georgia, and they fell for it. Russia began signaling in the beginning of the year that it was going to press the issue of Abkhazia (another pro-Russian de facto independent region within Georgia), intervening more heavily in the affairs of the two breakaway republics, and in April shot down an unmanned Georgian drone over Abkhazia. Russia started building up its forces in Abkhazia beyond the limits set out in a UN treaty, and before you know it, the war was on. Georgia really blundered when it shelled the South Ossetian capital of Tskhinvali – whether or not they committed atrocities against civilians is debatable, but regardless of the truth, it gave Russia a propaganda tool, and an ostensible excuse for further action against Georgia.
  • The Russians way overplayed their hand by attacking Gori – a city without a pro-Russian secessionist movement. They further proved (as if it needed to be said) that the war wasn't about preventing the Georgians from massacring civilians when they headed for Tbilisi (it remains to be seen if they'll reach it) and occupied about half the country along the way. To make matters worse, the Russians are still denying that they've moved outside of South Ossetia, a tacit admission that it would be illegitimate to take the war any farther.
  • None of this would have happened had Georgia been let into NATO. As a NATO member, the US would have been obliged to defend Georgia against a Russian invasion, and Putin isn't suicidal enough (unlike Georgia's Saakashvili, apparently) to go to war with the US. Regardless of whose side you're on, it's tough to deny this.
  • Ultimately, it's all about the oil. The Georgian military as it relates to possible atrocities committed in South Ossetia has no stake in the Baku-Tbilisi-Ceyhan oil pipeline that the Russians have been bombing, and same deal with the port of Poti, through which a lot of oil flows. In attacking these targets, the Russians have proven that everything else was a pretext, and what they really wanted was to ensure that Russia continued to have a monopoly on delivering energy resources to Europe from the east. Make no mistake: Russia does not care about the South Ossetians or the Abkhazians, and is only using their plight as an excuse to further its energy interests. If they truly cared, they would have been careful not to touch Georgia's energy resources so as to prove to the world that they were interested only in the welfare of the Ossetians. Compare what's happening in the Georgian secessionist republics to the lack of action in Transnistria, a pro-Russian enclave in Moldova. The reason? There's no oil, or oil pipeline, in Moldova.

Iraq: capitalism gone wild?

To respond to Naomi Klein's thesis about Iraq being a playground for neocons' free market fantasies (which she links, however implausibly, to no-bid government contracts), the NYT has an article about the rising levels of statism and anti-market policies within Iraq. Since 2005 the number of Iraqis on the government's payroll has almost doubled to 2.3 million. The percentage of working Iraqis "in the public sector" has risen from 31 to 35% in the same period, with 40% being the number in Saddam's day. I'm not sure if the difference comes from an expanding "labor force," or if "public sector" is a broader category than "government employees" – the article isn't clear.

Though the article blames the lack of free market investment in the lack of infrastructure, it seems more plausible that violence and a poor strategy of privatization (such as woefully imperfect privatization like that used with highways, which moves the situation ever so slightly but doesn't involve more fundamental economic and political reforms) are the cause of the low rates of investment.

More on my hate-hate affair (because I'm sure that she's aware of my existence, so popular as I am) with Naomi Klein here.