Author: Sam Koritz

In Backtalk:

Monica Benderman announces the establishment of the Kevin Benderman Defense Committee’s Web site: BendermanDefense.org.

John Mayew suggests that we write to our elected representatives in support of Sibel Edmonds, while T. Tunney says that letter-writing is futile.

Kent Johnson: Bush is the American Robespierre.

Don Bacon, of the Smedley Butler Society, thinks Bush doesn’t care who runs Iraq – it’s all about war-profiteering and controlling the oil. “Scheherazade” agrees that oil is a motivator but suggests that the U.S. has intentionally empowered Iraq’s Shias as a counterweight to the Saudi Wahhabi Sunnis.

Mohamed Shukri defends Islam’s treatment of women.

And more…

In today’s Backtalk:

Carl Webb, a soldier protesting the Iraq Stop Loss Program, announces his new website: CarlWebb.net.

Monica Nouwens seeks Iraq veterans in southern California for her documentary: monicano@earthlink.net.

Tim Gillin continues the “peak oil theory” discussion: Why are Iraq hawks driving Priuses?

Michael Austin directs a reader to AWC’s quotes archive.

Phil Crincoli and Sam Koritz discuss the politics of retracted news reports.

Justin Raimondo and Nebojsa Malic reply to critics.

Paul Craig Roberts replies to William S. Lind’s relatively optimistic "The Dangers of Abstract Nationalism" and asks, "…What becomes of the American police state that the war on terror has put in place? … How do we get rid of it in the event the new nationalism deflates as Bill Lind suggests?" Abstract nationalism or fascism? Ian Bell reminds us of Mussolini’s definition of the latter: the merger of state and corporate power.

It turns out that people think conflicts of interest don’t much matter. “If you disclose a conflict of interest, people in general don’t know how to use that information,” George Loewenstein, an economics professor at Carnegie Mellon, says. “And, to the extent that they do anything at all, they actually tend to underestimate the severity of these conflicts.”

Usually, conflicts of interest lead not to corruption but, rather, to unconscious biases. Most analysts try to do good work, but the quid-pro-quo arrangements that govern their business seep into their analyses and warp their judgments.

“People have a pretty good handle on overt corruption, but they don’t have a handle on just how powerful these unconscious biases are,” Loewenstein says.

To test the idea, Loewenstein and his colleagues Don Moore and Daylian Cain devised an experiment. One group of people (estimators) were asked to look at several jars of coins from a distance and estimate the value of the coins in each jar. The more accurate their estimates, the more they were paid. Another group of people (advisers) were allowed to get closer to the jars and give the estimators advice. The advisers, however, were paid according to how high the estimators’ guesses were. So the advisers had an incentive to give misleading advice. Not surprisingly, when the estimators listened to the advisers their guesses were higher. The remarkable thing was that even when the estimators were told that the advisers had a conflict of interest they didn’t care. They continued to guess higher, as though the advice were honest and unbiased. Full disclosure didn’t make them any more skeptical.

In the course of the experiment, Loewenstein discovered something even more startling: that disclosure may actually do harm. Once the conflict of interest was disclosed, the advisers’ advice got worse. “It’s as if people said, ‘You know the score, so now anything goes,’ ” Loewenstein says. Full disclosure, by itself, may have the perverse effect of making analysts and auditors more biased, not less.

Obviously, we shouldn’t keep conflicts of interest secret. But revealing them doesn’t fix a thing. To restore honesty to analyses and audits, you need to get rid of the conflicts themselves.
http://www.newyorker.com/talk/content/?021209ta_talk_surowiecki

An official US audit provided evidence yesterday of widespread corruption in postwar Iraq, finding that L. Paul Bremer’s occupation authority failed to keep track of nearly $9,000,000,000 in reconstruction funds. The critique added to warnings from US and international auditors about weak financial controls in Iraq, and growing evidence of cronyism and fraud.
http://www.guardian.co.uk/Iraq/Story/0,2763,1403034,00.html

President Bush awarded the Presidential Medal of Freedom, the nation’s highest civilian honor, to former CIA director George Tenet, who told Bush it was a “slam dunk” that Iraq still had weapons of mass destruction, and L. Paul Bremer, who presided over the first 14 months of Iraq reconstruction.
http://www.washingtonpost.com/wp-dyn/articles/A63623-2004Dec14.html

Commentator Armstrong Williams was paid $241,000 by the Education Department to promote Bush’s education policy. Columnist Maggie Gallagher received $21,500 from the Health and Human Services Department to work on the president’s marriage initiative; syndicated columnist Michael McManus received about $4,000, and his group Marriage Savers $49,000, to work on the program. http://seattletimes.nwsource.com/html/nationworld/2002164731_pundits30.html

Halliburton has the largest number of Iraqi reconstruction contracts. It was the Pentagon’s No. 7 overall contractor in 2003, up from 37th place in 2002. In Iraq, The U.S. Government Accountability Office said Halliburton overcharged the government by more than $165,000,000. The agency said the company had charged three times what the Defense Department spends to send gasoline into Iraq.
http://www.iht.com/articles/530577.html

Halliburton is still making annual payments of up to $1,000,000 per year to its former chief executive, the vice-president Dick Cheney.
http://www.guardian.co.uk/Iraq/Story/0,2763,912515,00.html

High-level government officials engaged in criminal, terrorist-related conduct, jeopardizing thousands of American lives to protect foreign business and diplomatic relations.
http://www.antiwar.com/edmonds/?articleid=3230

The Defense Policy Board, a group of outside advisors to the Pentagon, got a classified presentation from the super-secret Defense Intelligence Agency on crises in North Korea and Iraq. Three weeks later, the then-chairman of the board, Richard N. Perle, offered a briefing of his own at an investment seminar on ways to profit from possible conflicts with both countries. He also, reportedly, solicited money from a Saudi who was seeking to influence U.S. policy on Iraq.
http://www.commondreams.org/headlines03/0507-03.htm

At least $1,000,000,000 made its way from the Saudis to the Bush-allied companies and institutions. The bin Laden family’s Texas money manager, James Bath, invested in Arbusto, a company founded by George W. Bush. When George W. was investigated by the S.E.C., Robert Jordon (James Baker’s law partner) helped him beat the rap; when Bush became president, Jordon was appointed ambassador to Saudi Arabia. George H.W. Bush invested in the Carlyle Group, a major defense contractor, and became a member of the company’s Asia Advisory Board. Saudis close to Prince Sultan, the Saudi defense minister, were encouraged to put money into Carlyle as a favor to the elder Bush. Under the leadership of ex-officials like former Secretary of State (and Carlyle Senior Counselor) James Baker and former Defense Secretary Frank C. Carlucci, Carlyle developed a specialty in buying defense companies and doubling or quadrupling their value. When relatives of 9/11 victims sued the Saudi Defense Minister, Baker’s law firm to defend him. George W. Bush served on the board of directors for CaterAir, a company owned by the Carlyle Group. The 27 classified pages of a congressional report about Sept. 11 describe direct, specific links between Saudi officials, two 9/11 hijackers and other potential co-conspirators.
http://www.michaelmoore.com/warroom/f911notes/index.php?id=17
http://www.michaelmoore.com/warroom/f911notes/index.php?id=18
http://www.michaelmoore.com/warroom/f911notes/index.php?id=19
http://www.michaelmoore.com/warroom/f911notes/index.php?id=20

Also see “Imagine Accountability.”

I received some comments on “The Economics of Oil.” T. Gillin wrote:

There is another dimension to the peak oil debate, at least insofar as foreign policy is concerned. Whether or not “peak oil” or more “price elastic” views of the oil supply situation is “right” or “wrong,” there is also the issue as to divining what the U.S. national security managers think the real situation actually is.

There doesn’t seem to be much publicly available material around to help us figure this out. Most commentators seem to be just guessing what they think is in Pentagon heads. Even former “insiders” like Karen Kwiatowski don’t seem to offer any insights here.

There is just no guarantee that national security managers will be operating within a realistic energy economics paradigm. History is rife with wars being pursued based on flawed economic advice. Look at the dubious attractions of the much-fought-over China market. Most of the foreign combatants always did more trade with each other than they ever managed to wangle from the Middle Kingdom.

I suspect that in a field where opinions are radically divided between the experts as to what the realistic energy economics paradigm actually is, responsible national security planners would probably choose the worst case scenario. So maybe peak oil theory, whether it is true or not, is behind Pentagon strategy after all.

It is possible that the neo-cons (despite the alleged faith in free markets) are drinking from the same well as the greens (who more or less reject any kind of market-based economic thinking as a matter of principle). It is a reasonable hypothesis to assume that the neo-con “faith” in free markets is superficial, especially when you consider their “Cold War liberal” roots. This faction has definite social democratic and interventionist heritage. So maybe the neocon “faith” in markets is similar to the proverbial Sunday morning Christian, loudly proclaiming his faith in Church but forgotten Monday to Friday.

Donald Losman has pointed out that well before the current Iraq war the U.S. was spending more on “defending” Persian Gulf oil than they were worth to the US at least when you count the cost of what the U.S. actually imports from the region. The same Donald Losman has pointed out that previous National Security Strategies, before the current pre-emptive war doctrine, i.e. those issued during the Clinton era, explicitly added “economic goals” like energy security to the Pentagon’s mission statement.

It is possible that what Losman is reporting here is an unpublicized revival of mercantilism by the U.S. Government, alternately we may be seeing the “military industrial complex” trying to find a new post-cold war justification. This may even turn classical theories of imperialism on their head. Instead of economic demands driving military imperialism, the imperialists are looking for economic sponsor to justify their expenditure levels.

I am old enough to recall that back in the 1970s OPEC oil crisis (which Losman has pointed out barely impacted the U.S. GDP — see pdf file here) even as ardent a defender of free trade as Milton Friedman was prepared to recommend a temporary tariff on OPEC-sourced oil imports as a means of discouraging dependence. Regardless of the validity of peak oil versus price elastic theories, a targeted tariff can be justified on strategic grounds. This would seem to me to be a fairly elegant response to the current situation, yet few seem willing to revive it.

Sam Koritz: I agree that bogus beliefs about oil economics – among other things! – influence foreign policy (see the 2nd half of “The New Energy ‘Crisis’ and Iraq“). My view is that all sorts of nonsensical ideas, some sincerely believed and some not, are used to justify government aggression. The natural tendency of those with power is to weaken restraints on that power. Leaders are often willing to sacrifice personal wealth or popularity to this end but, as Robert Higgs points out in “The Iraq War – A Catastrophic Success,” many of the initiators of this war have personally benefited from it. The active, ongoing limitation of executive power-grabbing is central to the successful functioning of political systems. (See “Common Denominator” by Nicholas Thompson about the judiary’s role – then see Simon Jenkins’ “I never thought I’d say this, but thank you to the Lords, the Libs and the law” for an example.) I don’t see how an oil tariff would help. Continue reading “Economics of Oil, Part 2”

I read the following passage in David D. Friedman’s Hidden Order: The Economics of Everyday Life (published in ’97):

In the previous discussion, we were considering a pure depletable resource — a resource whose price was entirely determined by its limited supply. Consider at the other extreme, a resource of which only a limited amount exists but for which production costs are substantial and for which that “limited amount” is very large compared to the quantity demanded at a price sufficient to cover the cost of production. The amount is so large that technology, law, and political institutions will have changed beyond recognition long
before the supply is exhausted.

Under those circumstances, saving the good now in order to sell it when supplies run short is not a very attractive idea — before that happens we may have stopped using it, the owner may have been expropriated, or the world may have ended. Changes in its price over time will be almost entirely determined by changes in production cost. The good is, strictly speaking, depletable, but that fact has no significant effect on its price. The pattern of oil prices over the past ninety years or so suggests that that may well be how the market views petroleum.

This reminded me of my arguments, months ago — on this blog and in Backtalk — against the Peak Oil Theory (POT). Curious about the present level of POT’s popularity I checked Google News and found that in the past few days POT has been mentioned in articles on numerous dissident sites, including Axis of Logic, Al-Jazeerah, ProgressiveTrail.org, From the Wilderness, Slashdot, DisInfo.com, CounterPunch, Znet, Common Dreams, AlterNet, Mother Jones, and Washington Dispatch. Two Indian news sites also mentioned POT but no mainstream Western sources did. In this case, I think the mainstream is getting it right. IMO, the relatively high current oil prices are due to political chaos, cartel decisions (possibly), and dollar inflation (depite the Iraq invasion, the euro price of oil has risen little; the prices of gold and real estate have risen with the price of oil but neither gold nor real estate is being consumed) — not due to oil’s peak passing.

Chris Nelder’s GetRealList blog has a good selection of pro-POT articles: here.

Not exactly on-topic, but here are a couple of articles about increasing fuel efficiency from the The Economist‘s Technology Quarterly: “The Rise of the Green Building” and “Plugging in, at Last.”

For previous blog and Backtalk debate on POT, click here.

The “bombs-and-Jesus crowd” (Hunter Thompson’s decade-old description) – whose heart is in Dixie – has become the decisive voting bloc in American politics.

For nearly a century after the civil war Dixie voted solidly Democrat until a magic bullet in Dallas killed the last Yankee king and broke the spell. Soldier/ spy Bush traded New England for Texas, followed by millions of others, filling the south with voters. In 2000 and 2004 every former Confederate state supported the lad who was born to be king, while he lost the rest of the country in a landslide. Do the math: In last month’s election Bush Jr. received 100% of Dixie’s (142) electoral votes but only 36% of the non-Dixie states’ (396) votes.

As antiwar Republicans like to point out, the Democrats have been the war party, so why hope for change? Because of the change in demographics: the Dems were arguably the more warlike party when they were the Dixie party (and the chief Dem warmongers – Wilson, Truman and Johnson – were southerners). They no longer are.

Since the Kennedy assassination, three Democrats have won the presidency; all three were southerners who ran against non-southerners. The pattern is clear. Antiwar Democrats should start looking now for a male, fiscally conservative, Protestant, Southern, war vet with a conservative personal life (and a similar VP) to run in 2008 – getting past Hillary won’t be easy.

More:

Condescendingly British, perhaps, but worthwhile: see “Sword of Honor” and a worthwhile reply on Grim’s Hall blog.