The Saudis would like some handouts, please.

Oil Here’s a rich idea reported by the New York Times: Pay oil producers for not producing oil. That’s right. Saudi Arabia wants “rich nations” to pay oil producers to help wean themselves from their dependency on oil. That is- oil exports. It’s just like paying farmers not to plant, right? Wrong. In this case, oil producers still sell what the market demands, it’s just that since the market will be demanding less, OPEC and the like will get less. According to the article, the Saudis have in the past gummed up the works on climate change protocols because of other nations’ refusal to accede to this sort of extortion.

Do the Saudis have a real problem? Yes. They and other large oil producers like Libya lack a sufficiently diversified economy, such that when oil prices dip, everyone suffers. This is known as Dutch Disease, and oil exports are right to be worried about it. Dutch disease happens because the demand of oil alone drives up national currencies, making all other industries in that country uncompetitive by price.

So here are a few questions:

Can oil producers wean themselves off of oil without economic assistance? After all, they’re taking in all of this money. Can’t they use some of it to develop other industries? It seems Dubai has been somewhat successful at this.
Would economic assistance actually help? If consuming countries gave them more money to compensate for losses of oil revenue, would producers just become dependent on the subsidy?
Isn’t there a broader picture here surrounding to the West’s relationship to the Middle East? Doesn’t good will count for anything? And don’t we need some of that good will in that part of the world?

Dutch Disease requires complex solutions. Simply providing a subsidy won’t do the job. In fact, providing a subsidy could in fact prop up the national currency and compound problems.

And then there’s the fact that most of us feel as though we’ve been held over a barrel by some of the countries in question, and would like to have done with entanglements in the middle east. Oil or no, however, the people in those countries are not going away. They and we need an equitable way to live together in the future.

This Post Brought To You By…

paperwork Today it was broadly reported that bloggers must inform consumers when they receive contributions for promotions they make on their blogs. But one wonders where it stops. Shouldn’t one’s day job have as much, if not more, material impact on what one says and doesn’t say? What about one’s stock portfolio?

For the record, this site makes me $0. I work for Cisco Systems. I won’t reveal my stock portfolio, but will tell you that I constrain my postings on this site to at least not completely inflame my superiors on business-related matters. That means that if you’re looking for someone who is critical of MPLS and many Internet Service Providers, while I am, I’m probably not going to rant here about it. Some of those people are customers, and they might reasonably ask what I am doing to make things better.

I will say this about my stock portfolio. It hasn’t stopped me from talking negatively about some of the companies whose shares I have owned, believe it or not.

We don’t need an opposition; we’re the Democratic Party

CNN reports today that Senator Max Baucus has been targeted in an ad campaign over his current health care proposal. As I live abroad it is hard for me to express strong feelings over the current debate, other than to say that the fastest way to hand Congress to the Republicans is for Democrats to kill health care reform. We can argue over the wisdom of Obama putting this issue front and center, but now that it is, he and the Congress have to deliver or there will be very serious consequences next Fall. In fact, it would be a repeat of 1994, only here the consequences would be worse. Back in 1994 President Clinton didn’t have a filibuster-proof majority in the Senate, and Senator Dole took advantage of that fact.

Open, honest debate is good. It should be something that everyone allows for, and it was something that Republicans have traditionally suppressed. However, that debate needs to be respectful, with a recognition that there are many sides to this very complicated issue. Having seen several national health care systems up close and personal, I’ll just point out that each has its problems. You cannot have both universal healthcare and the choice of every healthcare option for everyone. The numbers just won’t add up. I’ll also mention that in America the argument is not between the government choosing and consumers choosing, but rather between government-regulated insurance choosing and insurance companies choosing. Consumers already have very few choices, and 46 million people have none.

Are Employees of the CIA above the law?

Update: CNN’s Peter Bergen points out all the flaws in Dick Cheney’s logic here.

Over the last few days there have been a plethora of conservative commentaries that range in their argument from Dick Cheney accusing the Obama administration of a political vendetta to The Wall Street Journal repeatedly arguing that the prosecutions are just wrong headed (such as this one) to Debra J. Saunders in the SF Chronicle, arguing that the employees in question should be pardoned. There are at least two problems with the arguments now appearing on the street:

In all cases, torturer sympathizers seem to forget that we, the American People, don’t actually know what happened yet. That is what an investigation is for.
In some cases, the argument seems to be that members of the CIA who were acting on orders should be shielded by the fact they were just following orders. We tried people and convicted them, not withstanding that defense, in Nuremberg. They were known as Nazis. We as a society need to send a message that no one is above the law. It may take years to catch up with people who have been politically shielded from their crimes, but they will be brought to justice.
According to the CIA, torture has been shown to be unreliable.

That leaves the argument that the current investigation by the Justice Department is politically motivated. I would have to say that if one’s politics require one to believe that torture is illegal and immoral, then the answer is yes. Our morality throughout the world has been called into question. Do we condone the torturing of human beings? What, then, separates us from those we accuse of being evil?

On the other hand, I do not see any evidence that this is some sort of game of political Gotcha. While Debra Saunders writes that General Holder has in the past been inconsistent in his views when it comes to pardons, that means nothing in the context of a factual investigation.

As to Mr. Cheney, let him speak. He may, at best, be shielded by the fact that the vice president cannot order anyone in the executive branch outside his own staff to do anything. He would be the wrong person to go after, anyway. If President Bush ordered a crime to be committed, let him be held accountable, assuming a crime was committed.

Ground Southwest?

Airplane This Monday’s Wall Street Journal reports that Southwest Airlines has been flying 82 planes for years with parts of unknown quality in potentially critical locations. The report states that the pieces in question are supposed to “protect movable panels on the rear of the wings from hot engine exhaust.” That’s an obfuscated way of saying that the parts protect the aircraft’s flaps. Flaps are deployed at both takeoff and landing. If those fail, several bad things can happen:

If flaps on one wing fail to extend as expected, when the other side deploys, the plane could pitch.
If the flaps on both sides fail to deploy, the plane will not slow to a normal landing speed.
In the most unlikely event that the integrity of the flaps themselves fails, all manner of bad things could happen.

Most failure modes involving flaps are probably recoverable in and of themselves. However, these sorts of failures happen close to ground, leaving little time to react to problems.

The authors write in the article, however, that, “Both Southwest and FAA agree that the parts, some of which have been on the planes for up to three years without causing apparent problems, don’t pose an imminent hazard.”

While it’s good that they’ve not spotted a failure, many failures go undetected for years, during which metal fatigue sets in. Often there are indications of impending failure, such as cracks. Southwest has indicated that they will increase their inspections between now and the time the parts are replaced.

Here’s the rub: because the construction method of these parts is untested, one wonders whether inspections are sufficient to mitigate the problem. This leaves the FAA with a dilemna: make life miseerable for hundreds of thousands of passengers while SWA corrects the problem or take a risk with the lives of a few hundred people.

One way or another, SWA should face a stiff penalty for putting travelers at risk, and forcing the FAA into this situation.