i.want.world

the impending collapse of the united states

Niall Ferguson writes:

One day, a seemingly random piece of bad news -- perhaps a negative report by a rating agency -- will make the headlines during an otherwise quiet news cycle. Suddenly, it will be not just a few policy wonks who worry about the sustainability of U.S. fiscal policy but the public at large, not to mention investors abroad. It is this shift that is crucial: A complex adaptive system is in big trouble when its component parts lose faith in its viability.

Over the last three years, the complex system of the global economy flipped from boom to bust -- all because a bunch of Americans started to default on their subprime mortgages, thereby blowing huge holes in the business models of thousands of highly leveraged financial institutions. The next phase of the current crisis may begin when the public begins to reassess the credibility of the radical monetary and fiscal steps that were taken in response.

Neither interest rates at zero nor fiscal stimulus can achieve a sustainable recovery if people in the United States and abroad collectively decide, overnight, that such measures will ultimately lead to much higher inflation rates or outright default. Bond yields can shoot up if expectations change about future government solvency, intensifying an already bad fiscal crisis by driving up the cost of interest payments on new debt. Just ask Greece.

Ask Russia too. Fighting a losing battle in the mountains of the Hindu Kush has long been a harbinger of imperial fall. What happened 20 years ago is a reminder that empires do not in fact appear, rise, reign, decline and fall according to some recurrent and predictable life cycle. It is historians who retrospectively portray the process of imperial dissolution as slow-acting. Rather, empires behave like all complex adaptive systems. They function in apparent equilibrium for some unknowable period. And then, quite abruptly, they collapse.

Washington, you have been warned.

The USDA Tries to Come Clean

I’m sure they’ll quickly correct this, but as I post this, the USDA’s blog currently reads:

…the USDA is making every effort to make sure that today’s children are the first American generation to have a shorter life expectancy than their parents.

Link.

Today's 'wow' Momment

"Globalisation allowed the US to suck up the savings of the rest of the world and consume more than it produced." George Soros, FT.com January 23 2008.

Seismograph. The line indicates the daily volatility of the Dow Jones index, between 1901 and 2009.

How do you like your chicken: with or without chemicals?

Roughly speaking, that's the issue in the EC - Measures Affecting Poultry Meat WTO dispute (DS389), for which the U.S. recently announced it will request a panel. The panel request describes the issue as follows:

The EC prohibits the import of poultry treated with any substance other than water unless that substance has been approved by the EC. The EC has not approved any other substance. Consequently, the EC prohibits the import of poultry that has been processed with chemical treatments ("pathogen reduction treatments" or "PRTs") designed to reduce the amount of microbes on the meat, effectively prohibiting the shipment of virtually all US poultry to the EC. The EC has not published or otherwise made available the process for approving a substance. The EC also maintains a measure regarding the marketing standards for poultry meat, which defines "poultrymeat" as only "poultrymeat suitable for human consumption, which has not undergone any treatment other than cold treatment."

In 2002, the United States requested the European Commission ("Commission") to approve the use of four PRTs in the production of poultry intended for export to the EC: acidified sodium chlorite, trisodium phosphate, peroxyacids, and chlorine dioxide. However, after more than six years, including unexplained delays, the EC has not approved any of these four PRTs and instead has rejected the approval of their use.

The EC's failure to approve is despite the fact that various EC agencies have issued scientific reports regarding a number of different aspects related to the processing of poultry with these four PRTs. Those reports did not find any scientific basis for banning the use of these PRTs. To the contrary, the conclusion of these reports is that the importation and consumption of poultry processed with these four PRTs does not pose a risk to human health.

In a nutshell, the trade issue is the following: U.S. producers use chemicals to clean their poultry, but the EC does not allow the sale of poultry cleaned this way, so U.S. producers can't sell their poultry in the EC.

For SPS disputes, I'm always interested to see how the substance of the dispute is presented, in particular whether the claim is mainly about "discrimination," "necessity," or "science," or some combination of these three.  Here, the parties seem to want to take different approaches to characterizing the dispute. From the USTR press release:

"The U.S. poultry subject to the EU ban is safe. There is no scientific evidence that the use of pathogen reduction treatments pose any health risk to consumers," said Nefeterius McPherson, a USTR spokeswoman.

By contrast, from the DG Trade press release: "we will defend our food safety legislation, which does not discriminate against imported products."  So, in the battle of the press releases, it's about science for the U.S., whereas for the EC it's about discrimination (or lack thereof).

Of course, it's the panel request that really matters in this regard.  Here are some of the key provisions the U.S. cited in the request and what they are mainly about:

SPS Agreement Article 2.2 - Necessity and Science

SPS Agreement Articles 5.1 and 5.2 - Science 

GATT Article III:4 - Non-Discrimination

GATT Article XI:1 -  Quotas and other Import Restrictions.  (This one could be interesting if it explores the intersection between import restrictions and domestic regulations, given that the measure bans all such poultry, not just imports)

TBT Agreement Article 2.1 - Non-Discrimination

It's interesting that the U.S. press release does not mention discrimination, but the panel request cites some discrimination provisions.  I'm not sure what to make of that.  I would have thought it would be a good idea to sell the case as being about discrimination, at least in part.

It's also worth noting that in the consultations request, the U.S. left out explicit references to the non-discrimination provisions.  There, the U.S. cited SPS Agreement Articles 2.2, 5, 8 and Annex C(1); GATT Articles X:1 and XI:1; Agriculture Agreement Article 4.2; and TBT Agreement Article 2 (without mentioning which sub-provisions).

The substance of the discrimination claims will also be worth following.  From what I can tell, this will be a claim of de facto discrimination, as the measures apply to all products regardless of origin.  It is these kinds of claims that often give the most insights into the scope of the non-discrimination standard.

Andy Warhol would be happy

David Reilly at Bloomberg notes that the pricing of credit default swaps on both the US government debt and Campbell’s is the same...

Here is the link. Hat tip goes to TheBrowser.

the Empiricist-in-Chief

Following up on yesterday's post about quantifying political speech, Dartmouth's Michael Herron - who is a first-rate political scientist and data hound - points out that Obama was the first president to speak about "data" in his inaugural address, and only the second to mention "statistics."

Chrysler hires BK law firm

From the WSJ: Chrysler Hires Law Firm Jones Day as Bankruptcy Counsel

Chrysler's move suggests the auto maker is preparing for imminent financial failure should its efforts to persuade Congress to deliver federal rescue funds fall short.

Click on cartoon for larger image in new window. Rerun of a great cartoon from Eric G. Lewis, a freelance cartoonist living in Orange County, CA.

Why libertarians should vote for Obama

First, war.  War is the antithesis of the libertarian philosophy of consent, voluntarism and trade.  With every war in American history Leviathan has grown larger and our liberties have withered.  War is the health of the state. And now, fulfilling the dreams of Big Brother, we are in a perpetual war.

A country cannot long combine unlimited government abroad and limited government at home. The Republican party has become the party of war and thus the party of unlimited government.With war has come FEAR, magnified many times over by the governing party. Fear is pulling Americans into the arms of the state. If only we were better at resisting. Alas, we Americans say that we love liberty but we are fair-weather lovers.  Liberty will flourish only with peace. 

Have libertarians gained on other margins in the past eight years? Not at all. Under the Republicans we have been sailing due South-West on the Nolan Chart – fewer civil liberties and more government, including the largest new government program in a generation, the Medicare prescription drug plan, and the biggest nationalization since the Great Depression. Tax cuts, the summum bonum of Republican economic policy, are a sham. The only way to cut taxes is to cut spending and that has not happened.The libertarian voice has not been listened to in Republican politics for a long time. The Republicans take the libertarian wing of the party for granted and with phony rhetoric and empty phrases have bought our support on the cheap. Thus - since voice has failed - it is  time for exit.  Remember that if a political party can count on you then you cannot count on it.

Exit is the right strategy because if there is any hope for reform it is by casting the Republicans out of power and into the wilderness where they may relearn virtue. Libertarians understand better than anyone that power corrupts. The Republican party illustrates. Lack of power is no guarantee of virtue but Republicans are a far better - more libertarian - party out-of-power than they are in power. When in the wilderness, Republicans turn naturally to a critique of power and they ratchet up libertarian rhetoric about free trade, free enterprise, abuse of government power and even the defense of civil liberties.  We can hope that new leaders will arise in this libertarian milieu.

86% of Americans could be fat by 2030

The blockbuster Disney movie, Wall-E, was criticized for its portrayal of a future in which not just some humans, but all of humanity becomes obese. A new study from Johns Hopkins, however, finds that its depiction comes uncomfortably close to projections from public health researchers.

As one of our commenters wrote, echoing other critics, "The future presented in the film was ridiculous and over-the-top in how unlikely it was, and portrayed humans as fat, disgusting, and stupid animals (which may be true of some people, but not of many)." 

The new study, however, finds that if something doesn't change with the American food system, almost 9 out of 10 Americans will be fat by 2030.

“National survey data show that the prevalence of overweight and obese adults in the U.S. has increased steadily over the past three decades,” said Youfa Wang, MD, PhD, lead author of the study and a professor at Hopkins' Center for Human Nutrition. “If these trends continue, more than 86 percent of adults will be overweight or obese by 2030."

It's not just an aesthetic problem, either. The health risks associated with obesity are well-known and the researchers say treating obesity-related conditions could result in nearly one trillion dollars of added health care costs. 

The projections appear in the July 2008 issue of the journal Obesity.

Image: The Captain from Wall-E. Via Worstpreviews.com.

WiSci 2.0: Alexis Madrigal's Twitter , Google Reader feed, and webpage; Wired Science on Facebook.

Bottled-water industry: Waterlog

Many in the industry would rather avoid the question

"SPARKLING or still?" The waiter's question seems to offer a choice, but is in fact designed to deny it: tap water, after all, is never on the menu. According to Elizabeth Royte's "Bottlemania", in 2002 Nestle produced a training manual aimed at waiters called "Pour on the Tips". Converting guests to pricey bottled water, it said, could boost their monthly earnings by $100 or more. Some waiters even try to humiliate people who resist. "I get great pleasure out of making each of those ladies who are trying to impress their friends repeat the word 'tap' back to me," wrote a server on "The Waiter's Revenge", an online message board.

Snobbery, convenience and worries about tap water have propelled the American bottled-water industry from sales of $4 billion in 1997 to $10.8 billion in 2006. Globally the industry is now worth about $60 billion. As well as the plain variety, there are now bottled waters laced with all sorts of extra ingredients, such as caffeine, appetite suppressants, skin enhancers and even laxatives. Bottled-water giants such as Nestle, the Coca-Cola Company and PepsiCo reckon that the market will continue to fizz. Last year Coca-Cola spent $4.1 billion to buy Glaceau, a firm that makes vitamin-enhanced water. ...

via The Economist: Full print edition on 7/17/08