We need more Hong Kongs

POST: Changing the world with Charter Cities, By Paul Raven, Futurismic, October 10, 2009

A very Development-in-a-Box™ style idea: outsourcing the sovereignty function temporarily to jump start a hub city, or one that generates super amounts of connectivity in a short time.

In effect, this is a grand version of a Special Economic Zone, meaning an idea that's been around for a while is being expanded dramatically as more and more thinkers and businessmen and politicians are seeking to facilitate globalization's next wave of expansion, seeing in it the best path (connectivity) for jump-starting remaining underdeveloped economies.

(Thanks: Cris Fitch)

Apple leaves the Chamber

STORY: Companies Quit U.S. Chamber Over Climate Policy, by Scott Horsley, NPR, October 6, 2009

Perhaps a tipping point between old-school and new-school chamber members.

(Thanks: David Blair)

The coming rise of cleantech

ARTICLE: Where's the next boom? Maybe in `cleantech', By Jordan Robertson, AP, October 6, 2009

Contrary to Thomas Friedman's logical fears (investment in clean tech would dry up in an economic downturn, especially as energy prices fall temporarily), the news on that front seems pretty positive, countering recent experience.

My guess: eventually investors see a short-enough path to profitability that they start discounting the near term up-and-down. That is what the rising global middle class accomplishes: it alters long-term perceptions of opportunity in a profound way.

(Thanks: Vonne Barnett)

The USG has not adjusted itself to COIN

ARTICLE: Civilian Goals Largely Unmet in Afghanistan, By ELISABETH BUMILLER and MARK LANDLER, New York Times, October 11, 2009

This judgment fits with everything I've encountered in my work (not wanting to put words in the mouths of others):

But Henry Crumpton, a former top C.I.A. and State Department official who is an informal adviser to General McChrystal, called those stepped-up efforts inadequate. "Right now, the overwhelming majority of civilians are in Kabul, and the overwhelming majority never leave their compounds," said Mr. Crumpton, who recently returned from a trip to Afghanistan. "Our entire system of delivering aid is broken, and very little of the aid is getting to the Afghan people."

Our military has adjusted itself to the demands of COIN to a great degree, but the same cannot be said about the rest of the USG. Such reform (to include my Department of Everything Else) awaits another, sufficiently big-enough failure.

And Af-Pak may well be it.

The relative success of the dollar's fall

ARTICLE: The dollar's fall is felt overseas, By Anthony Faiola, Washington Post, October 29, 2009

Two sides to the contentious but--so far--quite quiet issue:

"If the dollar is going down this way, it is because that is what the Americans want," economic commentator Yves de Kerdrel wrote in the French newspaper Le Figaro this week. "In a globalized economy where national egoisms persist but where customs barriers have almost disappeared, the best protection consists in playing on exchange rates."

Yet analysts say the fall of the dollar reflects a basic economic truth: the U.S. financial situation is no longer as solid as it once was. Rather than being undervalued, many argue that the dollar has room to fall further.

Seeing how crucial this is to the global rebalancing effort, I remain amazed how low-key this process has remained. A quiet success story for Obama.

The importance of access to health care

ARTICLE: In China, too, a health-care system in disarray, By Steven Mufson, Washington Post, October 29, 2009

Again, the weird symmetry of both China and the U.S. trying to correct their health care systems as part of the global rebalancing effort:

As U.S. lawmakers engage in a tense debate over health-care reform, Chinese authorities, too, are attempting to fix their system. Over the past five years, the government has tried to provide coverage to more of its 1.4 billion people. But even people covered by a minimal health insurance program are often left with big hospital bills and must pay for most outpatient services and medication. More than 300 million people do not have any health insurance.

In a country once committed to erasing class differences, the gap in the quality of care has been steadily growing, too.

You get the feeling, as we head deeper in this century of biological transformation, that access to health care will be THE human rights issue of the age.

More arms control naivete

OP-ED: Pragmatists in Tehran, BY HILLARY MANN LEVERETT, Foreign Policy, OCTOBER 30, 2009

Mann Leverett is always good, and she displays a strong logic here.

Worth perusing.

I especially liked the ending:

The idea of a U.S.-Iranian "grand bargain" starts from the premise that Iran is not just a problem to be managed. In much the same way that President Richard Nixon understood that strategic rapprochement with the People's Republic of China was imperative for American interests in the early 1970s, strategic rapprochement with the Islamic Republic is now truly imperative for American interests in the Middle East.

At this point, the United States cannot achieve any of its high-priority objectives in the greater Middle East -- in the Arab-Israeli arena, Lebanon, Iraq, Afghanistan, with regard to energy security, etc. -- without a more productive relationship with the Islamic Republic.

Of course, the opening to China had important implications for America's established allies in Asia -- most notably, Japan -- in much the same the way some fear an American opening to Iran would have negative implications for Israel. But the U.S.-Japan alliance not only survived America's rapprochement with China -- in fact, the consolidation of a largely cooperative Sino-American relationship profoundly reduced the security threat to Japan emanating from China.

For those in Israel and her supporters here who believe that a U.S.-Iranian "grand bargain" would inevitably be struck at the expense of Israel's interests, I would say two things: First, Israel's interest would also be profoundly well served by a U.S.-Iranian rapprochement that helped to settle the unresolved tracks of the Arab-Israeli conflict, put Iraq and Afghanistan on more stable trajectories, and effectively eliminated the risk of U.S.-Iranian (or Israeli-Iranian) military confrontation.

Second, without U.S.-Iranian rapprochement, the United States will not be able to achieve any of its high-priority goals in the Middle East. This would be bad for Israel, which needs credible and effective American leadership in the region to maintain a stable balance of power, address serious threats, and ensure its safety and survival. We should think hard about what Israel's strategic situation would be like if the United States is seen, to a much greater extent than is already the case, as a declining power, unable to deliver.

Of course, such thinking is so "naive." EVERYTHING must be sacrificed to the arms control gods! Because look at what we've achieved with Israel's regional WMD monopoly these past four decades: everything going in our favor!

(Via WPR Media Roundup)

Our Leviathan has retarded Asia

OP-ED: The Truth About Asian Integration, By RAZEEN SALLY, Wall Street Journal, OCTOBER 28, 2009

Sophisticated analysis of why regional integration in Asia is a long ways off, and yes, we are partly to blame for this reality. By playing regional Leviathan so well, we retarded what should have been the natural development of regional security integration. A corollary ensued in trade relations, one that I can't say would have been prevented by regional security integration, but which was undoubtedly exacerbated by the lack of it.

What I like about the piece: it locates globalization's inherent connectivity in production chains, not trade schemes. We are already seeing Asia extend globalization to Africa in this same manner, slotting local labor into buyer/producer chains.

(Via WPR Media Roundup)

Bullseye on China

ARTICLE: Al Qaeda tells China's Uyghurs to prepare for holy war, By Saad Abedine, CNN, October 9, 2009

China, as I've long predicted, naturally becomes a prime target for the forces of fundamentalism/disconnection/anti-globalization.

Why?

Because it's the main force behind globalization today.

Somebody tell the five Jews in NYC who are allegedly in charge!!!!!

Have no fears, though, new conspiracy theories are being prepared as I type. The nutso brigade does not lack for adherents--brains (obviously) but not numbers.

Stupidity, after all, breeds.

And yes, that too should make China plenty nervous.

Yergin on natural gas--the latest American revolution

OPINION: "America's Natural Gas Revolution," by Daniel Yergin and Robert Ineson, Wall Street Journal, 3 November 2009.

The rise of "unconventional gas" in the U.S. What is unconventional? Gas from shales, coal-bed methane and so-called "tight formations" that are harder to access.

Twenty years ago, such unconventional sources accounted for only 10% of U.S. production. Now it's up to 40%, and the much-ballyhooed prediction about the U.S. suffering production shortages en masse appears to be averted--just like that. It looked like we'd be pulled into global LNG (liquid natural gas) markets, thus creating new dependencies, but now, we're looking at a huge resurgence of domestic production thanks to a few companies making a breakthrough on shale gas.

Ground zero of this experimentation is the Barnett Shale near Fort Worth, TX. The two new approaches are horizontal drilling and "fraccing" with injected water and sand. No great breakthrough moment: just constant incremental development of new extraction technologies. The result? Lots more gas at "much lower unit cost than previously though possible."

As these technologies were perfected, they spread around to other production sites across America.

So U.S. known reserves are climbing: 177 trillion cubic feet in 2000 to 245 Tcf last year. That rise is roughly equal to half of Qatar's known holdings. As drilling experience grows, estimates are likely to continue rising dramatically in the next few years, meaning we're likely to have a lot more than a century's supply (current known supplies project out 90 years).

This is a game changer, says Yergin and Ineson, when it comes to electricity generation going forward. Nat gas plants are easier to build and emit so much less CO2. Places that traditionally import energy for electricity, like PA and NY, will become serious producers.

The one hitch? Fears of ground-water contamination from the fraccing. Truth: thousands of feet separate these operations under ground from the water supplies.

The global impact: the U.S. doesn't need LNG now, which is getting diverted to Europe, which will change the equation with Russia's Gazprom.

Then there's the longer-term reality that, as this tech spreads, shale gas all over the world will become available, meaning the oil-and-gas rich Middle East becomes less crucial.

I got this message about a decade ago from Cantor Fitzgerald and Yergin's company at one of my Naval War College economic exercises atop World Trade Center 1: the assumption that gas is only to be found associated with oil is wrong, so assuming that the Middle East remains central to the global energy equation is wrong. Non-associated or unconventional gas would change everything.

And so it appears to be doing now.

Watch for a lot of stories on this subject. Yergin and Ineson say it will take another half decade to properly assess just how much new gas America has.

Alas, perhaps now we must cancel the resource wars over natural gas too, including the world war between NATO and Russia.

Bummer!

Erasing the line yet again on drug smuggling

FRONT PAGE: "Mexican Pot Gangs Infiltrate Indian Reservations in U.S.," by Joel Millman, Wall Street Journal, 5 November 2009.

So our increased firewall approach on drugs is now being breached by foreign gangs working in both our national forests and on Indian reservations: these Gapsters are finding gaps within our union and exploiting them quite nicely.

Previous post noted the growth of "grows" in forests, but this article says the Mexican gangs are expanding their ops much faster on reservations.

Slick.

More evidence of Iranian logic

ARTICLE: Iran's Nuclear Program: Deciphering Israel's Signals, By Ehud Yaari, PolicyWatch, November 5, 2009

Gist:

The current assessment in Israel is that although the Iranian regime long ago decided to get "within reach" of a bomb and is doing its utmost to move toward this objective, no decision has yet been made to go for a "breakout." The reason is that Iran would not risk the consequences of a breakout for a bomb or two but rather would only contemplate such a dramatic step when it had enough low-enriched uranium for a modest "arsenal" of about a half dozen bombs.

This fits the logic of a country seeking a deterrent capability. If you're truly a religious nut, then you reach for 1-2 bombs as quickly as possible and pull the trigger pronto.

(Via WPR Media Roundup)

Earth continues recent cooling trend

CURRENTS: "The Earth Cools, and Fight Over Warming Heats Up: Many Scientists Say Temperature Drop From Recent Record Highs Is a Blip, While a Few See a Trend; Inexact Climate Models," by Jeffrey Ball, Wall Street Journal, 30 October 2009.

The upshot of this debate: everyone is coming to recognize just how much swag there is in these climate models.

No, a few years of cooling doesn't negate global warming, the long-term trend, but just like with the sudden drop in global oil demand challenging previous projections, we are reminded to go easy on the hyperbole and fear-mongering.

Just how much conservation can matter: a drop in global oil demand

WORLD NEWS: "World Need for Oil Expected to Ease: International Energy Agency Says Conservation Efforts Will Trump Any Global Economic Recovery," by Spencer Swartz, Wall Street Journal, 4 November 2009.

More amazing news: the International Energy Agency is substantially revising--downward--its long-term forecast for global oil demand, for the second year in a row.

The forecast of slower growth in oil demand puts the IEA increasingly in a camp of contrarians bucking the popular view that crude demand will grow briskly in a postrecession world. That view holds that long-term demand will grow at a fast-clip because of rising emerging-market wealth and consumption in places like China and India.

The key change is not the perception of the recession's impact but the "demand management policies" (aka, conservation) of advanced economies, which still account for about 55% of world use.

Daniel Yergin's projection: a future of much more subdued consumption growth than popularly anticipated. Why? Consumers remember the sting of the recent run-up in prices, fear future MidEast instability, and are becoming more sensitive to climate change worries.

Yergin's company, Cambridge Energy Research Associates, says that Old Core oil demand peaked in 2005 and that it will happen for the world at large sometime around 2030.

It has been my running assumption for years now (going back to the energy game I ran with Cantor Fitzgerald in 2000, which CERA attended) that global oil demand will peak before global oil production--primarily for cost and pollution reasons (cost in the Old Core, pollution in the New Core). Meanwhile, technology will continue to advance . . . as we move down the hydrocarbon chain.

Lost in America

ARTICLE: U.S. Can't Trace Foreign Visitors on Expired Visas, By JAMES C. McKINLEY Jr. and JULIA PRESTON, New York Times, October 11, 2009

Yet another compelling argument for strategic missile defense!

You want to be really progressive? Eat right

ARTICLE: Putting America's Diet on a Diet, By ALEX WITCHEL, New York Times Magazine, October 6, 2009

I do see this as a primary battleground in America's unfolding progressive era: teaching ourselves to eat differently.

Clinton and State intentional non-work

ARTICLE: Deal to restore ex-president languishes in Honduran Congress, By Tyler Bridges, McClatchy, November 4, 2009

This is, of course, why the Hondurans agreed to the deal: once accepted, all the initiative lies with the Congress, which already demonstrated its anti-Zelaya sentiment.

Along those lines, you have to credit Clinton and State for delivering such a wonderful non-outcome.

And yes, I think it they knew what they were doing.

(Via WPR Media Roundup)

Obama's best bet on Iran is opposition, not nukes

OP-ED: Iran's nuclear diversion, By Ray Takeyh, Washington Post, November 5, 2009

The usual smart stuff from Roy Takeyh:

As the Obama administration grapples with the conundrum of Iran, it must balance its proliferation concerns with its moral responsibilities. Iran's post-election tremors have hardly subsided; in fact, the regime is systematically eviscerating its democratic opposition. Amid their merciless efforts to consolidate power, President Mahmoud Ahmadinejad and his allies see discussion of the nuclear program as a means to silence the criticism that their domestic behavior merits. In the coming months, Iran will no doubt seek to prolong negotiations by accepting and then rejecting agreed-upon compacts and offering countless counterproposals. The United States and its allies must decide how to approach an Iranian diplomatic stratagem born out of cynical desire to clamp down on peaceful dissent with relative impunity.

Couldn't agree more, and we need to make this choice explicit in our debates: Obama can focus on nukes or the opposition movement, but he can't have both. To me, focusing on nukes is a losing proposition for reasons I've cited repeatedly now for four years, whereas focusing on human rights, the protests, etc. fits nicely with a long-term soft-kill strategy.

(Via WPR Media Roundup)

Karzai is even worse than Maliki

OP-ED: Obama's Unrealistic Afghan Assumptions, By ELISE JORDAN, Wall Street Journal, NOVEMBER 5, 2009

A valid point worth remembering, except Maliki was largely still an unknown, whereas Karzai has had a painfully long time to prove himself--and not done so.

(Via WPR Media Roundup)

Lake Michigan from my room

Allen Center, Kellogg School of Business, Northwestern U, Evanston IL.