Richard Landes

…Israel, a country with no natural resources, an economic backwater even in the Ottoman Empire, rose to the top of the developed world in a century on culture alone. The Arab nations, on the other hand, illustrate the necessity of a certain kind of culture: Even those with vast petrodollars still have among the least productive economies in the world.

Americans tend to assume that everyone shares their cultural attitudes—that everyone strives to get to “yes,” to positive-sum, win-win, voluntary relations; that everyone holds productive work in high respect and prizes the principles of fairness embodied in the meritocratic principle of “equality before the law”; that everyone encourages criticism, treasures intellectual capital, promotes risk-taking, prizes transparency and fosters innovation. With institutions built on such values—with a culture dedicated to making, not taking, money—a society can make use of whatever primary products a land offers.

But there are cultures whose favored mode is not voluntary but coerced and zero-sum relations, where the principle of “rule or be ruled” dominates political and economic life. The elites in such cultures hold hard work in contempt, and they distrust intellectual openness and uncontrolled innovation as subversive. They emphasize rote learning and unquestioning respect for those in authority. Protection rackets rather than law enforcement assure the public order and bleed the economy. Public criticism brings sharp retaliation. Powerful actors acquire wealth by taking, rather than making.

Few cultures on the planet better illustrate the latter traits than the Arab world, a fact outlined in painful detail by a 2002 United Nations report written by Arab intellectuals. As “The Wealth and Poverty of Nations” points out, Arab culture intensifies these problems with its attitude of hyper-jealousy and misogyny toward women, which turns out entitled sons and cloistered daughters.

Even the huge influx of petrodollars did not change the basic contours of Arab economies: Rather than fueling economic development that benefited all, it bloated corrupt and opaque elites. Oil-rich countries like Libya and Iraq have social structures akin to those of oil-bereft Egypt and Syria. Change may occur, but it is hindered by an authoritarian culture that fears it. Such societies impoverish the masses, while elites thrive on their debasement.

Legal Insurrection

Carbonite famously dropped Rush Limbaugh on a Saturday Night at the height of the Sandra Fluke controversy.  Carbonite became the poster child for the Rush boycott movement organized by Media Matters, which coordinated the effort with so-called independent groups.

At the time I examined Carbonite’s SEC filings, and how Carbonite had built its business model based on high growth driven, in significant part, by the promotion of Carbonite by Limbaugh.  I predicted that Carbonite had shot itself in the foot, and put political correctness before the interests of its shareholders.

Since that time the Stop Rush effort has imploded, with backstabbing and accusations among the participants.  Limbaugh has had better numbers than ever, and the hype surrounding Mike Huckabee as a Limbaugh replacement has gone flat.

Yet what became of Carbonite?

On August 1 Carbonite released its 2d Quarter 2012 results, the first full quarter after dropping Limbaugh in March.  The results shocked Wall Street, as Carbonite did not meet its growth targets, causing multiple analysts to drop the target price.  The stock dropped 15% in a day. (h/t reader W).

Forbes says China’s manufacturing edge is waning as robots become more capable. But who will build the robots?

There is great concern about China’s real-estate and infrastructure bubbles.  But these are just short-term challenges that China may be able to spend its way out of. The real threat to China’s economy is bigger and longer term: its manufacturing bubble.

By offering subsidies, cheap labor, and lax regulations and rigging its currency, China was able to seduce American companies to relocate their manufacturing operations there. Millions of American jobs moved to China, and manufacturing became the underpinning of China’s growth and prosperity. But rising labor costs, concerns over government-sponsored I.P. theft, and production time lags are already causing companies such as Dow Chemicals, Caterpillar, GE, and Ford to start moving some manufacturing back to the U.S. from China. Google recently announced that its Nexus Q streaming media player would be made in the U.S., and this put pressure on Apple to start following suit.

But rising costs and political pressure aren’t what’s going to rapidly change the equation. The disruption will come from a set of technologies that are advancing at exponential rates and converging.

These technologies include robotics, artificial intelligence (AI), 3D printing, and nanotechnology. These have been moving slowly so far, but are now beginning to advance exponentially just as computing does.  Witness how computing has advanced to the point at which the smart phones we carry in (more…)

I have no opinion about the design of the US Olympic uniforms, nor where they were made, but this does jump out:

The Ralph Lauren firm physically produces nothing: It is a design, marketing and licensing operation that hires factories to make its stuff. The company has had the U.S. Olympic team deal since 2008. A men’s team shirt costs $425 and a woman’s skirt $498. The beret that makes the athletes look like recruits for the U.S. Special Forces and a T-shirt each cost $55.

Guess what? The 1%-ers built the bridge, not big government.

Matt Welch at Reason:

In President Barack Obama’s fairly maligned “If you’ve got a business, you didn’t build that” comments the other day, he also said this:

When we invested in the Hoover Dam or the Golden Gate Bridge, or the Internet, sending a man to the moon — all those things benefited everybody. And so that’s the vision that I want to carry forward.

To which the engineer W.J.J. Hoge replied:

The federal government did build Hoover Dam. However, the Golden Gate Bridge was funded by a $35 million dollar bond issue by the six counties in the Golden Gate Bridge District. It was a state-authorized project built by a partnership of local governments.

What’s more, the conservative commentator Thomas Purcell asserted last November (Obama having been playing the Golden Gate card for a while now), “it was the ‘One Percenters’, as is the term coined of the rich and powerful these days, that built the Golden Gate, not government. More importantly, it was government that posed more obstacles for the building of the bridge than any other entity and if the Department of Defense had their way it never would have been built at all.” More Purcell:

The Department of Defense (then called the Department of War) kicked and screamed saying that the bridge would be dangerous and block the channel from ships going in an out of the Presidio base.

Since the DOD owned the land on either side of the channel, there was no way to build it without Federal approval, and they refused to grant it.

After another year of wrangling, and some heavy support from the fledgling automotive industry lobbying (yes, they had lobbyists back then too), the DOD finally relents and allows construction of the bridge, but only sells the land back to the state commission and does not participate in its construction.

Construction did not go as smoothly as planned. It takes another FIVE years for the government and the architects to come to agreement on the design. Furthermore, Federal contractor unions wanted the contracts to build the bridge and stalled the government on the issue, demanding they take action to halt construction unless they got the contract. Fortunately, local authorities insisted that as part of the contract only local labor would be used instead of Federal union contracts, insuring the area had work during Depression era unemployment…

Deroy Murdock:

The Environmental Protection Agency has slapped a $6.8 million penalty on oil refiners for not blending cellulosic ethanol into gasoline, jet fuel, and other products. These dastardly petroleum-mongers are being so intransigent because cellulosic ethanol does not exist. It remains a fantasy fuel. EPA might as well mandate that Exxon hire leprechauns.

“EPA’s decision is arbitrary and capricious,” said Charles Drevna, president of American Fuel and Petrochemical Manufacturers (AFPM), the Washington-based oil-refining-industry association. “We fail to understand how EPA can maintain a requirement to purchase a type of fuel that simply doesn’t exist.”

“We’ll fund additional research in cutting-edge methods of producing ethanol, not just from corn but from wood chips and stalks or switchgrass,” President George W. Bush said in his 2006 State of the Union address. “Our goal is to make this new kind of ethanol practical and competitive within six years.”

So, in 2007, Bush idiotically signed the Energy Independence and Security Act. Beyond prohibiting Thomas Edison’s groundbreaking incandescent light bulb by 2014, EISA’s Renewable Fuel Standard mandated cellulosic ethanol. Under the RFS, refiners had to blend 6.6 million gallons of cellulosic ethanol in 2011. Although this substance is not extant, EPA then demanded to see 31 percent more of it. This year’s quota is 8.65 million gallons…

The Mercatus Center at George Mason University has a special website just for the topic of cronyism.

Mouse over the pieces of the ice berg for pop-ups.

Mickey Kaus

Good news for Obama: Government-subsidized battery maker A123 may make it past election before going bankrupt. From Reuters:

The company, which received a $249 million grant from the Obama administration as part of a program to develop advanced lithium-ion batteries, said in documents filed with U.S. regulators that it “expects to have approximately four to five months of cash to support its ongoing operations” based on its recent monthly spending average. [E.A.]

A123 supplies batteries for the troubled Fisker company as well as other auto manufacturers. It says it intends to raise more money. …

P.S.: Here’s a nagging question Obama chronicler Jonathan Alter may be able to answer: In his 2011 State of the Union address, Obama laid out a plan to have “a million electric vehicles on the road by 2015,” a goal that now looks increasingly unrealistic insane. Did Obama know the million-EV goal was BS when he announced it?

Was he misled by advisers? If the latter, have any suffered adverse consequences ? Was he too inexperienced to know the extent to which bureaucracies tend to tell the boss what he wants to hear, even if it’s a fantasy? Or did he not care?

New York Times

…New York’s biggest investment houses are shifting jobs out of the area and expanding in cheaper locales in the United States, threatening the vast middle tier of positions that form the backbone of employment on Wall Street.

The shift comes even as banks consider deeper staff cuts here, which could undermine the state and city tax base long term.

“Places like New York or London will remain financial centers, but most of the players are taking a much harder look and asking whether they can move large numbers of jobs,” said James Malick, a partner at the Boston Consulting Group who advises banks on relocation. In addition to higher taxes in the New York region, employers face real estate and labor costs significantly above the national average.

Consultants say they have seen a sharp pickup in this trend, known as near-shoring, as opposed to offshoring overseas. Goldman Sachs, during a presentation to investors in late May, even boasted of the cost savings that relocating jobs can bring.

“Near-shoring?” That demonstrates just how provincial New Yawkers can be — their tiny island is the world, and anything else is foreign territory.

“Some functions need to stay in the United States, but they don’t need to be in New York City or near the client,” Mr. Malick said. And with most investment giants facing anemic revenue and more stringent regulation that cuts into trading revenues, relocation is more tempting than it was before the financial crisis.

Low-level jobs have already migrated to call centers and back offices overseas, while top-end traders and bankers are secure in the New York area, experts say. Instead, services like accounting, trading and legal support, and human resources and compliance are being shifted to places like Salt Lake City, North Carolina and Jacksonville, Fla.

Wouldn’t it hilarious if Salt Lake City created a special financial business zone and named it Wall Street?

Ah, if only we could create Nerf world where no one ever gets hurt. Not even their feelings.

A very smart man has invented a way to prevent table saws from cutting off fingers — a commendable goal and technological achievement.

Now he wants to make sure everyone buys his saw, and has the Nanny State California legislature behind him.

The Oregon inventor has developed a table saw that can stop a whirling blade almost the instant it comes into contact with human flesh. The machine, known as the SawStop, has been hailed by some woodworkers as a godsend to prevent injuries and amputations that cost their industry and hobbyists billions of dollars a year.

But Gass also is a patent attorney who stands to gain from tough new safety standards proposed in California. He’s pushing legislation that would require all new table saws sold in the state to be equipped with so-called injury mitigation technology. His SawStop is the only product currently on the market that is likely to meet the bill’s requirements.

…Gass holds about 90 patents that they [competitors] contend could make it expensive if not impossible for rival manufacturers to match his technology because of the risk of patent-infringement lawsuits.

Why not do this is Oregon first? My hunch is that he has calculated that if he can get California to mandate his patented device, manufacturers will be forced to license his design. The California market is just too large for tool makers to skip.

So Gass is using California as a de facto way to nationalize his invention that can:

…halt a saw blade whirling at 4,000 revolutions per minute within one-hundredth of a second after human flesh touches the teeth. The invention’s central component is a sensor that can detect changes in electrical conductivity. If it detects a change associated with human flesh, it halts the blade’s spinning by applying a powerful brake.

Gass’ company, SD3 of Tualatin, Ore., has sold about 35,000 SawStop table saws in the last eight years. Gass said his technology or something similar could add as much as $75 to the cost of manufacturing a table saw, which currently sell for $220 to $3,500.

Selling 4300 saws a year won’t cut it (sorry), so he’s using government muscle.

If I were in the market for a table saw, I’d pay the extra $75, but I sure as hell don’t want the government forcing me to do so or forcing me to do business with a monopolist.

Nothing changes human nature.

The waitresses at Twin Peaks wear skimpy plaid tops that accentuate their chests. In case you didn’t catch the joke, the chain’s logo is an image of two pointy, snow-capped mountains. And the sports bar doesn’t stop there: It promises “scenic views.”

Twin Peaks owner Randy DeWitt downplays all of that and insists that the appeal of the restaurant goes beyond the obvious. Hearty meals and a focus on making customers feel special, he says, are what really keeps them coming back.

“We believe in feeding the ego before feeding the stomach,” he says. Or as the website of the mountain lodge-themed restaurant states, “Twin Peaks is about you, ‘cause you’re the man!”

Twin Peaks is part of a booming niche in the beleaguered restaurant industry known as “breastaurants,” or sports bars that feature scantily clad waitresses. These small chains operate in the tradition of Hooters, which pioneered the concept in the 1980s but has struggled in recent years to stay fresh.

Walter Russell Mead

As activists in Rio and around the world mourned the failure of yet another useless summit to do anything about climate change, good news on the CO2 front was coming from the country greens love to hate: the US.

While Europe has adopted a plethora of expensive laws without any significant effect on CO2 emissions, the US is substantially reducing its emissions even as air pollution levels drop. As a CNN report puts it:

Despite there being no real effort by Congress to address global warming and America’s longstanding reputation as an energy hog, U.S. carbon dioxide emissions are falling.

The lackluster economy has something to do with it. But it doesn’t fully explain what’s happening. Consider that even factoring in a stronger economy, forecasters see greenhouse gas emissions continuing to fall.

It’s possible the country may meet its pledge to reduce emissions 17% by 2020.

The secret isn’t laws, green activism or regulations (although these do have roles to play). Innovation is the force that is enabling the cut in US carbon emissions. Specifically, the new ways of extracting natural gas that make have driven a natural gas boom in this country and dramatically cut the cost of the cleanest hydrocarbon energy source of them all.

What’s interesting is to compare the US performance with Europe. Europe has done many of the things greens want the US to do, but despite their “virtue” and our “sin”, the US is doing better than Europe at meeting key environmental goals. As CNN puts it:

Europe, by contrast, has seen its energy-sector carbon emissions remain basically flat. This despite the fact that most of Europe operates under a market-based cap-and-trade scheme where emissions are capped at a certain level and companies get tradable credits to emit pollution.

Plus, Europe has significantly higher taxes on energy.

Ignore the greens and innovate, and you will cut carbon. Pay a lot of attention to them, spend a lot of money — and you will keep carbon emissions unchanged.

The story of course is more complicated than this, and there are real environmental problems that come with fracking. Nevertheless, the one force capable of enabling human beings to have the kind of freedom and abundance that they want while preserving the planetary environment on which we all depend is innovation. Regulations and laws have their place, but they can only do so much.

Right now, fracking is doing more to control carbon emissions than all the efforts of all the greens in the world. And by promoting American (and Chinese!) domestic energy production, it is doing more to lay the foundations of world peace than all the peace activists and disarmament campaigners in the world. And by creating more well paid blue collar jobs both in gas and oil extraction and in the manufacturing industries that will grow to exploit the new cheap energy sources, fracking strengthens the American economy and the tax base, providing revenues for both federal and state governments.

Fracking is the left’s best friend.

A friend in LA is part of a tech startup. Presently he’s trying assemble a team of computer engineers and everyone qualified for the job is already working. “I’m poaching talent. Everyone I interview comes in knowing that I need them for than they need me.”

Meanwhile, the California unemployment rate is near 12%.

One commonsense idea for job growth is to keep as much engineering and scientific talent inside the United States. But our immigration laws often force graduates of American universities to leave and go create their businesses elsewhere.

Dumb. We educate people who will compete against America.

One solution is to staple a green card to anyone who graduates with an advance degree in science, math, engineer or technology.

Thus, the STAPLE Act, sponsored by Senator Jeff Flake of Arizona. Seems like a no brainer, right?

Here’s a debate at US News & World Report.

As the U.S. economy staggers out of recession, many see the growth of the science, technology, engineering, and mathematics fields, known collectively as STEM, to be crucial in keeping the United States competitive on the global stage. In addition to facilitating the study of these fields among American youths, some STEM proponents argue that immigrants who come to the United States to learn about the sciences should be encouraged to stay here once they have graduated. They fear that otherwise, foreign STEM grads will take their skills and education to their home countries, costing America the opportunity for job-creating innovation. The STAPLE Act, which would grant immigrants who earn Ph.D.’s in STEM fields permanent residency and exempt them from immigrant quota limitations, is one initiative being proposed to keep foreign STEM graduates on U.S. soil in the hopes that they will create successful companies and more jobs for Americans. Opponents say this and similar measures would have the opposite effect, taking jobs away from Americans and supressing wages in the fields. Should foreign STEM graduates get green cards?

It’s not just white collar jobs that go unfilled: a Southern California steel maker cannot fill positions.

With more than 12.7 million Americans unemployed, companies have no trouble attracting applicants. What’s tougher for some firms is finding qualified workers. Just ask California Steel Industries.

The Fontana steel maker needs experienced electrical and mechanical technicians to help it make metal pipes and flat-roll sheets used in construction projects. The pay is good. An industrial maintenance mechanic can make $64,000 a year plus health benefits. In good years, company profit-sharing can boost pay by $5,000.

Still, California Steel is struggling to fill 18 openings.

While these workers don’t need college degrees, they need at least two years of specialized training plus strong math, reading and writing skills. The plant is loud and filled with heavy machinery. And because the facility operates 24 hours a day, workers must rotate shifts, making it even harder to recruit, said Brett Guge, executive vice president of finance and administration.

“It’s been a chronic problem for many years,” Guge said. “You would think it’d be somewhat easier in this economy.”

Something is amiss. We have too many students graduating with degrees in communications, gender studies, poetry. etc.

Maybe we can export them.

…after news broke that Obama has “hacked” the White House website to promote himself in the bios of past presidents.

The speed of satire today is astonishing.

Plenty more of President Obama Zelig Obama here.

And speaking of Microsoft, there’s this nugget, from an editorial in the WSJ:

“When I hear people talk about the free enterprise system and entrepreneurship, I try to remind them, you know, all of us made that investment in Darpa [the Department of Defense Advanced Research Projects Agency] that helped to get the Internet started,” said Mr. Obama. “So there’s no Facebook, there’s no Microsoft, there’s no Google if we hadn’t made this common investment in our future.”

Microsoft—a product of the Internet? That may surprise Bill Gates and Paul Allen, who founded the software company in 1975. The company didn’t introduce its first Internet browser for another 20 years, and in the meantime it became the dominant computer software company long before the Internet became economically important. The irony of Mr. Obama’s error is that for much of Microsoft’s history the Internet was seen as a threat to its desktop dominance.

There’s no doubt that Darpa has done many good things, but the point Mr. Obama misses is that Darpa is engaged in funding research. This is a proper role for government, especially on national defense. But Darpa does not attempt to commercialize products. Facebook and Google, like Apple and Microsoft, were founded by private investors.

The President likes to elide that distinction between government funding for basic research and commercialization, which is how his Administration lost so much money on stinkers like Solyndra.

Michael Fumento:

Medellín — There are two Latin Americas. There’s the largely fictional one of media-perpetuated stereotypes; and there’s the real one: an incredibly vibrant, industrial, youthful, open-minded people with whom the United States — if it wishes to remain a great power — absolutely must forge stronger economic and political bonds.

I have now lived in four cities of two Latin American countries: Medellin, Bogota, and Cartagena, Colombia, and Guadalajara, Mexico. I stay in others’ homes and rarely speak English. And I’ve observed what the empirical data support: Gringos suffer mass misperceptions harmful to all parties; false beliefs that impede business dealings and national security arrangements with people who are both neighbors and friends.

“Gringos” he says. Isn’t that a nasty word? Sure, in context — like when the bandito calls Clint Eastwood’s character a “Feelthy greengo peeg!” In reality, it’s a neutral term often applied to any foreigner and sometimes to lighter-featured people within the country.

(I’ve also never heard anyone say “Hasta la vista!” In Guadalajara it’s usually “¡Que le vaya bien!” essentially “May all go well!” Nice, huh?)

Yes, they’re neighbors. This notwithstanding that two different Americans whose jobs concern Latin America recently asked me of Mexico, “What is South America like?” Maps show Mexico firmly attached to the U.S. in the North American continent.

Yet the real South America is close enough that you can fly from Washington, D.C., to two major capitals there in the same time it takes to go from L.A. to Washington, D.C. That means all of Mexico, Central America and the Caribbean is even closer. You can also drive from the U.S. to the southern tip of South America. Try that with Hawaii while keeping your socks dry.

How about the stereotypical Mexican with the huge sombrero and poncho, napping under a tree? Never saw that, but have personally observed that Latin American work weeks are six days, 10 to 12 hours on the job with a two-hour lunch. Hardly surprising, then, that the Organization for Economic Cooperation and Development (OECD) says Mexicans are the hardest-working people of its 26 member nations.

Nor should it be surprising that the economy of Latin America grew 4.3% in 2011, while that of the U.S. limped along at 1.7%. No wonder Latin American economic performance confidence levels are higher than in anywhere else in the world, according to Thornton International’s 2011 report.

That also helps explain why between 1998 and 2009, total U.S. merchandise trade (exports plus imports) with Latin America grew by 82%. This compared with 72% for Asia and only 51% with the EU nations. Yet the U.S. has barely tapped that potential, with almost 60% of Latin American trade coming from just one nation — Mexico .

Brazil’s economy alone is twice the size of Mexico’s and growing much faster. Indeed, it’s now the world’s sixth-largest. And two years ago China knocked aside the U.S. as its largest trading partner. Indeed, throughout “America’s backyard” China is gaining market share from the U.S. at an astounding pace…

There’s a lot to learn in this. Not all crude oil is the same, not all refineries are the same. And the Keystone pipeline would help things a lot by getting Canada’s sand oil to the Gulf refineries that can process it.

Marin Katusa

…What gives? Is it all about Iran? Are speculators manipulating the market? Do any politicians have good ideas on how to “fix” the high cost of gasoline? And is there relief on the horizon?

What gives is a combination of forces. Rising tensions in the Middle East are part of the problem, but so are deficiencies in North America’s oil infrastructure that are causing price discrepancies across the nation. Some of the refineries being forced to pay premium prices for oil are shutting down, and that limits gasoline supplies in parts of the country. Speculation is also a factor, as it is an ingrained part of the market, but it is not the driving force behind America’s fuel-price problems.

If you’re wondering, there aren’t any politicians with novel, sound ideas on how to reduce fuel prices. Newt Gingrich’s promise to bring prices below $2.50 a gallon is as attainable as Michelle Bachmann’s plucked-out-of-the-air promise of $2 gasoline.

Thankfully though, there is some relief on the horizon. First, we’ll tackle the issues. Then we’ll outline some developments that should ease the pain.

A Two-Part Problem

Two main forces are driving fuel prices upward in the United States: high global oil prices and the state of the US oil transportation and refining industry.

High oil prices are the more obvious part of the problem and are certainly the part that attracts the most attention. Tensions in the Middle East have been elevated since Tunisia’s revolution kick-started the Arab Spring in January 2011. Subsequent revolutions in Egypt and Libya as well as the oftentimes violent suppression of dissent in Bahrain, Jordan, and now Syria have kept questions about the stability of supplies from the oil-important Middle East front and center all year.

Now, of course, it’s Iran that is keeping oil traders up at night. Between oil embargoes against the country and threats from Iran to block the Strait of Hormuz (a maritime passageway vital to the oil industry), the growing rift between Iran and the Western world is threatening supplies from the world’s fourth-largest producer. That’s a surefire way to push oil prices skyward.

The result: Brent North Sea (the pricing benchmark for crude oil traded in Europe) climbed above US$100 per barrel a year ago and hasn’t looked back. Since last February Brent crude has traded above US$110 per barrel more often than not, and has regularly topped US$120 per barrel…

Read it all.

Mickey Kaus

Sorry, shareholders taxpayers! Car & Driver compared six family sedans, including the Honda Accord, Hyundai Sonata, Kia Optima, Toyota Camry, plus the new Chevy Malibu and a VW Passat, the GM-killer sedan built at a non-UAW factory in Chattanooga, Tennessee. Results: The non-union VW came in first. The new Malibu came in last. …

P.S.: GM’s excuse is that the Malibu Car & Driver tested was the mild-hybrid “Eco” version, which presumably isn’t as much fun to drive as the regular gas versions. But Car & Driver tested the “Eco” Malibu because it’s the only Malibu that is available. The other versions won’t be out for months. … Why did GM choose to introduce this crucial car by leading off with a relatively undesirable, but “green,” hybrid niche version? I don’t know.

But you have to wonder if the company would have put environmental correctness over salesmanship if it wasn’t owned in large part by the Obama Treasury Department. … Am I being paranoid? I don’t think so. GM’s government ownership came up as a possible factor in the company’s sudden willingness to accept mileage and emissions standards without a fight. Why not in deciding to spotlight the Malibu’s hybrid credentials? … This is the sort of issue where unsophisticated people think the company just crudely caves to what it thinks the President wants. More sophisticated people know it’s much more subtle and complex than that. And real insiders think the company crudely caves to what it thinks the President wants.

Air operations in Libya made it clear that European-made missiles and smart bombs were every bit as good as the American stuff. As a result, the major European arms manufacturers (mainly BAE, EADS, and Finmeccanica) suddenly have billions of dollars in new orders.

While some of this business comes from existing customers replacing all the missiles and bombs they used in Libya, a lot of new customers have shown up. These European weapons are now “battle tested” in a highly publicized and successful operation. Many countries are glad to see credible competition for American weapons. Competition means the buyer can negotiate a better deal.

The air campaign over Libya also demonstrated that one European missile, the Brimstone, was unique and superior to anything the U.S. had. Brimstone also demonstrated, once more, that smaller is often better.

George Will:

…Creative destruction continues in the digital age. After 244 years – it began publication five years before the 1773 Boston Tea Party – the Encyclopaedia Britannica will henceforth be available only in digital form as it tries to catch up to reference Web sites such as Google and Wikipedia. Another digital casualty forgot it was selling the preservation of memories, a.k.a. “Kodak moments,” not film.

America now is divided between those who find this social churning unnerving and those who find it exhilarating. What Virginia Postrel postulated in 1998 in “The Future and Its Enemies: The Growing Conflict Over Creativity, Enterprise and Progress” – the best book for rescuing the country from a ruinous itch for tidiness – is even more true now. Today’s primary political and cultural conflict is, Postrel says, between people, mislabeled “progressives,” who crave social stasis, and those, paradoxically called conservatives, who welcome the perpetual churning of society by dynamism.

Stasists see Borders succumb to e-books (and Amazon) and lament the passing of familiar things. Dynamists say: Relax, reading is thriving. In 2001, the iPod appeared, and soon stores such as Tower Records disappeared. Who misses them?

Theodore Roosevelt, America’s first progressive president, thought it was government’s duty to “look ahead and plan out the right kind of civilization.” TR looked ahead and saw a “timber famine” caused by railroads’ ravenous appetites for crossties that rotted. He did not foresee creosote, which preserves crossties. Imagine all the things government planners cannot anticipate when, in their defining hubris, they try to impose their static dream of the “right kind” of future.

As long as America is itself, it will welcome the messy chaos that is not really disorder but, rather, what Postrel calls “an order that is unpredictable, spontaneous, and ever shifting, a pattern created by millions of uncoordinated, independent decisions.” Professional coordinators, a.k.a. bureaucracies, are dismayed. Good.

Charles Gasparino

Back when he agreed to advise the Obama administration on economics, General Electric CEO Jeff Immelt told friends that he thought it would be good for GE and good for the country. A life-long Republican, Immelt said he believed he could at the very least moderate the president’s distinctly anti-business instincts.

That was three years ago; these days Immelt is telling friends something quite different.

Sure, GE has managed to feast on federal subsidies, particularly the “green-energy” giveaways that are Obamanomics’ hallmark.

But Immelt doesn’t think he’s had anywhere near as much luck moderating the president’s fat-cat-bashing, left-leaning economic agenda of taxing businesses and entrepreneurs to pay for government bloat.

Friends describe Immelt as privately dismayed that, even after three years on the job, President Obama hasn’t moved to the center, but instead further left. The GE CEO, I’m told, is appalled by everything from the president’s class-warfare rhetoric to his continued belief that big government is the key to economic salvation.

Or, as one friend recently put it to me, “Jeff thought he could make a difference, and now realizes he couldn’t.”

Immelt’s conversion from public Obama supporter to a private detractor is important: It shows how even businessmen who feast off his subsidies worry about his overall economic agenda and its long-term impact on the economy.

Don’t expect Immelt to say anything publicly about the downside of president’s economic agenda anytime soon: He’s still serving as what is considered the top outside economic adviser to the White House. (A GE spokesman insists that the reports I’m sharing here about Immelt’s private criticism of Obama are “ludicrous.”)

GE has too much to lose for Immelt to publicly ’fess up to his disdain. The president now routinely talks up his desire to tax businesses that create jobs overseas, and GE overseas expansion is well-documented. Nor does the company want to put all its green subsidies at risk.

And of course the last thing Immelt or his shareholders need is for the president to turn his class-warfare fire on them, as he did to his erstwhile pals in the banking business.

Yet friends report that Immelt’s displeasure with the president’s economic policies is real and palpable in private settings…

Or could he be trying to have it both ways? If Obama loses, he gets to say I told you so. If he wins, well, he denies ever saying such things.

James Pethokoukis

One of my favorite moments from the new book The Escape Artists: How Obama’s Team Fumbled the Recovery:

Energy was a particular obsession of the president-elect’s, and therefore a particular source of frustration. Week after week, [White House economic adviser Christina] Romer would march in with an estimate of the jobs all the investments in clean energy would produce; week after week, Obama would send her back to check the numbers. “I don’t get it,” he’d say. “We make these large-scale investments in infrastructure. What do you mean, there are no jobs?” But the numbers rarely budged.

Now let’s fast forward to this past September:

A $38.6 billion loan guarantee program that the Obama administration promised would create or save 65,000 jobs has created just a few thousand jobs two years after it began, government records show. The program — designed to jump-start the nation’s clean technology industry by giving energy companies access to low-cost, government-backed loans — has directly created 3,545 new, permanent jobs after giving out almost half the allocated amount, according to Energy Department tallies.

So where are the new jobs coming from, at least the good-paying ones? From the industry Obama wants to replace as much as possible with “clean” energy: oil and gas. A new report from the World Economic Forum estimates the sectors “added approximately 150,000 jobs in 2011, 9% of all jobs created in the United States that year.”

Those numbers are even more impressive once you realize that some 40% of all new jobs are being added in low-pay sectors such as retailing and leisure. So nearly 20% of new “good jobs” are in oil and gas.

That’s what you get when you promote an inexperienced ideologue to the world’s top executive position.

Just yesterday our garden supply man called to say that he’d come up empty locating a “Black Magic” rose. We have one already, but my wife wanted another.

These are hard times for fancy roses as the LA Times reports

Future generations may never know the beauty of Diana, Princess of Wales; sniff Catalina in the sunshine; or fall for Beloved.

For a century, devoted gardeners have appreciated the marvels of delicate and finicky hybrid roses and referred to them by name, like pets or family. The product of generations of breeding, the queen of flowers could act like a spoiled princess because its delicate blooms offered a special reward.

In recent years, though, time-strapped homeowners have traded their big teas for compact shrub roses — utilitarian soldiers in the landscape that could cover ground without fuss.

Our desire for the carefree — no-iron shirts, no-wax floors, and now low-maintenance yards — has brought the rose industry to a crossroads.

“At some point, it becomes a self-fulfilling prophecy,” said Charlie Anderson, president of Weeks Roses, the only major company still creating new varieties of full-size roses. “[Landscape] roses will be all you have; the beautiful, unique hybrid teas will be gone.”

Actually, roses are not hard to grow at all. You do have to prune them and water them, but it’s not that much work.

Thanks to fracking, the US now has a massive supply of natural gas. So much so, that the price has dropped to record lows.

So instead of trying to make cars run on batteries, why not use the fuel we have? CNG powered buses already run in American cities, so it’s a proven, much cleaner technology.

As the WSJ reported a week ago, CNG powered pickup trucks are already in the works.

U.S. auto makers are introducing pickup trucks powered by natural gas as they look to catch the growing wave of interest in the fuel as an alternative to gasoline.

On Tuesday, Chrysler Group LLC plans to disclose it will build the first production-line pickup truck powered by natural gas. The auto maker is promising to build at least 2,000 heavy-duty Ram bi-fuel trucks that run on a combination of compressed natural gas and gasoline starting in June.

General Motors Co. on Monday plans to disclose it will offer bi-fuel Chevrolet Silverado and GMC Sierra 2500 pickups in the fourth quarter. The trucks will be built by GM and sent to a supplier that will retrofit them to use compressed natural-gas tanks.

What’s the hitch?

The biggest hurdle to wider use is refueling. Today there are fewer than 400 public CNG fueling stations in the U.S.

The interest in natural-gas vehicles comes as gasoline prices are on the rise again and support for using domestic natural gas to replace oil is gaining support. After years of promoting electric cars, President Obama signaled a change in the administration when he said during his January State of the Union speech the nation needs to explore all alternative energy sources.

“We have a supply of natural gas that can last America nearly 100 years,” Mr. Obama said in his speech. “My administration will take every possible action to safely develop this energy. Experts believe this will support more than 600,000 jobs by the end of the decade.”

Thanks to the private sector for finding that gas, Mr. President. Please don’t let the feds screw it up.

Meanwhile, there is a bill afoot.

…the Senate looks to shovel heavy subsidies at backers of the natural gas industry, including four billionaires: T. Boone Pickens, Aubrey McClendon, Stephen Schwarzman and George Soros.

The Senate is set to vote on a natural-gas-related amendment to the transportation bill that would send about $5 billion to the industry. For Pickens in particular, the measure is a return on the years and money invested in his relationship with Senate Majority Leader Harry Reid (D-Nev.).

The natural gas amendment, which looks a lot like an energy policy plan that Pickens proposed in 2008, would help build the infrastructure needed to, among other things, allow the U.S. truck fleet to convert to cleaner-burning natural gas. That’s a high priority for Reid, who is a longtime supporter of natural gas. For big investors in the industry like the four billionaires, taxpayer-subsidized conversion would guarantee a faster-growing market and rising demand.

This could be crony capitalism or good public policy. Sometimes it takes government to overcome the chicken or egg problem.

LA Times

Spanx inventor Sara Blakely is now a billionaire at 41 years old, making her the youngest woman on the latest Forbes magazine billionaires list to amass that much wealth on her own.

Blakely, the creator and owner of the line of women’s slimming, smoothing undergarments called Spanx, is the youngest self-made woman to make Forbes list – meaning she didn’t inherit or marry into the money.

She’s one of several billionaires who appear on the cover of the latest Forbes issue.

According to Forbes, Blakely was 29 when she invested $5,000, her entire life savings, in an attempt to come up with something flattering to wear under her white slacks. She ended up inventing a new line of shaping underwear.

…”I’ve always had that gratitude that I had the opportunity to pursue my potential,” she said. “So I think my story says that, when women are given the chance and the opportunity, that we can achieve a lot. We deliver. We can make the world a better place, one butt at a time.”

Better send an OWS squad right away.

Gawker

A source with close knowledge of Twitter’s financials leaked us revenue, profit, and other figures from the company’s recent past. They are not encouraging.

It’s notoriously hard to build a profitable tech startup, even in these bubble times. But Twitter, the business, has been provided a huge leg up by Twitter, the technology platform. It counts somewhere north of 100 million global active users. But more than the numbers, it’s the quality of users that should have the company raking in ad dollars.

Twitter is provided a huge quantity of free celebrity content that sites like the hugely profitable Facebook would kill for, from the presidents of the United States and Russia to top film and TV stars like Tom Hanks, Steve Martin, Oprah Winfrey, and Ashton Kutcher, all the way down to gossip magnets like Lindsay Lohan and Kim Kardashian. It has also raised an insane amount of cash, with net inflows of around $760 million. The company, now six years old, has had plenty of time to experiment with extracting gold from its enviable mine of content.

But for years and years, Twitter has failed to do so.

Daniel Henninger says that Obama’s story, part of which is that he saved the American auto industry, needs to be refuted before it takes hold. (Which is why I reposted more on the GM story in the post below.)

…The Obama campaign knows it has to compete in big, “working-class” states laden with electoral votes—Ohio (18 electoral votes), Pennsylvania (20), Michigan (16) and Wisconsin (10). To this end, the Obama narrative, his mythic America the Unfair, is now set. As defined in speeches from the State of the Union through the UAW barnburner, it goes like this:

Working men and women are the true American patriots: “It’s unions like yours that helped build an arsenal of democracy that defeated fascism.” (A nice Gingrichian touch there.)

You were in trouble: “The heartbeat of American manufacturing was flatlining.”

They were going to sell you out: “Some even said we should ‘let Detroit go bankrupt.’”

I saved you: “It wasn’t just because of anything management did. It was because I believed in you. I placed my bet [the $80 billion bailout] on American workers.”

They resent you: “They’re still talking about you as if you were some greedy special interest that needs to be beaten.”

The deck is stacked: “We will not settle for a country where a few people do really well, and everyone else struggles to get by.”

The answer, as always, is America’s abandoned values: “Hard work. Fair play. The opportunity to make it if you try.”

Only one place to go—to the ramparts: “So I’ll promise you this: As long as you’ve got an ounce of fight left in you, I’ll have a ton of fight left in me. . . . God bless the work you do, and God bless America.”

This is a caricature of a $15 trillion American economy functioning amid the complexities of the world circa 2012. Even Upton Sinclair, who wrote this sort of thing in “The Jungle” in 1906, would be embarrassed to pump out such a vision today.

GM didn’t need saving, it just needed a bridge loan to get through a tight spot.

Obama brags about saving General Motors from extinction. In fact, the turnaround at GM had already been done, overseen by the man Obama’s car Czar promptly fired.

As Malcolm Gladwell explained in 2010, Wagoner had pulled off an amazing feat at GM. (I broke out bullet points from Gladwell’s text to make them easier to read.)

…Wagoner was not a perfect manager, by any means. Unlike Alan Mulally, the C.E.O. at Ford, he failed to build up cash reserves in anticipation of the economic downturn, which might have kept his company out of bankruptcy. He can be faulted for riding the S.U.V. wave too long, and for being too slow to develop a credible small-car alternative.

But, especially given the mess that Wagoner inherited when he took over, in 2000—and the inherent difficulty of running a company that had to pay pension and medical benefits to half a million retirees—he accomplished a tremendous amount during his eight-year tenure.

• He cut the workforce from three hundred and ninety thousand to two hundred and seventeen thousand.
• He built a hugely profitable business in China almost from scratch: a G.M. joint venture is the leading automaker in what is now the world’s largest automobile market. In 1995, it took forty-six man-hours to build the typical G.M. car, versus twenty-nine hours for the typical Toyota. Under Wagoner’s watch, the productivity gap closed almost entirely.
• Most important, Wagoner—along with his counterparts at Ford and Chrysler—was responsible for a historic agreement with the United Auto Workers. Under that contract, which was concluded in 2007, new hires at G.M. receive between fourteen and seventeen dollars an hour—instead of the twenty-eight to thirty-three dollars an hour that preëxisting employees get—and give up all rights to the traditional retiree benefit package.
• The 2007 deal also transferred all responsibility for paying for the health care of G.M.’s retirees to a special fund, administered by the U.A.W. It is hard to overstate the importance of that second provision. G.M. has five hundred and seventeen thousand retirees. Between 1993 and 2007, the company paid out a hundred and three billion dollars to those former workers—a burden unimaginable to its foreign competitors.
• In the 2007 deal, G.M. agreed to make a series of lump-sum payments to the U.A.W. over ten years, worth some thirty-two billion dollars—at which point the company would be free of its outsized retiree health-care burden. It is estimated that, within a few years, G.M.’s labor —which were once almost fifty per cent higher than the domestic operations of Toyota, Nissan, and Honda—will be lower than its competitors’.
• In the same period, G.M.’s product line was transformed. In 1989, to give one example, Chevrolet’s main midsize sedan had something like twice as many reported defects as its competitors at Honda and Toyota, according to the J. D. Power “initial quality” metrics. Those differences no longer exist.
• The first major new car built on Wagoner’s watch—the midsize Chevy Malibu—scores equal to or better than the Honda Accord and Toyota Camry. G.M. earned more than a billion dollars in profits in the last quarter because American consumers have started to buy the cars that Wagoner brought to market—the Buick Regal and LaCrosse, the Envoy, the Cadillac CTS, the Chevy Malibu and Cruze, and others. They represent the most competitive lineup that G.M. has fielded since the nineteen-sixties. (Both the CTS and the Malibu have been named to Car and Driver‘s annual “10 Best Cars” list.)

What Wagoner meant in his testimony before the Senate, in other words, was something like this: “At G.M., we are finally producing world-class cars. We have brought our costs, quality, and productivity into line with those of our competitors. We have finally disposed of the crippling burden of our legacy retiree costs. We have expanded into the world’s fastest-growing markets more effectively than any other company in the United States. But the effort required to bring about that transformation has left our balance sheet thin—and, at the very moment that we need a couple of years of normal economic activity to refill our coffers, auto sales have fallen off a cliff. Do you mind giving us a hand until things get back to normal?” This is not arrogance. It happens to be something very close to the truth.

No, the arrogance was Obama’s. He appointed a private equity guy named Steven Rattner to oversee the bailout. Rattner met Wagoner one time, then fired him.

After an investigation by the SEC over other business dealings, Rattner paid a $6.2 million fine and agreed to a two year ban from associating with investment advisors or broker dealers.

Joseph Rago in the WSJ:

The old-line Marxists used to talk about “heightening the contradictions” of capitalism to make things worse and hasten the revolution. One of the great ironies of the Affordable Care Act is that it may be doing just that.

Two years on, the major achievement of President Obama’s new entitlement and its regulatory apparatus has been to heighten the contradictions and dysfunctions of the health-care status quo even as it creates multiple new problems. The good—and less noticed—news is that the growing disruption is driving the industry toward the solution that prevails in the rest of the economy: the price mechanism. In the context of American health care, this might be a watershed.

To appreciate what’s wrong with the current system, imagine four patients identical in every way except for their insurance coverage. They report to the same doctor for a routine procedure, say, a colonoscopy.

The first patient is on Medicare, which controls prices. The program’s fee formula sets prices unilaterally for about 7,000 physician services and pays lump sums for 600 general hospital diagnoses, regardless of the quality of care. Medicare pays twice as much on average for a colonoscopy if it is performed in a hospital outpatient setting rather than in a doctor’s office.

Patients two and three are covered by private insurers, but those insurers are likely to reimburse the doctor at different rates—whatever they’ve negotiated to include him in their networks. The rate will be higher than competitive to make up for Medicare’s below-cost fees—the gap between public and private rates is now about 40 percentage points. The rate is also likely to be a proprietary trade secret, or else literally unknowable: The doctor can only generate price information when he codes his services and bills the insurer.

The fourth patient is uninsured. If she seeks treatment, she’ll be billed directly from a “chargemaster,” a hospital’s list of marked-up sticker prices that no one with coverage will ever pay.

So one doctor, four patients, four different prices, multiplied times one-sixth of the economy. Price discrimination, or varied pricing, is common in service industries with high fixed and low marginal costs: airlines, colleges, hotels, telecom. But nowhere else but health care are prices so arbitrary, so disconnected from value. The consensus, on the right and left, is that this fee-for- (more…)