Peter L. Berger's Blog, page 499

January 31, 2016

How GMOs Could Help Biodiversity

By modifying the genes of plants, scientists have discovered ways to make food crops more resilient to drought and pestilence, and to increase crop yields, to boot. A team of scientists from Brazil and the UK has new research that suggests that GMO crops can not only feed more people, they can also boost biodiversity. The BBC reports:


Increasing crop yields could help meet the rising global demand for more food while sparing land to protect biodiversity, a study has suggested. […]

“The least bad way we can reconcile the rising demand for food production over the next 50 years with the need to protect the environment… is through this notion of land-sparing, which is pursuing sustainable but high-yield farming on farmland,” said co-author Andrew Balmford, professor of conservation science at the University of Cambridge.“By doing that, we can meet our needs but on a relatively smaller footprint of land and spare intact or restored natural habitat for other creatures or for the benefits we get from nature that we rely upon.”

This isn’t exactly a novel idea—by growing more food on less land, we can lessen our overall impact on the environment and in so doing protect more of the habitats of the species with which we share this planet. Perhaps the fact that it’s being backed up by a scientific paper will be enough to convince greens of the extraordinary promise of these new food technologies.

Perhaps, but we won’t hold our breath. For a movement that seems to pride itself on having the backing of the latest research (how else can greens justify their costly and often inefficient policies?), environmentalists seem remarkably adroit at dropping that mantle of science when it no longer suits their preconceived biases. And, to the modern green, GMOs are a devilish creation—an affront to nature!—so vile that it’s not worth even considering the fact that study after study has found them to be perfectly safe for human consumption.More than that, they’re one of the only promising solutions we have to the dire problems greens have promised us climate change is now bringing. In an increasingly crowded, hot world characterized by more extreme weather, GMOs seem a technology tailor made to keep humanity fed. And, as this latest study shows, they can also help us better coexist with other species. If that doesn’t get greens’ attention, we’d imagine nothing will.
 •  0 comments  •  flag
Share on Twitter
Published on January 31, 2016 09:00

Francis Fukuyama: ISIS Will Not Establish Viable State

In a recent interview with RFERL, TAI Chairman Francis Fukuyama explained that neither Russia nor ISIS have established forms of social organization that can compete with liberal democracy in the long run. Putin’s regime, he said, has been sustained by a commodity boom that is on the wane, and ISIS is unlikely to be able to extend its appeal beyond a narrow swath of intensely alienated people. Watch his comments on ISIS in the clip below (and go to the original interview to see his comments on Putinism):

As we’ve written before, “the ideology that undergirds ISIS isn’t just bad in the sense of evil. It is bad in the sense that it does not provide a framework that can organize the life and work of a community on a productive and enduring basis.” We can’t sit idly by while ISIS slaughters people by the thousands—indeed, we should be more aggressive about confronting and defeating it—but we should also not fall into the trap of believing that it represents a credible civilizational alternative to the Western way of life.
 •  0 comments  •  flag
Share on Twitter
Published on January 31, 2016 07:00

January 30, 2016

Dithering as the Shadows Grow

China’s stock market is even more corrupt than you thought, according to a fascinating story in The Fiscal Times:


Hong Zhou and Guoping Li of Beijing’s Central University of Finance and Economics find in a paper that 74 percent of private firms which get to list under Chinese IPO rules are politically connected. What’s more, those politically connected firms are also more likely to report “significant deterioration” in financial performance after listing.

“The widespread existence and ubiquitous importance of political connections in China’s stock markets suggests that to some degree, China’s stock markets have been regulated on a political connections-based regime, which may explain the poor performance of China’s stock markets,” the authors write in a paper published last week.

There’s been a lot of talk about a bubble in Chinese stocks, but, as this story suggests, stock prices have largely underperformed given China’s growth. With twenty years of world beating growth rates, the Chinese stock market should have made even more millionaires than it has. One big reason for this is the role of politics in the Initial Public Offering approval process.

When a company goes public and places its shares on the open market in an IPO, insiders who invested early on can reap large rewards because their pre-IPO investments now turn into shares that can be sold at higher prices on the stock market. In China, politically connected firms appear to receive special treatment: they get approval for IPOs based on misleading and false information, and they escape penalties when any problems appear. What this means in concrete terms is that while the insiders reap huge reward, the ordinary people who buy shares in these companies will watch their shares lose value as the companies fail to live up to expectations — because those expectations were based on false, misleading and incomplete data. The company doesn’t do well and share prices go down, or in a best case scenario go up but not as much as they should have as the original, politically-connected investors cash in and laugh all the way to the bank.This is not only bad news for individual investors; it points to a central flaw in the Chinese economic model, a flaw that is taking an increasing toll. China’s capital allocation system has been so highly politicized that hundreds of billions of dollars in precious, irreplaceable funds have gone to investments that will not pay for themselves. Sometimes it is state-owned enterprises or local governments getting access to huge amounts of credit for political rather than economic reasons; sometimes it is private sector loans that are driven by policy rather than fundamentals (China regularly tweaks the cost and availability of credit to prop up housing prices by luring more investors to buy real estate); as we see here, it can be through a system that fails to screen IPOs properly.Chinese authorities for the most part very good with analysis and they understand with perfect clarity that their economic growth model needs to change. Reform, however, is a lot harder than it looks. There’s been a lot of talk about the need for a shift from export-oriented growth based on manufacturing cheap products for sale abroad to a service-oriented economy based on domestic consumption. But expediting that adjustment is only part of the challenge. China also needs to shift from politically-driven capital markets to a system that allocates capital efficiently and transparently.That isn’t easy to calibrate under the best of circumstances; capital markets are dynamic, fast moving, extremely sensitive to short term factors — and often moved irrationally by herd psychology. Western history since the Dutch tulip bubble of the 1600s has been marked by the booms and busts of capital markets, and as both the U.S. housing bubble and the euro bubble in countries like Italy, Spain and Greece demonstrate, the regulation of financial markets remains more of an art than a science.In China’s case, the simultaneous shift to a new growth model and a new financial market system will be particularly tricky. That’s partly because hard as both transitions are to accomplish on their own, the problems multiply when you try to do it all at once. The single problem that vexes China’s policymakers more than anything else is that the political system is both deeply embedded in and dependent on the status quo. The Communist Party is held together by the very corruption that President Xi Jinping deplores, and the current system of politically based lending has grown up to keep the public happy. Getting rid of the subsidies and closing down the money losing state owned enterprises will mean that a lot of people lose their jobs.Meanwhile, after decades of policy-based lending, China is more of a bubble kingdom than a Middle Kingdom. We’re seeing housing bubbles, manufacturing bubbles, infrastructure projects that can never pay for themselves, malls that will never bring in enough revenue to cover the cost of construction, and whole regions (like the Northeast) where rust belt industries are on life support and state-driven lending for the construction of buildings that have no real commercial or residential use are the only things keeping the economy from tanking. There are so many bubbles, and they are so vital to the prosperity and thus to the political tranquillity of the country, that the government seems to have reached a place where it is equally unsafe to stand pat or to move.China is at a political and economic impasse. The steps required to overcome the economic impasse worsen the political crisis and so, at the moment, China, despite its competent technocrats, its ambitious and activist president, and the extraordinary wealth it has created over three decades of astounding, world-changing growth, is paralyzed in the face of unfolding events. No wonder investors around the world are so worried.
 •  0 comments  •  flag
Share on Twitter
Published on January 30, 2016 13:25

Shaking up Higher Ed Accreditation

Our existing higher education accreditation system—the means by which the federal government determines which colleges can receive certain federal funds and award recognized degrees—is a mess. For instance, it chokes off healthy competition by preventing innovative academic programs and courses from getting a foothold in the market. And even the accrediting agencies are beginning more seriously to consider changes to the system. Politico reported on a recent gathering of the Council for Higher Education Accreditation on the morning of the event’s first day:


The Future Is Now: Where Is Accreditation?” is something many higher ed policy wonks have been asking themselves lately — and it’s the theme of this year’s conference of the Council for Higher Education Accreditation [.  . .]

“We’re convinced that significant change is upon us in accreditation, and the best thing that can happen is, indeed, that we lead it,” CHEA President Judith Eaton told Morning Education. Some of the ideas driving that change — risk-based institutional reviews, for example, or the need to move more quickly to revoke accreditation from a bad college actor like Corinthian — are “out of the comfort zone of, traditionally, what we have been doing for years,” she said. “This is what the public wants from us, and this is what government wants from us.”

A change like stripping failing schools of their federal subsidies could do some good on the margins. But, at the same time, if that means imposing more rigorous federal requirements, that could create its own set of problems: Colleges already spend an inordinate amount of money complying with regulations set by accreditors, and adding more might not only increase these costs but also make it even more difficult for promising new programs to get approved.

Perhaps a better approach could be to break the federal monopoly on accreditation by allowing other bodies, including local governments, corporations, and nonprofits, to accredit individual courses. This could give students greater flexibility, increase competition, and bring down overall higher education costs. But seeing how hesitant the current educational establishment is to accept changes to accreditation, don’t expect it to sign on to such a radical idea anytime soon.
 •  0 comments  •  flag
Share on Twitter
Published on January 30, 2016 09:00

The Promise of Genetically Modified Mosquitoes

As the Zika virus spreads unchecked through the Americas, there’s been an urgent search for a way to stop it. In the public policy equivalent of a Hail Mary pass, El Salvador’s government even advised its citizens to avoid getting pregnant until 2018. Yet help may be on the way, NPR reports:


In Brazil, in the wake of mounting concern over Zika, Oxitec has announced it is expanding a program to release genetically modified Aedes aegypti mosquitoes in Piracicaba, a city about 100 miles northwest of Sao Paulo.

The company breeds and releases into the wild male mosquitoes that don’t produce viable offspring. When females mate with the GMO males, they lay eggs that hatch but the larvae die before adulthood. Oxitec says trials conducted in Brazil and other countries over the past decade show releasing bioengineered male mosquitoes can reduce the wild Aedes aegypti population by 90 percent.

We’ve mentioned Oxitec’s mutant mosquitoes before as a potential way to protect against dengue fever, but the Zika crisis might just end up being their breakout role.

Shipping and airplanes give the virus a way to spread—but just as technological innovation creates new problems, so too can it offer solutions. Let’s hope that even if mutant mosquitoes don’t work out, scientists are able to find an alternative in short order.
 •  0 comments  •  flag
Share on Twitter
Published on January 30, 2016 07:00

January 29, 2016

Signs of a Coming North Korea Missile Test?

After reports emerged earlier this week that North Korea may be getting ready for a long-range missile test, Japan has been making precautionary preparations. The Christian Science Monitor reports:


Japan has put its military on alert for a possible North Korean ballistic missile launch, following increased activity at the Sohae satellite launch facility, indicating that Pyongyang may be preparing for a test firing, according to Japanese officials.


“Increased activity at North Korea’s missile site suggests that there may be a launch in the next few weeks,” a source told Reuters.


Japan’s Minister of Defense Gen Nakatani ordered Aegis destroyers in the Sea of Japan to be ready for any North Korean projectiles, but it’s not clear whether the destroyers have been deployed.


North Korea’s continued belligerence is alarming, but it’s never clear what to expect from Pyongyang. Will the test be remotely successful? Will they even conduct a test? These are unknowns, and could remain so for some time—or not.

Nevertheless, one thing is clear: When North Korea makes an aggressive move, China loses. By scaring its neighbors, Pyongyang gives Japan and South Korea a reason to militarize.
 •  0 comments  •  flag
Share on Twitter
Published on January 29, 2016 14:24

No Date Set for Russia-OPEC Talks

When word first got out yesterday that Russian energy officials and the heads of some of its largest state-owned energy companies were meeting to discuss collaborating with OPEC to coordinate production cuts and thereby drive oil prices up from their bargain-basement levels, markets reacted strongly and prices spiked, but in the aftermath of that flurry of activity, there’s been plenty of pushback on just how significant this spate of news was.

The vice president of the state-owned oil company Lukoil helped kick off this speculation when he said earlier this week that “if such a political decision is taken, Russia should jointly work with OPEC to cut supply to the market,” concluding that “it’s better to sell one barrel of oil at $50 than two barrels at $30.” Lukoil is Russia’s second largest oil company, and a spokesperson for its largest—Rosneft—downplayed the chances of production cuts, telling the FT that “nothing new has happened,” and adding, “Consultations with Opec happen all the time. All positions are well known; they have not changed in any way.”Market analysts themselves have piled on the skepticism. As one Barclays commodities analyst wrote, “Talk of an OPEC cut is likely no more than an attempt to shift market sentiment. We remain skeptical about a change.” “I think chances are pretty slim that there could be a major output cut,” said another analyst from Société Générale.Russian Energy Minister Alexander Novak told Bloomberg today that while Russia was open to the idea of joint cuts with OPEC, it would only happen if those cuts were made by everyone involved. “This should be a consensus. If there’s a consensus, it makes sense,” he said, adding that “there’s no set date” for a meeting to hash this all out.Still, just by mooting the idea, Russia has seen oil prices kick upwards more than 5 percent. Even if an actual agreement doesn’t seem in the offing (and it doesn’t), this hasn’t been a total wash.
 •  0 comments  •  flag
Share on Twitter
Published on January 29, 2016 13:51

China’s Slowdown Hits Germany

Slowly but steadily, we’re learning new details about China’s weak economic fundamentals: Some of China’s biggest companies are in peril of defaulting, according to the Financial Times. “Beijing knows,” writes the FT, “that with $15tn in corporate debts, equal to about 145 per cent of gross domestic product, any sustained wave of defaults would trigger a financial crisis.” Yet though Beijing has been injecting liquidity into the companies, the government appears to be floating the idea of letting some sputtering enterprises default.

Letting even a few of these companies fail could have grim, if unpredictable, effects on the domestic economy, particularly in the already beleaguered Liaoning province—known as China’s rustbelt. And the effects of China’s overall economic troubles don’t stop at its borders, either. The China slowdown is having a serious impact on the international economy. This is particularly true for emerging markets, but the WSJ reports that Germany, a developed country, is feeling the pinch too:

German exports to the U.S. and many other markets are still growing, cushioning the impact of China’s troubles. But with much of Europe still licking its wounds from the long eurozone debt crisis, business confidence in Germany is vulnerable to continued cooling in Asia.

“The overall situation in China is depressed,” said Ulrich Reifenhäuser, a management-board member at machinery maker Reifenhäuser Group in North Rhine-Westphalia. “I see very few orders in the near future.”German exports to China fell by 4.3% from January through November, compared with 2014, the German statistics service said this month.

It isn’t just commodity exporters, that is, who are vulnerable to China’s slowdown. Makers of capital goods for China’s heavy industry are badly exposed to it, too.

China heavily over-invested in manufacturing capacity, projecting that super-hot growth would last forever. It never does, and now China has too much manufacturing capacity and its factories are either closing or churning out goods that people won’t buy at a price that covers costs. Chinese manufacturers have woken up to these realities, and they are scrambling to stay alive. That means they aren’t spending money on buying more equipment to make more stuff that they can’t sell. But Germany’s economic strength is heavily connected to its ability to make high-quality capital goods—machines that make other stuff. Germany’s export sector therefore needs a strong Chinese manufacturing sector, and the cutback in Chinese purchases of high-quality capital goods is hurting the German economy—and will continue to so for some time.Conditions are going to be tough for quite a while. The manufacturing bubble in China (and globally) is huge, and the existing overcapacity will take years to be liquidated.
 •  0 comments  •  flag
Share on Twitter
Published on January 29, 2016 11:31

NATO Spending Still Shrinking

Despite the ongoing Russian occupation of eastern Ukraine and the conflicts in Syria and Libya that are driving millions of refugees into Europe, the European members of NATO still cut their defense spending overall last year. Reuters reports:


NATO’s defence spending as a share of economic output fell 1.5 percent in 2015, the sixth straight year of cuts, dragged down by a 12 percent decrease in Italy, the U.S.-led alliance said in its annual report.

The 2008/09 financial crisis and the ensuing euro zone crisis forced many NATO allies into drastic measures to reduce their budget deficits, leading to sometimes sharp cuts in defence spending.But NATO Secretary-General Jens Stoltenberg welcomed the data showing total defence budget reductions outside the United States, which accounts for almost three-quarters of NATO military spending, fell just 0.3 percent last year. Overall, the alliance’s total cuts were the mildest in four years.“We have started to move in the right direction,” Stoltenberg told a news conference, saying that 16 allies spent more on defence in real terms in 2015 and there was also an increase in spending on new equipment. “The cuts have now practically stopped among European allies and Canada.”

Stoltenberg is trying to spin this as good news. But after the Great Recession, many European NATO members treated their defense budgets as rainy-day funds and raided them heavily (Italy, for instance, cut defense spending by 28%.) Collectively, our European NATO allies shed the equivalent of the the entire German Army in troops. To get back up to scratch, even larger increase, in percentage terms, will be required. (Due to the laws of mathematics: think of what it would take to recover from a 28% drop in a stock portfolio.) Germany, for instance, recently mulled the kind of spending increase that would be required to get to the NATO target of 2% of GDP: an eye-watering 70% increase in its military budget.

As those German defense hearings indicate, there have been some signs recently that some European nations are waking up to the necessity of defense increases. But it is alarming to see the Italians still treating their military as optional, even as Libya burns across the Mediterranean, migrant boats come ashore every day, and, not to put too fine a point on it, America has made it clear it’s no longer willing to take care of every military problem that affects Europe. Under the circumstances, it’s hard to see “just” a 0.3% overall decline as anything to cheer.It’s true that after President Obama, the next occupant of the White House will almost certainly be at least somewhat more proactive in the military crises (Ukraine, Syria, Libya) that are currently bedeviling Europe. But America will not just be able to wave a magic wand and make the problems go away. During the Cold War, the Europeans were a much stouter part of NATO than they are now, accounting for 50% of total spending, as opposed to approximately 30% presently. Now that history has returned, so too, sooner or later, must the measures all mature democracies take to defend themselves.
 •  0 comments  •  flag
Share on Twitter
Published on January 29, 2016 09:45

Blue Civil War in New York’s Jails

An effort by the New York Correction Officers’ Benevolent Association to grant anonymity to guards found responsible for wrongdoing highlights the ongoing clash between unionized public sector workers and the people they are supposed to serve—an increasingly important dynamic taking place in city and state governments across the country that’s part of what we’ve dubbed the “blue civil war.” From the New York Times:



Last year, an administrative law judge ruled that [a corrections officer], should be fired for repeatedly kicking a 16-year-old in 2011 who was prone on the floor. The judge noted that Officer Victor had been suspended for kicking another young inmate in 2004. The officer’s lawyers requested that his name and records be redacted.


But the judge, Faye Lewis, declined, writing, “OATH’s publication of its reports and recommendations without redaction furthers the public interest in transparency and open government.”


Last summer, the Correction Officers’ Benevolent Association appealed the tribunal’s hearing by going into State Supreme Court and arguing that not only the officer but also all other officers “similarly situated” should be granted confidentiality.


Public sector unions are an important Democratic constituency and form the foundation of the urban political machines that control so many large American cities. But the most serious grievances that many Democratic voters feel are about the inadequacy of the services these employees provide: dysfunctional schools, unaccountable law enforcement, abusive prison guards, or inefficient welfare bureaucracies.

Unions, without hesitation, seem to side with the incompetent or mean-spirited employee over members of the public, whether they are children being taught by bad teachers, or inmates being beaten up by brutal guards, or African Americans being shot by trigger-happy cops.There are two sides to every story, and public employees (who are often competent and well-intentioned) aren’t automatically the villains. Even so, it’s clear that public sector unions tip the balance too far in favor of the employee—not only in individual disputes, but in contract and pension negotiations that effectively mortgage the futures of entire cities and states.Neither party is able to deal with this problem forthrightly. Republicans are more likely to defer to the police and prison guard unions, Democrats to the teachers and bureaucrats—and nobody wants to pick a fight with the firefighters.This is understandable—to some extent, political coalitions depend on currying favor with interest groups—but it’s important to realize that the victims are disproportionately poor and minority communities whose prospects are profoundly affected by whether cities are well-managed and well-run.
 •  0 comments  •  flag
Share on Twitter
Published on January 29, 2016 08:29

Peter L. Berger's Blog

Peter L. Berger
Peter L. Berger isn't a Goodreads Author (yet), but they do have a blog, so here are some recent posts imported from their feed.
Follow Peter L. Berger's blog with rss.