• SOME LIGHT READING

    Things are slow here at B R Blog so here are a couple of items worthy of a quick read:

    Currently on CNN there is a column by David Frum titled โ€œUnhealthy habits are whatโ€™s killing usโ€ that is worth the time to read and consider.

    Citing a recent study for the National Bureau of Economic Research, Frum makes good observations about the root causes of the unfavorable comparisons between the health of US of Aโ€™s citizens and those in other nation-states that spend far less on health care.

    To underscore the validity of Frumโ€™s point a pole now running on CNN.com shows 48 percent of the respondents admit they have POOR health habits.

    There are a range of pointed responses to Frumโ€™s column but if one adds two basic points that can be gleaned from the critical views of Frumโ€™s observations he (plus his commentors) have a good handle on what ails us.

    The two additions are:

    1) Fairly allocate costs. (For example, add the cost of increased health care for those who smoke tobacco to the cost of buying tobacco.)

    2) Narrow the Wealth Gap so that the second and third generation rich (living off of first generationโ€™s initiative) do not have a free ride.

    The Second item is from todayโ€™s WaPo.

    Robert J. Samuelsonโ€™s column โ€œDemocracyโ€™s Demolition Derbyโ€ (he calls it a โ€œpersonal reflectionโ€) provides a many good insights on democracy and journalism.

    It is just too bad Samuelson still has not learned about human settlement patterns. He gets a lot of things right, but so far the importance of location and the spacial distribution of human activity is a blind spot in his understanding of how the world works.

    EMR has not had much to say here at Baconโ€™s Rebellion Blog for a few weeks. We have been more than busy getting TRILO-G Beta 2 ready to ship to Amazon in early January. In spite of motherboard meltdowns, software conflicts, etc. it looks like it will make it thanks to the help of Jim Bacon and many others.

    EMR will also have an item on future prognostication up before 2010. We hope.

    Seasonโ€™s Best and Happy New Year.

    EMR


  • Speaking of Long-Term Liabilities…

    As a follow-up to my previous post about Virginia’s unfunded pension obligations, one might wonder how much long-term debt the commonwealth carries. According to Virginia’s Comprehensive Annual Financial Report (CAFR), the state has long-term debt of $29.5 billion.

    Sixteen percent of that debt, or $4.7 billion, was incurred in Fiscal Year 2009.


  • It Could Be Worse

    As the General Assembly convenes next month with the pressing objective of balancing the budget, one of the things our parliamentarians should be thinking about is the commonwealth’s $3.6 billion unfunded liability for its employees’ post-retirement benefits. That figure comes from a November report published by the U.S. Government Accountability Office.

    Outgoing Gov. Tim Kaine has proposed increasing the contributions of teachers and state employees into the pension system. (See my previous coverage, “On a Slippery Slope: The State Pension Fund.”) With all the other painful decisions that need to be made, will our new governor and legislators have the stomach to enact that reform, or even some other? I don’t know. But we can consider their action or non-action as a good bell-weather for their determination to maintain the state’s AAA bond rating.

    It may come as some consolation to know that many other states have it worse. Our neighbor and economic competitor to the south, North Carolina, has an unfunded liability of $28.7 billion — eight times larger. Our friends to the north, Maryland, have a $14.7 billion liability.

    Or, if you want to consider someone who’s really in a world of hurt, take a look at New Jersey ($50.6 billion liability), New York ($50.8 billion) or California ($62 billion). The powerful public employee unions are pushing those states straight toward bankruptcy. It will be interesting to see which state defaults first, and how many years off that default is. Anyone want to make odds?


  • McDonnell Taps Connaughton to Run Transportation

    The selection of Sean Connaughton for Secretary of Transportation will likely be one of Gov.-elect Bob McDonnell’s most significant cabinet appointments. Connaughton, former chair of the Prince William County Board of Supervisors and then administrator of the Maritime Administration, knows a thing or two about transportation.

    In PWC, Connaughton established a county department of transportation, issued bonds and oversaw the construction of $300 million worth of roads. He’s the logical man to execute McDonnell’s strategy of building more roads while miraculously not raising taxes. Also, his experience with the Maritime Administration makes him well qualified to guide the future of the ports at Hampton Roads.

    Said McDonnell in his press release:

    [Connaughton] gained solid understanding of the transportation challenges facing our suburban and exurban localities in the faster-growing parts of our state. He agrees with me that we much be much faster and more efficient in transportation planning and decision making. And his overall background in transportation law and policy give him a broad perspective on this multi-faceted issue.”

    Given the political reality that McDonnell would appoint (a) someone with strong Republican credentials, and (b) support his program of raising megabucks (but somehow without raising taxes) for transportation improvements, Connaughton is as good a pick as anyone could expect the governor-elect to make. He does, in fact, have an appreciation for viewing transportation in a land use context — a good thing. On the other hand, he showed that he is comfortable with General Obligation debt, which he used (if I recall correctly) to fund road improvements in PWC. Issuing G.O. bonds is one funding source for transportation that Virginia needs to steer clear of as the nation spirals closer to Boomergeddon.


  • Yegor T. Gaidar: R.I.P.


    One of my favorite economists is Yegor T. Gaidar, a former Communist who struggled hard in the 1980s and 1990s to turn Russia into a capitalist country. Gaidar, 53, died Dec. 16 of a blood clot.

    So many people on this blog are free market advocates. At times, they get into the nit-picky about what they sometimes see as a creeping turn to socialism and big government.
    Think of Gaidar and see the approach turned on its head. Consider that you are a member of the Communist Party of what was then a super power. You even edit an academic tome titled “Kommunist.” Yet during the excitement of Mikhail S. Gorbachev’s “perestroika,” you get free market religion and, in increments, you turn into a capitalist that Milton Friedman would envy.
    At the same time, you are thrust into a decision making position of a country undergoing a huge, lightning-fast transition from police and military industrial state to what Russians call “dicki capitalism,”” or “wild” capitalism. You have to keep things in check, fight off mossbacks in the government, avoid civil war (with nuclear weapons no less) and somehow build an enduring structure of a free market economy.
    The man who assumed the Herculean task was Gaidar. He sure didn’t seem the part. He looked literally, like an egghead. His round, oval face topped a small body that was equally round and soft. He was usually soft spoken and kind when we used to meet in the cluttered office at his institute in the late 1980s. The issue then was than Gorbachev’s efforts towards breaking from the command economy past weren’t going fast enough.
    Gaidar had an interesting background. His great grandfather and grandfather were Russian culture icons since they wrote children’s fairy tales that are still in circulation today. Not many people know this but in 1962, young Yegor was a child in Cuba during the Missile Crisis. He was there because his father was an official with the Soviet team supporting Castro.
    When the Soviet government fell apart in December 1991, Gaidar was one of the leaders who tried to plot a new course. Just a month before, he had become minister of finance and the economy. He lasted in that post only two months, but that was enough to launch”shock therapy” which is kind of like using a defibrillator to electrify the country into capitalism.
    “Shock therapy” had been used with some success in basket case economies such as Bolivia’s. It had had some success in Poland. Gaidar’s plan was to overhaul state industries and end the gigantic government subsidies, ruble funny money, that for decades had kept the country from teetering to a crash.
    The result were awful in the short term. Inflation jumped to something like 2,000 percent per annum. People saw their life savings vanish overnight and comparisons with Wiemar Germany were inevitable. Later, Gaidar helped with mass privatization in which ordinary citizens got vouchers for shares in formerly state-owned industries. It was a privatization of a scale never seen before. Even Margaret Thatcher, the Queen of Privatization during the Reagan era, only really privatized maybe a couple dozen British firms.
    Gaidar had plenty of critics. He was blamed for crashing the economy. Rank and file Russians had no idea to do with their vouchers, so smart entrepreneurs picked them up for mere kopecks, giving rise to the oligarchs, which still rule today.
    Gaidar’s political career remained spotty. He served briefly as Boris Yeltsin prime minister before being sacked. But as Anders Aslund, a Swedish economist and Russia expert notes, Gaidar helped create the capitalist foundations of the new Russia that people like Vladimir Putin get credit for.
    My most vivid member of Gaidar was in the coup d-etat against Gorbachev on Oct. 3 and 4, 1993. I was Moscow bureau chief for BusinessWeek and the streets erupted into gunfire. We were conveniently located about a quarter of a mile from the White House, the locus of most of the fighting.
    I was leading a team of three. We were crashing a cover story, intermittently running out on the streets, dodging for cover from the machine guns and then running back to the office to file a steady narrative to New York. We needed analysis as well.
    That’s where Gaidar came in. The streets were extremely hazardous. The two-day combat resulted in more than 1,000 casualties, including 150 dead. Of them, seven were journalists.
    Gaidar knew we needed an interview. He also knew that we would be placing ourselves in great danger if we tried to get to the Kremlin where he was holed up with Yeltsin’s staff.
    You know what he did? He grabbed a tape recorder, interviewed himself and sent us the tape.
    This post is in memory of the man.
    Peter Galuszka

  • Give Me My Gas!


    As Chamber of Commerce events go, the energy conference held in Richmond by the Virginia group on Dec. 10 seems typical enough. A slew of energy company executive boosted their endeavors and their products, noting that the state will need coal, nuclear, wind, and natural gas.

    For the coal officials, there was no mention of mountain top removal which lops off entire mountaintops like a bottle cap forever changing the watershed and aesthetics of coal country. There was the usual griping about possible cap and trade legislation and regulations and regulators in general.
    Which is a curious point when one reads the Bristol Herald Courier in a Virginia city so far west it is half in Tennessee. The newspaper ran an eight-day series raising questions about how royalties from natural gas deposits are collected and distributed.
    Some time ago, the General Assembly enacted laws that required “forced pooling” which means that others can tap the gas deposits underneath your property. You can’t give your consent — it’s not your call. But, you are supposed to get funds from an escrow fund into which the gas tappers are supposed to put a certain amount of money to pay you back. That way, you see, it’s not outright theft.
    The newspaper found that some natural gas companies such as EQT and CNX Gas, a unit of coal giant Consol Energy, don’t always make such payments. The issue gets more complex because some property owners have deeded over rights to coal, but not the methane that is typically found underground nearby the coal. What’s more, many of the land owners are merely individuals who may not even live in the gas producing areas of Virginia.
    They may not know what’s going on and the state’s Gas and Oil Board and the Department of Mines, Minerals and Energy are supposed to tell them. That’s a tough pull since the state has all of TWO (count ’em) regulators overseeing something like 1,000 production wellheads.
    So much for the whining about over regulation.
    It’s really too bad since natural gas is coming into its own. There’s a flurry of mergers such as ExxonMobil’s acquisition of XTO Energy. Big new reserves have been found in the U.S. and Canada.
    Sounds great. But who will have the advantage? Big companies such as those at the Virginia Chamber’s one-sided energy conference. Small property owners don’t have a place at the table.
    Peter Galuszka

  • Tim Kaine’s Excellent Idea


    Sunday was an awful, cold and rainy day so I ended up on the sofa reading The New York Times by the fire with my German Shepherd who wasn’t feeling well.

    Imagine my surprise when I turned to the magazine and saw Old Virginny mentioned in “The 9th Annual Year in Ideas.” Among the great idea snippets such as putting artificial sound machines in hybrid cars so you can hear them coming and prevent accidents was the state being praised for severely limiting cul-de-sacs from future subdivision development.
    The real estate development complex loves cul-de-sacs because they can be touted as safer for parents of young kids and lots on them sell at a premium. But critics, the Times notes, say that they “funnel cars onto clogged arterial routes and restrict access to neighborhoods when emergency vehicles need to respond.”
    The Times credited Gov. Tim Kaine with pushing the pioneering legislation through. Future subdivisions need a new level of connectivity and if developers don’t go along, the state, which provides 83 percent of road services, will cut back on things such as maintenance and snow removal.
    We wrote about this in “The Road to Ruin” series on this blog. So, it is nice to see that the state is getting some attention for being forward looking rather than the opposite, which is all too often the case. The Times says that other states are likely to follow Virginia’s lead.
    Peter Galuszka

  • Cogeneration in Copenhagen

    Another Sunday article worth reading is Neil Peirce’s most recent column, in which he touts the virtues of cogeneration as a technology for district heating. He writes:

    The setup in Copenhagen, created by a regional accord of five mayors in 1984, captures heated water from electricity production that would normally be pumped into the sea, and channels it back into homes and businesses for heating through a 1,300-kilometer system of underground pipes.

    The result: 97 percent of the region now gets clean and affordable heating with sharply reduced carbon emissions. The systemโ€™s steadily switched from coal to natural gas and biofuels such as straw and wood pellets. Plus, it taps waste heat from incineration plants.

    The result: Copenhagenโ€™s individual homeowners save close to $2,000 in yearly utility costs. And the system reduces carbon emissions by hundreds of thousands of tons each year.

    There is nothing new about cogeneration heating — many American cities employed it once upon a time. I believe that Richmond has a complex of old district heating ducts in the Capitol area. The trick is to adapt cogeneration to modern times. The challenge isn’t technology or economics, it is institutional inertia and the increased complexity of our society that makes it difficult to execute any kind of communal enterprise.

    Perhaps the Virginia Department of Mines, Minerals & Energy could survey Virginia cities to see where cogeneration could be readily applied. Or maybe some enterprising developer could design a real estate/power project near — dare I suggest it — a municipal dump where it could tap the biofuels.


  • Musing on the Quality of the Transportation Experience

    Alex Marshall, a former reporter for the Virginian-Pilot who covered metropolitan growth issues and went on to write, “How Cities Work: Suburbs, Sprawl and the Roads Not Taken,” has raised some interesting issues regarding peoples’ choices of transportation modes. The length of time it takes to complete the trip is a factor (and so, I might add, is the cost). In a piece distributed through citiwire.net, Marshall invites readers to consider the quality of the trip.

    Money quote: “When it comes to transportation, time is an elastic, subjective, almost mystical thing. One minute spent traveling one way is not the same as another. But the โ€œintangiblesโ€ are hard to introduce into official transportation debates.”

    I hope Gov.-elect McDonnell is attuned to such nuances as he addresses transportation policy in Virginia. He seems to be of a mindset to raise and spend a lot of money. I hope he spends it wisely.


  • “Fair and Balanced” Deficit Blame


    Since bashing deficit spending is now de rigueur for some on this blog, especially the Baconator himself, I thought it might be interesting to note what the Huffington Post and the Center on Budget and Policy Priorities have to offer on the topic.

    True, they are from the left side of the aisle, but I am asked to take seriously lots of stuff put out by Commentary or the American Enterprise Institute, so, like Fox News, I am trying to be “fair and balanced.”
    Sam Stein of the Huffington Post notes that a new study by the Center shows that the current $1.4 trillion annual deficit run by the government doesn’t really have all that much to do with Barack Obama. Au contraire it is the fast-forgotten “W” (remember him?).
    A few of George W. Bush’s deficit culprits:
    • Tax cuts in 2001 and 2003 (which aided mostly the rich), cut revenues.
    • The wars in Iraq and Afghanistan are major factors. The other day at a Richmond speech, Sen. Jim Webb but the price tag at $2 trillion. Noted economist Joseph. E. Stiglitz has put it at $3 trillion.
    • The nasty recession has cut tax revenues as sales diminish and property values tank.
    • The TARP financial services bailout and the rescues of Fannie Mae and Freddie Mac added mightily to the expense list and these were Bush programs. In fact, while government spending did rise noticeably in 2009, about 41 percent or $245 billion of it were the result of Bush bailouts.
    To be fair, TARP now seems to have worked and banks are repaying their rescue funds. Obama is thinking about flipping some of the money over to create jobs, which is a fine idea. But Obama’s troop hikes in Afghanistan are going to be costly. So will health reform, but that is pretty much in the hands of the House and Senate leadership, not Obama’s.
    Anyway, read it and weep. Where were all those grave deficit concerns among you Republicans during the Bush years of 2001 to 2009?
    Peter Galuszka


  • Who Lost B&W?

    McDermott International Inc. has announced plans to spin off its Babcock & Wilcox subsidiary, which designs and builds nuclear reactors for power plants and the U.S. Navy, and move the corporate headquarters from Lynchburg to Charlotte, N.C.

    The relocation will involve fewer than a dozen employees, leaving some 2,400 employees in the Lynchburg area unaffected. But the loss could prove to be more than symbolic. The employees making the move presumably will be highly compensated senior executives. They will require high-end office space, they will support their new community philanthropically and, one can only assume, they will hire the support staff required to run a publicly traded company. That office space, that philanthropic support and those jobs will go to Charlotte, not to Virginia.

    It is understandable that a publicly traded company, as the new J. Ray McDermott International S.A., will be, would want to locate a headquarters facility in a city providing easy access to legal, financial, accounting and other talent. But that talent is readily available in nearby Richmond or Northern Virginia, both the home to numerous corporations the size of McDermott. Were either of those two locations considered? Was anyone in the state economic development community aware of the decision? Did Virginia communities ever have a chance to pitch McDermott? Is there anyone to hold accountable for this lost opportunity?

    I have posted in the past on Virginia’s opportunity to grow a powerful nuclear-power industry cluster around the presence of B&W and Areva in Lynchburg, the Northrup Grumman shipyard in Newport News, Dominion in Richmond, North America’s largest uranium deposits in Pittsylvania County, and access to nuclear regulatory authorities in the Washington, D.C., area. In that regard, Virginia has far more to offer than North Carolina. A year or two ago, Sen. Ken Cuccinelli, since elected Attorney General, showed a strong interest in the idea of leveraging Virginia’s nuclear expertise into more economic development — he and I chatted briefly and exchanged some email correspondence on the subject. But I never sense a glimmer of interest from anyone else. And that, sadly, includes the Kaine administration.

    Claiming the corporate headquarters of a publicly traded company whose main business is nuclear power would have highlighted Virginia’s role as a leader in the nuclear industry — all the more because of B&W’s leadership in that industry. In June the company announced the development of a small nuclear reactor, which could make it possible to bring nuclear power online in smaller, less expensive increments. The company described it as a “potential game changer for the global nuclear market.”

    The loss of the headquarters won’t change where the design work takes place, which, I presume, is Lynchburg. But the announcements, the glory and much of the deal-making will come out of North Carolina. Consider the McDermott-H.Q. episode as a lost opportunity. Also count it as one more defeat in the long-running competition between the Tarheels and the Cavaliers. Our record doesn’t look much better in economic development that it does in basketball.


  • Virginia Corrections Could Use Some Correcting

    Virginia’s prison system is one of the biggest budget-busters in state government. Expenditures have doubled over the past eight years to about $1.25 billion. I’m all in favor of putting the crooks in jail — and keeping them there. But that doesn’t mean we can’t do a better job of running the system.

    One very simple reform could save millions of dollars. As pointed out by Pat Nolan in the current edition of the Bacon’s Rebellion newsletter (published by the Thomas Jefferson Institute for Public Policy):

    For instance, almost 10 percent of new admissions to Virginiaโ€™s prisons havenโ€™t committed a new crime. They have merely broken the rules of their supervision. Many of these offenders are just knuckleheads who donโ€™t follow the rules. They donโ€™t turn in paperwork, or miss an appointment with their parole officer or test dirty for drugs. Of course we want them to follow the rules, but at $28,000 per prison bed per year, it is very costly โ€“ and counterproductive โ€“ to send these โ€˜technical violatorsโ€™ back to prison.

    It is far more effective, and costs much less, to administer quick, certain and short consequences for breaking the rules. In Hawaii, Project Hope enforces the rules of probation with immediate consequences. If offenders have a dirty urinalysis they are immediately jailed โ€“ but not for years, just 24 or 48 hours. The result: reduced โ€˜dirtyโ€™ drug tests by 91 percent and a drop in both revocations and new arrests by two-thirds. This program accomplishes what we want โ€“ teaching offenders to follow the rules and keeping addicts in drug treatment โ€“ without filling the prisons.

    Nolan, who leads the prison reform arm of Prison Fellowship, describes the efforts of other states to bring their correctional budgets under control. As Gov.-elect Bob McDonnell looks for ways to close a $1 billion+ budget gap next year, the correctional system is a logical place to look for savings.

    Speaking of Virginia prisons, Reason magazine had this to say about the ban on moking in state prisons. Without cigarettes, what will prisoners use as a means of exchange?

  • Rethinking Nuclear Power

    Flash back 30 years and review the mood about nuclear power. Hollywood had just come out with its prescient anti-nuke film “The China Syndrome” with such A-list actors as Jack Lemmon, Jane Fonda and Michael Douglas. Just a few months later, a real meltdown did occur at the Three Mile Island commercial plant in Pennsylvania.
    Here in Virginia, yours truly was a reporter at The Virginian-Pilot investigating Vepco’s Surry Nuclear Station, which resulted in a front page article with two full inside pages of text. At the time, Vepco’s badly managed nuclear program had earned the highest level of federal safety fines ever.
    So, it was an eerie sense of deja vu that I was being escorted around at Dominion’s (formerly Vepco’s) North Anna nuclear station for an article I was researching in Style Weekly. Dominion officials seemed willing to let a photographer and I see just about everything. Underlying the post 9/11 trauma, from time to time tough-looking men in black flak jackets and evil looking assault rifles sauntered about.
    Dominion is considering adding a third unit at North Anna. It needs about 4,600 extra megawatts of power over the next decade or so, thanks in part to the extra heavy loads that the ordinary household demands for our cell phones, desktops, big screen televisions, Wii games, iPods, among other devices. Another issue is that big search engine firms such as Google plan huge server farms in Northern Virginia which is a switching center for half of the Internet traffic in the U.S. The server farms are huge electron hogs.
    Another reason is that Its North Anna and Surry units are 1970s vintage, like most of the 104 operating reactors in the U.S. Utilities are scrambling to upgrade aging units while some 17 power companies, including Dominion, are planning 21 new units with newly-designed reactors that may reflect three decades worth of technical improvements. Dominion has applied for a license for North Anna Unit Three and is considering bids from six reactor builders with a winner expected by this spring.
    One plus is that as environmentalists concerned about greenhouse gases decry new coal-fired
    generation, nukes seem to be getting a clean bill of health globally. Unlike coal, the nukes don’t emit much in the the way of carbon dioxide and that has changed the minds of some ecologists around the world, according to a piece in The Washington Post.
    True, experts among nuclear critics point out that nuke’s still have a lot of unsolved issues, such as where to permanently dispose of the extremely toxic waste fuel that is now kept on plant sites. And while there hasn’t been a Chernobyl-style accident since 1986, there have been some near misses.
    A notable one had its roots in 2001 when the Nuclear Regulatory Commission decided to delay inspections of the Davis-Besse nuclear plant on the shores of Lake Erie in Ohio. In March 2002, an inspection revealed that boric acid had almost eaten through the 6.5 inch thick pressure vessel enclosing the 32-year-old reactor owned by FirstEnergy of Akron.
    Had inspections been delayed by another five to 12 months, the vessel would have been completely breached, causing a loss of coolant accident similar to Three Mile Island. Fixing it took two years and $600 million. The NRC rated the incident as one of 10 that could have resulted in a TMI-style disaster.
    For Dominion, which has greatly cleaned up its nuclear program since the Vepco days, the biggest hurdle is cost. Utility officials won’t give a price estimate for Unit Three but experts believe it might be about $8 billion.
    That’s a much bigger price tag than Dominion’s highly controversial $1.5 billion Wise County coal-fired plant although it will generate 585 megawatts or about half the power.
    Given the complexity and lingering potential for a radioactive disaster, few investment banks are willing to fund multi-billion dollar nuclear stations without federal loan guarantees. Congress did grant $18.5 billion for such guarantees in 2005 but that’s only enough for about four new nukes nationwide. But 17 electric utilities have applied for the guarantees to build 21 new reactors at a cost totaling $188 billion, or many times what Congress originally provided for.
    Dominion had been considering a reactor design by GE Hitachi called an ESBWR, but talks broke down early this year. Dominion opened up bidding from six reactor makers, including the firm Areva, which is owned by the French government and has a big Virginia footprint in Lynchburg and Newport News. But the delay meant that Dominion was not included in the first four reactors that were picked in May from across the country to get the federal loan guarantees. That’s a major setback.
    Critics have long noted that commercial nuclear power has a lot of hidden costs and trip wires. The loan guarantee issue is just one of them. Much of the development cost of developing nukes has been hidden in Defense Department budgets that funded early reactors in Chicago and at arms plants such as Hanford and Savannah River. Many of today’s reactor designs still are pretty much based on Navy submarine and aircraft carrier reactors originally developed when the testy Adm Hyman Rickover was in charge. And commercial nukes could never have gone forward back in the 1950s and 60s without the Price Anderson Act which capped liabilities for utilities that had an accident at $560 million.
    Gov. Time Kaine has noted that nuclear power could play a key role in the state’s energy future. Curiously, GOPers like Bob McDonnell would rather play their Sarah Palin card of “Drill Here, Drill Now,” regarding offshore oil development when nukes seem a much surer bet since they’ve been int he state since the early 1970s while offshore oil is still highly speculative.
    True, nukes have a lot of dangers. But if the concerns of global warming are as serious as so many believe, they do deserve another look.
    Peter Galuszka

  • Going Vertical


    Being a “pro-business” state, Virginia typically follows trends in business. So, it will be interesting indeed if the Old Dominion follows this new trend.

    This morning’s Wall Street Journal has an intriguing front page story about how big businesses are retreating from the decentralized, outsourcing model that had been in vogue for a few decades. In its place, big companies are sparking renewed interest in the traditional, vertically-integrated approach in which the firms control the supply, the production, the marketing, the sales, and the planning.
    The latest advocate is Larry Ellison, CEO of Oracle who wants to buy Sun Microsystems. He plans to make it “vertically integrated” firm that produces software, computers and computer components.
    Other firms retreating to the 100-year-old corporate model include PepsiCo, General Motors, Arcelor Mittal and Boeing. Pepsi wants to buy back a lot of bottlers and Arcelor is moving back into the raw materials business by buying mines in Brazil, Russia and the U.S.
    What’s with this return to the Andre Carnegie days? It seems that with the downturn, companies no longer can rely on de-verticalization and outsourcing. Bad times have made it harder for first, second and third tier suppliers and producers to operate. They are very short of cash and credit and can’t meet obligations.
    For a prime example, look at Boeing. Its upcoming Dreamliner passenger jet is supposed to set the market for commercial aircraft for years to come. But following management styles du jour, Boeing has outsourced making parts for the plane through a highly complex and far-flung global network of independent suppliers. These firms haven’t made the mark. The Dreamliner has faced delay after delay.
    What has all this got to do with Virginia? Mind set, that’s what.
    When I returned to the state in 2000 after and 18-year-long departure, I noted that outsourcing, privatizing and minimizing governments roles had become a mantra. It wasn’t a political clan thing. It didn’t matter if you were George Allen or Jim Gilmore or Mark Warner or Tim Kaine. Everything was outsourced, including trimming vegetation on the sides of highways, operating roads, and upgrading and running the state’s IT system. Everything that is, except for operating the state’s ABC stores.
    In fact, privatization became a kind of church liturgy that you recite without really thinking about it means. That’s what got us in the VITA/Northrop Grumman mess with huge cost overruns and lousy service.
    With its budget woes, the state will be hard-pressed to follow the corporate trend into vertical integration. Another problem is that considering that the state might run things as well or better than private enterprise is political heresy. A lot of the dinosaurs who run the place or write for this b log will harumph and continue their laud of Thomas Jefferson and limited government.
    Unfortunately, that’s the way it is. But don’t forget, back in the founding years, had TJ gotten his way we would not be a big, powerful country today. We’d be a nation of small farms and shops, sort of like Holland.
    Peter Galuszka

  • The Science is Now Un-Settled

    Back in early 2008, Gov. Timothy M. Kaine launched a commission to study the impact of Global Warming on Virginia. “Gone are the days of debating whether man-made effects exist,” he said. “Those days are gone.”

    Well, it turns out those days are back. And one of the central figures in reopening the debate is none other than Patrick Michaels, the environmental scientist and former state climatologist whom Kaine defrocked from his post. (I covered these events when they happened. Type “Patrick Michaels” into the search box to read my commentary.)

    In what is fast exploding into the greatest scientific scandal of the decade, a large volume of email correspondence and other documents have been either hacked or leaked from the Climate Research Unit (CRU) at the East Anglia University in the United Kingdom. The CRU is the keeper of the world’s most extensive data files tracking temperatures across the globe and back in time. Its data formed the basis for the United Nation’s 2007 Intergovernmental Panel on Climate Change, the report before which anthropogenic Global Warming advocates bow, scrape and genuflect as holy writ.

    The hacked/leaked emails contain extraordinary material suggesting that the keepers of the data massaged the data until it yielded the results they wanted, stonewalled Freedom of Information Act requests to access the data, and sought to marginalize Global Warming skeptics by keeping them out of peer refereed scientific journals. It’s as if an archaeologist had stumbled across a cave in the Holy Land and unearthed documents proving that ancient scribes had tampered with the Gospel of Mark to support their theological views.

    One of the most vilified figures in the email correspondence is none other than Patrick Michaels, a leading skeptic of human-caused Global Warming. As one of the GW high priests said, “Next time I see Pat Michaels at a scientific meeting, I’ll be tempted to beat the crap out of him.”

    The CRU has put out the story that its computers were hacked, thus casting a pall of illegitimacy upon those who would use the documents to criticize the institute, but it’s entirely possible that they were leaked. In truth, the story has been brewing for a long time. In September, Michaels wrote a column in National Review, “The Dog Ate Global Warming,” in which he described the lengthy and unsuccessful efforts over several years of GW skeptics to obtain the CRU’s data . CRU officials gave a variety of reasons for refusing to cooperate. Then one of them confided to a University of Colorado scientist:

    Since the 1980s, we have merged the data we have received into existing series or begun new ones, so it is impossible to say if all stations within a particular country or if all of an individual record should be freely available. Data storage availability in the 1980s meant that we were not able to keep the multiple sources for some sites, only the station series after adjustment for homogeneity issues. We, therefore, do not hold the original raw data but only the value-added (i.e., quality controlled and homogenized) data.

    As Michaels observed then, two months before the scandal broke, “If we are to believe Jones’s note to the younger Pielke, CRU adjusted the original data and then lost or destroyed them over twenty years ago. “

    Apparently, he wasn’t far off the mark. One of the most damaging of the 3,600 documents revealed in what the blogs are calling Climategate is one entitled “HARRY_READ_ME.txt” composed by an unknown computer programmer (presumably named Harry) who spent three years trying to debug the computer code at the core of the CRU’s climate model. Declan McCullagh with CBS, who has done the best MSM reporting I’ve read so far, reports some of the more damaging statements regarding how the database incorporated data from temperature reading stations:

    I am seriously worried that our flagship gridded data product is produced by Delaunay triangulation – apparently linear as well. As far as I can see, this renders the station counts totally meaningless. … I am very sorry to report that the rest of the databases seem to be in nearly as poor a state as Australia was. There are hundreds if not thousands of pairs of dummy stations. … There truly is no end in sight… So, we can have a proper result, but only by including a load of garbage! …

    One thing that’s unsettling is that many of the assigned WMo codes for Canadian stations do not return any hits with a web search. … Makes me wonder if these are long-discontinued, or were even invented somewhere other than Canada! …

    Knowing how long it takes to debug this suite – the experiment endeth here. The option (like all the anomdtb options) is totally undocumented so we’ll never know what we lost. … Right, time to stop pussyfooting around the niceties of Tim’s labyrinthine software suites – let’s have a go at producing CRU TS 3.0! since failing to do that will be the definitive failure of the entire project. …

    Ulp! I am seriously close to giving up, again. The history of this is so complex that I can’t get far enough into it before my head hurts and I have to stop. Each parameter has a tortuous history of manual and semi-automated interventions that I simply cannot just go back to early versions and run the update prog. …

    Right now, defenders of the GW orthodoxy are conceding that the emails are embarrassing but don’t change the overwhelming evidence in support of anthropogenic global warming. That, of course, is total nonsense. The scandal changes everything. The CRU data undergirds the U.N.’s IPCC report, which is widely regarded as the final word on the “consensus” view of Global Warming. If the data has been corrupted — or, worse, deliberately tampered with — the temperature reconstructions of this critical document are worthless. This development, combined with the truly inconvenient truth that, against all expectations, global temperatures have remained flat for the past decade, has thrown the GW debate wide open.

    I warned some time ago, and I repeat my warning now, that Virginians who believe in the necessity of Fundamental Change in human settlement patterns should not rest their case on Global Warming. There are many good reasons for supporting Fundamental Change — rising energy costs, pollution caused by the extraction and combustion of fossil fuels, and dependency upon foreign oil — for moving toward a more energy-efficient society. In recent years, those entirely legitimate reasons have faded into the background as the enthusiasm for saving the world from Global Warming has become the animating force — witness Tim Kaine’s commission on climate change. The danger is this: If GW orthodoxy is descredited in the public mind, so, too, is the need to reform human settlement patterns. And that would be a public policy disaster of the first order.