Monthly Archives: May 2015

Airpower

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We are, sort of, using airpower to support the resistance effort against Daesh in Iraq. I say “sort of” here for a different reason than just that it’s desultorily applied, with a low rate of application. My “sort of” stems from one reason why that rate is so low.

…a bureaucracy that does not allow for quick decision-making. One Navy F-18 pilot who has flown missions against ISIS voiced his frustration to Fox News, saying: “There were times I had groups of ISIS fighters in my sights, but couldn’t get clearance to engage.”

And

Sources close to the air war against ISIS told Fox News that strike missions take, on average, just under an hour, from a pilot requesting permission to strike an ISIS target to a weapon leaving the wing.

And here’s the problem confessed, even though the man plainly does not understand what he’s said:

A spokesman for the US Air Force’s Central Command pushed back: “We refute the idea that close air support strikes take ‘an hour on average.’ Depending on the how complex the target environment is, a strike could take place in less than 10 minutes or it could take much longer.”

Ten minutes for a pilot on scene to get permission to strike. And, as the…spokesman…said, it could take much longer.

Ten minutes for a pilot on scene, who already has his rules of engagement, his limitations on collateral damage, his mission briefing, and targets lined up, to get permission to strike those targets.

Does this administration trust these pilots, trust their judgment, or does it not? If this administration does trust, the pilots need to be allowed to strike, not orbit the area asking for permission and waiting—and waiting—to get it.

A lot can happen in those interminable 10 minutes, and a lot more can happen in that hour. The targets can complete their mission, killing innocents or initiating their own attack on their own targets. The targets can leave the zone, or they can disperse. They can spread themselves among innocents, thereby running the risk of collateral damage above allowed limits for our pilots’ mission. The pilots’ fuel could be consumed in the wait before that permission arrives.

Our pilots should take off with permission to engage. We should be applying air power, not playing bureaucratic games.

Business Investing

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US businesses, feeling heat from activist investors, are slashing long-term spending and returning billions of dollars to shareholders, a fundamental shift in the way they are deploying capital.

Data show a broad array of companies have been plowing more cash into dividends and stock buybacks, while spending less on investments such as new factories and research and development.
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As the trend picks up steam, so too has debate about whether activist investors—who take sizable stakes in companies, then agitate for changes they think will boost share prices—have caused companies to tilt too far toward short-term rewards.

Vipal Monga, David Benoit, and Theo Francis in their Wall Street Journal article at the link lay the bulk of this reallocation of business funds to activist investors demanding a prompt return on their, and other investors’, return. In truth, there’s a lot to this.

There’s another factor though, that plays at least as important a role: government regulation. Regulation compliance cost the US $1.86 trillion in 2013—11% of our GDP. That’s the general case; there also are regulations surrounding increasing—even improving existing—physical plant. The EPA’s new water “protection” rule, for instance, gives the EPA—the EPA!—a say in whether, and under what conditions, a new factory can be built.

And taxes. Despite lots of Congressional chit-chat, there remains on the books, for instance, the medical device tax of Obamacare, a tax that takes money off the top line revenue—revenue coming into a company before the first dime is spent on company-related things. A tax that’s already caused companies to cancel expansion plans or to move them overseas.

Regardless of the cause, though, whether activist, regulation, to taxes, this misallocation of funds can only have a negative effect in the mid- to long run, even though it’s a short-term good for investors like me. This sort of thing is bad for business’ competitiveness and bad in the aggregate for American global competitiveness and technological leadership.

Should our government do anything about this? Of course not, at least not directly. It is bad business to allocate all those funds to buybacks and dividends at the expense of expansion, upgrade, and innovation, but the real economy, the private economy where actual citizens and market participants live and work, will do a fine job of handling this. There’s no need for government to “get impatient” and step in, because the time lags between the stock market and the actual economy are so variable and unpredictable. Which lags make it positively counterproductive for government to interfere.

It would be good, though, if our government moved to reduce the cost of regulation. A good first step would be simply to rescind a random 10% of existing regulations, and then begin serious rescission from there. After that, the real economy will deal with the activists.

Europe’s Immigration Problem

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A European Union proposal to resettle tens of thousands of refugees from Syria and Eritrea across Europe met with strong resistance from some governments, raising doubt about its prospects.

At the same time, another EU plan for dealing with its refugee crisis—a naval operation in the Mediterranean Sea to destroy the vessels that smuggling gangs use to transport migrants—came in for criticism from United Nations Secretary-General Ban Ki-moon.

Never mind that both of these approaches are counterproductive, although not in the way that “some government” or Ban seem to think.

Rewarding these refugees for fleeing, desperate though their plight might be, does exactly nothing to solve their problem—or the problem of their fellows and future refugees in northern Africa. Instead, it only allows the problem to grow worse, and it makes the growing flood an even greater humanitarian problem and an even greater problem for the nations of Europe.

Ban made manifest the general misunderstanding of national responsibilities in this regard.

I encourage EU member states to show compassion as they consider this important proposal to share their resettlement responsibilities. This can enable the European Union to address the dramatically increasing flows of people while setting an example for other regions of the world facing similar challenges[.]

No nation, including no European nation, has a “resettlement” responsibility here. No nation is obligated to allow people—or peoples—who are not citizens to cross its border and enter without permission. And no nation has any obligation to grant that permission—such an obligation would destroy the very concept of borders. Which in turn would destroy the very concept of private property and of ownership, whether private or national.

The effort, money, energy, and other resources committed to “resettlement” (reservations? The US has some experience with the failure of that sort of thing) or to sinking boats (which won’t stem the flow in the slightest; boats like the ones refugees or their African coyotes are using are easy to cobble together) would be better spent, would be more morally spent, working the problems in the refugees’ home countries so there would be far fewer refugees in the first place.

Of course political solutions are preferable, but even with its high up front cost (while potentially being far cheaper in the long run), an included option for working the problems at the source is military intervention. Just War Theory allows for humanitarian military intervention; all that’s necessary is for the intervening country(s) to do it like they mean it.

Besides that, there’s a utilitarian reason to intervene rather than merely to absorb refugees. The refugees are not looking for a place in which to better their lives; they’re looking for a place in which to stay alive. The countries from which the refugees are flooding will only become the more violent as time passes and peaceable people leave. And those countries will become increasing threats to the peace and safety of the European nations just across the Med.

Funny Thing

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…about competition and private cost control.

The Saudis and their OPEC colleagues, at the start of the shale and fracking revolution last year, made an overt decision to keep their own production up, which would allow prices to drop (much of OPEC—especially Saudi Arabia—had lots of cash reserves with which to handle the drop), which would kill American deep drilling and put those competitors out of business, restoring price control to OPEC.

However.

The US shale industry is by necessity becoming more efficient than ever. Low oil prices have become an opportunity. The Saudis have lit a fire under producers to trim the fat, deploy new productivity-boosting technologies and zero in on the most productive geology.

And

Just a year ago, popular opinion seemed to be that shale oil production was generally unprofitable if oil prices fell below $80 per barrel.

And

Statoil, for example, reported that just in a few months it cut its drilling time for new wells in Texas’ Eagle Ford formation from 21 days to 17. That kind of efficiency gain has helped “petropreneurs” reduce the cost of drilling wells from $4.5 million to $3.5 million.

Other companies are experimenting with new fracking fluids and different types of sand to create better shale-rock fractures. Some are effectively incorporating Big Data to better understand the sweet spots of geologic formations and optimal well-spacing to increase productivity.

The result is a rapid decline in the break-even price across shale plays. Already, analysts believe it is now $60 per barrel and before long will fall to $50.

Oops.

Russia’s New Gulag

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…is on the verge of becoming the whole nation.

Russia’s media watchdog [Roskomnadzor, a government agency] has written to Google, Twitter and Facebook warning them against violating Russian Internet laws and a spokesman said on Thursday they risk being blocked if they do not comply with the rules.

Carefully crafted rules: the three companies encrypt their transmissions, which means the Russian government can’t tell who’s saying all those nasty things about Putin and his fellows in that government.

To comply with the law, the three firms must hand over data on Russian bloggers with more than 3,000 readers per day, and take down websites that Roskomnadzor sees as containing calls for “unsanctioned protests and unrest[.]”

This is “free” speech and rule by law in action, Russian style.