United States should offer Chen Guangcheng unconditional political asylum

The People’s Republic of China is the world’s most populous autocracy, controlled by a very small winning coalition, of perhaps 200 members.  Predictably, it is one of the world’s worst functioning societies from the perspectives of human rights and economic freedoms. The leaders of the country are busily engaged in looting the people for their own private benefit and in making sure that no whiff of jasmine reaches its masses, yearning as they are to be free.

So it is no surprise that the regime clamped down hard on one of its most heroic citizens, the blind human rights activist, Chen Guangcheng, first jailing him and then subjecting him to house arrest for the crime of exposing forced abortions in pursuance of the one-child policy across the People’s Republic. For good measure, the Standing Committee of  Nine has made sure that Chen’s wife has been brutally beaten at regular intervals as a warning to other would be activists who work for personal freedom in this wretched enslaved country.

Last week Chen made a brilliant escape from his thuggish environment, finding his way, with the assistance of other like-minded freedom-fighters, to relative security in the United States Embassy in Beijing.  The U.S. media is now making a big deal about the difficulty this situation imposes for the Obama administration, in resolving the future of an unexpected guest. 

The hand-wringing is surely specious. For the solution is self-evident, if the principles of  individual liberty and national sovereignty are the joint criteria that govern rational decision-making.

President Obama should immediately and unconditionally offer Chen political asylum in the United States. If he accepts, then the United States should provide  him with safe passage from Beijing to the United States, with or without the permission of the Chinese dictators, and by whatever means – transparent or opaque –  are considered necessary.

Should Chen choose to remain within the People’s Republic, in order to pursue his political agenda from within his own country, President Obama should release him from the Embassy to whomsoever he may choose, but without any further United States’ protection. To do otherwise would be to transgress upon sovereign rights. And the United States has no justification for so transgressing, unless it chooses to declare war on the People’s Republic. Such a declaration,  of course, would be extremely unwise, and almost certainly would be political suicide for the Obama administration.

The solution is simple, but it will take political courage to effect it. Whether President Obama is endowed with such courage is yet to be revealed. No doubt all will be revealed well before the November 2012 elections take place. It should not take more than six months to spirit one dedicated freedom-fighter  to the freedom that he has so justly earned.

 Unfortunately, whatever happens, Chen’s family will remain in the brutal hands of China’s autocrats.  The days of the devils are still with us, and will so remain until the sweet scent of jasmine embraces the entire Middle Kingdom.

Simple route to Social Security reform

As expected, Social Security deficit-financing worsened significantly during 2011, not least because of the hike in inflation in the United States energized by the so-called Arab Spring. Social Security’s inflation adjustment kicked in at 3.6 percent for 2012 instead of at last year’s projected 0.7 percent.

Because Social Security is a Ponzi Scheme and its Trust Fund is a figment of politicians’ imaginations, it is entirely appropriate to treat the program from a ‘pay-as-you-go’ perspective. On this basis, the system trails red ink as far as the eye can see.

The brutal reality is that in 2011 the Treasury had to borrow $160 billion to give to Social Security so that its electronic checks to eligible seniors would not bounce.  This borrowing consisted of $103 billion to cover the cost of the 2012 electioneering reduction in payroll taxes and $57 billion to redeem Treasury securities that Social Security’s ‘trust fund’ cashed in. Yes!  The Treasury issues bonds in order to redeem bonds. That is all that is left of the Ponzi scheme set up by FDR.

In 2012, such bond issues take place without a discernible impact on interest rates. That is because the Federal Reserve is buying bonds like a drunken sailor to keep those interest rates down. This is an unsustainable solution. In due course, the nation will pay a heavy price in terms of inflation for such an unwarranted expansion in the monetary base.

So, if pay-as-you-go cannot fund Social Security checks, what will happen?  Well according  to the law, each and every Social Security check will be reduced proportionately to bring the pay-as-you go into balance. Politically, this is unlikely to happen until the rhetorical trust fund has cashed in all its IOUs to the Treasury. On current trends that will occur around 2030, in the absence of reform. From that date forward, all Social Security checks will be cut by 25 percent.

Who will be hurt most by such a proportionate cut?  Why the least well off, of course. For not only are their checks already smaller, because of low contributions. But they account for a high percentage of the net  worth of the individuals concerned.

The numbers are as follows: Social Security benefits account for a whopping 92 percent of the net worth of single non-homeowners whose income is in the bottom 80 percent of all Americans.  By comparison, Social security benefits account for 62 percent of the net worth of married homeowners in the bottom 80 percent.  Social Security benefits account for only 9 percent of the net worth of households in the 80 to 99 percent bracket.

So, if benefits are going to be cut – and cut they surely will be if major tax hikes are not to be levied across all income tax payers in America – it makes sense not to cut them proportionately.  Indeed, if political support is to be maintained for Social Security at all, it makes sense to increase the age of eligibility as quickly as possible from 67 to 70 years, and then to allow it to rise by a formula linked to actuarial life expectancies. It also makes sense to eliminate tax discrimination against the young by treating Social Security benefits as fully taxable by the IRS.

Those two moves would go far to restoring pay-as-you go balance to the system. The better off would lose significantly more Social Security benefits than the less well-off, more so indeed than if proportionate cuts in monthly checks are implemented.   But they are much better able to withstand the shock.  Their net worth outside of the system is much more favorable. A win-win situation,  if only there was a political leader out there with the courage to embrace it.

 Where oh where is the Messiah?  Out on the campaign trail, everyone.

Hat Tip: Allan Sloan, The Washington Post, April 29, 2012

Will President Obama rat out blind Chinese human rights activist?

In September 2005, blind  lawyer, Chen Guangcheng, is arrested by the Chinese government. His alleged crime is helping to mount a legal challenge over policies designed to force Chinese women into abortions in conformity with the country’s ‘one-child’ policy. In August 2006, Chen is sentenced to four years imprisonment on charges of ‘intentional destruction of property’ and ‘gathering crowds to obstruct traffic’. The crowds gathered to rejoice in the courageous actions of a human rights hero in a country whose government is bereft of all morality.

In January 2007, following international protests and a review of his case, his sentence is upheld.  In September 2010, Chen is released from prison but held at home without charges and monitored by government-paid thugs. In November 2011, Secretary of State Hillary Clinton ‘whispers’ that the United States is ‘alarmed’ by Chen’s continued house arrest. In December 2011, actor Christian Bale attempts to visit Chen, and is badly beaten and turned away by the thugs who guard him.

On April 22, 2012,  following 18 months of house arrest, and persistent beatings of his wife,  Chen Guangcheng skillfully evades his captors and escapes from his house. He walks alone and unguided for fifteen hours until  human rights friends locate him and take him to the ‘safety’ of the United States Embassy in Beijing.

How ‘safe’ is ‘safe’ is now the $64,000 question. A U.S. consulate  evidently was far from ‘safe’ in the case of Wang Lijun, the police chief of ousted party leader Bo Xilai,  just one month ago. ‘Hand him back to the Chinese jackals’ was the order issued by a White House fearful of any loss of good will from Chinese dictators who own $3 trillion of America’s national debt:

“In a video posted online, Mr. Chen appealed to Chinese Premier Wen Jiabao for mercy for his family, which remained behind in his home village of Dongshigu in China’s eastern Shandong province.  ‘Dear Premier Wen Jiabao, with great difficulty, I’ve escaped,’ the activist, clad in a black Nike jacket and black sunglasses says at the beginning of the video. He detailed the conditions of his confinement, including beatings by local thugs.  ‘My mother, wife and child are still in their clutches,’ he said expressing fears that they may be subject to ‘insane revenge’ now that he has left.” Josh Chin and Jay Solomon, ‘Blind Chinese Activist Flees Captors’, The Wall Street Journal, April 28, 2012

This time, President Obama, you are not dealing with the human rights of a brutal police chief with a reputation as being a former enforcer for Bo Xilai. This time you are dealing with the human rights of a man who towers above you in terms of courage and humanity. Throw Chen Guangcheng to the Chinese  junkyard dogs, Mr. President, and may you  justifiably be damned to Hell.

President Obama’s hit list

“Politics is rough, but a president has obligations that transcend those of a candidate.  He swore an oath to protect and defend a Constitution that gives every American the right to partake in democracy, free of fear of government intimidation or disfavored treatment. If Mr. Obama isn’t going to act like a president, he bolsters the argument that he doesn’t deserve to be one.” Kimberley A. Strassel, ‘The President Has a List’, The Wall Street Journal, April 27, 2012

President Obama is not the first American president to develop and publicize a hit list targeted at individuals who actively finance rivals for his presidency. President Richard Nixon, before him appalled many Americans with his ‘enemies list’.  Not many presidents  would relish going into the history books with such a reputation for paranoia and vindictiveness.  President Obama, however, shows no qualms whatsoever. Any one with the nerve to finance a political campaign against the Messiah will be listed as an enemy of the state on the President’s campaign website:

“This past week, one of his campaign websites posted an item entitled ‘Behind the curtain: A brief history of Romney’s donors.’  In the post, the Obama campaign shamed eight private citizens who had donated to his opponent.  Describing the givers as all having ‘less-than-reputable records,’ the post went on to make the extraordinary accusations that ‘quite a few’ have also been on the wrong side of the law’ and profiting at ‘the expense of so many Americans.’…These are wealthy individuals, to be sure. Not one holds elected office. Not one is a criminal. Not one has the barest fraction of the position or the power of the U.S. leader who is publicly assaulting them…The real crime of the men, as the website tacitly acknowledges, is that they have given money to Mr. Romney.  This fundraiser of a president has shown an acute appreciation for the power of money to win elections, and a cutthroat approach to intimidating those who might give to his opponents.” Kimberley A. Strassel, ibid.

The power of the presidency carries with it the power of the IRS, the INS, the Justice Department, the DEA and  the SEC.  Barack Obama has essentially put the names of  Governor Romney’s donors up on ‘Wanted’ posters across all federal government offices.

The President’s hit list displays complete contempt for the First Amendment to the Constitution of the United States. The top name on his list, in truth, should be his own, for breaching the oath of office that he swore in January 2009.

Americans in government: the reign of indiscretion

“Carousing Secret Service agents, thought to be an oxymoron in a slovenly time, was one we didn’t see coming. Former Congressman Anthony Weiner, from a class of humanity that fell long ago, nonetheless broke new ground by frolicking in ghastly color online with unmet women thousands of miles away.  The General Services Administration ‘on retreat’ in Vegas was a bottomless joke until you saw five senior GSA officials (not all of them partygoers) standing in front of a congressional committee, their hands raised like characters in ‘The Godfather.’  That would be hitting bottom for most people.” Daniel Henninger, ‘The Age of Indiscretion’, The Wall Street Journal, April 26, 2012

The Secret Service scandal and the GSA scandal involve serious issues of mismanagement and malfeasance. At least that was recognized in the GSA in the form of top level resignations quickly after the scandal was unraveled. So far the leadership of the Secret Service and of each of the four branches of the US military have not  fallen on their swords to recognize the dishonor that their management failure has inflicted upon their organizations. Maybe that is still to come.  To make it happen, President Obama will have to ask the individuals concerned to turn in their badges and medals and clean out their offices. Those individuals enjoy their perks of office too much to turn them in without outside pressure.

But the scandals would not occur, even under conditions of  gross managerial laxity, in the absence of blatant hedonism on the part of each and every government agent who decided to throw the dice high and go for self-indulgence in breach of his personal responsibilities.

So two issues demand attention. First, how does such undisciplined low-life find its way into positions of high responsibility. The answer to that lies in the culture of government and its bureaucracy. All power corrupts is an excellent working hypothesis.  Scaling down the size and power of government is the only feasible solution.

The second issue is the truly serious one. The reign of indiscretion has been a long time coming in America, starting as it did during the early 1970s when flower power, drugs, sex, and rock and roll, roiled a once hard-working and decent people. With the advent of the social media, the reign of indiscretion is running completely out of control. When a Secret Service agent chooses to project his image on Facebook with photographs of himself becoming sexually aroused by ogling the backside of a Vice-Presidential candidate, for example, one knows immediately that top management in the Service is the targeted audience. How could it be otherwise?

If Britney Spears and Paris Hilton can gain audiences in the millions and celebrity status while their careers tumble, simply by displaying themselves in public with their  private parts uncovered, why not members of the Service and of the military. In a world of relativism, after all, what is good enough for Hollywood low-life is good enough for them.

Well, that is not how it is meant to be! The cure awaits the election of a real president to the White House. President Romney, a Mormon with squeaky-clean morals, is just the person to re-impose discretion on the bureaus and agencies that report to his authority. Clean house, Mr. President. Close your eyes and hold you nose while you do so, because there is much that you will unearth that is unfit for any decent person to behold.

Obama shovels deep to locate 2012 campaign bagman

So why the trip dowm memory lane?  Because the Obama campaign just announced that Mr. Corzine is still on the list of top-tier bundlers for the Obama re-election campaign.  Mr. Corzine has raised more than half a million dollars for Mr. Obama…Whatever happened to changing how Washington works?  We’re about to enter a very long campaign in which an apparently squeaky-clean Mitt Romney is going to be demonized for his success and dragged through the gutter.  Meanwhile, Mr. Obama took cash from a true denizen of the gutter.” Jonah Goldberg, ‘Obama’s tainted bundler’, The Washington Times, April 25, 2012

Jon Corzine has established an inimitable record  for failing his way up the corporate and political ladder, while filling his own pockets with money not always his own. 

Forced out of Goldman Sachs, following a power struggle for a government bailout of Long-Term Capital Management, Corzine neatly pocketed $500 million when the company went public. He spent $62 million of that money-pile to purchase a  New Jersey seat in the United States Senate. The newly elected Senator conveniently struck up a personal  relationship with Carla Katz, also married, but head of Local 1034 of the Communications Workers of  America.  When that extra-marital union disintegrated, after Local 1034 had already endorsed Mr. Corzine and lobbied (unsuccessfully) for his Senate re-election, Jon Corzine paid her off with some $6 million.

The newly-liberated Corzine then expended $40 million in 2005  to purchase the Governorship of New Jersey. When he ran for re-election in 2009, both President Obama and Vice-President Biden stumped on his behalf, the latter raving about Corzine’s economic and financial smarts. The Governor went down in defeat in that re-election bid to reformer Chris Christie, who has since transformed the New Jersey economy. Who truly had the smarts is not now in question. As usual, Joe Biden’s judgment was way off base.

Unchastened by his defeat, Corzine hastened back to Wall Street, where the real greenbacks reside. He became chief executive officer of MF Global Holdings, a bond -trading firm that relied on Jon Corzine’s contacts in Washington to steer the company into lucrative waters. Well, Corzine steered the company into deep waters, but not of the kind that they had anticipated. At MF Global, Jon Corzine bet more than $6 billion on the European sovereign debt crisis, using borrowed client money. Worse still, Jon Corzine commingled client and company funds to pay off financial obligations. That is illegal. Somehow, Jon Corzine physically misplaced $1.6 billion of client monies.  That money-pile cannot be located. Before the 2012 campaign ends, Jon Corzine will be bundling bagmoney for the Obama campaign out of Rikers rather than out of Wall Street.

Almost inevitably, when dirty money has passed through enough ‘white gloves’, no one can tell whether that money is dirty or clean.  At the end of the day, Jon Corzine may hope to receive a personal presidential pardon for any mishaps along his snakes and ladders journey through corporate and political markets.

 Of course, that hope may not materialize in practice. Once back in office for his second-term, even the Messiah’s memory about past promises  may quickly fade. Any other Local 1034  femaleleader out there in New Jersey, interested in dating a badly-treated gentleman endowed with sound long-term prospects?

 

Ugly new arithmetic for US social security and medicare programs

On Monday April 23, 2012, trustees for social security and medicare released annual reports that signal a continuing deterioration in funding projections. The Obama administration – as is its continuing custom – made no response.

In reviewing annual reports in this field, one must distinguish truth from false rhetoric. False rhetoric has it that Social Security’s two trust funds – one for disability benefits, the other for retirees – hold accumulated surpluses from  under-expenditures of past payroll taxes. False rhetoric has it that the medicare trust fund – designed to provide hospital care under Part A of the program – also holds similar accumulated surpluses.

The reality is that presidents and legislators long ago have purloined those monies and expended them on  pork-barrel projects designed to keep them in elective office. In place of real money, Treasury IOUs are all that remain. So all three programs in effect are pay-as-you-go programs. Seniors have just one thin straw to hold on to in this regard. Presidents and politicians know what will happen to them if the truth is ever acknowledged. So those mythical trust funds are likely to be covered as first priorities on the budget, at least, until they are rhetorically drained.

The unpleasant new arithmetic is that the time-line for that rhetorical draining to occur continues to shorten. The cupboard will become rhetorically bare within the lifetimes of some current enrollees in social and security and medicare. And that is politically dangerous.

Let us review each trust fund in turn, starting with the social security disability trust fund. 

The social security disability trust fund is already paying out more in benefits than it collects in tax revenue.  In large part, this is due to soaring disability rolls as unemployed Americans suddenly find that they are prey to irreversible disabilities of one kind or another.  In 2011, social security paid out $128.9 billion to 10.6 million recipients. If current projections hold, this trust fund will be exhausted (rhetorically-speaking) by 2016. This means that the Messiah – if he is re-elected in November 2012 – will have to confront  the problem in his second term.

The social security trust fund for retirees remains in better shape. Its rhetorical surplus is now projected to become exhausted by 2033, three years sooner than anticipated one year ago.  In 2011, social security paid out $596.2 billion in retirement benefits to 44.8 million retirees. By law, benefits are paid in full only as long as the fund balances show a surplus. In the absence of intervention, retirees will lose approximately one quarter of their annual benefits in 2033.  With increasing longevity, some current retirees are in for a nasty shock.  If nothing is done by then, the 2034 elections should make fascinating reading. The reasons behind the worsening outlook, are (1) the 2012 electioneering payroll tax holiday, (2) worsening demographics and (3) rising inflationary expectations.

The medicare trust fund that pays for hospital benefits is projected for rhetorical exhaustion in 2024, unchanged from last year’s projection.  However, over-shadowing this projection is the message that the number of Americans covered by the program increased from 47.5 million in 2010 to 48.7 million in 2011. On average 100,000 additional Americans are joining the program every month. What is going to happen in 2024 when some 55 million American seniors find themselves denied access to hospital wards?

Each year, leading American politicians of both parties dig their heads deeper and deeper into the sand in order to ignore these unpleasant numbers. Sooner or later, they will find themselves buried alive, if they do not confront the underlying problems and provide long-term solutions.

The Dictator’s Handbook: best new book in public choice for 40 years

In a well-established field like public choice, blockbuster publications are extremely rare. Normal science dominates and progress comes in a sequence of marginal steps. Bruce Bueno de Mesquita and Alastair Smith defy such low expectations with their 2012 blockbuster book: The Dictator’s Handbook: Why Bad Behavior Is Almost Always Good Politics. Not since William A. Niskanen’s 1971 book, Bureaucracy and Representative Government has a game-changing text of this seminal importance appeared in the market-place of public choice.

Public choice is often referred to as the most dismal of the dismal sciences for its assumption of self-seeking motivations by all actors in the market-place of politics. But regular public choice is Pollyannaish in the extreme by comparison with this break-out text. Sadly, as the authors brilliantly justify in their case studies and other empirical analysis, The Dictator’s Handbook depicts the nature of political leadership with unerring accuracy. Bad behavior almost always is good politics under conditions both of autocracy and of democracy.

The prime mover of interests in any state is the person at the top – the leader. The authors correctly start from this pivot: the self-interested calculations and actions of rulers are the driving force of all politics. The answer to how best to govern: whatever it takes, first come to power; then stay in power; and control as much national revenue as possible all along the way.

For would-be political leaders the landscape can be decomposed into three groups of people: the nominal selectorate (which includes every person who has at least some legal say in choosing the leader); the real selectorate (the group that actually chooses the leader); and the winning coalition (the subset of the real selectorate that makes up a winning coalition). The authors identify these three groups as (1) the interchangeables, (2) the influentials, and (3) the essentials. Understandably, in order to seize power, a potential leader devotes his energies to category (3)  the essentials. Not to do is to ensure failure from the very outset of the adventure.

Differences in the relative size of these three groups, as the authors demonstrate, decide almost everything that happens in politics – what leaders can do, what they can and cannot get away with, to whom they answer, and the relative qualities of life that everyone under them enjoys (or only too often does not enjoy). Oh yes, and leaders are not representatives of anyone.  By definition they are at the very top of the food chain, and they do their level worst so to remain.

The authors basic concept of utter self-interest on the part of would-be leaders and the notion of governing for political survival, together define five basic rules leaders must use to succeed:

Rule 1: Keep your winning coalition as small as possible. Until his recent passing, Kim Jong Il of North Korea was the world’s best practitioner of this rule.

Rule 2: Keep your nominal selectorate as large as possible. By maintaining a large selectorate of interchangeables, a leader can easily replace any troublemakers in his coalition , influentials and essentials alike. Bravo to Vladimir Ilyich Lenin for introducing universal adult suffrage into Russia’s old rigged election system. Lenin mastered the art of creating a vast supply of interchangeables.

Rule 3: Control the flow of revenue. It’s always better for a leader to determine who eats than it is to have a larger pie from which the people can feed themselves.  The most effective cash flow for a leader is one that makes lots of people poor and redistributes money to keep the essentials wealthy. Bravo to Pakistan’s president, Asif Ali Zadary, estimated to be worth up to $4 billion, as he governs a country near the world’s bottom in per capita income.

Rule 4: Pay your key supporters just enough to keep them loyal.  Remember, your backers would rather be you than be dependent on you. Your big advantage over them is that you know where the money is, and they do not. Give your coalition enough so that they do not shop around for someone to replace you. But do not give them one penny more. Bravo to Robert Mugabe (good old Uncle Bob) who, whenever facing a military coup, manages finally to pay his army, thereby keeping their loyalty against all odds.

Rule 5: Don’t take money out of your supporters’ pockets to make the people’s lives better. Remember that hungry people will not have the energy to overthrow you. Disaffected coalition members, in contrast, can defect, leaving you in deep trouble. Bravo to Senior General Than Shwe of Myanmar who made sure, following the 2008  Nargis cyclone, that food relief was controlled and sold on the black market by his military supporters rather than letting aid go the people. He lost maybe 500,000 of his interchangeables to death by starvation, while taking good care of his well-fed essentials.

Well, by now you will have ingested the message. The quality of this book is not in the nature of the message. It is in the meticulous empirical support for the model that the authors demonstrate for nations of all stripes over many years of experience.

Almost without exception, bad behavior is good politics. Read this book and come to terms with the grim reality of what makes some leaders thrive, while others quickly flit across the political stage and vanish. Money, money money, ruthlessly extracted and ruthlessly outlayed, is what does it folks.

Why Argentina is on the edge of an economic black hole

It all started with Argentina’s 2001 sovereign debt default and the legal tangles with holdouts that still continue. Since 2001, Argentina  has been effectively excluded from the world’s debt markets.  Governments confronting a cash crunch typically turn to those debt markets. In the case of Argentina, however, investors rationally demand punishing interest rates, where they will lend at all.

In such circumstances,  cautious governments balance their budgets and allow their economies to grow and develop without the support of increased sovereign debt.  However, in 2003, Argentinian voters chose to ignore reality. The ghosts of Juan and Eva Peron still stalk the streets of Buenos Aires. So Nestor and Cristina Kirchner – Juan and Eva reborn – ruled Argentina as an adored couple.

Following Nestor Kirchner’s untimely death, his widow – the new Evita – rules alone and, like her original, she spends other people’s money without any constraint.  So Cristina Fernandez is now scraping the bottom of a very limited money-jar.

In 2008,  she came for the monies residing in private pension funds, appropriating them officially as assets in the public domain. In practise, she devoured those funds to cover increasing budget deficits, while avoiding the market in sovereign debt.

In 2010, by which time she had spent her way through the nation’s pension monies, this wicked witch of Latin-America purloined the reserves of the Central Bank of Argentina.  That was enough to win a sufficiency of votes to secure re-election to the presidency. Well they say that a democracy elects governments that they deserve. And the  Peronist Party  is and always has been the party of the gutter.

In 2012, Cristina Fernandez is cash-constrained once again, with all the central bank reserves running like water through her fingers. Well perhaps water is the wrong substance.  For after all, she is a witch.  The economy has slowed, and with it her political popularity has declined, from 70 percent in December 2011 to 50 percent in April 2012.

The time thus came for sabre rattling internationally as Cristina Fernandez played on Latin-American bravismo with cries for seizing what she calls the Malvinas.  This whips up support among those less than well-endowed with political intelligence. But it can carry the witch only so far. She knows that her feeble broomstick will not prevail against a United Kingdom fully ready and prepared to defend its citizens against attack.  She remembers what happened to General Galtieri  and his junta thirty years ago.

So now, Cristina Fernandez has launched another sortie from her witch’s wand – the nationalization of 51 percent of YPF, targeting exclusively the shares that Spain’s Repsol bought in 1999,  six years after YPF was privatized as a money-raising measure. One can rest assured that  Repsol will not be compensated fairly for those shares.

 Predictably, Cristina Fernandez does not intend the oil firm to stay for long in her greasy palms. Find another sucker – if she can – to buy her out,  is her cash-constrained goal. China has shown interest. Better be careful there, Evita. China would not hesitate to use its gunboats if you attempted to pull the stunt twice.  And your broom will look like paper in the face of their military might.

With an electoral majority seemingly composed of stupidos Cristina Fernandez may well secure a third term as president by this maneuver.  Eventually, her big-spending ways will take the economy down the black hole that justifiably looms. Evita’s fate, before the final collapse, most probably will have  been determined by an assassin’s bullet.  The Peronists will mourn her passing with candles and laments. Eventually, those candles will run out.

A culture of moral decay

Good moral orders cannot be imposed. They evolve over lengthy periods of time. They are invaluable assets to organizations that inherit them.

Unfortunately, moral orders are much quicker to decay than to evolve. And when moral rot sets in, an organization is well-advised to stop it at the source and to rebuild it as best one can under admittedly adverse conditions.

Because of a disputed payment for overnight sexual services by a senior member of the U.S. Secret Service, while supposedly preparing security for President Obama’s visit to Columbia last week, significant insights into a pattern of corruption that most likely pervades the Secret Service has come under public scrutiny. A total of eleven Secret Service agents, and ten military officers, all supposedly on duty to safeguard the Presidential contingent, drank themselves out of their minds while partying at strip clubs, brothels, and tourist bars in the port town of Cartagena.  They then brought twenty-one prostitutes and escort-girls back to their hotel rooms for a night of  sexual debauchery. 

The police were called to the hotel and the debauchery was revealed. All agents and officers concerned were placed on administrative leave and forcibly returned to the United States. One senior Secret Service agent has been summarily fired, one senior Secret Service agent  has been allowed to retire, and one more junior agent has resigned. The inquiry continues through the mandatory use of polygraph tests and of  blood tests for drugs other than alcohol. Additional ousters are expected in coming days. In the meantime, the security clearances of all concerned have been withdrawn.

Bringing loose women back to a hotel while on presidential protection duty clearly violates Secret Service conduct rules, as does drunkenness in the course of duty. The more fundamental issue, however, is how widespread this moral decay and agency corruption extends. To be sure, this is not an isolated incident. ‘Wheels up and rings off’, is widely acknowledged as the culture of Secret Service agents whenever they travel out of the country  on security detail .

The Secret Service has long been viewed as an elite organization, composed of members who maintain the highest standards of fitness and integrity, and who are willing to take a bullet for the President. In Columbia, none of those qualities were on display. Two senior agents evidently were cheering on their juniors to get drunk, to engage in sexual liaisons, and ex post to breach their contracts with the prostitutes concerned. Evidence suggests that the heavy drinking had been occurring over several days. I expect that the hotel registers will indicate overnight ‘guests’ in many of the agents’ rooms over a sequence of nights.

When moral decay develops on such a scale, it can only do so when it is condoned from the top of the agency. A nod is as good as a wink, when agency rules are broken and protection responsibilities are pushed aside. For this reason alone, the Secret Service Director, Mark Sullivan, should be fired for cause. The entire second tier of administrators within the agency should also be removed, in their case through forced retirements, thereby protecting accumulated pension funds.

The Secret Service, under new leadership, should then investigate every Secret Service agent, through the use of polygraphs ands drug tests, to determine how far the corruption has spread. Terminations should follow wherever evidence suggests corruption. Even if some agents sue successfully for breach of contract, the agency should stand firm. One rotten apple in the barrel contaminates many others.

Where did this moral decay start? In my judgment, it was ignited by the bad example of two libidinous presidents, John Fitzgerald Kennedy and William Jefferson Clinton. When Secret Service agents are ferrying prostitutes and escort girls into the White House on a daily basis to service the Head of State – as occurred with JFK – and when Secret Service agents are driving the President late at night under covers in unmarked cars for assignations with prostitutes in local Washington hotels – as allegedly occurred with Clinton – they not unnaturally think:  ‘What is sauce for the gander is sauce for the goslings.’

New beginnings will require draconian interventions given the 50 years of moral decay that has worked its way through the Secret Service. The alternative is to abandon Secret Service protection and to allow each president to provide his  own trusted personal bodyguards. Then he will be directly responsible for protecting his own life.