Belmont Club

Sometimes Less is More

De-weaponizing government

The Washington Post tells the interesting story of Trump secretary of state nominee Rex Tillerson and Hugo Chavez.  “Rex Tillerson hadn’t been CEO of ExxonMobil very long when the late president Hugo Chavez made foreign oil companies in Venezuela an offer they couldn’t refuse. Give the government a bigger cut, or else.”

Most of the companies took the deal. Tillerson refused.

Chavez responded in 2007 by nationalizing ExxonMobil’s considerable assets in the country, which the company valued at $10 billion. The losses were a big blow to Tillerson, who reportedly took the seizure as a personal affront.

Only Tillerson didn’t get mad, at least in public. He got even.

Threatened with a weaponized state Tillerson ceded Chavez the physical ExxonMobil assets and took his company to neighboring Guyana.  There it developed one of the largest oil finds in the world.  Now Guyana is sitting pretty while Venezuela is in abject misery.

GEORGETOWN, Guyana, Monday January 16, 2017 – A leading consultancy firm says Guyana is poised to join the world’s major oil producing countries on the heels of the latest oil find.

Last Thursday, international oil and gas company Exxon Mobil struck liquid gold a second time in its exploration efforts offshore Guyana. The company said it discovered oil from its Payara -1 well on the Stabroek Block after drilling for three months.

“It’s not often that a country goes from 0 to 60 so fast like this,” Matt Blomerth, head of Latin American Upstream Research for Wood Mackenzie, a consultancy firm, told the New York Times.

It’s not often that a country goes from 60 to 0 as fast as Venezuela.  But like many socialist strongmen Hugo Chavez thought riches consisted in physical things he could redistribute through state power. He did not realize that wealth came from human capital.  When Exxon took their know-how to Guyana they left Chavez with the magnificent but declining Exxon asset base. The Bolivarians believed fervently in State power; what they failed to grasp was the lack of power was power too.

Chavez’s misconception was understandable because socialism has always been a set of rules for spending money. No socialist theorist has ever figured out how to make it except through the literal mechanism of printing currency. Yet Venezuela’s attempts to salvage its economy by printing gigantic bills  have only resulted in crowds of paupers roaming the alleys with a millions of bolivars in worthless scrip.

People who actually want to buy something in Venezuela have to use a currency the opposite of the endlessly available bolivar: the mathematically limited Bitcoin.  “Amid growing economic chaos, and the highest inflation rate in the world, some Venezuelans are swapping bolivars for bitcoins in order to buy basic necessities or pay their employees …the number of users has increased from 450 in August 2014 to more than 85,000 in November 2016.” The key virtue of Bitcoin value is scarcity. The State can’t make it.  Generating new Bitcoin requires real resources like as computing equipment and electricity to find the next block. God, or something like Him is the actual Chairman of the Cryptographic Reserve.  This creates the scarcity which analysts at Bank of Canada point out allows it to potentially act like a Gold Standard.

The Tillerson story and Bolivar vs Bitcoin anecdote raise a wider paradox: why is the lack of bureaucratic power sometimes liberating?  The answer may become clearer by examining the opposite phenomenon: the constraining effect of endlessly expanding power.  The Washington Post recently described how nominated education secretary Betsy DeVos repeatedly dodged attempts by liberal inquisitors eager to find her guilty of political blasphemy.

At her contentious confirmation hearing as Donald Trump’s nominee to be education secretary on Tuesday, Betsy DeVos was asked a question by Sen. Al Franken (D-Minn.) about an important education debate involving how student progress should be measured. The query essentially rendered her speechless as she appeared not to know how to answer. When Franken told her he was upset she didn’t understand it, she did not protest.

That was just one of several moments during the hearing in which DeVos either displayed a lack of knowledge about education fundamentals or refused to answer questions that Democratic members of the Senate Education Committee believe are critical to her fitness for the job….

DeVos refused to agree with a Democrat that schools are no place for guns, citing one school that needs one to protect against grizzly bears. (She really said this.)

Such inquisitions have a chilling and sterilizing effect upon American creativity and life. Liberal paternalism cuts both ways.  If people are to be “nudged” into enlightened behavior at some point “liberal paternalism” must become soft fascism.  There is always some line beyond which the “nudge” become a “prod” and then a “cattle prod”.

Who is to judge except those in charge of the nudging?  With half of America in a state of panic over Donald Trump it may timely to ask what liberal paternalists think of Obama’s expansion of executive power now it can be turned against them.  The Senate “nuclear option“of Harry Reid, so desirable when Obama was in office, is now an dreaded implement which can be used by the Republican majority to ram nominees through the ranks of dissenting Democrats. Who lives by the weaponized state necessarily dies by it.

The paradox is that we must judge the state not according to what we would do if we controlled it, but in the light of what it could do if our enemies controlled it. It’s existence, like nuclear weapons become a factor in itself.  The playwright Robert Bolt understood what the Bolivarians did not: the state can be dangerous unless it can be made predictable.   As one of Bolt’s plays puts it: “the law is not a ‘light’ for you or any man to see by; the law is not an instrument of any kind. …The law is a causeway upon which, so long as he keeps to it, a citizen may walk safely.”

The greatest power of the state lies in what it chooses not to do.

This is a hard doctrine for activists who see the state as the agent of change, the giver of benefits, the breaker of rules.  But it’s better than even money that the last thing liberals would like to hear now is: “I’m from Trump and here to tell you what to do”.  Al Franken should understand the danger: if a school “is no place for guns” then why should society be a good venue for the vastly more powerful weaponized state that he now ostensibly fears?

The state has become a potential agency of destruction.  Yet all liberals can think of is how to get the weapon back rather than contemplating how the menace got there in the first place.  If the nation is to avoid becoming what PBS described as the Divided States of America it must first of all throw away the gun each side is diving for in the center of the scrimmage. Venezuela can’t fix it’s woes by printing more money.  Maybe it can go further by printing less.

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Books:

Code Warriors: NSA’s Codebreakers and the Secret Intelligence War Against the Soviet Union, Author Stephen Budiansky – a longtime expert in cryptology – tells the fascinating story of how the NSA came to be, from its roots in World War II through the fall of the Berlin Wall. With access to new documents, Budiansky shows where the agency succeeded and failed during the Cold War and a series of appendixes explain the technical details of Soviet codes and how they were broken. An essential and timely read for all who seek to understand the origins of the modern NSA.

The Righteous Mind: Why Good People Are Divided by Politics and Religion, by Jonathan Haidt. A well-researched examination of human moral impulses that gives you the key to understanding the miracle of human cooperation, as well as the curse of our eternal divisions and conflicts.

The Revolt of the Elites and the Betrayal of Democracy, Author Christopher Lasch asks the question: Can a society survive when a significant portion of its elite have forsaken its founding principles? He blames America’s current problems on a default by its educated elite – their loss of moral values, and their abandonment of the middle class and the poor – and calls for a return to community, schools that teach history not self-esteem, and a return to morality.

The Punic Wars, by Adrian Goldsworthy. An account of the struggle for supremacy between Rome and Carthage (264-241 B.C., 149-146 B.C.) whose outcome had far-reaching consequences for the Western world. Follow the fighting on land and sea; the terrible pitched battles; and such generals as Hannibal, Fabius Maximus, and Scipio Aemilianus, who finally drove Carthage into the ground.

For a list of books most frequently purchased by readers, visit my homepage.


Did you know that you can purchase some of these books and pamphlets by Richard Fernandez and share them with your friends? They will receive a link in their email and it will automatically give them access to a Kindle reader on their smartphone, computer or even as a web-readable document.
The War of the Words, Understanding the crisis of the early 21st century in terms of information corruption in the financial, security and political spheres
Rebranding Christianity, or why the truth shall make you free
The Three Conjectures, reflections on terrorism and the nuclear age
Storming the Castle, why government should get small
No Way In at Amazon Kindle. Fiction. A flight into peril, flashbacks to underground action.
Storm Over the South China Sea, how China is restarting history in the Pacific
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