American Brain Drain

November 30, 2007

One myth dogging the immigration debate is that employers are fibbing (or grossly exaggerating) when they claim that hiring foreign professionals is unavoidable because U.S.-born Ph.D.s are hard to come by. But a new report on doctorates from U.S. universities shows they're telling the truth, and then some.

Foreign-born students holding temporary visas received 33% of all research doctorates awarded by U.S. universities in 2006, according to an annual survey by the National Opinion Research Center at the University of Chicago. That number has climbed from 25% in 2001. But more to the point of business competitiveness, foreign students comprised 44% of science and engineering doctorates last year.

"China was the country of origin for the largest number of non-U.S. doctorates in 2006," says the report, followed by India, Korea, Taiwan and Canada. "The percentage of doctorates earned by U.S. citizens ranged from lows of 32% in engineering and 47% in physical sciences, to highs of 87% in education and 78% in humanities." Given this reality, is it any wonder that 40% of Ph.D.s working in U.S. science and engineering occupations are foreign-born?

Immigration opponents still claim that the likes of Intel and Oracle merely want to hire Chinese engineers on the cheap. In fact, U.S. law already prohibits companies from paying these foreign nationals less than natives. And all other things being equal, the American job applicant has an advantage because employers are required to pay an additional $4,000-$6,000 in taxes and fees on every H-1B visa holder they hire.

A mere 65,000 H-1B visas for foreign professionals are allocated each year. And this year, as in the previous four, the quota was exhausted almost as soon as the applications became available in April. This effectively means that more than half of all foreign nationals who earned advanced degrees in math and science in 2007 have been shut out of the U.S. job market.

Economic protectionists oppose lifting the visa cap to meet demand. But it makes little sense for our universities to be educating these talented foreign students, only to send them packing after graduation. Current policies have MIT and Stanford educating the next generation of innovators -- and then deporting them to create wealth elsewhere.

Closing the door to foreign professionals puts U.S. companies at a competitive disadvantage and pushes jobs out of the country. Worse, it does so at a time when other nations are rolling out the welcome mat. Earlier this year Microsoft, which is the third-largest sponsor of H-1B visas, announced plans to open a new software development center near Vancouver. The decision to locate the facility in Canada was based in part on the fact that it doesn't have access to enough foreign workers state-side.

"We currently do 85% of our development work in the U.S., and we'd like to continue doing that," says Jack Krumholtz, the company's director of government affairs. "But if we can't hire the developers we need, . . . we're going to have to look to other options to get the work done." Meanwhile, the European Union recently introduced its own new temporary work visa that's designed to reduce red tape and waiting periods for foreign professionals.

If the U.S. spurns this human capital, it will find a home somewhere else. And that will be America's loss.

Estado autoritario decide quién gana

Efectos de la suba de retenciones a la exportación
Estado autoritario decide quién gana

La nueva ola de aumentos en las retenciones a las exportaciones que aplicó el gobierno tras las elecciones del 28 de octubre trae varios interrogantes implícitos. ¿Cuál es el límite legal que tiene el Estado para apropiarse de ventas que hacen productores? ¿Hasta qué punto tiene la Nación derecho a apropiarse de esos fondos frente a las provincias? No son los únicos. Dos expertos, cada uno en su campo, analizan estas cuestiones en detalle.

Por: Agustín A. Monteverde

Ámbito Financiero

La discusión sobre las retenciones ilustra las verdaderas prioridades que hoy tienen los argentinos. Las justificaciones que dan el gobierno y sus defensores poco tienen de novedoso, pero son sí muy concretas. La suba podría sumar ingresos fiscales por 0,6% del PBI, muy necesarios después del feroz salto del gasto que requirió asegurar el continuismo conyugal. Sin embargo, las necesidades de la caja fueron exhibidas como un mero aderezo del combate a la inflación, argumento central del oficialismo. Desde la UIA se deslizaron incluso elogios ante una medida «prudente» para evitar el impacto en los precios internos. A los obsecuentes y aduladores siguen siempre los oportunistas. Ni lerda ni perezosa, una cámara empresaria se anotó para el reparto. Su reclamo de que se eliminen subsidios a otros sectores no les impidió que los pidiesen para sí.

Mucho más curiosos han sido los argumentos usados por el sector agropecuario -los petroleros ni siquiera se han pronunciado públicamente- para rechazar la suba de las alícuotas. « Inoportuna» y «contraproducente» fueron los adjetivos que con más insistencia los dirigentes rurales descargaron sobre la medida.

# Confusión

Es en este punto donde, para nuestra sorpresa, el razonamiento de la víctima se confunde con el del victimario. Reparemos en la primera de las críticas. Si la medida ha sido inoportuna, significa que en otras circunstancias bien podría no serlo...

Peor que estar mal es acostumbrarse a estar mal. En un país cuyas instituciones, a lo largo de décadas, se han ido vaciando de contenido y mantienen sólo su fachada, el individuo se acostumbra a ser ultrajado en sus derechos (y a violar los de los demás). Habitante más que ciudadano, ya no invoca sus derechos y se aviene a la ley de la selva que -como siempre- dicta el león.

Es así que a la confiscación abierta y por supuesto ilegal -¿es que la Constitución no es la ley superior?- que significó la pesificación de los depósitos se la disculpó aduciendo que «finalmente los ahorristas recuperaron algo muy parecido al capital que depositaron». Por eso, hoy a la manipulación de las estadísticas se la critica por «demasiado» burda, pero no se condena el que sea un mecanismo de control social.

Es el acostumbrarse a vivir en la selva y el encariñamiento con el león lo que lleva a debatir sobre el grado de oportunidad de controles de precios, restricciones o impuestos que son discriminatorios y violan derechos básicos; a enredarse en discusiones sobre si los márgenes comerciales «toleran o no» el nuevo zarpazo del rey.

La aplicación de retenciones a sectores discriminados es propia de visiones autoritarias, que otorgan a los gobernantes derecho y capacidad para decidir cuáles son los niveles de rentabilidad «adecuados» o «tolerables» y quiénes merecen ganar más y quiénes menos. El que gobernantes y burócratas fijen los precios de lo que producen los particulares entraña avasallar y convertir en ilusorio el derecho de propiedad de estos últimos sobre esos bienes y servicios. ¿Cuán dueño es usted del producto de su trabajo si desde un despacho oficial pueden fijar en la mitad o en un tercio el valor al que debe transferirlo?

Bajo esta óptica autoritaria, las unidades productivas son de hecho consideradas como si trabajaran bajo un régimen de concesión antes que como legítimos propietarios con pleno ejercicio de la libertad de comerciar.

Entre otros perjuicios, la suba de las retenciones incrementará la dependencia de las provincias respecto de las transferencias discrecionales del Ejecutivo nacional pues los derechos de exportación no se coparticipan. Y como la suba no ha sido incluida en el Presupuesto 2008, los mayores ingresos podrán ser administrados al antojo de la señora Kirchner, sin discusión parlamentaria.

Afecta en particular a las tres principales provincias agrícolas que a diferencia de las petroleras, que perciben regalíasaportan retenciones sin beneficio directo para ellas.

El incremento de la carga fiscal a las exportaciones agrícolas desalienta la producción y la compra de equipos e insumos productivos justo en el sector que lidera la inversión en la Argentina. A falta de una reforma tributaria integral, las retenciones son una suerte de discriminatoria duplicación del Impuesto a las Ganancias, exclusiva para los productores agrícolas.

# Subsidio

En la perinola productivista, unos llevan siempre y otros no dejan de poner. El aporte del agro no se agota en las retenciones: la tasa de gasoil que paga por los 4.800 MM litros anuales que consume subsidian al transporte urbano y suburbano y a los camioneros. Y, según denuncian las estaciones de servicio, son los mismos transportistas los que revenden al campo con notable sobreprecio la mitad del gasoil subsidiado que reciben.

El aumento de los derechos castigará especialmente a los propietarios de los campos más que a los arrendatarios, empresas y grandes pools de siembra que acostumbran pactar los alquileres en quintales de soja. Y resultarán particularmente gravosos para los chacareros de las zonas marginales.

Retenciones y compensaciones dejan en el ridículo nuestro reclamo contra los subsidios agrícolas en la UE y EE.UU. e inoculan en el sector más competitivo de nuestra economía el virus de la dependencia del Estado.

Estas son las paradojas del «productivismo». Sustrae fondos al sector más productivo y que más invierte para pasárselo a los más ineficientes o para engrosar la «caja chica» -no tan chica, ya supera los $ 26.000 millones- del jefe de Gabinete. Es que, en un país prebendario, es muy peligroso ser productivo.

En el caso de la industria petrolera, el nuevo mecanismo de retenciones significa una virtual estatización y desalienta la inversión y exploración en un sector con oferta insuficiente.

La sociedad se hizo adicta a la inflación

El economista del mes
La sociedad se hizo adicta a la inflación

Ámbito Financiero

En la tradicional entrega de «El economista del mes» el análisis de la coyuntura y las perspectivas bajo el próximo gobierno de Cristina de Kirchner estuvo a cargo del economista y profesor del CEMA Jorge Avila. Tras ahondar en la adicción al mágico dólar fijo y a la mayor inflación, explica la enseñanza que deja Kirchner sobre el poder del superávit, por lo que en 2008 descuenta que lo reforzará. Siembra dudas sobre las cifras oficiales de crecimiento frente al comportamiento de la prima de riesgo-país.

1 - El dólar quieto tiene poderes mágicos

En pocos días más se cumple el mandato presidencial de Néstor Kirchner. Según las urnas, una amplia primera minoría opina que el país está mejor. La oposición no fracasó por falta de unión, sino porque la población aún no tiene sed de cambio.

Kirchner ha atropellado mil instituciones económicas y políticas. Por ejemplo, el piquete a la petrolera Shell arrumbó la libertad de precios; la anticumbre de Mar del Plata selló nuestro aislamiento internacional, y la intervención del INDEC ha promovido el descrédito institucional del país y ocasionado un segundo default. Pero Kirchner consiguió en su mandato dos cosas valiosas para un país atormentado por una inestabilidad crónica: aseguró la estabilidad y alejó el fantasma de la hiperinflación, y aseguró la gobernabilidad y alejó el espectro de la anarquía. En este orden. Primero, la estabilidad monetaria; luego, la estabilidad política.

Kirchner tuvo la sabiduría de mantenerse dentro del cauceque habían abierto en 2002 el ex presidente Duhalde y su ministro Lavagna. En 2002, Duhalde no fue el cirujano de bisturí que exigían las circunstancias; fue un carnicero de hacha improvisada y eficaz. Lavagna no aplicó la libre flotación que iba a conjurar todos los males de la convertibilidad, sino una convertibilidad disfrazada e informal de 3 por 1, tan efectiva que todavía perdura. El aporte fundamental de Kirchner consistió en reforzarel superávit fiscal y no toquetear el dólar. Su otro aporte fue la suerte, que no es un atributo menor en un gobernante. El índice de precios de las materias primas argentinas creció durante su mandato un excepcional 107%, luego de una larga declinación durante los gobiernos de Menem y de De la Rúa.

La convertibilidad informal, el elevado superávit fiscal (mayor que el de Menem, quien a su vez lo tuvo mayor que Alfonsín) y la reestructuración de 75% de la deuda pública en 2005 determinaron una aguda reducción de la prima de riesgo-argentino, una reversión notable del flujo internacional de capitales y un importante crecimiento de la demanda agregada. Esta es la causa primaria de la expansión del PBI argentino en el período 2003-07. La causa secundaria es el viento de cola que sopla desde los mercados de commodities del mundo. Digo que éste es el orden de causalidad porque es improbable que un viento de cola genere un aumento de 50% del PBI en presencia de desborde fiscal y disparada del dólar. El dólar quieto tiene poderes mágicos.

2 - Una clave fue la caída de la prima de riesgo-país

La relación inversa que se verifica entre la prima de riesgoargentino y el flujo de capitales se ilustra en el gráfico 1. Los datos corren entre enero de 2002 y noviembre de 2007. Mide la prima anual (en puntos porcentuales) sobre el eje derecho y el ingreso mensual en dólares (como promedio móvil) sobre el eje izquierdo. El ingreso de capitales luce como la imagen especular de la prima de riesgo-país. Esta relación tiene un papel clave en la explicación de la recuperación económica argentina. La aguda reducción del riesgoargentino transformó la salida de capitales de 2002 en una creciente entrada. El impacto macroeconómico de una menor salida de capitales es igual al de una mayor entrada. Digo impacto macroeconómico porque el ingreso de capitales puede verse como una adición a la demanda agregada. Una entrada mensual de u$s 1.500 millones representa 7,5% de la demanda agregada de un mes (con un PBI de u$s 240.000 millones por año, algo menor que el actual).

Por su parte, el gráfico 2 ilustra la relación inversa que existe entre la prima de riesgo-argentino y la producción. En este gráfico, los datos corren entre enero de 1998 y noviembre de 2007. El eje derecho mide la variación anual de la prima (en puntos porcentuales) y el eje izquierdo, la variación anual de la producción industrial (en puntos porcentuales). Se advierte que entre octubre de 2002 y junio de 2007 la variación anual de la prima de riesgopaís fue siempre negativa mientras la variación anual de la producción industrial fue siempre positiva. Estos gráficosson, obviamente, complementarios.

La estabilidad y la expansión económica elevaron la base imponible en mayor proporción. La estampida de la recaudación impositiva, sumada al carácter nacional de las retenciones, al régimen de coparticipación federal de impuestos (que es más unitario que federal) y a los superpoderes, convirtió al Presidente en el gran cajero de la Nación. Los gobernadores, que en un régimen auténticamente federal son sus rivales naturales por el poder, se convirtieron en mendigos. Y la oposición legislativa, en espectadora, pues el superávit le evita al PEN el desgaste político de pedir favores. Por el uso hábil, pero no republicano ni federal de la caja, por su carácter más bien autoritario y por la gracia que le ha concedido un pueblo agobiado por la inestabilidad, Kirchner recuperó entonces la gobernabilidad.

3 - Kirchner reforzará el superávit en 2008

El presidente saliente deja a su esposa, la presidente electa Cristina de Kirchner, un ramillete de éxitos y de urgencias. Los lineamientos generales de la política económica asociada al modelo productivo no cambiarán, pero habrá retoques a fin de asegurarle la supervivencia. Hay cuatro grandes áreas de retoque: el gasto público y el superávit fiscal; los vencimientos de la deuda pública y el Club de París; el reajuste tarifario y la crisis energética; y la inflación y la credibilidad del INDEC.

El superávit primario (antes de pagar los intereses de la deuda) del gobierno nacional ha caído de casi 4% del PBI en 2004 a casi 2% en 2007. Esto significa que el superávit financiero (después de pagar los intereses) quedará reducido este año a un mero 0%. El presidente Kirchner es el primer presidente, desde antes de Perón, que se dio cuenta de que superávit fiscal es igual a poder. Frente a los gobernadores, como dije antes, y frente a los mercados, cuya volatilidad un déficit agudiza y puede tumbar presidentes (Alfonsín y De la Rúa).

Kirchner reforzará el superávit durante 2008 y creo que el ajuste fiscal será más fácil que en otras ocasiones. Una simple comparación bastará para aclarar lo que quiero decir. En marzo de 2001, el ministro López Murphy intentó realizar una modesta rebaja del gasto público; fue misión imposible; en parte, por el contexto político dentro del cual se movía el gobierno de la Alianza y, en parte, porque la economía argentina sufría una recesión con deflación. En esta ocasión, con sólo hacer que el gasto público crezca en 2008 15% con respecto a 2007, en vez del 50% que creció en 2007 respecto de 2006, el superávit primario saltaría a 4% del PBI a fines de 2008. Nótese que no estoy diciendo que el gasto deba bajar.

Apenas sugiero que si en 2006 fue igual a $ 100 y en 2007 fue igual a $ 150, en 2008 debería ser igual a unos $ 172. El superávit aumentaría, de todos modos, pues la recaudación impositiva seguiría subiendo a un ritmo de 30% anual (puede ser menos) de la mano del PBI nominal. Esta variable viene aumentando a una tasa de 8% por año en virtud del crecimiento real del país, más un 20%-25% por año en virtud de la inflación que se verifica en los mostradores. En consecuencia, una suba del gasto de 15% y un aumento de la recaudación de 30% obrarían, en conjunto, el milagro de recomponer en forma dramática el superávit fiscal y restaurar así el poder político y financiero de los Kirchner.

Con el objeto de minimizar cualquier error de cálculo, el gobierno acaba de aumentar las retenciones sobre las exportaciones de soja, cereales, petróleo y naftas. El aporte al Tesoro rondará $ 8.000 millones, que equivalen a 0,8% del PBI. Con esta contribución adicional del campo y las empresas petroleras, el gobierno podría aumentar el gasto por encima de aquel 15%.

4 - La otra herencia pesada

A riesgo de caer en otro farragoso default en 2008, algo tendrá que hacer el gobierno con las deudas que mantiene con el Club de París y con los bonistas (hold outs). Ambas suman u$s 35.000 millones. Debe reestructurarlas y empezar a servirlas. Pero para esto se impone recuperar el acceso al mercado mundial de crédito voluntario. De otra manera, el gobierno no podrá refinanciar los vencimientos de capital a partir de 2009.

Si el gobierno no avanzara en el par de puntos anteriores, el país perdería la estabilidad y el ritmo de crecimiento de la producción y el empleodel período 2002-07, incluso cuando los precios de las materias primas argentinas siguieran exhibiendo elevados niveles. Por esto creo que avanzará.

Luego viene la cuestión tarifaria, de cuya resolución depende la atenuación de la crisis energética. En esta área me queda la impresión, quizás apresurada, de que el gobierno no pretende avances significativos. Apuntaría, más bien, a autorizar las subas estrictamente necesarias para que las empresas privatizadas no quiebren. Tampoco parece apurado por renegociar con criterio de mercado los contratos que regulan la actividad de las empresas. No debería esperarse un boom inversor en rubros como electricidad, gas y transporte en los próximos años.

Por último, viene la cuestión inflacionaria. La sociedad argentina se ha vuelto adicta a la inflación. Cree que la inflación es parte inextricable del crecimiento. El gobierno no la quiere, pero la necesita para licuar el gasto público. Su principal aliado, la UIA, la tolera porque es consecuencia de la devaluación, que es la fuente de su rentabilidad. El agro, pese a las retenciones, es una suerte de cómplice pasivo de la UIA; no hace lobby para devaluar, pero no repudia la devaluación. Los sindicatos encuentran en la inflación la justificación de su existencia; las discusiones salariales les devuelven la vida frente a los asalariados (de ahí tanto odio a Menem y a la convertibilidad).En tanto que el sector servicios, que representa 65% del PBI y que es el gran perjudicado por la devaluación, se mantiene al margen de la discusión; por un lado, los bancos y las empresas privatizadas temen el escrache, y por el otro, los médicos y los peluqueros no tienen voz y no entienden la relación causaefecto. Por todo lo dicho, creo que el tema no es prioritario. Para el gobierno, abatirla es un lujo que no se puede dar. Para la industria y el campo, no es negocio. Lo mismo que la credibilidad del INDEC. Si el precio a pagar por la restauración de la credibilidad es el peso fuerte, el tema tampoco es prioritario para el gobierno y la dirigencia industrial y rural. Prefieren no hacer olas.

5 - La inflación será de 23% anual.

Kirchner acaba de anunciar con bombos y platillos que la producción industrial aumentó 9,5% anual en octubre.Cuesta mucho creer que tan alto ritmo de crecimiento económico se mantenga en el segundo semestre de 2007. A juzgar por el fuerte aumento de la prima de riesgoargentino desde enero, la tasa de crecimiento de la producción industrial (y del PBI) debería exhibir una clara tendencia bajista desde agosto a más tardar. Sin embargo, a juzgar por la fuerte suba del precio de las materias primas que el país exporta, hay motivo para esperar que el PBI siga creciendo a buen ritmo.

Un aumento de la prima de riesgo-país es un shock de demanda negativo. Determina una menor entrada (o una salida) de capitales, y por tanto una menor tasa de crecimiento de la demanda agregada. Luego, la oferta agregada (el PBI) tiene que aumentar a menor ritmo. El riesgoargentino observa desde julio un cambio de comportamiento altamente significativo. Ese mes, la prima fue casi igual a la de un año atrás, y en agosto, en setiembre,en octubre y en noviembrefue 42%, 28%, 23% y 32% mayor que en los mismos meses de 2006. Desde agosto de 2007 hay motivo entonces para pensar que la producción crece cada vez más lentamente. Esta presunción se fortalece al comprobar la evolución del flujo de capitales. El último tramo del gráfico 1 muestra una suba abrupta de la prima de riesgo-argentino junto a un giro abrupto del flujo de capitales. Este pasó de una entrada de u$s 1.400 millones por mes en julio a una salida de 200 millones en setiembre.

Un aumento del precio internacional de las materias primas que exporta el país es un shock de oferta positivo. Determina un aumento proporcional de la oferta agregada y, por tanto, del PBI. En los últimos 12 meses, el índice de precios de materias primas aumentó 46%. Esto implica que el PBI de 2007, sólo por esta razón, debería ser 3% más alto que el de 2006. De manera que el efecto negativo del aumento del riesgo-país habría sido compensado por el efecto positivo del aumento de los términos de intercambio del país.

Con respecto al año 2008, me resulta difícil pronosticar el PBI y comparativamente fácil, la inflación. No creo que la crisis hipotecaria de EE.UU. afecte negativamente el precio de las materias primas argentinas; creo que el refuerzo del superávit fiscal debería contribuir a una reducción de la prima de riesgo-argentino; es aventurado pronosticar los desenlaces de los temas tarifario y hold outs. El sentido común lleva a pensar que una reducción de la tasa de crecimiento a 6% es probable, pero subrayo que la tasa de crecimiento es muy sensible a dicho abanico de variables. Con respecto a la inflación, hay también varias fuerzas en conflicto. Pero en vista de que nadie quiere reducirla seriamente, se repetiría un nivel cercano al actual: 23% anual según FIEL.

At peace with Pax Americana

Does being the leader of the free world make the U.S. an empire?
Jonah Goldberg - November 27, 2007
L.A. Times

For lack of a better word, the United States is getting tagged as an "empire" from all quarters. Indeed, it's been a century since the notion of an American empire got such wide circulation, and back then Washington truly had designs on such expansion. (Google "Spanish-American War" if you're unfamiliar with this period.)

The empire charge has long been a staple bit of rhetoric lobbed about by those on the political extremes -- and has even bubbled up in the presidential race. Lefty Rep. Dennis Kucinich insists that we must abandon "the ambitions of empire." Hyper-libertarian Rep. Ron Paul says that America could afford healthcare if we weren't paying the freight on "running a world empire." The word "empire" substitutes for an argument; there are no good empires, just as there are no good fascists, or racists, or dictators.

In recent years, however, there's been an attempt to rehabilitate the e-word. Historian and former Times columnist Niall Ferguson deserves primary credit for the mainstreaming of the empire debate with his 2004 book "Colossus." He faced the empire charge head-on, saying, in effect, "Yeah, so what's your point?" The world needs a stabilizing, decent watchman to keep the bad guys in check and to promote trade, he argued, and the United States is the best candidate for the job.

Ferguson concedes, however, that the American people don't want an empire, don't think that they have one, and even our elites have no idea how to run one. As David Frum noted at the time in the National Review, Ferguson "repeatedly complains that his particular fowl neither waddles nor quacks -- and yet he insists it is nevertheless a duck."

Even as he strives to rehabilitate the idea of empire, Ferguson acknowledges that the word has limitations. It "is irrevocably the language of a bygone age," he writes at the end of his book. It has become irretrievably synonymous with villainy.

Critics of American foreign policy point to the fact that the U.S. does many things that empires once did -- police the seas, deploy militaries abroad, provide a lingua franca and a global currency -- and then rest their case. But noting that X does many of the same things as Y does not mean that X and Y are the same thing. The police provide protection, and so does the Mafia. Orphanages raise children, but they aren't parents. If your wife cleans your home, tell her she's the maid because maids also clean homes. See how well that logic works.

When they speak of the American empire, critics fall back on cartoonish notions, invoking Hollywoodized versions of ancient Rome or mothballed Marxist caricatures of the British Raj. But unlike the Romans or even the British, our garrisons can be ejected without firing a shot. We left the Philippines when asked. We may split from South Korea in the next few years under similar circumstances. Poland wants our military bases; Germany is grumpy about losing them. When Turkey, a U.S. ally and member of NATO, refused to let American troops invade Iraq from its territory, the U.S. government said "fine." We didn't invade Iraq for oil (all we needed to do to buy it was lift the embargo), and we've made it clear that we'll leave Iraq if the Iraqis ask.

The second verse of the anti-imperial lament, sung in unison by liberals and libertarians, goes like this: Expansion of the military-industrial complex leads to contraction of freedom at home. But historically, this is a hard sell. Women got the vote largely thanks to World War I. President Truman, that consummate Cold Warrior, integrated the Army, and the civil rights movement escalated its successes even as we escalated the Cold War and our presence in Vietnam. President Reagan built up the military even as he liberalized the economy.

Sure Naomi Wolfe, Frank Rich and other leftists believe that the imperialistic war on terror has turned America into a police state. But if they were right, they wouldn't be allowed to say that.

Two compelling new books help explain why our "empire" is different from the Soviet or Roman varieties. Walter Russell Mead's encyclopedic "God and Gold" argues that Anglo-American culture is uniquely well suited toward globalism, military success, capitalism and liberty. Amy Chua's brilliant "Day of Empire" confirms why: Successful "hyperpowers" tend to be more tolerant and inclusive than their competitors. Despite its flaws, Britain was the first truly liberal empire.

America has picked up where the British left off. Whatever sway the U.S. holds over far-flung reaches of the globe is derived from the fact that we have been, and hopefully shall continue to be, the leader of the free world, offering help and guidance, peace and prosperity, where and when we can, as best we can, and asking little in return. If that makes us an empire, so be it. But I think "leader of the free world" is the only label we'll ever need or -- one hopes -- ever want.

El maestro ciruela

El maestro ciruela
Por: Enrique Szewach

Ámbito Financiero

Permítanme un ejercicio mínimo de docente. Supongamos que hay tres países: A, B y C. A exporta 100 dólares de trigo, 50 a B y 50 a C. A su vez, importa 100 dólares de computadoras, 50 de B y 50 de C. En este caso, el balance comercial de A con B y C está equilibrado.

Supongamos ahora que la fábrica de computadoras de C no da abasto y no tiene excedente de exportación. Y que todas las computadoras deben ser importadas desde B. Ahora, A le exporta 50 dólares de trigo a B y 50 dólares de trigo a C. E importa 100 dólares de computadoras de B. En este caso, A tiene un déficit comercial con B (le exporta 50 e importa 100) y un superávit comercial con C (le exporta 50 y no le importa nada). ¡Pero en la economía de A, nada ha cambiado!

Mucho se está hablando del déficit comercial de la Argentina con Brasil, pese a la devaluación del peso frente al real y la espectacular ganancia de productividad "teórica" que dicho tipo de cambio peso/real implica a favor de la Argentina.

Sin embargo, como muestra el ejemplo anterior, mirar los números sin analizar las causas puede llevar a conclusiones apresuradas.

En primer lugar, la Argentina está experimentando un fuerte incremento de sus importaciones, producto de su recuperación económica. Como con Brasil rige un acuerdo comercial amplio -el Mercosur-, tenemos bajos costos de fletes por la cercanía, y todas las monedas, salvo el bolívar, la moneda iraní y alguna otra africana o asiática, se han revaluado contra el dólar en la misma proporción que el real, es razonable pensar que una parte importante del incremento de las importaciones provenga del país vecino.

En segundo lugar, la Argentina no tiene una política de incremento de sus exportaciones que vaya más allá de commodities agrícolas o industriales y algunos contados productos de valor agregado, en el marco de comercio administrado y más por decisión de las empresas multinacionales, o las "multilatinas", que por decisión de política.

Mientras tanto, Brasil encaró, ya hace unos años, una agresiva política exportadora. Es natural, entonces, comprobar que las importaciones argentinas se incrementan al ritmo del aumento de la economía local, y nuestras exportaciones sólo crecen por la suba de los precios internacionales y del volumen del comercio mundial. En este contexto, es lógico esperar que caiga el balance comercial total y que frente a Brasil tengamos déficit, dado que importamos mucho, por lo ya comentado, del país fronterizo, y lo que vendemos está más "distribuido". Un dato interesante surge de considerar que, mientras la participación argentina en el comercio mundial está estancada en 0,5% del total en los últimos 10 años, Brasil aumentó su participación en las exportaciones totales en más de 30%, al pasar de 0,9% a 1,2% del intercambio global.
• Inversión pasada

En tercer lugar, y vinculado a lo anterior, todo incremento de exportaciones que no surge de una sustitución del mercado interno por el externo, es decir que no surge de una recesión, es "hijo" de una inversión pasada. Si la Argentina presenta hoy un récord de producción y excedentes agrícolas, se debe a que el sector invirtió para expandir sus tierras cultivadas y aumentar su productividad. En el caso agropecuario, existe un "techo" a la producción total dada la tierra disponible. El aumento de la producción de ciertos granos, entonces, se hizo a expensas de otros productos, como la carne o la leche. En estos casos, no sólo por un cambio de precios relativos a favor de la agricultura, sino por la directa intervención del Estado prohibiendo exportaciones de carne o lácteos, o fijando precios artificialmente bajos.

En el caso industrial, donde, en principio, "no hay límites" físicos, influyen el entorno macro, las ventajas competitivas, las reglas de juego, el mercado de capitales y el clima de negocios. En ese sentido, primero la devaluación brasileña del 99, sumada a los incentivos fiscales de los Estados de ese país, y el enorme mercado de capitales de largo plazo -mucho más importante que el "famoso" Banco de Desarrollo, que, en todo caso, se "fondea" en dicho mercado (téngase en cuenta que la relación créditos/PBI supera 40% en Brasil, y en la Argentina es de apenas 13% con la recuperación postcrisis. Dicho sea de paso, Chile, con estabilidad, Fondos de Pensión y sin Banco de Desarrollo, tiene una relación superior a 60%).

Pero volviendo a las ventajas brasileñas, devaluación, incentivos impositivos, mercado de capitales y reglas estables respecto del clima de negocios y la macroeconomía hicieron que muchas inversiones en la región se "mudaran" a Brasil o se instalaran directamente en ese país. Basta con ver los datos de inversión extranjera directa en términos de producto. Pero no sólo en el caso brasileño: tanto Chile como Uruguay están en récord de inversión extranjera directa en términos de sus respectivos PBI, y Chile ha desplazado a la Argentina como tercer receptor de inversiones de la región, y no precisamente por su enorme mercado interno.

Está claro, entonces, que no sólo de "tipo de cambio" viven las exportaciones. Dependen de decisiones de política económica mucho más complejas y de decisiones empresarias que responden a la macroeconomía, al clima de negocios, a la calidad del mercado de capitales de largo plazo en moneda local -con 20% o 15% anual de inflación y destruyendo el CER, el Banco de Desarrollo sirve para muy poco o, mejor dicho, para muy pocos amigos-, a los recursos humanos, a la provisión de energía, a las reglas del mercado de trabajo, al sistema impositivo, etcétera. En ese sentido, las "malas reglas" sólo han servido para que los extranjeros, en especial de la región, compren barato empresas argentinas, " castigando" su precio por las políticas locales y aprovechando, en este caso sí, el diferencial cambiario a su favor.

Mientras Brasil encaró un serio programa global de inserción, aprovechando la situación internacional, la Argentina se concentró en priorizar el consumo y el crecimiento acelerado, en un clima adverso a los negocios de exportación de largo plazo y a la radicación masiva de inversiones exportadoras, salvo en el complejo agrícola que, por su ciclo, responde rápidamente a mejoras en la rentabilidad. O en sectores de comercio administrado con inversiones ya hundidas, como el automotor.

En ese contexto, es fácil explicar por qué, aún con un dólar caro en la Argentina, nuestras exportaciones están estancadas en términos relativos y mantenemos un fuerte déficit comercial con Brasil. ¡Y encima el mundial de fútbol de 2014 será brasileño!

Argentina and the Paris Club

THE AMERICAS

Argentina and the Paris Club
By MARY ANASTASIA O'GRADY
November 19, 2007; Page A18

Argentina, the reigning world champion of debt default, wants to get back into the international credit markets. Given the antimarket agenda that President Néstor Kirchner and his Peronist Party have imposed on the economy since 2003, that's a scary thought. Here's a scarier one: The International Monetary Fund seems desperate to play a role in Argentina's debut as a rehabilitated deadbeat.

Anyone who watched the collapse of Argentina under IMF guidance seven years ago understands that these two parties -- like an addict and an enabler -- deserve each other. But someone should stop the fund before it "helps" again. Writing itself into the next chapter of adventures in Peronist populism is neither necessary nor desirable.

Better to let the gauchos design and execute their own economic policy. Lenders will then assess Argentine risk -- without the distortions caused by an IMF imprimatur -- and charge an appropriate premium. And politicians won't be tempted to rely on IMF credit lines to close spending shortfalls. If the whole thing comes a cropper, Argentines can burn effigies of their own this time.

Back in 2001, Argentina gave the impression that it didn't care about its credit-market standing. When interim President Adolfo Rodriguez Saa announced a moratorium on servicing more than $100 billion in foreign debt at the end of that year, the Congress cheered. Shortly thereafter the government trashed another contract by devaluing the peso. Then it abrogated the agreements it had signed with Spanish and French utility companies, which had made big bets that the country had finally become a reliable place to do business.

Mr. Rodriguez Saa gave no indication about when or how creditors would get their money back. Seventeen months later, in May 2003 when Mr. Kirchner took office, the situation was no better. Many Argentines who held government debt had suffered from the default. But their plight was ignored while Mr. Kirchner poured vitriol on the foreigners. As the economy moved from crisis to recovery, denouncing the barbarians in faraway lands became a Peronist Party sport. The blame for the collapse was laid at the feet of foreign creditors, foreign governments, foreign investors and the IMF. It wasn't until February 2005 that Mr. Kirchner offered 30 cents on the dollar to creditors holding $82 billion of bonds.

This was good for the coffers and for politics. In playing the nationalism card while scalping creditors, the kirchneristas created the illusion that Argentina was transformed from poor to rich by tossing out the foreigners.

But now the punch bowl at the party is running dry. Having demolished property rights, the government is finding that investment rates are too low to sustain modest growth. A more immediate problem is the lack of funding for the energy sector, which has not been able to meet demand in recent years. This is why President-elect Cristina Fernández Kirchner is expected to try to restructure the almost $6.5 billion of debt and interest owed to Paris Club governments that has accumulated since 2001.

The reason to make up with the Paris Club is that members' export agencies (such as the Export-Import Bank in the U.S.) can't provide subsidized financing for companies doing business in Argentina as long as the bilateral debt is in default. Mrs. Kirchner wants the evil foreigners to come back to Argentina to build electricity plants and railroads. Investors, too, want to return and roll the dice again -- if, that is, they get subsidized financing. They're complaining that Brazil, Russia, India and China are gobbling up the opportunities while entrepreneurs from Paris Club countries can't get government help.

Argentina's overture toward clearing its Paris Club debt is a positive development. Government defaults are nothing new, and if Buenos Aires is ready to make amends on its bilateral debt, it should be given the chance.

Whether members of the Paris Club should guarantee new financing in a country that doesn't respect property rights is a separate question. But what ought to be ruled out is a new IMF program as part of the Paris Club negotiation. Argentina does not want a new IMF program, but some have suggested that it is a requirement of the Club. It is not. It may be a precedent, but only because debtor nations renegotiating bilateral debt are normally bankrupt. In this case, Argentina not only is not bankrupt, it is flush with cash. It could pay back in full what it owes immediately, though, in true Peronist fashion, it feels no compunction to do so.

For the IMF, a program for Argentina is attractive because it would come at a time when the institution's "client" base, and hence its relevance, is shrinking. But if IMF sponsors seek to improve the welfare of the Argentine people and the health of the international credit markets, they will see that the fund stays out. The economy is an accident waiting to happen, and no outsider can prevent it from hitting the shoals as long as price controls, manipulated inflation data, high taxes, subsidies for energy and transportation, and fiscal profligacy are the policy tools of choice in Buenos Aires. As we saw in 2001, the fund has no power to influence a political class obsessed with its own power.

High-risk premiums, and not a new line of credit from the IMF, are far more likely to guide Mrs. Kirchner toward more rational behavior. The government needs to raise $7 billion in the capital markets next year and an estimated $10 billion in 2009. Meanwhile, the flight to quality since the subprime debacle has pushed up Argentine borrowing costs. In a 10-year dollar-denominated domestic bond offering issued last week, it had to pay 10.5%. By comparison, Brazilian 10-year bonds yield 5.6%. In other words, Argentina's creditors are demanding almost five percentage points over Brazil to cover the risks of the unsustainable economic agenda of a government that thumbs its nose at property rights, contract security and free prices. The $22 billion of bonds held by the private-sector and still in default don't help either.

Peronists still insist that market economics are part of a right-wing "neo-liberal" plot. In other words, they have a lot to learn. The international community can help by letting them learn it on their own.

Write to O'Grady@wsj.com1

''Impulso competitivo es más por la caída masiva de salarios''

Lo dice la economista Carola Pessino, de Di Tella
''Impulso competitivo es más por la caída masiva de salarios''

Ámbito Financiero

Para Carola Pessino, "el gran impulso competitivo en este modelo fue la caída masiva de los salarios reales más que aumentos genuinos en la productividad". Así lo sostuvo en la entrevista con Ambito Financiero en su oficina de la Universidad Torcuato Di Tella en la que, además, señaló que "la devaluación provocó los aumentos de pobreza más espectaculares de los últimos 50 años". La economista, doctorada en la Universidad de Chicago, fue secretaria de Equidad Fiscal entre 1997 y 1999, y asesora del ex ministro de Economía Roque Fernández. A tres semanas de la asunción de Cristina Kirchner, Pessino manifestó no tener muchas expectativas acerca del pacto social como posible marco para las negociaciones salariales. "No creo que sea útil ya que es difícil que contemple las realidades de cada empresa. No se pueden hacer pactos globales y corporativos cuando la realidad es diferente para cada sector y en particular para cada compañía", afirmó. En este sentido, vaticinó que "el año próximo puede haber más conflictos y que se llegue a incrementos no tan altos como en el pasado".

Carola Pessino
Periodista: ¿Por qué sostienen las empresas que hay dificultad en encontrar trabajadores?

Carola Pessino: Es por la actual situación que favorece la sustitución de importaciones; hay una demanda laboral superior en sectores industriales y en particular de personal semicalificado y no calificado. Se habla de lo difícil que es encontrar profesionales en la industria química, o en el área de computación, entre otros. Lo que ocurre es que esta «falta» es un signo de que el salario que se les paga es bajo. Y como lleva tiempo adquirir conocimientos para determinados oficios y calificaciones, las remuneraciones de ese tipo de personal deben aumentar para ajustar la demanda.

P.: Pero el faltante mayor se da en puestos de operarios especializados, más que en puestos medios y gerenciales...

C.P.: Sí, efectivamente.Hubo un cambio estructural tanto en la composición de la demanda laboral como en la consecuente estructura salarial. En la década del 90, el precio del capital con respecto al del trabajo fue relativamente bajo, lo que impulsó la inversión en capital. Entonces hubo más demanda de gente con mayores calificaciones que de personal con menor nivel de educación, por lo que aumentó el salario relativo de ese grupo en la década pasada. Esto se conoce también como el aumento en la brecha salarial o incremento en el retorno del capital humano. A partir de la devaluación esto cambia y se comenzó a incrementar el pedido de trabajadores no calificados relativamente más que la de los que tienen mayores niveles de educación, a la inversa de lo que se dio en la década anterior.

P.: Con respecto a la estructura salarial, ¿ocurrió una verdadera recuperación de las remuneraciones?

C.P.: Todo el mundo mira las estadísticas del salario promedio, pero el agregado esconde qué es lo que pasó con cada persona o grupos en particular. El del personal menos calificado, cuya demanda relativa aumentó (amén de las convenciones colectivas) creció más que la inflación oficial de precios minoristas, con lo cual se tiende a pensar que el salario real de ese sector se incrementó desde la devaluación. Pero, por otra parte, las remuneraciones del personal más calificado no lograron superar ni siquiera la inflación minorista y todavía son mucho menores, de entre 40% o 50% menos en términos reales. Y esto es teniendo en cuenta los datos oficiales de precios minoristas.

P.: Por lo que en verdad las mejoras en el bolsillo son incluso menores...

C.P.: Con la inflación bien computada, el aumento del poder adquisitivo fue menor, especialmente el de este año. Además, la devaluación provocó aumentos en primer lugar en los alimentos, que tienen un gran componente de precios internacionales, a pesar de las retenciones. Como la demanda de estos bienes es muy inelástica, entonces la canasta de bienes del consumidor promedio cambió ya que la proporción de alimentos tiende a ser mucho mayor en el total de ingresos. Es así que si se computa una nueva cesta más acorde con la realidad, la inflación es aun mayor, inclusive sin retoques en el índice. Es por todo esto que el salario real «verdadero» creció menos que el de las estadísticas y esto se refleja en el sentimiento popular cuando uno va al supermercado, por ejemplo, y el dinero no le alcanza para las compras usuales.

P.: Y esto repercute también en la línea de pobreza...

C.P.: La devaluación provocó los aumentos en pobreza más espectaculares del los últimos 50 años. Luego, con la recuperación del salario nominal, tendió a bajar, pero aún se encuentra en niveles superiores a los de los 90. Incluso aparece menor que la verdadera por la manipulación de los datos en el INDEC. Además, la pobreza está muy influenciada por la informalidad, donde hay aumentos inferiores en el salario real. Las remuneraciones de este grupo están todavía en la mitad de las del sector formal por lo que están sobrerrepresentadas en la pobreza.

P.: Pero no es lo que ocurrió en la Argentina...

C.P.: Este cambio es muy reciente. Esos estudios son siempre «ceteris paribus», es decir suponiendo constantes otros cambios en la demanda por otras razones. De todos modos, la indemnización sigue siendo alta respecto de la de otros lugares de la región y del mundo. Si hubiera un efecto hoy, creo que sería mayor el «blanqueo» que el despido, aunque no sería suficiente para bajar la informalidad. Los impuestos y otros costos extrasalariales siguen siendo altos y han sido aumentados en los últimos años, y los servicios que se reciben por este tipo de contribuciones no han sido mejorados, como en el caso de la jubilación privada, que ha sido objeto de numerosos atentados por parte del Estado.

P.: Con la inflación actual y algunas cifras dando vuelta, ¿de qué porcentaje cree que serán los pedidos de aumento salarial el año próximo?

C.P.: No tengo una clara idea, pero si se mira la dinámica del mercado, hasta el momento parte de los aumentos pudieron ser absorbidos por las empresas. Ahora creo que se va a sobrepasar los límites y muchas de ellas van a enfrentar problemas. Es así que puede haber más conflictos y que se llegue a incrementos no tan altos como en el pasado.

P.: ¿Será útil el pacto social en este sentido?

C.P.: No creo, ya que es difícil que contemple las realidades de cada empresa. No se pueden hacer pactos globales y corporativos cuando la realidad es diferente para cada sector y en particular para cada compañía. Sólo se podrán lograr acuerdos muy lavados y sería muy peligroso que trataran de ser muy específicos, por ejemplo regulando precios de productos particulares.

Entrevista de María Iglesia

Argentina's First Lady

By ALVARO VARGAS LLOSA - WSJ
November 16, 2007

Just before Cristina Fernandez's victory in Argentina's recent presidential elections, author Marcos Aguinis told me in Buenos Aires, "Some people think she might be a bit better than her husband because she likes haute couture and meeting the rich and famous -- but who knows." He was referring to the hope that her well-known penchant for all things glamorous will keep the president-elect, who is also a former senator, from being an anti-American and globaphobic populist like her husband, outgoing president Nestor Kirchner.

Glamour, however, will not prevent the crisis that will hit Argentina if she does not reverse her husband's policies. In classic Peronista form, the Kirchner couple has engaged in political patronage, manipulated the country's institutions, and encouraged radical left-wing groups to take center stage while presiding over a serendipitous economic boom.

What the Kirchners think is their "new model" for Latin America is essentially the short-term reward resulting from the massive devaluation of the currency a year and a half before Nestor Kirchner took office, the skyrocketing prices of the country's commodities, and the president's decision to pay back barely one-third of the face value of $140 billion worth of government debt paper.

The prices of Argentina's cereals, fuels and minerals have experienced a double-digit rise this year, continuing a trend that, together with cheap tourism, has helped generate GDP growth rates of between 7% and 9% in the last four years. As the world's fifth largest exporter of foodstuffs, Argentina is having a field day with the voracious demand coming from China and other nations. At times, Argentineans seem to be reliving their golden 19th century days when their abundant meat and cereal exports attracted millions of Europeans to Buenos Aires in search of the cornucopia.

But these blessings conceal two fundamental problems. The first is a dysfunctional institutional environment. It did not start with the current administration but the presidential couple has made it worse. The second problem is a byproduct of the first: An economy riddled with political bottlenecks that are consuming the capital accumulated in the previous decade, and fueling inflation.

The Kirchner presidency has systematically undermined checks and balances. Thanks to a law that was passed with the support of his wife in the Senate, Mr. Kirchner changed the structure of the Magistrate Council and placed the judiciary under Peronista control. He also brought into the fold the crushing political machinery of the Buenos Aires province, which accounts for almost 40% of the national vote and used to be in the hands of former president Eduardo Duhalde, a Peronista rival. That was achieved by having Cristina Fernandez run for the Senate seat of the Buenos Aires province as opposed to the seat representing Santa Cruz.

Mr. Kirchner has also used his majority in Congress -- now expanded by his wife's victory in the presidential elections -- to obtain "emergency powers" that have given him personal discretion over the entire budget. In traditional corporatist fashion, Cristina is now speaking of a "social pact" by which the government will negotiate laws and policies with groups supposedly representing civil society but in reality working to keep the Peronista clientele happy.

Then there is the economy. On the surface, things couldn't be better. After a crisis that turned a middle-class country into a Third World nation, Argentina has seen about 11 million people pull out of poverty -- i.e. go back to their living conditions of the 1990s. By raising public spending by 50% annually and wages by 40% in the last four years, keeping interest rates low, controlling half the prices that make up the consumer price index, and nationalizing or creating state enterprises in eight major sectors of the economy, the government has achieved a populist artifice. As the results of the presidential elections show, Argentineans are not buying this illusion of prosperity in the main urban centers (the nation's capital, Cordoba, Santa Fe, and others), but the rest of the nation is.

The real story is that investment is very low and inflation very high -- and the social demands of a population that has been promised a paradise are infinite. Although Mr. Kirchner has tried to conceal inflation figures by replacing the head of the national statistics institute, no one I talked to in Argentina thinks inflation is below 20%. The energy crisis, a consequence of Mr. Kirchner's decision to continue to freeze prices at one-third of market value and therefore discourage investment at a time of rising demand due to the economic bounce, is causing havoc. Foreign direct investment has dropped by about 30% in the last three years, whereas in Chile, Argentina's next-door neighbor, it has risen by almost 50%.

This amounts to the squandering of a marvelous opportunity for a country whose past prosperity, relatively educated population and political gravitas in the region should have granted it a leading role in Latin America in this new millennium. The fact that a sophisticated woman will be the next president should have been a reason to rejoice in a part of the world where politics has been a notoriously "machista" enterprise. But it will take a miracle, i.e. an act of political treason by Cristina against her husband's legacy, to avoid the iceberg for which Argentina's Titanic is headed.

Jorge Luis Borges, Argentina's late poet, used to say, "Peronismo is neither good nor bad -- it is incorrigible." Will Cristina's love of the good life serve as an antidote to Peron-style populist socialism? Although the chances are extremely slim -- she has announced that nine of her husband's ministers will stay on to serve in her cabinet -- let us pray that Cristina proves Borges wrong.

Mr. Vargas Llosa is the director of the Center on Global Prosperity at the Independent Institute and the editor of the upcoming book "Lessons From the Poor," to be published in March by the Independent Institute.

Curioso espejismo de impuestos y subsidios

Curioso espejismo de impuestos y subsidios

Por: Enrique Szewach

Ámbito Financiero

En economía, como en otros ámbitos de la vida, no siempre algo es lo que parece ser. En el caso de los impuestos y subsidios, existen numerosos ejemplos en los que la intención de «castigar» a algún sector en particular o beneficiar a otro termina de manera diferente de la buscada.

El reciente aumento de los impuestos a la exportación de granos pretende ser una medida por un lado «redistributiva», dado que le quita recursos a un sector «rico» y de alta rentabilidad y beneficia a los consumidores de menores recursos, intensivos en alimentos, al impedir que se traslade a los precios internos el fuerte auge de los precios internacionales (puesto que las retenciones reducen el precio interno). Por otro lado, «productivista», en tanto que los recursos que recibe el Estado permiten mejorar la situación fiscal, reduciendo el riesgopaís, bajando la tasa de interés que enfrenta la Argentina y mejorando las condiciones de financiamiento de sectores productivos no agrícolas. Este razonamiento, sin embargo, por impecable que parece puede tener algunas fallas.

En primer lugar, al quitarle poder de gasto al sector privado agrícola, se reducen los ingresos de aquellos sectores que recibían dicho gasto. En parte, proveedores de fertilizantes o maquinaria agrícola. En parte, fábricas de automóviles o camionetas 4x4; en parte, constructores de inmuebles; en parte, oferentes de servicios de distinto tipo. Es decir, si los productores tienen u$s 1.600 millones menos para gastar, habrá muchos sectores -y sus trabajadores-vinculados a dicho gasto, que ahora no verán aumentar su demanda en esa cifra. El aumento de impuestos al campo se traduce, en la práctica, en una reducción del ingreso de los sectores beneficiados por la mayor bonanza del sector agrícola.

En cuanto a la mejora de la situación fiscal: está por verse, dado que no se sabe el destino de los fondos adicionales. Si los mismos se utilizan para cancelar deuda externa, está claro que eso mejora la situación financiera de la Argentina, reduciendo el riesgo eventual de default. Pero si esos fondos no regresan al país en forma de ingreso de capitales privados o inversión extranjera directa, estamos frente a un instrumento «ortodoxo» de desaceleración de la demanda, dado que aproximadamente se resta medio punto del PBI de la demanda interna.

Hasta ahora, sin embargo, el mercado financiero internacional sigue dudando de la Argentina en su condición de deudora. Como consigna el informe de Santander Investment: paradójicamente, después del anuncio del aumento de las retenciones a la exportación de los CDS a cinco años (Credit Default Swaps a cinco años), seguros contra default de la Argentina, ¡aumentaron su diferencial de tasa de riesgo, tanto en términos absolutos, como respecto del promedio de riesgo latinoamericano!

En otras palabras, el mercado no considera el incremento de ingresos por impuestos a la exportación como una mejora sustancial de la situación fiscal de la Argentina. ¿Pensarán acaso que se gastarán en nuevos subsidios?

Y eso lleva a otro aspecto de lo que «parece y no es».

El gobierno se ha preocupado en estos años por mantener artificialmente bajos los precios vinculados con la energía en general y con la «hogareña» en particular. No sólo son bajos los precios en comparación con los que predominan en la región, sino que además son bajos respecto de los que han predominado en términos relativos en la Argentina en el pasado. En efecto, si se considera el precio relativo de productos o servicios vinculados con la energía, comparando la evolución de los precios mayoristas y sus asimilables al consumidor que regían a finales de 2001, con los datos actuales, los precios al consumidor tendrán que duplicarse o triplicarse para parecerse a la relación que tenían con los mayoristas cuando estalló la convertibilidad.

Pero, otra vez, como la demanda de energía, combustibles y transporte es relativamente inelástica (es cierto que, en mi casa, consumimos más electricidad y gas que lo necesario, pero no es menos cierto que no mantengo las estufas encendidas en verano, ni duermo con la luz prendida porque sea barata, ni viajo más veces a la oficina porque el viaje en subte esté regalado), el subsidio a estos servicios se transforma en mayor ingreso disponible para otros consumos, desde la cuota de un electrodoméstico, hasta una salida a comer afuera o turismo de fin de semana, etc. En otras palabras, más que un subsidio a la energía en los hogares, es un subsidio a la demanda de otros productos y servicios que, seguramente, se consumirían menos si tuviéramos que pagar la electricidad o el gas más caros. Aun reconociendo que hay derroche y que se podría ahorrar mucho.

Es síntesis, los aumentos en los impuestos a la exportación, como las eventuales reducciones de los subsidios a los precios de la energía, los combustibles o transporte de la clase media urbana deben verse como lo que son: el comienzo de la desaceleración de la demanda que tanto negaba el kirchnerismo en campaña.

Movin' On Up

November 13, 2007 - WSJ

If you've been listening to Mike Huckabee or John Edwards on the Presidential trail, you may have heard that the U.S. is becoming a nation of rising inequality and shrinking opportunity. We'd refer those campaigns to a new study of income mobility by the Treasury Department that exposes those claims as so much populist hokum.

OK, "hokum" is our word. The study, to be released today, is a careful, detailed piece of research by professional economists that avoids political judgments. But what it does do is show beyond doubt that the U.S. remains a dynamic society marked by rapid and mostly upward income mobility. Much as they always have, Americans on the bottom rungs of the economic ladder continue to climb into the middle and sometimes upper classes in remarkably short periods of time.

The Treasury study examined a huge sample of 96,700 income tax returns from 1996 and 2005 for Americans over the age of 25. The study tracks what happened to these tax filers over this 10-year period. One of the notable, and reassuring, findings is that nearly 58% of filers who were in the poorest income group in 1996 had moved into a higher income category by 2005. Nearly 25% jumped into the middle or upper-middle income groups, and 5.3% made it all the way to the highest quintile.

Of those in the second lowest income quintile, nearly 50% moved into the middle quintile or higher, and only 17% moved down. This is a stunning show of upward mobility, meaning that more than half of all lower-income Americans in 1996 had moved up the income scale in only 10 years.

Also encouraging is the fact that the after-inflation median income of all tax filers increased by an impressive 24% over the same period. Two of every three workers had a real income gain -- which contradicts the Huckabee-Edwards-Lou Dobbs spin about stagnant incomes. This is even more impressive when you consider that "median" income and wage numbers are often skewed downward because the U.S. has had a huge influx of young workers and immigrants in the last 20 years. They start their work years with low wages, dragging down the averages.

Those who start at the bottom but hold full-time jobs nonetheless enjoyed steady income gains. The Treasury study found that those tax filers who were in the poorest income quintile in 1996 saw a near doubling of their incomes (90.5%) over the subsequent decade. Those in the highest quintile, on the other hand, saw only modest income gains (10%). The nearby table tells the story, which is that the poorer an individual or household was in 1996 the greater the percentage income gain after 10 years.

Only one income group experienced an absolute decline in real income -- the richest 1% in 1996. Those households lost 25.8% of their income. Moreover, more than half (57.4%) of the richest 1% in 1996 had dropped to a lower income group by 2005. Some of these people might have been "rich" merely for one year, or perhaps for several, as they hit their peak earning years or had some capital gains windfall. Others may simply have not been able to keep up with new entrepreneurs and wealth creators.

The key point is that the study shows that income mobility in the U.S. works down as well as up -- another sign that opportunity and merit continue to drive American success, not accidents of birth. The "rich" are not the same people over time.

The study is also valuable because it shows that income mobility remains little changed from what similar studies found in the 1970s and 1980s. Some journalists and academics have cited selective evidence to claim that income mobility has declined in recent years.

But the 58% of lowest-income earners who moved to a higher income quintile in this study is roughly comparable to the percentages that did so in several similar studies going back to the late 1960s. "The basic finding of this analysis," says the Treasury report, "is that relative income mobility is approximately the same in the last 10 years as it was in the previous decade."

All of this certainly helps to illuminate the current election-year debate about income "inequality" in the U.S. The political left and its media echoes are promoting the inequality story as a way to justify a huge tax increase. But inequality is only a problem if it reflects stagnant opportunity and a society stratified by more or less permanent income differences. That kind of society can breed class resentments and unrest. America isn't remotely such a society, thanks in large part to the incentives that exist for risk-taking and wealth creation.

The great irony is that, in the name of reducing inequality, some of our politicians want to raise taxes and other government obstacles to the kind of risk-taking and hard work that allow Americans to climb the income ladder so rapidly. As the Treasury data show, we shouldn't worry about inequality. We should worry about the people who use inequality as a political club to promote policies that reduce opportunity.

More Trouble for Chávez

By MARY ANASTASIA O'GRADY
November 12, 2007 - WSJ

In December 1957 Venezuelan dictator Marcos Pérez Jiménez held a plebiscite on his presidency. By going through the exercise of a national vote, he thought he would legitimize his rule, which a military junta had handed him five years earlier.

In the event, his government said he won, but Venezuelans weren't convinced. Within a month, a popular uprising drove him from the presidential palace and out of the country.

Next month will mark the golden jubilee of Pérez Jiménez's fateful December "triumph," which provoked his demise and opened a space for democracy to emerge in 1958. Coincidentally the anniversary falls in the same month as a referendum -- called by President Hugo Chávez -- on 69 constitutional reforms that will, among other things, allow him to rule for life.

Like the last dictator, Mr. Chávez believes that if he can show that a majority of voters back his power grab, his government will have won the imprimatur of democracy. But now, as then, Venezuelans are putting up a fight.

Mr. Chávez has already consolidated his power by getting control of Venezuela's political institutions. But now he wants to close any remaining loopholes by writing his absolute rule into the 1999 constitution. The trouble is that, according to the document, a major rewrite of the text can be carried out only by an elected constitutional assembly. This process is designed to preserve some measure of democratic pluralism and by trying to skip it, the president has provoked a firestorm of criticism.

Mr. Chávez has been working to remove any counterbalances to his power for almost nine years now. Over that time he has met strong resistance from property owners, businesses, labor leaders, the Catholic Church and the media. But since the spring, when university students of varying backgrounds began to lead an opposition movement against his crackdown on civil liberties, many have wondered whether chavismo has begun to lose the support of the population more broadly.

In opposition to the Dec. 2 referendum, university students have redoubled their efforts in the streets and a number of the president's heretofore backers have joined the chorus -- all of which has led to increased speculation that Mr. Chávez's days are numbered.

It's easy to see what Mr. Chávez is after. Besides lifting presidential term limits, the referendum proposes to allow the media to be censored and civil liberties suspended under a state of emergency, to permit the government seizure of private property, to mandate a six-hour work day, to increase presidential power over state authorities and to end central bank autonomy.

Up to now the fiery orator has had a rather easy time of rolling over his opponents. To counter their claims that he is taking Venezuela down the Cuban path, he has simply sounded the battle cry of class warfare and pointed to the corruption of former governments. The opposition has been fragmented and easily thwarted by a demagogue who promises to spread the oil wealth more equally.

But this year something has gone terribly wrong with the formula, as evidenced by the dissent coming from previously supportive quarters. Mr. Chávez's decision to strip prominent media critic, RCTV, of its broadcasting license earlier this year may mark the tipping point. Assaults on private property and the jailing of opponents over the year hadn't produced much of a response from university students. But the clampdown on free speech set them off. They poured into the streets, amid tear gas and rubber bullets yet, notably, never called for Mr. Chávez to leave office. Instead they chanted for "liberty." While they lost their bid to save RCTV, they gained respect with the public as a credible voice against one-man rule.

Now the students are back in the streets putting up a fight against the referendum. In the past three weeks tens of thousands have marched to the Congress, the Electoral Council and most recently to the Supreme Court. They are a problem for the president, not the least because their leaders are from middle and low-middle income backgrounds and cannot be dismissed as "elites." Moreover, their defense of civil liberties seems to resonate with an increasing number of Venezuelans. They say that they are opponents, not of Mr. Chávez per se, but of the destruction of the country's institutions that guarantee freedoms.

Last week Mr. Chávez suffered another political setback, this time from his former minister of defense, Gen. Raúl Baduel, who said that if the president gets his amendments it will amount to a "coup" against the democracy. That's a serious charge from any member of the armed forces, but coming from Gen. Baduel it is devastating. He was a key player in restoring Mr. Chávez to power when others in the military had removed the president briefly in April 2002. His criticism raises questions about whether Mr. Chávez is losing support within the barracks.

Yet another high-profile defector from the Chávez camp is Hermann Escarrá, a constitutional-law scholar and one of the architects of the 1999 constitution, which Mr. Chávez has so often cited as sacred. Mr. Escarrá opposes the referendum, has joined the students in their protests and has vowed that he will not retreat. Most university rectors also back the students.

If public support for Mr. Chávez is waning, it may not be due entirely to his politics. Inflation could finish the year above 20% and milk and sugar are extremely hard to come by. Still, analysts believe that the opposition is too weak to derail him at this time and that the referendum will be carried out regardless of its popularity.

Nevertheless, just as Pérez Jiménez found, holding the vote can't reverse Mr. Chávez's political fortunes if he has fallen from grace. Surely he knows this and it is why he has been preparing for a showdown. His supporters are armed, as we saw on Wednesday when students returning to the university from a protest march were ambushed by gun-toting pro-Chávez goons. One student was shot. Tragically, if Venezuelans decide Mr. Chávez should go it is not likely to happen without more such violence.

"La recuperación es por los empresarios, no el gobierno"

Sorman habla también de la incertidumbre de presidencia de Cristina

"La recuperación es por los empresarios, no el gobierno"

El francés Guy Sorman es uno de los defensores más reconocidos en el plano internacional de las ideas del liberalismo económico. Periodista, economista, filósofo y escritor, conversó con este diario sobre cómo busca interiorizarse sobre la realidad argentina.

Ámbito Financiero

Periodista: ¿Cómo evalúa la situación en la Argentina?

Guy Sorman: A la gente le parece buena porque la compara con años atrás. Por supuesto que hay una recuperación, pero esta recuperación es mecánica porque lo que pasó después de la crisis es que todo comenzó de nuevo. También el país tiene mucha suerte en virtud de la alta demanda internacional de productos primarios, como la soja. Un factor que contribuyó al crecimiento es que la Argentina tiene excelentes empresarios en el sector agroindustrial. Es decir, la recuperación económica no es producto del gobierno, sino de la calidad del sector empresario.

P.: ¿Ve que el país puede ser destino de inversiones de afuera?

G.S.: La recuperación argentina también está basada en inversiones que se llevaron a cabo en la década del 90, pues en ese período la inversión fue alta. Después de la crisis las inversionesse frenaron totalmente, salvo en el sector inmobiliario. No hay inversión en energía, por lo que creo que ustedes se enfrentarán con serios problemas de producción energética en los próximos años. En una gran mayoría de los países de América latina, por no mencionar Asia, los políticos entendieron que uno puede ser de izquierda o de derecha -como ocurre en Chile, Uruguay y Brasil, cuyos mandatarios son de partidos de izquierda-, pero que la economía no tiene ideología.

P.: ¿Cómo ve a la administración de Néstor Kirchner?

G.S.: Las palabras no importan. Kirchner está haciendo política y cuando se hace política es bueno decirle a la gente que el gobierno anterior fue un desastre y fueron los responsables de la crisis. Esto es política. No sabemos qué hará la señora de Kirchner porque ella ganó las elecciones sin plataforma política, sin explicitar sus programas o ideas de gobierno, por lo tanto es totalmente impredecible.

P.: ¿Qué opinión tiene del período de los años 90?

G.S.: El problema durante esos años fue la contradicción de la política monetaria con la expansión del gasto público. El gobierno era liberal en un sentido, pero en otro no.

P.: El gobierno recientemente fue ratificado por los votos...

G.S.: La gente vota por razones muy simples; los que votaron a la señora de Kirchner son aquellos que están contentos porque existe una recuperación, pero no son economistas. La democracia está basada en principios muy básicos: la situación está mejor, la crisis quedó en el pasado, así que la mitad o un poco menos de la mitad apoya al gobierno. Pero la otra mitad no lo apoya, y esto es importante. No es una gran victoria para Cristina Kirchner, pues a pesar de tanta intervención estatal y de los altos niveles de crecimiento, obtuvo un pobre resultado electoral.

P.: En la Argentina es muy difícil lograr que los empresarios opinen en contra del gobierno...

G.S.: Sí, pero creo que es porque existe demasiada interferencia por parte del Estado en la economía, entonces muchos empresarios prefieren mantenerse callados. Algunos están haciendo dinero porque están cerca del gobierno y otros callan porque tienen miedo. La conducta de los empresarios es muy racional y los entiendo. Desde la perspectiva empresarial ellos viven en un país peligroso. En Francia o en los Estados Unidos, si uno dice algo en contra del gobierno no pasa nada, porque son países libres.

P.: Algunos comparan al gobierno de Kirchner con el del venezolano Chávez...

G.S.: El gobierno de Kirchner no es tan autoritario como el de Chávez. La sociedad venezolana es diferente a la argentina. En la Argentina existe una importante clase media, muchos medios de comunicación, tienen un nivel de educación cívica que no tiene la sociedad venezolana. No creo que los Kirchner quieran actuar como Chávez. Chávez tiene una ambición imperial, quiere ser el líder de la región y la Argentina no tiene la intención de liderar Latinoamérica.

Entrevista de Liliana Franco

Courage (por Bill Whittle)

"Courage is love coming to the rescue."

Reprint de un artículo de Bill Whittle, que luego pasó a formar parte de su libro de ensayos "Silent America". Mientras leen esto, les recomiendo que vayan abriendo amazon.com en otra ventana y ordénenlo.

Y los desafío a leer este texto y no lagrimear de emoción (yo lo estoy haciendo ahora durante el cut & paste).

COURAGE
by Bill Whittle - www.ejectejecteject.com
February 15, 2003

Sometimes, even when you are very young, something happens in your life that is so profound, so astonishing and so big that you just know everything has changed and you will never be who you were again. I had one such experience at age 5, and I was to have another eleven years later.

I grew up in Bermuda. My father was a hotel manager, so I grew up in the most perfect corner of Bermuda. I would go to Warwick Academy and sing God Save the Queen in my blazer and school tie. Usually we’d take the bus home, but when mom picked us up, we’d wriggle into bathing suits in the back seat and go snorkeling for a few hours. This was pretty much every day. And, like just about everyone else at that age, at that time, I had decided that my future would consist of being a railroad engineer, or a fireman, or a cowboy – that would be a Daniel Boone, coonskin cap, Winchester rifle and buckskin kind of cowboy, not the garden-variety pretty-boy kind with the chaps and the showy chrome six-shooters. I considered them a little too precious for real work, even at that age.

I didn’t know it then, but I would have traded all of that for a father with a nine-to-five job selling insurance, because the price of such a life was a dad who lived his job. Most dads lived their jobs in those days. It’s just that mine had a full day of work to do, and then a full night of entertaining as well.

So I was just happy to be spending time with my dad as we sat in the bleachers at Kindley Air Force Base, down at the other end of the island. A two hour wait in the sun is interminable at that age, but finally, six men in blue jumpsuits appeared, and walked down the flight line like robots. People applauded politely. I did too. Didn’t seem worth a two-hour wait, though…

They climbed into their silver jets with the red, white and blue stripes and the numbers on the tails. I found out later that they were F-100 Super Sabers – really glorious airplanes, sleek and muscular. Down came the canopies in unison. Then they started the engines.

Better…

They taxied to the end of the runway, took off in a roar, and disappeared out over the turquoise and green reefs. Spectacular! Great show! Not sure it was worth two hours, and that one guy down there won’t stop talking…

Launched on May 25th, 1953…powerful symbol of the American Indian…never missed a show due to maintenance problems, blah blah blah...

Hey, thought the five-year-old, the jets are gone, show’s over, let’s get out of the heat...

But behind my back were six of America’s most powerful fighter aircraft and the best pilots on the planet, not a hundred feet above the water and racing toward the rear of our bleachers at nearly seven hundred miles an hour – just under the speed of sound. And I mean just under.

So when I looked down at this man in the blue jumpsuit, I couldn’t hear them coming, because they were only a few feet behind their own roar. And when he said, “Ladies and Gentlemen, the United States Air Force---“ something caught my eye at what seemed like a few feet above my head. I saw a blur of silver and red, white and blue, and that’s about all I had time for, because the man shouted into his microphone the word “---THUNDERBIRDS!" and that’s when the sound hit.

And that was about all she wrote for little Billy. I was pretty much done after that.



I’ve thought a lot about courage in the last few years. And what I’ve come to realize is that behind courage is a greater emotion still, and that emotion, not surprisingly, is love.

Think about it. Think of the infantryman who throws himself onto a hand grenade. Perhaps love of country brought him to that time and place. Certainly he loved his family, his wife and children. And more than that, even, he loved his own life, his chance to watch his sons grow into honorable manhood, to give his daughter away in a small church on a Sunday morning. All of this love may have given him the courage to come to the place where he would face that grenade, but it was his love of his buddies that overcame all of that in that one instant where the heart rules the mind and courage rises unbidden from its mysterious, deep harbor.

Actions like these, time and time again, leave me speechless and dumbfounded. And yet they are commonplace in times of great peril. I have sat in silent awe of the firemen that rushed into those buildings – and of all the firemen, everywhere, that do it every day. I think of passengers on an airliner who would, in that one moment of desperate courage, decide on the spot to fight hardened murderers who had spiritually and psychologically prepared themselves for years, to advance on their slashing box cutters, to break into the cockpit and push those controls forward, to stop the men from righting the plane, kicking and biting and punching as the ground filled the windows. I think of that kind of courage and am struck mute at the love those people bore for the rest of us. I gape in awe, like I did that day when I was a little boy, at the kind of society that can generate that common courage.

And in this imperfect, flawed nation of ours, perhaps more than anywhere else on earth, I think about the courage it takes to be poor, to face that sickening knot of worry and despair that comes with not having the money to pay your bills. For there is no more steady and enduring courage than that of a poor family, especially a single parent, who fights a never-ending battle of brutal hours at miserable pay, of perennially unrealized dreams, and of the desperate, numb agony of disappointed children. For people like that, who force themselves to work two jobs while we sleep, to avoid the temptations of crime and dependency while surrounded by luxury and wealth the likes of which man has never known…well, that is dogged courage of a sublime nature that passes all understanding.

If courage is love coming to the rescue, then what do we make of people who willingly put themselves in great danger? How are astronauts any different than bungee jumpers or other thrill seekers? Are men and women like that simply adrenaline junkies, people who do not feel really alive unless they face danger and death at point-blank range? Do they indeed flirt with death? Because if they do, then that is not courage but rather a dark and filthy addiction. What kind of people do these things, and why?



If we really want to get to the heart and truth of the matter, we must turn once again to Hollywood – for they, as usual, have gotten it absolutely, totally wrong.

For as is typical for so many who write about the military, Hollywood looks at courage and sees only bravado. Bravado is to real courage as a slick personality is to genuine character.

You do not earn the privilege of flying these amazing machines because of lightning-fast reflexes or a cocky smile, or even a best-who-ever-lived belief in your own ability. Everyone who applies has these in spades. You get to fly jets, or Space Shuttles, because you have the discipline to study phone book after phone book of manuals and procedures. It is unglamorous, tedious, vexing work. There are armies of young men and women willing to do this, who fling themselves into jungles of facts and data for the chance to sit in that chair and face death on a daily basis.

I know this because I was one of them. And then, eleven years after six red, white and blue Super Sabers changed my life, after building every Mercury, Gemini and Apollo model in the known universe, after memorizing the details of every aircraft in the US and Soviet inventory, after getting a job at the Miami Space Transit Planetarium at age 13, after correcting the tour bus guides at the Kennedy Space Center (I wanted to be shot into space, and they wanted the same, only without the capsule), after leaving any hope of a social life at the altar of after-school physics classes, after lining up letters to Senators and enduring High School Counselors who told me 6’1” would make a pretty good basketball player, after all this and more than you can imagine, I walked out of the preliminary medical exam for the United States Air Force Academy with an optical prescription for the 20/25 vision in my left eye (20/10 in my right being irrelevant) and the inescapable reality that someone else was going to command the first Mars Mission.

That was a hard thing to do to a seventeen year old, and to this day I look at our military pilots and I am ashamed of myself. I know there’s no reason or logic to it; it’s just how I feel. Still. To this day.




The Space Shuttle is, without question, the most complex machine ever created. You look at her and see an airplane. Look deeper.

Look at her bones; her wing spars, her bulkheads and decks. Look at her delicate hydraulic blood vessels, her electrical nervous system, her computer brains and inner ear, her exquisite balancing organs. Look at the warm cocoon behind her nose, a little piece of Planet Earth set in a fortress against the vacuum and bitter cold of space. Think of her communications suite, her inertial guidance systems, her orbital maneuvering thrusters, her elevons and landing gear and rudder. Picture the slightest pressure on a man or woman’s wrist sending her rolling or pitching to a fraction of a degree. Think of her eyes, her windows – windows that can hold back 2000 degree-hot plasma. Think of her revolutionary, reusable rocket motors. Think of her thermal tiles, so efficient at dissipating heat that you can hold a white-hot tile in the palm of your hand. Think of the thousands of them that make up her skin, each unique – every one.

We don’t call industrial-sized air conditioning units “she.” Well, most of us don’t anyway. We don’t refer to buildings this way very often, or to generators or dumpsters.

But vehicles, they are different somehow. If you do not believe it is possible to love an inanimate object, then you do not know too many teenage boys and their first cars. Ships have always been she. Airplanes, too. And I don’t think this is so hard to figure out, because there is something about a machine that takes us places, something alive and magical. Many foreign observers of America simply cannot comprehend our love of automobiles, but that is because they have never had to face crossing Texas. There is a rite of passage for everyone in the US, and that is your first teenage road trip. And no matter what kind of piece of crap you may be driving when you take that trip, that machine is serving you up pure, unrefined freedom and it’s so delirious and liberating that it makes your head spin, and carves the songs you heard during those glorious hours into that part of your brain that makes you cry when you hear them again twenty and forty and sixty years later.

A guy on a Harley knows real freedom in the single, left and right direction of the highway. Sailors know it in two dimensions, the ability to point the bow anywhere on the compass and follow it, come what may.

And then there are those of us who have worked and studied and trained like hell so that we may know freedom in all three dimensions. Now a lot of people think this makes pilots a little arrogant and aloof. Not so. The average pilot, despite the sometimes swaggering exterior, is very much capable of such feelings as love, affection, intimacy and caring. It’s just that these feelings don't involve anyone else.

I knew, when I was sitting in those bleachers all those years ago, that those red, white and blue jets were alive. I always see airplanes that way. They live. They are here to set us free. And the most docile and sweet-natured of them can only just barely kill us.



Like most every pilot I know, I read everything I can about other people exactly like me who have managed to kill themselves in an airplane. Our crusty old flight instructors always said to us new pilots, “Try to learn from the mistakes of others, son – you won’t live long enough to make them all yourself.”

Again, like most every pilot I know, I have lost friends to the airplanes I so deeply love. No one very close yet, but that’s just a matter of time. It’s going to happen. “When a friend dies, you lose a friend; when you die, you lose all your friends.” We say things like this when we start talking about our dead comrades. We say it to deflect the reality of it, of course, but what we really do is dig into the details of every fatal accident. Ah, see – I wouldn’t have done THAT. You feel better. Some of the things pilots do to get themselves killed are truly and staggeringly stupid, so much so you really do tend to look at it as natural selection. But if we’re honest, we often see ourselves in the wreckage, catch a glimpse of something we almost did or might have done, or did, in fact, survive.

Like every pilot I know, I read these accident reports relentlessly, and for the same reason: to save myself from making that same mistake. And it works, too. And it does something more: it makes you face the possibility, the very idea of dying. Realistically and openly. You are making a trade with death – I’ll deal with the horror in exchange for the wisdom.

I like to fly because it combines intelligence, ingenuity, passion, skill, discipline and guts. We do not flirt with danger. We try to get as far away from danger as we can. We look at the death of our friends and colleagues right in the eye so we know what it looks like when it comes for us. This is not a love or a fear of dying. This is confronting the fact that death is in fact real, and by doing so, by facing that, you do, indeed, develop courage.

Courage is not the absence of fear. It is taking action in the face of fear.

And I know courage is the stern face of love because I love to fly more than I fear being killed while flying. I do everything I possibly can to reduce the risks, knowing I can never eliminate them all. There comes a time when I can honestly tell myself I’ve been as careful as I know how to be, and then, and only then, is the time to strap in. I’ve made the risks and the fear as small as I can. The joy stays as large as it ever was.

One day, I was on a solo flight in a small, single-seat sailplane – a glider about the size of a bathtub, with long, thin, very efficient wings.

It’s usually dry in the Mojave desert, but this was still early spring, and the San Gabriel Mountains were covered in snow. Wind hitting the mountains has nowhere to go but up, and so that’s where I was – 80 knots, plenty of speed to get out of trouble – and perhaps two wingspans away from the trees. I was so close I could see squirrel tracks in the snow. Just thinking about a turn was all it took, and I ran the contours of those mountains certain that I would never have to come down.

And then I saw something I have never seen before or since. Off my left wing, between me and the mountains, moist air was being pushed up so fast that it was condensing, turning into cloud before my eyes. It was like an inverted waterfall of smoke, and there I was, dipping a wing into it. The power of all that lift, the force and the speed of it, all that free energy – and somehow, we hairless, gibbering, bickering monkeys managed to figure out a way to grab it and ride it. I remember thinking, Four billion years of struggle and evolution put me in this seat right now. Billions of dead people spent their lives dreaming of what this must be like.

And as I looked away from that upward rushing waterfall of air, I saw ahead of me another sight I had never seen before or since, for the sun was setting below a cloud layer, yet above a lower one, and there we were, just me and Apollo himself -– caught in an envelope of purple and gold glory that would make the most heavenly Hallmark card look like something done on an Etch-A-Sketch.

And I will never forget this feeling: I knew, right then, as if I had been hit between the eyes with a diamond bullet, that I no longer cared about dying. I had seen and done something that only the smallest handful of us have ever experienced, sailed a silent ship through a place that cannot be described or imagined. I didn’t care if the wings came off. I didn’t care if I got pushed through the grille of an oncoming truck on the way home down murderous highway 138. It just didn’t matter to me anymore. I had done this. Anything that followed in this life was gravy, and I knew it as surely as if the thought had been with me all my life.

I wouldn’t have traded that moment for the moon.



Of course, the risks we private pilots face pales in comparison to our military fliers, and is absolutely nothing compared to that met eye-to-eye by men and women like Rick Husband, Willie McCool, Dave Brown, Laurel Clark, Kalpana Chawla, Mike Anderson, and Ilan Ramon; nor does it require the courage and skill of Dick Scobee, Mike Smith, Ron McNair, El Onizuka, Christa McAuliffe, Greg Jarvis or Judy Resnik. These are the last crews of Columbia, and Challenger before her, buried with their ships in the skies over Florida and Texas. But many, many others have taken that walk in those spacesuits, smiling and waving as they pass the cameras on their way to their seats atop 2 million pounds of explosives, and they took exactly the same risks and bore them with the same courage. It is fitting that we remember the names of those lost with their ships, but not fitting at all that most of us cannot name a single living crewmember, some of whom have taken that walk four or five times.

Story Musgrave was one of those people. He described the Space Shuttle as "a beautiful butterfly that's bolted to a bullet."

Here’s what he meant:

Your chairs are facing the sky as you crawl into the Orbiter. You can barely move anyway in your orange pressure suits – thank god for the technicians. They literally ratchet the five-point harness across your chest and legs. On a full flight, it’s four on the flight deck: Pilot and Mission Commander on the controls up front. Two behind him, three on the deck below.

You sit for hours like this – minimum of three hours or so, often longer. There is a lot to think about, and I have no doubt that since Challenger rose and then fell on that cold January morning not one of them has been able to avoid seeing in their mind’s eye that horrible forked smoke trail and raining, smoldering debris. No one talks about this. No one has to. There’s a lot of smiling and nodding, but the chatter is kept to a minimum since the intercom is dominated by call-outs from launch control to the crew, most often the Mission Commander and Pilot.

There’s a lot of built-in holds, chances to catch up and work minor, last minute problems. At the T-21 minute hold, the Flight Director polls the Launch Control Team to confirm we are go for launch. This is a solemn moment. It is, in essence, the passing of a cup of responsibility. Everybody takes a sip. It’s a little less dramatic than in the Apollo days (Telemetry? GO! Cap COM? GO! Booster? GO FLIGHT!), but it’s still where we sign the check.

They pick up the countdown. There’s another built-in hold at T-9 minutes. Any one of these can, and very often does, result in catching one or more of the one million components falling out of nominal status. That’s either more delay strapped into your chair, or a trip home for the night, or the week, or the month.

T minus 31 seconds -- OBS takes over, with auto-sequence start at T-28. Software is running the countdown from this point forward, but anyone at any console can stop the launch if they are not happy.

Computers are checking each system twenty-five times a second. The crew hears everything. Pilot and Mission Commander are busy as hell, but the other five are essentially passengers, and now they are scared. Now they are calling on all of their courage, reasoning with themselves. Smiling at each other. That helps a lot. That and The Nod. The Nod is untranslatable. It means, very roughly, that I know what you went through to sit here with me, and you know the same about me. It’s not something you and I can do. This is something reserved for the very best people we have as a species. That inner voice, the one we cultivate and nurture through untold hours of training and simulation, whispers to us, pushing out the fear: Those controllers are the best there are. The engineers too. The technicians. All of them. We don’t know if they can keep us safe but we know they’ve done their best, and that’s as good as it gets.

Ten, nine, eight…

Okay, head back. Here we go. On the flight deck, some orange gantry out the left window – everything else is blue sky. A butterfly bolted to a bullet.

At T-6 seconds, fire-hoses of fuel and liquid oxygen begin to flow to the three main engines at the back of the Shuttle. They only give us about a quarter of the thrust we’ll need to get off the pad. But they’re on fire now, pushing the Orbiter forward, giving the crew the sickening feeling that the ship is falling over. The vanes constrict and focus the thrust – we’re going to need it all now. Everything she’s got.

Come on, baby. Come on.

The entire shuttle assembly rocks back into place now, and even during these last five seconds, computers can catch a stray reading and shut it all down…

Three, two, one…

SRB ignition. The two flanking Solid Rocket Boosters ignite, pitching more than a million pounds more thrust onto the orange External Tank, the bullet that the butterfly rides into orbit.

And now you’re headed for space, and there’s nothing you can do to stop it.

The SRB’s kick in, and that is what it is, a hammer to the back. You were scared before; you’re terrified now. The SRB’s are horrible, they’re pigs, they scrape and hiss and rattle and they feel like they will shake that ship to pieces. Look at the cockpit cameras during launch, and you’ll see the crew battered like they’re taking speed bumps at two hundred miles an hour. Everyone hates and fears the SRB’s; you’ll never relax while they’re burning.

15 seconds in and you’re clear of the tower. The Shuttle rolls 90 degrees left, fast. You’re not only on your back now, you’re tipping over upside-down and it’s getting worse as you angle out over the Atlantic.

A few miles away stand the smartest men and women the human race has ever produced, and they are watching over you like a hawk. There’s just so goddam little they can do for you now. They’ve already done everything they can and they’re as much a passenger as you are.

You are probably too scared to think about it, and it is CERTAINLY too loud to hear, but further away, thousands and thousands more watch the glare as the SRB’s light. The Shuttle rolls off the pad in complete silence at that distance. It’s surreal. There’s nothing to compare it to. People are usually kind of quiet.

Then the sound hits you: you feel it in your chest more than hear it, the sound of millions of pieces of thick canvas being torn all at once. And then a funny thing happens, because you’re surrounded by people but suddenly you’re all alone out there – sunburn forgotten, mosquitoes a memory from a past life. You’re ten or fifteen or twenty miles away, but it’s just you and the white butterfly now, that’s all there is. You’re crying and you don’t know it, you're screaming but you can’t hear it, you’re jumping up and down, and it’s every time a Gator wide receiver ever beat a Florida State defensive end and he’s just pulling away and ain’t nothin’ gonna stop him now – he’s going all the way.

Go, baby! Go! GO! Go you son of a bitch! Yeah, they say she burns liquid hydrogen and LOX, but that’s just camouflage. It’s pure love that keeps that ship in the sky.

And she is going. She’s going like a bat out of hell. And every traffic jam and dental appointment and blind date and income tax form is suddenly worth it to be able to see this with your own eyes, to live through a time like this. It’s a pillar of fire and a pillar of smoke, but it’s not God coming down to speak to us, it’s us going up to have a word with Him. Good GOD look at her go!

40 seconds. The mains throttle back. Nothing stops the goddam solids: they keep roaring and hissing and knocking loose your fillings if you're dumb enough or human enough to keep your teeth clenched. We’re at Max Q, and the Shuttle is experiencing the highest aerodynamic loads it can bear. We keep getting faster, but the air starts to thin. This is as hard as the air can push back, and if we do it at full power we’ll be blown to pieces.

Fifty years ago it took all the Right Stuff we had in the box to push a tiny orange glider level through the sound barrier. Now we do it in less than a minute, straight up, from a standing start, with a spacecraft the size of a ten story building weighing a few million pounds. Ka-BOOOM! Mach 1, baby, and you ain’t seen nothin’ yet!

A little more than a minute and most of the atmosphere is behind us. Main engines back up to 104%

"Challenger GO at throttle-up…"

73 seconds.

“Oh no—“

That’s as far as Challenger got that cold January morning. 73 seconds. End of story.

“Roger Columbia, we copy you go at throttle-up”

I know how they must have felt at 2:02 – a kick and a pop, and all of a sudden, the ride turns to pure velvet as the SRB’s fall away. I know one of them must have looked at another and smiled. We’re safe now.

Well, safer. Now a complete engine failure could result in a return glide to Kennedy. Forget all that nonsense about parachutes and escape poles. At mach 5 and climbing the air is as hard as concrete.

2:32 – we’ve been in the air for two and a half minutes, and we are high and fast enough now to glide to Africa.

4:20 – Two engine Abort to Orbit – if we lose a main engine now, the other two will get us to orbit. We can sort things out up there.

7:00 – One engine ATO. Even better. We’re gonna make it.

7 minutes, 45 seconds. MECO. Main Engine Cut Off. Welcome to by-God outer space! Everything is strapped down except your arms. They float in front of you like they do at the top of a roller coaster. Only this one is going to last for two weeks. You’re weightless.

A few moments later the External Tank falls away, headed for the Indian Ocean. That funny dark spot is where some of the insulating foam came off during launch. It’s happened before. Probably nothing to worry about…




Back during the Apollo days, before we forgot that we could accomplish anything we set our minds to, the Space Shuttle was going to be a different bird indeed. Not a butterfly strapped to a bullet at all, but more a hawk on the back of an eagle.

No SRB’s, no O-rings, no foam insulation, no External Tank falling away into the ocean half a world away. No, the original plans for the Shuttle called for something that would have looked a bit like those pictures you’ve seen of the Orbiter riding on the back of a 747, as it’s moved from Edwards Air Force Base back to Florida.

Almost all of the weight lifting off that pad is fuel. Why? Because it takes insane amounts of thrust to go straight up. The engines on a 747 don’t lift us into the air – the wings do that. All the engines do is keep the aircraft moving forward fast enough for lift to develop, and it takes a lot less energy to go forward than it does to go up.

In the original design, an orbiter sat on the back of a manned, winged transport. The shuttle would take off from a runway – any major airport would do – climb to about 100,000 feet using jet engines, and let aerodynamics do the heavy lifting just as it does on a jumbo jet today. Then, already moving at several times the speed of sound and with 95% of the atmosphere below it, the Orbiter would separate and using a scramjet – supersonic ramjet – claw for more speed and altitude until there was practically no air left at all. The front of the scramjet would close, making it into a rocket, and liquid oxygen would be added to the fuel. Although you wouldn’t need too much – you were most of the way there already.

This was an elegant, reliable and very safe way to get to orbit. Once built, it would have gotten the cost of going into space down to rates that approached flying the Concorde. But to build it was expensive, and after Apollo 11, we had bigger fish to fry.

No one has been able to tell me what those fish were.

Anyway, never time or money to do things right, but always the time and money to do them over. And over.

Solid Rocket Boosters and foam-covered External Tanks were engineering sleight-of-hand tricks to get us to space on far less money than we needed to do it right. It was like making a lunar lander out of old boilers and playground equipment. To the extent that the Shuttle has flown 111 out 113 missions successfully is a testament to the skill and dedication of NASA’s engineers and administrators, and not, I’m afraid, to the vision or commitment of the Congress, the President or the American People.

Look at the pictures of Columbia after a landing at Kennedy, and you are struck by just how dirty she was by the time of her last mission. Well, she was 22 years old – that’s old for titanium and steel that’s been shaken and burned and twisted and rattled, freezing on one side and boiling on the other during her weeks and weeks in the unforgiving vacuum a few miles above us. But it looks as though Columbia herself never failed her crew. Challenger certainly did not. It looks like components of the External Tank and SRB’s did both Orbiters fatal harm. These ships were destroyed, and their crews perished, because of the various band-aids and cost-cutting work-arounds we applied to what was once a magnificent design. NASA was forced to do this to maintain our tenuous status as a spacefaring species, and I applaud and admire them for that ingenuity and courage. For all her design short-cuts, I would fly the Shuttle tomorrow. Please let me fly the Shuttle tomorrow.




The scales of Joy and Fear somehow balance. On its final mission, the Challenger Seven never got to space, and her crew died not long after she cleared the pad and climbed into memory.

But the crew of Columbia had a much larger helping of joy – sixteen days in orbit, almost a hundred sunrises and sunsets, playing weightless choo-choo trains through narrow tunnels and tweaking gravity’s tail good and long and hard – and the Columbia Seven would be destined to pay for that by several minutes of knowing that they were about to die.

As they strapped themselves in for the long, quiet ride home, they had the satisfaction of a job so well done that NASA was calling it the textbook mission.

Rick Husband took his six crewmembers rock climbing during their years of training. He wanted to bond them into more than a crew. He did: he made them into a family. There’s a picture of them in shorts and sunglasses, atop that mountain, admiring the view. They look like they’d known each other since grade school.

I’ll bet they talked about that day as they pulled down their visors, and Willie McCool pitched the Orbiter on its back for the de-orbit burn. They talked about who was waiting for them, where they would go, what they would have for dinner.

As Columbia began to press against the first thin wisps of air, a little hint of gravity, a little push at the small of their backs must have felt strange after sixteen days of weightlessness. But it was time to go home. And like all coworkers facing the end of a close assignment and weeks and months of hard work together, I know they planned to get together over the years. I know Laurel and Mike were talking about their families, Dave and Kalpana already grinning about being the old salts next time and how much they would miss this team, this family, in all of their future rides on the bullet. Ilan Ramon must have invited them all to his house in Israel, perhaps a few years from now when things had settled down a little. It’s beautiful there. I know that they meant it too, that these were not idle platitudes but real offers from people who knew they would be friends for the rest of their lives.

And so they were.

Perhaps ten minutes before eight am on Saturday morning, Rick Husband and Willie McCool started to pay attention to the data coming from the left wing sensors. It was 30 degrees warmer than normal in the left wheel well. Not much, considering the 2-3000 degrees on the leading edge of their wings and nose, but something to pay attention to. Anomalies are never good. There are no pleasant surprises in the flying business.

By 7:55 things were looking worse – a lot worse. Unbenownst to the crew, telemetry beamed to the ground showed that readings from the heat sensors in the left wing started to rise, and then dropped to zero. They were failing, in a pattern expanding away from the left wheel well. Tire pressures were way high on the left side, and then those sensors failed too.

Sensors fail all the time. But this was different. This was a pattern, and it was spreading. And something was starting to pull the ship to the left.

I don’t know the words he used, but I can hear the tone perfectly in my head, because it’s exactly the same tone I’ve heard dozens of times on cockpit voice recorders. It’s concern. Alarm, even. But it’s cool. Disciplined.

All right, we’ve got a problem here...

The Pilot and Mission Commander probably never exchanged the knowing look that we’d see in the movie. They were too busy working the problem. But in the two seats behind them, and the three below, those five brave passengers looked at each other and now the smiles and the grins were gone.

Something was wrong with Columbia’s left wing. The air that should be slipping over and under her like water off the back of a duck had found something to hold on to: almost certainly some missing tiles knocked loose by insulating foam coming off the External Tank. But 3000 degree ionized air was pushing into that wing, and heat sensors were winking out one by one because they were being burned through by gas far hotter and sharper than that at the end of a blowtorch.

Guys, we’re in real trouble here.

The Commander would have told them. I have no doubt of this at all. You love and respect those people, people who have shown courage the likes of which we will never know. These are not babies, not shrieking, hysterical, self-centered celebrities either. These are astronauts. They deserve to know.

The air pushing backward and into that left wing continued to yaw the nose of the orbiter to the left. This cannot be allowed to happen – the ship will disintegrate if she doesn’t come in at exactly the right angle. So the computers flying Columbia commanded the aircraft to roll right, to bring that left wing forward using the rudder and elevons, the controls on the wing and tail that made Columbia an airplane and not merely a space capsule.

It wasn’t working. Columbia still pulled hard to the left, so hard that the computers fired the attitude control rockets on the nose to try and force it back into the relative wind. When that happened, when they heard the roar of those rockets firing in a last desperate effort to keep that ship intact, and when the rockets fired again, and kept firing, Rick Husband and Willie McCool must have known that they were not going home that day.

Guys, it’s Rick. I don’t think we’re gonna make it.

And I know what courage did for these people. I know they looked at each other and nodded, and whether they actually said goodbye I know it was in their eyes. We know it. We know. We saw it on the deck of the Titanic, in the aisles on United Flight 93. On some level, they had all said goodbye to their families and their lives before they walked through that circular hatch, right below the word COLUMBIA.

When PSA Flight 182 collided with a small plane over San Diego in 1978, and dove straight into the ground trailing fire from the wing, the last words on the Cockpit Voice Recorder was a calm, level, “Ma, I love you.”

And in that last second, there may just have been enough time, as that bulkhead wall opened into golden and purple light, to smile and think, It was worth it. It was a great ride. I wouldn’t have traded this for the m

Buildings shook in Texas. Columbia was coming home.