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Saturday, February 25, 2006

Experienced Shipper Answers Questions on UAE Controversy

I contacted a relative (through marriage) with a lot of experience in the shipping business. I asked him to comment on the UAE port takeover issue. Here is his response:

Hi Neal,

As a Coast Guard Port Security Officer, and with 43 years of export/import shipping experience, and having been to every U.S. port of any significance from Portland Maine to Seattle, I have a little knowledge of how ports operate.

I believe the media have confused the word "port" with the word "terminal" in that ports consist of various terminals, usually specializing in certain commodities or certain types of ships. Oil and other liquids are handles at specialized facilities, as are container vessels and bulk cargo vessels, such as grain carriers.

The P&O Company, a British firm, sold their terminal contracts to the UAE government firm. I don't know how extensive their holdings were, but they did not "control" any ports.

The security at U.S. ports is under the control of the Coast Guard and the Customs, as well as private security at the various terminals within the ports. Regardless of the ownership, nothing concerning security will change.

The Coast Guard website published an article from the Philadelphia Inquirer, which was the first intelligent reference to Terminals, and I'veattached an excerpt.

I don't like the idea of a UAE government -owned firm operating any part of a U.S. port, but the situation is by no means as serious as the media make it seem, by their constant references to "control" of U.S. ports.


The excerpt:

Is an Arab nation taking over the Philadelphia port?

No. The port is run by a state agency, the Philadelphia Regional Port Authority. The agency, in turn, has contracts with companies that run terminals and load and unload ships.

So what is being purchased?

A company with one of those contracts.

Delaware River Stevedores Inc. has a lease to run one of the city's terminals - the Tioga Marine Terminal. It also loads and unloads ships in Camden and Wilmington.

Delaware River Stevedores is half-owned by SSA Marine in Seattle. Until last week, the other half was controlled by a North American unit of Peninsular & Oriental Steam Navigation Co. of London. That was the unit sold to Dubai Ports World, a government-run company in the United Arab Emirates.

Will the new partner in Dubai send workers here?

Not likely, said Robert Palaima, president of Delaware River Stevedores. When the partner was a British company, no British employees were based here, he said. He does not expect that to change now that the partner is based in Dubai. "I'm president, and I'm not hiring," Palaima said.

Friday, February 24, 2006

Business Relationship Will Reap Rewards

Another pundit whom this writer admires is Mansoor Ijaz, a regular on Fox News. In his piece "Why Dubai is good for US Business", Ijaz writes:

In the battle of hearts and minds that defines America's struggle to combat terrorism, the emotional eruption from US politicians in the past week over the proposed takeover of six key American ports by a Dubai company is a big step backward for US national security. It is a uniquely un-American reaction that assumes the worst of an important Arab ally, pronounces its guilt, and seeks to paint its companies as enemies without one shred of evidence.

Ijaz recounts the many ways Dubai has assisted the US in the War on Terrorism. If we prefer creating a long-term friend rather than create a dangerous enemy, then open economic relations with Arabs is a must. Writes Ijaz:

It is hypocritical for America to want democracy in the Middle East, to champion capitalism as the best economic framework while pushing for reform, transparency, and anticorruption practices in its businesses, and then turn protectionist when a Dubai-owned company turns up on our shores having played the capitalist takeover game responsibly and transparently.

We will win this war by making allies, not enemies. Historically, that was tried by our and out foreign aid grants. That bought us nothing and the poor people of those countries nothing but a strengthened dictatorship. A working business relationship is the better path.

MSM Ignores Iraqis Calls For Peace Not Revenge

MSM anti-Bush, anti-free Iraq reporting is almost gleeful in its unconcealed hopes for civil war. Power Line provides a report from its Reader Haider Ajina that:

[W]hat is not being reported is the calling for calm and cooperation by all Sunni & Shiite religious leaders (except the young Alsadar who remains a thorn). The demonstrations of national unity. The mullahs in Sunni & Shiite mosques calling for support for injured brothers and sisters, national calm. They do not report on the Shiites standing guard outside of Sunni mosques in the south. Etc...There are two sides to this incident. The side of revenge, anger and the much larger side of unity and support. This bombing in Samarah has brought more unity amongst Iraqis than any other incident since the stampede on the Kahdumiah bridge (when Felujans [mostly Sunni] donated blood for the wounded in Kahdumiah [mostly Shiite] in Baghdad). Iraqi political parties, community leaders, religious leaders, political leaders all are strongly condemning this bombing and asking for national support and help for the people of Samarah. This outpouring of compassion, support and help is what is not being reported.

The MSM and their friends have been employing this strategy since the war began. It assists the terrorists. The blogosphere has the antidote. Readers, please keep on surfing.

Higher US Involvement in the UAE Administration of the Ports

A favorite pundit of this Think Tank is Charles Krauthammer. On the ports sale to the UAE company, Krauthammer is against it, sees the Democrats as being hypocrites (they would cry "racial Profiling" if a shiek from the UAE was given heavier airport scrutiny) and recognizes the downside of the deal is not as dire as being portrayed by opponents. He says that since the time to have stoped the deal was at an earlier stage,

[A]t this point doing so would cause too much damage to our relations with moderate Arab states. There are no very good options. The best exit strategy is this: (1) Allow the contract to go through; (2) give it heightened scrutiny by assigning a team of U.S. government agents to work inside the company at least for the first few years to make sure security is tight and information closely held; (3) have the team report every six months to both the executive and a select congressional committee.

Like we said, Vet it and Increase Security.

But then defeating this deal has finally united the parties. As Jonah Goldberg notes:

Bipartisan consensus is often a troubling sign, particularly when it's on an issue few know much about....Democratic and Republican politicians respond by insisting that the UAE is a bad country full of bad Muslims and Arabs, while Britain is a nice country where everyone likes us. I'm as Anglophile as they come, but you might have noticed that Britain has a surfeit of jihadi nut bags, such as the guys who blew up the Underground and want to behead Danish cartoonists. Besides, the same Dubai company bought CSX's American port business in early 2005, and nobody seemed to care then.

It a bipartisan issue. Per Goldberg, Senator John McCain is not one of them. For that, he goes up another notch to me.

Thursday, February 23, 2006

Canadian Med System Leads To Scarcity and Death

George Reisman, the economist who wrote the comprehensive "Capitalism A Treatise on Economics", has a wonderful blog. He discussed the harm done by socialized medicine as currently proven by the vaunted Canadian system. In Canada there are long waits and poor quality healthcare. However, using private medical services is outlawed. Reisman explains why:

[A]ll one need do to understand why socialized medicine leads to the prohibition of private medicine is simply to hold in mind the combination of deteriorating medical treatment and controlled physician incomes under socialized medicine and ask what would happen if an escape from this nightmare exists in the form of private medicine. Obviously, physicians who want to earn a higher income and to have the freedom to treat their patients in accordance with their own medical judgment will flee the socialized system for the private system and leave basically only the dregs of medicine for what will remain of the socialized system. That is what the government’s prohibition of private medical care is designed to prevent.

This was confirmed in arguments before the Canadian Supreme Court. The Times article on the subject reported that

Various medical experts, government representatives and union leaders argued in court that privatization of insurance and services would bring an exodus of medical talent from public to private practices, and make waiting times even longer.

And there you have it. Socialized medicine destroys the quality of medical care and dare not allow the competition of private medical care. To prevent that competition, it must prohibit private medical care and establish a legal monopoly on medical care.

Shall we apply this economic theory to other government programs?

Harvard Orthodoxy Stifles Diversity of Thought

Alan Dershowitz made an unexpected comment on teacher tenure in an interview by Hugh Hewitt (transcript posted by Radioblogger).

Dershowitz discussed the recent resignation of Harvard President Larry Summers after being smeared by the small faction of radical faculty (largely staff of the humanities curriculum). Dershowitz said:

Well, you know, tenure has failed. I can tell you why. There is no less courageous group that I have ever encountered in my life, and I meet people from all circles of life, than tenured professors at major universities. They are among the biggest cowards. They use tenure as a sword, but not as a shield. And they are afraid to speak their minds, even on the Summers thing. So many faculty members who supported Summers were afraid of alienating some people on the hard left, and remained silent. And therefore, we got a very, very skewed public debate about Summers' qualities as a president.

One expects tenure to be the means of teachers to avoid worry of job loss and to focus on better teaching methods and improving the school. Instead, they cower as if they have something to lose. Since job loss is not a consequence, the next incentive for a tenured teacher is community acceptance. This leads to a reduction of ideological diversity and ultimately a loss to the students. Thomas Sowell explains that students pay for this ideological orthodoxy:

Even if every conclusion with which students are indoctrinated were true, unless those students develop their own ability to weigh opposing arguments, these conclusions will become obsolete as new issues arise in the years ahead. These "educated" people will have developed no ability to analyze opposing sides of issues.

Students are getting half an education at inflated prices and learning only how to label, dismiss and demonize ideas that differ from what they have been led to believe. Their "educated" ignorance is a danger to the future of this country.

Wednesday, February 22, 2006

Happy Birthday Kelo!!!

The height of judicial activism is "celebrated" today by Linda Chavez in "A year after Kelo". Kelo is, of course, the SCOTUS decision that allows municipalities to use eminent domain to take private property from one citizens for use of another citizen. What was abrogated was the need to prove the property was in a blighted condition and that the use of the property was for a public need such as a street, railroad or courthouse. The SCOTUS decision by its liberal wing now allows the mere increase in the municipal tax base to suffice as a public purpose in the taking (and we will not get into the issue of the money paid to the owners in this non-free markket sale).

My minor complaint from her column regards this quote:

The Court's decision in Kelo sparked considerable controversy and may be the one recent public policy debate that united many conservatives and liberals. Conservatives generally don't like government interfering in private transactions anyway, and the thought that a city or county could decide to condemn otherwise sound property in order to increase tax revenue by replacing it with a more valuable property strikes many conservatives as a good example of the rapacious appetite of Big Government. Liberals, on the other hand, see this as government choosing the wealthy over the poor and middle class, Big Business triumphing over the Common Man, whites displacing blacks and other minorities.

It is not "Big Business over the Common Man". It is Preferred Interests using government to trump the rights of others. That is what the Founders sought to protect us from by limiting government's thrust in our pursuit of liberty, justice and property rights. The parties with access to the powerful government as it has been allowed to grow are responsible for the laws we take fro granted and which erode our rights in this inching towards what Herman Cain calls "gutless socialism".

Response to the Prior Post

Comment from a reader:

Watched Chris Matthews last night and came away a little more assuaged about this deal. I am not quite the libertarian you are and would occasionally bow to National Security interests even at a cost - much as Bush has done over the last three years at various times "because we are at war."

However the hysteria getting whipped up over this deal is staggering. As to Hardball, Miami Police Chief Timonen noted that when that little private plane went down in the harbor a while back, the Port was shut for three days as a security / investigative measure. So he had concerns about the political fallout upon the Port's economics if there were another "incident" to be investigated for terrorism potential and the Port were shut down "indefinitely" and as this whole arrangement came under scrutiny as part of the investigation - which it likely would have to. Are we just asking for trouble, even if this appears "clean" today?

At the show's close, Tom Ridge put in his five minutes and felt this was "ok".

My response:

How about the "hearts and minds" message? The Arab world should be provided the "carrot" of economic access for playing by the rules. Ironic, we will play with the despots when it comes to their oil but not for bona fide business pursuits. Quite a message there. And it is not lost on the greater Arab world.

In "Arab Americans see bigotry behind ports uproar" Reuters reports:

"I find some of the rhetoric being used against this deal shameful and irresponsible. There is bigotry coming out here," said James Zogby, president of the Arab American Institute.

He said politicians were exploiting fears left over from September 11 to gain advantage in a congressional election year.

"Bush is vulnerable so the Democrats jump on it. The Republicans feel vulnerable so they jump on it. The slogan is, if it's Arab, it's bad. Hammer away," Zogby said.

However, this view reminds me of the idea that Muslims are not ready for or have no interest in democracy or freedom. Interesting generalizations coming from many ideological tracks.

And that Bush has vowed to veto any bill Congress might approve to block the agreement sends a very interesting and consistent message. While we never let our guard down, we recognize there are moderates within the Muslim community who are not the enemies of the US.

Or are we at war with the whole Arab world?

Meanwhile Skip March tells us at noontime:

I'm sitting here working and watching CNBC (market is up on tame inflation figures by the way) and Charles Pascarella (Dem-NJ) is on talking about the Port Deal and keeping Congress informed. In his first few sentences he lumped together issues surrounding the Port Deal, Medicare Reform and Cheney hunting in the countryside. He then goes on to call the Bush Administration secretive (talking point) and inept (resurrected talking point). So much for seriously addressing national security..........

Vet The Deal But Go Forward

We are for a free market.

Last July, we criticized the Congressional pressure that ended the Chinese bid for Unocal, the US oil company. The worries of China’s sinister dominance over the world oil supply appeared hysterical and against the free market principles this blog upholds. Now, under the guise of national security, the United Arab Emirates purchase of P&O (the British company that manages U.S. ports) is being challenged by politicians for purported fears of unsecure ports should an Arab country assume ownership.

Some of us in this Think Tank worried:

I guess I just don't think they can be trusted...whether or not they are supposedly protected by the Coast Guard, Port Authority and Dept of Homeland Security...are those organizations 100% guaranteed to keep the bad guys out? I think not. Besides, I hear they only check something like 5% of the cargo. I can just hear it now (adapted from a caller I heard on the radio yesterday that works in the port in NJ)..."Oh, there is a language barrier...we need to hire people from the middle east who can understand us"...and then we have to believe they are OK...etc....

On the face of it there looks to be a square argument here. However, if the worry is minimal container checks, that can be improved. If it was so poor under British management, why can't this be changed.

Wrote Wayne Alder:

This seems to me to be a bit of a "mcguffin", i.e. something that seems like it is important, but really is not. This is about ownership of an operating company. Arabs will not be running the security of the port- We will by the appropriate agencies. They will be getting the profits from the operation of the port. But this is what we do in an open world market.

As always, the story behind the outrage tells all.

As reported by the WSJ:

The timing of this sudden uproar is also a tad suspicious. A bidding war for the British-owned P&O has been going on since last autumn, and the P&O board accepted Dubai's latest offer last month. The story only blew up last week, as a Florida firm that is a partner with P&O in Miami, Continental Stevedoring and Terminals Inc., filed a suit to block the purchase. Miami's mayor also sent a letter of protest to Mr. Bush. It wouldn't be the first time if certain politicians were acting here on behalf of private American commercial interests.

So it is protectionism of a US business that cannot compete fairly on a level playing field, it is the interests of union workers and typical political grandstanding that assumes the stage. This meeting of 3 interests, that do not care a fig about national security, have converged to raise this canard.

Meanwhile, there would be no lessening of port security. Writes the WSJ:

Dubai Ports World would be managing the commercial activities of these U.S. ports, not securing them. There's a difference. Port security falls to Coast Guard and U.S. Customs officials. "Nothing changes with respect to security under the contract," Defense Secretary Donald Rumsfeld said yesterday. "The Coast Guard is in charge of security, not the corporation."

In a telephone interview yesterday, Kristie Clemens of U.S. Customs and Border Protection elaborated that "Customs and Border Protection has the sole responsibility for the cargo processing and cargo security, incoming and outgoing. The port authority sets the guidelines for the entire port, and port operators have to follow those guidelines." Again, nothing in the pending deal would affect that arrangement.

When comparing the national security credentials of Donald Rumsfeld and George Bush against the national security credentials of trade protectionist Chuck Schumer and "shoot a bomb into the middle of the desert" Hillary Clinton, I feel safer knowing the administration backs this deal over the posturing of the usual suspects. Vet the purchasers and increase port security measures, something that has been needed anyway, but let the deal go through.

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