Saturday, April 9, 2005

Oil and the Dollar

John Tamny at National Review Online talks about why oil prices are so high. He notes that the price is a function not only of increased demand but even more importantly, the falling value of the dollar. Since the barrel price of oil is pegged to the dollar, oil producers' profits suffer when the value of the dollar sags. In order to keep their profit margins up as the worth of the dollar sinks, producers charge more for the oil they sell.

Tamny asserts that the problem actually began back in the 70's when President Nixon took the dollar off the gold standard and set it afloat, a point that Bill () has emphasized in his posts here at Viewpoint on numerous occasions.

Tamney says:

Since oil is priced in dollars, it was only natural that the oil price rose substantially in the 1970s. Early in that decade, oil "shocks" were a U.S. phenomenon related to the Federal Reserve's failure to maintain dollar stability, and a world phenomenon to the extent that other currencies followed the dollar's inflationary descent.

The reason why oil producers were far more able to meet economic growth with supply between 1947 and 1967 has to do with the U.S. monetary regime at the time and the fact that the dollar was fixed at $35 an ounce of gold due to the Bretton Woods agreement.

Producers could drill for oil during the Bretton Woods era highly confident that they would receive $2.50 a barrel. As evidenced by the fluctuating oil price since 1971, the floating dollar has introduced major instability that made occasional shortages and gluts inevitable. Oil hit a low of $10 a barrel in 1998, and that low price goes far in explaining why today's price has risen across all currencies.

What is needed is a commitment on the part of the Greenspan Fed to dollar stability, ideally in terms of gold. A message like this would give oil producers the confidence to make up for any shortfalls with new supply. As economists Peter Huber and Mark Mills note in their latest book, The Bottomless Well, we're not running out of oil.

This last assertion is interesting. If it's true that shortfalls in oil availability are not the consequence of limited supply in the ground, then they're obviously the result of factors like manipulation of supply or, less insidiously, limited drilling or refining capabilities. We haven't built a new refinery in twenty years in this country, and we're told that our present capacity can't keep up with the demand. We might ask our profit besotted oil executives why they haven't plowed some of their enormous cash harvests from the last two decades back into production enhancement. Or is that a silly question?

Interesting Quote From WND

"The Bush brothers' refusal to prevent Terri's killing will do lasting political damage to them both," writes Wheeler. "As John Fund of the Wall Street Journal points out, if Janet Reno could override a court order and have Elian Gonzalez kidnapped at gunpoint to be returned to Communist Cuba, either Jeb or George Bush could have overridden Greer to save Terri's life. Her death will be an ineradicable stain on GW's presidency and Jeb's chances for the White House.


"If any good is to come of this tragedy it would be to catalyze the recognition among Americans that America is no longer a democracy," Wheeler explains. "It has become a krytocracy, a government of judges. We no longer have a government of, by and for the people. America today is ruled not by elected representatives, but unelected judges, governed not by law but by the arbitrary - and in the case of George Greer, homicidal - whims of people in black robes."

Draining the Swamps

According to the Middle East Media Research Institute Yemen has announced that in order to drain the swamps which breed Islamic extremists they intend to close down 20,000 religious schools which are not under government supervision.

On balance, in Yemen, and knowing what kind of hate-filled religious beliefs are often taught in these schools, this is no doubt a positive development, and one wishes Saudi Arabia and other Muslim countries would do likewise. On the other hand, of course, we find ourselves uncomfortable applauding the general idea that government should supervise religious instruction.

Our discomfort raises some interesting questions. Will the first amendment right to freedom of religion only work in a predominantly Christian country? More concretely, has there ever been a non-Christian nation (or government) which genuinely guaranteed freedom of religion? Does Israel? Has any officially Muslim or atheistic government ever granted the freedom to worship and preach whatever religious belief we wished?

I confess I don't know the answers. Perhaps a reader might be able to edify us on the matter.

Racial Disparities in Public Schools

The New York Times has a fascinating account of the racial disparity between the percentages of students in upper and lower level classes in a New Jersey high school:

This is a reality at many high schools coast to coast and one of the side effects of aggressive leveling, the increasingly popular practice of dividing students into ability groups.

I'm not sure what the Times means here by "increasingly popular". I'll bet everyone reading this attended a high school where college-bound students took more intellectually demanding courses than students who were on other tracks. School curricula have been structured this way at least since the 1950's. Even so, this is a minor quibble.

But at Columbia High, the students nearly revolted. Two weeks ago, a black organization on campus planned a walkout to protest the leveling system. Word soon spread to the principal, who pleaded with the students not to go. The student leaders decided to hold an assembly instead, in which they lashed out at the racial gap.

Were the students complaining that some of their classmates are not as bright as others? Exactly what is it about leveling that these students find so intolerable? If there's a racial gap why is that the fault of class levels or of the school?

The student uproar is now forcing district officials to take a hard look at the leveling system and decide how to strike a balance between their two main goals - celebrating diversity and pushing academic achievement.

Of course. If minority students are disproportionately represented in the lower level classes then an obvious solution to liberals is to do away with levels. We don't want students having their self-esteem damaged by being placed in the dunderhead classes, even if they really are dunderheads. Better to diminish the quality of education available to all students than to have some students fall hopelessly behind. Let's celebrate our diversity, not strive for academic excellence.

The superintendent of the district, Peter P. Horoschak, acknowledged that there were, in a sense, two Columbias. The de facto segregation is most visible at the extremes. Statistics for this year show that while a Level 5 math class, the highest, had 79 percent white students, a Level 2 math class, the lowest, had 88 percent black students. Levels 3 and 4 tend to be more mixed, though a school board member, Mila M. Jasey, said, "Some white parents tell me that they know their kid belongs in a Level 3 class but they don't want them to be the only white kid in the class."

The flashpoint of the assembly came when Nathan Winkler, a skinny, intense senior who says he wants to be governor some day, grabbed the microphone and announced that he had no sympathy for people in lower levels because all it took was hard work to move up.

His short outburst was like a cleaver, splitting the student body in two. Many blacks booed him. Many whites cheered. He was then accused of using the term "you people" in his speech - though he did not, according to a videotape of the assembly. After the assembly, he said, he was stalked in the hallways.

"I felt extremely isolated during that assembly," he said. "For the first time I was aware of being part of the minority. White kids are outnumbered at Columbia. I knew that, but I hadn't really felt it before."

Poor Nathan. He has the temerity to tell the minority students, who are in fact the majority, that they have every opportunity to improve their academic status through dint of hard work, and he's booed. Indeed, why should they work harder if they can just pressure the administration to get rid of levels? Mr. Winkler so offended the academic malingerers by his suggestion that they actually try studying and doing homework that they were sure he referred to them by the insufferably crushing epithet "you people", and in good "can't-we-all-just-get-along" fashion, sought to intimidate him in the halls.

The debate over leveling here boils down to fairness. Is it fair just to ensure equal access to upper level classes? Or does fairness go farther than that and require administrators to truly level the playing field so that the racial makeup of upper classes better resembles the racial makeup of the school?

Simply to ask the question is to know the answer. Fairness has nothing to do with equal access, it's all about equal outcomes. Critics of academic levels assume that if kids of one race can't compete with kids of another then the system is unfair and needs to be changed. I wonder if these critics think the school should apply the same principle to their basketball program.

"She's got an entire black population that wants to get rid of the leveling system and an entire white population who would leave this town if they did that," he said. "What's she supposed to do?"

What she's supposed to do is to tell those who want to get rid of the levels that their suggestion is so dopey that it could only have originated among people who spent their own high school years wallowing in classes that an average third grader could master.

It is astounding that actually watering down the more difficult courses is a live option at Columbia. The African-American students seem to be of the view that it is an affront to them that courses are offered which other groups seem able to handle but which they can't. Their solution is to eliminate the disparity by eliminating the difficulty of the course.

All manner of hand-wringing goes on in the article about this situation - what's causing it and how to fix it. Throughout the piece everyone seems to dance around the possibility that the lower academic levels are populated by individuals who in fact actually belong there. This just seems unthinkable to some of the interviewees in the account yet it is almost certainly the case.

Students of whatever race who find themselves on the academic ground floor in most schools in this nation have demonstrated throughout their scholastic career that, as Mr. Winkler trenchantly observed, they are either unable or unwilling to do the work necessary to succeed in the more challenging classes.

The concern at Columbia, of course, is that the lower level students are disproportionately black and the tacit assumption is that they are victims of a subtle racism that assumes that they can't handle upper level work. I find this highly implausible. Had these students shown a scintilla of academic potential at anytime along their march through the lower grades they'd have been seized upon by administrators and teachers desperate for opportunities to tout academic success among their black student body, and they'd have been cultivated and nurtured like rare orchids.

The fact is that black students do poorly, to the extent that they do, not because their schools don't encourage them but because they often don't respond to the encouragement. Why they don't respond varies from student to student, but the reasons are generally an impoverished socio-economic status, a dysfunctional family life, a depauperate urban sub-culture, and inherent inability. Any of these by itself is a millstone around the neck of any student. Two of them together pretty much guarantees that that individual will spend his or her youth in the academic netherworld. It is an extraordinary individual that can overcome the disadvantages imposed by these handicaps, and most kids are not extraordinary. Unfortunately, many urban black kids are encumbered by at least two of them and their prospects for success in school are correspondingly dim.

They are often poor because their families are dysfunctional and their families are sometimes dysfunctional because they're poor. They often have only one parent, no father, and the harried mother simply can't, even if she is inclined, provide the environment for her children necessary for healthy intellectual growth and development.

Kids in the inner city often grow up feral, with too little effective discipline, few or no rules, and minds influenced by dysgenic role models from early on. Rarely encouraged to read until they get to pre-school, they adopt the fashions of the street which dictate that they dress like they're intentionally trying to look as stupid as possible, listen to mind-numbing, degenerate music, and adopt speech habits which render them at best marginally articulate. If a white child spoke as unintelligibly as many of our inner city youth he or she would be taken to a speech therapist.

This urban culture too easily accepts these detriments as well as the disastrous phenomenon of teenage unwed motherhood, which is a socio-economic death sentence for most children born into such a circumstance. The child begins life at a tremendous disadvantage, faced with almost insuperable odds, and, in most cases, manages only to fall further behind every year.

Moreover, the sort of aptitudes necessary to succeed in some academic disciplines don't seem to come easily to such children. Black communities have produced men and women of genius, but only rarely is that genius in fields requiring a mathematical turn of mind. Black students are often unsuited both intellectually and temperamentally for the rigors of math and get frustrated early on in their schooling by the fact that they seem to have to work so much harder than their classmates to understand it. Add to this the lack of effective parental expectations and control at home, and the wonder is not that there are so many black kids in the low levels, but that there are as many as there are in the higher levels.

Even though almost everyone who has had at least one eye open for the last thirty years recognizes these problems, it is nevertheless considered totally unacceptable to give voice to them in polite liberal society. Charles Murray was pilloried for suggesting a couple of decades ago in his book The Bell Curve that blacks may not have, on average, quite the same intellectual potential as other racial groups. Murray was practically drawn and quartered for this transgression of the bounds of tolerable opinion.

Liberals assume that if blacks are underrepresented in the more challenging academic settings they must be being discriminated against. They must be the victims of subtle forms of racism. It is the perennial liberal solution to all racial disparities, at least those which work to the detriment of blacks, to look under the bed for lurking racists. Anyone who offers a modest dissent from the orthodox dogma, is, like Nathan Winkler, booed and intimidated, or worse. It's much easier and much less painful to dilute the curriculum so that everyone can succeed rather than admit and confront the sociological causes of black academic failure.

For the sake of African-American children we need to stop playing feckless games with political correctness. We need to stop acting like the characters in the story The Emperor's New Clothes who all knew the emperor was naked but nevertheless clucked and chortled about how marvelous was his finery. We need to be able to speak frankly, like Bill Cosby has done, about the causes of black failure without being reflexively labeled a racist just because some of that frankness may make people feel uncomfortable or may insult their self-image. Until we do, a large percentage of American children will continue to languish in academic purgatory, continue to drop out of school as soon as they can, and continue to perpetuate the whole culture of failure for generations to come.