When I read this post at RealClearWorld on U. S. policy with respect to Yemen:

Washington should also encourage partners to develop or restore relationships with individuals who have chosen to support the Houthis politically during the civil war but who might not entirely believe in their cause. Houthi adherents might include members of the former ruling party still in northern Yemen and northern-based families and tribes who have calculated that their political prospects and futures were better with the Houthis than with the loose-knit coalition opposing them. Splintering the Houthi movement in this fashion could begin to diminish the group’s influence in Yemen. Reducing the Houthis’ strengths would increase the prospects of an acceptable negotiated settlement to the war and a political resolution in Yemen.

I began to wonder about the relationship between the Houthi alliance with Iran and the feckless way in which the U. S. has conducted the War on Terror. Our first armed drone strike took place in 2002. Since then we’ve conducted 329 drone strikes, killing more than 1,200 people, many of them civilians.

Just as in Afghanistan we rely heavily on local governments for intelligence—we have very little human intelligence of our own in Yemen. How honest is the Yemeni government? I would suggest not very. They are highly motivated to point out enemies of the government (Houthis) as Al Qaeda whether they are or not.

Were the Iranians supplying the “Houthi rebels” prior to 2002? Or was the alliance created in self-defense?

At Forbes Robert Rapier presents the evidence that Saudi Arabia’s breakeven price for oil production is closer to $40 per barrel than it is to the $10 per barrel that has been assumed for decades:

Saudi Aramco, the national oil company of Saudi Arabia, is by far the largest oil company in the world. The company produces around 13% of the world’s oil, but its business operations have been notoriously opaque for decades. It has often been stated that the company has plenty of low-cost legacy wells that drop its overall production costs to $10 per barrel, or even lower.

Because there was no way to audit this information, the world was left to guess at the actual breakeven costs for the world’s largest oil company. Today, Saudi Aramco lifted the veil on its financial condition in a bond offering for the company. (PDF link here).

That’s an enormous difference with huge geopolitical implications. The breakeven price of some shale oil production in the United States is $51 with its proponents claiming it will go even lower. A lot of Saudi influence depends on its being the low cost producer of oil with a lot of disposable revenue.

I agree with Leon Aron’s assessment at Foreign Affairs. Concerns about an alliance between Russia and China are highly premature:

History and geography militate against an entente cordiale between the two Eurasian giants. Authoritarian states sharing a 2,600-mile border, with much of that boundary first imposed by imperial Russia on a weaker neighbor, are hardly ideally set up to build mutual trust.

Reinforcing that barrier are very significant structural differences between the two countries’ economies, which result in their holding divergent stakes in the present world economic order. Confined largely to exporting oil and gas, Russia’s integration in the world economy is at once quite secure and quite limited. Moscow can afford to rock the boat and to seek from Beijing a pointedly anti-Western, active, and committed military-political partnership.

Unmentioned in Mr. Aron’s account is both countries’ history of xenophobia. The factor most likely to encourage Russia to seek common cause with China is heightened irrational conduct by the U. S.

A poacher was trampled to death by an elephant and then eaten by a pride of lions:

A POACHER hunting rhinos in the Kruger National Park met a gruesome end after being trampled to death by an elephant and then eaten by a pride of hungry lions.

Four other poachers who fled the game reserve in South Africa in terror were picked up by police and explained how a member of their gang had been killed.

They described how an angry elephant surprised them as they stalked endangered rhino and stamped their friend to death giving them a chance to run for safety.

Kruger Park Rangers immediately set out for the area known as Crocodile Bridge and sent up their airwing helicopter in a bid to find the dead man’s remains before it got dark.

KNP ranger Don English led the team out again at first light on Wednesday to recover the body.

But with no luck the police officers in the case re-interviewed the captured poachers to try and get more detail as to where the elephant attacked and killed their friend.

They found what was left of the poacher on Thursday but it appeared he had been eaten by a lion pride.

All that was left to bring back to the camp was the poacher’s bloodied head some clothes.

For decades the prime market for rhino horn has been countries in Asia where it is valued as a medicine despite the lack of scientific proof of efficacy. Formerly, it was valued in Yemen for dagger handles until a government crackdown and educational campaign reduced the demand there. The slaughter of rhinos is likely to continue until social stigma is attached to the use of rhino horn in China and Vietnam. Or we run out of rhinos.

I understand the rationale for Illinois’s raising the legal smoking age to 21. That’s consistent with the legal drinking age here. I do not see how that move can be reconciled with a voting age of 18.

I encourage you to read this engaging piece at Bloomberg by John Authers and Lauren Leatherby on the enormous increases in debt at all levels—personal, corporate, and governmental—all over the world. Here’s a snippet:

The global economy suffered a difficult decade—a global Great Recession followed by a persistent slump in western Europe, and slow growth and widening inequality in the U.S. It might have been far worse without desperate measures from central banks and China’s debt-fueled spending splurge. But while their intervention averted a painful deleveraging, it created an alarming set of problems.

It’s chockful of charts and graphs. I wish more of the charts actually illustrated comparables, e.g. they measure the performance of U. S. banks in terms of debt to equity but European banks in terms of assets compared to national GDP.

The staggering increases in personal debt have largely been driven by student loans. Educational debt is another good instance of the parable of the broken window. At this point it’s a self-licking lollipop. We desperately need to change what we’re doing. At the very least educational institutions must have more skin in the game.

Here’s a passage I found telling, this time about corporate debt:

Big companies have enjoyed big profits, fattened by widening margins as wages stagnate. That’s allowed them to sustain a huge debt load. But drilling down shows that credit quality, as viewed by ratings companies, has tumbled. According to S&P Global Ratings, the companies rated BBB+, BBB, or BBB- (the three lowest investment grades before they would hit “junk” status and face much higher interest payments) now outnumber all of the companies with some level of A-rated debt. It looks as though companies are “gaming” the ratings companies, borrowing as much as they can get away with.

Yuh think? Why do the ratings companies exist at all at this point? If there’s one thing we should have learned from the Great Recession it’s that the ratings agencies are a scam.

I sometimes wonder what planet academic pundits are from. In an op-ed in the Washington Post Lawrence Summers and Natasha Sarin express skepticism over the amount of government revenue that can be derived from wealth taxes:

Sen. Elizabeth Warren (D-Mass.) recently proposed a 2 percent “wealth tax” on those worth more than $50 million. Emmanuel Saez and Gabriel Zucman, economists at the University of California at Berkeley, have played a major role in developing and validating this proposal. They estimate that the tax would raise $187 billion in 2019 (Warren’s additional 1 percent “billionaire surcharge” brings their total revenue estimate to $212 billion). This represents a substantial sum and has been widely quoted in both academic and policy discussions of wealth taxation.

Saez and Zucman are perhaps the world’s leading experts on wealth statistics, but they have not previously been involved in tax-revenue estimation. One of us (Summers) has often been struck by how much his judgments regarding tax revenue based on published economic statistics have differed from those of professional revenue estimators. So it seemed a worthwhile exercise to estimate the proposed wealth tax revenue based on actual tax revenue data.

Here’s the part that caught my eye:

We reasoned as follows: The existing estate tax is a wealth tax levied at the time of death. If 2 percent of wealthy families experience a death and intergenerational transfer (rather than a spousal transfer) each year, then the current 40 percent estate tax should roughly be the equivalent of a wealth tax of 40 percent multiplied by 2 percent — or a 0.8 percent wealth tax — assuming equivalent definitions of wealth and the same threshold for taxation. Since most wealth is held by fairly elderly people, and the mortality rate of 70-year-olds is above 2 percent, we suspect that 2 percent mortality is a conservative estimate. So the actual wealth-tax equivalent of the estate tax is likely greater than 0.8 percent.

Their assumptions are completely wrong. The wealthy have strategies to avoid having their wealth be subject to the inheritance tax. The greater the wealth, the more strategies are available. The only wealthy people who pay inheritance tax are those improvident enough not to have made the necessary arrangements. They’re estimating based on the number of those eligible rather than the number who actually pay.

The same will be the case with any realistically conceivable wealth tax. There will be ways to avoid it and most will avail themselves of them. The richest will be able to avoid them with the greatest facility.

How could the authors possibly not know that? As I have pointed out any number of times, economics is a science of human behavior. How can you make pronouncements about economics without knowing how people will behave?

At the Washington Post Massachusetts Sen. Elizabeth Warren has an op-ed calling for more executive accountability:

Opening unauthorized bank accounts. Cheating customers on mortgages and car loans. Mistreating service members. If you can dream up a financial scam, there’s a good chance that Wells Fargo ran it on its customers in recent years. Last week, after years of pressure, the company finally parted ways with its second chief executive in three years. But that’s not nearly enough accountability. It’s time to reform our laws to make sure that corporate executives face jail time for overseeing massive scams.

In 2016, after the Wells Fargo fake-accounts scam came to light, I called out then-chief executive John Stumpf for gutlessly throwing workers at the bank under the bus — and told him he should resign. Weeks later, he did. When Wells Fargo elevated longtime senior executive Tim Sloan to replace Stumpf, I told Sloan he should be fired for his role in enabling and covering up the fake-accounts scam. For years, I pressured federal regulators, urging Sloan’s dismissal, and last week Sloan “retired.”

Don’t get me wrong. I’m glad Sloan and Stumpf aren’t in charge anymore. But this isn’t real accountability. When a criminal on the street steals money from your wallet, they go to jail. When small-business owners cheat their customers, they go to jail. But when corporate executives at big companies oversee huge frauds that hurt tens of thousands of people, they often get to walk away with multimillion-dollar payouts.

I’m surprised that Sen. Warren didn’t mention Sarbanes-Oxley in her op-ed. Under Sarbanes-Oxley CEOs are supposed to certify that they know what’s going on in their companies. In other words Messrs. Stumpf and Sloan either perjured themselves, were personally responsible for the misconduct at their company, or just plain ignored Sarbanes-Oxley’s requirements.

Over the seventeen years that have passed since Sarb-Ox was enacted in the wake of the Enron scandal, companies have spent hundreds of billions of dollars on compliance with it. To the best of my knowledge not a single CEO has been charged under it. Those are hundreds of billions that weren’t used to expand operations, pay salaries or bonuses, compensate stock holders, or any other useful purpose. It’s a perfect example of a broken window as in Bastiat’s parable. Why isn’t it being enforced?

IMO it was never intended to be. It was feel-good legislation that allowed legislators to go back and tell the voters back home that they were doing something. Hundreds of billions of unnecessary spending is too much to pay to make legislators look better.

It was six men of Indostan
To learning much inclined,
Who went to see the Elephant
(Though all of them were blind),
That each by observation
Might satisfy his mind

What struck me about this analysis at The Conversation by Beverly Moran comparing various plans for taxing “the rich” was not the plans themselves but the eye-catching graphic attached to it, comparing the Gini coefficient, a measure of inequality, of the United States with those of Spain, Luxembourg, France, etc.

Why those countries? By and large they’re ethnic states, relatively small, and geographically compact. The only thing we have in common with them is we’re rich. Why latch onto the tax system? Each of those countries also has an official language. Why not latch onto that difference?

Why not compare us with large diverse countries that are former colonies of European countries like, say, Brazil? We’re much more equal than Brazil. Or Mexico. Is it possible that such comparisons wouldn’t prove what they want to prove?

I want the people in the U. S. to be more equally economically and socially as they were up until about the time I graduated from college. IMO changes in the tax system are less significant in the developments since then than immigration, trade, and educational policies and taxing “the rich” without changing the other policies will not accomplish what their proponents believe they will. Invidious comparisons don’t help to make their case.