The Tohoku Earthquake
By Kevin Yang
It was the largest earthquake ever recorded to hit the island nation, measuring to be an incredible 8.9 magnitude. When an earthquake does critical damage to Japan, a nation of “earthquake-veterans”, its major news. It is now around the half-year anniversary of this devastating tragedy we now know as the Tohoku Earthquake, yet the impacts are still being felt across Japan, specifically in Japan’s energy sector.
The infamous Fukushima reactor that was disabled and heavily damaged by the Tohoku Earthquake was one of many nuclear reactors in Japan. According to the World Nuclear Association, nuclear energy provides about 30% of Japan’s electricity. Shortly after the earthquake hit, the Tokyo Electric Power Company laid out a plan to bring the Fukushima Nuclear Power Plant back to a stable state known as cold shutdown. In total, the plan is expected to take around 9 months. The first part of the plan includes building new cooling systems, which would prevent any further release of radioactive materials. In a press conference, Tokyo Electric’s chairman, Tsunehisa Katsumata, explained the company’s intentions: “The company has been doing its utmost to prevent a worsening of the situation.” Experts are having mixed opinions about this plan, as some believe it is too ambitious, while others think the company can finish the entire process is less time than is outlined in the plan.
In a reaction to the problem of the contaminated water, the company announced that it would build an improvised water-processing unit that would remove radioactive particles from the water. Hidehiko Nishiyama, deputy director general of the Nuclear and Industrial Safety Agency offered some discouraging words on the entire situation: “there is a possibility that normal cooling systems cannot be revived.”
Meanwhile, Japan’s ministry of Economy, Trade and Industry announced that it will spend 20 billion yen on a new energy project, which includes the creation of six 2-mega-watt wind turbines off the Fukushima coast, in an effort to help rebuild the devastated region. These turbines are expected to be completed in March 2016.
The impacts of the earthquake were compounded by the current economic stagnation in Japan. Following the earthquake, the production and sales of automobiles decreased. Furthermore, to make up for the lost energy resulting from the closing of the Fukushima reactor, Japan tripled its oil exports. These all went on to hurt Japan’s economy, which is the last thing the word needs in such tough economic times.
Although one may think that the nuclear disaster would change Japan’s view on nuclear energy, the amount of energy Japan gets from nuclear power is surprisingly expected to increase from 30% to 40% of total electrical power. While the Fukushima nuclear accident did increase awareness and cause Japanese policymakers to look to other forms of renewable energy such as wind and solar power, it did not reverse the upward trend in the usage of nuclear power was clearly evident before the disaster. Although unexpected, these predictions are a symbol of Japan’s resilience and fearlessness. With plans to build new, safer, sources of energy and to rebuild the Fukushima reactor, Japan is on its way to recovery.
By Howard Wei
The Federal Reserve Bank of the United States has two stated goals, termed the dual mandate. The first is to ensure that the economy maintains the maximum rate of natural employment. The second is to ensure stable prices in the economy.
In accordance with its dual mandate, early November of 2010, the Federal Reserve announced the implementation of a second round of large scale asset purchases, LSAP, in hopes of expanding the economy. The Fed claimed that they would buy $600 billion in long-term Treasuries in the coming months, while also reinvesting an additional $250 billion to $300 billion in Treasuries with the proceeds of earlier investments. One of the main criticisms of such a policy was that there was a risk of uncontrollable inflation because the policy severely decreased the value of money. However, at this time, the Fed viewed that ensuring maximum employment was a more important goal than stable prices. For some time, the economy had been flat, with no discernable growth, and there was even a possibility of deflationary pressures.
Discussion of changing the Federal Reserve’s dual mandate into a single mandate has occurred for quite some time. However, recently, there has been a growing trend in Republicans to restrict the Fed’s mandate. Congressmen hope to introduce legislation limiting the dual mandate to only the mandate to price stability. Representative Kevin Brady Vice Chairman told a hearing of Congress’s Joint Economic Committee that restricting the Fed’s mandate to price stability would not mean the issue of employment would be ignored. In addition the legislation would require the Federal Reserve to publicly announce an inflation target. Similar sentiments from other members of the Republican Party stem from the fact that US economic recovery remains fragile, and unemployment has remained above 9 percent.
In this article, I contend that the use of a single mandate is detrimental to the efficiency and efficacy of the central bank, and that a single mandate of price stability is especially detrimental to economic growth in the United States.
Politicians have cited many reasons for a single mandate. First and foremost is that by adopting a single mandate, the Fed can focus on a single goal and set up a clear framework to achieve that goal. Kevin Brady told a hearing of Congress’s Joint Economic Committee that restricting the Fed’s mandate to price stability would not mean the issue of employment would be ignored. But by limiting the Fed to only a single mandate, the justifications for monetary policy are severely decreased. An action taken by the Fed would have to be warranted by some effect towards price stability. Even if the Fed keeps an eye on employment, methods of aiding that aspect of society is hard if the Fed only has one stated goal. Further, a working paper published by the IMF claimed that deflation generally does not occur when there is a large output gap. Thus, by solely concentrating on a single mandate, other aspects of the economy can easily be overlooked, such as the output level of the economy.
In addition, price stability and unemployment are inevitably locked concepts. When monetary policy affects price stability, effects will be found in employment levels. For example, when the Fed decreases interest rates, generally, prices would rise, and unemployment would fall. Restricting to only a single mandate would disregard this obvious relationship, making monetary policy all the more difficult to implement. Those advocating for the single mandate cite this as a reason for the single mandate, as the central bank should not focus on two cross purposes, and thus only focus on price stability since the bank can directly control inflation. However, just because employment is trickier to deal with, because there may be other variables that affect the unemployment rate, that is not a coherent reason to disregard it as a goal. The bank should strive to best achieve the goal of maximum employment, because it ensures a better economy holistically. The inability to accurately perceive an outcome is not a reason to not consider that outcome. The mindset of this justification thus implies that employment is only secondary to price stability, when the opposite situation may be true.
Further, a move for the single mandate in the current economic situation is especially harmful to economic policy. The instability of the economy could produce widely undesirable effects if the environment of economic policy is changed. Although economic conditions have not improved since the implementation of LSAP, the movements of Congress do not help the cause. While the Fed has imposed expansionary monetary policy, Congress has implemented a detrimental contractionary fiscal policy. On October 4, in a testimony before Congress, Ben Bernanke emphasized that the Fed is already acting aggressively to support growth, but that the Fed alone cannot fully recover the situation. Fiscal policy makers are acting in opposition to monetary policy, as Bernanke elaborates, “state and local governments continue to tighten their belts by cutting spending and employment in the face of ongoing budgetary pressures.”
The reason for the movement for a single mandate is already flawed in their motivation. As Congress attempts to place the blame for poor economic recovery on non political institutions, the root problem of economic recovery cannot be solved. Politicians inevitably must please their constituents, so cannot always focus on economic policy. While the economy is in a downturn, expansionary policy is needed. However, to those who already have a hard time paying mortgages or finding jobs, hearing that the government is increasing spending only incites anger and frustration. Therefore, the Federal Reserve plays a unique role in that it is widely unaffected by such pressures, and can implement the policies needed to improve the economy. Limiting this institution in its mandate will only limit its powers, making economic regulation an even harder task.
The recent movement in Congress to change the Fed’s dual mandate to a single mandate of price stability has been misconceived from the start. The anemic economy cannot be blamed solely on the Federal Reserve, and limiting its powers can only mean greater harm to the economy.
1 Lisa Lambert “Republicans Question Federal Reserve’s Dual Mandate” Reuters. Oct 4, 2011 .
2 Andre Meier “Still Minding the Gap – Inflation Dynamics during episodes of Persistent Large Output Gaps.” IMF Working Paper. August 2010 .
3 Mark Thoma “Bernanke: Fiscal Policy is of Critical Importance” CBS Moneywatch. October 4, 2011 .
By Sam Klein
Simply put, the time has come for financial incentives for organ donation. According to the United Network for Organ Sharing, over 110,000 people are currently waiting to receive an organ. Yet last year, there were less then 15,000 donors. In fact, 19 people die every day in the U.S, waiting for an organ, about 7,000 people every year. Right now, 33,000 people currently on the waiting list will die on the waiting list, due to the lack of organs. These facts alone are enough to conclude that there is a significant need to attain organs. Yet, the real issue lies in the fact that, in the United States, the number of patients on waiting lists has risen 313 per cent since 1988, while the number of donors has only risen 42 percent. Thus, the rate at which the demand exceeds the supply is drastically increasing. Therefore, there is an obvious need for more organs in America, which financial incentives can solve.
William Potts explains in the Monash University Law Review that, “Given that there are enough organs in existence to significantly reduce, if not entirely eliminate, the organ deficit, the time is now to consider more creative methods for increasing the supply organs. The main problem with present systems of organ donation is that people have very little incentive to donate their organs.” Therefore, we currently have the resources available to solve the problem, yet the issue is obtaining them. Michael H. Shapiro in the Capital University Law Review explains that, “The option to sell will become ‘more plausible and sometimes compelling’ once the legal barriers to sales are removed, [leading] to an overall increase in the number of transplant organs.” Thus it can be seen that once the federal government permits the use of financial incentives, the barriers will be broken and the solvency will occur. Gary S. Becker from the University of Chicago even found that with the implementation of financial incentives, kidney donations would increase 44 percent, and liver donations, 67 percent. Furthermore, a study done by the National Legal Center for the Medically Dependent and Disabled found that when Pennsylvania announced its program, Organ Donation Trust Fund, which provided financial incentives for organ donors, over 3 million people signed up to donate organs (thus proving that this system is appealing). In fact, since Georgia offered a reduced cost for driver’s licenses, the amount of organ donors increased by 33%. In the end, we simply cannot rely on our current methods of obtaining organs, as they are vastly inefficient. People will continue dying until stronger incentives to encourage organ donation are provided.
Furthermore, by providing financial incentives for organ donation, our nation will save money and increase the quality of life of its citizens. Transplant surgeon Arthur Matas and health policy professor Mark Schnitzler estimate that since dialysis is expensive, paying organ donors would end up saving the government $275,000 per transplant. USA Today also notes that over 350,000 patients are on dialysis each year, which allows the opportunity for our government to drastically save money, on top of the lives. Greg Becker of the University of Chicago estimates the total net savings at roughly $1.3 billion each year. With the amount of money saved, our nation will be highly better off. Jake Lindon, Professor at Florida State University notes that decreased quality of life from dialysis impose a social cost upon patients. He states that, “many (or most) of those [dialysis] patients experience energy loss, nausea, weakness, hypertension, bone disease, infections…and other problems that emanate from the treatment itself. Those numbers do not take into account the physical and emotional toll on patients, many of whom cannot work, and who as a group are 100 percent more likely than non-dialysis patients to commit suicide.” Therefore, financial incentives will not only provide the benefit of saving lives, but improving the quality of life as well. In the end, our nation needs to find more innovative methods to acquire more organs. Providing financial incentives for organ donation would saves lives, money, and increase the quality of life of many, clearly proving that this method is a must in today’s society.
Dwindling Economies of the World
By Deepetanshu Singhvi
United States debt can be estimated to increase exponentially. With increased money owed comes an increase in the number of economic enigmas. For example, a series of shocks spread through-out the financial world when Standards and Poor 500 cut the long term Triple A US credit rating by one notch to a Double A plus. In fact, other nations’ debts are not inconspicuous. Just this week, various corporations have degraded the ratings of numerous European Countries including Spain, Italy, and countless others.
One of the biggest occasions in fluctuating credit ratings encompassed that of Spain. Fitch Ratings, a corporation parallel to S&P500, dropped Spain’s credit rating down by 2 notches (From an AA+ to an AA-). Spain’s rating, which was AAA until 2010, has been lowered twice due to its intensified involvement within the Euro crisis, slower growth, and failing attempts at recovery procedures. Fitch projects Spain’s growth pattern as it says it expects Spanish growth to remain below 2 percent a year through 2015. Additionally, they quantify the impotent recovery attempts as Spain is paying yields of around 5 percent on its 10-year bonds even after the European Central Bank stepped in to prop up its bond market on Aug. 8. Unemployment rates remain above 21% and regional governments expected to hire half of Spain’s public workers are behind schedule. In a general perspective, conditions are not favorable to bring any alleviation to the drastic economic status.
To further observe Fitch’s ratings, one should look to the Italian bond crisis. Fitch downgraded Italy’s rating by one notch to tie Italy with Spain, both being at an AA-. Being Europe’s second largest debt (owing 1.9 trillion dollars), many determine that Italy should boost it’s international credibility to keep its financial house proper while at the same time encourage the populous to spend more on the bond market. Italy has not only hit by one corporation but both Moody’s Investor Service and S&P500 have degraded the ratings by a considerable amount. Many cite that the cost preventing Italy’s debt to reach default has doubled since the dawn of this year. In similarity to the Spanish crisis, Italian economic growth has had many impediments. It is enumerated that the financial growth from 2001 to 2010 has constituted of about only 0.2% annually. However the staggering part is that Greece has to combat a more magnified issue. Condition within the European economies is not at all at a high point and until bond investors gain more trust within the economy, growth will remain minimal.
All in all, it is easy to say that the US isn’t alone when comparing debts. In wake of such adverse conditions credit ratings won’t be on the rise till there is the institution of a feasible solution. Generally, the governments of these countries need to enforce unique policies that can increase the certainty of return which in turn will facilitate of recovery rates.
CIA Drones: The New “It” Weapon
By Vicki Liu
On October 7, 2011, Defense Secretary and former CIA director Leon Panetta joked that “obviously I have a helluva lot more weapons available to me in this job than I had at the CIA — Although the Predators aren’t that bad.”
This seemingly innocuous remark is actually an indicator of what probably is our government’s most prized secret. The use of drones in the military. Ever since the 9/11 attacks, the use of the Predator has surged in popularity and is largely constituting the United States’ entire counter-terrorism initiative. Many terrorism “linch-pins” have been eliminated this way and just last week, key Al Queada leader Anwar Awlaki was killed in Yemen during a CIA led drone strike. Yet, even with this reasonable success, why does the government continue to keep these weapons under a veil of secrecy? Panetta’s remark represents one of the first use of the word drone (Predator) in a statement, instead of it’s preferred anonymous grouping into “counter-terrorism operations.” Consequently, the fact that the U.S government does not officially recognize the use of drones on foreign soil causes several implications.
First is the problem of government accountability. As of now the use of drones for targeted killing is an extra-judicial process that the government need not account about. This allows for plausible deniability whenever mistakes occur and if there is significant collateral damage conducted by the drones. According to the New America Foundation 32 per cent of those killed in drone attacks since 2004 were civilians. Their study was conducted over 114 drone raids in which more than 1200 people were killed. Of those, between 549 and 849 were militant targets while the rest were innocent. Despite these damages, Obama has still deemed drones a “high value” weapon. At the point where the government is not responsible for lost lives and damaged infrastructure, how does the cost of war change?
Second is the implications on foreign relations. The attacks against terrorists groups that base themselves in Pakistan have caused much tension to rise between it and the U.S. Additionally, Pakistani citizens are outraged at their loved ones being killed, and their homes being destroyed all thanks to the misjudgment of these unmanned weapons. The unmanned nature of drones is what makes them the most valuable as well as the most hated weapon used by the CIA. Although it guarantees the safety of soldiers, it subjects innocent citizens to the pain and humiliation of having their lives ruined by an unfeeling machine that cannot even feel remorse for its actions. The Pakistani government has continued to voice it’s anger at the U.S for using these tactics on their soil without their permission or knowledge, and the loss of this tenuous ally could be crucial in the War on Terror.
Third is the particular implications of the death of Anwar Awlaki. Unlike most terrorists that the U.S targets, Anwar was an American citizen. This begs the interesting question of whether or not his killing without any notification — let alone a trial — was unconstitutional. In America the government recognizes a duty to it’s citizens, the most important of which being security. Would this constitute a violation of that duty? And if not, who will be responsible for defining this bright line in the constitution?
In order to continue this conversation, it is important to keep in mind, the tradeoffs due to terrorism . What exactly are we willing to give up for security? Privacy? Rights? Accountability? Trustworthiness of the government? Which duties are okay to violate? Which core American values are okay to undermine once in a while? Thus, in order to think about the nature of drones, it is necessary to think about counter-terrorism culture and how it defines our lives.
1 David S. Cloud, “U.S.: Defense secretary refers to CIA drone use.” Los Angeles Times. October 7, 2011 .
2 Dean Nelson, “One in three killed by US drones in Pakistan is a civilian, report claims.” The Telegraph. October 8, 2011 .
3 LOLITA C. BALDOR, “Panetta spills a little on secret CIA drones,” Associated Press. October 7, 2011 .
4 Yael Stein. Response to Israel’s policy of Targeted Killing: By Any Name Illegal and Immoral. 2003.