Happy Kyoto Treaty Day! Actually, the Kyoto treaty came into effect for its signatory nations on February 16th, 2005. Did you notice, fellow Americans? Well, if you didn’t, there’s a reason. The United States is not taking part in the Kyoto treaty. In fact, on July 25, 1997, the Senate voted 95-0 against signing the treaty if President Clinton ever presented it to them.

Of the 141 nations who have signed on to the treaty, only 34 nations will actually be limited by it: Austria, Belgium, Bulgaria, Canada, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russian Federation, Slovakia, Slovenia, Spain, Sweden, Switzerland, Ukraine, and the United Kingdom of Great Britain and Northern Ireland are all signatories of the treaty and are listed as industrial nations who need to limit their evil, polluting ways. Some news articles list 35 nations bound by this treaty, but the 35th is listed as the “European Community,” which is neither the European Union nor a sovereign nation. Since most of the listed nations are already part of Europe, I don’t know who thought it was a good idea to sneak “European Community” onto the list. Four nations who are on the list have not yet jumped on the Kyoto bandwagon: Australia, Croatia, Monaco, and the United States of America.

The rest of the world’s nations–the ones not listed–are not limited at all; essentially, they get a free pass to pollute to their hearts’ desire. As I see it, this treaty has very little to do with ecology and much to do with punishing industrialized nations, because they are the ones required to drop their production of greenhouse gases–either by cutting back on productivity or spending gobs of cash to clean up what is left of their industrial emissions.

In a nutshell, the Kyoto treaty aims to roll back the amount of greenhouse gases produced by developed nations to an artificial 1990 limit. Since no civilization exists without producing greenhouse gases of one form or other, this is effectively saying that the developed nations must either push back their production levels to what they were in 1990 or spend huge sums of money to keep their emissions at 1990 levels. Since it is a basic trend for nations (and people) to produce more and different goods each decade, this is a bit like asking you to voluntarily roll back your wages to the level they were fifteen years ago. For most people, that would be a significant drop in earnings. This is just as true for nations.

Imagine all the things that have been invented and popularized since 1990. If you consider only the field of consumer electronics, you could probably name a score of items that were either rare or nonexistent at the start of the ’90s and that have since become wildly popular: cell phones, PDAs, notebook computers, next-generation video game systems, digital cameras, DVD players, iPods… the list could go on, but that ought to suffice. Now imagine that, because of the pollution that is a by-product of making them, the production of all these items must be pushed back to 1990 levels, or that products in other fields must be artificially pushed back to allow the production of new items. Imagine what that would do to supply and demand, what kind of artificial shortages (and attendant high prices) the situation would create. In such a depressed and deliberately-muzzled market, where electronics are costly and difficult to obtain, how many cool new gadgets are likely to be developed, produced and marketed? Well, the signatories on the Kyoto treaty are about to find out how well that works.

It is for this simple reason that I see the Kyoto treaty as an economic treaty, not a climate treaty. If the treaty actually dealt with scientific facts rather than economic suppositions, it would acknowledge that the primary source of global warming is the sun, and the sun is pretty active right now. Instead, the treaty focuses on six greenhouse gases, listed in Annex A: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF6). Of these six gases, CO2 is the one getting the most attention as it comprises more than half the volume of the greenhouse gases in question.

The sad thing is that the treaty completely ignores the most important and most abundant of all greenhouse gases: water vapor. To give you an idea of the difference between the amounts of water vapor and CO2 in the atmosphere, imagine piling 100 pennies on the table and then focusing all your attention on three pennies–because the total amount of CO2 in the atmosphere is about 3%. That is what the scientists behind the Kyoto agreement would like the world to do. But the Kyoto treaty isn’t alone in this blindness about the most plentiful greenhouse gas. Other sites also discuss greenhouse gases without any mention of water vapor. It’s like ignoring the dead elephant in the middle of the room. Why are these people concentrating on the less than 3% that CO2 contributes to the problem, while ignoring the 97% of water vapor? I believe people are so fixated on CO2 because it is man-made, and it can be used as a handy club to beat industrialized nations.

If the Kyoto treaty were really about fixing the environment and stopping global warming, then it would demand that rampant polluters such as India and China be added to the list of polluting nations. But these nations are overlooked in favor of pointing the finger of blame at the U.S. and other developed nations. This means that India and China, both of which are hungry for electric power and the comforts it brings, may continue to build polluting, coal-fired power plants without raising an eyebrow of the Kyoto backers. And India, China, and the U.S. are planning to build lots of new power plants. To quote Mark Clayton’s December 23, 2004 article in the Christian Science Monitor:

The official treaty to curb greenhouse-gas emissions hasn’t gone into effect yet and already three countries are planning to build nearly 850 new coal-fired plants, which would pump up to five times as much carbon dioxide into the atmosphere as the Kyoto Protocol aims to reduce.

The magnitude of that imbalance is staggering. Environmentalists have long called the treaty a symbolic rather than practical victory in the fight against global warming. But even many of them do not appear aware of the coming tidal wave of greenhouse-gas emissions by nations not under Kyoto restrictions.

Clayton continues to point out that the extra 2.7 billion tons of CO2 put out by new plants in India, China, and the U.S. will dwarf the 483 million tons projected to be cut by Kyoto-complying countries. But some of this extra CO2 can be avoided if we in the United States choose not to create some of the 800+ coal-fired power plants slated for construction around the world. Since no one other than a handful of Californian ecofreaks wants to live in rolling blackout conditions, we must increase the power available to us. So what can we turn to in order to produce the power we need, without creating the CO2 that makes U.N. busybodies foam at the mouth? There is one obvious answer: nuclear power plants.

Oh, the horror! Well, not really. While most people’s initial reaction to a nuclear power plant is to envision terrifying scenes from The China Syndrome, Three Mile Island, or Chernobyl, none of those horrors need happen thanks to the development of pebble-bed reactors. Unlike their unstable big brothers, these smaller reactors cannot cause a meltdown even if all the cooling helium is released from the plant. This means we have the capacity to produce hundreds, if not thousands, of these Chernobyl-free plants around the globe. They are safe, provide inexpensive power, and do not produce the CO2 that makes environmentalists see red.

But environmentalists will never accept nuclear power, even safe nuclear power, because it would encourage countries to become developed and industrialized nations. And they don’t want that. It would destroy their future vision of a clean, primitive, and people-free Earth. Well, free of people who are not the few and right-minded environmentalists, of course.

In part 1 of this article, I discussed Professor Ward Churchill and Lt. Gen. James Mattis. In this section, I discuss someone who has lost his position because of his words.

In January of this year there was a gathering of peoples at the World Economic Forum in Davos, Switzerland. One of the people in attendance was Eason Jordan, the executive vice president and chief news executive of CNN. Jordan made some disturbing comments at the forum. These were first reported by Rony Abovitz:

During one of the discussions about the number of journalists killed in the Iraq War, Eason Jordan asserted that he knew of 12 journalists who had not only been killed by US troops in Iraq, but they had in fact been targeted. He repeated the assertion a few times, which seemed to win favor in parts of the audience (the anti-US crowd) and cause great strain on others.

Due to the nature of the forum, I was able to directly challenge Eason, asking if he had any objective and clear evidence to backup these claims, because if what he said was true, it would make Abu Ghraib look like a walk in the park. David Gergen was also clearly disturbed and shocked by the allegation that the U.S. would target journalists, foreign or U.S. He had always seen the U.S. military as the providers of safety and rescue for all reporters.

Eason seemed to backpedal quickly, but his initial statements were backed by other members of the audience (one in particular who represented a worldwide journalist group). The ensuing debate was (for lack of better words) a real “sh–storm”.

There has been some debate as to whether Jordan actually said what Abovitz claimed he did. The forum was video-recorded, but both CNN and the World Economic Forum have refused to release the transcript. It has been labeled an “off the record” event. How it is possible to call something witnessed by so many people and recorded for posterity as “off the record” is beyond me, but I’m not a professional journalist. Since that late January meeting, the Internet was set abuzz over Jordan’s comments, but the mainstream media wouldn’t touch the issue with a ten-foot pole. More and more bloggers demanded a full explanation from CNN and Eason Jordan and asked for proof to back up his claims, but explanations were not forthcoming. On February 11th, Eason Jordan abruptly resigned from CNN.

This Yahoo News article contains some interesting anomalies. In a memo to CNN, Jordan wrote, “I never meant to imply U.S. forces acted with ill intent when U.S. forces accidentally killed journalists, and I apologize to anyone who thought I said or believed otherwise.” But this statement is in direct contrast to what several witnesses say Jordan actually said. The article continues, “But the damage had been done, compounded by the fact that no transcript of his actual remarks has turned up.” This misleading sentence makes it sound like CNN had been digging to find a transcript and came up empty-handed, but that isn’t the case. The meeting was recorded, and CNN could have requested the tape. Instead, CNN and the World Economic Forum sat on the tape, claiming that the forum was “off the record” and that it couldn’t be released. I suspect “couldn’t” isn’t the right word — “wouldn’t” is probably more accurate.

One thing stands out — the major media dropped the ball on this news story. When Jordan resigned, many major papers were in the unenviable position of explaining to their readers why he had quit, and admitting that they hadn’t reported the story at all. The people who get their news exclusively from ABC/CBS/NBC and the national papers didn’t know anything about the controversy until Jordan left.

Since Rony Abovitz broke this story to the world and his comments led to the resignation of a major media player, I think it only fair to defer to his summary of this debacle:

The lesson to be learned here is not that speech or expression should be limited. The lesson is one of conviction and the power of words. If Eason Jordan held to his original assertions, even without data, but called out that he was in the midst of a deep news investigation which would soon yield ripe fruit, he would still have his job. But that is not what happened. He had no hard facts, no substance. He was caught, in some sense, doing his job. Not his job delivering objective news, but his job as a corporate executive, feeding his target audience what they want to believe, and maybe what he truly felt. He was in his element, his home turf, in an environment of palpable anti-American feelings and sentiment. He was building his brand, and never expected to be called hard on his own words, challenged intensely and publicly when among elite friends. That is not the Davos way. In the old Rome, he would have been safe, nestled in its walls. But in this decaying Rome, the Huns have entered Rome. What is Google, whose founders were the toast of Davos, if not a gateway to a vast new world? Civilized Huns, but Huns nonetheless. The persistence, speed, exponential growth, and unanticipated power of free information is beyond comprehension for most people. The speed of revolution is now linked to Moore’s Law, in some way we do not understand. No corrupt leader, politician, dictator, or despot can rest easy anymore. Eason Jordan was not really any of these – he was an executive doing his job, catering to his market, caught in what is becoming a massive change in the way the world functions. Caught in a grass roots demand for more honesty, more truth, more equity – and much less B.S. Caught in change itself.

Editorsweblog.org takes a different stance on the issue:

Sad conclusion in the Eason Jordan affair (see below the New York Times article), sad day for the freedom of expression in America and sad day again for the future of blogging: the defense of the US army honor seemed more important to some bloggers than the defense of reporters’ work (and sometimes life)! Nevertheless, there is one advantage in this story: masks are fallen! Within the honest community of bloggers, some of them claimed to be the “sons of the First Amendment,” they were just the sons of Senator McCarthy.

Pablo’s comment on this post:

What rubbish! The “citizen media” simply asked for clarification of the remarks, and the evidence that supports them, while legacy media did its best to ignore the situation despite the outrage expressed by the two American congressmen who were present.

It’s perfectly valid to demand an explanations for remarks like those Jordan made. His problem is that if they were true, he’d still be running CNN.

Calling out a liar is not McCarthyism.

We have freedom of speech here in the United States as guaranteed by the First Amendment. People like Eason Jordan are free to make whatever claims they wish. But with this freedom comes the responsibility of being held accountable for one’s words. You are free to call your neighbor a sheep pimp, but you are not free to avoid the slander lawsuit that is likely to result. You are free to break the law by making a bomb threat as you board your plane, but you will be held accountable for your words. Likewise, Eason Jordan was free to claim that the U.S. military actively targeted journalists, but he was also responsible for owning up to his words. Rather than allowing them to be published, he chose to quit his position.

Cox & Forkum have a great editorial cartoon, summing up the mainstream media response to bloggers:

To paraphrase Uncle Ben to a young Peter Parker: “With free speech comes great responsibility.”

In his January 6, 1941 address before Congress, nearly a year before the Japanese attack on Pearl Harbor, President Franklin Roosevelt outlined four freedoms: “freedom of speech,” “freedom of religion,” “freedom from want,” and “freedom from fear.” Based on Roosevelt’s address, it is possible to call free speech our first freedom. Free speech is also listed in the First Amendment in the Bill of Rights, but it comes after freedom of religion. Note that Americans are guaranteed freedom of religion, not freedom from religion. It has become clear to me that based on its actions, the ACLU believes more in the latter. But that’s not what I really want to focus on today.

We enjoy a freedom of speech that other nations don’t have. Here in the United States, we have the freedom to stand up and call someone a sheep pimp if we want to. There will usually be repercussions from such an act, including a probable lawsuit for slander, but in the United States, truth is the best defense. If you can show evidence that said someone is indeed a pimper of sheep, then you can successfully beat any slander lawsuits. But such is not the case in Canada. In the land to the north, calling someone a sheep pimp and then laying out documents, videotapes, and recorded sheep testimonies will not stop the pimp in question from suing you for defaming his character and hurting his feelings. And the pimp would win, regardless of his own actions defaming his own character. So much for freedom to speak the truth in the Great White North. While you may still say what you want, truth is no longer a defense in court. Apparently, Canadians value not being offended or having their feelings hurt over the bare, honest truth. And there are times when the truth hurts and offends.

Speaking of offense, a person is currently generating some controversy because of the way he chooses to exercise his freedom of speech. Professor Ward Churchill of the University of Colorado at Boulder is being condemned by numerous people for his defamatory comments about the victims of 9/11. Here is a fairly long excerpt from a longer article called “Some People Push Back:” On the Justice of Roosting Chickens which Professor Churchill wrote shortly after the September 11th attacks:

They [the September 11th terrorists] did not license themselves to “target innocent civilians.”

There is simply no argument to be made that the Pentagon personnel killed on September 11 fill that bill. The building and those inside comprised military targets, pure and simple. As to those in the World Trade Center . . .

Well, really. Let’s get a grip here, shall we? True enough, they were civilians of a sort. But innocent? Gimme a break. They formed a technocratic corps at the very heart of America’s global financial empire — the “mighty engine of profit” to which the military dimension of U.S. policy has always been enslaved — and they did so both willingly and knowingly. Recourse to “ignorance” — a derivative, after all, of the word “ignore” — counts as less than an excuse among this relatively well-educated elite. To the extent that any of them were unaware of the costs and consequences to others of what they were involved in — and in many cases excelling at — it was because of their absolute refusal to see. More likely, it was because they were too busy braying, incessantly and self-importantly, into their cell phones, arranging power lunches and stock transactions, each of which translated, conveniently out of sight, mind and smelling distance, into the starved and rotting flesh of infants. If there was a better, more effective, or in fact any other way of visiting some penalty befitting their participation upon the little Eichmanns inhabiting the sterile sanctuary of the twin towers, I’d really be interested in hearing about it.

Churchill’s comments gained more attention when he was invited to speak at Hamilton College in New York. After the powers that be at Hamilton found out about Churchill’s essay and his follow-up book, they cancelled the appearance. Both the Colorado State Senate and House have passed non-binding resolutions calling the words of Churchill “evil and inflammatory.” The Yahoo news article on the subject finished with the comment: “Democratic state Sen. Peter Groff cast the lone ‘no’ vote, saying he disagreed with Churchill but that the resolution provides him with undeserved attention and attacks free speech.” What Senator Groff seems to have missed is that these resolutions in no way attack free speech. The resolutions merely indicate the opinions of the Colorado Senate and House. People like Churchill are still free to say what they want, but what they say can certainly get them into trouble.

Speaking of trouble, Lieutenant General James Mattis has been ordered to watch his mouth by his commanding officer. This three-star Marine Corps general is in trouble for saying, among other things, the following:

Actually, it’s a lot of fun to fight. You know, it’s a hell of a hoot. It’s fun to shoot some people. I’ll be right up front with you, I like brawling, You go into Afghanistan, you got guys who slap women around for five years because they didn’t wear a veil. You know, guys like that ain’t got no manhood left anyway. So it’s a hell of a lot of fun to shoot them.

The Left recoiled in horror from this comment. Shock! Horror! Here was a general who wasn’t feeling conflicted and anguished over his job. Worse still, he actually enjoyed his job. Who promoted this troglodyte?

One comment came from General Mike Hagee, commandant of the Marine Corps. He said, “Lt. Gen. Mattis often speaks with a great deal of candor. I have counseled him concerning his remarks and he agrees he should have chosen his words more carefully.” Notice that Mattis was not reprimanded for killing Taliban fighters. Rather, he was counseled to choose his words better in the future. The unspoken comment from his superior officer is to stop saying things in public that make other people feel bad or uncomfortable.

While I believe that the taking of life is a somber and serious affair, I can’t condemn Lt. Gen. Mattis too much. I doubt that Mattis, as a three-star general, is directly engaged in any firefights with the enemy. Generals usually give strategic direction. When you are looking at the big picture, it is genuinely gratifying to see that the mission has been accomplished–and if that means killing the bad guys and breaking things, then that is part of the job. And when you get down to it, winning is fun.

If I were to speak for the general, assuming that I knew what he meant to say, I would not use the word “fun” to describe the feeling of a job well done. Instead, I would say that when faced with an enemy like the Taliban, successfully removing such reprobates is emotionally gratifying, particularly when you know how much better the lives of the women in Afghanistan will be.

Because of free speech, Lt. Gen. Mattis is free to say what he wants–but also because of free speech, people are free to call for his dismissal. It doesn’t appear that the military brass will listen to these calls, but people are still able to express a desire for Mattis’ removal.

Speaking of removal, I’ll continue this article next time.

If I say something wrong, who will ever know? At most, the two or three people who read my articles may know. While I try to be as accurate as possible in my writings, I’m sure there are things I have written that are just plain wrong. Yet none of these mistakes have been made out of a sense of malice or a willful desire to deceive. If there are errors, they come from my lack of knowledge. Some things I do know from experience and study, but there are also many subjects about which I know little or nothing. I try not to voice an opinion on these subjects. As I am not a professional journalist working for a large media outlet, I do not have any fact-checkers on staff. So while it is quite possible that I have made many errors in my writings, and while these errors might be embarrassing when revealed, it is nothing like the embarrassment that comes upon a well-known and well-supported professional journalist when he is proven wrong.

Bill Moyers is one such journalist. He has spent over fifty years in the field, so his voice carries some weight. He recently received the Global Environmental Citizen Award from the Center for Health and the Global Environment at Harvard Medical School. At the awards ceremony, he spoke at length about–what else–the environment, and a pressing threat to the environment: those insane Christians.

One of the biggest changes in politics in my lifetime is that the delusional is no longer marginal. It has come in from the fringe, to sit in the seat of power in the oval office and in Congress. For the first time in our history, ideology and theology hold a monopoly of power in Washington. Theology asserts propositions that cannot be proven true; ideologues hold stoutly to a world view despite being contradicted by what is generally accepted as reality. When ideology and theology couple, their offspring are not always bad but they are always blind. And there is the danger: voters and politicians alike, oblivious to the facts.

Later in his comments, Moyers focused on the political clout of fanatical Christians:

Nearly half the U.S. Congress before the recent election – 231 legislators in total – more since the election – are backed by the religious right. Forty-five senators and 186 members of the 108th congress earned 80 to 100 percent approval ratings from the three most influential Christian right advocacy groups…. The only Democrat to score 100 percent with the Christian coalition was Sen. Zell Miller of Georgia, who recently quoted from the biblical book of Amos on the Senate floor: “The days will come, sayeth the Lord God, that I will send a famine in the land.” He seemed to be relishing the thought.

What a nasty bit of innuendo at the last! It is a shame that someone with decades of journalism experience under his belt, such as Bill Moyers, would do such a piss-poor job of quoting then-Senator Miller and deliberately misunderstanding the quote. Here is the full text of the verse in Amos that was quoted on the Senate floor:

Behold, the days come, saith the Lord GOD, that I will send a famine in the land, not a famine of bread, nor a thirst for water, but of hearing the words of the LORD:

Notice that the famine is not literal, but spiritual in nature. But in Moyers’ rush to tar fanatical Christians, he ignored the meaning of the Biblical verse, the better to cast aspersions on Miller’s presumed anticipation of famine and pestilence. This is not journalism. This is a shameful twisting of the facts and a crass misrepresentation of Miller’s words that bears no resemblance to his actual discourse before the Senate.

Having gone out of his way to trash the former Senator by warping his words and presuming to know his thoughts, Moyers continues to make friends and influence people in Congress. He blithely lumps together the 231 members of the House and Senate who received high scores from three Christian groups with Timothy LaHaye, the author of the best-selling Left Behind series and “Christian fundamentalist and religious right warrior,” to use Moyers’ phrase. Moyers fails to acknowledge that although LaHaye’s fiction books are popular, not all devout Christians believe in the rapture as LaHaye does. But it makes little difference to Moyers, as he tars Christians with a wide brush.

What Moyers fails to mention, either through sheer ignorance or willful disregard of his subject, is that among Christians the rapture is a far less common belief than is the concept of stewardship. Most Christians recognize that we do not own the Earth; we are mere stewards or caretakers holding and managing this world for Him who created it. When our days are through, He will require a reckoning of our responsibilities. It is the goal of a good steward to hear these words from his Master: “Well done, thou good and faithful servant: thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord.”

When I wake up in the morning, my first thought and principle aim for the day is not “Woohoo! Time for me to trash the planet!” But Bill Moyers would have you believe that is precisely the purpose of every Christian in this nation. Yet this was not the worst part of Moyers’ acceptance speech.

The worst came when Moyers stated libel as fact:

Remember James Watt, President Reagan’s first Secretary of the Interior? My favorite online environmental journal, the ever engaging Grist, reminded us recently of how James Watt told the U.S. Congress that protecting natural resources was unimportant in light of the imminent return of Jesus Christ. In public testimony he said, ‘after the last tree is felled, Christ will come back.’

The problem is that former Secretary James Watt never made any such statement. Bill Moyers used only the article by Glenn Scherer published on grist.org as source material for his claim about James Watt. While Scherer has since printed a correction stating that he didn’t have the facts right when he quoted Watt, Bill Moyers has yet to publish a correction. Well, to be honest, he may have done so, but my searching has yet to turn up one.

John Hinderaker of the Power Line blog wrote of his conversation with James Watt. Watt supplied Hinderaker with a transcript of his confirmation testimony before the Senate, and his statement was quite different from Moyers’ quote:

That is the delicate balance the Secretary of the Interior must have, to be steward for the natural resources for this generation as well as future generations.

I do not know how many future generations we can count on before the Lord returns, whatever it is we have to manage with a skill to leave the resources needed for future generations.

His testimony was one of a man who believes devoutly in stewardship, not the planet-trashing canard that Moyers repeated without checking the facts. Whether Moyers failed to check the actual source on this quote, or whether, in his rush to condemn the Christian bugaboo, he chose to use a quote he knew was fraudulent, I honestly don’t know. But either situation is damning to a journalist with the stature of Bill Moyers. Or perhaps I should say, “former stature.”

Addendum (2/9/2005): Hindrocket at Power Line reports that Bill Moyers has personally “apologized profusely” to James Watt for misquoting him and inaccurately portraying his environmental views. Moyers said he would make the apology as public as the initial trashing of Watt’s name. Does this mean that Moyers will go before the Center for Health and the Global Environment at Harvard Medical School and admit he tarred the former Secretary of the Interior? I’ll keep an eye on this.

With this apology, it is clear that Moyers is at least guilty of shoddy journalism.

I don’t go for multi-level marketing schemes. I don’t care whether the MLM is peddling vitamins, water purifiers, lotions, or solid gold bricks, I won’t take part in it. Both individuals and the U.S. government have spoken out against MLMs, but people still go for them because they promise lots of money.

MLMs don’t work in the long run because they are fundamentally unstable pyramid schemes. You buy into the program, get some other people to buy in under you, then they get others to buy in under them, etc. It doesn’t take very long to realize that the numbers don’t work. Let’s play with a simple pyramid, with each participant getting 10 people below them, and calculate how many people are added in each iteration of the MLM.

1st 1
2nd 10
3rd 100
4th 1,000
5th 10,000
6th 100,000
7th 1,000,000
8th 10,000,000
9th 100,000,000
10th 1,000,000,000
11th 10,000,000,000

At the 11th iteration, we have reached a total of over 11 billion people in the MLM. Since that is obviously greater than the current population of Earth, you can see that a simple MLM can swiftly grow faster than the available number of people on the planet. You could artificially limit growth by allowing only four people in a participant’s downstream group, but this only prolongs the inevitable growth. If you limited each iteration to four times the size of the previous one, you would grow past the human population in the 14th iteration, only three more than in the example above. All of this assumes that the widget or service sold by the MLM is something that every living person wants and will buy. There isn’t a single item on earth that everyone is willing to purchase–not even water. If you don’t believe me, do your best to come up with one and let me know.

Pyramid schemes are not anything new. These schemes are sometimes referred to as “Ponzi schemes,” after Charles Ponzi who developed a huge investment scheme in 1919-1920 before it blew up, as these schemes inevitably do. While it was possible for investors to make fantastic profits after 45 or 90 days, Ponzi constantly relied on a new influx of investors to pay off the previous ones whose payments were coming due. A modern revival of the Ponzi scheme is the “make money fast” letters and emails that continuously make the rounds on the Internet. Most of these never get anywhere, but sometimes these schemes have disastrous effects, such as the Ponzi scheme that trashed the nation of Albania in the 1990s.

We may scoff at how the Albanians fell victim to a Ponzi scheme, but here in the United States we have our own inherently unstable pyramid called Social Security. Some have argued that Social Security doesn’t qualify as an actual Ponzi scheme, but there can be no argument that Social Security relies on the money from current workers to pay benefits for previous generations. Back when President Roosevelt started Social Security, there were sixteen wage earners for every person receiving benefits. The current ratio is about three workers for each recipient, and the number of wage earners continues to drop. This ain’t good.

Here is what the President said in his State of the Union address:

The best way to keep Social Security a rock-solid guarantee is not to make drastic cuts in benefits, not to raise payroll tax rates, not to drain resources from Social Security in the name of saving it. Instead, I propose that we make the historic decision to invest the surplus to save Social Security.

Specifically, I propose that we commit 60% of the budget surplus for the next 15 years to Social Security, investing a small portion in the private sector just as any private or state pension would do. This will earn a higher return and keep Social Security sound for 55 years.

This declaration was greeted with applause and cheers by the audience. The catch is
that I just quoted President Clinton’s 1999 State of the Union address. When President Bush
pointed out the oncoming collapse of Social Security in his 2005 State of the Union address, the Democrats who had cheered President Clinton on the same subject only six years before, instead muttered, griped, and complained that the President was being reactionary. I’ve created a 85kb mp3 sound file of the Democrats grumbling during President Bush’s speech. It seems the Democrats no longer agree that Social Security is a looming disaster, though they lauded President Clinton’s call for a similar fix.

Social Security has been called the “third rail” of politics; similar to the electrified third rail used in subway systems, anyone who as much as touches this political topic is in for a great shock. But is Social Security a good deal? If it were to be proposed today, it would never be accepted by the people. Don’t believe me? Would you agree to an insurance policy that would generate less than a 2% growth of your investment, and at your death the unspent balance goes not to your beneficiaries, but reverts to the government to be spent as it sees fit? If you are honestly excited about such a deal, I want to sell you your next car.

I could almost like Social Security if the money I was earning were to go into a secure account with an interest rate of 2% over inflation. You could think of it as a forced savings account. The problem is that there is no trust fund or lockbox on Social Security money. At the moment there is more money going into Social Security than is needed to pay current expenses, but rather than setting the extra money aside to earn interest, government officials have taken the money and spent it. In its place they have been writing IOUs, promising to pay back the money at some future date. And that date never comes. As P. J. O’Rourke said, “Giving money and power to government is like giving whiskey and car keys to teenage boys.”

So what will you see in the next few months? President Bush and the Republicans will push for ways to make Social Security better, and Democrats will vilify and nay-say every idea they bring up. After all, it will be easier for the Democrats to bury their heads in the sand and pretend that the pyramid scheme we call Social Security will continue to be a rock-solid investment — as solid an investment as Charles Ponzi’s Securities Exchange Company ever was.