But they're sure he lied

Saddam Had WMD

Posted 2/24/2006

WMD: Now that Leno and Letterman have had their way with Vice President Cheney's hunting accident and the port controversy, maybe we can get back to something really important — like Saddam's WMD program.

Yes, the linchpin of opposition to the Iraq War — never really strong to begin with — has taken some real hits in recent weeks. And "Bush lied" — the anti-war mantra about the president, Saddam Hussein and weapons of mass destruction — looks the most battered.

Inconveniently for critics of the war, Saddam made tapes in his version of the Oval Office. These tapes landed in the hands of American intelligence and were recently aired publicly.

The first 12 hours of the tapes — there are hundreds more waiting to be translated — are damning, to say the least. They show conclusively that Bush didn't lie when he cited Saddam's WMD plans as one of the big reasons for taking the dictator out.

Nobody disputes the tapes' authenticity. On them, Saddam talks openly of programs involving biological, chemical and, yes, nuclear weapons.

War foes have long asserted that Saddam halted his WMD programs in the wake of his defeat in the first Gulf War in 1991. Saddam's abandonment of WMD programs was confirmed by subsequent U.N. inspections.

Again, not true. In a tape dating to April 1995, Saddam and several aides discuss the fact that U.N. inspectors had found traces of Iraq's biological weapons program. On the tape, Hussein Kamel, Saddam's son-in-law, is heard gloating about fooling the inspectors.

"We did not reveal all that we have," he says. "Not the type of weapons, not the volume of the materials we imported, not the volume of the production we told them about, not the volume of use. None of this was correct."

There's more. Indeed, as late as 2000, Saddam can be heard in his office talking with Iraqi scientists about his ongoing plans to build a nuclear device. At one point, he discusses Iraq's plasma uranium program — something that was missed entirely by U.N. weapons inspectors combing Iraq for WMD.

This is particularly troubling, since it indicates an active, ongoing attempt by Saddam to build an Iraqi nuclear bomb.

"What was most disturbing," said John Tierney, the ex- FBI agent who translated the tapes, "was the fact that the individuals briefing Saddam were totally unknown to the U.N. Special Commission (or UNSCOM, the group set up to look into Iraq's WMD programs)."

Perhaps most chillingly, the tapes record Iraq Foreign Minister Tariq Aziz talking about how easy it would be to set off a WMD in Washington. The comments come shortly after Saddam muses about using "proxies" in a terror attack.

9-11, anyone?

In short, let us repeat: President Bush was right. We had to invade to disarm Saddam — otherwise, he would have completely reconstituted his chemical, nuclear and bio-weapons programs when inspectors left.

Saddam probably knew better than to use them himself against the U.S. But it's likely he wouldn't have hesitated giving one or more to terror groups with which he had routine contact.

Lest you think we're making the case entirely based on these tapes, let us assure you that other evidence — mounting by the day — points to the same conclusion.

We've been very impressed by the story told by Georges Sada, the former No. 2 in Iraq's air force. He has written a book, "Saddam's Secrets," that details how the Iraqi dictator used trucks, commercial jets and ships to remove his WMD from the country. At the time, the move went largely undetected, because Iraq pretended the massive movement of materiel was to help Syrian flood victims.

Nor is Sada alone. Ali Ibrahim, another of Saddam's former commanders, has largely corroborated Sada's story.

So how was Saddam able to use his "cheat and retreat" tactics without being found out? He had help, according to a former U.S. Defense Department official.

"The short answer to the question of where the WMD Saddam bought from the Russians went was that they went to Syria and Lebanon," said John Shaw, former deputy undersecretary of defense, in comments made at an intelligence summit Feb. 17-20 in Arlington, Va.

"They were moved by Russian Spetsnaz (special ops) units out of uniform that were specifically sent to Iraq to move the weaponry and eradicate any evidence of its existence," he said.

These are extraordinary developments. They deserve a full airing in the media, since they essentially validate part of Bush's casus belli for invading Iraq and deposing the murderous Saddam.

But once again, the mainstream media have dropped the ball. They seem more interested in Dick Cheney's marksmanship and American port management than in setting the record straight about one of the most important developments of our time.

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Windfall taxes

The OPEC Protection Act February 17, 2006; Page A12

Now that President Bush has declared a national commitment to end our alleged addiction to foreign oil, naturally the first energy bill that Congress wants to enact this year would make America more dependent on foreign energy companies.

That would surely be the result if Congress passes two provisions buried in the Senate version of a tax bill now in House-Senate conference: One is a tax on oil company inventories, which is a disguised windfall profits tax on five big oil companies; the second would repeal the foreign tax credit for the same companies.

Democrats -- and Maine Republican Olympia Snowe -- promoted the provisions late last year as a way to punish the companies whose CEOs had defended their pricing policies before Congress. But the more you understand the details, the nuttier this looks. For example, the $4 billion to $5 billion windfall tax on inventories applies only to the reserves of U.S.-based oil producers (such as Exxon and Chevron), while foreign producers pay nada.

This is an energy policy only Arab oil sheiks could love, because it drives their production and profits up, at the expense of home-grown producers. When Congress last passed a windfall tax on oil in 1980, America's domestic crude oil production plunged and demand for foreign oil increased by almost 15%. We imposed a tax on ourselves and OPEC nations got the windfall.

Equally wacky is New York Senator Chuck Schumer's idea to deny the same companies the U.S. foreign tax credit -- a fixture of the corporate income tax since 1917. If this took effect, American oil companies would have to pay the U.S. corporate tax rate and the taxes in the country where it produces the oil. Almost no other nation in the world requires companies to pay a double tax on foreign profits.

So if Mr. Schumer has his way, U.S. oil companies would have to pay as much as a 25% higher tax on foreign-produced oil than if it were drilled from the ground by a French, Chinese or Danish firm. Mind you, the U.S. would still import the oil, but any profits from that oil would flow to foreign, rather than U.S., firms and investors.

Yes, oil companies are making big profits. Exxon's 2005 profit of $36.1 billion was the highest of any firm in American history. That sure seems preferable to the results of, say, General Motors, which is losing money and laying off workers. The S&P 500's earnings growth would have been one-third lower since the fourth quarter of last year if it were not for the energy industry. Investors beware: Tax away those profits and Washington may well promote a bear market.

The latest justification for these ideas is that the oil companies paid tiny royalties on many of their offshore leases. But Uncle Sam freely entered into these contracts. The companies then took the risk of investing billions of dollars in new production, even in the 1990s when prices were at less than $15 a barrel and profits were smaller. It's hardly equitable to retroactively tax the companies on deals consummated a decade ago simply because they turned out well for these firms. This isn't tax fairness; it's confiscation.

In any case, the biggest "windfall" from high oil prices hasn't gone to the oil companies but to federal, state and local governments. The Tax Foundation reports that the average tax on gasoline is 46 cents a gallon. The average profit that the oil industry earns on that gallon of gas, even at today's high prices, is 18 to 20 cents. The government already grabs $2 for itself for every dollar the energy companies and their investors receive. The harmful addiction problem here isn't Americans to oil. It is politicians to taxes.

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Not so smart tax

Simple Tax, Fair Tax

By RON WYDEN and RAHM EMANUEL February 17, 2006; Page A12

It's that time of year again -- when millions of Americans begin the mind-numbing chore of doing their taxes. Once again, they'll collect W-2 forms and call for missing 1099s, sift through shoeboxes for receipts and cancelled checks. The typical taxpayer needs more than 30 hours to complete this process, struggling to comprehend a tax code that contains more than 10,000 sections. That's why taxpayers spend more than $100 billion annually on tax preparation. But it doesn't have to be this way.

We have proposed the Fair Flat Tax Act, which would require most taxpayers to fill out a simple, one-page Form 1040. There would be just three personal tax rate brackets -- 15%, 25% and 35% -- instead of the current six. Gone would be the maze of regulations and loopholes. The tax code would receive what it desperately needs: a good cleansing.

And it should not just be simpler, but fairer as well -- especially for the middle class. Under the current system, a police officer walking the beat pays a higher effective tax rate than someone who makes their money from capital gains and dividends. The policeman who makes $70,000 in annual wages pays almost 25% of that salary to the federal government, while an executive who makes five times that in capital gains pays just 15%. Today's tax code has not just become anti-middle class, but anti-worker. Wealth and work should be treated equally.

There are other ways to help the country's middle-class families. By eliminating the Alternative Minimum Tax, which our plan does, we can put an end to the process that forces millions of Americans to do their taxes twice. These measures can help taxpayers without eliminating the incentives used most by the middle class: home mortgages, retirement savings and education.

Our aim is not to soak the rich but to make the tax system fairer. Every American has a right to build and grow wealth. Eliminating the unfair ways wages and investment income are currently treated can allow markets -- not government -- to drive our country toward the best use of investment capital.

Can we afford fundamental tax reform, given our record deficits and tight budgets? We believe America can't afford not to reform. And it can be done without exploding the deficit. By eliminating scores of tax breaks for the fortunate few, reforming the corporate code, and refusing to renew the disproportionate Bush tax cuts, we can give significant relief to those who really need it -- and cut the deficit by $100 billion.

Every year, the tax rigmarole takes more time and leaves more Americans more frustrated. It's time for a change. If we make the tax code easier and fairer, come Tax Day, more Americans will have more sanity, more freedom -- and more money.

Mr. Wyden is a Democratic senator from Oregon and a member of the Senate Committee on Finance. Mr. Emanuel is a Democratic congressman from Illinois and a member of the House Ways and Means Committee.

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Scientism and faith or a faith?

February 19, 2006

'Breaking the Spell: Religion as a Natural Phenomenon,' by Daniel C. Dennett

The God Genome

Review by LEON WIESELTIER

THE question of the place of science in human life is not a scientific question. It is a philosophical question. Scientism, the view that science can explain all human conditions and expressions, mental as well as physical, is a superstition, one of the dominant superstitions of our day; and it is not an insult to science to say so. For a sorry instance of present-day scientism, it would be hard to improve on Daniel C. Dennett's book. "Breaking the Spell" is a work of considerable historical interest, because it is a merry anthology of contemporary superstitions.

The orthodoxies of evolutionary psychology are all here, its tiresome way of roaming widely but never leaving its house, its legendary curiosity that somehow always discovers the same thing. The excited materialism of American society — I refer not to the American creed of shopping, according to which a person's qualities may be known by a person's brands, but more ominously to the adoption by American culture of biological, economic and technological ways of describing the purposes of human existence — abounds in Dennett's usefully uninhibited pages. And Dennett's book is also a document of the intellectual havoc of our infamous polarization, with its widespread and deeply damaging assumption that the most extreme statement of an idea is its most genuine statement. Dennett lives in a world in which you must believe in the grossest biologism or in the grossest theism, in a purely naturalistic understanding of religion or in intelligent design, in the omniscience of a white man with a long beard in 19th-century England or in the omniscience of a white man with a long beard in the sky.

In his own opinion, Dennett is a hero. He is in the business of emancipation, and he reveres himself for it. "By asking for an accounting of the pros and cons of religion, I risk getting poked in the nose or worse," he declares, "and yet I persist." Giordano Bruno, with tenure at Tufts! He wonders whether religious people "will have the intellectual honesty and courage to read this book through." If you disagree with what Dennett says, it is because you fear what he says. Any opposition to his scientistic deflation of religion he triumphantly dismisses as "protectionism." But people who share Dennett's view of the world he calls "brights." Brights are not only intellectually better, they are also ethically better. Did you know that "brights have the lowest divorce rate in the United States, and born-again Christians the highest"? Dennett's own "sacred values" are "democracy, justice, life, love and truth." This rigs things nicely. If you refuse his "impeccably hardheaded and rational ontology," then your sacred values must be tyranny, injustice, death, hatred and falsehood. Dennett is the sort of rationalist who gives reason a bad name; and in a new era of American obscurantism, this is not helpful.

Dennett flatters himself that he is Hume's heir. Hume began "The Natural History of Religion," a short incendiary work that was published in 1757, with this remark: "As every enquiry which regards religion is of the utmost importance, there are two questions in particular which challenge our attention, to wit, that concerning its foundation in reason, and that concerning its origin in human nature." These words serve as the epigraph to Dennett's introduction to his own conception of "religion as a natural phenomenon." "Breaking the Spell" proposes to answer Hume's second question, not least as a way of circumventing Hume's first question. Unfortunately, Dennett gives a misleading impression of Hume's reflections on religion. He chooses not to reproduce the words that immediately follow those in which he has just basked: "Happily, the first question, which is the most important, admits of the most obvious, at least, the clearest, solution. The whole frame of nature bespeaks an intelligent author; and no rational enquirer can, after serious reflection, suspend his belief a moment with regard to the primary principles of genuine Theism and Religion."

So was Hume not a bright? I do not mean to be pedantic. Hume deplored religion as a source of illusions and crimes, and renounced its consolations even as he was dying. His God was a very wan god. But his God was still a god; and so his theism is as true or false as any other theism. The truth of religion cannot be proved by showing that a skeptic was in his way a believer, or by any other appeal to authority. There is no intellectually honorable surrogate for rational argument. Dennett's misrepresentation of Hume (and his similar misrepresentation of William James and Thomas Nagel) is noteworthy, therefore, because it illustrates his complacent refusal to acknowledge the dense and vital relations between religion and reason, not only historically but also philosophically.

For Dennett, thinking historically absolves one of thinking philosophically. Is the theistic account of the cosmos true or false? Dennett, amazingly, does not care. "The goal of either proving or disproving God's existence," he concludes, is "not very important." It is history, not philosophy, that will break religion's spell. The story of religion's development will extirpate it. "In order to explain the hold that various religious ideas and practices have on people," he writes, "we need to understand the evolution of the human mind." What follows is, in brief, Dennett's natural history of religion. It begins with the elementary assertion that "everything that moves needs something like a mind, to keep it out of harm's way and help it find the good things." To this end, there arose in very ancient times the evolutionary adaptation that one researcher has called a "hyperactive agent detection device, or HADD." This cognitive skill taught us, or a very early version of us, that we live in a world of other minds — and taught us too well, because it instilled "the urge to treat things — especially frustrating things — as agents with beliefs and desires." This urge is "deeply rooted in human biology," and it results in a "fantasy-generation process" that left us "finding agency wherever anything puzzles or frightens us."

Eventually this animism issued in deities, who were simply the "agents who had access to all the strategic information" that we desperately lacked. "But what good to us is the gods' knowledge if we can't get it from them?" So eventually shamans arose who told us what we wanted to hear from the gods, and did so by means of hypnosis. (Our notion of God is the product of this "hypnotizability-enabler" in our brains, and it may even be that theism is owed to a "gene for heightened hypnotizability," which would be an acceptable version of a "God gene.") To secure these primitive constructs and comforts against oblivion, ritual was invented; and they were further secured by "acts of deceit" that propounded their "systematic invulnerability to disproof." Folk religions became organized religions. The "trade secrets" of the shamans were transmitted to "every priest and minister, every imam and rabbi." Slowly and steadily, these "trade secrets" were given the more comprehensive protection of "belief in belief," the idea that certain convictions are so significant that they must be insulated from the pressures of reason. "The belief that belief in God is so important that it must not be subjected to the risks of disconfirmation or serious criticism," Dennett instructs, "has led the devout to 'save' their beliefs by making them incomprehensible even to themselves." In sum, we were HADD. Here endeth the lesson.

There are a number of things that must be said about this story. The first is that it is only a story. It is not based, in any strict sense, on empirical research. Dennett is "extrapolating back to human prehistory with the aid of biological thinking," nothing more. "Breaking the Spell" is a fairy tale told by evolutionary biology. There is no scientific foundation for its scientistic narrative. Even Dennett admits as much: "I am not at all claiming that this is what science has established about religion. . . . We don't yet know." So all of Dennett's splashy allegiance to evidence and experiment and "generating further testable hypotheses" notwithstanding, what he has written is just an extravagant speculation based upon his hope for what is the case, a pious account of his own atheistic longing.

And why is Dennett so certain that the origins of a thing are the most illuminating features of a thing, or that a thing is forever as primitive as its origins? Has Dennett never seen a flower grow from the dust? Or is it the dust that he sees in a flower? "Breaking the Spell" is a long, hectoring exercise in unexamined originalism. In perhaps the most flattening passage in the book, Dennett surmises that "all our 'intrinsic' values started out as instrumental values," and that this conviction about the primacy of the instrumental is a solemn requirement of science. He remarks that the question cui bono? — who benefits? — "is even more central in evolutionary biology than in the law," and so we must seek the biological utilities of what might otherwise seem like "a gratuitous outlay." An anxiety about the reality of nonbiological meanings troubles Dennett's every page. But it is very hard to envisage the biological utilities of such gratuitous outlays as "The Embarkation for Cythera" and Fermat's theorem and the "Missa Solemnis."

It will be plain that Dennett's approach to religion is contrived to evade religion's substance. He thinks that an inquiry into belief is made superfluous by an inquiry into the belief in belief. This is a very revealing mistake. You cannot disprove a belief unless you disprove its content. If you believe that you can disprove it any other way, by describing its origins or by describing its consequences, then you do not believe in reason. In this profound sense, Dennett does not believe in reason. He will be outraged to hear this, since he regards himself as a giant of rationalism. But the reason he imputes to the human creatures depicted in his book is merely a creaturely reason. Dennett's natural history does not deny reason, it animalizes reason. It portrays reason in service to natural selection, and as a product of natural selection. But if reason is a product of natural selection, then how much confidence can we have in a rational argument for natural selection? The power of reason is owed to the independence of reason, and to nothing else. (In this respect, rationalism is closer to mysticism than it is to materialism.) Evolutionary biology cannot invoke the power of reason even as it destroys it.

Like many biological reductionists, Dennett is sure that he is not a biological reductionist. But the charge is proved as early as the fourth page of his book. Watch closely. "Like other animals," the confused passage begins, "we have built-in desires to reproduce and to do pretty much whatever it takes to achieve this goal." No confusion there, and no offense. It is incontrovertible that we are animals. The sentence continues: "But we also have creeds, and the ability to transcend our genetic imperatives." A sterling observation, and the beginning of humanism. And then more, in the same fine antideterministic vein: "This fact does make us different."

Then suddenly there is this: "But it is itself a biological fact, visible to natural science, and something that requires an explanation from natural science." As the ancient rabbis used to say, have your ears heard what your mouth has spoken? Dennett does not see that he has taken his humanism back. Why is our independence from biology a fact of biology? And if it is a fact of biology, then we are not independent of biology. If our creeds are an expression of our animality, if they require an explanation from natural science, then we have not transcended our genetic imperatives. The human difference, in Dennett's telling, is a difference in degree, not a difference in kind — a doctrine that may quite plausibly be called biological reductionism.

Dennett is unable to imagine a fact about us that is not a biological fact. His book is riddled with translations of emotions and ideas into evo-psychobabble. "It is in the genetic interests of parents . . . to inform — not misinform — their young, so it is efficient (and relatively safe) to trust one's parents." Grief for the death of a loved one is "a major task of cognitive updating: revising all our habits of thought to fit a world with one less familiar intentional system in it." "Marriage rituals and taboos against adultery, clothing and hairstyles, breath fresheners and pornography and condoms and H.I.V. and all the rest" have their "ancient but ongoing source" in the organism's need to thwart parasites. "The phenomenon of romantic love" may be adequately understood by reference to "the unruly marketplace of human mate-finding." And finally, the general rule: "Everything we value — from sugar and sex and money to music and love and religion — we value for reasons. Lying behind, and distinct from, our reasons are evolutionary reasons, free-floating rationales that have been endorsed by natural selection." Never mind the merits of materialism as an analysis of the world. As an attitude to life, it represents a collapse of wisdom. So steer clear of "we materialists" in your dark hours. They cannot fortify you, say, after the funeral of a familiar intentional system.

BEFORE there were naturalist superstitions, there were supernaturalist superstitions. The crudities of religious myth are plentiful, and a sickening amount of savagery has been perpetrated in their name. Yet the excesses of naturalism cannot hide behind the excesses of supernaturalism. Or more to the point, the excesses of naturalism cannot live without the excesses of supernaturalism. Dennett actually prefers folk religion to intellectual religion, because it is nearer to the instinctual mire that enchants him. The move "away from concrete anthropomorphism to ever more abstract and depersonalized concepts," or the increasing philosophical sophistication of religion over the centuries, he views only as "strategic belief-maintenance." He cannot conceive of a thoughtful believer. He writes often, and with great indignation, of religion's strictures against doubts and criticisms, when in fact the religious traditions are replete with doubts and criticisms. Dennett is unacquainted with the distinction between fideism and faith. Like many of the fundamentalists whom he despises, he is a literalist in matters of religion.

But why must we read literally in the realm of religion, when in so many other realms of human expression we read metaphorically, allegorically, symbolically, figuratively, analogically? We see kernels and husks everywhere. There are concepts in many of the fables of faith, philosophical propositions about the nature of the universe. They may be right or they may be wrong, but they are there. Dennett recognizes the uses of faith, but not its reasons. In the end, his repudiation of religion is a repudiation of philosophy, which is also an affair of belief in belief. What this shallow and self-congratulatory book establishes most conclusively is that there are many spells that need to be broken.

Leon Wieseltier is the literary editor of The New Republic.

Rebutting energy nonsense

Lugar the Magnificent Performs a Fuel Trick February 16, 2006; Page A17

Sen. Richard Lugar asserts ("Are Alternatives to Fossil Fuels Really Viable?¹" Letters to the Editor, Feb. 13) that "external costs" make fossil fuels "far more expensive" than the $2.50-a-gallon price at the pump reveals. He then proceeds to shuffle barrels and gallons, billions and cents, with the skill of a deft magician performing a card trick.

He points first to the estimated $50 billion a year we spend safeguarding the Mideast oil fields. Those billions of dollars, however, secure the annual flow of about seven billion barrels of Mideast oil -- i.e., 300 billion gallons -- to Japan, Europe, other U.S. allies and (last and least) the United States. So here, at least, Sen. Lugar's "far more" means about 15 cents a gallon.

"The world's overreliance on petroleum," Sen. Lugar adds, enriches some nasty people. It does indeed. At $50 per barrel of crude, feudal theocracies festering with hate are sitting on $30 trillion. But to cut that terrifying total in half, the world (not just the U.S.) needs alternatives that cut in half the global price of crude. Sen. Lugar says ethanol "will soon be commercially competitive with $2.50 gas." But $50 a barrel is $1.20 a gallon, so at the end of the day, the target price point is about 60 cents a gallon. And to have a serious impact on global price, the world will need to produce alternative fuels in volumes comparable to the 30 billion barrels of oil currently produced -- 10 billion barrels a year, say. Coal, tar sands, natural gas and uranium can readily supply that much energy, at that kind of price -- they already do, and can clearly continue doing so for centuries to come. No serious student of energy markets believes that cellulosic ethanol can come anywhere close.

Peter Huber Bethesda, Md.

Sen. Lugar appears to have undergone a political transformation. His letter repeats the Democratic Party environmental mantras. He appears to have bought into the left-wing idea that the Iraq war was "all about oil." This assertion is ridiculous on its face -- the idea that the U.S. government has any real control over the source of crude oil that private companies import into the U.S. is laughable. Oil is fungible, just like money. If Iraq oil was being sold into other countries than the U.S., then oil would come here from other locations, such as Asia and South America.

He misrepresents the opinion of the National Defense Council Foundation by claiming that it endorses his view of using our military to secure Middle East oil -- the NDCF says no such thing. Finally, he regurgitates the line of ADM and other ethanol producers that they have the answer -- if we will only subsidize it with tax dollars.

Roger F. Jones Broomall, Pa.

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Global warming? cooling? whatever

Scientist predicts 'mini Ice Age'

ST. PETERSBURG, Russia, Feb. 7 (UPI) -- A Russian astronomer has predicted that Earth will experience a "mini Ice Age" in the middle of this century, caused by low solar activity.

Khabibullo Abdusamatov of the Pulkovo Astronomic Observatory in St. Petersburg said Monday that temperatures will begin falling six or seven years from now, when global warming caused by increased solar activity in the 20th century reaches its peak, RIA Novosti reported.

The coldest period will occur 15 to 20 years after a major solar output decline between 2035 and 2045, Abdusamatov said.

Dramatic changes in the earth's surface temperatures are an ordinary phenomenon, not an anomaly, he said, and result from variations in the sun's energy output and ultraviolet radiation.

The Northern Hemisphere's most recent cool-down period occurred between 1645 and 1705. The resulting period, known as the Little Ice Age, left canals in the Netherlands frozen solid and forced people in Greenland to abandon their houses to glaciers, the scientist said.

© Copyright 2006 United Press International, Inc. All Rights Reserved

It's the business model, stupid

Why Toyota Won

By JAMES P. WOMACK February 13, 2006; Page A16

The latest bad news is now in from GM and Ford: 60,000 U.S. and Canadian jobs will go in the next few years, 24 giant factories will close, and North American losses in the billions will continue. Clearly MoTown needs a new approach and it's natural in the car industry to think that the secret must be a killer model -- a Toyota Prius hybrid or some other concept to replace the big pickups and SUVs that floated the American firms for 15 years.

Actually, it's not a new car model that's needed. It's a new business model. Toyota is leading the charge against Detroit -- largely from inside the U.S. -- with a fundamentally different approach to business that my MIT research team in the 1990s labeled "lean" enterprise. Compared with these Toyota practices, GM and Ford's approach has five fatal weaknesses:

Prius: Not built by Dilberts.

• GM and Ford can't design vehicles that Americans want to pay "Toyota money" for. And this is not a matter of bad bets on product concepts or dumb engineers. It's a matter of Toyota's better engineering system, using simple concepts like chief engineers with real responsibility for products, concurrent and simultaneous engineering practices, and sophisticated knowledge capture methods. The Prius is not the result of a hunch or luck but rather the likely result of a development system that tries out many approaches to every problem, then gets the winning concept to the customer very quickly with low engineering cost, low manufacturing cost, and near perfect quality. (That's not to say that Toyota can't produce a dud -- the first-generation Previa minivan and Tundra pickup stand out -- but the likelihood of producing winners is higher than with traditional development systems.) • GM and Ford are clueless as to how to work with their suppliers. Sometimes they try to crush their bones -- which only works when the suppliers have any profits to squeeze, and few currently do. Then they embrace contentless cooperation that makes everyone feel better briefly but fails to produce lower costs, higher quality, or new and better technology. Toyota, by contrast, is getting brilliant results and lower prices from American suppliers like Delphi while also giving suppliers adequate profit margins. How? By relentlessly analyzing every step in their shared design and production process to take out the waste and put in the quality. • GM and Ford have miasmic management cultures. These turn competent people into Dilberts. By contrast, Toyota does a brilliant job of making one person responsible for every key business process, like the chief engineer overseeing each new model. And it teaches managers how to ask the right questions (rather than give the usual big-boss answers) in order to engage everyone involved in every process to go faster and do a better job with fewer resources. A Dilbert-free environment naturally emerges, but not because everyone has received cultural training to spur teamwork. Rather, if ordinary people -- Dilberts even -- are put in a great business process they become great team players. • GM and Ford cling to their wide range of brands: Chevy, Pontiac, Buick, Cadillac, Saab, GMC, and Hummer at GM; Ford, Mercury, Lincoln, Mazda, Jaguar, Volvo, Aston Martin, and Range Rover at Ford. And they still talk about brand revitalization as the way ahead. Yet the most successful car companies in the world -- Toyota and BMW -- have only two or three brands. And this is not an accident. Indeed, it's hard to see how any modern-day car maker can support more than three truly distinctive brands -- a buzzy, "what's new" brand (Scion, Mini); a value-for-money, hassle-free-transportation brand (Toyota); and a distinctive "aspirational" brand for folks who just need something better than the other fellow's (Lexus, BMW). A plethora of brands that can't pull their weight drains management energy and company coffers. • GM and Ford still treat customers as strangers engaged in one-time transactions. Toyota's Lexus, by contrast, has created a new and better customer experience. Customers cheerfully pay more for the car and the service and then come back for more cars because they love the treatment. As Toyota applies its fabled process management to retailing to take out costs, which it is now starting to do at Lexus, customer touch becomes the final weapon in the Toyota arsenal.

But note: I haven't mentioned the creaky factories, vast pension obligations, and cranky unions that commentators on the current situation seem obsessed with. In fact, Ford and GM's factories are now good enough to compete in terms of labor productivity and quality. They just can't support employees with no work in "job banks" and unsustainable pension and healthcare benefits for retirees as the companies continue to shrink. Union and management both know this, yet no accommodation has been reached on these issues because their conversation has broken down. With zero confidence that management knows what it is doing, a union will try to get what it can now rather than look at the long term. In consequence, unless GM and Ford soon present a plausible path to a brighter future -- combining a better business model with significant short-term pain during the transition -- there may be no long term.

There is no mystery about the lean business model. All of the elements are operating in this country every day at Toyota and at many other American companies in a range of industries. What is mysterious is why GM and Ford can't embrace it. And what is dismaying is how many of their employees are likely to suffer if they don't. But finally, what is reassuring for the country is that if GM and Ford can't fix their problems, they will simply be replaced by new players in America, led by Toyota, who can.

Mr. Womack is president of the Lean Enterprise Institute and is the author, with Daniel T. Jones, of "Lean Solutions: How Companies and Customers Can Create Value and Wealth Together" (Free Press, 2005).

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Dynamic scoring - it's about time!

Dynamic Treasury February 13, 2006; Page A16

Believe it or not, there is some good news to report from Washington. The Treasury Department wants to create a small new shop to study the impact of tax changes on economic growth and thus also on federal revenues.

President Bush's Fiscal 2007 budget last week requested about half a million dollars to establish the office of "dynamic analysis" within Treasury's tax division. The not-so-novel idea is to assess the macroeconomic impact of tax policy, with an eventual goal of more accurately measuring the consequences of both tax cuts and tax hikes on federal revenue.

If you're wondering why the feds don't already do this, join the club. These columns have been urging this for going on 30 years, and it would seem to make good policy sense since tax changes are proposed and sold in part for their economic benefits. Yet the bureaucracy, both in Congress and in most of the Treasury, calculates the impact of tax changes largely on a "static" basis, which assumes little impact on taxpayer or investor behavior. So in the crudest example, cutting income tax rates by 20% is estimated to cut revenues by roughly 20% as well, while a tax increase of that amount gets "scored" as raising a like amount of revenue.

In the real world, this almost never happens. That's because everyone outside of Beltway Land knows that tax changes have a huge impact on business and individual incentives -- on how and where to invest, how much to work and save, and whether to seek tax shelters to avoid confiscatory tax rates. You'd think politicians would want to take at least some of that into account when contemplating tax changes.

Expect to read in the coming days from liberal critics that supply-siders are hijacking Treasury to show that "tax cuts pay for themselves." But the real goal here is accurate score-keeping that takes into account the real impact that taxes have on the economy. And no supply-sider we know -- and we know them all -- claims that all tax cuts pay for themselves on a dollar-for-dollar basis.

Not all tax cuts are created economically equal because they have different effects on incentives. Some of the most politically popular are also some of the least economically useful. Tax "rebates," for example, are largely a one-time cash transfer, so they don't affect long-term incentives. They thus cost Treasury a bundle because they get very little economic bang for the buck.

Cuts in marginal income tax rates, on the other hand, have demonstrated over the years that they have a big impact on investment and work decisions and thus recoup much of the revenue that "static" models estimate they will lose. Harvard's Martin Feldstein has done research calculating that marginal rate cuts yield back at least one-third of their projected revenue loss.

He's also shown that such cuts have an especially large impact on the decisions of household second-earners, typically women, to enter the workplace. A 50% marginal tax rate on the next dollar of income -- the combined state and federal burden in such high-tax states as New York and California -- reduces greatly the incentive for a spouse to trade staying home for a 40-hour week.

Cuts in capital gains tax rates have had an even larger revenue payback over the years, because they raise the after-tax return on capital and because of the incentive they give investors to lock in a profit by selling stocks and thus creating a taxable event. The 2003 tax cuts on capital gains and dividends have been producing far more revenue than the official estimates expected, including a surprise $100 billion windfall last year. As White House Budget Director Josh Bolten told Congress last week, that's real money even in his business.

All of which is to say that the Treasury proposal is much needed and deserves support from Congress. Come to think of it, Congress should undertake a similar effort at the Joint Committee on Taxation, which has a record that makes Treasury look prescient and open-minded.

	URL for this article: http://online.wsj.com/article/SB113980143846172184.html

Copyright 2006 Dow Jones & Company, Inc. All Rights Reserved

Flat out amazing!

Rhode Island Revelation February 10, 2006; Page A18

Let's hope James Carville, Robert Rubin, Nancy Pelosi and other national Democrats are all sitting down for this one: The Rhode Island legislature is considering a flat tax, and the proposal comes from its majority Democrats.

That's right, last week Ocean State Democratic leaders proposed an optional flat rate income tax of 5.5% as an alternative to the current "progressive" tax schedule, which imposes rates ranging from 3.75% to 9.9% for the highest earners. The flat tax is part of a more comprehensive reform plan that would also include a sales tax holiday weekend in August and a full week of relief on "energy efficient" items in March 2007 from the state's 7% sales tax.

And listen to how House Speaker William Murphy pitched the idea at a news conference: "The ultimate goal is to put more money directly into people's pockets both by giving relief to those who need it and by making Rhode Island a more attractive place for business that will provide high-paying jobs for more Rhode Islanders." What's going on here? Have the state's liberals all taken Art Laffer happy pills?

The answer is tax competition, and the discovery that Rhode Island's high tax burden is damaging its economy. Just as the countries of the former Soviet bloc have passed flat taxes to make themselves more competitive, Rhode Island politicians are hoping the idea can help them stop their most talented workers and growth industries from going elsewhere.

In a recent survey by the Boston-based Beacon Hill Institute -- which measured the economic competitiveness of states based on their ability to generate income and growth -- Rhode Island ranked 37th, or well behind Massachusetts, Vermont, New Hampshire and Connecticut, which were all in the top 20. Only two years ago, Rhode Island ranked 22nd in the same survey.

The Democrats noted in their press release that Rhode Island's current top marginal income tax rate of 9.9% is among the highest of the 41 states with broad-based income taxes. They also cited a study that showed this high marginal rate "might be having an effect on the retention of wealth in Rhode Island by causing retirees and companies to move to states with lower taxes, and causing large companies with multiple locations to put their highest earners somewhere other than Rhode Island."

That "somewhere" else is often just up the road in Massachusetts, which has a 5.3% flat tax. One reason the Bay State, once known as Taxachusetts, cut its tax rate was to be able to compete with nearby New Hampshire, which still has no income tax at all. Bay Staters were moving to southern New Hampshire in droves, taking their tax dollars and high-tech know-how with them.

Rhode Island currently piggybacks the already complicated federal tax system -- residents pay the state 25% of their federal tax liability -- which further increases complexity and costs on businesses and individual filers. By contrast, the proposed flat tax would be levied on adjusted gross income (AGI) with no deductions, exemptions or credits. The fairest taxes are not only simple but are levied on the broadest base possible. And working off AGI is both.

All of this ought to be especially instructive to national Democrats, who typically confront tax cuts with garlic and crosses. It's especially useful to have liberals underscoring that marginal income tax rates matter to incentives, and can drive both investment and workers into lower-tax venues. California and New York liberals still haven't figured that out.

Rhode Island Republicans, including Governor Don Carcieri, were also caught off guard by the Democrats' proposal and now sound like Beltway Democrats in raising objections. House Minority Leader Robert Watson has said he'd like to know how the Democrats "plan on paying for these tax cuts." A spokesman for the Governor had a similar cart-before-the-horse mentality, telling the Providence Journal that "the governor hopes to work with the General Assembly to make the spending cuts necessary to enact real tax relief."

But opposing good policies out of partisanship isn't going to make Rhode Island a more attractive place to work and invest. Tax cuts will. Republicans might try congratulating Democrats for their supply-side revelation, and then join them in doing right by taxpayers.

	URL for this article: http://online.wsj.com/article/SB113953993179670364.html

Copyright 2006 Dow Jones & Company, Inc. All Rights Reserved

That '70s show

The European Disease February 8, 2006; Page A16

Thousands of union workers and politicians marched in France and Germany yesterday against any and all attempts to tweak their rigid labor rules. What a perfect demonstration that eurosclerosis, that ugly word from three decades ago, is back.

The growth trends in the Europe's three largest economies should put all doubt to rest. GDP per capita in Germany, France and Italy is falling, relative to the U.S., to levels below those recorded in the 1970s. (See nearby chart). And according to a study released yesterday by the Paris-based Organization for Economic Cooperation and Development, EU countries have made scant progress adopting policies necessary to boost growth.

This relative decline raises uncomfortable questions about the Continent's ability to finance its welfare state, stay competitive and even sustain its geopolitical alliance with America. "At current trends, with demographics the way they are, the average U.S. citizen will be twice as rich as a Frenchman or a German in 20 years," Jean-Philippe Cotis, chief economist at the OECD, told us. The divergence between the continents will make it harder to share the mutual defense burden.

Labor markets are an obvious culprit. The rate of employment for people age 50 and older is glaringly low in Europe. Echoing Nobel laureate Edward C. Prescott, the OECD says Europeans don't choose to work less than Americans; they respond to perverse incentives to leave the labor pool at significant cost to taxpayers. Efforts to remove the tax incentives to retire early have gone nowhere in the EU, though at least some countries (Denmark and the Netherlands) have started to overhaul sick and disability benefits.

The policy reforms under discussion in France and Germany are politically brave but economically insufficient. German municipalities want to increase the working week to 40 hours from 38.5, sending public sector unions into a fury. French Prime Minister Dominique de Villepin got 170,000 off the jobless rolls by loosening hiring and firing guidelines for small companies, among other steps. He now wants to make it easier to employ people age 26 and under, but this "first job" proposal sparked yesterday's nationwide protests.

Barriers to the movement of capital and services are also a serious drag on Europe's growth, says the OECD. Take banking. Mr. Cotis estimates that aligning the financial regulatory regime in countries prone to banking protectionism with the OECD average could add as much as 0.5 percentage points to annual GDP. The top three countries in the share of cross-border loans in total domestic borrowing -- one measure of international competition -- are Iceland, Ireland and Luxembourg. These are also three of the richest.

Open markets go further in boosting innovation, and thus competitiveness, than any state-led effort to increase spending on R&D or education. The U.S. regulates product markets less than any OECD country but has one of the strongest intellectual property regimes. Staying faithful to this policy mix, America is the world's leading innovator.

Europeans don't lack for good advice, as the OECD's exposure of policy shortcomings shows. The problem is finding the political will to change. For Europe to keep its current living standards, much less improve them, this '70s show needs to be cancelled.

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