By Steve Chapman Originally published May 13, 2003 <a href=www.sunspot.net>The Baltimore Sun

CHICAGO - Presidential candidates sometimes do surprising things, and Joseph I. Lieberman, who made his name as a "new Democrat," is not one to slavishly follow his party's traditional prescriptions. But who would have thought he'd be borrowing themes from Richard Nixon?

In a major policy speech in Washington on Wednesday, the Connecticut senator proposed "a Declaration of Energy Independence" to "put us on a path to the day when we won't have to use one drop of foreign oil." He intends to reduce our dependence on foreign oil by two-thirds within 10 years and end it completely within 20.

Where have we heard that before? In Mr. Nixon's Project Independence, announced during the energy crisis of 1973. He explained it in language that sounds eerily like Mr. Lieberman's. "Let this be our national goal: At the end of this decade, in the year 1980, the United States will not be dependent on any other country for the energy we need to provide our jobs, to heat our homes, and to keep our transportation moving."

Maybe this is just proof that in politics, there are no new ideas - just ideas so old that everyone's forgotten what was wrong with them the first time. Energy independence didn't make sense in 1973, when oil prices were skyrocketing, inflation was raging and we lived in fear of Arab oil-producing nations. And it doesn't make sense in 2003, when oil prices are dropping, deflation looms and Arab oil-producing nations live in fear of us.

The notion of national self-sufficiency conflicts with the most unassailable proposition of international economics: Nations don't lose from importing goods; they gain. That's why they do it. We import oil because other countries can find and extract it cheaper than we can. For Americans to insist on producing, at high cost, something we could buy from abroad at low cost is not a recipe for prosperity.

But oil is different from other goods, we are told. "For too long," says Mr. Lieberman, "our economy and our security have been at the mercy of foreign producers. ... I'm not going to let foreign countries blow our families' budgets by running up your heating bills and what you pay at the pump."

Even if we produced 100 percent of the oil we consume, though, foreign countries would still be able to run up our energy bills and hurt our economy. If a supply disruption occurs in Saudi Arabia or Venezuela, world oil prices will shoot up - and so will U.S. oil prices. Why? Because American producers will sell to the highest bidders, whether they're at home or abroad.

Mr. Lieberman hopes to achieve self-reliance by spending lots of money subsidizing the use of coal, which we have in abundance. He wants to spend $15 billion on schemes to convert coal into hydrogen, "the cleanest fuel in the universe." Another $6.5 billion would go to research and development on "fuel cells and other innovative technologies to wean us off oil."

That approach makes the same mistake made by President Jimmy Carter, who burned up large sums on harebrained schemes to extract oil and gas from coal. It assumes federal employees are better able than energy companies to figure out the most efficient sources of energy. They aren't. But they are good at using tax dollars to satisfy political constituencies. The chief virtue of Mr. Lieberman's plan is that it would make him friends in coal states that the Democrats need to win next year.

He also proposes a sharp increase in fuel economy standards for automakers. But while it may make sense to cut our overall fuel consumption to combat global warming, slapping mileage standards on cars and trucks is the clumsiest method you could find. Every energy economist will attest that the cheapest and surest way to do it is to put heavier taxes on oil and gasoline.

Mr. Lieberman, like presidents before him, pretends to put the burden on the auto industry instead of consumers. In fact, motorists will pay higher prices for their vehicles, or they'll pay more at the pump. But if the sticker price of a car rises, every politician knows, citizens will blame car makers, not Congress.

Mr. Lieberman wants us to think we can 1) have energy independence and 2) require no sacrifice from ordinary Americans. He's wrong on both counts. Thirty years ago, a lot of people thought energy independence was an idea whose time had come. In reality, it was an idea whose time hadn't come, and never will.

Steve Chapman is a columnist for the Chicago Tribune, a Tribune Publishing newspaper. His column appears Tuesdays and Fridays in The Sun.

<a href=www.zwire.com>Oconomowoc OnlineAmy Glasheen, staff writer May 12, 2003

Imagine a city on the other side of the world, where people don't have the money or the medicine to receive the treatment they need for HIV or AIDS. Such a city is anything but imaginary. In one city in India, a conservative estimate has more than 250,000 people stricken with the disease.

Think India is far away? Bryan Sauer will tell you differently. He spent four months providing medical care in India. The medical challenges that residents faced left a lasting impression on the Oconomowoc native.

Sauer, a 1994 graduate of Oconomowoc High School, completed medical school at the University of Wisconsin-Madison in May and took the year off. He spent the time traveling to places such as Venezuela and Belize. He also was a substitute teacher.

During the year off, he also spent from January to April in India, working with local people infected with various diseases, such as HIV, malaria and tuberculosis.

This was the third time he had traveled to the country, having spent 10 weeks there during each summer in 1998 and 1999.

Sauer stayed in the city of Thane, approximately 35 kilometers (about 22 miles) from the city of Mumbai, formerly called Bombay. He also did village work in Dolkhamb, which is about 75 kilometers (46 miles) from Thane.

Sauer spent time at Lok Hospital, also located in Thane. The hospital's first phase of construction was completed in 1997 and has been added onto since.

"After getting my M.D. in May, I took a year off basically to spend this extended time in India to work at this hospital and help out," Sauer said.

This hospital is a Christian hospital, in a country where the predominant religion is Hinduism, Sauer said. The government in India has persecuted a number of Christians, Sauer added.

"I think the success and safety of the hospital is a testament to the prayers and support of so many around the world," he said. Sauer added that the hospital was built and updated through donations from people in the United States, United Kingdom and India.

Sauer said that surgeon Stephen Alfred, whom Sauer met through a friend in college, started the hospital. Alfred is a native of India.

While he was there, Sauer also helped with Jeevan Sahara Kendra HIV initiative, which he said means "Center of Life and Help."

"HIV has a very negative stigma, especially in India," Sauer said. "A lot of people find out they have HIV and they're left by the wayside. Their families disown them and they have nothing ... they live in the slums."

He said that the purpose of Jeevan Sahara Kendra is to "bring dignity to these people and help them to die with dignity."

The HIV/AIDS initiative was started less than a year ago, Sauer said. A couple of volunteers and paid staff visit their contacts stricken with the disease.

Sauer said they had approximately 100 contacts with HIV or AIDS that they visited. The initiative is in the initial stages, Sauer said and plans are under way for a support institution where people can be treated for diseases associated with HIV and AIDS.

Without proper medicines, people in India with HIV die much faster than someone with the proper treatments, Sauer said.

"During the four months I was there, at least six to seven patients we had contact with died," Sauer said.

Seeing the way some people lived was difficult, Sauer said.

"I can't imagine having HIV in a country where is little education (about the disease) and then to not have the family support," he said. "That has to be hard."

While seeing different diseases not commonly experienced in this part of the world, such as malaria, was a medical benefit for Sauer, he said helping people was the main reason he was there.

"The people all over were very welcoming," Sauer said. "Ninety-nine percent of the people that you meet are such kind-hearted people and so content with what they have."

The people did everything they could to make him feel welcome, Sauer said.

"I went to one family where we had chicken, and Stephen (Alfred, a surgeon friend) said they probably only have chicken twice a year at their house," Sauer said, due to the families not having a lot of money to buy meat.

He added many of the children enjoyed seeing their pictures on Sauer's digital camera immediately after he took them.

Working in another country didn't provide as big a language barrier that some would think.

"A lot of the communication was based on nonverbal communication," he said.

With all the time he has spent in India, Sauer said that it's a fascinating country. He said one of the hardest parts to see is the poverty-stricken areas.

"It's hard to see people living on the street, people begging," he said.

Although he was an 18-hour plane ride away from Oconomowoc, family wasn't far away. Sauer said that his sister, Julie, paid him a visit during this last trip and his twin brother, Cary, visited him during his summer trip in 1999.

Next month, Sauer will head to the University of Virginia for his residency in internal medicine. His brother is already there for a residency in pediatrics.

Sauer said he could see himself traveling again to use his medicine once he's completed his residency. He said he probably wouldn't make it back to India during his residency.

"You leave those people behind not knowing if you're going to go back for three years," Sauer said.

By Martin Hutchinson <a href=www.upi.com>UPI Business and Economics Editor From the Business & Economics Desk Published 5/13/2003 9:27 AM

WASHINGTON, May 12 (UPI) -- During the late 1980s and 1990s, there was general agreement on the policies that emerging markets should implement in order to achieve economic growth, so much so that a term "Washington Consensus" emerged for it. There is no longer such a consensus, and citizens of many countries will suffer for its disappearance.

The Washington Consensus, as originally propounded by international economist John Williamson in 1990, consists of a set of free-market but middle-of-the-road economic policies, that the IMF and World Bank use as a template when judging Third World economies. Its highlights include the following:

-- Fiscal discipline, but with no preference between achieving this through higher taxes or lower spending -- A redirection of public spending towards areas with a high economic and social return, such as public education, public health and infrastructure -- Broadening the tax base -- Liberalizing interest rates -- A competitive exchange rate, and free movement of trade and foreign direct investment -- Privatization and deregulation in areas where there are barriers to firms entering and exiting the business -- Secure property rights.

The consensus failed to live up to its advance billing, with gross domestic product growth rates in Latin America, where it was most intensively pursued during the 1990s, declining from 4.2 percent per annum in the first half of the 1990s to 2.0 percent in the second half, and to negative overall economic growth since 2000. Clearly it is at best in trouble.

Criticism of the consensus has come from two directions, the free-market right, generally in the United States, and the anti-free-market left, in emerging markets themselves but also, since 1999, from the anti-globalization protesters of the rich west.

From the right, there are three major criticisms of the consensus: -- It fails to discriminate between cutting public spending and raising taxes as methods of imposing fiscal discipline, thus over time inexorably expanding the public sector -- It fails to provide adequately for the interests of the domestic private sector in emerging markets, in particular the interests of private sector savers, generally middle class, who are often the victims of repeated expropriation of one sort or another by local governments. -- It rests on an assumption that government and the international financial institutions will direct policy, leaving inadequate policy space for the emerging markets private sector, the leaders of which aid bureaucrats tend to regard with deep suspicion. It is notable that in countries in which the IMF and World Bank have been prominent in recent decades, the private sector is of much less importance in policy formation than the government.

Indeed, even when comparing countries with equal degrees of poverty, a country such as Thailand in which the private sector is powerful is over the long run likely to be very much more successful than one such as Argentina, in which the local government and international policy bureaucrats call the tune.

There is thus a clear alternative to the consensus available, which has been in one form or another been proved successful in East Asia, and is now proving its mettle in India, a country of enormous social problems where the influence of Washington aid bureaucrats is limited.

In much of the world, however, Latin America in particular but also almost all of Africa and most of the Middle East, the critique of the consensus has come from the other direction. In the recession since 2001, it is this leftist criticism of the consensus that has achieved most political traction and made its way most prominently into emerging market public policy: -- Fiscal discipline, the balancing of the national and state budgets, is denounced as "Herbert Hoover economics" (Hoover himself, of course, far from being fiscally disciplined, increased public spending sharply during his 4-year tenure of the presidential office.) Instead of "Hooverism," primitive Keynesian remedies for recession, involving public sector handouts to all and sundry, are repeatedly tried in an effort to restart the economy. -- Education, health and infrastructure are neglected, particularly in Africa, and money is spent instead on social handouts and on propping up loss-making public sector monopolies. -- Tax policies are given a populist tinge, in an effort to squeeze the "rich" for electoral gain -- Interest rates are once more fixed and subsidized, and credit is directed by the government, to reduce the borrowing cost of the government and provide subsidies to favored companies at the expense of middle-class savers. -- Free trade is denounced as "neo-liberalism," and bilateral deals are arranged with neighboring countries which are in a state of equal economic decrepitude -- Exchange controls are reintroduced, not only on capital inflows, to prevent profits going to foreign "speculators" but more perniciously on capital outflows, in an attempt to trap domestic savings where they can be looted -- South Africa has recently strengthened these, as I mentioned last week. -- Foreign direct investment is discouraged, particularly in industries that can be labeled "strategic" and existing foreign direct investors are harassed by national and local bureaucracy, in the hope of increasing the state sector's cash returns from them -- the Chilean Luksic group's unhappy experience in Peru is a good (or rather, bad) example of this. -- Privatization is halted, and privatized companies which have been sold to foreign investors are harassed, in the hope that they can be returned to state control. -- Property rights become once more a political plaything, with environmental dictats now being used to add to their restrictions, and outright expropriation in countries such as Venezuela.

The reversal of consensus policies is extremely widespread. In Latin America, there is now no country except to a limited extent Colombia, in which the hated "neoliberal" policies are still pursued -- Luiz Ignacio Lula da Silva's Brazil talks the talk, but is showing no sign of walking the walk. In Africa, "consensus" policies were never very extensively tried in the first place, and are now limited to at most Botswana and Uganda. In the Middle East, the existence of oil revenues appeared to obviate the need for fiscal and economic discipline, and only a few small polities such as Qatar remain the exception.

In Asia, the new Roh Moo-hyun government has turned away from Korea's version of the consensus, that had been implemented by the previous Kim Dae-jung administration, and appears to be flirting with nationalism, protectionism and anti-business activism, all of which are likely to cause trouble. Indonesia has effectively ceased privatization, and is pursuing increasingly nationalist economic policies, modified only by the need to get further money out of the IMF and World Bank, which are themselves only too eager to lend it.

More optimistically, there are at the other extreme a number of countries which have worked out their own variant on consensus policies, and are pursuing them with some success. Malaysia broke publicly with the international institutions in 2001, and has achieved continued economic growth in difficult conditions with a policy that can best be described as free market autarky. Thailand under prime minister Thaksin Shinawatra has taken its balance of payments for granted and pursued a policy of development oriented towards domestic small business, again with some measure of success. Both countries have paid much more attention to the needs of domestic middle class savers, and less attention to the needs of international capital, than the consensus would have recommended. India, too, has achieved a steadily improving rate of growth on the back of a high domestic savings rate and good returns for savers, without ever solving its fiscal problems as the consensus would have dictated.

The Washington Consensus is thus being applied in a small and decreasing number of countries currently, and as a policy mix is unlikely to be revived. (A new book "After the Washington Consensus" by John Williamson and Pedro-Pablo Kuczynski, suggesting a revised post-consensus economic development strategy for Latin America, was launched Monday at the Institute of International Economics; I will review its policy recommendations in due course.)

Clearly, if the useful recommendations in the consensus were kept, the errors discarded and the omissions rectified, this would be a good thing. However, in too much of the world this is not happening. Instead, country after country is reverting to a poisonous mix of nationalism, socialism and protectionism that promises to be economically highly counterproductive.

To see what the result of such a policy mix might be, one need only look at Venezuela, whose per capita GNP declined by 20 percent between 1950 and 2000, at a time when even in Latin America the average per capita GDP was more than doubling. Throughout that period, Venezuela has benefited from oil revenues, which were of course greatly increased by the oil crises of 1973 and 1979. However, by bad policy of democratically elected governments since 1958, Venezuela has squandered its oil wealth and impoverished its people.

Benjamin Disraeli, in "Sybil" (1845), wrote of "Two nations between whom there is no intercourse and no sympathy; who are as ignorant of each other's habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets. The rich and the poor."

As the current recession grinds on, the world may increasingly be divided into two worlds, differing as completely as did Disraeli's two nations. The poorer world, of the vast majority of Latin America, Africa and the Middle East, together with scattered countries elsewhere, will be separated from the richer to the same degree as Disraeli's two nations. But the separation will be due, not to differing resources, or to rich country oppression, or even to differing prior levels of wealth, but to differing policy mixes: the improved consensus vs. the rejected consensus.

By then, even to those who see its defects all too clearly, the Washington Consensus, and the slow growth and modest progress in emerging markets that it produced, will be seen as a lost Nirvana.

-0- (The Bear's Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that, in the long '90s boom, the proportion of "sell" recommendations put out by Wall Street houses declined from 9 percent of all research reports to 1 percent and has only modestly rebounded since. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)

Lemont, Illinois, May 12 (<a href=quote.bloomberg.com>Bloomberg) -- The U.S. Midwest has the lowest supplies of gasoline of any region of the country, leaving motorists there vulnerable to higher prices at the pump as the warm-weather driving season begins.

Consumers in the Midwest saw bigger price increases than the rest of the nation in two of the past three years during the months when refiners run close to capacity to meet peak gasoline demand. Midwest prices were higher than in other locales because of low inventories and clean-air rules that limited flexibility to use fuel in one place to meet shortages elsewhere.

I don't think all the problems are necessarily behind us,'' said Mark Smith, general manager of the Citgo Petroleum Corp. refinery in Lemont, Illinois, 35 miles southwest of Chicago. We're still concerned about the volatility'' seen in the region's gasoline prices in prior years, he said.

The Midwest tends to be more vulnerable to fuel price swings than other parts of the U.S. because of the region's distance from the Gulf of Mexico and other deep-sea ports. Crude oil is primarily moved into the region by pipelines from Canada or the Gulf Coast.

Enbridge Energy Partners LP, which delivers most of the crude processed by Chicago-area refiners, shut part of its oil pipeline system for two days in mid-April, following a leak in rural Minnesota.

A longer shutdown might be enough to curtail refiner output and affect gasoline prices, analysts said. U.S. refineries typically run the hardest in the spring. They processed 15.7 million barrels of oil a day last week, the most since September 2001, according to the U.S. Department of Energy.

Chicago Refineries

When you run on the low side with inventories you have less ability to absorb unexpected supply disruptions,'' said Joanne Shore, a senior analyst with the Energy Department. Even with all of the refineries running, there still is a tight market situation.''

Citgo's 1,100-acre Lemont complex, which processes as much as 167,000 barrels of crude oil per day, is one of three in the Chicago area that account for almost a quarter of the Midwest's refining capacity and a fifth of its gasoline production.

The other two, Exxon Mobil Corp.'s refinery in Joliet, Illinois, and BP Plc's in Whiting, Indiana, both have had outages already this year. Part of the Whiting complex was closed for five weeks following a Feb. 18 fire.

While refiners have scaled up production, fuel inventories in the Midwest remain low as the period of heaviest gasoline demand approaches. The start of the summer driving season in the U.S. is typically marked as Memorial Day at the end of May.

Inventories

Supplies in Illinois and 14 other states in the region totaled 48.3 million barrels in the week ended May 2, down 8.2 percent from 52.6 million a year earlier, according to the Energy Department. Regional supplies are close to levels seen at the end of April 2000 and 2001, when summer prices jumped.

Motor gasoline supplies in the rest of the U.S. are at 159.5 million barrels, 1.2 percent below last year.

Gasoline demand is rising. Nationwide, consumption may reach a record 9.18 million barrels a day for April through September, up 1.6 percent from the same period a year ago, according to the Energy Department.

The jump in Midwest gasoline prices in June 2000 was caused by difficulties producing enough fuel under new clean-air regulations that had just gone into effect and by a pipeline outage, on top of the low inventories.

The average retail price for regular-grade gasoline across the Midwest reached a record $1.874 a gallon, up 26 percent from the average in May, according to the Energy Department. In Chicago, the average pump price reached a record $2.11 a gallon.

Midwest Prices

Chicago wholesale prices more than doubled from mid-April to mid-June 2000, reaching about $1.46 a gallon. That outpaced gains of about 50 percent for New York and Gulf Coast spot prices.

In May 2001, Midwest retail prices jumped as high as $1.813 a gallon, up 15 percent from the April average, government data showed. Over the past week, the average Midwest price averaged $1.413 a gallon, up 4.7 cents from a year ago, the Energy Department said today.

``If you drive from St. Louis to Chicago, which is about 300 miles, you drive through four different gasoline zones,'' said Patrick McGinn, a spokesman for Exxon Mobil Corp. That means shortages in one area can't always be made up from supplies elsewhere, he said.

Summer Grades

Federal regulations require a switch to ``summer-grade'' gasoline for some regions and cities, where gasoline must have a lower evaporation rate to reduce emissions. Chicago and Milwaukee fuels are blended with ethanol, a corn-based additive, to meet these requirements.

Such requirements have ``essentially created an island'' in the Midwest where the fuel that is consumed is tailored to the market and mostly made in the region, Shore said.

Refineries last year kept up with demand and avoided most disruptions. Midwest retail prices averaged $1.378 a gallon in May and June, little-changed from $1.382 in April.

Several years working with environmental rules may have given refineries a better understanding of how to balance production of various clean-air fuel blends.

``Each year we get a little bit smarter on how to maximize our production,'' said Glen Rabinak, business service manager for Citgo Lemont. Citgo is the U.S. refining unit of Venezuela's state oil company, Petroleos de Venezuela SA. Last Updated: May 12, 2003 17:23 EDT