Two for the price of one

Ports addendum

By Dick Tunison

A number of readers have written to say how informative my blog about the Ports deal was. I’m glad, because my sole purpose in writing these essays is to encourage new thinking on a particular subject. The surprising thing to me has been the slowness with which the press put its arms around the real facts. Many reporters are still referring to “ports” rather than terminals and they insist on referring to the deal as a “sale” rather than the ordinary business process of taking over an existing lease.

Harking back to my oil company days I see a similarity to what goes on in the oil industry when companies bid on government land. The winning company never actually gets to own the land as a leading bidder, it gains a lease for the purpose of exploring and, hopefully, developing worthwhile production. At a later time, the operating company may decide it’s in its best interest to “sell” the lease to some other oil company. So it enters into negotiations with a suitor. If everything goes according to Hoyle the transfer takes place and the new operator takes over the lease.

A good example of this can be found on the North Slope of Alaska. One of the first lessees of the government land was Standard Oil Company of Ohio. Several years after the discovery of oil, SOHIO was bought by British Petroleum Company – a foreign firm. As a result of the purchase, BP gained the rights to the lease along with SOHIO’s other assets. Some years later, BP purchased AtlanticRichfield with similar results. So now BP operates several large leases on the North Slope.

As I attempted to explain in my last blog, that’s what happened in the port terminal matter. A British firm, P&O held leases on six port terminals along the Eastern and Gulf Coast. The company did not own the terminals; they were the property of the various states where the ports were located. P&O decided it was in its best interest to find a buyer for its US operations. Dubai Port World was the only viable party that showed interest in taking over these terminal facilities, and so the deal was done. But in this case, the US Government was required to review and approve the transaction because of the Foreign Investments Act.

Unfortunately the press seems incapable for explaining this business transaction without using inflammatory language. They continue the drumbeat of false implications.

Now the focus has moved almost entirely to the political stage. This will allow those strange actors to resume their mysterious roles as inquisitors of the heretics who obviously have no other reason in life than to subject the American people to security breaches and the evil deeds of would be terrorists.

I hope you have had the chance to watch a little of the hearings that were aired on CSPAN this week. One interesting aspect was the testimony of the DWP Chief Operating Officer, an American, along with several other company officials who made their allegiances quite clear. They took umbrage at any suggestion that they might be complicit in shenanigans not of the best interests of their country. Others, from various government departments and the Longshoreman’s Union made their support of the P&O/DWP deal quite clear, despite the inquisitor’s attempts to illicit the answers they were salivating for.

This issue has not been laid to bed despite the fact Sen. Harry Reid (D-NV) has announced new hearings mean nothing because his mind is made up. He won’t allow the deal to be consummated. We must now go through the reiteration of an analytical review by the CFIUS committee. I guess that’s OK, but it won’t change the mind of the most stubborn opponents.

There is one other matter that has not been given the light of day. It concerns the international financial ramifications of transactions such as these. The United States is a net payer nation. Simply stated, we owe more than we earn. The value of foreign imports exceeds the value of what we sell to others. High on the list of countries with which our balance of payments is askew are the major oil producers. When we find opportunities that attract these countries to invest in American businesses we need to be mindful of the importance of such moves. Opportunities like the port terminal businesses can generate millions of dollars of inbound cash flow for America without the need to sell off our real estate or other assets.

Why didn’t we open the deal to an American shipping operator? It was available to any qualified company but none was in a position to offer a bid. According to American business standards, a profit could not be made by an American company. That fact should give us pause.

But we must be aware there’s a lot to be said for the importance of foreign investments in the United States. Although some are fearful it could become the selling of America, it also helps keep the wheels going around. According to the Wall Street Journal, “at the end of 2004 foreigners held $1.9 trillion in US corporate stocks, $2.2 trillion in government securities, $2.1 trillion in private bonds and $2.9 trillion in debt owned to banks.” So there are a lot of eggs in those baskets that help American business grow, provide workers jobs and regular paychecks, and generally boost our economy.

Even when our balance of payments problem subsides, the advisability of foreign investments, in both directions, will remain important simply because we are now living in a global economy. Someone recently observed that a woman sitting on a dirt floor in Guatemala weaving native fabric for export was wearing western clothing. The observer asked why she didn’t wear indigenous clothes and she remarked they cost too much. It was a superior financial transaction to buy foreign readymade clothes and sell her handmade products to a French designer. Now that’s how Globalization changes our lives.

Please continue to ponder this matter, because the political paper mills are running at high speed and we should not allow ourselves to be caught up in the flow.


Just as an additional bonus for my faithful readers I’m offering, without any extra charge, a full view of my Op-Ed column published in the March 5 edition of the Edmond Sun newspaper. This will likely not happen often because most of my stuff is long and requires great concentration to grasp. But what the heck, let’s start out the month with a bang.

Dick


Don’t be stuck on stupid

By Dick Tunison

Taking a little liberty with what Dr. Samuel Johnson said about an acquaintance, “He is dull, naturally dull. But it must have taken him great pains to become as stupid as he appears.”

Rank stupidity came out in full force over the past several weeks at the University of Washington when members of the student government balked at a plan to erect a memorial to Colonel Gregory Boyington, one of the school’s most famous alumni. The resolution to construct the memorial was approved, but only after numerous attempts to scuttle the project.

Even some of my youngest readers will remember the TV series that celebrated the exploits of “Pappy Boyington” the leader of the Black Sheep Squadron during the Second World War. Actor Robert Conrad played the role of Boyington who was awarded the Congressional Medal of Honor for his heroism and the Navy Cross for shooting down 28 Japanese aircraft near the New Hebrides Islands in the South Pacific.

But Boyington was more than a Marine pilot and ace; he pulled together and inspired a fighter squadron when the Marine Corps need it most. The early war in the Pacific was in a defensive mode in 1943 when he persuaded his commanding officer to let him fill a gap by finding enough pilots to create the rag-tag VMF 214 Squadron.

Gregory Boyington graduated from the University of Washington in 1934 with a degree in aeronautical engineering. After a year at Boeing Aircraft, working as a draftsman, he joined the Marines and was assigned as a flight instructor until he volunteered to be a “Flying Tiger.” The 1930s were tough times for anyone wishing a college education. To pay his bills he worked summers in Idaho mining operations – no Pell Grants, scholarships or student stipends in those days.
Boyington was not a perfect man. He was often overtaken by alcoholism and he moved frequently from job to job in his later life in an endless attempt to “find” himself. In summary of his own life, he wrote, “If this story were to have a moral, then I would say, ‘Just name a hero and I’ll prove he’s a bum.’”

But we don’t designate heroes for what they are not, but what they are when the chips are down.

Now, the University of Washington is struggling with whether it should recognize one of its own in a lasting tribute or toss that man’s memory into the trash heap. The difficulty in making this choice is that some of the most vocal voices are being raised by students who have risen to new heights of stupidity.
Student Senator Jill Edwards said she “didn’t believe a member of the Marine Corps was an example of the sort of person UW wanted to produce.” Ashley Miller, another senator, argued “many monuments at UW already commemorate rich white men.” Senate member Karl Smith amended the resolution to eliminate a clause that credited Boyington for shooting down enemy aircraft, tying the record for the most aircraft destroyed by a pilot in American uniform, for which he was awarded the Navy Cross. Smith argued “the resolution should commend Colonel Boyington’s service, not his killing of others.”

Well, there is always room for input from those who object to war out of conscience. They have a moral position to express and sometimes that position can give balance when it is needed most. But there are also the jabberings of meatheads who want to speak with the authority of Moses but lack the wisdom of his wooden staff. Unfortunately, some college students believe that since they’ve mastered quantitative analysis they should be viewed as the new generation Linus Pauling. Acquiring knowledge is not the same as replacing stupidity.

It seems a shame to me that there are elements in our society that would destroy the long standing shibboleths defining who our heroes are and replace them with new standards that miss the point altogether. My heroes are still those whose courage took them to soaring heights while others stood quietly in the shadows. My heroes are still those who stepped forward with new ideas that flew in the face of erroneous notions.

If there were only a chance that Jill Edwards, Ashley Miller and Karl Smith could bring the renown to the University of Washington that Gregory “Pappy” Boyington has brought, there might be room to excuse their youthful stupidity. But as Louisiana National Guard General Honore commented about the situation in his state after Katrina, “Don’t be stuck on stupid.” I hope some of today’s college students hear those words.