The Citizens

Iranian Saber Rattling- Don't Panic

2012-01-03T13:09:00.000-08:00

Iran has been threatening to close the Straits of Hormuz- again. They do this periodically. I doubt very much it will actually happen. I think this is “North-Koreaesq”/”Saddamesq” game playing of a desperate regime. What they really want is a spike in energy prices to further weaken Western economies. They are using the tools they have.

The Iranian government is weak and slowly collapsing. There have been reports of tensions between the Ayatollahs and Ahmadinejad. The latest round of sanctions is aimed at the Iranian Central Bank and seeks to hasten the process. And while we haven’t heard much publicly about the Green Movement, it is alive and well underground. It still threatens the regime. Choking off money with these sanctions will fan the coals. That is what we want.

Some have speculated that the saber rattling over Hormuz is intended to draw first fire from the US or its allies, which would then re-entrench the current government and its Ayatollahs. I doubt they are hoping to get the US to shoot first, but they may be baiting Israel. With the Syrian regime weakened, Israel is probably feeling queasier than usual. But Iranians are intelligent gamblers. They know we won’t strike militarily in an election year. We don’t have the money. They do know what a spike in Energy prices would do. The mere threat has already caused a spike. But then, it doesn't take much to cause an oil price hike.

Another news commentator on NPR said that Saudi is increasing its oil production and that we are hoping for Libya’s oil to come back on line as well as Iraqi oil. I wouldn’t count on that. Iraqi security is obviously a problem and the Iraqi government isn’t going to do too much to anger its Shia cousins in Tehran. We may have live with higher oil prices and take the hit.

We should not underestimate the game Iran has been playing over the last 30 years. They have been more effective that Libya ever was at creating terror cells. They have kept their population poor by turning their oil money into guerrilla movements, like Hezbollah and Hamas. But they have also funded several other groups in places like Pakistan, Iraq, Afghanistan, and India. This is well known and documented. I myself have commented on it several times in this blog. Wherever there was an opening for insecurity and mayhem, Iranian money could be found. It’s a rogue state- but a very ancient civilization that has survived by skillfully playing diplomatic and military games. So while we should be wary, we should not panic. We need to see this for what it is. The worst thing we could do is to attack or allow our allies to attack!

Why I Don't Think the Euro Will Dissapear

2011-12-05T19:26:00.001-08:00

Hi Everyone,

The punditocracy is waxing panic stricken about the future of the Euro. With the ongoing crisis in Greece, Italy, Spain, Portugal and Ireland, there is increasing pressure on government borrowing throughout the Eurozone. This has many TV experts pronouncing that a break up of the Euro and a return to national currencies is inevitable. From this, many go on to predict that the EU itself is in serious danger. These types are fond of referring to the EU as an "experiment." But I think there is another outcome that is at least as likely. I think the EU will become even more centralized. Here are my reasons.

First, a number of economists have reported (see this article in Der Spiegel) that the costs of abandoning the Euro will be even greater than the costs of fully committing to a bail out of all the countries in crisis. The key quotation is here:

UBS chief economist Deo, has even gone so far as to estimate that 20 to 25 percent of GDP might be realistic in the first year after a German exit alone. That would translate to a per capita cost of between €6,000 and €8,000, with costs of between €3,500 and €4,500 in subsequent years. By comparison, if, after Greece, Portugal and Ireland each had to be given a debt haircut of 50 percent, Deo estimates it would only cost around €1,000 per German citizen -- and it would be a one-time cost.

In other words, the German government has a choice between a really bad outcome and a truly horrendous one. Similar choices face the governments of the other Euro-zone countries. So long as European leaders are not so foolish as to put this choice (or more likely part of it) to a popular referendum, I'm fairly confident that each government will be wise enough to chose the really bad option and avoid the truly horrendous outcome.

Another reason I think the EU will become more centralized has to do with what the German government will demand in return for financing these bail outs. As the EU leaders begin to talk about reforming the treaties that govern the EU, the proposals all seem to be in the direction of more integration and more central control over national spending. One would be forgiven for thinking that the Germans are insisting that if they get stuck with the lion's share of the bill, then they should be allowed to remake the European Central Bank more in the image of the German Bundesbank. That is a powerful and independent central banking institution that acts to restrain inflationary government spending policies.

Furthermore, if we think about the incentives to a country like Greece to ditch the Euro, the choices have been badly misunderstood in the press. The way the story is reported in most media, it is assumed that the Greek people are being made to suffer more for the sake of staying in the Euro. This is most likely not the case. If Greece left the Euro, it will still be obliged to pay off its debts. Having left the Euro, it would have to do this by printing Drachmas... A LOT of Drachmas. Predictions of hyper inflation are not unreasonable in this event. That would hit Greece at exactly the same time that it gave up the trade advantages and attractiveness to Northern European investors that came with the Euro. In other words, Greece has a choice between painful austerity and painful austerity plus stagflation! Greek politicians have already indicated their choice... they'll take the austerity and pass on the stagflation.

Finally, even though all these changes will require heroic compromises between governments with often opposing interest, I think a deal for long term reform will happen. The consequences of failure to reach a compromise will be so dire that the governments will make the deal happen. It will be messy, lurching, awkward and push things to the final final deadline, but I think a deal will happen. And although the Germans will end up paying most of the bills for this mess, the price they will charge in return will be in the form of major reforms to the EU itself. In five or ten years we will be talking about the de facto Bundesrepublik Europa.

I should also emphasize that I'm not predicting a rapid economic recovery in Europe. I still think the EU will be hit with a nasty recession. I'm just surprised that so many people think that this recession will destroy the Euro and the EU. I get the impression that most commentators simply do not understand how firmly established the EU really is. They seem to think of it as some kind of European version of NAFTA with a currency union tacked on to it. It is far more institutionalized and deeply rooted than that.

I'm Sick of the Greeks!

2011-11-01T14:55:00.001-07:00

I have often blogged or commented about my opposition to direct democracy. Usually, my ire is directed at Prop 13 and other examples of how direct democracy undermines good government in California. But today I'm going to direct my disapproval at the proposal of the Greek Prime Minister, George Papandreou's, that the EU debt deal be subjected to a popular referendum in Greece. In particular, Mr. Papandreou, a social democrat from the PASOK party, is arguing that since the deal requires further austerity measures in Greece, he cannot implement them without the mandate of a popular referendum. I shall make three arguments against this step. The first is institutional: that Mr. Papandreou could in fact implement these measures immediately. The second is practical: that the average Greek citizen is not qualified to understand the implications of rejecting this plan and is even unlikely to understand which alternatives are genuinely viable. The third argument is moral: that since a significant contributing cause of the crisis is the widespread tax evasion of ordinary Greeks, they do not have the moral authority to plunge the entire European Union and the world with it, into another Great Recession.

Greek institutions are exceptionally centralized. Policy implementation in Greece, when it happens, is a relatively straightforward process. Most policies are implemented under the supervision of local prefects appointed by the interior minister. The interior minister is appointed by the Prime Minister and since Greece is nearly always governed by a single party government, Prime Ministers are the top of a highly centralized chain of command within the bureaucracy. There might be a legislative problem. Mr. Papandreou's party have a very slim majority and there have been resignations. One might suggest that this could prevent Mr. Papandreou from enacting the necessary legislation. However, the main principles of the austerity measures are in line with the typical agenda of the center right. As it happens the only serious opposition party in Greece is a center right party, New Democracy. Surely some deal could be struck that would allow cooperation between both parties. Indeed, several PASOK members of parliament have called for a grand coalition of national unity between the two major parties to do exactly that. The only reason a referendum is "necessary" is because Papandreou is trying to avoid getting the political blame for painful austerity measures.

So why is it more practical for this be done by a representative legislature instead of a referendum? There a three reasons for this. First, a referendum by its nature can only be a straight up or down vote on a given proposal. Negotiations and amendments, even minor ones, are not possible. A legislature allows for nuance and flexibility that may be critical in a time of monumental economic crisis. Second, voters cannot be expected to understand the complexity of all policies. One should not expect the average voter to understand the enormous complexity of a debt restructuring program that involves numerous national governments in Europe, North America and beyond along with global intergovernmental organizations like the International Monetary Fund. Third, if a majority of Greek voters reject the restructuring package out of a reluctance to accept the pain of the austerity elements, it would almost certainly provoke a disastrous financial tsunami on the order of the 2008 financial collapse. The Greek voters simply cannot be relied upon to understand the consequences not only for their own country but for the world if they indulge in some emotional populism in the form of this referendum.

But why, you may well ask, should a democratic society be expected to accept massive economic pain (and it will be painful) without being given the chance to vote for their own interests? Normally, I'd be quite open to this line of reasoning. However, the Greek situation is one of their own making. International banks did not force the Greek government to neglect the training and staffing of their tax collection authority. International banks did not force individual Greeks to take advantage of that lack of tax collecting enforcement by engaging in widespread tax evasion. As I have said in other blog entries that raising taxes is not a viable option because the Greek tax collection capacity combined with the ubiquitous tax evasion means that raising the nominal tax rates will simply change the text of the tax laws that everyone is ignoring. It won't actually generate more revenue. The Greek people, politicians and bureaucrats brought this catastrophe on themselves and the rest of us. They should NOT be given a veto over how the world decides to fix the mess.

There is plenty of pain being shared around the world in this restructuring. German tax payers will be paying off Greek pensions for a generation or more as it is. German taxpayers are also putting up additional emergency funds to cover future problems should the debt crisis spread to Italy or Spain. French banks are going to write off enormous portions of the debts Greek borrowers owe them. The Italian parliament just approved austerity measures of their own to stave off a similar crisis emerging in that country. Ireland has been living with these austerity policies since 2009. For the Greeks to now sabotage this plan is adding insult to the injuries already being endured around Europe! Enough! Mr. Papandreou should enact this law NOW. And if it means his political career ends after that, so be it!

Obama's Proposals Don't Change Student Loans

2011-10-28T14:36:00.000-07:00

It has been reported that the President wants to change the student loan program. One change that is being touted is that students are allowed to consolidate private and public student loans.

Well, this isn't a change. This is a long standing policy. I had both private (i.e. Sallie Mae) and USDE loans (Public). I consolidated them with the USDE in 2000. What they do is average out the interest rates on all your loans to get a new interest rate for your current loan. The benefit is that you make one payment to one lender at one interest rate. Usually this means a single lower monthly payment. Credit counselors have used this trick for years to help "restructure" the debt of their clients. This type of consolidation is not new nor does it represent a change to the current student loan systems.

Assuring that student loan payments don't exceed more than 10% of someone's disposable income doesn't represent much of a change either.The student loan program introduced an "income contingent" repayment plan back in the early 2000s. They take your pay stub and based your monthly student loan payment on your gross salary. The bad news here is that if your income is low, then your monthly payment under the income contingent program may not be enough to cover the interest that accumulates over the moth. Interest that is not paid is capitalized, meaning added to the principle of the loan. So there is a whole cycle there. Interest needs to amortized like they do with home mortgages to really be fair and help students pay down the loans. Building bigger principle is simply a desperate measure to alleviate today's pain. Income contingent re-payment only keeps people under the boot of debt longer.

I am not sure if the Obama Administration is being misunderstood by the media, or if it really is selling a load of crap to the "Occupy" crowd and the voters. I would hate to believe that the Obama Administration is that cynical.

Really the best deal for students and lenders is what I already proposed in my earlier post.

The End of Gadhafi

2011-10-20T13:27:00.001-07:00

It's official, Lybia is now well rid of Moammar Gadhafi. This may seem like a minor event to most Americans who - justifiably - may be focussed on more pressing economic troubles at home. But this could have enormous, mostly positive implications not just for the Middle East for Africa and the rest of the developing world.

Gadhafi saw himself as world revolutionary leader with particular interest in tilting at internationalist windmills. In the 1970s Gadhafi was a prime moving force behind abortive plans to unite various Arab countries into the Arab Islamic Republic or the Federation of Arab Republics. The FAR plan's collapse led eventually to a war between Egypt and Libya (Egypt won reasonably easily). In the 1990s, Gadhafi turned his vision southward and pushed for the creation of a United States of Africa.

Gadhafi was not only a consistent backer of terrorist attacks but he was also the primary source of training and weapons for some of Africa'sworst dictators and irregular militia groups. Gadhafi had close military ties with (among others): Idi Amin, Charles Taylor, Robert Mugabe, the Janjaweed, Slobodan Milosevic, FARC, Hugo Chavez, Daniel Ortega and other, less infamous, tyrants, cleptocrats, thugs and killers. It's worth noting however that Gadhafi was consistently incompetent militarily. Other than successfully winning his coup d'etat 42 years ago, I don't think he was victorious in any military operations of note (I may be wrong but a string of famous defeats is foremost in my head now).

This man was not merely a quirky and somewhat clownish dictator who oppressed his own people. He was a force for chaos and bloodshed around much of the world. He had a knack for picking loathsome allies. His only saving grace was his military incompetence. If he had succeeded in more of his plans, the world would have been even worse off than it was given his bloody failures.

Occupy Wall Street: Student Loan Forgiveness

2011-10-18T12:15:00.000-07:00

Some Occupy Wall Streeters are calling for student loan forgiviness. This sounds like a great idea, especially for people like me with high debt. However, I disagree with this proposal. Rep. Hansen Clarke (D-MI) has sponsored a bill to forgive student loans and MoveOn.or is sponsoring a petition in support of this.

I do not agree with complete loan forgiveness. Nor do I think it should be discharged in bankrupcy court. They tried that once and young people ended up filing for bankrupcy at alarming rates. 1) moral hazard arguments still stand 2) So long as the price of education is inflating faster than that of medical care, student loans are going to be a necessary and permanent evil. We cannot create disincentives for lenders or further barriers to qualified students. 3)Currently, there is a new bubble forming around student loans as they are packaged and sold as derivatives. The chain reaction has been sent into motion just like the housing market. This will encourage larger loans to lesser qualified students, and further fuel rising tuition costs.

But the program rules should be changed to make the loans more fair on borrowers. I have some more moderate suggestions that I would like lawmakers to consider.

Some background: I graduated with my MA in 1999 with over $60K in debt- of which about half was used for tuition and the other half for housing and expenses. I took on this debt freely, but out of necessity. The job market requires a graduate degree, I needed the money to help pay for it. I consolidated my debt with the USDE at 7.26% interest, low compared to many of my predecessors.

When interest rates began to fall in the mid-2000s, I called the USDE to see about re-financing and was told that this was not legally possible. Once consolidated, borrowers are not allowed to refinance unless they are willing to take out a private loan, usually a second mortgage. I didn't own a home and couldn't afford one with my debt levels froms school, and even in 2004 most lenders were not going to provide a loan without collateral. Therefore, I continue to pay an interest rate more than twice the current market rate.

I do receive a tax deduction on the interest I pay. However, this is little help throughout the year as monthly bills come due. Nor does it adequately address the inherent unfairness (almost usury) in how interest is handled in the student loan programs. And let's face it, it isn't an asset-backed necessity like housing. So I'd be willing to sacrifice it for some real reforms.

Interest on student loans accrues daily. And no matter how much you pay beyond your fixed amount, the interest is always paid first and it usually eats up most of the payment. And what’s worse, it's a moving target. The amount I pay in interest changes constantly and is nearly impossible to budget for, calculate, or get around. To date, the amount I have paid back in interest is nearly equal to the principle balance I started with and I still have $42K to go. Currently, if I were to make payments so that I could pay the remaining balance in 10 years, I would have to pay over $750 a month, down from the over $800 I would have paid 10 years ago. Either
way, that's not possible. But the debt is still my responsibility, students still need loans, and the USDE needs the revenue stream these loans create.

Rather than forgive debt entirely, I would suggest the following:

1) that the law be amended to allow for refinancing of all student loans down to current rates
2) once the amount paid back in interest exceeds more than say 20% of the original principle, the interest should be curtialed entirely while the remaining principle is paid down.
3) if #2 is not feasible, then the interest should be regulated in the same way has home loans.
4) outlaw the selling of derivatives on student loans.

These changes would lessen the burden on borrowers without the moral hazard associated with total loan forgiveness or the loss to the lenders, which includes the USDE. They may be enough to prevent fueling education inflation. Making the terms a bit more fair would be welcome and would help the longer term economy and a generation of young people trying to get started in a jobless economy who will default in droves if we don't do something.

Rading Social Security Funds

2011-10-14T10:13:00.001-07:00

This is a short post, but this article, Looting of Social Security posted on Fed-Smith.com today is the clearest explanation of what has happened to Social Security funds that I have yet seen. It is a quick and easy read.

Basically, the 2.7 trillion surplus that was to be invested in Social Security has been poured into the general fund and spent. It's gone. There is nothing but a literal cabinet filled with IOU statements.

Now, will the government repay this money?? Well that is a good question. From where will it get the money? Since it wasn't invested as promised.

Again, I remind everyone that this isn't news. Remember Al Gore and his "lock box". So we are all investors who have been swindled. So, in light of this, I agree with the President that the 2% cut in payroll taxes should be continued. And it's all legal. Because in a democracy, you can pass all kinds of laws to make what you want or need to do legal. In another context, this would be termed "corruption".

Because money paid for social security is going into the general fund, it amounts to a 2% income tax hike on the salaried class. Another reason we are the 99%.

National Sales Tax... Worst idea ever

2011-10-13T15:18:00.000-07:00

Herman Caine is surging in the polls as the latest "Not Romney" As he is, the media is falling all over themselves to do halfassed analyses of his 9-9-9 tax plan. As you may have heard this refers to a 9% flat income tax, 9% flat corporate tax and a 9% national sales tax. Most of them focus on whether it will raise or lower the over all tax burden on the average family or whether it will generate enough revenue to cover existing spending. It is probably not surprising that a plan put forward by a Republican reduces revenue and further shifts tax burden away from the wealthy and corporations and onto middle class families. But the problems with the 9-9-9 are, if anything, even more catastrophic than simply yet another screwing the middle class the Grand Old Plutocrats. That 9% sales tax is a like a bomb let off in the heart of the US economy.

Right now, retail sales/household spending make up about 70% of the US economy overall. If we suddenly imposed a 9% sales tax to everything bought in the US, it would certainly cause that vital sector of the economy to shrink. Consumer demand in the United States is not only a vital part of our economy it is an important driving force for the entire world economy. For example, China exports about 20% of all their exports to the US alone. If the US demand for Chinese stuff suddenly drops, it would be a serious blow to the Chinese economy as well. The same goes for Mexico, Canada, the EU, etc etc etc.

With the world economy in a fragile state now, Herman Caine's plan could plunge the world into a demand slump depression along the lines of what we saw in 1929. Imagine, just as we are showing the faintest hints of recovering from a capital crisis recession and just as the Europeans are getting their collective act together about Greece, Cain would have us voluntarily jump off the cliff again. You can't run a global economy like a pizza delivery joint.

Oct 5th Statement from Occupy Wall Street

2011-10-10T21:36:00.000-07:00

They didn't leave anything out. That is for sure!

Neutron Bomb

2011-10-07T13:45:00.000-07:00

Last night, Harry Reid exercised what is known as the "nuclear option" in some circles over Senate rules. He led a majority of Democrats to overrule a parliamentarian and cut off the right of the minority to call for multiple votes on amendments after cloture. It happened rather unexpectedly in an attempt to an amendment to the Chinese-currency-kvetching bill. McConnell wanted to force a vote on an amendment containing Obama's original jobs bill (not the current version with the millionaire's tax) to embarrass the president and cause more delay. This restricts post-cloture maneuvering by the minority. Of course, this is not really a nuclear option in the sense that that term was created to talk about outlawing the filibuster altogether in 2005. (Note, according to The Hill, a similarly arcane such use of the majority-overrule took place in 2000 under Bill Frist's leadership to eliminate votes on "sense of the senate" resolutions under such circumstances.)

This is actually a very big deal. It is the first time Harry Reid has ever done anything to stand up to the minority in the Senate worth a damn. It is the first time he has reacted seriously to the way McConnell has flouted tradition to all but shut down the Senate. Republicans are threatening direly about possibly messing with the filibuster when they're in the majority as retaliation. I have no doubt they will do so no matter what Reid does. I hope we see more of it. Part of what made it work was the Reid sprang this on McConnell unexpectedly and got the 51 votes without much fuss and bother. No showdown, just a win.

Two Visions of Frustration

2011-10-05T08:44:00.000-07:00

In light of the last post about the Occupy Wall Street protests and how they might be an emerging contrast to the Tea Party I thought I would post two links to the Democratic version of the "us vs elites" meme and the Republican version of the "us vs elites" meme.

Here is Elizabeth Warren's now famous statement about fair taxation and "class warfare."

Here is Governor Rick Perry's address to a Republican/Tea Party rally in Austin Texas.

One thing that strikes me is that Warren's rhetoric is must more focussed economic distribution. Who wins and who loses from the current economic regime. Perry's rhetoric does mention taxes but mainly focusses on abstracts like "states' rights" and "the constitution" and "the founding fathers" etc.

Another difference is that Perry's rhetoric - to the extent it talks about economic distribution - focusses on the idea that government should stop taking things from individuals. Warren's rhetoric focusses on the idea that corporate elites have been taking things from the community without paying anything back.

It's not obvious to me which message will have more traction in the midst of ongoing sluggish economy or renewed recession. But certainly the mere fact that there is now a clearly enunciated and easily understood alternative to the "taxes bad" mantra of the Tea Party makes the 2012 election campaign more competitive. It's also refreshing that this may turn out to be the first election in a long time in which the two parties are clearly debating rival visions of the future in a substantively meaningful way. It will be nasty and hard fought. And many people will be upset that their side didn't win but this is exactly the kind of policy debate so many people who are frustrated with politics as usual want to see.

Occupy Wall Street A Potential Game Changer?

2011-10-01T17:09:00.000-07:00

Something interesting is happening in response to a year of Republican austerity measures imposed by the 2010 elections at the state level and by House Republican blackmail over government shut downs and government debt defaults. A new wave of protests have emerged modeled on the "Occupy Wall Street" protests in NYC. The protests are spreading to cities across the country. What's more, while unions were not the initial driving force, they are quick to see the potential of allying themselves with these protesters. Several big unions are planning to join the protesters.

Here is why I think this is potentially a big deal. First, this seems to be a continuation of the anti-union busting protests in Wisconsin that lead to the recall of several Republican state legislators in that state and threatens to lead to the recall of Republican governor Walker. These kinds of protests are provoked by Republican policy overreach and have a record of have electoral consequences.

Second, and this may be more important, both the Wisconsin protests and the Occupy Wall Street protests are changing the nature of the anti-elite populism that the Tea Party has tried to tap. Where the Tea Party directs their ire at government and intellectuals, these protests are defining the elite in terms of wealth. Instead of calling high school teachers "communists" or railing about homosexuals, immigrants and "librul elites" these protests are zeroing in on the mega wealthy at the top of corporate America. In other words, the Tea Party now has serious competition for the leadership of the angry masses. If the new wealth-based definition of bad-guy elites takes hold, it will directly undermine the Republican 2012 political campaign and find an obvious ally in the Democratic party which is already pushing for more transfer of wealth from the mega rich to the middle class and poor.

Finally, the single greatest fear of the Republican party is a high turnout election in which large numbers of middle and low income people vote based on their rationally identified economic self interest. So long as this segment of the population can be distracted by "Guns, Gays, and God" or by the Tea Party's cartoonishly ideological rants, the GOP can survive the fact that their policies are actually likely to have a negative impact on the clear majority of voters' lives. These protest threaten to put the focus of the 2012 elections on income disparity and tax fairness. If those become the dominant themes of 2012, it gives the Democrats and inherent advantage. It also gives Democrats something to rally their otherwise demoralized base around.

Obama's New Approach

2011-09-22T15:57:00.001-07:00

President Obama has adopted a new approach to going after the Republicans. Rather than bending over backwards to compromise with uncompromising jerks, he is focussing the spot light on meaningful policy differences that most people can readily understand. This is a good idea. The deficit/debt problem is fundamentally a distributive one. Specifically there is no solution that makes all interested parties better off without making someone worse off. That means that any debate will ultimately boil down to WHO is going to be made to be worse off that the others may benefit. Republicans are insisting that it should be the middle class and poor who are made worse off so that the wealthy and corporations benefit. That's a hard position to defend when it is revealed for what it is.

The Democrats' position is that taxes should be raised on the top brackets and corporations. At this point the mood of the country is increasingly angry with exactly the targets of these increases.

So long as Obama continued to try to find common ground the stark differences would not be revealed and Republicans could more easily hide the real effects of their policies. But with Obama's new confrontational approach, the Republicans will be forced to state exactly why the super rich should continue to pay low tax rates while the rest of the country struggles. Obama dug quite a whole for himself through the (I think necessary) compromises to avoid defaulting on the debt, but the more the 2012 election becomes about these two competing visions, the harder it will be for Republicans to win. If the Republicans are foolish enough to nominate Perry, the contrast will only become starker.

In Defense of Crossing T’s and Dotting I’s

2011-09-16T16:58:00.000-07:00

There is an emerging talking point among Republicans that the way to create jobs is not to spend government money on infrastructure projects or even to cut payroll taxes or give tax breaks to companies that hire new people. All of these things have been supported by Republicans in the past. But now they swear that the only policy worth pursuing is eliminating a wide range of existing regulations. I was watching CNN this morning as I ate breakfast and it is clear that American journalists are simply not equipped to report on this subject. Instead of engaging in a discussion of what regulations are and how they are enacted, CNN ran a human interest style story where they interviewed the owner of a small car painting business in California. He swore that he was personally committed to protecting the environment etc but that some regulations were simply unreasonable intrusions into his business. He described these as regulations that did nothing but force him to “cross t’s and dot I’s.” The point of the story was clear: Regulations are silly because they make well intentioned business owners waste their time filling out paper work instead of creating new jobs. This interview reminded me of a conversation I once had with a group of small business owners at a yacht club in Santa Barbara. They are standing around grousing about exactly this sort of regulation. They hated it and blamed “socialists” in Sacramento and Washington for the whole thing. Here is the gist of what I told them.

The complexity of the paperwork is not a result of “socialist” dominance. On the contrary, the excess of paperwork is a direct result of a regulatory system that depends overwhelmingly on self-reporting. The self-reporting approach was insisted upon by conservatives who were able to force it through the necessary compromises so common in American politics. In more centralized democracies, such as the UK, there is a good deal less paperwork to fill out. However, such countries have a good deal more inspectors barging into businesses and snooping around. I asked the cluster of businessmen at the yacht club if they would rather have paperwork or government inspectors and they all said, “Paperwork!” without hesitation.

Clearly the Republicans are trying to use the persistent economic troubles as an excuse to undo a century of regulations entirely. They want to return us to a Dickensian dystopia of the 1890s. If we eliminate the paperwork without hiring thousands of new inspectors at the state and federal agencies that enforce environmental, workplace safety and other regulations, we would effectively eliminate the original regulations. These regulations were not imposed to make life difficult for business. Rather they were put in place because businesses were making life unlivable (literally) for the workers who were getting sick and injured in dangerous workplaces, the neighbors who were being poisoned by industrial run off and the many species that were being driven to extinction by the same (such as the bald eagle that Republicans love to fetishize).

Marketing the Presidency-There Danger Lies

2011-09-14T10:37:00.000-07:00

Prepare for a rant. Today I was reading NBC's news blog. The headline was "Obama's Rough News Day". After describing why the day was tough, the article says, "All of these stories can be explained away via individual context. But taken together, they signal how Obama’s brand has taken a big hit." (Italics are mine")

It is no secret that we market celebrities, politicians, and ideas like candy and children's toys. The lines between simple advocacy and unadulterated celebrity have long been blurred. But I beat an old horse, already whipped by Noam Chomsky. The difference today is the ability to target specific people and to gather data using new technologies. The ability to hit smaller and smaller targets only increases with each passing day. And it segments and balkinizes the body politic. Marketing to a vast audience is now narrowed to brainwashing a specific piece of the electorate. And it plays with our minds. Politics is no longer a national discussion to be held above the din of marketing. We can now target the 10 people in Indiana who we need to convince to vote for us rather than the entire state.

We use to joke about the celebrity of Bill Clinton, or JFK for that matter. But the entire presidency? This NBC thing is the first time that I have seen such a blunt admission that the presidency is now a "brand". It'd be funny if it wasn't so disturbing. Palin is a brand. I haven't heard yet of the "Bachmann or Romney brand". That's just because they haven't yet been fully market tested. But they are working on it. They already know that the one line testing well for Bachmann is "“Make no mistake about it, Barack Obama will be a one . . . term . . . President!” (New Yorker: Leap of Faith). They can do this with audience response systems. And they ensure that her "Barbie Doll"(Mattel, slogan: "Creating the future of play") image is well honed and protected. To be fair, all candidates are doing the same thing.

We now live in a landscape where the nonsensical is standard for marketing. Can you tell me what "Natural French Fries" are? If they are now natural, what the hell have they been up until now? That ranks up there with Jumbo Shrimp and all natural flavor, which means what again? Chemistry meant to taste natural, or that they actually added a dab of real fruit juice to that high fructose corn syrup? Our politics are as nonsensical. "It's time for America to be America again" (Rick Santorum). What has it been up until now? Pseudo-America? The line is actually from a Langston Hughes poem- a liberal civil rights poem.

Gee, maybe we should just give up and go all the way. Let's cut the deficit by funding our government institutions like we do sports stadiums. After all, California was ready to sell off real-estate to close its budget gap. Maybe the Super Committee (reminds me of jumbo shrimp again- just a flavorless crustacean, higher in useless cholesterol and empty calories than the regular shrimp) should try this out. We can sell the White House to Proctor & Gamble and rent it back, calling it "The Gillette White House". We can do the same with Congress. I can see "The Coca Cola Capital Dome". And on the Old Executive Office Building, we can add a digital billboard with all sorts of great advert slots for sale. Before the opening speech at the next party caucus they can announce, "This caucus, hosted in Tazo Stadium, is brought to you by Pepsi co., a family of beverage firms bringing naturally refreshing ideas to you!" And we can digitally swap out the banner ads along the balconies of the convention center like they do at Pro tennis matches. (Maybe they are already doing this?) And we can employ Google technology to insure that if you check a candidate website every banner ad on your free e-mail engine will belong to that candidate or his friends. They can link it to the local party congressional candidate (thanks to that address you provided on your Facebook page) to ensure that you get the full party slate.

Then when we can overlay consumer buying patterns at Home Depot against voting tendencies and demographic data to identify the 10 those Independent voters in central Indiana to the exclusion of everyone else. And while we are at it, we can make sure to find clever ways to disenfranchise those 50 voters in county X who always vote for the wrong state assembly representative. We need wall-to-wall one party rule, you know. And we don't even need gerrymandering to do it anymore. Gerrymandering has gone they way of the filibusterer. All of this subverts the democratic process. Everyone of us becomes nothing more than a cog in the marketing wheel- divorced from the means of production. (Gee, can you say Carl Marx? Moment for thought. Hummmm.)

My favorite brand is "The American People". What a brand that is! I can see it now, "American People" bubble gum- light, airy, and full of hot air! The label can be emblazoned with eagles and flags. I just watched a movie the other day where Susan Hayward's character says, "Millions of dollars spent to sell the American culture to the world, and still no one knows what Root Beer is." We are bought, sold, and spent.

So, to end my rant, my dad use to shake his head and say, "you can't stop progress". And he is right. But you should be able to control it. The day we turn entire branches of government into nothing more than brands and commodities, we have lost as a citizenry. The technology has taken over and we don't matter to the process. Only the 10 people in some distant corner of the nation matter. And candidates will further lock themselves in DC while radicalizing their ideas and rhetoric to capture those 10 people. And in the process, the whole purpose of getting elected by a majority to genuinely to govern and serve, is lost.

Libya

2011-08-22T04:34:00.001-07:00

The news is out. Libyan rebels have taken most of the capital and captured three of Gadhafi's sons including his heir apparent, Saif Al Islam, who promised that the streets would run with rivers of blood before his family gave up power.

The CNN infotainment models are making a big deal this morning about whether the US involvement was "worth it." So let's do some rough cost benefit calculations.

What did cost? CNN reports that the White House estimates that US involvement in Libya will cost $1.1 Billion. Other estimates by critics of the operation run more like $33 Billion. What did it achieve? I believe no US military people have been killed.

1) Gadhafi's forces were poised to perpetrate a mass slaughter of the populations of Benghazi and Misrata - cities with hundreds of thousands of people each. The operation clearly prevented Gadhafi's forces from capturing either city.

2) Gadhafi was a particularly nasty dictator who had sponsored some of the most infamous terrorist attacks other than 9/11. He's now out of the world picture except as a fugitive.

3) The US was able to make a high profile, tangible effort to remove an Arab dictator that the overwhelming majority of Arabs across the Middle East despised. For once the US was doing something that advanced the cause of democratic reforms in the Middle East.

4) The example of Libya should not be underestimated in relation to the ongoing rebellion against the Assad dictatorship in Syria.

5) At the time the US got involved, there were indications that some of our close European allies were keen to get involved with us or without us (especially France and the UK). Our involvement made their efforts much more likely to succeed. Preventing a European foreign policy disaster is of great value to us and should not be dismissed casually.

The cost benefit calculation for the Libyan operation is in stark contrast to the enormous costs (in lives and money) and dubious benefits of either the war in Iraq or Afghanistan. Granted, the honeymoon in post Gadhafi Libya will be brief. Libya will almost certainly have a long, painful and ultimately disappointing transition. But the same is true for Iraq and Afghanistan both of which cost much much more. As military adventures go, Obama's foray to the Shores of Tripoli will probably be shown to be a relatively costless distraction at worst but at best could end up generating a series of important benefits for US policy in the Middle East for a bargain basement price.

If you thought you new Michele Bachmann . . .

2011-08-15T20:59:00.000-07:00

you don't. She is a Christan Taliban. Total fringe. This article from the Aug. 15th, edition of the New Yorker is worth the read. RBR, I'd be interested in your take on the Iowa Straw Poll.

Sunday Musings-DEBT

2011-08-14T12:24:00.000-07:00

The recent downgrade by the S&P of US debt was lousy, but it was a wake up call. US citizens have too much debt- and it isn't all their fault. College tuition is rising faster than inflation. It's keeping pace with medical care. It's a crisis in the making, a real catch 22. So students take out loans for tuition then put their text books on credit cards. Hello!

Now the next big debt bubble: Student Loans- largely fueled by for-profit institutions. Problem here, folks, is that there is no way out for the borrows. Waltz on over to MyBudget360.com for a very good article on the next crash.

That was the morning coffee conversation with my fiance this morning. Then we went grocery shopping and we were having a conversation with the clerk. She and her husband are having trouble paying their mortgage. So they called the bank to see about renegotiating their 6% interest rate into something lower. The bank informed them that to do this, they would have to reassess the property and that they are not currently assessing property. End of conversation. She and her husband told them that they were considering strategic default. This had no effect on the bank. (People in my part of the world are rather open about their finances-oddly enough.)

After leaving the grocery store, my finance and I started to figure out what perverse incentive was keeping the bank from a simple re-negotiation. Of course, this has been written about all over, but not by me. So my turn. This is what we realized:

1) Banks don't pay property taxes on the homes they are holding.(thus the strapped states and counties)
2) Banks can keep inflated assets on their balance sheets, thus not having to recognize their losses to investors. The idea is to keep investors interested in Bank stocks. But investors have been bearish on banks stocks because of the confusing about what these banks actually hold on their balance sheets and because banks are keeping larger cash slush to cover bad debt,
3) Banks collected on the PMI. In other words, they got the insurance money on the loss.
4) all told, even if the bank tears the house down, they've made more money on it than they would have if they sold the houses at a loss.

The way this works is that the bank will foreclose. Then the house is supposed to go to auction. So the bank will bid whatever price is equal to the outstanding mortgage. Of course, the outstanding mortgage is usually based on very inflated prices. So the bank usually wins the house at auction. Then the county tax collector sends the bank a bill for the outstanding taxes, the banks asks for a deferment until they sell the house. Without the proper legal remedy, the tax collector agrees to to the deferment. But then the bank holds the property off the market, not wanting to further deflate prices with overstock.

So in the end, the original owner has a great incentive to walk away- believing that in 3 years he will be able to buy a new house at a cheaper price. The banks on the other hand were hoping to see interest rates rise. But the Fed just told them not to hold their breath. So score 1 to the people.

We need to start putting banks back in line- charging them property taxes and putting bans on their ability to package student loans into securities. They also need to change the rules on student loans. At this point, I must start to agree with those conservatives who point out that student loans encourage sharking by universities and colleges- particularly the for-profits. Loan limits need to be set lower. And students should be given a 20 day grace before interest accrues on their loans, like credit cards.

London Calling

2011-08-09T19:26:00.000-07:00

London has finally managed, more or less, to put an end to three nights of rioting which has also spread to other cities. The cause of the rioting is not specifically known. From across the pond, I think the reason for the rioting is not hard to discern. Teenagers have seen a massive economic collapse, their futures effectively taken away from them (in the short timeframe of youth) and nobody has yet paid for it. A kid who was 14 in 2007 saw a crash when he was 15 and is now trying to get a job at 18, with none available. This is not a specific riot over a specific thing. It is the result of an alienated and disaffected generation that is angry at society at large and sees nothing in government, church, or school that would connect them to civil society. The best analogy is to California hills in recent years that are full of unburnt fuel (trees and brush) from years of bad forest management, bone dry and ready to ignite.

Eventually, there was bound to be some violence in response to what I would call the economic violence perpetrated by bankers against the middle classes of the developed world. In London, it appears to be low scale rioting by kids. In the USA, it is taking on the darker hues of the Tea Party, a group not dissimilar to emotional teenage rioting but much more dangerous. Or random violence such as the shootings in Tucson last January. As I said to people two weeks ago, the main desire of Tea Partiers was to see an actual default by the Federal Government and the chaos that would follow: "Burn, baby, burn!" There will be blood. This was to be expected. Lucky London that it is all so mild and juvenile. Greece has not been so lucky.

Downgrade

2011-08-08T09:36:00.000-07:00

My opinion on this is pretty strong. Ratings agencies should not rate the credit worthiness of governments. Governments are more like non-profits. They serve a social purpose. They should not be treated like businesses. The logic of the downgrade has little to do with finance and more to do with Congress. From the S&P press release:

"More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011. Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon."

The S&P should not have any power over the government finances of the United States, the hand that feeds it, the nation that allows it to exist, that provides the environment under which it thrives. This is a prime example of the corporatist model gone awry.

This is aside from the fact that the ratings agencies have had terrible track record. Didn't they give AAA ratings to toxic bonds?

I am just cynical enough to believe this is political gamesmanship.

What's the deal with the Tea Party?

2011-08-04T14:23:00.000-07:00

In our last post, we debated a little about whether the Tea Party was really a 3rd party or just a passing fad. I found this map at Patchwork Nation. The map is interactive. So go to the site and take a look.

What jumps out at me is that there are varying degrees of support for the Tea Party, but that this support is widespread, even if the numbers are relatively small in individual counties. It remains to be seen how this will play out in the next elections.

The Debt Limit Compromise, Keynes And Obama

2011-08-01T09:42:00.000-07:00

There are two lessons about this deal that most Democrats seem to be missing. First, in any "divide the dollar" type negotiation, the side that is most willing to see no deal take place has a big advantage. Second, the side that makes the proposals has a big advantage. In this case, both of those advantages were with the Republicans. We should expect, based on those two factors alone, that the Republicans would be able to get almost all of what they wanted.

The Democrats were divided between those, like Reid, who wanted a combination of modest cuts and modest tax increases and those on the left who wanted only tax increases.

The Republican House was demanding massive and immediate cuts to social security, medicare and medicaid all while refusing any consideration of tax increases. Some versions of their demands even demanded additional tax CUTS.

So what did they get? CNN has a summary of the deal here. The full text of the bill is here. The big thing is that the debt limit will be increased in stages such that we won't face this kind of crisis/deadline again until after 2013 (after the 2012 elections). There will be neither any immediate tax increases or cuts to medicare, medicaid or social security. With regard to the two biggest issues being debated, the compromises essentially punts. Neither spending cuts nor tax increases will take place immediately but both could be possible later. The bulk of immediate deficit reduction will come in the form of caps on military spending and domestic spending other than medicare, medicaid and social security. The second round of deficit reduction will take place this fall and will be proposed by a bipartisan joint committee of House and Senate members. If they can't get a deal then, the debt ceiling will automatically raised. The bottom line is that the deadline is postponed for a couple of years and one would be forgiven for thinking they're going to let the voters determine the actual outcome in November 2012.

The irony is that this is a fundamentally Keynesian deal. At least in the short term, the fragile recovery will not be burdened with either tax increases or spending cuts. So for all the wailing and gnashing of teeth on the left, we are going to see the Republicans sign onto a deal that implicitly acknowledges the legitimacy of Keynes' approach to economics. Von Hayek would not approve.

Many Democratic activists are running around bemoaning Obama's lack of backbone or the Democratic parties habbit of caving in to Republican demands. These are silly and, to the extent they hurt Democratic party chances in 2012, ultimately counter productive attitudes to take. Frankly, I'm inclined to think that Obama and the Democrats got very close to the best deal they could have gotten out of a Republican party willing to put the entire world into a global recession to prevent a few relatively minor tax increases on the rich and oil companies. Democrats had a very weak hand to play but managed to avoid their worst case scenario or even their second worst case scenario.

For those liberal activists convinced that Obama "caved," I'd like to know what they think he should have done in this situation. What should Obama have done with default looming? Should he have refused to sign anything that didn't include tax increases and dare the Republicans to join him in default? Doing that would not only be disastrous for the economy, it would be unclear who voters would blame for the misery that would result.

Norway, Nationalism and the Consequences of Terror

2011-07-24T16:48:00.000-07:00

By now everyone who reads this blog has heard of the tragic events in Norway. A radical, right-wing populist blew up a car bomb in front of the office building containing the Prime Minister's office, killing seven, then drove to a summer camp for the youth organization of the Norwegian Labor Party where he killed another 85 or so innocent people. The murderer was eventually caught alive and has confessed to the mass murder.

He targeted members of the Labor Party because he associates them with the generally welcoming attitude towards immigrants that has typified Scandinavian politics for most of the post WWII era. I strongly suspect his goal in murdering so many of the party's youth organization was to sabotage that party's future. I strongly suspect he may only have succeeded in radicalizing the Labor Party (the largest party in Norway) and encourage them to lead the charge against right wing populism.

He was a former member of the youth organization of a rival party in Norway, the Progress Party. The Progress Party is a far right wing populist party known for its antipathy to taxes, the welfare state and multiculturalism and immigration. The Progress Party is part of a cluster of right wing populist parties that emerged in Denmark, Norway and Sweden in the 1970s and 1980s. Today, these parties include the Norwegian Progress Party, the Danish Peoples Party (formerly the Progress Party) and the Swedish Democrats. Despite their progressive sounding names, these parties are typically nationalist, socially conservative, xenophobic and fiscally populist. In short, if an American were trying to figure out who these parties are, thinking of them as the Scandinavian answer to the "Tea Party" wouldn't be a bad start. Like the Tea Party, they often oppose the welfare state in the general rhetorical stance but just as often support aspects of it that can be restricted to those members of society they deem to be deserving (a status often implicitly or explicitly dependent on ethnicity). Also like the Tea Party they are vehemently opposed to immigration. In Scandinavia the most visible immigrant population comes from Turkey and the Middle East. Slogans like "Danmark for Danskerne" (Denmark for the Danes) and "Bevara Sverige Svenskt" (Keep Sweden Swedish) are typical of the kind of rhetoric these parties like to use. As are patently absurd claims such as Norwegian Progress Party's leader, Siv Jensen's claim that Sharia law had replaced Swedish law in Sweden.

The popularity of these parties has been rising for some time. In Denmark, the mainstream conservative coalition of the Liberal Party and the Conservative People's Party depends on votes from the Danish People's Party to pass legislation. In Norway the social democratic Labor Party governs but the Progress Party is probably the fastest growing party in the country. That said, these parties usually represent between 15% and 30% of the voters and usually closer to 15% than 30%.

The fact that the worst case of political violence in Scandinavia since the liberation of Denmark and Norway from Nazi Occupation was perpetrated by a long time supporter/member of such a party may prove to be a major development not just in Norway but in Denmark as well. Denmark's government is constitutionally required to hold an election no later than November of this year. Danish voters will know the Norwegian Progress Party very well and they will understand the issues involved and the inflammatory rhetoric in play very well. The Danish People's Party will have to be careful to distance themselves from the violence without alienating their populist base of support. Many Danes will see a direct connection between the over the top xenophobia and populism of these parties and their leaders. One consequence of these tragic murders could be the decline of the electoral success of these parties and a policy backlash against their views.

This is not to say that these countries will open up to unrestricted immigration, but the increasingly aggressive escalation of policy attacks on immigrants and immigration may stop for a time.

LOST and the Debit Ceiling

2011-07-18T12:30:00.000-07:00

For all you LOST fans, think about the season they found the bunker. In the bunker, there was a computer system. And every so many hours, a code had to be plugged into the system. If not, they were told that the Island would explode, and take them all out. So they entered the code. But this raised a philosophical question: what would happen if they didn’t enter the code? Would the Island really explode? How risky is risk? Was this really a manipulative game? In one scene, they decide to dare the system by refusing to put in the code, and this scary countdown starts. And suddenly,the characters are fist fighting and trying to hold each other back. But someone breaks through and enters the code. Welcome to the debt ceiling debate. Mark my words, this will happen.

But for shits, what will happen if we don’t enter the code? The Tea Partiers will have us believe that nothing will happen. But what would be the benefit? Robert Rubin, the former treasury secretary, said it best. He said, “we don't know what will happen, but why would you want to find out?” Didn’t we learn anything from the brink of disaster in 2008? Why would you want to take bigger risks? Is it for the adrenaline rush?

The Debt Ceiling is an arbitrary number that limits the amount of money we can borrow to pay our bills. It was sent by our legislators in 1917 and has been changed numerous times. Between 2001 and 2008, it was increased 5 times. Any small business owner who was unable to get a short term bank loan to cover payroll back in 2008 will understand completely the situation the US Treasury now faces. I am sure you yourself have borrowed from your savings to cover your bills, and then put it back. Maybe you ask your friend to spot you $50 with the promise to pay back $55 in a week, etc. It’s no different for the Feds.

For our readers who may not fully understand the debt, please read The Debt Limit: History and Recent Increases by the Congressional Research Service. This explains nicely how the government creates both Public and Inter-government debt. The short version is that debt is issued is through the sale of government (i.e. Treasury) bonds of varying duration. The US government currently pays the lowest interest of anyone on these bonds because it is deemed so low risk. This will change if default happens. For lessons, see Argentina.

The amount of government debt and revenue is in constant flux. Money comes in, money goes out. This further complicates the Treasury’s job of balancing the government’s check book. Because of the flux, Treasury can’t know for sure when we will actually run out of money. What we do know is that we actually hit the legal debt ceiling May 16th. But the Treasury has been able to juggle money to make ends meet-largely through accounting gimmicks and borrowing from government accounts (like civil servants’ pension funds). The Treasury estimates that it will run out of wiggle room on Aug 2. This is why stalling, gaming, and procrastinating are so serious. We may go into default without meaning to.

So if the government defaults, what happens? We don’t really know, but history offers guidance. In past instances when we have approached this limit, the markets have sometimes responded by starting to charge a larger risk premium in order to lend money to the federal government. This tends to encourage speculation on US treasuries in ways similar to what just happened with the housing market. You will start to see nations take out insurance on US debt which is a way of betting against our ability to make our debt obligations. This will further deepen our troubles.

Historically there have been many defaults and banking crises. Since 1800 France has had 12 years of banking crises, Norway 16. We had our own in 1936. Germany has spent 16 years in default or restructuring since 1800. Most victims suffered after wars. In this way, we are no exception. Usually, when there is a default, 6 things can effectively address a crisis.
1) Get a higher GDP.
2) Lower interest rates on public debt.
3) Get a bail out- go to the IMF or hope a friend will help you.
4) Tax increases and cuts to public spending (i.e. entitlements).
5) Print more money
6) Default totally. This will mean one of several things. We will a)reschedule our interest payments, b)put moratorium on paying c) restructure the debt, etc.

Items 1-2 have already been exhausted. We are practically at 0% interest now. And in a recent interview with one of Fed Chairs, he said it was time to start raising rates to encourage savings. When loan rates are low, so are interest rates on savings accounts. Item 3 was tried, but not announced. China purchased $7.6 bil. in bonds from the US Treasury back in June. That was China’s first increase in bond purchases since October. It now has $1.15 tril. in US holdings. This came after it sold US bonds for 5 straight months.

That leaves us with 4-6. Number 4 is the crux of the current debate. We will have to do both. But Congress is now looking for which groups they can slaughter with the least political consequence to themselves. We have already done 5 to some extent. For the Treasury to do Quantitative Easing, it basically bought back debt using newly printed money. And now we are on the brink of number 6.

So what has happened to other nations who defaulted? Well look no further than Europe today and the EURO.
1) Military spending is usually the first on the chopping block. Notice that we are arguing now with Europe over its lack of military funding. And we are looking to cut ours. Fine with me.
2) If there is a default or restructuring, there are usually increased conflicts with creditors. This leads to political & economic instability. Notice that there has been talk of the end of the Eurozone because the Germans are quite angry at the Greeks and Irish. See Cartoon for other possibilities.

3) Investors are dumping the Euro and running to the Swiss Franc. And they are dropping the dollar as well. The value of the Swiss Franc has been on the rise for over a year. One year ago, I was in Switzerland getting a SFr1 to $1. We were there for 3 weeks and by the end, we were getting SFr.96 to $1. Today, it is SFr. 817 to $1. And China has been pushing for a second reserve currency.

This will devalue the dollar and increase inflation across the board. Basic economics tells us that inflation leads to less job creation, higher prices, increased poverty, and capital flight. It would have a much worse effect that any tax hike because it would be broad-based and not necessarily controllable. Time for the House to get their collective heads out of their asses. Pass a Ceiling, then work on the 2012 budget with austerity measures and tax hikes.

Rupert Murdoch, Corruption and Fox News

2011-07-17T15:08:00.001-07:00

Rupert Murdoch is one of the most powerful men in the world. The Australian media mogul has used his massive presence in the world media market to push a right-wing/populist agenda, often with a cheap dedication to sensationalism and slight regard for facts. He owns News Corp which itself owns several newspapers in the UK as well as the Wall Street Journal and Fox News here in the US. Murdoch also is the plurality stock holder of Sky TV and only backed off a recent attempt to take complete control of Sky just this past week.

There is a growing scandal brewing in the UK about newspapers (tabloids), owned by Rupert Murdoch's NewsCorp company, have been systematically hacking into peoples' private telephones to gather information. It has also come out that they've hacked the phones of the families of British war veterans killed in action, murder victims (obstructing an investigation in the process), the Royal Family, and members of the British Government including former Labor PM, Gordon Brown. There are also reports that News of the World hacked the phones of 9/11/2001 survivors. This is highly illegal and to prevent their being prosecuted about it, they bribed very high level officials in the British police forces to prevent them conducting investigations. This has begun to spread. The manager of the News of the World (the Murdoch owned tabloid where the scandal first emerged) has resigned and has since been arrested. The chief of the London Metropolitan Police has resigned. The Sunday Times has also recently been implicated in the spreading scandal. On this side of the Atlantic, Murdoch's man running Dow Jones and the Wall Street Journal (two other divisions of Murdoch's empire) has also resigned. Make no mistake these resignations are both members of Murdoch's inner circle.

The FBI is now investigating whether US based divisions of Murdoch's media empire participated in any illegal practices overseas (which is a violation of US law). It would not surprise me at all to find out that Fox News has been engaging in the same kind of phone hacking and bribery of officials for information here in the US. For dedicated Fox News viewers, it won't matter. But anything that weakens Rubert Murdoch and his media empire is good for democracy and good for Democrats.

The Republican Crisis

2011-07-07T15:47:00.000-07:00

There is an article in The Economist (see link here), in which they lay the blame for the failure to resolve the deficit reduction dispute (and the related debate about the debt ceiling) squarely at the feet of the Republican Party and their refusal to consider tax increases as part of the response to the current accounts problem. This is surprising because The Economist is normally squarely on the right side of the political spectrum with regard to fiscal and economic policy. I would go further than The Economist though. I would say that not only is the Republican Party responsible for failing to solve the problem, they are responsible for creating it in the first place. Furthermore, the lack of sophistication among the national press corps has allowed the Republicans to frame the situation as an existential crisis by making baseless comparisons between the US debt and Greece's debt. At the same time, there is very little coverage of how low our tax rates are relative to other industrialized countries and relative to our own past.

According to The Economist article above, US tax receipts as a share of GDP is around 15%. To put this in perspective, I looked at the tax receipts data from the OECD (see data sheet here). The numbers from the OECD are a little different than those quoted in The Economist. OECD says that tax revenues as a share of GDP are at about 24%. According to the OECD, 24% is the lowest share of the national economy taken in taxes in the USA since 1965 (the first year for which data is reported in the table). What's more, 24% is among the lowest share of GDP taken in taxes for any OECD country since 1965! Only relatively poor OECD members such as Chile, Korea, Portugal and Turkey have lower tax/GDP ratios in their history. What's more, these countries' lowest tax/GDP ratios occurred when they were better considered as developing countries than wealthy industrialized countries (and in the cases of Chile, Korea and Turkey largely before they were democracies). Many of the countries that have similar or superior growth rates to the US tax their economies more heavily. So contrary to Republican rhetoric, we are not over taxed by any meaningful measure. At the same time, Republicans are also on thin ice when they argue that increasing our tax rates will undermine the overall economic health of the country.

What about our spending levels? According to Visualeconomics.com, the US government budget takes up about 21% of GDP. The Economist says that number is about 25%. Regardless of which figure you use, that's much lower than most industrialized democracies. So it is not the case that our spending per se is especially high or "out of control" relative to our peers. Again, the Republicans are distorting the real situation to make their case for protecting low tax rates the wealthy and corporations at the expense of public services that benefit society as a whole (like education, health care and infrastructure).

What about our debt levels? To hear Republicans talk about it, the United States is a global laughing stock because of our debt levels. Even if we accept the Republican premise that we couldn't solve our debt problem overnight by returning our tax rates back to the 1990s levels (27% to 29% of GDP), are we really in the midst of a crushing debt crisis? According to the OECD (see link here), our debt as a share of our GDP is at 74% for 2011. To put this in perspective, that's about the same debt level as found in Ireland, Portugal which are in fiscal crises but lower than Belgium (80%) and Japan (127%) which, because they are larger more advanced economies, not in fiscal crisis. Greek debt is at 125% of their GDP.

It's worth pointing out here that a number of countries that Republicans love to vilify for their supposedly budget busting welfare states have much better debt situations than we do with little to show for our borrowing other than a bloated military. Denmark's debt is only 2.7% of their GDP. Canada's is 33.7%. Germany's is 50.2%.

For all these reasons, I think we should think about the current situation with regard to taxes, spending and debt as a "Republican Crisis," rather than a genuine "Debt Crisis."

Where Greece Should Go From Here

2011-06-29T09:26:00.001-07:00

First, let me get to the big point first. Kicking Greece out of the Euro won't fix anything. German and French banks are still heavily exposed to bad Greek debt (both public and private). If Greece were kicked out of the Euro (or left on their own), all they would do is start printing their currency in enough quantity to pay off their debts (and make that currency increasingly worthless). The effect would be a de facto restructuring of the debt. The northern European Euro states may as well bail Greece out and let them restructure the debt while staying within the Euro. Letting Greece stay in the Euro would be about as costly as kicking them out but would prevent the nasty political crisis that such a move would probably impose on the EU as a whole.

So what should Greece do? In the short run they should do what they've just done today, namely pass a harsh austerity package that dramatically cuts government spending. They have no choice. They've been spending money they didn't have and, worse, couldn't raise for decades and it's time to pay the piper. In the long run, Greece should get serious about administrative reform. The real cause of this crisis is the Greek government's inability to collect the taxes it is owed. The reason the Greeks can't fix their debt problems without enormous outside help is because they do not have an internal revenue service worthy of the name. That needs to change as quickly as possible. The problem is that it cannot change in time to fix the current crisis. But it could change in time to prevent the next crisis.

And this administrative incapacity is the key reason why the US IS NOT LIKE GREECE. The US can fix its deficit problems by returning its tax rates to where they were in the 1990s. That would be a relatively minor adjustment all things considered. Because our government is competent (yes, I said the government is competent), when we raise the tax rate, more tax money comes in. That's not the case in Greece.

How Did Greece Get Here

2011-06-28T08:29:00.000-07:00

Greece is again (still) embroiled in crisis, riots and talk of default. How did it come to this? Greece is a long time in brewing this stew and the EU has let them do it.

Step 1: Greece had a ridiculously generous welfare state for a relatively poor country. For example, Greeks were allowed to retire with generous benefits as early as 55 years old. That’s great for middle aged Greeks. But where is the money going to come from? The country was poor in comparison to the rest of Europe. The Greek per capita GDP is well below the EU average. Greece also has a particularly under staffed and poorly organized tax authority. Even when taxes are – on paper – sufficient to pay for government expenditures, the Greek government has extreme difficulty collecting those taxes. So the answer to the money question was BORROW IT!

Step 2: The Greek government was initially prevented from adopting the Euro currency because their debt and deficit rates did not conform to the convergence criteria for adopting the Euro. Unfortunately, a conservative Greek government simply cooked their books to get in. In doing this they had the active help of Goldman Sachs which helped them by arranging a variety default swaps and other financial gimmicks to conceal the enormous debts that Greece was piling up. The European Central Bank authorities employ enough finance experts to see through these gimmicks or at least see that something fishy was going on. But for political reasons, there emerged a kind of norm of tolerance to failure to meet convergence criteria. Most of the current members of the Euro Zone failed to meet the strict standards for entry. But most of those failures were minor. Only Italy was really in flagrant violence of the criteria but allowed to join anyway. So, Greece hired some Wall Street city slickers to cook their books, the European Central Bank held their nose and let Greece join the Euro.

Step 3: In 2009, the Greek socialist party defeated the conservatives and reveals the true fiscal situation in Greece. With the 2008 recession in full swing, all Hell broke loose in Greece. By 2010, Greece was begging for the EU and the IMF to bail them out by restructuring their debt. A condition for that help was a substantial austerity package that included dramatically reducing the aforementioned generous welfare benefits.

Step 4: Greeks have been rioting periodically in reaction against the austerity measures – often violently.

Same Sex Marriage Wins in New York

2011-06-26T07:43:00.001-07:00

There were two fascinating things about the same sex marriage victory in New York on Friday night. First, the Democrats were united and crowing in victory, with Governor Cuomo seeking the limelight and the party. Contrast that with Governor Baldacci in Maine two years ago who signed the bill after publicly fretting. Second, the Republicans who had the power to block the vote in the NY Senate let the vote take place, knowing they would lose. Both point to the same thing: the view that same sex marriage is now popular enough that Democrats want to use it to get votes and money from their base. Big change. The more interesting thing was the Republican decision. I think the GOP wants to use gay marriage the way it has used abortion for years: as a rallying cry for the rubes, but without actually DOing anything that would upset their suburban, educated voters who really don't want to see abortion be illegal. "Choose life" is better than "Outlaw abortion." Even Sarah Palin seemed unable to grasp that being pro-life means wanting to outlaw abortion rather than just being sanctimonious about it. So that's where the Republicans are heading. By not actually making policy against gays, they open a space for some gays and moderates, and educated voters to cast their ballots for them despite their anti-gay rhetoric designed to attract the rural and uneducated voters. I know family members, for example, who are firmly pro-choice but vote Republican because the GOP allows them to practice this sort of cognitive dissonance.

I'll take it.

Is the Party Over For China?

2011-06-18T05:03:00.000-07:00

In the 1980s it was common for people to say that America's time in the sun was over, that we were about to be surpassed by the Japanese. Japanese investors were buying American real estate left and right. Japanese manufactured goods were everywhere. Workers raged about "unfair competition" from Japanese imports. But even before the tragic earthquake and tsunami, Japan's supposed economic threat to the US was fading. But by the late 1990s, the same fears were arising again, this time with China playing the role of Eastern Threat. In both these cases the fear mongers assumed that trends at the time would continue unabated. That did not prove to be the case in Japan (Japan has spent much of the last 15 to 20 years in severe economic distress) and it may be proving to be not the case in China. Here are some signs of trouble for the Chinese political-economy:

First, inflation. Chinese food prices and fuel prices are soaring. There have been numerous stories in the press lately about Chinese people finding it increasingly difficult to buy the basics of fuel, cooking oil and food staples. This is a big problem for a single party, authoritarian regime who's legitimacy is based largely, if not entirely, on continuously rising prosperity.

Second, rising transportation costs (see stories here and here for slightly different perspectives). A major driving force for China's economic boom in the last 20 years has been exports. China's vast and cheap labor force can only impact the world economy if it's products can make it to markets. That means shipping to North America and Europe. Improvements in port facility standardization and relatively cheap shipping costs in general made that easier. But as the oil that the large container ships run on gets more expensive, the advantage that manufacturers in China realize from the cheap labor will be off set by high transportation costs. That could encourage some manufactures to relocate back to older manufacturing centers closer to their markets. China's government has responded by investing heavily in alternative fuels and by trying to build their own domestic markets as quickly as they can. They may be running out of time.

Third, rising unemployment especially among young, college educated Chinese. China's economic advantages lay in a huge, cheap, relatively low skilled workforce. China has invested a lot of its recently gained wealth in university education. But now it's economy is incapable of finding rewarding jobs for all those new college graduates. Again, for a regime who's legitimacy depends on maintaining prosperity, a large population of unemployed or underemployed college graduates is a dangerous thing. It was underemployed college graduates who were much of the driving force behind the revolution in Egypt. Chinese officials are concerned about similar unrest breaking out in China.

Fourth, China is developing a nasty real estate bubble (see stories here and here). I've heard annecdotal stories from friends with relatives in China that real estate is a popular investment for middle class, urban Chinese. If this real estate bubble pops (and signs suggest it is about to), much of China's emerging middle class could see their savings wiped out in the blink of an eye just as rising prices in other areas, reduced exports and rising unemployment are becoming problems as well.

Fifth, increasing political unrest (see stories here, here, and here). Riots over local corruption, food prices and abuses of eminent domain have been popping up around China for some time now and appear to be getting more common.

Finally, all of this is a contributing factor to a final worrying development: an authoritarian retrenchment in the Communist Party of China leading to oppressive crackdowns (see stories here, here and here).

If all this comes to a head at once, I'm not sure how it would impact the world economy. I suspect that it might not be the worst thing in the world for US manufactures and jobs. If China's political economy starts to look less attractive to investors, the US will look like a safe haven in comparison. But a more repressive and insecurity Communist Party of China is probably not a good thing for the world. This could be a bumpy ride.

Hallelujah!

2011-06-17T17:39:00.001-07:00

Hallelujah! The Senate has done something I never in a million years expected them to do. They voted overwhelmingly to eliminate several billion in tax breaks for ethanol! (story here). This is a great development! Most of the punditry are looking at this as a symbolic blow to energy subsidies. But this is just as much a subsidy to entrenched agricultural interests. If this leads to further decreases in corporate welfare for either Big Energy or Big Ag, I would be thrilled!

The reason I never expected this is because Republicans are so committed to rural voters and big business that the combination had me thinking they would never touch ethanol or ag subsidies. I'm thrilled to be wrong about that. Well done to the 73 Senators who voted to end this waste of money!

California Redistricting Commission

2011-06-10T15:32:00.000-07:00

The California Citizens Redistricting Commission (CCRC) released its first draft of 2011 maps based on the 2010 census at www.wedrawthelines.ca.gov. The result has been described as a political earthquake at politico. Some analysis suggests the maps favor a Democratic pickup of 4 seats statewide. This suggests that the result is not all that different from what the legislature would do... except that specific powerful incumbents got dealt some powerful blows. That would not be likely in a legislative arena. It is interesting that the fears expressed on this blog that the CCRC maps would favor Republicans are, at this point, unlikely to be the case. Given the large Democratic registration advantage statewide and the surging Latino population, a map not explicitly gerrymandered could well lead to a larger number of mildly Democratic districts rather than a smaller number of very safe districts as we have today. I have not seen analysis of the new State Assembly and Senate District maps. Given that Dems are presently 2 assembly and 2 senate seats away from a 2/3 majority of both houses, Democratic pickups are a fascinating prospect.

More on Republican Candidates in 2012

2011-06-05T08:35:00.000-07:00

As the field is shaping up, I am increasingly coming to RBR's view that the nomination is open for Romney. It's a field of midgets, and he alone has some modest stature. Given that the Presidency will be an "open" seat in 2016 should Obama win in 2012 (neither Biden nor Clinton will run as an obvious successor to Obama), that is a much more enticing race to serious candidates.

Romney has three big problems, though. The first is his religious/evangelical problem. In 2008, the GOP nominated one of its few candidates who is not an evangelical, John McCain. The result, an electoral disaster of Dukakis-like proportions, is instructive in itself to some GOP operatives. Worse, Romney is a Mormon who was pro-choice until recently and presided over gay marriage in his state with hardly a peep. So he loses on religious and "values" grounds. The second is health care reform. He is not a credible critic of the program. The third is his personality. He could overcome the other problems with charisma, but he is so dull and uninspiring.

Will someone like Tim Pawlenty be able to capitalize on his noted charsima and evangelical beliefs to overcome Romney? Tough to say. It can happen. If there was ever a year the GOP was bound to nominate an insurgent candidacy, 2012 is it: most of the establishment figures have bowed out and the party is in the grip of TeaPartyMania.

I think we shouldn't count out Ron Paul. He has the enthusiasm, a clear anti-big-government message, and appeal in the battleground western states like Oregon, Nevada, New Mexico, and Colorado that the Democrats need to win in 2012. Sure, he's not an evangelical, but he has the gifts to overcome that, and he's not a mormon. Let' face it, Ron Paul really is the darling of many in the Tea Party movement. If he notches a surprise win in Iowa, NV, or NH - and he is the only one of the top four delegate finishers from 2008 other than Romney to be back - he would be such a media darling he might race to an early nomination.

Pragramatic Flexibility vs Doctrinaire Foreign Policy

2011-05-30T14:41:00.001-07:00

So the latest in Libya is that 8 high ranking officers in the Libyan army are defecting to the rebels. This comes after a series of cabinet officials, including the Oil Minister and Foreign Minister, have defected. Qaddafi is rapidly losing friends. The time is coming soon when Qaddafi will be hold up in some bunker somewhere with a thousand or so "dead enders."

Meanwhile, in Syria, the military has "surrounded" several towns (see BBC story here). Over a thousand people have been killed. However, because of Syria's military strength, alliance with Iran and sensitive quasi-peace with Israel, the world has largely taken a hands off approach.

Perhaps, more worrying, China has declared martial law in a number of cities in Inner Mongolia where demonstrations have taken place (see story here). To expect the world to react to China the same way they react to Libya (or even Syria) is just absurd. We cannot hope to move China with military force. Nor can we expect that economic sanctions against China would be a realistic option.

The critics of President Obama's reaction to Libya have focussed on the lack of a "doctrine" that would be consistently applied around the world. But what I like about the President's approach is its pragmatism and its flexibilty. Syria and Libya are doing exactly the same things. If Obama were to adopt the doctrinaire approach favored by the right, we should be bombing Damascus right now. But I doubt even McLieberman and the other neo-cons would advocate doing that to China. Obama's policy recognizes that different countries require different approaches.

Saudi Spills Beans

2011-05-29T17:09:00.000-07:00

CNN.com is reporting (here) that a Saudi prince let slip that his family wants oil prices to stay lower to prevent Americans and Europeans from investing too much in alternative fuels.

"We don't want the West to go and find alternatives, because, clearly, the higher the price of oil goes, the more they have incentives to go and find alternatives," said Talal, who is listed by Forbes as the 26th richest man in the world.

This just underscores the central role that research in renewable energy sources and electric cars should play in our national security thinking. But the Republicans want us to back off from renewables, reinforce our relationship with oil sheiks and spend lots and lots on new wars and weapons in the Middle East.

The CA LAO Needs to Remember It's place

2011-05-26T10:36:00.001-07:00

California's Legislative Analyst's office is putting itself smack in the middle of a political battle . . . on purpose!

The CA LAO is suggesting that the state legislature refuse to appropriate matching funds for California's new High Speed Rail unless the ground breaking is in either SF or LA. To get Federal funds for this project, the state must provide matching funds. The LAO insists that the California High Speed Rail Authority has overstated ridership, thus profit, and understated the construction costs. If the LAO persists, and if the CA Legislature follows this advice, CA will loose all it's Federal money and in effect, the rail project will be dead, despite the strong support of CA voters and the Obama Administration.

The LAO suggests that the authority renegotiate start plans with the Feds, but the Feds have made it clear that starting the project anywhere but Central Valley will result in no Federal monies, period. The project deadlines must be met or the funding dissolves.

Now, I don't think the LAO is trying be partisan. But the media I've heard and read today makes it seem like the LAO is overstepping, or at least being too pushy. Assembly woman (D), Cathleen Galgiani is quoted in the Fresno Bee article as saying, "The LAO wants the Legislature to set criteria for choosing where to start building, but legislators already did that when they put Prop. 1A on the ballot. What this looks like is that perhaps the LAO doesn't like the outcome, so they want another legislature to change the rules to affect a different outcome." If the LAO is overstepping, it needs to be put in its place.

For some background you can read more at the Fresno Bee or the LA Times.

So the plans for ground breaking are all set. CA rail authority planners have worked closely with the Federal Government to get started. The Feds have insisted that the first branch to be built be the Central Valley portion from south of Merced to Bakersfield. See map below.

Actually,I would prefer to see the track laid between Sacramento and Fresno. It would be more expensive, but it would serve more people immediately. So in some sense the LAO's objection is valid. That said, it isn't worth it if it means killing the whole project. Talk about snatching defeat from the jaws of victory! There are a couple of good reasons why the Merced-Bakersfield plan makes sense. 1)The Valley is under-served in terms of public transportation. Many commuters to the Bay Area and LA live in the Central Valley where property is more affordable. 2) The Bay Area has BART, and it is heavily used. It reaches inland to Pleasanton. LA has public trans as well. The main highway down the Vally (HW 99) is overused and in pretty bad shape. I-5 carries a lot of traffic as well, but is also in varying degrees of disrepair. 3)The Valley needs the jobs & development. This part of the Valley is the poorest of the poor. 4)There is strong political support for it in the Valley and less environmental resistance. The Valley has space and the land is much cheaper than in the LA or SF areas.

The LAO's report makes some fair arguments about overall costs of the project. But we are talking about a public good. And public goods, like the post office, shouldn't be expected to turn a profit. We need to get used to this idea. Some things are purely about services and the economic growth that those services make possible. Truth be told, LA and the Bay Area are nearly built out. And if CA wants to draw big companies, the only place left is the Central Valley.

CA should not go the route that Florida went and turn away federal matching funds. This project is too important.

More On Romney and the GOP

2011-05-24T12:03:00.001-07:00

In an earlier post, I argued that the biggest beneficiary of Huckabee dropping out was Mitt Romney. This argument was based not on my assessment of the popularity of Romney's increasingly contradictory policy positions with Republican voters. Rather, my argument is that in most of their competitive nomination races since WWII, the Republicans have nominated the guy who's turn it is. That is, they have a strong tendency to nominate someone who has run before and usually someone who was the first runner up in the previous nomination round.

There is new poll from CNN/University of New Hampshire of voters in New Hampshire (see link here) that has some interesting results in light of my expectation that Romney is "the guy" that the GOP will ultimately line up behind (however unenthusiastically). You can see CNN's analysis of that poll here.

First, since Huckabee's dropping out, Romney's support has jumped from around 20% (see older results here) to 32%. The next best polling Republican is Ron Paul with only 9% support. So if the primary were held today not only would most voters in New Hampshire be really surprised but Romney would win the primary walking away. He'd get about a third of the vote in a field of about ten candidates.

Second, 87% of the Republicans say that they were really unsure about who they will vote for, so the preferences voiced above could be very unstable. So it would be good to see where Romney stacks up in the 2nd choice and 3rd choice results as well. Romney is also by far the most popular 2nd choice with 20% of Republicans naming him as their second choice (Sarah Palin is the next most popular 2nd choice with 10%). Romney is also the most popular third choice (9%). This suggests to me that as candidates continue to drop out (will Gingrich be next?), Romney will gain more of their supporters than the other candidates who stay in. Romney might have reason to worry if someone else, Pawlenty for example, were closer on the first choice numbers and ahead of him on the 2nd choice numbers. But Romney leads the pack across the board.

Another feature in the poll suggests that the media story about the weakness of the field of Republican candidates isn't telling the whole story (at least as far as Republicans are concerned). While it is true that many New Hampshire Republicans are dissatisfied with their choices (about 43%), most are satisfied (51%) even if they aren't fully decided about which choice they'll make.

Of course, all of this good news for Romney may just be because Romney is from Massachusetts and New Hampshire Republicans like their neighbor. But New Hampshire's early timing makes its results especially important. At the same time, the other early state, Iowa, has older polling that while a bit stale (taken prior to Huckabee dropping out) may tell a similar story, albeit at an earlier stage of development. See the press release here of the Hawkeye Poll from the University of Iowa and top results here. That poll doesn't have a "2nd choice" question. But it does show that Romney's support among people who identify themselves as "not strong Republicans" is only 5% but among self identified "strong republicans" Romney's support is 23% suggesting that more deeply a person identifies with the GOP the more likely they are to support Romney. In contrast, Palin gets about the same amount of support from both weak Republicans and strong Republicans. It's also worth noting that in this poll from Iowa, Romney was first and Huckabee was second and no other candidate was in double digits. Huckabee is out. If I had to guess, I'd guess that the next poll about the situation for Republicans in Iowa will show Romney way out in front.

Governor Pawlenty's announcement that ethanol subsidies should be abolished won't hurt Romney's chances in Iowa either. The national press is full of praise for Pawlenty's courageous reversal of his long time support for ethanol. However, Iowa conservatives I've talked to tend to be both rural and thoroughly convinced that agricultural subsidies like ethanol are a kind of divinely ordained right. The looks on their faces when I've made passing references to the negative consequences of ag subsidies in class rooms or living rooms where the stakes don't matter suggest to me that when these people are confronted by someone actually in a position to do something about ag subsidies, they'll react negatively. Maybe not all of them, but enough of them to reinforce Romney's already existing advantage.

Romney is also far ahead in Nevada (see realclearpolitics here) and his closest rival is Gingrich who had a bad week to put it mildly. That Gingrich's problems are related to his graceless flip flop regarding the individual insurance mandate feature of the so called "Obama care," it will make it hard for Gingrich to attack Romney's Massachusetts health care reform for having the same feature. It's hard for the second place guy to catch up if he makes himself look just like the guy he's trying to catch.

I think this all adds up to Romney winning both Iowa and New Hampshire then going into the Southern Primaries as the best funded Republican with a solid organization and local activists who remember his campaign from 2008. He will also likely have the lion's share of the delegates.

Of course, a lot can happen between now and February. Romney could have a flip flop public relations disaster like Gingrich. Pawlenty could prove me wrong and look like a "leader" with this latest ethanol flip flop. But Pawlenty is about as exciting you'd expect from a moderate from Minnesota. So for now, I'll stay with my expectation that Romney will be the eventual nominee.

It’s about time!

2011-05-20T11:39:00.001-07:00

"The dream of a Jewish and democratic state cannot be fulfilled with permanent occupation."- Barak Obama

Its’ about time that somebody got a bit more aggressive with Israel. You can see how the map of Israel/Palestine has evolved over the years by going to this link. I don't know much about the book and I don't necessarily endorse it. However the map on the cover is a good one and I don't want to risk violating copyright laws by posting the illustration here.

It’s a hackneyed discussion, I know. But I don’t think we should let it pass without comment. The President’s speech was important because it was agile. He had to speak to many people- leaders of the Arab world, activists in the Arab World, and leaders outside the Arab world wondering how Obama would define a new US policy toward the region. I think he succeeded. Obama was smart to place the long standing conflict in the larger regional context of the Arab Spring. This is particularly interesting since Israel was NOT a central issue to demonstrators across the region. It was an issue, but not the most important issue. Changing their governments was the issue. If the demonstrators succeed in getting more democratic, stable governments, this will increase pressure on Israel and provide the US with other options for alliances in the region. Remember, US support of Israel started because Nasser’s overtures to the USSR. Prior to that, the US was very cool toward Israel.

The best I can add is that for any negotiations to take place, Netanyahu must stop the settlements. That’s not a new idea. And he will have to abandon some of these settlements because they were built illegally. Telling Palestinians that Israel should be allowed to annex territory where Israeli settlements have been built is the equivalent to telling them that they will have no state. There just isn’t that much room in this tight corner of the world.

What Israel and Egypt have succeeded in doing is isolating Hamas through tough blockades. This has forced Hamas to work with the Palestinian National Authority. Hamas has not been able to get a foothold in the West Bank. Hamas should go the way of Shin Fein. It should cut its ties with Iran, give up its calls for the destruction of Israel and function as a political party. That said, I recently read the most of Hamas’ funding comes from Saudi via Syria. So there are multiple money sources at play. Hamas will continue to harass Israel with an occasional rocket, seeing if it can draw Israel into another military action. But that should also stop if Hamas’ intents to see some form of peace.

Vive La Difference

2011-05-20T09:51:00.000-07:00

This post was inspired by an interesting interview published in Le Monde with Arthur Dethomas, a French lawyer who also practices in New York discussing the difference between the criminal justice system in the US and France. What I like about the interview is that he doesn’t pass judgment on which system is better. He simply presents the differences. It thought it would be interesting to share what he said here.

The first difference between the US and France is how charges are brought against the accused. In the US, we accumulate charges. So in DSK’s case, there are 7 charges against him, each which comes with a set punishment. So the accused must counter each charge. And for those changes for which he is found guilty, the punishments accumulate. Therefore, prison sentences are longer. In France, they try the accused for the single most serious charge, the one that will result in the harshest punishment. What Dethomas doesn’t address is if after the trial for the severe charge, the accused can be tried on a different, lesser charge. So if anyone knows, share!

He also points out that sex crimes are addressed more aggressively in the US than the France because we have a culture that requires that. This has less to do with the law than with culture values and traditions.

The next question he addresses is about the heavy-handedness used by American authorities (the violence of the system) and if this is something of a culture shock or clash between the US and France. Mr. Dethomas says that there is cultural difference that rests on notion of the “perp walk”. In America, we tend to display the accused when he/she is brought before the judge. In France, the accused is not shown when brought before the judge. It is not really correct to say that the American system is more or less harsh than the French system, but that the American system is more visible, and therefore, appears more harsh. Mr. Dethomas says that the French system is equally harsh in its own way. It incarcerates, denies people liberty, places people on probation or under guard, etc.

Next, Mr. Dethomas says that the idea of “innocent until proven guilty” is the underlying principle of both systems. However, because there is less regulation of privacy in the US (he emphasize use of photos and film here), the system exposes the accused. And to assume that you treat celebrities with more discretion would be viewed by the American system as “special treatment”.

In France, the judge determines the charges against an accused. The judge uses the powers vested in him/her by the state to lead an investigation and to determine which charges to bring based on that investigation. One benefit of the French system is that is levels the playing field for the accused. You don’t need a lot of money to hire private investigators and high-end lawyers.

In the US, he says, state prosecutors determine the charges and the defense team must argue before a judge why certain charges should be dropped. The prosecutor, or the state, has a great deal of power. So in effect, the accused appears to be very “alone” in facing a system that is geared toward accusation. However, Dethomas doesn't mention the role of the Grand Jury (or that part got edited out). In the DSK case the prosecution laid out a set of charges before a grand jury, not a judge. And it was up to the grand jury to determine which charges were viable and which were not based on testimony from the accuser. The defense didn't even get to argue.

Because prosecutors in many jurisdictions, New York being one of them, are elected, they reap political benefits from successful prosecution, especially if those are high profile cases. This isn’t the case in France.

Lawyers in the US have the right/duty to run independent investigations. The prosecutor must share with the defense all evidence (called “discovery”) that their investigation of the CRIME turns up. That does not extend to investigations of witnesses. So to get an edge, they investigate witnesses and try to discredit them. That said, the defense team has to “protect” the accused from media attention, and from the possibility of civil suits that can be brought against the accused after trial. The French don’t have this type of system, where you can be found innocent of the crime in criminal courts and then be tried in civil courts. (Frankly, I don’t think we should allow this either. It’s a mere technicality to say that you aren’t being tried twice for the same crime just because the charges and type of law change.)

When asked if there is a two-tiered system in the US, one for the rich and one for the poor, Dethomas agrees that those with more means get a better quality defense. However, France also has a two tiered system, he says－one for celebrities and one for everyone else. In American, DSK is being treated as a common prisoner. In France, he’d get special treatment.

DSK is Guilty, But Not of Rape

2011-05-17T09:27:00.000-07:00

When I was growing up, my parents consistently drove home the point that to avoid trouble, you don’t put yourself in risky situations. Vigilance and discipline will keep you clear of trouble. That has worked well for me thus far. This scandal of Dominique Strauss Kahn(DSK) is a prime example of what happens when you ignore such wise advice.

At this point, I believe DSK was set up. I believe this for a couple of reasons- all of them speculative on my part:
1) Sarkosy is scuzzy enough to sully a strong contender for his job.
2) Perhaps I am cynical, but I doubt the NYC police would take the accusations of a hotel maid so seriously as to rush over to JFK and pull DSK off an airplane unless they wanted him for some other reason. And I find it hard to believe that they are actually holding him at Rikers.I think the maid was a pretext really. There is something else going on.
3) The guy is wealthy enough, that if he wanted sex, he could hire a very high class prostitute.
4) I don’t know how a man can force an unwilling woman to do a blow job. Women have teeth, we can and will bite.
5) French news is reporting that DSK left the hotel well before the claimed time of the “attack” and that the reason the maid entered the room to begin with is because she believed it to be empty and ready for cleaning.
6) You don’t spend a life in politics without making enemies. He is part of what the French call the “caviar left”. His politics is left (i.e. French Socialist, former communist), but his lifestyle is much the opposite. He is part of a wealthy, intellectual elite in France. I’m gonna guess that there are plenty of people who would love to take the guy down a notch or two.

All of that said, if DSK was set up, it was because he was an easy target for just such a honey trap. He consistently put himself in situations where trouble was possible. He has a reputation worthy of Bill Clinton.

He was accused of rape in 2002 by a French journalist who did not press charges. Reports are that she is now reconsidering. Big surprise. Not sure what the statute of limitations for such crimes is in France.

In 2008 he was investigated for having an affair with a subordinate, married, IMF employee. She accused DSK of harassment, coercion, and abuse of power. She was fired but DSK found her a new job.

The man has been married 3 times and four daughters.

DSK’s sexual activity and love of the ladies has long been the stuff of tabloid in France.

DSK is guilty of something, but I don’t think it’s rape. I will be interested to follow this tale to see if there is a deeper truth here. It's yet another classic case where a successful person's weaknesses lead to a spectacular crash.

Obama vs Romney in 2012

2011-05-15T08:16:00.001-07:00

Hi Everyone,

I thought I would indulge in a little excessively early prognostication. With Governor Huckabee declaring his non-candidacy, that leaves the field open. The conventional wisdom among many is that Mitt Romney is incapable of winning the Republican nomination because he's Mormon and is "soft" on Obama-care. I think Romney is the guy to bet on getting the nomination and here is why...

First, there is a long history of the GOP nominating the guy who has the "resume." If the Democrats picked nominees like the GOP did, the 2008 contest would have been between Clinton and Edwards with Obama having to wait for a VP offer - assuming he could hang around longer than Richardson. But Republicans LOVE to pick the resume. The often nominate the runner up from the previous election cycle. Examples: Reagan lost to Ford in 1976 and was nominated in 1980. GHW Bush lost to Reagan in 1980 and was nominated in 1988. Bob Dole was Ford's running mate in 1976 and lost the nomination to GHW Bush in 1988 but was nominated in 1996. John McCain lost the nomination to GW Bush in 2000 but had a come back win to get the nomination in 2008. So who came in "second" in 2008? It depends how you figure it. Romney was probably the second most serious candidate but Huckabee hung on like grim death to come in second in the delegate count even though he was mathematically eliminated. So the "who's turn is it" question would be open to interpretation with both Romney and Huckabee in the race. With Huckabee out, Romney is in sole command of the "best resume" title for 2012.

In addition to the "tradition," the GOP nomination process is more dependent on "winner take all" results. So if a candidate comes in first in a crowded field but with only 25% of the vote, that candidate could walk away with 100% of the delegates for that state. So being out in front is huge. The early polls show that only Romney and Huckabee were consistently getting close to 20% of support from Republican respondents (see polls here). Romney and Huckabee were also the most popular "second choice." So with Huckabee gone, that sets up Romney.

Then there are the delegates who get to vote at the convention independently from the primary and caucus results. Democrats call these "super delegates." Republican use them too. This crowd is the "Party establishment" that the tea party dislikes so much. These are also the people who occasionally leaked out "Palin is an idiot" stories in the aftermath of the 2008 election catastrophe. I hardly think these people are going to line up behind either Palin or Trump. They'd be torn between a couple of former governors with decent records in office but not when the choice is between one of them and cluster of whackos, anti-establishment demagogues and unknowns. Gingrich MIGHT attract some of this support but his tenure as Speaker was controversial among the Republican establishment. Also, Gingrich's infamous relationship with his family(ies) makes the Mormon Romney look good to evangelicals, at least the elite ones, by comparison.

This sets up Obama vs Romney in 2012. It also takes the health care reform issue off the table for things Republicans can challenge Obama on. That could be huge as this was the main issue Republicans used to win seats in 2010. Romney's close ties to the auto industry might make it hard for him to go after Obama on the stimulus because a big part of the post 2010 bail out/stimulus was directed at keeping the US auto industry afloat. On foreign policy, Romney can hardly make a serious claim that he's got more or more hawkish foreign policy credentials than the incumbent president who "got Bin Laden." His best bet would be run against the idea of foreign policy and portray himself as something of an isolationist (which is what Ron Paul is doing).

All of this makes me think that the biggest beneficiary of Huckabee's non-candidacy is going to be Obama.

What's the Deal with Pakistan

2011-05-09T11:28:00.000-07:00

OK, so the big post Bin Laden story is about how messed up our relationship with Pakistan is. Our alliance with Pakistan, much like the mess in Afghanistan, is a hangover from the Cold War. When the British Raj ended in the South Asia, Pakistan and India emerged as bitter rivals. India tried to steer a path of "non-alignment" in the Cold War. But India early on moved closer to the Soviet Union.

Pakistan decided an alliance with the US was the way to go. Pakistan was a charter member of CENTO (a less well known part of the series of treaties, including NATO, designed to contain the spread of communism inside a ring of regional alliances, the third organization was SEATO). Pakistan had already established a separate relationship with China in 1950, being one of the first countries to recognize the Communist government following their defeat of the Chinese nationalists in 1949.

The 1960s, 70s and 80s saw the complex alliances get entrenched. As the US enlisted China as an ally against the USSR, a kind of three way alliance between the United States, Nationalist Pakistan and Communist China formed. All of it was based on convenience. The US wanted allies against the USSR. China wanted support against the USSR and India and Pakistan wanted support against India. This three way alliance was useful when the USSR invaded Afghanistan with Pakistan playing a crucial role in US efforts to support the anti-soviet resistance in Afghanistan. Part of Pakistan's foreign policy had always been enlisting Islamic fundamentalists as proxies both in their conflict against the Soviets in Afghanistan and against India (especially in Kashmir). All of this led to the emergence of the Taliban and Al Qaeda.

But in the post cold war era, the goals of the US have shifted. Russia is no longer the greatest concern. Rather, US foreign policy is focussed on containing Islamic fundamentalism and China. Pakistan is a particularly unreliable ally for both goals. At the same time, democratic India is looking increasingly like a better ally in that region on both dimensions. India is a large, fast growing developing country that is already a relatively stable democracy. They have an inherent incentive to see containing China as a benefit and they are a frequent target of Islamic fundamentalism.

So why do we still need an alliance with Pakistan at all? So long as we have troops in Afghanistan, we need Pakistan's cooperation to keep them supplied. Afghanistan is land locked and any connection to the Indian Ocean must go through or over either Iran or Pakistan. Iran is out of the question so... Pakistan's military elite has us by the short hairs. And since they know we need them and they're helping us is politically costly for them domestically, these elites demand exorbitant payoffs in the form of massive military aid and indulgence when they do things like sell nukes to North Korea or support terrorism against India or hide Bin Laden from us.

Also, our support for secular elites in Pakistan is the only thing keeping that country away from sliding into becoming a nuclear armed version of Afghanistan. Granted those elites are way too cozy with people who mean to do us serious harm. But we have little choice at this point but to try to influence the Pakistanis as best we can. The faster we pull out of Afghanistan the easier it will be Pakistan to be friends with us and the less they'll have us by the short hairs. In other words, us pulling out of Afghanistan will strengthen our bargaining position with Pakistan just as it makes it easier for Pakistan to be cooperative with us.

In the long run, our best outcome would be to build friendly relationship with both Pakistan and India and use their mutual friendship with us to establish something like the peace that now reigns between Greece and Turkey. Getting out of Afghanistan helps that. Frankly, even if things deteriorate in Afghanistan after our departure, it's better for us to be out.

What the Killing of Bin Laden Means

2011-05-02T13:12:00.000-07:00

Now that Osama Bin Laden is dead, it's time to think about what it means. There are lots of consequences that could be discussed, and may well be brought up in comments or future posts by various contributors to this blog, but for now I'll focus on just a few that come to mind. In particular, I'll open discussion on three dimensions: the implications for the future "war on terror" (including our involvement in Afghanistan), implications for our relations with Pakistan and India, and the implications for domestic politics, especially presidential politics, here in the United States.

Terrorism and Afghanistan:

This is not going to end the terrorist threat to the United States or in any country. But the killing of Bin Laden is a serious blow to one of the most important international terrorist groups in the world. Al Qaeda has been increasingly marginalized by the so called "Arab Spring" and the Obama administration's cautious but reasonably consistent, albeit imperfect, support for democratization demands in Arab nations. Because of this political marginalization, it is perhaps more important that killing Ben Laden gives President Obama the opportunity to declare victory in Afghanistan and move forward with a decrease in the US military presence there. This is important because it will allow Obama to get out of Afghanistan while inoculating himself against the "cut and run" charge that will inevitably be directed against him by the Republicans.

US Policy on the Subcontinent:

Because of the circumstances around this raid, it is increasingly clear that Bin Laden was getting protection from elements in the Pakistani military/intelligence apparatus. It simply does not pass the stink test that Pakistani authorities would allow such a large and secure compound to be built and inhabited so close to their primary military academy without checking it out. I doubt someone could build such a complex in the United States (a relatively free society) without attracting the attention of police. That such a building could pass unnoticed in a police state like Pakistan is simply implausible. This is the most prominent bit of evidence that the Pakistanis make very poor allies indeed. I'll post more about this later, but for now I'll just mention that Pakistan was important to us because our primary goal was the containment of the USSR. Now, our primary foreign policy goals are the containment of China (a close ally of Pakistan) and the tracking and combatting of terrorist groups. Pakistan is not a reliable ally for either goal. At the same time, India is an almost natural ally for both goals and to the extent that Pakistan will insist that we chose between Pakistan and India, finding Bin Laden living for years, literally on the door step of the main Pakistani military academy makes that choice considerably easier to make.

Domestic Politics in the United States:

On September 26, 2008, then candidate Obama said, "If the United States has al Qaeda, (Osama) bin Laden, top-level lieutenants in our sights, and Pakistan is unable or unwilling to act, then we should take them out." To this Republican nominee, John McCain replied, "(Obama) said that he would launch military strikes into Pakistan. Now, you don't do that. You don't say that out loud. If you have to do things, you have to do things, and you work with the Pakistani government."

A hypothetical President McCain would have informed the Pakistani authorities at least of our intent to conduct a raid and asked permission to proceed. That would have risked Pakistani leaks to Bin Laden's people. For all we know, ill advised trust of Pakistani military/intelligence officials is why the Bush administration was never able to get Bin Laden in 8 years of trying.

This inoculates Obama from the charges of being "weak" and "lacking leadership" that Republicans' talking points have been focussing on lately. Now, every time he is accused of being "weak" he can whip out the "well, we got Bin Laden on my watch and I'm the guy who gave the order and to hell with Pakistani sensibilities."

Bin Laden Dead

2011-05-01T20:47:00.000-07:00

He'd been hiding in a mansion in suburban Abbottabad, Pakistan (a city just north of Islamabad). This is going to take some time to process. I'm sure a lengthier post will be forthcoming on this blog.

The Republican Dystopia

2011-04-25T10:42:00.000-07:00

I've been thinking a lot lately about what our country would look like if Republicans got what they wanted. I'm not talking about them forcing government shut downs or a default on the national debt which is what they are threatening if they don't get what they want. Rather I'm thinking about what the consequences would be if they actually got their wishes fulfilled. Granted, not all Republicans agree with the dominant faction within their party on each issue but I think we can have a pretty good idea of where they would take the country if we assume that for each faction the usual suspects will drive the GOP's policy.

Foreign Policy: Our foreign policy in the Middle East would continue to be based on military conflict with "terrorists" and unconditional military support of Israel, Egypt, Saudi Arabia and a slew of less important but more violent regimes. We would put ground troops in Libya to overthrow Qaddafi even while openly speculating about the Al Qaeda connections of the rebels. Would this mean that Republicans envision a 10 year nation building project in Libya along the lines of what they attempted in Iraq and Afghanistan? My impression is that a Republican policy in the rapidly changing Middle East would be confused and directionless - but violently so.

Taxes: Taxes on corporations and higher income individuals would be lowered. Taxes on inheritances would eliminated altogether. To the extent that the government needed to raise revenue to pay for "necessary" things like constant warfare in the Middle East and subsidies for big oil and big agriculture, they would institute a national sales tax.

Health Care: The so-called Obama Care would be repealed and replaced with a privatization/defunding of Medicare and Medicaid. Even if we take the Ryan plan as it is spun by the Republicans, it includes at it's core a voucher system for health care costs to replace public financing of health care under those plans. But the voucher's values are supposed to be indexed to inflation and health care costs are rising considerably faster than inflation. So the plan has built within it a gradual defunding of public health care support for the elderly and poor.

Education: The Republicans are really hostile to public higher education. They're not thrilled about public primary and secondary education either. The attacks on public education by Republican governors like Walker in Wisconsin and others are well known. In a Republican America, public school teachers would earn wages and benefits similar to, if not worse than, the average worker regardless of skill level and far below the wages typical of college graduates. All this while public funding for public universities was cut so much that college graduates would have to be either from wealthy families willing to pay the high fees/tuition or incur enormous student debts (which would be entirely provided by private banks at unsubsidized interest rates). Who would take a job as a teacher under such conditions? Certainly not the best and brightest?

The world the Republicans envision is not what they say it is. They would have us believe that they offer a return to some nostalgic post-WWII, pre-Vietnam golden age (a Boomertopia if you will). But what they really offer is much more like the 1890s (but with more wars) than the 1950s. I find it hard to believe that more than a small minority of Americans actually wants to live in this kind of world. But the Republicans have become masters of speaking to emotions while obscuring the consequences of their policies.

Obama and the Middle East

2011-04-23T18:34:00.001-07:00

There is an emerging meme in the media that Obama "is a weak president." It's getting to the point where the parrots in the news cycle have repeated it so often that this has become the starting point for any discussion of Obama's foreign policy in particular. I think this is not only unfair but a serious misunderstanding of the American position with regard to the ongoing crisis in the Middle East.

In the Libya the US is supporting an allied effort to prevent Qaddafi from wiping out a nascent revolution with heavy weapons. Critics (like Senators McCain and Lieberman) argue that the US should engage more directly and more forcefully. I give them points for consistency, but I really think repeating the Bush strategy from Iraq in Libya would be a disaster waiting to happen. It's much better to let the British, French and Italians take the public lead (by sending advisors - we all know where that can lead) while remaining dependent on US power to actually accomplish anything. The recent introduction of low flying pilotless drones into the Libyan mix will give NATO the ability to counter Qaddafi's latest tactic of deploying his forces in small units that are difficult to identify from high altitude. Most importantly in this, Qaddafi is very unpopular in the Middle East and the rebels are asking for our help - loudly.

In Bahrain, the US largely stayed out but when the local government cracked down (with Saudi help) made strong critical statements against the crackdown - albeit without actually doing anything about it. In Yemen, the US is staying out of the issue as well.

Now, Syria which is turning out to be rather key. The demonstrators in Syria are showing a willingness to continue hitting the streets despite repeated bloody crackdowns by the Syrian government. That government is now getting major support from Iran. And Secretary Clinton and then President Obama announced that Iran was backing these violent crackdowns and condemned that assistance strongly.

Here is why what Obama's been doing makes sense. If we had been following a Neo-con approach like that advocated by McCain and Lieberman, we would have supported Mubarak in Egypt. If that had succeeded in propping Mubarak up, there likely who not have been rebellions in Bahrain, Yemen, Libya or Syria. At the same time, we might have found ourselves backing, like Iran is now, an increasingly bloody minded dictatorship. But if Mubarak had fallen anyway, which may well have happened, the US would be in a horribly undermined diplomatic position in the region. If the rebellion in Libya had taken place anyway, the neo-cons would have had us invading Libya to support that even while Mubarak was shooting people in the streets with US support. Under those circumstances, any criticisms we would level at Iran at that point would be completely transparent.

Instead, the US picked the correct side in Egypt and Libya. This makes our criticism of Iran have real force, not only with Europe but with people in the Middle East. The center piece of the Obama foreign policy has been to isolate Iran by behaving reasonably in the region. That strategy has been far more successful than the Bush/Neo-con strategy of isolating Iran through constant and often military confrontation.

The Middle East is at a crossroads now. It is still unclear which way things will go. Egypt and Tunisia may transition to democracies or not. Libya may get rid of Qaddafi quickly or settle into a prolonged stalemate. Syria's Assad has been revealed as a bloody tyrant and may be overthrown or not. Regardless of the turn events take, the US is in a position to be a constructive force for positive change. Or if you prefer a more 'realpolitk' frame - in a position to end up on the winning side. In contrast, Iran is clearly on the side of bloody crackdowns and the status quo. No matter what happens, this cannot be good for Iranian influence in the region. It is true that Iran seems to be behind some of the nastier factions in Iraq but that is the one country where we've dug ourselves into the deepest whole, thanks the reckless policies of the same people criticizing Obama for being weak. And even there, I suspect that the popularity of any politician with close ties to Iran will be trying to spin what their constituents are watching on Al Jazera. If the US had backed a crackdown in Egypt and/or then invaded Libya that explaining would be laughably easy for them to pull off.

A Thought on the Military Budget

2011-04-20T13:51:00.000-07:00

There is no doubt in my mind that we can and must cut the Defense Budget. In fact, it is arguably the most poorly run budget in Federal Government. In 2010, the GAO declared the department’s finances “unauditable”. No surprise. But le'ts think about the DoD budget beyond the weapons systems and soliders.

One of the reasons the DoD budget is so big ($664 bil.) is that it is basically the 51st state of the union. To give you an idea, in 2010-2011, California will have spent $230 bil. (I am sure it, too is unaditable.) The DoD has all the facilities that your state government has, and then some. If you start looking at the budget in detail, you will be amazed at what that department does:
Take a look at The Sec. Of Defense’s Operations and Maintenance Overview from 2010 to get an idea. This isn't even its totality. Here's a short list:

1) Infrastructure maintenance: The DoD has to maintain all the military bases and offices across the globe. This includes base housing and transportation networks for military and dependents, medical facilities for active duty, roads, and even air ports. Computer networks must also be maintained and secured. Utilities have to be provided to base residents. Each base has its own police and fire department. The family housing budget, but the way, was cut by 20% between 2009 and 2010, but military construction was up by 19% in that same period. Non-combat Infrastructure has to be upgraded and maintained just like everything else.

2) Subsidized Shops: Because many military personnel are paid less than people in the private sector, they have to shop at the PX, which are grocery and household goods stores. There, products are sold at lowered prices that are more in line with military pay. Usually the “discount” is that federal and local taxes aren’t applied to purchases. Sometimes prices are lower because the military can cut a good deal with wholesalers. These are especially important overseas where US military personnel and their families are discouraged from shopping “on the economy”, meaning in local stores. So basically, the DoD runs a “Wall-Mart” style business for its personnel.

3) Environmental Protection: The DoD funds several programs to limit it’s environmental footprint and protect the health and safety of its military and dependents. They run restoration programs, clean ups, research programs, etc.

4) International Sporting events: Who do you think pays for all those jet fly overs at football games? In addition, the military has to maintain a budget in case they are called upon to provide security at international sporting events.

5) Humanitarian work: Schools for Afghans and water treatment for Iraqis. Assisting in natural disasters around the world. That sort of thing.

6) Dept. of Defense Education Activity: This is a civilian run organization that is part of the DoD . It runs 194 schools in 14 districts located in 12 foreign countries, seven states, Guam, and Puerto Rico serving 86,000 students (military dependents). I once heard that this is the largest school district in the world. In 2009, it cost about $3bil.)

These are just a few that I can come up with off the top of my head. But when people start talking about cutting Defense, they need to think about all the functions that the DoD actually has to manage. I liken it to a socialist country. They subsidize, control, and operate everything for their personnel and their dependents.

Political Implications of Demographic Shifts

2011-04-16T16:15:00.001-07:00

In 2008 pundits said that the Republican Party was doomed. Then with the election results in 2010 many of the same pundits are saying the Democratic Party is doomed. This view has been compounded by people doing naïve analyses of the electoral vote changes resulting from the 2010 census. However, a closer look at these demographic trends yields a picture more favorable to Democrats than the commonly expressed interpretation would (Here is a map of population changes by county that might make for a good reference for this discussion).

The 2010 census revealed a shift in population from the Northeast to the South and West. With one exception, Michigan, all US states gained population between 2000 and 2010. But the size of those population gains has been higher in the South and West than in the North and East. This has led to a shift in the apportionment of congressional representation and Electoral College seats that seems to favor states that usually vote for Republicans. For example, eight states (AZ, FL, GA, NV, SC, TX, UT, and WA) gained congressional seats. Of those, Obama won three (FL, NV, WA) and two of those, FL and NV, are notoriously closely fought in most elections. On the other side of the equation, ten states lost congressional seats (IL, IA, LA, MA, MI, MO, NJ, NY, OH, and PA). Of those, Obama won all but two, LA and MO. Many people are taking this to indicate a shift in favor of Republicans for 2012 and beyond.

Two factors undermine the argument that the Republicans are going to clean up as a result of this shift: the increasing Hispanic population and the increasing urbanization of the South and West. Hispanics make up an enormously disproportionate share of the population growth in the highest growth regions of the country. This is politically relevant because Hispanics are also much more likely to vote Democrats and Republicans. This trend is showing few signs of changing as the Republican party becomes more and more associated with anti-immigrant, nativist attitudes and policies. Most worrying for Republicans, Texas, their great bastion of electoral votes, is becoming increasingly Hispanic at a much faster rate than the country as a whole. This could mean that even as Texas adds 4 Electoral College votes (!), it could be moving away from being completely safe for Republicans and towards something more like Florida where both parties can hold out hope of a win (I’m not saying this is going to happen overnight, just that this is the direction things are moving in Texas). Most of this has been well covered in the mainstream media. And of course the low rate of voter registration among Hispanics mutes this effect somewhat.

The effect of urbanization is perhaps much more important and has gotten much less attention. Urbanization is happening in both the high growth and low growth parts of the country. This is politically relevant because voters in urban areas are much more likely to vote for Democrats than are rural voters. For example, in Ohio, it used to be the rule that the Cleveland metropolitan area voted for Democrats and the less densely populated Central Ohio area was a Republican bastion. As the population of Cleveland declined and that of Columbus rose, many Republicans saw reason to believe that Ohio was becoming a solidly Republican stronghold. However, as Columbus grew it became increasingly prone to vote for Democrats and for the last several election cycles the county around Columbus has emerged as a safely Democratic bastion within Ohio even as Cleveland's influence on statewide results has declined. To link this with the discussion above, it's worth noting that the Hispanic share of the overall population of Franklin County (in which Columbus is located) has increased by 129% and the African American share of the population increased by 29% while the share of Franklin county that is "White" declined by 2%. That cannot be good news for an increasingly xenophobic and anti-urban Republican party.

Two examples of how urbanization impacts the population shift can instructive. Utah is one of the fastest growing states in the country but it’s not the rural areas of Utah causing that growth. Rather it is booming metropolitan area centered on Salt Lake City that is driving this growth. Utah is going to get another congressional seat (and Electoral College vote). And it is also true that Utah is overwhelmingly Republican in its voting history. That may mean that Utah’s extra electoral vote will likely go to Republicans for the foreseeable future. However, the congressional seat will likely have to lead to more representation for urban voters in Salt Lake City. Because the newly drawn districts in Utah will have to have roughly the same population within them and since most of the new population is concentrated in and around Salt Lake City, it will be hard to avoid, even with gerrymandering contortions, either creating an entirely new urban district or make several existing districts significantly more urban. So even in Utah, perhaps the safest state in the country for Republicans, the population shifts may pose some hard choices for Republicans and some opportunities for Democrats. When one considers that a lot of the population growth in Texas is not only Hispanic but concentrated in urban areas, like Houston, that are already starting to trend Democratic, one starts to see the fly in the demographic ointment for Republicans.

On the other side of the equation we have Iowa losing a congressional seat and an electoral vote. However, within that state, the population is becoming more urban (at least by Iowa standards). Most of the rural counties in the state are losing population while most of the population growth is concentrated in the relatively urban counties around Des Moines, Cedar Rapids, Waterloo, Iowa City, and Davenport. The new plan for the new districts has been proposed and is likely to pass. It combines the district in rural SW Iowa with the district around Des Moines. This new district would be the home district of the long standing incumbent Democrat who has represented Des Moines for several terms. The plan also shifts boundaries of the districts in such a way that the two Republicans who had represented two rural districts in NW and SW Iowa are now both residing in a single rural district in NW Iowa. At the same time, the boundary line between the two districts in the more urban eastern part of the state was shifted so that the two Democrats who represent those two districts are now both residing in the same district. One of those two Democrats lives very close to the boundary and has announced his intention to move to the other side of the boundary and take up residence in what would otherwise be a district with no incumbent, most of which had been part of his old district. The result is that while Iowa is losing a seat, it will most likely be a Republican who gets eliminated. A similar process is likely taking place in Illinois, New York and Pennsylvania. Only in Michigan and Ohio where large urban areas are in serious decay (Detroit and Cleveland) could there be some serious deviation from this effect.

America's population is shifting to the South and West, traditional strongholds of Republicans and conservatism. However, as it makes this shift, the American population is becoming more urban and less "White." The result of all of this could be that while the Republicans will see a short term advantage in the Electoral College, they will see a short and especially a long term disadvantage in Congress. And even the short term advantage in the electoral college may prove difficult to realize for Republicans as the vote rich, and once safely Republican, Florida becomes increasingly likely to vote for Democrats as its population also becomes more urban and more (non-Cuban) Hispanic.

New Nuclear Politics in Germany

2011-03-27T14:50:00.000-07:00

Hi Everyone,

There were two big shocks in the Land (state) elections in two large German Lander: Baden-Wurttemberg and Rheinland-Pfalz. The Greens won big in both elections! The recent crisis at the Fukushima nuclear plant in Japan seems to have been a major factor in both elections. You may ask, "so big deal, the Greens won a by-election." But Baden-Wurttemberg is one of the most conservative Lander in Germany. This would something like the American Green Party winning the governorship in Georgia. The Greens won enough seats that they can take the Premiership of the Land if they can form a coalition with the slightly smaller, Social Democrats (see election results here). In Rhineland-Pfalz, the Social Democrats had hoped to continue to govern alone but will be forced into a coalition with the Greens (see election results here). Both elections mean that the Greens will have more representation in the German upper house (Bundesrat).

Earlier I posted an attempt to start a discussion about the new politics of alternative energy that will result from the Fukushima crisis (and the oil price increases we're likely to see for the foreseeable future). These election results in South Western Germany suggest that the new political landscape is already emerging.

Germany gets about the same share of its electricity from nuclear power as Japan does (a little more than a quarter). The Social Democratic and Green Party coalition that governed Germany until 2005 had begun a plan to gradually phase out their nuclear power. The Greens had said from the start it wasn't going far enough quick enough but in any case, that coalition lost the election the Christian Democrats. In 2009 with the Christian Democrats consolidating their power, German Chancellor, Angela Merkel, announced a major extension of the date by which nuclear power would be phased out. After Fukushima, Merkel announced that she was flip flopping and suspended operation at several older plants and suspended the extension of the phase out. Too little, too late apparently.

If these results had happened in one of the more left leaning, northern Lander like Nordrhein-Westfalen, I'd be less impressed by this. But that these elections, especially the one in Baden-Wurttemberg, are happening in the more conservative south western part of the country suggests a major shift in German politics. One might be inclined to say this was a fluke resulting from the high profile coverage of the Fukushima crisis. But anti-nuclear sentiment in Germany had been building for a long time. Fukushima may have just put it finally over the threshold where nuclear power is permanently on the outs in Germany.

Germany cannot hope to supply its power needs with wind power or current solar technology. Germany is already a world leader in research and development in alternative energy sources. I think there will be a number consequences of this. One of them will be that it will be even harder for Germany (and the EU) to meet their Kyoto targets. Another will be that the Germans are about to ramp up their investment in non-nuclear alternatives. This will mean that the warnings that Obama has been sounding about the US falling behind in the fields of research that will generate the 21st century economy are even more valid.

The Libyan Situation

2011-03-19T10:32:00.000-07:00

Here are my opening two cents on the complicated situation in Libya:

Value and limits of US power: The US cannot and should not try to impose its will on the world unilaterally. It doesn't need to do so really. Many countries benefit enormously from a world organized in the way the US likes it to be organized. The US should not need to always be the unilateral "international cop." Sometimes direct US involvement simply isn't worth much of a US commitment even if the stakes are high for some of our allies. I think that is the situation in Libya. The stakes are much higher for Europe than they are for us and it is as correct as it is novel that Europeans shoulder the majority of the burden here. But even if the US doesn't want commit much, the US is unique in its ability to project power around the world. The Western European militaries are very capable. They have air forces that are nearly as capable as ours. They operate fancy jet fighters like F-16s, the Rafale and the Eurofighter/Typhoon. These forces are more than a match for the aging and poorly trained Libyan air force. But they will be hard pressed to operate those air forces even in nearby Libya. The Europeans will probably need US logistics support if not US combat support. A friend of mine in the USAF told me that even if they are operating from bases in Sicily, F-16s (for example) would probably need to refuel on the way to and on the way back from Libya to give them much air time over the combat area.

Why the Situation in Libya Matters More to Europe than to the US: If there is a bloodbath in Libya, it would provoke a massive refugee crisis in Tunisia and Egypt both of which are in no position to deal with such. Very quickly, many of those refugees would end up in Western Europe (especially France, Italy and Spain). Also, there is the possibility that European leaders still feel some shame about their inability to act in Bosnia in time to prevent a bloodbath there. While Americans may look at Libya and see Iraq: Part II, Europeans see besieged Libyan towns like Misrata and Benghazi and fear another Srebrenica. At the same time, the current President of France, Sarkozy, is facing Bush-like disapproval ratings. Two thirds of Frenchmen disapprove of his policies. Sarkozy may be trying to "wag the dog." Much of that disapproval is tied to Sarkozy's reaction to the revolutions in North Africa and the Middle East (his initial move was to stand by Tunisia's ousted dictator - le oops).

What the US Should Do: I think Obama is correct that this is NOT a situation that warrants the commitment of US ground troops. The only exception to that I could imagine being worth while would be a temporary deployment to secure a landing zone to evacuate a small number of foreign nationals or perpetrate a snatch and grab operation to kidnap/arrest Gaddafi and get the heck out of Dodge. I don't think anything that happens in Libya (even the emergence of an Islamist regime or the shut off of Libyan oil) is worth the long term deployment of US troops.

What Will Happen Next?: The short answer is: "who knows?" It's up to Gaddafi, who is probably lurching from one psychotic break to another, and the people around him. All of the inner circle people in Libya probably fear, with much justification, that there are few options for them other than to go out in a blaze of gunfire. If the US has visions of a decade of quagmire in Iraq and the Europeans have visions of Srebrenica, Gaddafi probably has nightmares of Saddam Hussein's execution and the killing of his sons in gun fights. If he would have thought more clearly, he would have jumped on a plane to Venezuela as soon as things looked to get ugly. But the man is clearly insane. If you make me guess, I'd put my money on Gaddafi trying to go down fighting. So far it looks like Gaddafi is trying to retake as much of the country as he can before European forces can get into action. There are rumors that Egypt is arming the rebels in Benghazi. If that's true, there may be a scenario whereby France, Spain and the UK et al, cripple Gaddafi's forces with air strikes which gives the rebels time to get organized and equipped to take over the country themselves. It's worth noting that every time the Libyan army (based on the Islamic Legion and its successor organizations) has gone up against organized resistance they have been routed.

The New Politics of Alternative Energy

2011-03-17T14:56:00.000-07:00

The Winter/Spring of 2011 will go down in history for two major events. Both of them will end up having a huge impact on how Americans view energy sources in the future. I’m referring, of course, to the latest round of unrest in the Middle East and to the earthquake, tsunami and subsequent nuclear power plant crisis in Japan.

I’ll discuss the Middle East first. So far, authoritarian regimes in two non-oil exporting states in the region have been overthrown and replaced by transition governments pledging to oversee a move to a more democratic and open regime. It remains to be seen what will happen in Yemen, another non-oil exporting state, as it teeters on the brink of failed state status. The regimes in the oil exporting states seem to all be willing to use massive amounts of force against any demonstrators. Libya’s Qaddafi seems poised to reconquer the eastern provinces of that country. The Saudis have already cracked down on their own population and are in the midst of a crackdown on Bahrain’s population. The unrest itself is making oil prices spike in the short run. If this period of unrest becomes a longer term problem of continued instability (a fairly likely outcome if you ask me), then we can expect periodic disruptions to the oil supply from the Middle East. There is a lot of talk about the Straights of Hormuz being a choke point for oil exports from the Persian Gulf states. But Gulf of Aden (between Yemen and Somalia) is just as important. If Yemen becomes a full fledged failed state, that water way would become even more plagued by piracy than it already is. This could force oil tankers on their way to the US and Europe to run a gauntlet of pirates and political instability all the way from Basra to the Suez Canal. I doubt this would lead to a cutting of the oil supply lines but it would make it more costly to transport the stuff and I have every confidence that the Big Oil companies would figure out how to pass those additional costs onto consumers. Rising and consistently high oil prices will increase political support for any alternative to imported oil. The Republicans will try to make this into a justification for “drill baby drill” but we all know that domestic oil reserves are simply incapable of making a dent in the price let alone significantly reducing our dependence on imported oil. In the final analysis, the only alternative to imported oil is something other than oil. It might mean a shift to natural gas but even that will need to be largely imported. That means that a long term solution to our energy needs will have to depend on some combination of wind power, solar power, biofuels, hydroelectric and nuclear energy which leads us to …

The tragic situation in Japan. The Fukushima plant seems on the verge of a meltdown. US authorities are openly second guessing the reserved reports from the Japanese. I’ve seen comments from US experts to the effect that the Japanese should just give up on saving any of the plant at all and get to work on a cement “sarcophagus” to entomb the ruined and toxic fuel rods as soon as possible. This is part and parcel with an ongoing drum beat in the US news media that is largely serving to spread the idea that the situation in Japan proves that nuclear power is fundamentally unsafe. I’m no physicist but it seems to me that much of this criticism of nuclear energy as a hole is exaggerated and unjustified (perhaps Dr. Strangelove would care to elaborate on these issues in the comments). Certainly putting nuclear power plants in earthquake and tsunami prone areas is a bad idea but if the Fukushima plant had been in the American Midwest and suffered a direct hit from an F5 tornado, I doubt we’d be talking about a meltdown. In any case, this is largely irrelevant in the short term because the political environment for nuclear power just got A LOT worse in the US.

All this adds up to a potential “I told you so” moment for President Obama. A key part of Obama’s agenda has long been investment in future technologies, especially alternative energy and infrastructure upgrades such as “smart grid” technology. In 2009, Republicans often scoffed that it was a waste of money and their criticism often stuck in people’s minds because oil prices were temporarily low due to the global recession. But now, with oil prices rising again, investments in anything but oil are looking like a pretty smart thing to have advocated. The Republicans will be left to criticize Obama for agreeing with them that nuclear power should be part of the future mix and renewing their chant of “drill baby drill.” But both of these Republican strategies have no real substance behind them. On nuclear power, Obama has two obvious ways out of the Republican accusations. First, he can say Republicans are even bigger fans of nuclear energy than he ever was. Second, he can offer a reasonable sounding compromise by reviewing any nuclear power plant in an earthquake zone and dare the Republicans to demand an outright moratorium on nuclear energy. On “drill baby drill” Obama also has two obvious responses. First, the BP oil spill in the gulf was not only a traumatic demonstration of the dangers of unrestricted oil drilling in the US, it made for good TV making it ready made for political ads in 2012. After all of that all that is left if Obama’s original agenda of increased government support for research in alternative energy technology and infrastructure upgrades. It should be clear to any thinking person that sooner rather than later, our country will not be nearly as dependent on fossil fuel technologies as it is today. We have a choice, not between the status quo and a fossil fuel free future but between a future of our own making or one that we will have to buy from China. Obama is 100% right to push hard to invest in alternative energy sources and he should use the events of this winter to underscore his advantage on the issue.

The Politics of Japan's Recovery

2011-03-16T16:18:00.000-07:00

Hi Everyone,

The deadly earthquake and tsunami in Japan are rightly dominating the news broadcasts these days. It’s even largely knocked the civil war in Libya and the increasing instability in places like Bahrain off the top of the news agenda. Most of the coverage is focusing on the immediate tragedy of the devastation and the following nuclear crisis. It’s reasonable that this should be focus of the 24 hour news crowd. But every now and again, they will bring up the economic consequences of this disaster – usually with a “what will this mean for the US economy” emphasis. What’s not being discussed is the politics of Japan’s response to the tsunami both in the short term and in the medium term.

Japan entered into this crisis already in a deep and ongoing recession. Japan’s economy has been struggling with deflation for more than a decade. Deflation is inflations nastier cousin. While inflation may be the “thief that robs in the night” by making everyone’s assets worth less, inflation at least benefits debtors. Deflation benefits no one. When the economy shrinks there is simply no way out of the reality that fewer assets are left to be divided up. Japan’s economy has been shrinking for a long time and the massive devastation to the North Eastern portion of the country will not help at all.

Adding to this economic misery, Japanese public debt as a percentage of their GDP as of 2010 was over 225%. That makes them #2 in the world in debt to GDP ratio. To put this in perspective, Greek and Irish public debt as a percentage of GDP are 144% and 94% of GDP respectively (as of 2010, the USA is at 58%). Japan may find it difficult to borrow the money to finance the rebuilding of a large part of their country.

Japanese politics is currently dominated by two major parties. The party that governed Japan for most of the post WWII period is the Liberal Democratic Party (LDP). The LDP set up a managed a protectionist, corporatist state that has been struggling for a long time. LDP officials dominated the politics of the country both legislatively and administratively. For decades, the civil service was hired, fired and promoted at the whim of the senior leadership of the LDP. They had cozy relations with big business and used their dominance of the courts and regulators to protect their corporate allies. There have been allusions to a scandal some time ago involving falsified inspection reports for the nuclear power plant currently in crisis in Fukushima.

The party in government at the moment is the Democratic Party of Japan (DPJ). This is a reformist, centrist party that grew out of the merger of a number of center-left parties and break away factions from the LPD in 1998. They finally won a majority in the Japanese lower house in 2009.

To manage the crisis, the government will have to establish the trust of the people and authority over private interests that may seek to take advantage of the crisis or escape responsibility for mismanagement (for example TEPCO's and their nuclear power plant). The long history of cozy and often corrupt relations between Japanese civil servants and corporate big shots may hinder this on two fronts. First, the Japanese civil service may still, after just two years, reflect the influence of 6 decades of LDP dominance. Many of these government bureaucrats may have more affinity with the executives at TEPCO than they do with their own elected superiors. I've heard comments from American media that various ministries in Tokyo are starting to give the press the run around - for example the science ministry refusing to discuss the Fukushima situation and referring all questions to the Prime Minister's office. This may be what the PM wants but it may also be unwillingness by the government officials with the most knowledge and responsibility to be forthright about what TEPCO is doing. Second, as the government appears to only release information once the story has already broken, it will lose the trust of the population and may not survive the next election.

To rebuild, Japan will have to either generate economic growth or borrow to finance government recovery projects. Japan is not in the best position to do either. We may be witnessing the event that marks the final transfer of regional leadership from Japan to China and South Korea.

Wisconsin, Walker and Reagan Democrats

2011-03-11T13:50:00.001-08:00

I think it's been mentioned on this blog recently before (I think by US West) that the union voters in Wisconsin who are now the arch enemies of that state's Republican party are exactly the demographic that the Republicans have depended on to undermine Democratic candidates. These are the so called "Reagan Democrats" who vote Republican for the nationalism and the odd tax cut here and there. But this attack by the Wisconsin Republican Party (and other Republican legislatures in other states) have laid bare the extent to which these people have been voting against their own self interest all this time. At the very least, even if this group has not completely defected to the GOP, they have largely stayed at home and not come out to vote for Democrats.

I often find myself wondering how many of the union members demonstrating in Madison in 2011 either voted for Walker or did not vote at all in 2010. To them I point them to a famous scolding from Harry Truman. He said then that the refusal of organized labor to support Democrats in elections had led directly to Republicans passing union busting legislation. Like Truman, part of me is inclined to think that these disloyal blue collar voters are getting exactly what they deserve. I hope the nationalist zeal and tax cuts compensate them for the years of reduced income that the elimination of their collective bargaining rights will produce.

But the less vindictive side of me looks at this and sees hope for the future. Has Scott Walker done to the blue collar Republicans what Pete Wilson did to Latinos in California? When Governor Pete Wilson began his anti-immigrant campaign, California was a swing state. But by completely alienating Latinos from the Republican party, Wilson doomed his party to permanent minority status. Has Governor Scott Walker (and Kasich in Ohio, and others) done the same thing for the relationship between the Republican Party and blue collar voters in the Great Lakes region? I doubt the anti-Republican backlash will be as severe as in the Pete Wilson case but I do think Republicans badly overreached on their anti-union agenda. So long as Republican union bashing was limited to depicting union leaders as stogie smoking hypocrites, they could count on some agreement from many blue collar voters and even from union members. But by directly targeting collective bargaining rights, they shifted the public image of their targets from the leadership to the rank and file. Bad idea. At the very least, they've handed Democrats in Wisconsin, Ohio and other Great Lakes states, a cause to rally behind. At worst, they've just jettisoned another part of their national electoral coalition.

Bigger Fish to Fry on the Arabian Peninsula

2011-03-08T09:54:00.000-08:00

With all the news about Libya, it’s easy to forget that there two other countries in protest- both of which are very important to U.S. security, Bahrain and Yemen. The catch is, they are also very important to Iran.

In Yemen, Protesters are calling for the resignation of President Salih. His term ends in 2013, but there are concerns that he may change the laws to allow himself another run. For updates on protests on Yemen, go to Aljazeera English.

In Bahrain, a constitutional monarchy, protesters are calling for the royal family to implement reforms that would open up more benefits for the majority Shia population. At the moment, most of the social benefits run to the Sunni elite. For more see the Christian Science Monitor.

Protests are being planned in Kuwait and Saudi Arabia as well.

See this map.

Notice the strategic locations both of these nations possess. Both are located on important trade routes for oil and natural gas. The Gulf of Aden has suffered in importance as of late because of Somali pirates. But it is still important for shipping.

Iran is watching all of this unrest in Yemen and Bahrain with great interest, I am sure. With the U.S. scheduled to leave Iraq in December, the Iranians are biding their time. Unless the Iranian opposition is successful (highly unlikely, I am afraid- moderate Hashemi Rafsanjani has been forced to step down from his post as chairman of the Assembly of Experts, signaling the tighter grip of hardliners), the Iranian government is sure to take advantage of the instability in Iraq. In fact, I’d speculate that they are covertly contributing to it by providing funding to opposition groups and clerics. They would also like to see Saudi Arabia destabilized. One way to do this is to covertly stir the pot in places like Yemen and Bahrain.

Iran wants to be a regional power. At the moment, it has to do little to achieve that goal. Since it has the Western World wrapped up in its nuclear game, it can play quietly on the side, sowing dissension. So, we should be watching these two nations more closely than we are Libya. Libya is all about internal forces whereas Yemen and Bahrain potentially involve external forces. Getting involved in Libya would be unwise as it would divert even more attention and resources from the bigger kettle that is simmering further south. The potential risk to US security would be much greater there than Libya.

UPDATE: March 14th

Saudi Arabia, along with other nations of the Gulf Cooperation Council are sending troops into Bahrain to quell protests. Saudi sent 1000 troops on Sunday, March 13. Secretary Gates was in Bahrain March 12th. According to reports from STRATFOR, Gates encouraged the Bahrainis to speed up implementation of reforms, warning that Iranian interference would become a greater possibility if Bahrain fails to do so.

Barhaini Shiites are now split into two factions. The Wafa and Haq blocs have formed a coalition with the Haq bloc headed by Iranian supported Hassan Mushaima. The Al Wefaq movement is the other side and has been trying to negotiate with the regime for reforms.

For Full story at www.stratfor.com: http://www.stratfor.com/analysis/20110314-saudi-intervention-bahrain?utm_source=redalert&utm_medium=email&utm_campaign=110314&utm_content=readmore&elq=c7a52d0c9b5442b0886d1d5eca569692

Class Resentment Misplaced

2011-03-05T12:33:00.000-08:00

I was looking around the web the other day and ran across this story on the political blog, The Monkey Cage. It’s an analysis by a University of Wisconsin political science professor, Kathrine Cramer Walsh, about what is going on in Wisconsin politically. Dr. Walsh happens to be in the middle of field research in Wisconsin about regional differences in public opinion. Her analysis focused on the conflict between rural and small town Wisconsinites from northern parts of the state and the more urbanized Wisconsinites from Madison and Milwaukee. One quote from her interviews around the state stuck with me. One of her northern subjects expressed his resentment of public employees, and teachers in particular, this way…

“Sam: I think a school teacher -- I know it can be hard. But they got great benefits. Tremendous benefits. And if you've been there for 15, 20 years, you're making 50 grand a year. There's nobody in town other than them making 50 grand a year. The guys in the [local] mill makes 20 thousand.”

Dr. Walsh’s intent was to present the dimensions of conflict driving the political scene in Wisconsin for the governor’s supporters. She was not seeking to engage their views or do anything other than present solidly objective political science. But I’d like to address the politics (as opposed to the political science) of her subject’s views.

He seems to think that someone making $50,000 after 15 or 20 years in a career is unusually and unfairly privileged. From the other comments in Walsh’s report, Sam and his neighbors have the view that they pay taxes on their small salaries to pay for high salaries and benefits that are not justified. They love seeing Walker stick it to those lazy public employees. This observation by Walsh seems very intuitive to me. It certainly seems to be my experience of how small town Midwesterners think of urban Midwesterners. But how does $50,000 really stack up to a teacher’s private sector peers?

According to teacherportal.com, teachers in Wisconsin start at about $25,000/year. The average teacher in Wisconsin makes about $46,000/year (close to the $50k figure referenced by “Sam”). But according to “Payscale.com”, the average starting salary for a graduate of the largest public university in the state, the University of Wisconsin – Madison is $47,900/year and the “mid career” salary is $87,400. The same numbers for graduates of UW-Oshkosh (a smaller, less prestigious branch campus of the UW system) are $38,900 and $67,800. Since all teachers have to have at least a Bachelor’s Degree, deciding to become a teacher upon graduating from college means making a massive sacrifice in pay. The gap is probably biggest for math and science teachers. Taken as a group overall, teachers make about half as much as their private sector counter parts throughout their careers. I know that teachers often get good health care and retirement benefits. But there is no benefits package I can imagine a teacher getting that's worth $40,000 a year.

What’s more, according to the National Center for Education Statistics, the average salary in 2008 of a male with a high school diploma was $32,000 (women average $25,000). So it is possible that a new high school teacher could congratulate her graduating students and watch them earn more than she does with nowhere near the same investment in education and training. If anyone should be resentful, it's the teachers.

This source also points out that the real value of the salaries of high school grads has dropped quite a lot in the last 30 years. No doubt, this perception of declining living standards drives the resentment that people like “Sam” feel towards teachers and other public employees. But I argue that Sam’s resentment is horribly misplaced. Over the same period, college graduates’ salaries have more or less flat lined (even including the private sector). If Sam and his neighbors want to find out where their share of the national economic pie went, teachers are not the place to look. They should look at Wall Street. But the Republican party has successfully convinced Sam and his friends that their real enemies are the people are managing to tread water while Wall Street pushes Sam and his friends under water.

The Word!

2011-03-04T09:39:00.000-08:00

New Country for Old Men

What an innovative idea!

Amen and Thank Goodness

2011-03-04T08:14:00.000-08:00

Finally, we have some defense in the mainline media for Federal workers.

From Thomas A. Kochan , professor of management at MIT's Sloan School of Management:

But let's be clear about the stakes: Wisconsin's governor is attacking a fundamental human right, the freedom of association and the right to have an independent voice at work. This is not only unacceptable; I hope we will have the courage to call it un-American.

In case anyone is interested, most public employees don't have the right to strike. So all they can do is collectively bargain or protest in their free time.

The problem is scandals like that in Bell, California confuse people. Scandals like that are NOT because of unions and they are NOT typical of public employees. Scandals like that are simply corrupted officials.

In interviews with people in Egypt, many cited corruption among their public officials. They had to pay bribes for everything from getting birth certificates to passports. This is what happens when governments fail to pay their civil servants living wages. I work with people from all over the world, many of them from very corrupt places. They marvel at the trust and honesty of most Americans. We do not know what it is in this country to pay a bribe to get a birth certificate, building permit, or stamps at the post office. We pay our public servants a living wage, and for professionals a competitive wage because the American people deserve the very best service and quality from its public servants. If that argument can be used to defend the over-sized salaries of bankers, why is it not legitimate for use when talking about public servants?

According to Transparency International the United States ranks 22 out of 178 countries for corruption. This, by the way, is the first year since the index started that the United States has fallen out of the top 20. Why? Was it because of unions and the public sector? NO! It was because of the financial collapse and the various banking scandals caused by Wall Street as well as by weakened government oversight.

Why is government oversight weak? One word: Deregulation. There aren't enough civil servants to do the hard work of monitoring food quality, building and environmental safety, tax compliance, banking rule compliance, etc. And that has been a Republican tactic: Bleed the system dry through cuts to everything and everyone EXCEPT the very wealthy and their supporters.

Nancy Boswell, president of Transparency International U.S.A, refers to an "Integrity Deficit."

We're not talking about corruption in the sense of breaking the law. We're talking about a sense that the system is corrupted by these practices. There's an integrity deficit.

"These practices" refers to loose lending in the subprime crisis, the disclosure of Bernard Madoff's Ponzi scheme, rows over political funding,various financial scandals at state and city level, etc.

And when I made arguments about Democracy or the lack thereof, my co-bloggers were correct to say that we do have a Democracy. My problem is that the type of sophisticated, white collar corruption that we have witnessed in this country for too long undermines faith in the system. And so much of our success as a nation has been because of the faith we've placed in it. Without faith, you end up in revolution.

Point of the Blunt Spear

2011-03-01T09:32:00.000-08:00

Over the weekend, Secretary Gates told a group of West Point cadets that they will be entering a very different military from that of their predecessors. He pointed out that financial and human resources are necessarily dwindling and that any president who thinks a ground war in Asia is a good idea needs "his head examined".

I am a big fan of Secretary Gates. And considering that Rumsfeld is out promoting his book claiming that Iraq was NOT a mistake, Gates offers a reasoned view that is very much grounded in reality. He gets it!

George Freidman writing for STRATFOR has put together a very good article on why Gates is correct in his analysis. The short version is that the US military faces three problems in Asia. 1) long supply lines that require huge human resources for logistics and 2) an inability to field a large enough fighting force (i.e so many human resources are taken up by logistics, little is left over for the actual fighting force) 3) the populations in Asia are disproportionately large compared to the size of US forces.

The one thing this article doesn't mention, but is becoming more an more discussed is the role of mercenary insurgents. It is more and more evident that many nations keep a stock of mercenaries available to fight anything from wars to suppressing uprising. That will be the next fad in military analysis if it hasn't already started.

To respect all copyright laws: Never Fight a Land War in Asia is republished with permission of STRATFOR.

Double Your Pleasure, Double your Fun With Double Mint Gum

2011-02-28T09:47:00.000-08:00

No one needed Wikileaks to learn about the latest diplomatic flops in the world. Let’s take a minute to amuse ourselves yet again with those consummate diplomats, the French.

French diplomacy, which seemed to enjoy a pretty good reputation as reasoned and measured during the Bush administration, has taken a nose dive. It’s amateurish to the point of cartoonish. Let’s consider recent events.

This weekend, French Foreign Minister Michele Alliot-Marie “resigned” her post to be replaced by the once exiled Alain Juppé. Now this is a story that is worth following just for the pleasure of seeing that other nations have screwed up politics. Alliot-Marie had ties to now deposed Tunisian President Ben-Ali. Here is a short list:
· Alliot-Marie had accepted visits to Tunisia in the private plane of a wealthy Tunisian businessman who is connected with Ben-Ali. That created a scandal back in December.
· Her parents and she are involved in a real-estate deal with the same business man, that broke while she was in Tunisia on vacation.
· She offered Ben-Ali the assistance of French security forces in crowd control. Not such a good thing to do in a former colony.

Her replacement, Alan Juppé has been serving as Defense Minister. This has helped re-integrate him into the French political scene after being convicted in 2004 for participation in Chirac’s jobs scandal during Chirac's mayoral tenure in Paris. He was given a 14 month suspended prison sentence and a one year ban from participating in French politics. He was mayor of Bordeaux throughout the whole thing.

Then there was the holiday taken by Prime Minister Francois Fillon to Egypt last fall. Much of his week-long vacation was paid for by the Egyptian government. Oops. Joke in France now is if you want to know which regime will fall next, see where French politicians are going on vacation. As a result of this, Sarko has declared that all French officials had to take their holidays in France. Just take a moment to digest the comic irony in that. Do you get the vision of little Napoleon jumping up and down complaining that none of his ministers like France well enough to vacation in it, so he’ll make them!

If you all recall, it was Sarkozy who tried to launch a Mediterranean Union in 2008. There was one meeting at the launch and nothing since. There was an attempted meeting in November, but it was postponed. The Co-president of the barely-formed Union was none other than Hussny Mubarak. How times have changed.

The most recent and comic blunder is a tit-for-tat with the Turks. There is no love lost between French President Sarkozy and Turkish Prime Minister Recep Tayyip Erdoğan. Again, no need for Wikileaks to know that. But it reached a comic level this weekend.

It all started with Erdogan expressed his disappointment that Sarkozy was coming to Ankara in his capacity as head of the G20 rather than as President of France. Both Erdogan and the Turkish President, Abdullah Gul have both been to France, and I suspect that they expected a reciprocal visit. Back in 2009, when Gul went, Sarko greeted him while chewing gum. Probably not very polite.

The personal rapport between Sarko and Erdogan is sour. Erdogan went on to acknowledge as much when he said, “Relations between political leaders shouldn’t erode relations between two countries.” He was disappointed that the visit was only scheduled for 6 hours. In an expression of his disappointment, he sent a Foreign Ministry Undersecretary and the Mayor of Ankara to greet Sarkozy.

Then, to add insult to injury, Sarko descended down the stairs of his plane openly chopping away on gum. Crude little habit, I’d say.

At the end of the visit, Sarko holds a press conference with Gul rather than the Prime Minister where he says Turkey's accession would “destabilize” the EU. This further offended the Turks. But they got the last word on this trip. The Mayor of Ankara, who was part of the delegation seeing Sarko off at the airport, put a wad of gun in his mouth and chewed away as he said good-bye.

Another Mysogynist

2011-02-25T08:06:00.001-08:00

So now some democratically elected office in Georgia wants to make miscarriages illegal. Cobb County Representative Bobby Franklin has proposed a bill that would potentially define a miscarriage as "parental murder".

Now this bill will probably die. But what a tactic to use. What he really wants is to outlaw abortion. So he proposes something outrageous like this, then he "negotiates" away the crazy parts and campaigns on what a "reasonable", "bipartisan" person he is. In the meantime, everyone in the opposition wastes time knocking this crap out of the way rather than focusing on the big stuff.

Who's to say that Walker in Wisconsin isn't using the same tactic against unions? It's good that the Obama Administration isn't getting involved in this type of stuff. It's better for them to stay focused on the big stuff and not get drawn into these fights. They are right to let their state organizations do that fighting.

Update:2/28/2011

Visit msnbc.com for breaking news, world news, and news about the economy

Walker and Union Busting for Benefits

2011-02-23T14:28:00.000-08:00

Check this out: Rachel Madow has outed Scott Walker. What a sleaze ball! And when you are done with the video, go for this article where a journalist, posing as David Koch totally bonks Scott.

Visit msnbc.com for breaking news, world news, and news about the economy

The Nature and Quality of American Democracy

2011-02-23T14:06:00.000-08:00

A recent comment and tangent to an earlier thread about the Middle East has lead to a request for a new thread on the nature and quality of American democracy. One anonymous commenter argued that the US "Never has, never will be a democracy." This commenter started by implying that anyone who disagreed with this view was suffering from a "delusion." I hesitate to engage such statement but US West would like to discuss it and I respect her so here is my first pass at starting just such a conversation.

First, I think it is important to understand that whether a country is a democracy or not is about the process used to determine policies not about policy outcomes. This is consistent with most of the political science research on the nature of democracy. A good example of this kind of literature is Polyarchy by Robert Dahl. It’s an old book but the definition of “polyarchy” (the term Dahl coins for regimes that are close enough to the democratic ideal as makes little difference), or something very much like it has become the standard working definition of democracy in political science. Dahl’s definition is about process not outcomes. He does not say “democracies have income disparity measures between this and this level” or “anything other than minimal flat taxation is undemocratic” or “democracies have this level of welfare spending” or “democracies have this level of unionization.” Rather he focuses on whether there are free and competitive elections and freedom of the press, speech, association etc. But this view goes far beyond the personal views of Robert Dahl. The process not outcomes definition is the standard in the field.

Second, given the standard definition of democracy, we can say that the United States is clearly a representative democracy (Dahl would call it a “Polyarchy” but that’s just semantic preference on his part really). We enjoy free, competitive elections. We also enjoy a range of rights that support the free competitive nature of those elections namely: freedom of association, freedom of the press, freedom of speech etc. We also enjoy a relatively stable rule of law with an independent judiciary and the right to due process before our life, liberty or property is taken away by the state (with some relatively isolated exceptions which we have complained about on this blog before). Any assertions that the United States is not a democracy are either based exaggerated definitions of democracy that make it an ideal that is impossible to attain (and so not a practical basis for reasoned discussion) or based on erroneous or highly selective use of evidence.

For example, debating about the degree of income inequality in the country, or the level of unionization etc really amounts to a debate about policy outcomes. Framing such a debate in terms of “my view represents democracy and the opposing view does not” is not really productive either for reasoned policy debate or a reasoned discussion of what democracy is.

All that said, there are useful questions about how our processes could be reformed (I might say "improved"). For example, money plays a big role in our elections because of the nature of our campaign finance laws. A reasoned person could argue that the representative quality of our democracy would be improved by instituting something like public financing for campaigns. Another example, commonly raised, is that our primary and secondary electoral rules distort representation. Specifically, some people would prefer that the US adopt a more proportional electoral system such as proportional representation, the single transferable vote or alternative list method for counting votes and assigning seats in the legislature. Others focus on how district shapes are assigned. Still other reform advocates suggest that voting should be made mandatory. But none of these dimensions of possible reform are of the order that we would expect to see if we were to claim that the US is not a democracy.

The Future US Role in the Middle East

2011-02-20T09:26:00.001-08:00

The measured US response that leaned increasingly towards the pro-democracy demonstrators combined with the stark contrast between the government responses to similar demonstrations in US ally, Bahrain and former Soviet client and pan-arabist dictatorship, Libya may be setting up a new role for the US in the Middle East.

We may be seeing a new US role in the middle east emerge in which our allies are more likely to democratize relatively smoothly if slowly and gradually (with a small number of exceptions like Iraq, Afghanistan and Yemen). While Bahrain is showing promising signs of opening up another round of liberalizing reforms, Libya's Gaddafi seems to be intent on killing as many of the protestors as he needs to. He may even be using foreign mercenaries (from other non-US allies like the Sudan) to do it.

For once, the US is not the outside power backing the ruthless dictator. Finally there are signs that the US can be a constructive influence on policies that really matter to Arabs. In the end, for the US to be the moderating restraining influence on dictators under pressure to reform may be more important than if the US were to suddenly abandon Israel. Call me crazy but I am of the opinion that if Israel were surrounded by reasonable, relatively peaceful governments that nevertheless kept the pressure on them it would do more to shift Israeli policy than all the bellicosity and threats of war and extermination that have been the mainstay of Islamist strategies. One possible consequence of this is that if Israel can no longer credibly claim that only unwavering US support prevents the genocide of Levantine Jews, it would allow the US to finally put real pressure on Israel. It would also empower the growing segment of Israeli society that genuinely wants a peaceful solution to the problem.

On Wisconsin!

2011-02-20T05:53:00.001-08:00

The situation in Wisconsin is really touching a nerve with me. Governor Walker (R) was elected as part of the Republican victory in 2010. He is now proposing a combination of policies that the country recognizes as a preview of things to come for many state governments. In his first month in office, Governor Walker pushed through a package of tax cuts for corporations. Wisconsin's corporate tax rates are comparable or below those of their main neighbors: Illinois, Minnesota, and Iowa (Wisconsin and Michigan share a border along the base of the Upper Peninsula but this is a sparsely populated part of Michigan that depends largely on mining which cannot relocated because of tax rates). Wisconsin's personal income tax rates are slightly higher than those in Illinois and Iowa but somewhat lower than those in Minnesota. Wisconsin's sales taxes are lower than those of Illinois, Iowa and Minnesota. I go through these comparisons to suggest that Wisconsin's citizens are not excessively taxed. Wisconsin's tax rates are comparable especially to its neighbors. This is important because a major argument that state leaders put forward for cutting taxes - especially on businesses is to encourage new businesses to relocate to their state and deter old businesses from relocating out of their state. My brief survey of Wisconsin tax rates suggests that this probably not a major problem for the Badger State.

Now, there is a recession on as you know. So by cutting taxes on corporations, Governor Walker is worsening his state's revenue short fall problem. This brings us to the other part of his policy agenda. Walker is proposing significant cuts to public employee benefits and a dramatic curtailment of public employee unions right to collectively bargain. The implication of his rhetoric and policies is that the public sector is over paid at the expense of a long suffering private sector. Walker's proposals have provoked a bitter fight. Wisconsin Democrats have left the state to prevent a quorum in the legislature. Public employees and union activists and sympathizers have hit the streets. Tea Party counter protesters soon followed. The newly elected Republican governor of Iowa is making exactly the same noises and a similar fight is coming for Iowans along with many other states.

But are public employees really over paid?? US West posted about this earlier but it bears repeating. Public employees are not paid more than their private sector counter parts with similar qualifications and responsibilities. In fact, they are paid significantly LESS than their private sector counter parts. In fact, the gap between private and public salaries increases as the qualifications expected of the worker go up. At the level of high school graduates, public employees make about 97% of their private sector counterparts. For college graduates public employees make just 75% of their private sector counterparts. Once you get to the level of professional employees (people with JDs, MDs, and PhDs), public employees make just 63% of the salaries awarded to their private sector counterparts. The only thing that public employees can point to that compensates them somewhat for this gap is their benefits packages. Public employees do tend to have good health and retirement packages that are seen as more secure than those operated by many companies because they are guaranteed by democratically accountable state governments rather than by corporations prone to rob their pension funds as they sink into bankruptcy.

I really hope the Democrats and the unions in Wisconsin can stand up to this. And I'm very glad that President Obama called this for what it is, an assault on unions. But it is also part of a broader assault on non-military public employees.

UPDATE (2/21): I found this video online of a Wisconsin Democratic legislator angrily describing the tricks that the Republicans have been using to ram through the Walker budget bill. What he is describing is tyranny of the majority.

Manah Manah Doo Doooo Doo Doo Doo

2011-02-19T05:27:00.000-08:00

Sorry, I can't get that song out of my head (because of the capital of Bahrain). So the revolutions and uprisings against dictators in the Middle East continue. Yemen, Bahrain and Libya are all best with massive demonstrations. Yemen is not that surprising as the country is already fighting two separate civil wars plus dealing with the largest branch of Al Qaeda outside of the Afghanistan-Pakistan theater. All three are deadly serious. But Bahrain and Libya are more interesting because their regimes were not so unstable to begin with.

Bahrain is a wealthy country by world standards but not by the standards of Gulf Kingdoms. Bahrain exports some oil but most of its economy is based on oil processing and especially banking. Bahrain has a ethnically/religiously divided society too. The monarchy and the elite come from the Sunni Islamic group. But a majority of Muslims are Shia Muslims. The news is common reporting that Bahrain is "majority Shia" but this is not exactly true. Shiites are the clear majority among Muslims but only make up about 50% of the total population because of the large non-Muslim communities (mainly Christians, Jews and Hindus). Like many Gulf states, Bahrain has imported laborers from South Asia in large numbers. Bahrain actually has a reputation for being relatively tolerant of different religious groups. And while there are Islamist groups in the country they are divided between Sunni Islamists and Shiite Islamists (and both have recently been rocked by sex scandals involving an unscheduled "fact finding" mission to Bangkok). Bahrain's political situation is such that the monarchy effectively manages a system of nominal competitive democracy characterized by a weak parliament and suspect elections. Bahrain's human rights record is mixed but by the standards of the Middle East it has a good record. The latest news is that the King has asked his son, the Crown Prince, to begin a national dialogue and that Crown Prince has since ordered the military off the streets. So it looks like Bahrain's regime has decided to respond to the crisis by continuing reforms rather than cracking down.

From the US perspective the big issue is that the US 5th Fleet is headquartered there. Some fear that Shiite majority = Pro-Iranian. People with this point of view fear that any reform in Bahrain will lead to the 5th Fleet being expelled from the country. To this I say two things. First, having a large naval facility in a small country like Bahrain means JOBS. Also, the 5th Fleet is there to keep the dangerous, local sea lanes open and open sea lanes are the life blood of this little island nation. So I wouldn't assume that even if there is a significant power shift in Bahrain that it would automatically lead to the US military being asked to leave. Second, if there is a request that we go, I wouldn't see it as anything other than a costly annoyance. The role that the 5th Fleet plays is popular enough with enough of the countries in the region that there would be a home for them nearby. I'm reminded of the "sky is falling" cries from the hawkish right about the fall of the Marcos regime back in the 80s. They said it would lead to the demise of two key US military bases in the Phillipines (Subic Bay Naval Base and Clark Air Force Base). The hawks feared that this would open up the Pacific to the Chinese. In the end, both bases were asked to be removed by the new Democratic government of the Philippines. We still have bases in western Pacific and we are still allies with the Philippines.

Libya has more oil than Bahrain but more people so they are poorer on average. Dictator, Gaddafi, is the often ruthless and increasingly clownish ruler of the country. Gaddafi's willingness to engage in murder and terrorism is combined with an almost absurd ambition to be a relevant world leader. That his regime is in trouble would seem to be a source of great pleasure for American policy makers. Other than a "better the devil you know" view, I can't see a reason not to embrace the anti-regime demonstrations in that country. Gaddafi of course has responded with a military crack down.

So what should the Obama administration do? I think the President should deal with Bahrain and Libya more or less like he dealt with Egypt. Constantly say that these are internal matters for sovereign people while expressing support for peaceful reforms and dialogues and condemnation of violence. I think it is especially important that the US not be seen to deal with these two countries differently. We are especially vulnerable to the charge of hypocrisy in the Middle East region and we should take care to be seen to be even handed an consistent when it comes to calls for democracy.

Who's next? My bet would be on Syria. If Gadaffi ends up going down, the Asad dynasty in Syria will be sweating bullets (and probably shooting a lot of them at crowds).

Government Shut Down

2011-02-18T17:08:00.000-08:00

So unless a continuing resolution or a budget is passed before March 4th, the government will shut down. Tea Partiers will see just how valuable the 200,000 civil servants who work in the "big government" are to our security and comfort as a nation. Civil Servants aren't paid when on furlough and many of us won't be shopping in our time off. Boehner had the audacity to say that he really didn't care about civil servants being unemployed. That means he doesn't care about the rest of America either. Everything is linked together. So if the government closes, Social Security isn't paid, taxes aren't filed or returns paid, contractors who work for the government aren't paid (many of them small businesses). A shut down would devastate the economy-especially if it goes on 5 days like the last shut down did.

I think this is a game of chicken. The Republicans will blink first. It would look real bad to get a majority in the House and then shutdown government. But then, I am convinced that some of these people care way too little about Americans.

Barbara Boxer co-sponsored a bill today that would prevent the President and Congress from being paid in the event of a shutdown and would prevent them from being retroactively paid. Good for her. Let's hope it doesn't have to be implemented.

The 2012 Budget and Presidential Leadership

2011-02-16T18:20:00.001-08:00

President Obama's proposed 2012 budget doesn't bother me as a budget document. It is not a proposal to solve all our growing fiscal crisis, however. It is just a proposed operating budget. The GOP is hammering Obama for lack of leadership. To some extent they have a point. What the Republicans wanted was for the President to propose the unpopular cuts. He didn't; he proposed the easier ones. That was smart. It is a good idea to force the GOP to stop taking potshots from the sidelines as they have done for two years and instead take some responsibility for governing. Want a balanced budget without raising taxes? Make a proposal. Let the country see just how much it will cost them to keep the Bush tax cuts for the super rich. Otherwise, let's talk turkey about how we reduce deficits during a recession without screwing everyone. Republicans need to be forced to admit that they can't solve the problems we face without serious cuts to very popular programs or some tax increases on the wealthiest among us. Until they do, and as long as they insist on claiming that the problem is Obama being a spendthrift, then there is no reason for the President to save their bacon. He needs a partner in Congress. If not, we can wait. I suspect we will have to wait.

On the other hand, I DID want to see the President take a stab at the entitlement issue. I do not mean I want him to adopt the idiotic proposals of his blue-ribbon commission. Those proposals are basically cuts. Good riddance. No. I wanted him to be 100% crystal clear that we are not going to cut or reduce social security, and that we will solve this entitlement problem through other budget spending cuts or raising the social security tax cap. That is leadership on the issue.

He does need to lay down the law on this issue and a few others, not just say "everything's on the table in private back-room negotiations." That's not transparency for you. So yes, President Obama, take the lead. Oppose "entitlement reform" where it means just screwing the taxpayers out of their old-age security. Instead remind the American people that Social Security and Medicare must be paid for, and that means we may need to restore some of the tax rates of the 1990s (the prosperous 1990s) on the wealthiest.

Tax Reforms for the Wealthy

2011-02-16T08:20:00.001-08:00

I just had the pleasure of doing my taxes for 2010. Good news, I get a return. Bad news, I thought it would be a bit larger. But welcome to the middle class where 35% of your income is taken off the top. So I start listening to all the budget talk. Most of the proposed cuts I hear about are cuts to things that benefit the poor and middle class: heating assistance, baby formula assistance, community redevelopment funds, etc. All of this while the unemployment rate lingers around 10%, prices for food and fuel are up, people are taking pay freezes and cuts, etc.

So I want to know what the wealthier set will be asked to sacrifice. This is what my search turned up.

Ending tax breaks for coal, oil, and gas sectors. Oil, gas and fossil fuel companies would lose tax breaks and subsidies and have to pay more taxes on profits.

Re-introducing an environmental corporate tax (Superfund taxes for clean-ups)
Ending tax breaks for businesses who transfer profits overseas
Increasing taxes on financial partnerships and hedge funds
Cap tax deductions on things such as charitable donations and mortgage interest paid by the wealthiest Americans (comes to about a 30% decrease in itemized tax deductions)
Allowing Bush tax cuts to lapse for those making over $250K a year.
A proposed tax on the largest financial firms and banks (which the Republicans oppose)

These are all good. Other options that should go on the table: hitting farm subsidies and price supports. I wish, however, some of these possibilities were covered along side the more common cuts so that the debate would be more fair. Arguments that Obama isn't "taking a lead" in this debate, are just wrong. When will the media get that we have a low-key president who has to work with the opposition? First they complain he isn't bi-partisan enough, then the complain that he isn't "taking a lead". Two contradictory statements.

The New Yorker had a good article on tax reform. It's worth a look.

Gutenberg, Zuckerberg and Egypt

2011-02-12T13:40:00.000-08:00

We all remember from our high school history classes (hopefully) how important the invention of the printing press was for the development of modern society – including democracy. Relatively widespread access to printed information made it easier for people to organize politically. They could print books about new political ideas, leaflets about immediate actions or current events, and keep the records needed to maintain a long lasting political organization. The enormous impact of the invention of the printing press is well known. We are almost certainly witnessing a socio-technological change of similar proportions with the emergence of social media as a political resource. Zuckerberg may be the new Guttenberg.

Central to much of the literature on democratization and revolutions is the idea that reaching a certain level of development makes new democracies more stable (see previous post on this blog of Jan 29^th for a far from exhaustive sampling). Implicit in these arguments is the belief that economic development makes it easier for likeminded individuals to organize to the point where they become politically effective for a long term. The idea is that people find it easier to organize when they have more economic resources. They have easier access to information and the skills and tools required to communicate with likeminded people and coordinate political action with them.

Access to information is central to political organization. It is impossible to formulate any kind of effective political response to a situation if you do not know what your options are or what the preferences of the other major political players are. In the old days, political scientists and sociologists used to count things like the number of radios, TVs, and newspaper subscriptions per 1000 households. These things cost money and for a long time, access to these things was largely restricted to the wealthiest countries or the elites within developing countries.

Setting up a lasting political movement requires a fair amount of skill. Higher literacy rates help potential political activists circulate information among them. In the old days the thinking was someone with a printing press or mimeograph machine or something would print off thousands of leaflets and distribute them around. These could be simply for propaganda purposes or let people know to show up at this or that square in a few days for a big demonstration or organizing meeting for a new political party. Without these kinds of resources, individual people who want to change their political environment may not be able to coordinate their actions. They may not know how many think like they do or how many are willing to risk a crackdown by the police to challenge the regime.

Egypt may change the thinking on all of this radically. It's fairly well known that Egyptians (and people in lots of other non-democracies) have been using Youtube to circumvent state media censorship for some time. Also, there is a lot of talk in the news that the Egyptian uprising was originally set in motion by a marketing exec for Google-Egypt and group of computer savvy young people who intentionally used social media like Facebook and Twitter to get as many people out on the streets as possible in very short order. These things, combined with relatively inexpensive computer (and smart phone) technology, have revolutionized the thinking about what it takes to overcome the difficulties in coordinating political activities. Now, a really big demonstration can be organized in hours. Emerging political parties can use social media to get the word out to their members and get information back from them about their desires and priorities. I even heard a pundit on CNN talk about how he had heard that the CIA was ordering all their station chiefs located in non-democracies to look into the local availability of social media. The clear implication of the conversation was that the CIA was looking into encouraging the spread of such technology in non-democracies where the US government would like to see more democratization (like Iran, Syria or China).

I personally know of several social scientists who are already studying the political importance of social media. One of them had decided to focus his research on the importance of social media for political revolutions even before things broke in Tunisia and Egypt. Applying this sort of research to revolutions and democratization is about to explode.

Egypt, Israel, and the United States

2011-02-12T08:03:00.001-08:00

So I've been engaged in a running debate with a couple of people about what the revolution in Egypt means for Israel. These two both believe that the USA betrayed Mubarak and that this is will end in an Iran-like regime that will dissolve the peace treaty with Israel and support more terrorism. They think Obama is stupid for not having tried to stop this dangerous revolution. Both are Democrats, but make the mistake that some Americans make of viewing everything through the lens of "is it good for Israel?" I've had to read their rants about how Muslims are "animals" who are incapable of democracy. In their view, Israel is completely blameless vis-a-vis the Palestinian - that Israelis are victims, plain and simple. Nevermind that Palestinians live under Israeli rule, and not the other way around. Nevermind that the relative civilian casualty count is more than 100 to 1 against the Palestinians. Nevermind that there hasn't been a car bomb or suicide bomber in Israel proper for years. Nevermind that every day Israel expands its settlements into the West Bank. I'm fed up to here (indicate neck) with this attitude. And I'm an American who is quite sympathetic to the Jewish people and their cause in Israel otherwise. This is exactly the attitude of the Netanyahu government that prevents any meaningful peace agreement.

So let's get a few things straight. The decision of the British in 1916 to conquer rather than liberate the Ottoman Arab territories, then encourage large scale European Jewish immigration into Palestine without the consent or even dialog with the existing mostly Arab colonial population was bound to, and did, cause resentment. It really didn't matter how peaceful and friendly the Jews intended to be or actually were. The British decision to divide the Arab world into various subject countries and install kings in TransJordan, Egypt, Iraq, and Saudi Arabia, was not calculated to win friends either. The third British decision - to ban Jewish immigration halfway through the project and abandon the situation to the same division of territory that has been so successful in Ireland and Kashmir - was equally disastrous. So the table was set really badly by the British. The Cold War made it worse, with the USSR supporting Arab nationalists against "American/Zionist aggressors" and the USA supporting in turn "moderate" dictatorships to keep oil flowing while trying to buttress Israel. All this is before the Israelis and Palestinians themselves made their own messes. Palestinian "leaders" like Arafat committed to a horrific strategy of terrorism and the Israelis began to create permanent settlements in the occupied territories, making it clear they were not leaving. It's now been more than 40 years of Israeli rule over millions of Palestinian Arabs who are not given any political rights in the Israeli state, but not allowed to have a state of their own. It's almost irrelevant that the Israelis have been pretty good rulers all told, permitting more liberty to Palestinian Arabs than they could have had elsewhere. It's almost irrelevant that the vast majority of Palestinians have had no connection to terrorism. Even if you decide that the Arab decision to engage in terrorism and start the 1967 and and 1973 wars make them by far the guiltier party, it does not mean that Israel is blameless, and it certainly does not mean that we should unquestioningly support the continued Israeli policy of occupation and gradual squeeze-out of the Palestinian Arab population denied political rights in their own country.

It is also a big mistake to think that Arabs are incapable of democracy or peaceful coexistence for cultural or religious reasons. First, it is historically idiotic. For most of the time since Mohammed's birth, Jews have been much, much happier in the religiously tolerant Muslim countries than in Christian ones. The holocaust wasn't their doing - it was the product of European/Christian civilization. Second, it is racist. Arabs are people too. Their problems are political, geopolitical, and economic at root, and the cultural stuff is largely epiphenomenal. Third, it's just an attitude designed to be self-fulfilling. Deny people liberty on the theory that they can't handle it and they will not learn how. Fourth, it pisses off everyone in the region to no end.

Israel is our best friend in the region. It ranks with Canada and the UK as our best friends in the world. But just as we tried to make peace in Northern Ireland rather than just supporting the UK (or just opposing it), we need to have get fucking perspective on the situation in Israel.

Watershed Event in Egypt

2011-02-11T08:15:00.000-08:00

Hosni Mubarak has officially resigned and left Cairo. His future will now be one of cocktails on beaches and old boy retreats with the Stonecutters. What will this mean?

For Egypt, despite the celebrations a lot is still up in the air. The last thing Mubarak did before he left town was dissolve the parliament and hand all power over to the military high command. So it is far from certain that anything like a democratic regime will emerge in Egypt anytime soon. Still, at a minimum this is the first, high profile, example of a successful, NON-VIOLENT (mostly), political movement in the Arabic Middle East.

If anything poses a threat to continued Israeli occupation of the West Bank and Gaza it is the example of peacefully demonstrating Palestinians refusing to cooperate with the occupation. Until now, no Palestinian movement has entertained the idea that they could get what they want politically without violence. Given the historic, ideological ties between the Egyptian Muslim Brotherhood and Hamas, that could be about to change.

Egypt is by far the most populous Arabic country. Its citizens live and work throughout the Middle East, sending checks home as they work abroad. The example of a peaceful political resistance to a dictator (even if he ends up being replaced by another dictator) is going to send shock waves around the region and the world.

A friend of mine told me that Chinese news media are being very mum about what's going on in Egypt. The Chinese government do not want wide coverage of what is going on there. I imagine Iran's government is equally nervous about this. What will Iranians do when they find out that Egypt's people successfully pulled off what they narrowly failed to do a couple of years ago?

This is a big big deal.

And before the Neo-cons start to take credit for it. This happened despite, not because of Neo-con, militarist policies in the region.

Bye-bye, DLC

2011-02-07T17:50:00.001-08:00

I'm sure you all are heartbroken.

The Democratic Leadership Council, the centrist Democratic group that once dominated the party and provided much of the core intellectual framework of the Bill Clinton presidency, could be on the verge of demise.

Ben Smith at Politico reports:

The Democratic Leadership Council, the iconic centrist organization of the Clinton years, is out of money and could close its doors as soon as next week, a person familiar with the plans said Monday.

Interestingly, the DLC's associated think tank, the Progressive Policy Institute, appears to still be alive and well.

The EU, Turkey and the Emerging New Middle East

2011-02-05T11:38:00.001-08:00

A couple of recent threads about Egypt have seen comments/posts by Law Talking Guy and US West about the emerging new Middle East, Turkey's place in it and the EU's possible increased interest in Turkey because of it. This all got me thinking about whether the EU would see Turkish accession to the EU as something that helped the EU in the new Middle East or a risky thing. It also gets wrapped up in the advantages/disadvantages of Turkish membership in the EU regardless of Turkey's geopolitical position or geographical location. I'll start with what we know and then move to a more speculative discussion.

What we, the Turks and the EU know:

The rules the EU uses to approve new members depend on a unanimous vote by the existing member states. There are currently 27 member states. It only takes one government to oppose Turkish membership for any reason they choose to justify that opposition for Turkish accession to be blocked.

Leaving aside any cultural considerations, there are reasons to believe that Turkey would be an economic liability to the EU. The EU's aggregate per capita GDP is $32,900 (see CIA world factbook). About 1.8% of the EU economy comes from agriculture with about 5.6% of the labor force working to produce that 1.8%. The largest share of the EU's budget (48%) goes to agricultural subsidies in the Common Agricultural Policy (CAP). Another 30% or so of the budget goes for cohesion/structural development funds (designed to improve economic development in areas lagging behind the rest of the EU). The CAP funds in particular a heavy and controversial drain on the EU budget.

Turkey's per capita GDP is $12,300 (see CIA world factbook) putting it at about a third of the overall per capital GDP of the EU. Turkey's economy is about 8.8% dependent on agriculture with 29.5% of the population working to produce that 8.8%. This suggests strongly that should Turkey join the EU, its ag sector could prove to a significant additional drain on the EU budget. This might not be a big deal if Turkey were a small country. But Turkey's population is 77.8 million which would make it the second largest (and second poorest, just beating out Romania to avoid being the poorest) member state in the EU. To put this in perspective, Greece is currently causing no end of economic headaches for the EU. Its per capital GDP is $30,200 with a relatively small (compared to Turkey) population of 10.7 million (see CIA world factbook). Another useful comparison for Americans might be that Mexico is somewhat wealthier and considerably less dependent on agriculture than Turkey.

The EU budget is derived from contributions from each member state based on their Gross National Income (a measure similar to but not exactly the same as GDP). Unless the EU dramatically changed the way the budget is paid for and distributed, dramatic change is not the EU's forte, Turkey would be among the largest net beneficiaries of the EU budget. That would mean that Turkey would get far more from the CAP and Structural/Cohesion funds than they contribute to the budget. This alone may be enough for one or more of the major net contributors to the EU (such as Germany, the Netherlands, and the Scandinavian members) to balk at Turkish membership. It might even be enough for one or more of the current major beneficiaries of the CAP and Structural funds to see Turkey as an unwelcome addition of countries with their spoons in the soup. Many in the EU look at Turkey and see a shadowy future of endless demands for agricultural and development aid perhaps combined with random shocks brought about by unforeseen bad government interludes (along the lines of Greece). If these fears and uncertainties lead just one out of 27 governments to veto Turkish membership, it won't happen.

Speculation:

But all that might be overlooked (it was for Bulgaria and Romania after all). Turkey's position in the world is unique. It straddles (literally and figuratively) Europe and the Middle East. One might expect that the EU would approach Turkey for membership in an effort to solidify democracy in the region. This motive is commonly put forward as a reason for the EU's rapid expansion in 2004 and 2007 to East Central Europe. This incentive however, has not made the difference so far. Turkey has been trying to to join the EU for a long time and the EU (or rather some governments within the EU) has always been reluctant. Only in the last decade has the process even gotten as far as official applicant status.

But the events in Tunisia and Egypt (and other countries?) may change the calculus. It might be that the case that if two or three new democracies emerge in the Middle East that the EU would see Turkish membership as less risky. They may see Turkey's established diplomatic and economic connections with newly energized (politically and economically) countries in the Muslim world as an opportunity. However, even in this more optimistic scenario the potential gains would have to outweigh fairly large known costs.

Alternatively, the unrest in Egypt could lead to greater instability in the region; either because conservative dictatorships end up being replaced by aggressive revisionist regimes or because the dictatorships are replaced by increased internal instability. In that event, the EU may look at Turkey as a kind of potential gateway to chaos that must remain shut (i.e. not included in the EU).

Hosni Mubarak: General, Tyrant, and Complete Idiot

2011-02-03T17:40:00.000-08:00

Pardon me while I vent...

From the start, Mubarak has been in denial about his true situation. But this latest turn of events is just insane. I think I heard best put by David Gergen on CNN this evening when he said that Mubarak's only chance of staying in office until September was if he had the backing of the US and a coalition of world governments. I had thought that he'd blown any chance of getting that support when he let loose the thugs on the anti-Mubarak demonstrators yesterday. But today he doubled down on crazy, blood thirsty tyrant strategy. He's set his thugs after the journalists from all over the world.

The top story regarding Egypt for half the new agencies on the planet is about to shift from "is it really Mubarak or chaos?" to "Hosni Mubarak Intolerable, Journalist-beating Monster." This may be interspersed with references to the Military Police attack on the Cairo office of Amnesty International and taking of its staff along with staff members of Human Rights Watch and some Egyptian human rights activists (all of whom are still missing as of the night of Feb 3). In very short order he will be confronted with near universal condemnation and demands to immediately resign.

Mubarak is 82 years old. It's been clear for a week that neither he nor his son were going to be running Egypt a year from now. The military is in a very strong bargaining position generally, so I doubt this is about Mubarak thinking this is about keeping the military in charge either. This is about Hosni Mubarak's pride. He's angry that a country he feels owe him so much doesn't love him. In revenge he's going to unleash hell on his countrymen and anyone else he chooses to blame for his situation. Blind rage in an individual is unfortunate enough. When combined with unchecked power, it's unspeakably horrible and tragic.

UPDATE (2/4): I have heard that the three largest opposition parties, the Muslim Brotherhood, New Wafd Party and El-Ghad Party are refusing to talk to Vice President Sulieman because they blame him for directing the attacks by pro-Mubarak thugs. Given what he said about foreign journalists just before the violence was also directed at them, I'm inclined to believe that Suleiman is behind it.

According to CNN, Suleiman said in a nationally televised address: "I actually blame certain friendly nations who have television channels, they're not friendly at all, who have intensified the youth against the nation and the state... They have filled the minds of the youth with wrongdoings, with allegations and this is unacceptable. They should never have done that. They should have never sent this enemy spirt."

Remaking the Map of the Middle East

2011-02-01T17:13:00.000-08:00

What is happening in Egypt today is going to remake the map of the Middle East. Until a couple weeks ago, American policymakers had a particular view of the region. The twin goals, not as compatible as we would like, were to support Israel and protect the flow of oil from the Gulf states. The Egyptian-Israeli peace accord of 1977 and the Iranian revolution of 1979 defined US foreign policy for the last 30 years after the USSR essentially stopped meddling in the region outside of Afghanistan. The Egyptian-Israeli accord pacified Suez (which was repeatedly blocked in the 1947-77 period). The US committed billions of dollars in payments to Egypt tied to the size of the aid packages given annually to Israel. The USA spends several billion a year on Egypt and Israel. We then pursued a policy of making nice to Gulf states, with the lynchpin being Saudi Arabia, and the goal of keeping them from military antagonism with Israel and out of the hands of Iran and its Islamists. The decision to use military force to protect one of the Gulf states in 1990 demonstrated how far the USA was willing to go to keep this structure in place. This still left as big issues, Syria, Jordan, and Iraq. The policy on all three was to try to herd them toward "moderation" - which meant no confrontation with Israel and no cozying up to Iran, and no opposing the USA. Success in Jordan, failure in the other two places. The USA finally just invaded Iraq entirely in an effort to deal with its destabilizing potential. Meanwhile the Israeli/Palestinian conflict dragged on, intensified, and created anger in the Arab street against their "moderate" governments like Mubarak and King Hussein who wouldn't really do anything about it.

Now this is about to unravel. We do not know what has been unleashed in Egypt, or what to do about it: only that we want to keep Suez open and the Camp David accords in place. But new governments in Egypt, Tunisia, may be more democratic but will almost certainly be less willing to continue doing nothing about the demands for action involving Israel. This will put pressure on the remaning more fragile dictatorships and kingdoms to take a harder line against Israel. It puts Iraq's fledgling government in a terrible position as the most aligned with the USA and by extension Israel. The specter of newly-democratized states using their oil leverage to squeeze the USA into abandoning Israel is a nightmare that now may loom. A return to the 1967-73 period would be a disaster. Recommendation to Israel: make peace fast and move past this scenario. (Wikileaks has told us that the two sides are not really all that far apart.)

The Scent of Jasmine

2011-02-01T08:50:00.000-08:00

So in the news today, other than Egypt:

King Abdullah of Jordan disbanded his government and appointed a former General as his new prime minister.

On the West Bank, they are rushing to hold municipal elections, the first since 2006.

Syrians are trying to organize mass demonstrations for Saturday. One of my Syrian employees was trying to reach her family in Damascus most of the day yesterday and the phone lines were down. You decide why that was the case. She finally got through yesterday evening. Her family had been trying to contact her from their end as well with no success.

There have been protests in Algeria and Yemen.

And there were protest in Lebanon last week when a Hezbollah candidate was selected as Prime Minister.

I am hesitant to speculate on what is going to happen because it seems that so many others are and the situation is changing so quickly. And it this point, it is just amazing to see how fast this has spread. The time is ripe and people are tired of being poor, jobless, and suppressed.

In Defense of the US Response to Egypt

2011-01-31T15:01:00.000-08:00

Hi Everyone,

I'll start by saying that I think the time has come for the US to come out and openly call for regime change - including the departure of Mubarak in very short order - or at least publicly endorse any evidence that Egypt is on that path. That said, I'd like to defend the Obama administration's response to the crisis in Egypt so far.

There is increasing talk about resentment being directed at the United States because the Obama administration has not been seen to do more to get rid of Mubarak. The assumption seems to be that the Obama administration is torn between their loyalty to Mubarak and their pro-democracy principles. Along with this seems to be that the US is either continuing to prop up Mubarak or at best doing nothing to get rid of a dictator who is their responsibility. But I think these critiques are not 100% valid.

First, Mubarak was not put in power by the US. Unlike many tin pot dictators around the world in the past 50 years or so (Pinochet, Marcos, Samoza, Batista etc), it's very hard to make the case that the current regime in Egypt was installed by the US. Mubarak's regime can trace its lineage with unbroken line of succession to the military regime of General Gamal Abdel Nasser. Nasser was a Soviet protege, not a US one. Nasser was succeeded by his long time friend and political ally, General Anwar El Sadat. Sadat was initially a Soviet client as well. It was only after the Egyptian military recognized the unfeasibility of a military solution the existence of Israel and he decided to shift away from a war policy to a peace policy, that Sadat also moved away from the USSR and towards the USA. When Sadat was assassinated for that shift, he was succeeded his protege, General Hosni Mubarak. Mubarak also began as a Soviet client - he graduated from a post-graduate training program at the USSR's Frunze Military Academy. My point here is that this is not a case of the US installing a despicable regime for its own purposes. Rather Egypt's military regime came to the US and offered its services and the US accepted - gladly.

Second, from very early on in this crisis, statements by both President Obama and Secretary of State Clinton have pointedly avoided mentioning Mubarak by name even while singing the praises of the friendly relations between Egypt and the United States or the "Egyptian people" and the United States. In a crisis like this for the US to make a point of not mentioning Mubarak by name is tantamount to a withdrawal of support. When these ominous omissions are combined with direct admonishments against using violence to put down the uprising, these kinds of statements amount to announcing US preference for Mubarak to leave (on the assumption that Mubarak can't stay without a crack down and the demonstrations won't stop until Mubarak goes). These basic statements have been embellished with progressively more direct calls for "dialogue," "reform," "transition," and "democracy." I'm increasingly convinced that all the evidence points to the US government effectively throwing Mubarak under the bus.

Third, suppose President Obama had come on TV on Wednesday of last week and said something like "the United States is calling for the resignation of President Mubarak..." That would probably cause celebrations in the streets in the short term. But it would have risked making whatever transitional government replaces Mubarak look like exactly the kind of US installed puppet, that Mubarak never really was. Some might also argue that such a move would have alienated some other US allies in the region with authoritarian regimes. But other than Yemen - which is teetering regardless of what Obama says about Mubarak - I'm not sure which other crucial allies would be likely to reverse their pro-US stance over this. I think the main motive for Obama's caution is a fear that the new regime in Egypt would appear to be anything other than a government of, by and for Egyptians.

This is certainly a messy situation and I'm not trying to say reasonable people wouldn't disagree about what exactly Obama should say and when. But I do think there is an increasing trend in the press - picking up on anger being voiced in Egypt and around the world - that Obama is either somehow pro-Mubarak or feckless.

Meanwhile upriver

2011-01-30T15:49:00.000-08:00

Sudan is about to split into two countries. The largely non-Muslim southern part of the country just voted overwhelmingly to be an independent country. This new country would be poor and land locked. Although what oil reserves Sudan has seem to be in this part of the country. The Chinese are the major players in developing those oil fields right now.

My Perspective on Egypt

2011-01-29T10:21:00.000-08:00

Hi Everyone,

I thought I'd share my thoughts on what is going in Egypt right now. Its very hard to predict how events will play out in the midst of a crisis. It doesn't look Mubarak is going to come out of this crisis still being President but he could stay in power if the army backs him and he cracks down with escalating violence or he simply waits out the riots while using the army to protect the things he cares about. But the medium and long term prospects are more amenable to prediction. Here are three thoughts I've had about the medium and long term prospects for events in Egypt.

First, on the demonstrations themselves. It's very important that the Muslim Brotherhood were not the initiators of this wave of protests and still don't seem to be the driving force for their continuation. The reason I think that's important is because I've read research that suggests that onlookers observe who the first demonstrators are. If the first people on the streets are perceived as radical or fringe elements, onlookers discount the significance of the protests and stay home and watch the whole thing from their windows or on TV. But if the onlookers start to see people they perceive as mainstream, regular people ("middle class" if you like), they are increasingly likely to join in. In particular, I think this sort of argument is made by Susanne Lohman's article "The Dynamics of Informational Cascades: The Monday Demonstrations in Leipzig, E. Germany 1989-1991." World Politics v47, n1 (1994): 42-101.

Second, Egypt's percapita GDP is about $6,000 (2009). That's right about at the level that some studies suggest we should expect that IF a democratic regime emerged out of this, it could last for years - which might be enough time for it to increase its prosperity enough to stabilize. It's also at about the level where dictatorships get more durable. A third possibility could be that Egypt will enter a period of alternating elections and coups d'etat. We saw a lot of that in Latin America and in Turkey for a while. An interesting starting point for this line of reasoning might be an article by Adam Przeworski and Fernando Limongi "Modernization: Theories and Facts" World Politics v 49, n2 (1997): 155-187.

Third, Egypt does export some oil and natural gas but it's not considered a major exporter. To put Egyptian oil production in perspective, it is far below the rank of a country like Mexico in terms of oil exports. This may be good news for Egypt. There is a fair amount of evidence that reliance on oil exports is negatively correlated with the emergence/survival of democracy. These findings actually seem to hold for any economy that is dependent on the export of a single, valuable commodity. For a good starting point for this kind of reasoning, see Michael Ross' article "Does Oil Hinder Democracy?" World Politics v53 (2001): 325-361.

Ugh

2011-01-28T10:38:00.001-08:00

I didn't think I could like congressional Republicans any less.

For years, federal laws restricting the use of government funds to pay for abortions have included exemptions for pregnancies resulting from rape or incest. (Another exemption covers pregnancies that could endanger the life of the woman.) But the "No Taxpayer Funding for Abortion Act," a bill with 173 mostly Republican co-sponsors that House Speaker John Boehner (R-Ohio) has dubbed a top priority in the new Congress, contains a provision that would rewrite the rules to limit drastically the definition of rape and incest in these cases.

With this legislation, which was introduced last week by Rep. Chris Smith (R-N.J.), Republicans propose that the rape exemption be limited to "forcible rape." This would rule out federal assistance for abortions in many rape cases, including instances of statutory rape, many of which are non-forcible. For example: If a 13-year-old girl is impregnated by a 24-year-old adult, she would no longer qualify to have Medicaid pay for an abortion. (Smith's spokesman did not respond to a call and an email requesting comment.)

Given that the bill also would forbid the use of tax benefits to pay for abortions, that 13-year-old's parents wouldn't be allowed to use money from a tax-exempt health savings account (HSA) to pay for the procedure. They also wouldn't be able to deduct the cost of the abortion or the cost of any insurance that paid for it as a medical expense.

Thank God this won't make it past the Senate. But these people are an election away from running this country!

Sudden Political Flux

2011-01-27T15:37:00.000-08:00

Egypt is balanced on the thin edge of a knife tonight. We have seen "people power" uprisings enough over the past 30 years to know that what happens on Friday evening in Cairo may be dispositive. If the police and army turn out in force and brutally repress, then keep it up for a few more days, the government may survive. We have seen this happen in Tienanmen square in 1989 and Tehran in the summer of 2010. If they waiver and crowds grow, it may be all over very quickly. I can foresee terrible violence or a million people out in the streets of Cairo, plus huge crowds in all the other major cities, demanding Mubarak to leave. Mohammed El Baradei has come to play the role of Vaclav Havel, Cory Aquino, and many others who have offered themselves as a crisis solution. Because 2/3 of the population is under 30 with large unemplyment, the prospects for massive demonstrations of people that have known nobody but Mubarak as president are huge. At this point, the odds of the Egyptian government surviving are still better than even, but waning fast.

That's the situational read. But here's the deeper commentary I want to make. We've seen this over and over again and are still trying to understand how suddenly, one day, a seemingly stable regime can collapse in a matter of days. Politics normally moves at a glacial pace. But sometimes a situation can become entirely fluid. That metaphor may be helpful or not for understanding a phenomenon we could call sudden political flux. Here's how I offer to explain the situation. We can call a state an "institution" but in the end it's just a bunch of people. The body politic is a human thing. The primary mechanism for sustained political structures is expectational. We see the same thing in markets. While the stock market normally moves slowly, it can suddenly move into periods of wild fluctuation as we saw in the Fall of 2008 and into 2009. The metaphor of "free fall" is not bad either - it describes a sudden, unexpected, but accelerating and seemingly uncontrollable event. We have also seen sudden breakdowns of order in places like Los Angeles in the 1992 riots, 1968 riots nationwide. In fact, one lessons of the past 30 years, both political and economic, may be that crisis is endemic to human social, political, and economic systems.

I do not know if a model can be made to predict when crises will occur or how they will resolve. It may be possible, but part of what makes them crises - sudden political flux, market collapse, riots - is that they are not predicted and the relevant actors are unprepared for them. Their spontaneity is their main feature. Moreover, organized premeditated attempts to create political flux through general strikes are rarely effecive. They also involve a set of decisionmakers not normally involved in political decsionmaking. What happens on the streets of Cairo tomorrow will be decided by huge numbers of individual, ordinary people -- protestors, police, soldiers -- in addition to the normal actors, their commanders and powerbrokers. The prerequisite to sudden political flux is mass communication - not mass media. The ability of vast numbers of human beings to participate in political drama is necessary for crises to occur. It may be observed that market crises also appear to be connected with bubbles and mass participation.

So we wait anxiously to see if Egypt will suddenly change its political system over the next twenty four hours.

What may be observable about political crises of this kind is that, like market crises, they cannot be handled by slow ameliorative efforts. It only spirals further out of control. To use another metaphor, a situation like this is referred to as a movement. Only brutal, dramatic, swift, and stunning action can arrest (literally and figuratively) a movement in its tracks. The situation tomorrow may be determined in a matter of an hour.

On-Line Univeristy

2011-01-27T10:25:00.000-08:00

During the State of the Union, the President commented that the United States has fallen to 9th place in terms of undergraduate degree holders,and he made several references to China and South Korea, indicating these are our competitors.

So I did a little fact checking. In fact this statistic is a bit off. We have fallen to 9th place compared to OECD countries, i.e industrialized nations. Neither China nor South Korea are in the OECD. That doesn't mean we shouldn't look at what these nations do to pick up on good ideas. But the comparison is unfair and inaccurate. It plants the idea, although in very diplomatic terms, that we should watch out for the "Yellow Peril".

Furthermore, when you adjust Elementary & High School test statistics for poverty (i.e dump the test scores of kids on school lunch programs and special assistance) the U.S. suddenly ranks much higher.

According to the is Census in 2009, 49.1% of the U.S. population has an AA degree of higher. According to the OECD in 2007 45% of 25-64 year-olds had and AA (upper Secondary) or higher. This puts us in 12th place among OECD nations. But it represents about a 4% drop since 1997.

My employer pays for many of its employees to get BA, MA, and PhDs in fields related to it's mission. This is a great, but many of the schools are on-line schools like University of Phoenix, Chapman, etc. The people going to the local CSU are taking several years to complete their degrees because the class loads, assignments and the like are heavy enough that they can't take more than one or two classes a semester. The people going to Chapman are done in a year. That is a huge difference, and I am not convinced it's a good one. The end result is not the same. The CSU grad is much more professionally prepared than the others who are doing the "resume-building" degrees.

So many universities are offering on-line programs for primary degrees that this frightens me. I can see running an Executive Program On-line because the students often have work experience in the field and university degrees from reputable programs. But I worry about the quality of education being offered for higher degrees. I know that these universities offering on-line degrees are money makers and that they make education more available to more people. But I ask the Citizens, is this really a good idea? Is it "education on the cheap" so to speak?

You still need the professor and the classroom time where critical thinking and discussion can take place. I don't think that a blog or Web cam discussion can really replace that. I read a lot of stuff in college that without a classroom discussion or lecture, I wouldn't have understood. The best schools are still offering that. Or am I just old fashioned?

Concealed Handguns and Personal Safety

2011-01-16T16:31:00.000-08:00

Many on the right like to argue that society is breaking down, that law enforcement agencies in particular are incapable of protecting law abiding individuals. They argue from this premise that allowing as many law abiding citizens to cary concealed hand guns will enhance the personal safety of the armed individual as well as general public safety. The logic is that when criminals are forced to consider that any given potential victim may be armed, they will not attack/rob as many people as often.

In the wake of the shootings in Arizona, CNN interviewed a witness who was carrying a concealed hand gun at the time of the shooting. He said he carried it because it made him feel safer. He was in the grocery store when he heard the shots. When he looked out the door of the grocery store, he saw a man raising a semi automatic hand gun. As the man told his story, he said he had a split second to decide to draw his own weapon and fire, run away for cover, or confront the man he saw raising the gun without drawing his own weapon. He chose the last option. That is fortunate because when he grabbed the man's arm, he found out that the guy raising the gun was not the shooter but one of the victims who had tackled Loughner when he stopped to reload.

The man being interviewed was fairly candid about how close he came to compounding the tragedy rather than preventing or resolving it. He pointed out that he could easily have shot an innocent man and in doing so made himself appear as a "second shooter" to anyone else in the crowd who might have had a concealed weapon or to responding police/security.

This story underscores many of what I consider to be the myths around the idea that having lots of random people carrying concealed hand guns makes any of us safer. This man being interviewed could easily have turned a tragic shooting with 20 or so victims into a chaotic free-for-all with many more victims. Or he could have been shot by the police while brandishing his weapon in a well intentioned attempt to secure the situation himself. Furthermore, in the end, this man in the interview was confronted with a truly violent crisis that was a potential threat to his safety. Unless he is a cop, a soldier, etc or lives in an unusually dangerous neighborhood, this will probably be the most dangerous situation of this sort he ever sees in his life. And yet, his hand gun ended up not doing him any good at all and may have made his situation worse.

Finally look at this situation from the point of view of a responding police officer. Suppose you are a cop responding to a frantic 911 call about shots fired at the local mall with several victims down. You pull up in your cruiser and jump out drawing your weapon. In an instant you have to survey the crowd for the shooter. You have every reason to believe that you are the first police officer on the scene yet you see a couple of people in civilian clothes holding pistols amid a panicked crowd with several people on the ground wounded. Would that situation make your job easier or harder?

At a minimum, a cop in this situation would have to confront the armed people he sees and tell them to disarm. That takes time. Assuming the people with guns that (s)he sees first are innocent bystanders trying to protect themselves with their legally carried guns, the cop still has to identify and stop the perpetrator. Having to disarm bystanders slows that down at best and at worst presents opportunities for further tragedy.

As an unarmed citizen, I feel safer with faster response rates by police, fewer people throwing bullets around in a crisis, and an environment in which trained law enforcement agents (accountable to democratically elected representatives) can perform their duties as efficiently as possible. To be honest, I simply do not understand the thinking that bring people to the conclusion that a world with high numbers of secretly armed civilians makes any of us safer.

Meanwhile in the Middle East

2011-01-14T08:47:00.000-08:00

Tunisia is undergoing a period of severe political instability. Massive street demonstrations calling for the resignation of President Zine Ben Ali who has been a relatively benign dictator since 1987. The latest reports have Ben Ali fleeing the country with the Prime Minister he appointed having taken power. These demonstrations have been going on since December but the rest of the world has taken little notice (probably because Tunisia isn't a major oil exporter and the government doesn't take high profile anti-western or anti-American positions). You can see Tunisia's CIA World Fact Book profile here.

According to the Polity IV project which provides broad measures of the level of democratization in countries, Tunisia (higher scores mean more democracy, lower scores mean a more authoritarian regime) has seen a period of significant improvement in political freedoms in the first half of Ben Ali's rule but has recently been slipping backwards in a more authoritarian direction.

Tunisia's economic situation makes me cautiously optimistic about their medium future. They have a fairly diverse economy and a relatively high per capita GDP for a non oil exporting country. There are concerns though. Decades of rigged elections has left a party system that has been untested in a fully democratic environment. We don't really know if they are up to it. In many new democracies, party systems become badly destabilized and in the worst cases, this can make people disillusioned with democracy and/or provoke a coup d'etat. But if the parties can manage to represent constituencies and compete with each other without resorting to violence, things could get very interesting in a good way.

Tunisia is a cross roads here. It is entirely possible that they could emerge from this with something resembling a stable democracy. If that were to happen in a predominantly Islamic country in North Africa it would be a great development for the region!

And in other news . . . California has a New Governor

2011-01-12T21:13:00.000-08:00

Governor moonbeam is back! And his opening salvo reminds us why we love practical Jerry. He opened by proposing that 48,000 state employees turn in their cell phones . This represents a 50% cut.

One commentator suggested that he also look at all the unused landlines that the state is paying for, but that are not being used. The article mentions that in a 2009 audit, they found 8000 unused lines in LA county alone. The annual cost: $1.5 mil .

Brown is an interesting and parsimonious character. He never moved into the governors' mansion in his first term, and brought to bear his monk's frugality to Sacramento. Then there is the story about the A $100 million hole in the carpet in the governor's office. Before leaving office, Ronald Regan offered to replace the carpet in the governor's office at his own expense. Brown refused. Near his desk, a hole opened up in the carpet. One day, Davis informed Brown that GSA has been scheduled to fix the hole. Brown was angry. "Don't you understand -- that hole has already saved us a couple of hundred million dollars. "People can't come in here and rail against me for not funding something, when there's a whole in the governor's rug."

So far, he refused office space on K Street in Sacramento for his transition team, preferring to use his Oakland campaign offices.

Apparently, the other thing Brown's time in seminary taught him was the need for sacrifice. He is going to be making some very unpopular cuts normal liberals would never suggest, such as cutting spending on public libraries. But that is the nature of the beast. We go from flash (Arnie) to stash.

Blood Libel? Not Bloody Likely

2011-01-12T14:27:00.001-08:00

So you have all heard by now that Sarah Palin claimed that those who drew a connection between Saturday's Tucson massacre and right-wing rhetoric are engaged in a "blood libel." What is a blood libel? The term comes from the late middle ages. It specifically refers to the false accusation that Jews used the blood of Christian babies as part of their matzoh recipe for passover. It more broadly refers to the related accusation that "the Jews" were and are responsible for the death of Jesus. A blood libel is not just another word for "false accusation of resopnsibility for murder," however. When abstracted from the context of anti-semitism from which it arose, the "blood libel" could be defined as follows: a false accusation that an unpopular ethnic or religious minority engages in unspeakable, secret crimes employed to encourage hatred of and violence against that group. The first key to understanding the terror of the blood libel is the power relationship: the ability of the majority which controls the public narrative to "libel" a minority. The second key is that the crimes are secretive and hard to prove, so that the accused group is forced to try to "prove a negative." How can Jews prove that no baby blood was used in the matzoh? The third key is that the crime is unspeakable: rather like accusations of pedophilia, the accusation alone creates a permanent stain. Cannibalism used to be like that - less so now because it is viewed rather as fantastical.

First, it is obviously absurd for conservative Christians - or Conservatives of any stripe - who just won the last election to claim such a minority status or victimhood. They are as close to "the majority" as you get in this country. Certainly they cannot be said to be analogues of the Jews at any time.

Second, nobody is accusing Tea Partiers of engaging in regular assassination or such a thing. It doesn't even look like a blood libel. Blood libel is not "guilt by association."

Third, there is no such odiousness about he accusations being made. Liberal commentators, even at their worst, are not accusing right wing commentators of doing unspeakable things like pedophilia or cannibalism.

What is happening is a discussion that we need to have. People show up with guns to Tea Party rallies and mutter about the Second Amendment. Some talk openly about resistance. Militia members prowl around with their guns and their heated anti-government hate and rhetoric. They have dark thoughts about cabals and the need to take matters into their own hands. Conservative groups have helped produce a theory they embraace - entirely false - that the Second Amendment enshrines a right to use violence to resist the federal government if you consider it to be tyrannical. There is a short road from saying that the Second Amendment right to bear arms is about the right to defend society against abstract tyranny to the statement that guns are needed now to defend against this Obama-tyranny now. The more mainstream conservatives don't endorse this Second Amendment construction openly, but they don't engage or deny it either. They want the votes of these extremists, so they won't contradict or condemnt them. And in subtle ways some even knowingly encourage these extremists a little. Coded language communicates that "I'm on your side" even without explicitly endorsing them. Even now we hear condemnations of this murder but not condemnations of the notion that political violence is enshrined in the Second Amendment if you really think the US government is tyrannical and unjust. And what is worse, the rhetoric used by even mainstream conservatives to describe Obama, the Democrats, and Health Care Reform are already every bit as bad as they could possibly be (tyranny, Nazis, communists, gulag). Those are the words that would justify political resistance with violence if taken literally, and if you believe the Second Amendment enshrines violent resistance with guns. That is what they are being called out on.

Violence? What violence?

2011-01-10T14:42:00.001-08:00

The defensive response from many on the right that their rhetoric is not violent or doesn't incite violence is just offensive. Here is a great example of what passes for humor on the political right. It's a hunting license for killing Democrats. You can buy one at the "patriot shop" (the name of course implying that if you don't like what they sell you must not be a patriot).

UPDATE: Dr. Strangelove pointed out that the product linked above has been taken down since I first posted this. But I found several other products at the same website that are nearly as indicative of the pervasive violent subtexts of the American right. Here, Here, Here and Here.

The Roll-Giffords Shooting, Policy and Politics

2011-01-09T05:38:00.000-08:00

The big story right now is the murder of a federal judge, John Roll, and the attempted murder of Representative Giffords (D-AZ) by a deranged young man (the police have him in custody and are currently seeking a possible accomplice) at a mall in Tuscon. A number of other people were also killed and wounded including a 9 year old girl. The Sheriff has publicly called out the right wing demagogues who whip up "prejudice and bigotry" and lamented that Arizona seems to have become the "capitol of it."

All of this is about to kick off a debate in this country about how responsible for right wing political violence are Republicans like Sarah Palin and others who are trying to ride the Tea Party to political power. Tea Partiers will say that this is the act of a lunatic and that it has no connection to politics at all. I agree that the man the police have arrested is probably mentally ill. But that does not mean that these murders are a-political or have no connection to the rhetoric and policies of the right.

The man may have been insane and murderously suicidal. But the nature of his murder/suicide is a product of right wing politics and policies. His choice of targets and the weapons he used (and therefore the number of victims) are the products of the politics of the American right.

There are murder/suicides occasionally in the United States. The overwhelming majority of them are obviously apolitical affairs in which somebody snaps and kills their family and then kills themselves. These kinds of events spike when the economy goes south. There have been a couple of incidents like this near where I live. They were well covered and there is no ambiguity at all about their nature. There is no mention of politics or anything that could even be called politics by a deranged mind. These are entirely personal tragedies.

The Roll-Giffords shooting is obviously different from that pattern. The perpetrator seems to be mentally ill and it may be that he was tackled before he could kill more people and then himself. It may also be the case that even if there were no political rhetoric for him to feed off of, he would have snapped and shot up his community college or his family or something. But the fact remains that the targets of this murderer had no connection to him at all. He chose them because of their political positions. Judge Roll had recently ruled in favor of an immigrant group in a lawsuit they had brought against the State of Arizona. Representative Giffords (D-AZ), like many Democrats, had been threatened since her vote for the health care reform bill. In the 2010 election her opponent held rallies around his firing automatic rifles with the headline for the event being "Get on Target for Victory in November. Help Remove Gabrielle Giffords from Office. Shoot a Fully Automatic M16 with Jesse Kelley." The shooter clearly chose to commit the crime he did because of politics. The atmosphere created by the right gave the shooter his inspiration for the how to manifest his mental illness. The shooter's web pages are full of references to secret government mind control projects and his desire to establish a new currency. These may seem nuts to most of us but these kinds of fantastic theories about economics combined with over the top paranoia about the government are relatively common among the tea party crowd.

There are attacks by mentally deranged killers in other modern societies as well. In some countries where gun control laws are stricter, these attacks take place with either knives or with firearms with low rates of fire. But in the US, the weapon of choice is often a semi- or fully automatic weapon. In the Roll-Giffords shooting, the shooter was using a semi-automatic 9mm handgun and shot 20 people before he was tackled while trying to reload. I imagine that we will hear that he had a high capacity clip in the thing and probably bought it all legally despite a long history of ringing alarms bells about his mental state (I just heard on CNN that he was rejected from the military for undisclosed reasons and has had "numerous" run ins with authorities while a student at the local community college).

So in my opinion this is a case of right wing chickens come home to roost. We have a lunatic who's particular victims, it is becoming increasingly apparent, were chosen after the shooter was inspired or egged on by the environment of right wing rhetoric. I'm also convinced that if there had been a years long drum beat by the left of violent rhetoric directed at Republicans and their allied institutions (say churches) and some lunatic with a website full of left wing inspired rhetoric murdered a right leaning federal judge and a Republican House rep there would be a hurricane like howl of condemnation of anyone to the left of Genghis Khan for their complicity in the violence. Hell, Sarah Palin accused Obama of being a terrorist or terrorist sympathizer because he once had coffee at a neighborhood association meeting with a former member of the Weather Underground.

UPDATE: I could also have pointed out that if this guy turns out to be a psychotic schizophrenic (which it looks like might come out), we owe his attack in part on the defunding of mental health provision that took place in the 80s. Since then, we've relied primarily on the prison system to treat the severely mentally ill - that means that people like this guy who are showing clear signs of being a danger to themselves and others are left on their own until they actually commit a violent crime.

Will Nobody Rid Me of these Meddlesome Politicians?

2011-01-08T14:46:00.000-08:00

So the Tea Party has turned to murder, at last, to the very "second amendment remedies" Sharron Angle advocated earlier. An Arizona Congresswoman was gunned down at a grocery store I used to shop at when I lived there. A federal judge was killed in the attack; she may live. Her husband, it turns out, is an astronaut.

The goal of this attack is to try to literally make Democratic politicians afraid for their lives so they won't take certain courageous votes. That's political terrorism pure and simple. I don't suppose the GOP will let us punish it in the manner they claim is 100% OK by the US Constitution and that they have written into law: by locking the perpetrator up indefinitely overseas, by torturing him for months at a stretch, all as part of an endless "war on terror," then using the laws barring material aid to terrorists to shut down all the tea party cells and Fox News.

The almost unbelievable part of this is that it is a tempest in a teapot. Americans by and large want solutions to the problem of unaffordable health insurance and aren't horrified by the prospect of buying health insurance, something that 80% already voluntarily purchase. Yet this is the cause celebre of these right wing lunatics.

Grand (Same) Old Party

2010-12-30T12:17:00.001-08:00

Hi Everyone,

CNN's website has a story today about the "Reborn GOP." This is in keeping with the usual media story that the Tea Party has somehow revolutionized the Republican Party. But let us look at the leadership of the GOP pre and post Tea Party.

In 2008 the GOP was lead by:

John Boehner (House Minority Leader)

Eric Cantor (Minority House Whip)

Mitch McConnell (Senate Minority Leader)

Jon Kyl (Senate Republican Whip)

In 2011 the GOP is lead by:

John Boehner (Speaker of the House)

Eric Cantor (House Majority Whip)

Mitch McConnell (Senate Minority Leader)

Jon Kyl (Senate Republican Whip)

Do you notice any differences? I sure don't. The only difference is that the titles of House leaders changed because the Republicans won the majority in that chamber. But they have the same leadership now that they had when the got creamed in 2008. So the Tea Party has not changed who is in charge. It may have changed the policies that these leaders advocate.

So what of those policies? The Republicans insisted on a tax cut for the rich that put enormous pressure on the deficit. In that deal they compromised on a range of issues about which the Tea Party might have been expected to be especially concerned and unwilling to give ground: DADT, FDA authority, START. Representative King (R-IA) will be Chair of a subcommittee of the Judicial Committee in the House and wants to hold hearings about ACORN (an old wining complaint of the far right from 2008). It seems to me that this leadership is both the same in identity and policy perspective. Their only priorities are tax cuts for the wealthy and political vendetta.

This suggests to me that we should not expect a great deal of influence by the Tea Party on the actual practice of governance by the newly empowered Republicans in the House.

Yay!

2010-12-30T09:42:00.000-08:00

Wow, a bit of good news from Tea Party Nation:

Tea Party Nation founder Judson Phillips put out a list yesterday of the "top five liberal hate groups," because "while the Left loves to accuse the Tea Party and Conservatives to be members of hate groups [sic], the simple fact is, there are a lot of liberal hate groups." And who made the cut for the top five? The NAACP, the Department of Homeland Security, the ACLU, the SEIU, and of course, the Southern Poverty Law Center.

...

The number two spot went to the DHS for taking part in "silly political posturing from the most corrupt regime in the history of this country." Referring to Secretary Janet Napolitano as "the DHS Clown in Chief," the list says that the "DHS will not enforce border security. It makes Americans go through a joke of a security system when they want to fly. It invades their privacy while not going after terrorists."

(emphasis mine)

Can I hold out hope that this means we will be getting rid of it soon, now that people on the left and right both distrust it? Or is it (as a jaded person might suggest) that everyone in America hates it except elected officials, and thus it will remain forever?

I also have this same question about indefinite detention.

Hegemony, Decline and Normalcy

2010-12-28T12:13:00.000-08:00

Hi Everyone,

Various of us have discussed the nature of American power in the world and the prospect of its decline. In the last two years, there has been an enormous amount of talk around (if not on this blog) about the supposed reality of American decline. This kind of talk is often combined with references to ascending new powers such as China. The usual contention is that China is replacing the United States as the world hegemon (i.e. the single greatest power on the planet). The purpose of this entry is not to discuss the validity of expectations of China's rise or to speculate about what sort of policies an ascendant Chinese government would pursue. Rather I would like to talk about something that has been on mind lately: namely that talk of China replacing the USA is rooted in the belief that a world dominated by a single great power is the normal state of affairs and that naturally, if the USA declines it must be replaced as "top country" by some other power and the most likely candidate is China. This view is badly mistaken.

A single power (or "unipolar") world, such as we have experienced since 1989, is not normal. Neither is the "bi-polar" world we lived in between 1945 and 1989. For most of human history different regions of the world were dominated by local powers sometimes with one power dominating a region, but more often with a small group of powers contesting for regional hegemony. For most of the time, these regions were only tenuously connected to each other and rival powers from different regions rarely came into direct contact let alone conflict. That began to change in the 17th century when a cluster of European powers began to transfer their previously regional conflicts to a global stage. That state of affairs held until after World War II with the additions of the United States and Japan to what otherwise had continued to be a European multi-lateral rivalry.

World War II changed all that for a couple of reasons. First and foremost, only the United States emerged from that war with a completely intact industrial base. Second, only the United States and the USSR emerged from the war with militaries capable of imposing their governments' wills in all regions of the world.

Between 1945 and 1989 two processes occurred that set up the unprecedented situation of a single global power. Those were Europe's and Japan's recovery from WWII on the one hand and the relatively rapid decay, within the span of a single human lifetime, of the USSR on the other.

Since 1989 we have seen processes that appear to indicate a decline of US power. These are the rapid industrialization of countries that until the 1940s and 50s were largely colonies of the great powers of the pre-WWII rivalry. This includes countries like China, India, S. Korea, Brazil, etc. Related to this is the ending of the post-WWII US monopoly on global economic power. Advantages that the US had briefly after WWII have disappeared. For example, no longer can American industrial laborer charge whatever they wish for their efforts without regard to what the industrial laborers of Europe, Asia, South America or even Africa are willing to charge.

But are these developments a valid pretext for declaring an end to American power? Far from it. The US remains the wealthiest, large country on the planet by far. It also remains by far the largest military power (many times more potent than China is really). At the same time, while the gap between US power and the rest of the world has narrowed somewhat of the world's ten largest military spenders, 7 are the US and its allies. China is one. Russia and India are the remaining two and while difficult to place squarely in the US camp, both have fought minor wars with China relatively recently and neither has much reason to support China's unrestricted rise. This suggests to me that while the gap between US and Chinese power narrows, the US still has a dominant advantage diplomatically. Chinese governments' positions on crises such as those involving North Korea or Iran do not help China's diplomatic status in the world.

What we are seeing is the return to the Pre-WWII multi-lateral arrangement but without the over representation of European powers that characterized the period from the 1600s to 1945. In my view what we have seen in the last 60 years is not so much the firm establishment of US hegemony as a transition from one 350 year period of multilateralism to the next period of multilateralism. What's more, this transition has been overseen by the US. In the grand scheme of things the advantage that the US realizes as a result of this position of dominance during the transition will prove a good thing both for Americans and the world.

Well, that's my two cents for now.

Big Government?

2010-12-22T08:17:00.000-08:00

The phrase "Big Government" gets kicked around so loosely, that I think it is worth considering its meaning. Wasn't it Bill Clinton who said the "era of Big Government" is over? In his case, it meant offloading government services to contractors. But that is really a cosmetic change at best. So what is is, and why is it so bad?

What do conservatives and Tea Partiers mean when they talk about "big government" , what do liberals mean? And aren't there good kinds and bad kinds of big government? And what government is too big? We have so many levels of government: Federal, State, Local.

There is no way that a country, the size of the US with a now new population of 357 million, can avoid big Federal government. It takes a lot of money and people to keep it running.

When conservatives talk big government, they are usually referring to Federal Government, Federal Spending programs (Medicare, SSI, Unemployment insurance, education funding, etc), the people who work and run those programs (too many civil servants and the unions that represent them), any form of regulation and the bodies that enforce them (EPA, FDA, IRS, etc.), stimulus spending to get the economy on track. These are the things liberals see as good kinds of government.

The inherent contradiction is that conservatives support big government by constantly voting for military spending, costly weapons programs, nanny state regulation (no abortions, no drug legalization, anti-sodomy laws, etc.), block grants to states who are then forced to build bigger government to meet the obligations, subsidies to private industry and key constituencies, etc. This, in turn, is what liberals mean when they talk "big government" and they see it as bad kinds of government.

Citizens, what's your take?

The GOP-Obama Tax Deal

2010-12-14T12:10:00.001-08:00

This morning I read that some conservatives are claiming that the GOP gave away the store in dealing with Obama on the tax cuts - the only good news I've hear din weeks. Of course it's not true - they're just upset that the GOP gave away anything at all. Evidently the Tea Partiers are all in a huff about extension of the 100 year old Estate Tax, which they call the "Death Tax" that they say "ruins small businesses" and "double taxes savings." These little-minded people who know nothing! At the same time, they are angry about the deficit. Huh? My fear is that the GOP will scuttle the tax deal, then come back in the new year and demand even more, which Barack Obama will give them, since he seems to be spineless at this point. The only good thing about the deal is the payroll tax temporary reduction which is a very good thing for middle class people and will totally stimulate the economy. If only, again, this weren't blowing a hole in the deficit. I think calling this the "Obama Tax Deal" rather than the "Republican Tax Deal" is a way of setting up the President for another defeat. Wait for it.

Responsible government would put in the payroll tax holiday and keep the tax rates low on the first $50,000 of income, but would allow other rates - and especially the tax on estates - to rise back to their levels in the 1990s. Remember the 1990s? Balanced budgets, even surpluses, and economic growth? Instead, more supply sider crap.

University Trends and National Security

2010-12-12T11:06:00.000-08:00

There have been a spate of talk shows and news stories lately discussing how universities are cutting back on modern language programs. I have a few thoughts on this issue, and I would be interested to know what the Citizens think, as many of you have a better grasp of Academic politics than I.

The Department of Defense is throwing a lot weight behind language learning. The Marines now have a language requirement for all troops being deployed to Afghanistan (see MARSOC). Language Training Detachments are being opened at major Military Bases with focus on training Special Forces. The Army in its 2010 Posture Statement launched its "Army Culture and Foreign Language Strategy". The DoD has provided millions in grants to universities such as University of South Florida, University of Maryland, UCLA, to name a few to bolster language programs. So there is now doubt that foreign language is now on the same footing as math and science as a top priority.

Therefore, I get concerned when I hear about how the University of New York at Albany is not allowing new students to major in some foreign languages, like French and Russian. Bad news is that French and Russian are considered important languages for National Security. In addition, we need to be adding programs in new languages, like Arabic, Persian-Farsi, Dari (very similar to PF), Pashto, Hindi, etc. Granted, finding qualified people in some of these languages is very difficult, but not impossible. Currently, the only foreign language increasing enrollments is Chinese. At UC Berkeley I hear they can't add the classes fast enough. Of course, I am pretty for sure it's a lot of MBA types.

To replace the Modern Languages, there is a movement in Academia that says you can teach "world culture" through Anthropology departments instead of language and that this is just as good. I think you can teach world culture, but that does not negate the need for foreign language training . Language and cultural go together. As someone who focused on Cross-Cultural communications, I can tell you that language is 70-80% of the game. Just learning "culture" doesn't do the job. And what does that mean to "learn culture", anyway? I think this is just a lazy attitude. It is hard to learn a foreign language, it takes a lot of effort and time. So what you are really saying is that we don't want our students to take time and work hard.

One proponent of this idea is Linguist John McWhorter , currently a lecturer at Columbia University and former senior fellow at conservative think tank The Manhattan Institute, who went so far during an interview with NPR's Talk of the Nation to say that after a certain age, the ability to learn language is so greatly reduced, it's pointless to start. The age he sites is 18. After that, he says you will always have an accent. Where do they dig these people up and who is paying this guy?

Bottom line, we need more languages taught in our schools at younger ages. I've always believed that and I think it's more important now than ever before. I don't even care which ones are being taught. Learning any language is useful.

China as Enfant Terrible

2010-12-10T07:20:00.000-08:00

Hi Everyone,

According to the Mirriam Webster online dictionary there are multiple definitions of "enfant terrible" and both apply to China: "a person known for shocking or outrageous behavior" or "a usually young and successful person who is strikingly unorthodox, innovative, or avante garde." So much is true of all great powers in history.

China has fit the second, more flattering definition when it managed a difficult transition away from totalitarian, Maoist communism towards a significantly less oppressive market oriented authoritarian dictatorship. In doing this China has established itself as a major world economic power while dramatically improving the standards of living for millions of its citizens. China's management of this transition has been far more successful and innovative than the Russian transition. China has also shown its innovative side when it devotes large resources to researching renewable energy (a farsighted policy for a country with rapid growth and not enough domestic fossil fuel reserves to meet future needs).

But China has also fit the less flattering definition. When China hypocritically claims to be the champion of non-interference in domestic affairs by major powers all while bullying aid recipients into buying Chinese or while supporting the horribly dysfunctional North Korean regime against the interests of the North Korean people and the entire region. China also fits this less flattering definition when it reacts so childishly to the Nobel Committee's award of the Peace Prize to the Chinese dissident, Liu Xiaobo.

China is on the verge of becoming a major global power. But they are still often stuck in the mind set of a petty dictatorship. Two recent events; one in North Korea and now this Nobel Peace Prize award highlight the ways in which China's leaders are not ready for prime time.

Leaky, Leaky

2010-11-30T12:40:00.000-08:00

Despite the high drama in the media about wikileaks latest disgorging, I don't see why the content is such a big deal. Most of what I've heard about so far seems rather typical and mundane. Of course people call world leaders names in cables. These are like private letters.

I think this event, and those to come raise several questions:
1) Who really did the leaking, and what was the real motivation or agenda?
2) What does this continued data dumping mean for governments trying to conduct private business?\
3) The 24 hour news cycle plays a serious role in the inability of government to function. It is partly responsible for the growing polarization we see among our political leaders, so how does such open and easy technology contribute to this?
4) How much can you disable technology, such as deactivating USB ports as the DoD has done, without paralyzing the functions of government?

I don't see think it is fair to compare this to the Pentagon Papers. That was the leaking of a specific report about a specific issue and it was done out of concern for the public good. This was indiscriminate and done to prove it could be done. The public good be damned.

What do the Citizen's think?

Federal Employee Pay Freeze

2010-11-30T04:53:00.000-08:00

What do you think about the federal employee pay freeze? I'm surprised to find myself for it. State employees in my state have faced pay freezes for years now along with furloughs and layoffs. I don't see why federal employees should be let completely off the hook.

That said, I'd rather the federal employee pay freeze happen sooner rather than later because we do face the potential of future inflation because of the high debt levels. I'd rather see federal employees have their pay frozen during a period of flat prices than rising prices.

You are now Free to Roam the Country

2010-11-22T14:23:00.000-08:00

The new TSA regulations about airport screenings are riling a lot of people. I have complained about them before on this blog. Needless to say, I very much hope I am not expected to travel anytime soon because I refuse to be strip searched by a scanner and I will not allow anyone to "touch my junk" either, unless it is part of a larger civil protest. I am not a criminal because I have chosen to fly. With that in mind, I encourage you to participate in the "Opt Out Day" if you are flying for Thanksgiving. This is acceptable civil disobedience.

And please, file your complaints about screening with the TSA. They keep saying that they are getting "minimal complaints". They are either lying or no one is bothering to file complaints. This article has information about IPhone aps for filing complaints. Let them hear you!

I have also been reading the blog Of John Tyner, the San Diego resident who used his cell phone to record his TSA encounter. He makes some very good points about contracts. I'd be interested what LTG thinks of his point of view.

I am most put off by the fact that the TSA threatened this man with fines because he left the screening area. He forfeited his ticket and agreed not to fly, at which point they threatened him.

And what is very disheartening is to hear people in the Obama Administration using the same scare tactics as Bush's people did. Here is what John Pistole said to the New York Times about the "Opt Out" protest, "If terrorists can anticipate that, it gives them an opportunity." Sad, very sad.

Income Taxes and Small Businesses

2010-11-17T09:13:00.001-08:00

Hi Everyone,

The Republican argument against allowing the Bush tax cuts to expire for tax payers making more than 250k/year is that raising taxes on this income bracket would kill off small businesses or at least slow their growth/recovery. They say this as if it is self evident but it raises a number of questions for me that I'd like to hear the opinions of some tax experts about (like maybe LTG or Seventh Sister).

First, are all small business profits treated as income for the owner for tax purposes?

Second, is there a way for a small business owner to reinvest their profits in their business before it can be taxed as income?

Finally, depending on the answers to the first two questions, shouldn't it be fairly straightforward to prevent what is intended to be a tax increase on the richest portion of the population from directly affecting small businesses in general?

Or is this just a typical Republican canard based on dishonest presentations of the facts?