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Such a perfect line. You have to admire the dryness of wit needed to pull this off.
Next time I’m arguing with someone invoking strawman arguments, I’m pulling this off the shelf.
[digg-reddit-me]It is commonly stated that China’s ruling power has struck a kind of bargain with it’s people – that they will accept the one-party rule and other political restrictions – as long as the government is able to keep the standard of living rising. Orville Schell, Dean of the Graduate School of Journalism at the University of California at Berkeley and author of several books on China, gives a typical explanation:
…it would not be excessive to say that everything – economic health, social stability, political reform, environmental modernization, etc. – all depend on China’s economy maintaining at least a 6 percent to 7 percent growth rate. This is something that most market economies cannot do in perpetuity given the nature of cyclical growth cycles.
When this topic is brought up in foreign policy discussions, it is often understood as a uniquely Chinese problem – this bargain between the people and the state that they will accept an authoritarian government in return for a growing economy. But a government’s dependence on its ability to increase opportunities for its people for its legitimacy is not a uniquely Chinese problem. The Chinese government may only be able to survive as long as it continues to provide economic growth to it’s citizens, but how different is this bargain the Chinese people have made with their government from the bargain the America people have with ours? As long as American citizens have their basic needs met and a reasonable opportunity to succeed, they will accept a polarized distribution of wealth, corruption of various sorts, and sundry other injustices. And as long as the Chinese citizens are moving towards having their basic needs met and have a reasonable opportunity to succeed, they will accept a single-party state, restrictions on freedom of speech and assembly, and other restrictions.
Any state’s constitutional structure is legitimated by whether it provides for the needs of it’s people. In another age, the state merely provided security against hostile invasions and criminals; later, it provided an identity as well; by the middle of the 20th century, a state was legitimated by the extent to which it could provide for the basic needs of it’s citizens. The Cold War was, to a large degree, a competition between the capitalist states and the Communists states to see which could provide more ably for the needs of it’s citizens. Today, the state is evolving from providing for the needs of it’s citizens to providing opportunities for it’s citizens. The basic problems of sufficient housing, food, clothes, and other necessities are able to be met with our global prosperity. ((Clearly, the problems associated with deficiences in these areas aren’t gone. But technologically, we have solved them. The problems remaining are systematic – how to satisfy the needs of those who don’t have access to the excess prosperity of the developed world.))
This evolution of our state into a market-state can best be seen by looking at the long-term trends in politics, shaping both the left and the right – as politiciains, with their ears constantly attuned to changing expectations, have sensed this evolution before most. Looking from Carter to Clinton to Obama, we can see how each has progressively embraced a different sort of liberalism – each less focused on a government providing services and more focused on government providing opporunity. Carter was a traditional big state Great Society liberal; Clinton favored free trade, ending welfare, and reining in the deficit; Obama’s liberalism accepts a number of libertarian premises and seeks as it’s goal the maximization of opportunity – as his health care reform plan, for example wouldn’t force people to join any particular program while offering a stable base for a necessary service that often causes people to remain in jobs they would not otherwise. A similar evolution can be seen in Nixon to Reagan to Bush – as Nixon favored big government programs; Reagan attacked big government; Bush focused on creating an ownership society among other reforms. Even when misguided – as for example his Social Security proposal – it was focused on offering greater opportunity.
James Glassman speaks for many doctrinaire anti-government conservatives when he suggests we allow our economy to contract – as eventually, it will reach bottom and bounce back. Stimulus – he says – is the wrong metaphor:
“We’re going to have to jump start this economy with my economic recovery plan,” [Obama] said on January 3. According to the image, one can jolt a dormant economy into action just as one can hook up polarized cables to a car battery, clamp a defibrillator to the chest, or breathe into the ear of a reluctant lover. Suddenly, the object of our attention will be back in action, aroused…
In fact, stimulus may be precisely the wrong metaphor. Rather than getting jazzed up, we need to be calmed down and to take the time to learn from the Great Depression, a time when government did too much, not too little.
Putting aside the non-consensus historical take on government action in the Great Depression (discussed here), Glassman misses the point our political leaders do not: our societal order is premised on the idea of continuous growth. A growing economy in a market state is like a beating heart – without it, we cannot survive. Perhaps a more apt metaphor is a business not making a payroll – the company can’t continue if it’s employees don’t get paid. The employees will no longer consent to subject to their employer’s authority – and the company will dissolve. When the nation-states of the early 20th century were not able to legitimate their structure by providing for the basic needs of their citizens, radicalism, revolution, and war ensued as the old order broke down and fascism and Communism took it’s place. Today, if market-states are unable to provide opportunity their citizens, they will not survive going forward.
Our politicians and the elites sense this – which creates the manic desire to arrest this free fall and start our economy moving forward again – before it’s too late.
James K. Glassman is the brilliant journalist and opinion-maker whose Dow 36,000 was published just before the tech boom crashed. In this book, he claimed that stocks were woefully undervalued and would rise sharply, with the Dow Jones Industrial Average reaching 36,000 by 2004 – at the latest. This prescient thinker has now written what is turning out to be an influential piece in some circles. For one, House Minority Leader John Boehner cites it on his blog. ((“Wait, he has a blog?” “Yes, he actually does.”)) I even saw some people reading print-outs of the article on my train – which is fairly unusual. It strikes me as an article written for those who already want to agree with the conclusions – and that it’s premises aren’t defended as much as stated as implicitly true.
For example, Glassman makes five historical claims which are – at best – debatable. I am not an expert on economic history – and I am sure Glassman can find an economist who will agree with each of these claims. But my understanding is that they are contrary to the general consensus.
- From the stock market crash of 1929 to the attack on Pearl Harbor, “fiscal stimulus simply did not jump-start the economy.”
While it’s clear that the New Deal spending did not get us out of the Great Depression, the economy had made significant progress before Roosevelt raised taxes in 1937 causing a sharp downturn. (See especially the graph of Gross Domestic Product that Paul Krugman produces. It makes clear how disingenuous Glassman is being with the above remark.)
- “[C]onsidering the fact that federal spending tripled during the Great Depression, rising from 3 percent of the country’s gross domestic product to nearly 10 percent in 1939, it does not seem the likeliest explanation” that “World War II and the unprecedented infusion of government dollars” was what brought us out of the Great Depression.
This claim is somewhat silly. Glassman fails to account for several basic factors: (1) Stimulus would not work to push the economy into growing in theory unless it was significant enough to counter the downturn. If the economy dipped more than 7% during the Great Depression, then this surge in federal spending would not have been sufficient to counter it. (2) States and other local governments cut their budgets and raised their taxes during the Great Depression, reducing the amount of total government spending more than the federal government was willing to make up. (3) Roosevelt also raised taxes significantly in 1937, thus offsetting the stimulus measures to some degree – and throwing the country into a devastating downturn within the Great Depression. (4) The spending during World War II dwarfed that of the New Deal – it just doesn’t make sense to claim that because spending increased significantly during one period that if it increases still more, it wouldn’t have any effect.
- “[E]fforts [to stimulate the economy through government spending] during the ten subsequent recessions proved…ineffective.”
Another seemingly true but misleading statement. As the Congressional Research Service explained in their report on economic stimulus (CRS – Report R4104 – Economic Stimulus: Issues and Policies) during the past 8 recessions, legislation was only enacted before the end of the recession once. Government spending was ineffective in combating all of these recessions because it came after the economy had already recovered – and as Glassman acknowledges, the one timely stimulus plan is generally agreed to have had some effect, if not an effect as large as expected. With escalating job losses and many other dire economic indicators, action now would seem to be timely.
- “It appears that the current sickness occurred because the Fed, in an effort to keep the economy stimulated after the collapse of the tech-stock bubble and in the wake of September 11, cut interest rates far too much during 2001 (from 6.5 percent at the start of the year to 1.75 percent at the end) and waited too long to raise them, making credit so easy that businesses expanded beyond all reasonable bounds, and banks, flush with cash and trying to make higher returns, shoveled money at borrowers with poor credit; risk aversion disappeared, and loans, especially to home buyers, went bad.” This is a theory – and not an entirely implausible one – but it seems hard for me to presume this – or to accept that this was the only cause – with so many other factors at work. It is a classic Austrian explanation for any recession. Glassman – while portraying Keynes as an enabler of ideological solutions to the business cycle – fails to acknowledge that his explanation is equally driven by ideology. And regardless – there are more than enough alternate explanations to call into question placing all of our faith in a single ideological explanation.
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Edited to protect the identity of the innocent, and those somewhat less innocent.
Categories
The History of the Earth in 60 Seconds
[digg-reddit-me]Seed Magazine has a great feature it describes as “an experiment in scale” which condenses “4.6 billion years of history into a minute.” Though they call it the evolution of life – there is no life for a significant portion of the video – so I’m calling it the history of the earth.
It reminds me of the opening of The Story of Mankind, the first book to win the Newbery Award in 1922, describing “a single day of eternity”:
High up in the North in the land called Svithjod, there stands a rock. It is a hundred miles high and a hundred miles wide. Once every thousand years a little bird comes to this rock to sharpen its beak.
When the rock has thus been worn away, then a single day of eternity will have gone by.
Of course, the concept of a measure of eternity is meaningless – but by attempting to measure it in such a way, we realize to some degree what the concept is.
Seed takes the opposite approach by condensing billions of years of history into 60 seconds.
Barack Obama is nothing if not a master rope-a-doper. For months last year, anxious liberals pleaded with him to respond to John McCain’s lacerating attacks. And, for months, Obama soared above the fray. Then, in early September, the McCain campaign squeezed out two ludicrously dishonest ads—accusing Obama of force-feeding sex education to kindergarteners and of calling Sarah Palin a pig. The press screamed bloody murder—Joe Klein labeled the former “one of the sleaziest ads I’ve ever seen;” Joy Behar of “The View” personally told McCain they were “lies.” At which point Obama saw an opportunity. With the media having pronounced McCain the aggressor and him the victim, Obama began to whale away—on healthcare, on McCain’s age, even Charles Keating—with virtual impunity.
My sense is that we’re seeing something similar play out with the stimulus.
Andrew Sullivan quotes one of his readers:
What many do not understand is that the government is playing for time, not some brilliant economic miracle. We do not have the money or political leverage to solve this problem from the top down by divine fiat. We have to buy time — literally — for the ten-thousand smaller acts of restoration and renewal to take place. All this flow of money, this vast seemingly indiscriminate transfusion of economic blood, has one purpose: to keep the patient’s heart pumping until the systemic crisis is past — another 6-12-18 months. It is messy, sloppy, gross heroic medicine.
Andrew Sullivan has his own just slightly less optimistic interpretation.
Yglesias points out some of what Obama is dealing with as Representative Steve Austria explains his opposition to Obama’s stimulus in historical terms:
“When (President Franklin) Roosevelt did this, he put our country into a Great Depression,” Austria said. “He tried to borrow and spend, he tried to use the Keynesian approach, and our country ended up in a Great Depression. That’s just history.”
“That’s just history.” The article Yglesias cites points out the slight problem with this “history”:
Most historians date the beginning of the Great Depression at or shortly after the stock-market crash of 1929; Roosevelt took office in 1933.
[digg-reddit-me]Hillary Mann Leverett in Foreign Policy tries to explain one of the biggest foreign policy blunders in the past half-century, how America at the height of it’s post-September 11 influence declined to respond to Iran’s request for comprehensive discussions with the United States on a number of high-profile issues, with the goal of becoming a strategic ally of America in the region:
When I served as director for Iran and Afghanistan affairs at the National Security Council from 2001 to 2003, national security advisor Condoleezza Rice dismissed then President Khatami as a potential diplomatic partner for the United States. Indeed, the erstwhile Sovietologist compared Khatami to Mikhail Gorbachev, arguing that by engaging Khatami, the United States would risk missing the opportunity to find the Islamic Republic’s Boris Yeltsin.
I suppose it’s not fair to lay the blame entirely on Rice – as Barton Gellman also described Cheney as having a role in rebuffing any talks.
As America became mired in Iraq (due in part to Iranian meddling and support of Shiia extremists there), Iran has gained regional influence. Iran has been commonly described as the biggest beneficiary of Bush’s War on Terror. Interestingly though, it was only with Iran’s tacit support that the surge was able to succeed – as Iran exerted its influence to hold back the Shiia militias.
As someone directly involved in negotiations with Iran during this period after September 11, Leverett’s analysis is extremely relevant. Leverett also points to Iran’s attempts to capture members of Al Qaeda who fled Afghanistan in the aftermath of our invasion – and to turn them over to the United States:
In the wake of the 9/11 terrorist attacks and the U.S. invasion of Afghanistan, Tehran detained literally hundreds of suspected al Qaeda operatives seeking to flee Afghanistan into Iran. Iran repatriated at least 200 of these individuals to the then new government of Hamid Karzai, to Saudi Arabia, and to other countries. The Iranian government documented these actions to the United Nations and the United States in February 2002, including providing copies of each repatriated individual’s passport…
Regrettably, instead of working to establish a framework within which Tehran could have made al Qaeda operatives detained in Iran available to the United States or some international body – as our Iranian interlocutors requested – the Bush administration insisted that Iran detain and deport all al Qaeda figures the United States believed might be in Iran, without any assistance from or reciprocal understandings with the United States
This ham-handed attempt to force our way demonstrates the tragic misunderstanding of the extent of American power of the Bush administration. Leverett points out that:
[I]t was the Bush administration, not Iran, that rebuffed a deal that would have given the United States access to important al Qaeda operatives -including, possibly, Saad bin Laden, Osama’s son.
Blunder upon blunder – all based on the same premise – that America has the power to unilaterally force it’s will and achieve all of our objectives. While America’s power is certainly sufficient to accomplish any number of our objectives – it is not enough to accomplish all of them.
But now opportunity is upon us – and as Leverett suggests, we should:
explicitly posit strategic realignment between Washington and Tehran as the talks’ end goal.
This strategic realignment would re-shape the region – and America’s Wars Against Terrorism. That a high level negotiator believes it is within the realm of possibility (and in this she is far from alone) is yet another reason for hope.
[digg-reddit-me]The Latin American Commission on Drugs and Democracy including a number of prominent Latin American politicians yesterday called the U.S. War on Drugs a failure. As summarized by Jose De Cordoba of the Wall Street Journal:
As drug violence spirals out of control in Mexico, a commission led by three former Latin American heads of state blasted the U.S.-led drug war as a failure that is pushing Latin American societies to the breaking point.
“The available evidence indicates that the war on drugs is a failed war,” said former Brazilian President Fernando Henrique Cardoso, in a conference call with reporters from Rio de Janeiro. “We have to move from this approach to another one.”
The commission, headed by Mr. Cardoso and former presidents Ernesto Zedillo of Mexico and César Gaviria of Colombia, says Latin American governments as well as the U.S. must break what they say is a policy “taboo” and re-examine U.S.-inspired antidrugs efforts. The panel recommends that governments consider measures including decriminalizing the use of marijuana. [my emhpasis]
The complete report (which I haven’t yet reviewed) can be found here (pdf).
The key point is the one I highlighted in the passage above – not only is the Drug War failing – but it is, according to these prominent ex-politicians – and “There’s no one so brave and wise as the politician who’s not running for office and who’s not going to be”) – pushing these neighbors of ours to the breaking point. Which is part of the reason the Joint Operating Environment report by the Department of Defense saw the sudden collapse of Mexico as a possibility in the next year.
The War on Drugs isn’t just failing. The War on Drugs isn’t just causing us to imprison a greater percentage of our population than any other in the world. The War on Drugs isn’t just eroding our laws and institutions. The War on Drugs doesn’t just undermine the War Against Terrorism. The War on Drugs isn’t just making our efforts in Afghanistan harder. The War on Drugs isn’t just wasting law enforcement resources, and costing America gold medals.
No – it is also destabilizing nations right next to us.
This is what makes a reevaluation of our Drug War a national security priority.
It’s interesting that former Republican turned Obamacon, Andrew Bacevich cites the classic work of conservatism by Richard Weaver while concluding his essay damnig the so-called conservatives of the neo variety:
Ideas have consequences. Post-cold war triumphalism produced consequences that are nothing less than disastrous. Historians will remember the past two decades not as a unipolar moment, but as an interval in which America succumbed to excessive self-regard. That moment is now ending with our economy in shambles and our country facing the prospect of permanent war.
Tom Friedman apparently spent last week talking to a slew of Indian businessmen – after all, he is in Bangalore – and he found that they were attempting to say something to him, that they were:
trying to make a point that sometimes non-Americans can make best: “Dear America, please remember how you got to be the wealthiest country in history. It wasn’t through protectionism, or state-owned banks or fearing free trade. No, the formula was very simple: build this really flexible, really open economy, tolerate creative destruction so dead capital is quickly redeployed to better ideas and companies, pour into it the most diverse, smart and energetic immigrants from every corner of the world and then stir and repeat, stir and repeat, stir and repeat, stir and repeat.”
The prose and the formulation is Tom Friedman at his insufferable worst. And I think Friedman is fundamentally wrong in his point – America did not get to be “the wealthiest country in history” by acting as Friedman describes. No – we got there by building up our infrastructure, exploiting our vast natural resources, and creating an enormous manufacturing base. Friedman was right about the immigrants part.
The reason we stayed enormously wealthy as a nation after this old manufacturing economy began to be outsourced is our higher education system – and the other stuff that Friedman mentions.
Which is to say that Friedman’s frustratingly dumbed-down “letter to America” that many Indian businessman are trying to speak to Friedman – is essentially correct in its prescriptions if not it’s history. We cannot have institutions “too big to fail” – and we cannot allow the massive government intervention into the economy to last. (On this though, Obama and Geithner seem if anything overcautious.) We cannot prop up “zombie” institutions. We cannot “protect” jobs – except temporarily. We need to create new jobs. We need smaller and more nimble companies.
This is what we need to keep our nation strong as we enter the period of the market-state – in which governments will succeed based on the amount of opportunity they are able to offer their citizens.
Frustratingly, I think Friedman – even with such dumb prose – is essentially correct.