Monthly Archives: February 2015

CINAY-sayers.

Posted on by
1
            David Wise (1930- ) went into the newspaper business as soon as he got out of college. Working for the “New York Herald-Tribune,” he became its White House correspondent in 1960. He served as the paper’s Washington bureau chief from 1963 to 1966. Wise came to know a lot of people and a bunch of them were in the intelligence community. The CIA, NSA, and Defense Department are as much a snake-pit of personal rivalries and tortured consciences as anywhere else. People told Wise things and gave him leads. Nobody ever got paid for just sitting around, so Wise ran down the leads. He published a series of books on what he found out.
            The books revealed to the reading public details of the development of the U-2 spy-plane; CIA efforts to overthrow hostile governments (Guatemala, Iran, Cuba, Indonesia); and covert operations in Southeast Asia during the Vietnam War.[1] Subsequently, he moved on to books on the struggle between Soviet intelligence (KGB) and its American opponents (CIA, FBI).[2]
            However, three of Wise’s books had a longer half-life in American politics than did his topical works on espionage. The Invisible Government, in 1964; The Politics of Lying: Government Deception, Secrecy, and Power (1973); and The American Police State: The Government Against the People (1976), all raised alarms about the growing power of the career professionals in agencies charged with protecting America from enemies. Wise warned against the encroachment of intelligence and police professionals on powers that traditionally were the responsibility of democratically elected officials. These books resonated with the public because of the times in which they were published. The “Pentagon Papers,” the fall of President Richard Nixon over the “Watergate” scandal; and the hearings chaired by Senator Frank Church on the intelligence community all inspired alarm among American citizens. Subsequently, the alarm died down after various reforms were put in place.

Recent events have revived concern. The 9/11 attacks, the war with Islamists, and the revelations by Edward Snowden all have contributed to concern about the erosion of individual civil rights and democratic government. This time the herald comes from academia.

Echoing David Wise lo these many years, Michael Glennon[3] argues that the elected officials charged with oversight of the government bureaucracy have abdicated their role. In part, this abdication springs from deference to experts on complicated issues.[4] In part, this abdication results from the decay of Congress from a participant in shared government to a freak-show. Without rigorous oversight and with the best of intentions, the national security organizations that were created to fight the Cold War with the Soviet Union have not only escaped control, but have actually gained the upper hand over constitutional government. The national security experts control the formulation of policy choices laid before the Executive. These same organizations help draft the laws that the Legislature passes; they then implement (or ignore) that legislation. They serve up the rationales for actions which the Judiciary usually approves. The National Security Council, the Central Intelligence Agency, and the Joint Chiefs of Staff figure as the big dogs in what Wise would have called a “secret government.”

[1] The U-2 Affair, with Thomas B. Ross (1962); The Invisible Government, with Thomas B. Ross (1964); The Espionage Establishment, with Thomas B. Ross (1967).

[2] Molehunt: the secret search for traitors that shattered the CIA (1992); Nightmover: How Aldrich Ames Sold the CIA to the KGB for $4.6 million (1995); Spy: The Inside Story on How the FBI’s Robert Hanssen Betrayed America (2002).

[3] Michael Glennon, National Security and Double Government (New York: Oxford University Press, 20 14).

[4] Pearl Harbor and 9/11 loom over this deference like a mushroom cloud.

 

A couple of economic ideas from the past.

Posted on by
Reply

As we lament economic inequality and get ready to keel-haul the Greeks, it is worth recalling  some commanding ideas of the past.

International payments and the domestic economy.

First, in the olden days, money had consisted of silver (good) and gold (better). Then, people had agreed to use paper money (which was worthless) on the understanding that it could be exchanged for gold whenever anyone wanted. To prevent scummy governments from printing all the paper money they wanted (“How can I be over-drawn when I still have some checks?”), fixed ratios of paper money to gold held by the government were established. The more gold that a government held, the more paper money that it could issue; the less gold that a government held, the less paper money it could issue. (See: accordion.)

Second, the money from one country can’t be used in another country. Countries settled their debts by transferring gold. Buy more stuff from a foreign country than you sell to that country and you had to settle the debt by shipping gold. Sell more stuff to a foreign country than you buy from it and they sent you some gold.

Third, if you put gold-backed paper currency together with the use of gold to settle international debts, you got a system in which the domestic economy of each country was linked to the international economy of all countries. If a country exported more than it imported, then gold flowed into the country. The increased gold supply inside the country compelled that country to increase the amount of paper currency in circulation. Prices and incomes would rise, making it less competitive. If a country imported more than it exported, then gold flowed out of the country. The decreased gold supply inside the country compelled that country to decrease the amount of paper currency in circulation. Prices and incomes would fall, making it more competitive.

Ideally, each country would strive for a rough equilibrium. However, the system was thought to be kinda-sorta automatically self-correcting. Countries with in-flows of gold and rising national incomes then could afford more stuff from abroad and ended up having to export gold. Countries with outflows of gold and falling incomes then could afford less stuff from abroad and ended up importing gold. This cut down on the role of any national government in managing the economy. Mostly, the heads of the various national banks (the Bank of England, the Bank of France, the US Federal Reserve Bank, etc.) were supposed to co-operate in smoothing out any bumpy patches.

 

Business cycle theory.

Commonly-accepted economic theory held that during a period of growth demand exceeded supply, so prices rose too high; any fool could make a profit and many did; wages tended to float up above a sensible level and many dead-beats got hired; and banks made unsound loans. In short, “plaque” built up in the “arteries” of the economy. This couldn’t go on. Eventually a “slump” would clean out all the plaque and re-establish the basis for sound growth. (See: angioplasty.) Demand would fall. Falling demand would force down prices to a reasonable level; unemployment would get rid of dead-beats and take wages down to a sensible level; silly businesses (see: nail salons) would go bankrupt; stupid loans would not be made; and the particular mix of products would return to what people actually needed. Then the economy could start growing again.

There is a seductive elegance to these all-encompassing theoretical systems. Same as there is with Marxism. The parallels don’t end there. Ideas have consequences.

What is globalization?

Posted on by
Reply

“Globalization” has been going on for a very long time, but in the last quarter of a century the degree of globalization has increased dramatically.

The ancient “Silk Road” trade route connected East Asia, South Asia, the Middle East and Europe. Sailors, caravan drivers, missionaries, and the odd tourist carried word of one civilization to another. (Bits of Roman armor have been discovered in Vietnam.)

The “Voyages of Discovery” created European empires of Trade in Asia and of Settlement in the Americas. Europeans (willing) and Africans (unwilling) moved to the Americas; cotton, coffee, corn, tomatoes, tobacco, potatoes, and Aedes aegypti all crossed the oceans for the first time.

Industrialization in the 19th Century spread Western power, ideas, and patterns of economic development all over the globe in new ways and to a greater degree than before. European investment poured into American, Indian, and Chinese railroads, and into the Suez and Panama canals; the telegraph eliminated time in sending messages; millions of people migrated.

The rise of Communism between 1919 and 1989 sealed off much of the world from Western Capitalism. These places needed scientists, doctors, and engineers, so they built up an educated elite. Then the collapse of the Communist model led to the opening of Russia, Eastern Europe, and China to the world market. Countries like India, much of Africa, and Latin America had all copied parts of the Communist model. After 1989 they also opened up. Low-skill jobs flowed toward low-cost producers who had to employ and feed poor people as best they could. Making steel, sneakers, T-shirts; assembling computers; and processing chicken all migrated.

The collapse of Communism roughly coincided with the development of the Internet for commercial uses. This, too, wiped away barriers. Call centers in India sprang up, making my afternoons a living hell. At the same time, angry Russian techies who had lost their cushy jobs with NepoCom went in for cyber-crime against Western businesses.

The whole world suddenly became more like One World than ever before.

 

It always has been driven by economic forces, but it always has had huge effects in every other aspect of human life. Here are a few examples.

On the one hand, the world is organized into nation-states, but there aren’t any borders in the atmosphere. Green-house gases emitted by one country affect every country. On the other hand, hundreds of millions of people live in environmentally-fragile places, but they are driving for industry as the path to a better life. What happens when 1.3 billion Chinese decide that they all want a car, just like 300 million Americans? I suppose we could tell them to stick to bicycles, but that seems kind of racist. Maybe we should go back to bicycles to set a good example?

Millions of people in poverty-stricken “failed states” want to get to some place that is successful. Even if they don’t speak the language, can’t read or write beyond an elementary school level, belong to a traditional culture that devalues women, and have spent their working lives behind a water buffalo. It will get worse if their country is about to go under water.

You can get a kidney transplant done for $5,000 in India (plus airfare and hotel); you can get SRS done for $16,000 in Thailand (plus airfare and hotel).

Rihanna is from Barbados; Frankie Joe Rukundo is from Rwanda; “Narcocorrida” is popular on both sides of the Mexican-American border; some of the most interesting American students consider themselves “otaku”; three French brothers produced “Assassin’s Creed.”

Inequality 2.

Posted on by
Reply

Americans history since 1967 has been complex and troubled. However, the economic fortunes of virtually all Americans have steadily improved.[1] In 1967, 40 percent of households earned less than $35,000; 53 percent earned between $35,000 and $100,000; and 7 percent earned more than $100,000 a year. In 2013, 34 percent of households earned less than $35,000 a year; 43 percent earned between $35,000 and $100,000; and 22 percent earned more than $100,000.

The share of households earning more than $100,000 increased from 7 percent to 22 percent. This 15 percent moved up from the middle class. If nothing changed for the lowest share of households, then the middle class would have fallen to 38 percent. Instead, the share earning less than $35,000 decreased from 40 percent to 34 percent. This 6 percent moved up into the middle class. This pretty much matches up with the 43 percent still earning between $35,000 and $100,000 a year. For all three classes, then, the years from 1967 to 2014 have seen a total of 21 percent of Americans moving from the lower class into the middle class or from the middle class into the upper class. This means that 79 percent of Americans remained in their original class. That doesn’t mean that many of them felt frustrated or deceived.

However, the over-all rise of American household fortunes masks other important trends. First of all, the general process of advance went into reverse after 2000. In 2000, 31 percent of households earned less than $35,000 a year; 45 percent earned between $35,000 and $100,000; and 25 percent earned more than $100,000. Then, between 2000 and 2013, 3 percent of households fell out of the middle class into the lower class, and 3 percent fell out of the upper class into the middle class. So, the American story up to 2000 was even more emphatically one of success. It was followed by a period of retreat. How much of the retreat—and the resulting sense of crisis–arises from the pain of the Great Recession and how much from long term trends like globalization? People were clearly falling backward between 2000 and the onset of the financial crisis in 2008. This decline resulted from foreign competition and new technology.

Some of the people who “fell” from the ranks of the middle and upper classes probably were marginal new arrivals. Any economic down-turn would shove them off the ledge. They were the victims of President Obama’s rejection of an adequate stimulus bill back in 2008-2009 and of Republican-enforced austerity policies after 2010.

Average median household income has fallen by 9 percent. Among households headed by people 65 or older, median income has risen by 14 percent since 2000. Partly, the rise in income for older households results from people who continue to work after age 65. Partly, it results from increasingly generous benefits (Social Security, Medicare) provided to older people.

One of the key factors here appears to be education. Even as late as 1992, almost half of middle class families were headed by someone with a high school education or less; slightly more than half by someone with at least some college. Today, 37 percent of middle class families are headed by someone with a high school education or less; 63 percent with at least some college. The middle class has declined most markedly in places that have shifted from industry toward technology and services. New England and New Jersey offer good examples.

How should we deal with globalization, the increased value of education, and the weighting of social policy toward older Americans at the expense of younger Americans?

[1] Dionne Searcey and Robert Gebeloff, “More Fall Out As the Middle Class Shrinks Further,” NYT, 26 January 2015.

 

The ticking clock.

Posted on by
Reply

President Obama and the Democratic majority began his first term by launching a stimulus bill and creating a national health insurance system.[1] Both had failings, real and purely imaginary. Many voters responded to the ravings of the Tea Party and mainstream Republicans had little choice but to fall into line. The 2012 elections began to movement toward a Republican majority in Congress that culminated in the elections of 2014. Along the way, the Republican majority in the House not only blocked any further stimulus spending, but actually forced spending cuts through the sequester. Americans are still paying for that foolishness. By November 2014 President Obama and the Democrats were facing a two year-long march through the desert. Republican majorities can block any policy initiatives from the White House just as effectively as the White House and the Senate blocked the policies of the Republican House for the last four years. Aides are beginning to leave the White House to prepare for future campaigns on behalf of others or to cash in their chips by becoming consultants.

By early January 2015 the unemployment rate was down to 5.6 percent and falling, and the deficit had shrunk to 3 percent of GDP. This seemed to some observers to open a new “post-recession, post-panic era.” What will be the political themes of this new period? The mainstream of the Democratic Party is intellectually exhausted, while the left-wing (Elizabeth Warren, Bernie Sanders) is filled with enthusiasm.[2]

Betes noire of the Democratic Party (to judge by my cousins’ posts on FB) include big banks and inherited wealth and money earned from assets. The bêtes blanche are the middle class working Americans.[3]

In part, the President appears to have said “OK, I’ll do what I wanted to do from the start—govern the country like I’m the king.” He used his “prosecutorial discretion” to temporarily amnesty millions of illegal immigrants”; he dumped the policy of pretending Communist Cuba is just going to go away. In part, the President appears to have decided to lay down markers for the course his Democratic successors should follow.[4] In his state of the union address President Obama pitched a new tax plan. The plan proposed to raise the tax on capital gains, force people to pay when they inherited assets, and put a stop to 529 education savings plans because well-off people use them more than do lower-income people. The additional revenue would be used to fund a $500 tax credit to families where both parents work, and to cut taxes on families with children.

Right now this plan is going nowhere. It’s just more hot air from a guy who has always believed too much in the efficacy of speech. Republicans are philosophically opposed to high taxes on assets because the economy needs investment to grow. Still, going forward, it sets up a straight fight between Capital and Labor as the basic issue in the 2016 election. Whether that’s the best solution to the current American problems is open for debate. (See: Inequality 1.) Whether Democratic candidates will feel bound by Obama’s speeches also is open for debate.

[1] Neil Irwin, “Obama’s Tax Proposal May Help in Setting a Framework for 2016,” NYT, 18 January 2015.

[2] This same pattern led to disaster in the 1970s and 1980s. One can’t help but wonder if the Democratic Party is headed down the same road as the British Liberal Party in the early 20th Century. See: George Dangerfield, The Strange Death of Liberal England (1935).

[3] This loose terminology sets academics to grinding their teeth for its lack of “rigor,” but the meaning is clear enough: pissed-off people who actually vote.

[4] Given the way Hillary Clinton and Leon Panetta have rushed into print with memoirs of their service under a still-serving president, you can understand his indifference to the effect on subsequent candidates. I’m leaving Robert Gates out of this because he’s in a different category of public “servant.”

Sahel of a good song.

Posted on by
Reply

Coulibaly is a common West African name.[1] A couple of ambitious hustlers named Coulibaly set up a Bambara “kingdom” in the 17th and 18th Centuries on the Niger River. The village of Segou served as the capital. Another ambitious hustler named Ngolo toppled the last of the Coulibalys in 1750. He and his son built up a larger and more solid kingdom that lasted until the late 19th Century, although bits and pieces were falling off for decades. In 1861 a jihadist hustler named El Hadj Umar Tall added the remnants to his own empire. Then, in 1890 an ambitious French hustler named Louis Archinard showed with troops, shot a bunch of opponents, and added the whole thing to the French Empire. Segou today has about 130,000 people living in and around it. There’s farming and fishing and crafts that are sold in the markets. There are a great many low lying buildings constructed of mud-block. Pretty much what one would expect a very arid land adjacent to a river. There’s a big steel bridge over that river. Poorly maintained roads run south to Bamako and north to Timbuktu.

One of the many attractions of Segou is the “Festival on the Niger” held in February each year.[2] If you want to hear the best of Sahelian music live, the Segou festival is second only to the annual “Festival of the Desert” held west of Timbuktu.

About three years ago a joint rebellion by Tuareg tribesmen and a small number of local Islamists swept over the northern part of Mali. The Islamists turned out to be against guitars (as well as many other things). Half a million people fled from the northern part of the country. The French—channeling Louis Archinard—weren’t taking this guff. A bunch of heavily-armed hard cases from the Marines and Foreign Legion paratroopers showed up. Soon thereafter, the leaders of the Tuareg-Islamist rebellion decided to take in the sights in remote areas of Libya or Algeria.

Meanwhile, the “Festival in the Desert” got cancelled for several years, what with the danger of getting shot and all. The “Festival on the River” took place in February 2014. Then the West African Ebola outbreak briefly edged into Mali in Fall 2014. So, that was concerning. In December 2014 the World Health Organization (WHO) declared Mali Ebola-free. Deep sighs of relief followed among many people. Among them were the producers of the “Festival on the River.” They announced that the show was on for February 2015.

One of the people in the audience in 2014 was Josh Hammer (1957- ). Hammer got a first-rate education (Horace Mann School, BA in English from Princeton University), then went into journalism. He did well at this and became the bureau chief for Newsweek in a series of places: Nairobi (1993-1996), South America (1996–1997, Los Angeles (1997–2001), Berlin (2000–2001), and Jerusalem (2001-2003). In 2001 he and his cameraman were “detained” (i.e. kidnapped) by Hamas gunmen. He has written about a wide range of subjects and places in a sensitive way.[3] One of his interests is the music of the Sahel. So, having made the pilgrimage to Segou, who does he recommend?

Ten minute film giving views of Segou, with a nice sound track. https://www.youtube.com/watch?v=Ob-Rc-IZ5Ps

 

Salif Keita. https://www.youtube.com/watch?v=9ZVzWsyGzRc&list=PL759F989C11E57C86

Khaira Arby. https://www.youtube.com/watch?v=_C85F6TJ3gI

Achmed Ag Kaedi and Amanar. https://www.youtube.com/watch?v=B3B2R7GHWyE

Tinariwen (band). https://www.youtube.com/watch?v=gINDDDo3do8

Sekouba Bambino. https://www.youtube.com/watch?v=lj3cxsCjRBg

Stelbee (Burkina Faso). https://www.youtube.com/watch?v=41GsivXUhf4

[1] If you’re scratching you head trying to place the name, Amedy Coulibaly was the Frenchman of Malian origins who shot a police woman and seized hostages in Paris a little while back.

[2] Joshua Hammer, “Along the Niger, the Beat of the Sahel,” NYT, 18 January 2015.

[3] A lot of biographical detail is hard to find. Bits and pieces found on the internet suggest that his father also was a foreign correspondent; that the parents’ marriage broke up; and that the life itineraries of human beings can take odd courses. His book about his younger brother’s journey to intense religious belief sounds fascinating.

Playing Chicken.

Posted on by
Reply

Architects of the Euro-zone sought a stronger, more prosperous, and more harmonious union.[1] The inauguration of the Euro in 1999 began a period of low interest rates for member countries. Low interest rate led to heavy borrowing by both public (Greece) and private (Spain, Ireland) sectors. When the world economy slowed down after the American financial crisis, debt-service became a problem.

The architects had not then—and have not yet—resolved all of the problems. One worm in the apple is that the single currency serves 19 sovereign states. Those states do not pursue uniform economic policies. Nor do all national cultures celebrate the same values.[2] German hostility to budget deficits closed off large-scale counter-cyclical spending as a policy tool. Instead, states were to pursue limiting deficits as a share of Gross Domestic Product (GDP).

The pursuit of austerity policies has had different effects in different countries.[3] The GDP of Germany has risen about 10 percent from 2009. The GDP of Portugal, Spain, and Italy are all down about 10 percent. The GDP of Greece is down more than 20 percent. The decline in GDP has increased the burden of the government debt financed by taxation. Government debt as a share of GDP has risen from about 30 percent to about 70 percent in Spain; from 90 percent to about 110 percent in Italy; and from 60 percent to about 120 percent in Portugal. Greek government debt as a share of GDP has risen from about 110 percent to about 170 percent. (Thus, austerity has pushed Italy and Portugal into the same territory from which Greece began.) This raises the danger that bigger, more severe crises lie over the horizon.

The the creditor countries could pursue expansionary policies that might fuel demand for goods from the debtor countries. Once again, different national politics and cultures come into play. The northern creditor countries don’t want to abandon the policies that they associate with their own success, least of all to bail out the improvident.[4]

The concept of the Euro-zone was that—like Mr. Lincoln’s theory of the Union—the members had formed an indissoluble bond.[5] The Greek crisis threatens that idea. If Greece was to be forced out, then any other country that got into serious financial difficulty in the future might suffer the same fate. Countries at risk would have to pay extremely high risk premiums for financing public debt. The whole Euro-zone could unravel from the bottom like a sweater. Crisis after crisis would gnaw at a union that seeks the benefits of stability.

Hard-liners have not said so, but it might turn out to be a way of finally enforcing the economic doctrines of the northern creditor countries on the southern debtor countries.[6] Any country that did not wish to pay high risk premiums to lenders would have to pursue “sound” finances. That, in turn, could force a reform of social and economic policies.

The Greek “Syritza” and Spanish “Podemos” parties have drawn strong support for demands to end austerity and for debt repudiation. Many American observers seem to think that the Germans and other creditors should be happy to get robbed by the Greeks and other debtors for the greater good. The long Republican counter-attack against high taxes since the Reagan Administration shows something different. People who feel victimized will fight back. Right now, the focus is on angry Greeks and Spaniards. In the future it’s likely to be angry Germans.

[1] Eduardo Porter, “Local Politics Are Fracturing European Unity,” NYT, 3 February 2015.

[2] Flexibility, thrift, and probity, for example.

[3] See the charts in Porter, “Local Politics.”

[4] The limited historical knowledge of many economic commentators leads them to make frequent references to the post-First World War inflation as a formative experience. They ignore the “cigarette economy” that flourished after the Second World War and the heavy burdens carried by West Germans after absorption of the defunct German Democratic Republic in 1989. Germans today have a far more vivid set of memories shaping their behavior.

[5] Stephen Fidler, “Europe Weights Costs of Casting Greece Aside,” WSJ, 6 February 2015.

[6] As Voltaire quipped after the Royal Navy executed Admiral John Byng, “They shoot one to encourage the others.”

 

Stuff my President says.

Posted on by
Reply

“They cling to guns or religion.” (April 2008.) Trying to explain why he was having difficulty getting traction with small-town and working-class Americans, Obama blamed the effect of hard economic times. Taken either in context or out of context doesn’t change the meaning: people who believe something different from Barack Obama do so because they are irrational.

“If you like the [health insurance] plan you have, you can keep it.” (June 2009.) This didn’t come back to bite him until early 2014, when insurance companies started cancelling “sub-standard” policies that many of the policy-holders said suited them just fine. There is no way to spin this one other than a) he was lying all along, or b) he didn’t understand his own plan.

“The Cambridge Police acted stupidly.” (July 2009.) Taken out of context, the quote sounds bad, like he was prejudging the case after confessing his ignorance of the facts. In context, it still doesn’t sound good because the police had arrested Henry Gates for “disorderly conduct,” not for breaking and entering, and because he linked it to historic patterns. He seemed to be trying to have his cake and eat it too.

Iraq is “sovereign, stable, and self-reliant.” (December 2011.) This came back to bite him in mid-2014. Seen in context, however, it was more of a prediction of what Iraqis could make of the situation left to them by the Americans. Almost immediately, however, Maliki and the Shi’ites began to mess-up everything.

“If you’ve got a business. you didn’t build that. Somebody else made that happen.” (July 2012.) Torn from its context, the quote sounds worse than it was. Obama sought to emphasize the importance of social capital and infrastructure in fostering economic growth. However, one wonders if he doesn’t believe that all economic growth comes from public initiative, rather than from a combination of social context and private initiative. This suspicion is reinforced by his declaration in the same talk that “Government research created the Internet so that all the companies could make money off the Internet.” In fact, the early form of the internet grew out of the cooperation of several nations with scholarly researchers for reasons unrelated to commerce. The current internet is largely a product of entrepreneurial initiative.

ISIS is a “JV team.” (January 2014.) The President tried to walk this one back by claiming that he was talking about a whole bunch of Islamist groups in the Middle East in general, and not about ISIS in particular. Politico.com fact-checked the White House claim and assigned it four Pinocchios.

Russia is” just a regional power.” (March 2014.) What the President said was “Russia is a regional power that is threatening some of its immediate neighbors — not out of strength but out of weakness.” Here he was pushing back against a Republican claim that Mitt Romney’s assertion in the 2012 Presidential debates that Russia was the most import geopolitical foe had been correct all along.   The President may be correct, but Russia is a “regional power” in the states of the former Soviet Union, in the Far East, in Europe, and—increasingly—in the Middle East.

Some of these “gaffes” are the product of circumstances changing after he made the statement (Iraq). Some reflect his now-evident failings as an administrator (health insurance). Some are conjured up by his opponents (business). Some spring from his habit of trash-talking people who disagree with him (voters, ISIS, Russia).   He’s better when he stays on script.

Your country gets an F.

Posted on by
1

In days of old when knights were bold and Nationalism was in flower, the sociologist Max Weber defined a State as a government that maintained law and order within the borders of the country, provided basic services to citizens, managed the economy, and dealt with foreign countries. Some countries do this really well. Who wouldn’t want to be a Canadian, eh? Other countries do this less well. Weber was discussing European countries at the end of the 19th Century.

However, in the 19th and 20th Centuries Western imperialism gobbled up a bunch of territories that had never been countries (notably in Asia and Africa), then divided them in to “nations” when the tide of imperialism ebbed after the Second World War. The imperial powers had not had the time to do very much to turn these places into “nations,” so some of them have come unglued in the years since independence. Tribal or religious loyalties may be stronger than patriotism; corruption may be so bad that the government can’t provide adequate public services; or rebels, war-lords, or terrorists can operate without much hindrance from the government. When these things happen, a country can be called a “failed state.”

The ten worst-off countries in 2011 were: Somalia, Chad, Sudan, the Democratic Republic of the Congo, Haiti, Zimbabwe, Afghanistan, Central African Republic, Iraq, and Cote d’Ivoire (Coat Dee-Vwar). Most of them have made the Top Ten list since 2005. (See: rut.)

You know how people try to cheer you up by saying that there’s somebody in the world with worse troubles than you? Well, Somalia is the last guy in that chain. Somalia is in the “Horn of Africa,” on the east coast across from the Arabian Peninsula. It is close to the equator, arid, with very little land to farm. Herding and fishing are important to the economy. Britain, Italy, and Ethiopia all conquered chunks of the territory in the late 19th and early 20th centuries. (Mogadishu has some Art Deco buildings worthy of South Beach.) Much of it became independent in 1960, although Ethiopia held on to important chunks. An army general named Siad Barre seized power in 1969. He became a Communist, started a war with Ethiopia, and ran the economy into the ground by 1990. Just to get even, Ethiopia stirred up various tribes against the government. Siad Barre got chucked out in 1991, but no one could agree on who to put in his place. Northern Somalia declared its independence, various soldiers tried to seize power elsewhere, and civil war broke out.

The war caused a famine, bandits (called “technicals”) molested the humanitarian aid workers, and the US sent troops to stop the parts of the violence that might accidentally get on American television. This didn’t work out and left a bad taste in everyone’s mouth about intervening in humanitarian crises. (See: “Black Hawk Down”; see: Rwanda a little while later.) Civil war dragged on to the point that government just disintegrated; after 9/11 the US got very hostile to “Islamists,” of whom there are a great many in Somalia and encouraged people to fight them; many Somali fishermen and soldiers turned to piracy on the Indian Ocean; and drought hit the country in 2011. There are probably a million refugees and internally displaced people. Curiously, it has some of the best internet and cell-phone service in Africa. What about Nigeria?

Inequality 1.

Posted on by
Reply

In December 2013 President Obama called income inequality “the defining issue of our time.” He’s agin it. Soon afterward Thomas Piketty, Capital in the Twenty-First Century (2014) garnered many accolades and some readers. This added academic fuel to the populist fires.

Already by Summer 2014, however, there were reasons to doubt the substance behind the passions aroused by the issue. Eduardo Porter raised two issues.[1] First, the problem of income inequality isn’t that important compared to other problems facing the United States. Social scientists have been trying to demonstrate that the rise of the “One Percent” has harmed society. They haven’t been able to prove it. Second, it may not be a problem with a practical solution.

What we think of as “globalization” (technology + open world markets) has polarized people toward the extremes of income: high-earners and low earners, but fewer and fewer people in between. The relationship between one’s job and technology is key. Someone who has a job that is not easily replaced by a machine, but which requires the manipulation of technology, is in a good place. In contrast, anyone with a job that can—or one day could be—done by a machine is in a bad place.[2] Generally, higher incomes are flowing toward people with higher education.[3] That’s true both within the United States and within the global economy. From this perspective, the “defining issue” is how to promote enough economic growth to insure a rising standard of living for the low-earners. Gregory Mankiw, a Harvard economist who served as an economic advisor to both George W. Bush and Mitt Romney, argues that raising the amount of education of American workers offers the best path to higher incomes.

Seen dispassionately, the best solution would be to help the people at the bottom of the income ladder without preventing the people at the top of the income ladder from doing the stuff that generates income for all. Allowing the gains from growth to flow only to those at the top of the income pyramid will not head off political trouble.  More could be done to take the rough edges off the state in which we find ourselves. For one thing, cuts in public aid to state colleges and universities has shifted a heavier burden onto parents and students seeking the higher education that is supposed to allow them to climb out of the pit. Restoring that aid would be a valuable step. Increasing the Earned Income Tax credit is another way. Developing policies to make the urban cores of the dynamic cities affordable to low-income workers by is another way. Still, reducing inequality by higher taxes on the well-off and an ever more generous social welfare system[4] cannot turn back the tsunami of change.

However, dispassionately isn’t how most engaged people are seeing the issue. Both the political parties have a stake in stirring up passions by misrepresenting the realities. The Right sees President Obama as an anti-business zealot. The Left sees Republicans as pawns of corporations.

How long will it take to make a more educated and better educated workforce? In the meantime, how does the country manage the social costs of the transition?

[1] Eduardo Porter, “Income Inequality And the Ills Behind It,” NYT, 30 July 2014.

[2] A 2012 poll of economists showed that the great majority believed that the uneven impact of technological change best explained the rise of income inequality. Reagan, Bush II, “deregulation,” and the other usual suspects didn’t figure

[3] Scholars have compared the college graduation rates for those born in the early 1960s with those for 1979-1982. People in the top 20 percent of incomes rose from 36 percent to 54 percent, while it rose from 5 percent to 9 percent for those in the bottom 20 percent. Furthermore, even the real incomes of people with a BA have hardly risen since the mid-1970s. NB: There is a lot you can do with this basic set of statistics.

[4] “Free sandals for foot fetishists,” as the Democratic columnist Mark Shields once described the policy prescriptions of the Democratic Party of the 1980s.