Iran Amuck 2 30 June 2019.

In the judgement of one expert,” the “Iranian economy has long been riddled by endemic mismanagement, corruption, cronyism, and brain drain.  Sanctions make all these problems worse.”[1]  However, the flaws are innate to the regime, rather than springing from the sanctions.[2]

American economic sanctions against Iran have a long history.  They began with President Jimmy Carter; were tightened by President Ronald Reagan; were greatly strengthened by President Bill Clinton, then were slightly eased by Clinton after the election of an Iranian president seen as “moderate” in the West; then were renewed under President George W. Bush.

In 2005, Iran announced that it would begin enriching uranium for its nuclear program.  At the behest of the Bush administration, the United Nations began imposing international economic sanctions.  In 2010, the Congress passed and President Barack Obama signed a law greatly strengthening sanctions.  Eventually, the pressure from the sanctions forced Iran to negotiate with an American-led coalition.  In 2015, the negotiations produced an agreement on delaying Iran’s march towards nuclear weapons in return for relief from some of the sanctions.

The agreement aroused controversy.  On the one hand, Iran remained under sanction for other actions.  Incomplete relief from sanctions continued to hamper improvements in the living conditions of ordinary Iranians.  Iranian hard-liners could argue that the sanctions relief hasn’t been worth giving up the chance at nuclear weapons.  On the other hand, Iran remained an active opponent of the United States and its regional allies.  Conservative critics of the Obama Administration could argue that only limiting Iran’s nuclear program, without addressing its other behaviors, hasn’t been worth sanctions relief.[3]

The Trump Administration falls heavily into the latter camp.  It has sought to re-open the negotiations with Iran with the intention of getting a better deal.  On 8 May 2018, Trump .withdrew the United States from the agreement.  Trump also announced that the United States would re-impose the previous sanctions and sanction any European companies that traded with Iran.  Within a year, Iran’s oil exports had declined by more than 50 percent.

On 8 April 2019, Trump designated the Islamic Revolutionary Guards Corps as a terrorist group.[4]  The designation carried with it further economic sanctions.

On 5 May 2019, after Iran had designated the U.S. Central command as a terrorist organization and after the U.S. had discerned Iranian preparations for action against American forces, a carrier battle-group and bombers were ordered to the region.

On 8 May 2019, the US increased sanctions on Iran’s exports and ended “waivers” granted to some countries to continue buying Iranian oil.

On 12 May 2019, four oil tankers were attacked in the Persian Gulf.  The Trump Administration claimed that Iran had attacked the tankers.  Iran soon .announced that it would return to enriching uranium.

On 13 June 2019, external explosions badly damaged two tankers in the Gulf.

The 2003 Iran War suggests a need for caution in all long-term projections.

[1] Helene Cooper, “How the U.S. Ratcheted Up Pressure on Iran and How Iran Responded,” NYT, 16 June 2019.

[2] The parallel to Venezuela is striking.

[3] See: https://waroftheworldblog.com/2018/07/24/iran-and-we-all-should-run/

[4] The IRGC handles terrorism abroad.

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The Origin of the Russia investigation.

In May 2016, a Trump foreign policy adviser, George Papadopoulos, told the Australian High Commissioner in London, Alexander Downer, that he had heard that the Russkies had “dirt” on Hilary Clinton.[1]  Downer immediately informed the Australian foreign ministry.

Six or seven weeks followed, during which time the Australian government did not inform anyone—officially or unofficially—that a hostile foreign power had breached the security of an American presidential candidate.

Christopher Steele had served in important positions in the British Secret Intelligence Service (MI-6), then had opened a private business intelligence company.  He had served in Moscow and had been the head of the “Russia desk” for MI-6.  In June 2016,[2] the Democrats had hired his company to conduct opposition research on Donald Trump.  Steele began investigating Trump’s Russian connections.  Between June and December 2016, Steele wrote 17 memos.  Steele’s memos suggested that a “well-developed” conspiracy linked Trump with the Russian government.  The Russian would help get Trump elected; President Trump would then end the economic sanctions imposed on Russia for its actions in Crimea and Ukraine.   Furthermore, the Russian possessed compromising personal information on Trump.

However, at this time, the FBI had no knowledge of Steele’s memos.

On 22 July 2016, Wikileaks began publishing the Democratic National Committee e-mails provided to them by the Russkies.  At this point, the FBI learned from the Australian government of the report on Papadopoulos.  [So, the FBI knew that the Russians had hacked the computers at the Democratic National Committee, that Russia was releasing stolen information through Wikileaks, and now had a report that the Trump campaign may have had fore-knowledge.]  On 31 July 2016, the FBI opened an investigation of Trump-Russia collusion: “Operation Crossfire Hurricane.”  The operation was conducted in great secrecy, with no leaks to the press.

After the launching of “Crossfire Hurricane,” the FBI sought a FISA warrant to surveil the communications of Paul Manafort,[3] Michel Flynn, Carter Page,[4] and George Papadopoulos.[5]  All four had varying degrees of prior contact with Russia.  [The warrant application was denied as “too broad.”]

In September, Steele shared his memos with the FBI.

[In late September, Michael Isikoff reported that a Trump campaign adviser was being investigated over contacts with the Russians.  The report was based on leaks.]

In October 2016, the FBI obtained a FISA warrant to surveil the communications of Carter Page.  A part of the supporting evidence for the warrant application came from the “Steele dossier.”

Thus, William Barr’s investigation isn’t likely to turn up compromising information.

[1] “The origins of the Russia investigation,” The Week, 28 June 2019, p. 13.

[2] Apparently at the time when the Australian government was not informing the American government of the remarks by Papadopoulos.

[3] The FBI had begun an investigation of Manafort after his candidate, the pro-Russian Ukrainian Yanukovich, had been ejected from power in early 2014.

[4] Page had been investigated by the FBI in 20013-2015 and found blameless.

[5] But not Jared Kushner or Donald Trump Jr. or Donald Trump Sr.  Why not?

Iran Amuck 26 June 2019.

Like his predecessors and a great many other people, President Donald Trump opposes the acquisition of nuclear weapons by Iran.[1]  A host of countries had imposed severe economic sanctions on Iran to coerce the country into an agreement.  President Barack Obama negotiated a multi-national[2] agreement that would delay Iran’s progress toward a weapon in exchange for relief from international economic sanctions.  The goal was to stop Iran’s nuclear program at a line one year away from constructing a nuclear weapon.  The alternative course would be war with Iran.  American public opinion at the time opposed a new war, so a deal made sense.

The nuts-and-bolts of the issue are that: a) it takes a lot of effort to get uranium from 3.67 percent purity to 20 percent purity; it takes much less time and effort to get uranium from 20 percent purity to 90 percent, the level required for a nuclear weapon.

The agreement required Iran to hold a maximum of about 600 pounds of “low-enriched” (3.67 percent purity) uranium until 2030 and no high-enriched uranium.  Iran already had more than 600 pounds of low-enriched uranium, so Iran exported the surplus.  The agreement also required Iran to submit to inspections by the International Atomic Energy Agency (IAEA).

As a presidential candidate and as an elected president, Trump disparaged the Iran agreement as “the worst deal in the world.”  In the view of President Trump and other critics of the agreement, one problem is that the agreement isn’t a permanent solution.  It ends in 2030.  After that, Iran will be free to pursue its nuclear ambitions once more.[3]  Furthermore, the agreement did not constrain Iran’s actions in other areas like Iraq, Yemen, and Syria, or in the development of ballistic missiles.  For American allies like Israel and Saudi Arabia, the agreement stank to high heaven.[4]  Another .problem is ballistic missiles.  Iran possesses missiles that can hit most Middle Eastern countries (e.g. Israel, Saudi Arabia, Afghanistan).

In May 2018, President Trump withdrew the United States from the multi-lateral agreement with Iran.  Since then, the United States has imposed increasingly severe economic sanctions.  Both Iran and the other parties to the agreement continued to abide by the terms.

In June 2019, Iran announced that it, too, would withdraw from the agreement.  Iran would begin stockpiling nuclear fuel above the threshold set by the agreement.  It might also begin enriching that fuel above the level needed for nuclear power plants and toward the level needed for a nuclear weapon.  Among the current unknowns are whether Iran has the technical capacity to make a bomb, and whether Iran had the technical capacity to miniaturize a bomb to fit on a ballistic missile.  The answers are not readily apparent.

IF Iran sprints toward completion of one nuclear weapon, THEN how will the United States respond?  IF Iran is just bluffing, THEN the ayatollahs may hope that other countries will push the United States into accommodation.  IF not, THEN can Iran survive a hi-tech war?

Both Iran and the Obama policy are about to be tested.

[1] Michael Crowley, “How the Nuclear Deal Splintered into a Crisis,” NYT, 18 June 2019.

[2] Iran, the United States, Britain, France, Germany, Russia, and China.

[3] President Obama seems to have believed that the Iranians would get fed-up with the clowns running the country before 2030.  Then a new Iranian government would pack in guns for butter.  I hope so.  However, President Obama also bet on the “Arab Spring.”  Some places actually play politics more hard ball even than in Chicago.  So,…

[4] Could they persuade someone in a position of authority to see it their way?  If so, how?

Default Setting II.

Between 1775 and 1825, the revolts against the British and Spanish Empires in the Americas created a host of new nations.  In the minds of European leaders, formal “empire” sold at a deep discount.  However, the “empire of free trade” arose as a far more appealing idea.  If non-European countries would pursue Western economic[1] and legal[2] policies, then you could get the same benefits of empire without the costs and heartbreak.  The Western capital generated by industrialization could then safely flow toward the economic development of the rest of the world.[3]  All would benefit.

The world of international investment brimmed with challenging opportunities in the later Nineteenth Century: Latin America, the United States, the Ottoman Empire, Japan, and China for example.  However, a willingness to fulfill commitments to Western economic and legal doctrines in exchange for Western investment varied from society to society.

Russia came late to industrialization and wanted to hurry the process forward.  Russia possessed rich natural resources, but its primitive agriculture generated little wealth.  Where to find the capital for rapid industrialization?  Two solutions offered themselves.  Either the country could borrow from rich foreign lenders or the peasantry could be squeezed very hard.  Fearful of peasant unrest, Russian leaders sensibly opted for foreign borrowing.

Foreign lenders could discern positive and negative features in Russian borrowers.  On the plus side were two essential factors.  Russia’s gigantic territory housed vast amounts of minerals and other natural resources.  In the middle of the century, the Tsar Alexander II had shoved through a series of “Great Reforms” intended to begin the modernization of Russia.  Those reforms had not yet taken full hold, but they provided a foundation for further progress.  On the negative side the “Great Reforms” had compounded the turmoil inside Russia.  Rapid industrialization would intensify the strains.  Then, Russia remained an absolute monarchy.  After the death of Alexander II, the quality of leadership declined markedly.

Between 1890 and 1920 political considerations, rather than purely economic ones, exerted a growing influence over foreign investments in Russia.  First, seeking escape from the diplomatic isolation into which it had been forced by Bismarck’s diplomacy, the French government encouraged lending to the Tsarist regime.  This lending supported the eventual Franco-Russian alliance that surprised and alarmed German statesmen.  Second, during the First World War, the French and British tried to prop up their tottering ally by ample credit.  Third, the Bolshevik regime repudiated the Russian external debt.[4]  The Bolsheviks understood the Red default as a stroke against global capitalism.  It would—and, in France, did—gravely weaken the middle class savers who formed a vital support for bourgeois democracy.

At the same time, default contributed to making Soviet Russia an international pariah.  Within a decade, the Soviets turned to the alternative strategy of squeezing assets out of the peasantry.  As late Nineteenth Century leaders had foreseen, the human cost would be terrible.

[1] Raise no barriers to imports and exports; pursue “sound” money.

[2] Practice Western notions of the rule of law, especially the sanctity of contracts.

[3] See, David Landes, Bankers and Pashas: International Finance and Economic Imperialism in Egypt (1958).

[4] See: Hassan Malik, Bankers and Bolsheviks: International Finance and the Russian Revolution, 1892-1922 (2018).

My Weekly Reader 20 June 2019.

If you don’t like the Donald Trump Presidency, then there are some questions you need to address.  First, is Trump what the Brits call a “one off,” or is he the leading edge of a new wave in American politics?[1]  Second, what led to Trump’s election?  No, it wasn’t the Russians.  No, it wasn’t Hillary Clinton’s incompetence as a politician.  Both are real, but the decisive factors lay elsewhere.  On the one hand, Donald Trump decided to target the grievances of white, working-class men.  On the other hand, Donald Trump decided to run as a Republican, rather than in his natural home as a Democrat.  Like “Bud” White, “he’s not as stupid as he seems.”

The grievances of white working-class men are real.  Once upon a time, they were the mainstays of the “New Deal Coalition” that put Democrats into the White House from 1932 to 1952, from 1960 to 1968, and from 1976 to 1980, along with various majorities in Congress.  Unionized working-class jobs gave blue-collar workers middle-class incomes.  Then they fell by the wayside for complex reasons: mostly mechanization, but also the two successive oil “shocks” of the 1970s, organized labor’s attack on struggling employers in the 1970s, foreign competition, and ideological shifts in the two major parties.  Then, in the 1990s, China’s accession to the World Trade Organization (WTO) under favorable terms compounded the problems of American industry.

As a result, men’s industrial employment declined, new jobs shifted to other geographic areas;[2] new jobs required “college” rather than “vocational” education; and the social world of the “left behind” disintegrated (single motherhood, alcohol and drug use, general demoralization).[3]

No one in either party had bothered to address those grievances.  The suburban base of the Republicans lives in blue oxford-cloth shirts and Dockers (or the female equivalent).  The Democrats have embraced “identity politics,” which excludes the identity of the white working class.  These are “post-industrial” societies.

As a result Trump’s campaign could drag into the ranks of the Republicans a bunch of normally Democratic voters or non-voters.  The opened the possibility of a Republican presidential victory that must have seemed far-fetched if any of the other munchkins running for the nomination won in the primaries.  Republicans lined up behind Trump and they will do so again in 2020.  They get to pack the federal courts for the lifetime of the appointees.  They get to stall and roll-back the imperial decrees of Barack Obama.

Are we—as a country—better for it?

[1] That’s a disturbing thought.  In twenty years we could be talking about John Carpenter’s “Trump Tower: Power Outage.”  In 2025, radical environmentalists (but I repeat myself) sabotage the federally-mandated coal-fired generating plants that power New York City.  Suddenly, the nightlight of the city-that-never-sleeps go dark.  The elevators (and escalators) and AC and cable-television stop working.  Chaos breaks out in the streets below, but atop Trump Tower a “celebrity roast” of former members of the Trump Administration is underway.  Comments by Jim Mattis, Reince Priebus, H.R. McMaster, Hope Hicks, Sarah Saunders, Jim Comey, Jeff Sessions, Rex Tillerson, Nancy Pelosi, Mike Pompeo, John Bolton, etc.  I suppose the deranged killer haunting Trump Tower could wear a Robert Mueller hockey mask.

[2] Try selling your house if you live in Erie, PA.

[3] See: Isabel Sawhill, The Forgotten Americans (2019) and Oren Cass, The Once and Future Worker (2019).  If this is what happened to white Americans, then what are we to make of the impact of “liberal paternalism” on African-Americans since the 1960s?

My Weekly Reader C 19 June 2019.

Why does any of this historical background matter?  It matters, first, because—in these contested times—I have to insist that Belief Systems evolve in response to changing conditions.  For two centuries and more now, Liberalism, Conservatism, and Socialism have all had to make their peace with Reality.[1]  It matters, second, because I’m getting fed-up with people who spout off their “smarmy, silly, half-baked opinions”[2] without any historical context.

Nineteenth-Century Liberals didn’t like Democracy.  In their minds, the “common man” wasn’t capable of dealing with the complexities of modern life.  If all men got the vote, then a horde of ignorant, selfish, short-sighted, and grasping voters would be led around by a ring through their nose.  They would vote for stupid people and stupid things in hopes of making their own lives materially better over the short-run.[3]  To a historian, this amounts to the Leninist criticism of labor unions: dumb-ass working people will prefer higher pay and shorter hours to Revolution.[4]  (Historical events have demonstrated that Lenin foresaw things accurately.)

Scholarly investigations by psychologists recently have added to our understanding of democratic choice.  One of the most important of these observers has been Cass Sunstein.[5]  His book Nudge[6] argued that people suffer from cognitive biases and mis-perceptions that inhibit the “rational choice” beloved of economists.  As a result, individuals often make choices that re not in their material best interests.  Moreover, people are effort-economizers.  They will choose the easiest thing at any given moment.[7]  Sunstein and Thaler proposed requiring people to “opt-out,” rather than “opt-in” to things like retirement savings plans, and that people who failed to choose a health plan should be assigned to the best available.  It’s easy to see how such an approach might be generalized.

What if the duty of the liberal state today is to liberate people from making errors?  People often do stupid things, either out of a lack of information, or bias, or lacking the time to study complex issues, or stupidity (d’uh).  Should the liberal state seek to “guide” choices in critical areas?

If the answer is yes, then who determines the “best” choice?  Bureaucratic and academic experts?  Once upon a time, eugenics had wide support upon educated people.  Today, the majority of Alabama voters oppose abortion on virtually any grounds.  Today the New York State legislature has approved a plan to oppose climate change.  All are examples of experts going nuts.  Then, what happens if people defy the approved “best” choice?

If the answer is yes, then where do we draw the line?   Donald Trump is, to my mind, plainly unfit to be president of the United States.  However, he won enough votes in the Electoral College to become president.  Should expert opinion over-ride the constitutional system?  If so, who controls entry into ranks of “expert opinion”?

[1] Whereas, Soviet Communism did not.  RIP.  Well, actually, Roast in Hell.

[2] See: https://www.youtube.com/watch?v=s9hkhKVq5rM&t=10s

[3] See: anything at all in the NYT since November 2016.

[4] See: https://www.youtube.com/watch?v=o_5bH-MLblE

[5] On Sunstein, see: https://en.wikipedia.org/wiki/Cass_Sunstein  See also: https://en.wikipedia.org/wiki/Daniel_Kahneman on the underlying research in psychology.

[6] Cass Sunstein and Richard Thaler, Nudge: Improving Decisions about Health, Wealth, and Happiness (2008).

[7] For example, racial prejudice is what might be called a “heuristic device.”  Saves time and thought.  Alas.

My Weekly Reader B 19 June 2019.

What “gave” first was Nineteenth Century Liberalism.  First, the sudden advance of modern science and medicine after 1850 explained a host of public health problems in a new way.  These discoveries compelled liberals to accept a huge—for them—expansion in the role of government to address the problems of cities: sewers, clean water supplies, public baths, street cleaning, streetlights, mass transportation, and a police force.  Then came interference in the labor market through the regulation of hours and working conditions.  Then they accepted democracy in the form of votes for adult males.  Then they accepted universal, compulsory, and free primary education.  Then came higher taxes, focused at first on the very wealthy to pay for these new services and functions—and for the public employees who made them work.  The goal here lay not in expanding government power for its own sake, but in using government in a positive way to create environments in which the Individual could fully achieve his/her potential.[1]  This wasn’t just a Liberalism that broke down previous barriers to Individual achievement.  It was an adaptive Liberalism that broke down the established barriers to Individual achievement created by the effects of previous Liberal reforms and difficult social changes.[2]

Then came the immense crisis of the first half of the Twentieth Century: two world wars and the Great Depression.  The First World War introduced economic planning, conscription both for the military and for industrial work, an end to free trade, the beginning of “managing” the money supply, and passports to control the movements of individuals.  The Twenties saw capitalist experiments with a managed and planned economy.  The Great Depression made governmental control of macro-economic processes a “normal” thing.[3]  How to maintain full employment amidst price stability?  Keynesian “demand management,” that’s how.  Government spends to take up the slack in business-cycle capitalism.[4]  The Second World War’s financing showed how to do this in peacetime as well.

It didn’t stop there.  Liberalism shifted it gaze to breaking down the barriers—Beliefs and Behaviors–that stopped Individuals in marginalized groups from reaching their potential.  The “Warren Court” attacked the oppression of Individuals by government at all levels and in all forms: racial discrimination and “Jim Crow” laws; sexism and “privacy” (contraception); censorship; policing (Miranda, etc.); housing conventions that barred property sales to African-Americans and Jews; and abortion.

Did “Liberalism” over-reach?  Perhaps.  Only time will tell and all political prognostications (i.e. consulting the gizzards of dead animals) are without value.  (Sad day for the op-ed writers, No?)  The current anti-liberal argument would be that modern Liberalism has embraced “identity politics” (i.e. privilege), “statism” (i.e. executive branch decrees and rule making), and the suppression of free speech (i.e. “name and shame” campaigns).  “Ah dunno.”

[1] For English Liberalism, one key author here is T.H. Green (1836-1882).  I read one of his books in Matt Temmel’s class on English history at the University of Washington.  Didn’t understand a word of it.  Rediscovered Green later.

[2] OK, “a fighting priest who can talk to the young.”

[3] See: Alan Brinkley, The End of Reform: New Deal Liberalism in Recession and War (1995).  Really good book.

[4] Great idea in a large sense, but—JMO—does that mean that capitalism loses some of the purgative effects that come with normal business slumps?  Do wages stay too high, do marginal businesses survive, do over-investment and poor choices go un-punished?