Author Archives: jsh54

Annals of the Great Recession IX.

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In the first five years after the “Great Recession” (i.e. 2008-2013), 60 percent of the new jobs that were created in the “recovering” American economy were low-wage jobs. By early 2013, a quarter of jobs paid less than $10 an hour. At the same time, from 2006 to 2012 the top 50 companies that relied on of low-cost labor paid $175 billion in dividends to stock holders. That is, middle and upper-income group stock portfolios rebounded from the recession while lower-income group earnings were held down. This created the much debated problems of the “working poor” and the legal minimum wage.[1]

Who are the “working poor”? The answer depends on your definition. One definition is people living in families in which at least one member is working but earns under the government-defined poverty line: $11,702 for an individual and $23,021 for a family of four. By this count, there are 46.2 million “working poor” in the United States. A broader definition, favored by activists, is anyone working who cannot afford the basics: food, clothing, housing, transportation, child-care, and health-care.

Who falls into this group? About 10 percent are white, mostly living in the South and Southwest. More than 25 percent each are African-American or Latino, distributed much more evenly around the country. Big business chains (Walmart, Target, fast-food chains like McDonald’s and Pizza Hut) that base their strategy on low-cost labor employ a lot of these people. Broadly, poor people come from poor families. Men from poor communities tend to have little education when the modern economy puts a premium on education; they have lousy jobs and are frequently unemployed; often they don’t get married or get divorced; lots of kids grow up in single-parent homes and go to the same lousy schools as did their parents. All this raises the prospect that we have created a hereditary under-class that amounts to a huge waste of human potential.

The federal minimum wage is $7.25 an hour. It hasn’t budged since 2009. Between 2009 and 2012, inflation raised the cost of living by 7 percent. This knocked the real minimum wage down to $6.75. Raising the minimum wage would lift many of these people a little further up the ranks of the poor. Critics warn that this would just lead to job losses through automation. (Some economists argue that these low-wage jobs can’t be automated. This is undoubtedly true of some low-wage jobs, but the self-check-out lines that are already common at grocery stores and hardware stores could easily spread to fast-food chains.)

Lots of employers appear to have privatized profit while socializing costs. Low wages and no health-benefits are possible—in part—because a lot of working people earning the minimum wage have to rely upon food stamps and other forms of public assistance. An estimated 3.5 million people—minimum wage workers and their dependents—depend on food stamps to feed themselves. The cost shifted from employers to tax payers is estimated at $4.6 billion. Raising the minimum wage to just over $10 an hour would move these people off the welfare rolls.[2]

Unionization is another possible response. This would allow workers to bargain more effectively for higher wages. Only 11.3 percent of American workers belong to unions, about half of them to public-sector unions. One barrier here is that 24 states have “right to work” laws that obstruct unionization.

Then, perversely, the federal government offers incentives to the working poor to not make more money. The Earned Income Tax Credit (i.e. transfer payment from higher income groups) falls as the recipient earns more money. In one case, each additional dollar earned reduces the EITC by 88 cents. Working more hours or getting a slightly better paying job doesn’t make any sense.

In short, the problem of the “working poor” involves a lot of difficult problems that have deep roots and have been building up for a long time. That doesn’t mean that we should just throw up our hands in despair. Simple and obvious solutions, however, may have unforeseen effects or even none at all.

[1] “Working, but still poor,” The Week, 8 February 2013, p. 11.

[2] “Noted,” The Week, 21 March 2014, p. 16.

An eye for an eye.

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Here’s the narrative of the Sunni-Shi’a conflict in the Middle East as seen through Saudi Arabian eyes.[1] Back in the day, as my students often refer to any historical event that occurred before the latest installment of “The Dark Knight,” the dispute over who should lead the Faithful divided Islam into Shi’ites and Sunnis. Over many years, the two different schools of thought pretty much learned to live with one another. Later still, most people stopped caring about the argument in any concrete way. For fifty years in the middle of the 20th Century conflict turned on rivalries between conservative monarchical (and pro-Western) regimes like Saudi Arabia and Iran, and revolutionary, “democratic” (and pro-Soviet) regimes like Syria and Egypt. Still, that did not mean that particular religious identity had ceased to matter to people, just that they wouldn’t fight over it. Then came the Iranian Revolution of 1979. Not only did the Iranian ayatollahs overthrow the Shah, they also claimed the right to lead all of the “ummah,” and they attacked the conservative monarchies that had once been Iran’s partners. The Sunni countries, led by Saudi Arabia, weren’t taking this pretentious claim lying down: they counter-attacked by questioning the ayatollahs. Political conflicts began to activate the long-dormant conflict between sects.

Then, in 2003, the United States attacked Iraq. The American invasion overthrew the established order (a Sunni minority ruling a Shi’ite majority), then, first, Al Qaeda in Mesopotamia and, then ISIS arose out of the conflict. From 2011 on, the civil war in Syria turned up the flame under the Sunni-Shi’a struggle.   The Iranians backed the Assad regime in Syria and the Shi’ite state in Iraq. Now, the Iranians have supported (fomented) trouble in Yemen by the Houthis. This has finally alarmed the ever-patient Saudis: “Until this war, there has been a sense that Iran was encircling Saudi Arabia, [and] that this Shi’ite revival is occurring at the expense of Sunnis.” With the outbreak of fighting in Yemen, however, “It was no longer a Shi’ite crescent, but a Shi’ite circle.” The Middle East has been engulfed in violence as a result of the immoderation of Iran.

What gets left out of this narrative? The most obvious thing is that Iraq attacked Iran at the start of the Iranian Revolution. In the long (1980-1988) war that followed, Saudi Arabia and Kuwait financed much of the Iraqi war effort. Iran had done little beyond rhetoric at this point to threaten either “revolutionary” Iraq or the conservative monarchies. It looks more like trying to profiteer off a weakened Iran on the part of Iraq and then an attempt to fend off the consequences of an ill-considered adventure by Iraq on the part of the Saudis.

A second thing to consider is that Saudi Arabia’s sponsorship of Wahhabism, a conservative brand of Sunni Islam, did not arise as a response to a challenge from Shi’ite Iran. Rather, the Saudi monarchy and Wahhabism have been long-term allies. The oil shocks of 1973 and 1979 vastly enriched Saudi Arabia.[2] The wealth sucked out of Western countries allowed the Saudis to embark on a vast Wahhabist propaganda/proselytization campaign in many areas of the Muslim world.[3] That propaganda described non-Wahhabi Muslims as “apostates.”

All narrative demands simplification as a means to clarity. Some narrative simplification can be carried too far in the service of political advocacy. Doubtless this page is a case in point.

[1] Yaroslav Trofimov, “Sunni-Shi’ite Conflict Is More Political Than Religious,” WSJ, 15 May 2015.

[2] See: https://en.wikipedia.org/wiki/Wahhabism#Afghanistan_jihad

[3] Including northern Nigeria, where Wahhabists opposed the local brand of Sufi Islam. Out of this struggle and from the many failings of the Nigerian state, emerged Boko Haram.

Menagerie a trois.

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Many Saudis blame Iran for fomenting the fighting in both Syria and Iraq, fighting in which Sunnis have been the biggest losers.[1] Government spokesmen equate the Houthis in Yemen with Hezbollah in Lebanon. A spokesman for the Saudi military stated Saudi Arabia’s view of Iranian strategy: “Wherever the Iranians are present, they create militias against these countries. In Lebanon, they have created Hezbollah, which is blocking the political process and has conducted wars against Israelis, destroying Lebanon as a result. And in Yemen, they have created the Houthis.” (Obviously, this is a simplistic analysis that ignores many other factors. However, not many people doing applied politics have the spare time to read the American Political Science Review.) Facilitating this equivalence is the Houthis’ firing of rockets into Saudi Arabia, which Saudi officials compare to Hezbollah’s firing of rockets into Israel. That is, the Saudis see the rocket as the Iranian weapon-of-choice. Since Iran is in hot pursuit of nuclear weapons, it is easy to see why this alarms the Saudis.

Alarmed over the looming escape from sanctions by the Iranians, the Saudis are beginning to draw distinctions. “Israel is an enemy because of its origin, but it isn’t an enemy because of its actions—while Iran is an enemy because of its actions, not because of its origin,” said a former Saudi diplomat. In theory, the Palestinian issue still obstructs Saudi-Israeli co-operation. In practice, anything that appears to be an existential threat to both countries will lead to lesser issues being swiftly resolved or adjourned.[2]

There are hints of other ramifications as well. Saudi Major General Anwar Eshqi (retired), now the director of the Middle East Center for Strategic and Legal Studies, told the WSJ that Saudi Arabia wants Israel to be integrated into the Middle East. “[W]e can use their technology while they can use our money.” When the United States cut off aid to Egypt after the coup against Mohammed Morsi’s Muslim Brotherhood government, Saudi Arabia immediately stepped in to more than make up for the lost aid. Since then, Egypt has gone ahead pretty much as it prefers without paying much attention to Washington. What if the same thing happens with Israel? Well, the Israelis are not likely to make an open break with the United States because it is the chief source of advanced arms and cover in the UN’s Security Council. Still, the Bush Administration’s attack on Iraq and the Obama Administration’s embrace of the “Arab Spring” have had long-term consequences that undermine American influence in the Middle East.

[1] Yaroslav Trofimov, “Saudi Arabia and Israel Find Common Ground on Iran,” WSJ, 19 June 2015.

[2] See: What would Bismarck drive? 3,” May 2015.

Good enough for government work.

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What follows is the sort of quibbling over details that appeals only to scholars. However, historians believe that human affairs are “contingent.” That is, even if humans are storm-tossed in some vast sea of historical processes, the actions that individuals take or do not take always have consequences.

Commenting on the troubles in Yemen and Libya, Professor Daniel Benjamin (US State Department counter-terrorism co-ordinator, 2009-2012, and now a professor at Dartmouth) said that “The forces that drove the Arab Spring [of 2011] were of such enormous dimensions that it’s unrealistic to think any president or any group of leaders could steer these events.”[1] It is possible to take a different view.

For one thing, the “forces that drove the Arab Spring” have been totally mastered. Protests in Morocco, Algeria, Jordan, Oman, Kuwait, the United Arab Emirates, Djibouti, and Somalia all soon ended after largely cosmetic concessions by the authorities.   Something harsher was required in in Egypt and Syria. Under pressure from the crowds in a few urban areas and from the United States, the Egyptian military dictatorship bent but did not break. Now it has reasserted its power, using the threat of Islamism as its justification. Seeing what was happening in Egypt, the far more ruthless Assad government in Syria took a strong line with the urban malcontents.   They malcontents are mostly in refugee camps at the moment. What the Syrians were left with was an uprising among conservative Sunni Muslims who have been joined by a flood of Islamist foreign fighters, just as the insurgency in Iraq attracted hordes of Islamist jihadis. What does Islamism have to do with the American liberal vision of the “Arab Spring”?[2]

For another thing, the United States played an active role in creating the chaos that now engulfs both Libya and Yemen.   The Obama Administration exceeded its mandate from the UN when it expanded its involvement in the Libyan rebellion from protecting civilian lives to toppling the Gaddafi regime through air-power.[3] Then the U.S. walked away when the overthrow of Gaddafi opened a Pandora’s box of troubles. Much more reasonably, the U.S. also supported the initiative by the Saudi-dominated Gulf Co-operation Council to push “president” Ali Abdullah Saleh out of office. Here alone the Americans had a clear goal: to preserve the ability to hunt Al Qaeda in the Arabian Peninsula jihadis.

As the NYT headlined the story in which Daniel Benjamin was quoted, “Killing Terrorists May Be Best U.S. Can Hope For.” That’s a modest goal. Not transformative of the entire Middle East. Not a lasting solution to the problem of radical Islam. Not the sort of thing to win someone a Nobel Peace Prize. But manageable within the limits of our power.

[1] Mark Mazzetti and Scott Shane, “Killing Terrorists May Be Best U.S. Can Hope For,” NYT, 17 June 2015.

[2] See: “Arab Youth,” September 2014.

[3] It also helped poison Russian-American relations. See: “Obama versus Putin,” September 2014.

Climate of Fear XVII.

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In 2006, a Pew poll reported that 79 percent of Americans saw global warming as a serious problem; in 2010 the number fell to 63 percent; and a recent poll reported that the number has risen to 69 percent. Similarly, in 2009, 57 percent of Americans accepted that there was “solid evidence of [global] warming”; in 2015, 68 percent agree.[1]

How do we explain the fluctuations? There are a number of possible answers. First, people trade off fears about climate change with fears about economic growth. When the economy tanks, people worry that environmental regulations will cripple recovery; when the economy recovers, people start to worry about the environment.

Second, the deep polarization of American politics causes the party out of power to swing against whatever the party in power proposes. In a classic example of this, in March 2015, 53 percent of Republicans supported automatic registration of all eligible voters. Recently, Hillary Clinton endorsed this proposal. Now, only 28 percent of Republicans support automatic registration of all eligible voters.[2] Many Republicans responded to the push by the Democrats for major climate legislation in 2009-2010 by clinging to their skepticism about climate change. Still, this hardly tells all of the story. For one thing, apparently, male Democrats are slightly less interested in the issue of climate change than are female Democrats, and the Democrats couldn’t get their climate change bill through Congress when they controlled both houses in 2010.[3] For another thing, what’s sauce for the goose is sauce for the gander. The Republicans now are the “party in power” in both houses of Congress. If parties become more intensely opposed to the position of the party in power, then perhaps the spike in climate change belief really reflects a knee-jerk response among Democrats.

The economy always fluctuates, but climate change is a continuing problem. The changing salience of climate change as a problem suggests something not very quantifiable about the continual intrusion of short-term concerns into the response to long-term problems. Parties alternate in power, sometimes every two years, but climate change is a continuing problem. The changing salience of climate change as a problem suggests something not very quantifiable about the continual intrusion of irrationality and passion into politics. Americans have no monopoly on this trait, as the bitter Greek debt negotiations show.

[1] David Leonhardt, “Americans’ Concern Over Climate Change Is Again on the Rise,” NYT, 17 June 2015.

[2] “Poll Watch,” The Week, 19 June 2015, p. 15.

[3] I know, I know: “super-majority,” “filibuster,” “gerrymandering,” and “the Koch Brothers.” However, Senate Majority Leader Harry Reid could not even muster the support of all the Democrats. See: Carl Hulse and David Herszenhorn, “Democrats Call Off Climate Bill Effort,” NYT, 22 July 2010.

“Die for Danzig?” Marcel Deat, “Mourir pour Danzig?” L’Oeuvre, 4 May 1939.

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Fighting Russia isn’t a very popular idea. Fighting Russia over Ukraine doesn’t have much support in spite of the obvious Russian intervention in the rebellion in eastern Ukraine. But fighting Russia if it attacks a fellow member of NATO seems like a no-brainer. That’s what a military alliance is all about, right? Well, not necessarily.[1]

Back in 1956, in the midst of the Eisenhower administration and at the height of the Cold War, 82 percent of Americans believed that a Russian attack on one member was an attack on all and that the US should fight, while 8 percent opposed it, and 10 percent weren’t sure. In a recent Pew Research Center poll, 56 percent of Americans supported using force against Russia if it became involved in a “serious military conflict” with another NATO member state, while 37 percent were opposed, and a mere 7 percent weren’t sure. Among some other NATO countries, support then falls off by small steps. Support for fighting slides down through Canada (53), Britain (49), Poland and Spain (48), France (47), Italy (40), and Germany (38).[2] In Germany, 58 percent opposed fighting Russia, while only 4 percent weren’t sure.

With regard to the conflict in Ukraine, Poland (50 percent) and the United States (46 percent) most strongly support sending weapons to the Kiev government. Thereafter, support declines among other NATO members through Canada (44), Britain (42), and France (40), before falling off sharply in Spain (25 percent), Italy (22) and Germany (19). Similarly, 62 percent of Americans favor admitting Ukraine to NATO, but only 36 percent of Germans supported such a move.

One way to think about this is that, in spite of the frequent media references to a revived Cold War, most people in the West aren’t there yet. Still, it may be where we are headed. Favorable opinion about the United States among Russians has fallen from 51 percent in 2013 to 15 percent in June 2015 and favorable opinion about NATO has fallen from 37 percent to 26 percent over the same period. Favorable opinion about Russia in the NATO countries has fallen from 37 percent to 26 percent.

Another way to think about this is that there has been a significant disaggregation within the NATO alliance since the end of the Cold War. The United States and Germany now represent opposite poles on a number of key policy issues. As the creation of the Eurozone and the negotiations over the Greek debt crisis show, Germany has become the dominant power in Europe. Americans demonstrate a resolution (or belligerence) unmatched by the Germans. This is something with which future leaders of both countries will have to wrestle.

Still another way to think about this is that we are witnessing yet another phase in the troubled, tortuous relationship between Germany and Russia. Before the First World War they were two conservative empires in opposed alliances. Between the wars they were ideologically opposed states driven to co-operate by their international pariah status. Since 1945, the partitioned Germanys first clung to their dominant partner, then West Germany’s “Ostpolitik” began opening a road East based on economic complementarity. Vladimir Putin’s assertion of Russian power and interests among the non-NATO former members of the Soviet Union has challenged that relationship. Belarus and Georgia may be next, but people worry that he will not stop at the borders of the Baltic states. Putin’s own moderation—or lack of it–holds the key.

[1] Naftali Bendavid, “Poll Shows West Is Divided On How to Deal With Russia,” WSJ, 10 June 2015.

[2] The Polish stance is worth some thought because Poland is going to provide the most likely battlefield in such a conflict.

Whistling past the graveyard?

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Simon Nixon holds that in the years before the financial crisis broke, Greece was flush with money. The Greek governments of the time did the popular thing by increasing pensions and wages for public employees well beyond the level that the feeble Greek economy could sustain in normal times. Then the slump dried up the river of money. Greece faced a crisis; a Greek financial collapse could spread to the rest of the Eurozone; and the European Central Bank, the Eurozone countries, and the International Monetary Fund stepped in with a bailout.[1]

In return for this bail-out, the creditors demanded that Greece make reforms of its unsustainable public-sector and pension systems to reduce spending to a level that the Greek economy could support in normal times. Instead of pursuing this politically unpopular course, Greece laid its main effort on enhanced tax collection and on a reform of the pension system that did not address the real problem. Thus, the number of bureaucrats fell as they were transferred to early retirement. This increased the burden of pensions in the budget rather than reducing it.

The Syriza government argues that budget cuts will just push Greece deeper into recession. They have been asking for an expansionary budget policy combined with more money from the European Union for “investment.”

There is a consensus on the need to “restructure” (greatly reduce) Greece’s debt. There is a consensus among the creditors on the need for serious reforms of Greece’s public sector and pension systems. A deal should be easy to reach. However, the Greeks want the debt reduction to come at the same time as the promise to implement reforms in the future.[2] The creditors don’t trust the Greeks to implement the reforms once they have the money in hand. As a result, they insist that the reforms have to precede any debt restructuring.

Anatole Kaletsky argues that, between the outbreak of the Greek financial crisis in 2009 and the end of 2014, there existed a real danger that a Greek default would be the first domino in a chain that ran through Portugal, Spain, and Italy before crashing down on Germany.[3] In January 2015, however, Mario Draghi, the head of the European Central Bank, won approval for a massive program of bond-buying on the part of the ECB. In essence, the ECB now can print all the money it needs to drown the fires of a financial crisis. Euro-zone countries agreed to this measure in order to build a fire-wall between Greece and the rest of the Eurozone. Now, the dangers of a Greek default are chiefly to the Greeks themselves: default will block access to foreign credits, end ECB support for the Greek banking system, lead to a run on the banks that will leave many people empty handed, and the government will be unable to pay the pensioners and public employees on whose behalf it has been engaged in this game of chicken.

Then there is the collateral damage. A “Grexit” may not do serious damage to the European economy. It will harm the reputation of the IMF. IMF rules bar it from lending to countries that are unlikely to be able to sustain the debt. The Eurozone lured the IMF into participating in the Greek bail-out by warnings of a “financial contagion.” Well, the current level of Greek debt is not sustainable. A Greek default will gore the IMF, which prime minister Tsipras has just denounced as ‘criminal.” That will affect IMF lending programs in several ways for the foreseeable future.

The level of emotional engagement here reminds us that politics isn’t always rational.

[1] Simon Nixon, “Athens and Its Creditors Head for the Brink,” WSJ, 8 June 2015.

[2] See: “I’ll gladly pay you Tuesday for a hamburger today.”

[3] Anatole Kaletsky, “Greek crisis: Europe has nothing to fear from Greek belligerence,” The Guardian, 16 June 2015.

A tale of two occupied cities.

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Recently, the Wall Street Journal ran two stories in one day on the problems of “occupied territories” in two wars. The stories cast some light on possible future developments.

Since seizing Mosul in June 2014, ISIS has provided a sort of good government to the captured city of 1-1.5 million people.[1] Roads have been repaired and are well-maintained. The street lights are working far better than they did under the old regime. Theft of electricity through improvised wiring has ended. You can walk down the street without navigating around kiosks and barrows. Littering has come to a stop. All men wear beards and all women are fully covered. You don’t feel offended all the time by people scrolling through their Smart phones because the cell towers and Internet have been turned off.[2] ISIS drove out the Christian minority from the city. Now churches host garage sales. ISIS blew up the Shi’ite shrines that once dotted the city. One way to ensure compliance with government orders is to kill anyone who violates them.

The recapture of Mosul has been a loudly-proclaimed goal of the American—I mean Iraqi—strategy against ISIS. So far, most of the heavy lifting has been done by the Kurds, who have made advances around the western, northern, and eastern flanks of the city. However, the fall of Ramadi in Anbar province has put a spoke in the wheel of that strategy for the moment.

The Sunni majority in the city fears both the reconquest by the Shi’ite-dominated government and what might follow at the hands of the “liberators.”

It isn’t at all clear that Petro Poroshenko’s Ukraine government expects—or even wants—to recover the rebel territories in eastern Ukraine.[3] A cease-fire worked out in February 2015 has greatly reduced casualties among civilians. However, Poroshenko’s government has been tightening controls on movement between the two parts of Ukraine. One estimate is that trade across the cease-fire line has fallen by perhaps 70 percent since the cease-fire was implemented.[4] The Poroshenko government argues that the economic and political integration clauses of the cease-fire agreement have to wait on the military aspect of the cease-fire being “fully ensured.” The distinction seems intended to punish the residents of the eastern zone. Delays at the Kiev government’s check-points have extended a round-trip between Donetsk and neighboring towns in Ukraine proper from two hours to twelve hours. Furthermore, the Ukrainian border guards regularly demand hefty bribes—in effect a government tax on exports—from truckers. Food and medical supplies from Ukraine have begun to dwindle as the border guards refuse to allow their passage. The Kiev government has begun denying pension benefits to anyone living permanently in the rebel-held regions. The Russians have not taken up the slack. Yet. This policy runs the risk of driving many people in eastern Ukraine who do not support “independence” under the Russian thumb into the arms of the rebels. One frustrated traveler said “”Give me the opportunity to work and live peacefully and I don’t care who is in power.”

Clearly, conditions in Mosul are far worse than in eastern Ukraine. The occupation of Mosul by ISIS seems likely to end in a horrific fashion, while Ukraine will be partitioned.

[1] Nour Malas, “Year of Islamic State Rule Transforms Mosul,” WSJ, 10 June 2015.

[2] That doesn’t mean that no news reaches the city. Residents seem well aware of the reports of very destructive fighting, looting, and retribution killings by Shi’ite militias in the re-capture of Tikrit.

[3] Laura Mills, “In Ukraine, Anger Grows as Border Tightens,” WSJ, 10 June 2015.

[4] That is, much more trade took place while the fighting was still going on at a high pitch.

Coming Soon to a Theater Near You: Grexit Rising:

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When it comes to tossing around their weight, it doesn’t matter that each country has a single vote at the U.N. General Assembly. There are a few big, important countries and there are many little, unimportant countries. You can see this at work in the current stand-off over the Greek debt issue.

The I.M.F., although chock-full of technical experts, still has an acute political awareness. So, the I.M.F. has long favored pairing a reduction (“restructuring”) of the debt owed by Greece to its European creditors (especially Germany) with economic reforms by Greece. Greek debt is up to 180 percent of GDP. There is no way the Greeks are going to make the sacrifices necessary to pay the debt, but the European creditors have refused to absorb the losses. The Greeks revolted against both austerity and the reforms pushed by the I.M.F. and the European Union. Now there is a dead-lock. However, in public the I.M.F. has laid the blame for the impasse at the feet of the Greek government. Complaints about the intransigence of the creditors were uttered sotto voce.[1] That reflects the importance of Germany and France on the world scene and within the European Union. The harsh stance toward the Greeks also reflects the utter unimportance of their country. Greeks are by nature Hellenophiles, so they have some difficulty registering the reality that no one else cares what happens to Greece.

Before joining the Eurozone, the Greeks could have dealt with their debt problem (and did) by devaluing their currency. Effectively, this robbed their creditors. Served the creditors right for lending to the Greeks. Financial Darwinism in action. Nobody much cared. Joining the Eurozone, with its single exchange rate, robbed Greece of this option.[2]

In a normal bankruptcy, the creditors would have to eat a lot of their claims on the grounds that they had been foolish to lend the money in the first place. The Greek case is different because the crisis arose when it became apparent that several Greek governments representing different parties had “cooked” the national accounts in order to deceive lenders. So, it seems perfectly reasonable to me that Greece would get its head held under the tap while someone (with a German accent) gave them a good scrub with a steel brush. Still, you can’t get blood out of a stone. Why not say “enough is enough”?

I conjecture that there are several reasons. First, once all is forgiven, and the debt has been written down, and the Greeks have agreed to some cosmetic reforms of unions and pensions, and enough time has passed for people in financial markets to forget about the whole thing[3], the Greeks will do it again. There is no solution to this problem except to boot the Greeks out of the Eurozone. Second, what will be the effect of a Greek default on the creditors? Back in August 2012, it was estimated that the Eurozone Central Banks could lose as much as 100 billion Euros from a Greek default, with the German Central Bank getting soaked for up to 27 billion Euros.[4] I have not seen much discussion of the impact on the creditor economies of a Greek default (but maybe I wasn’t looking). Economically, but even more politically, accepting that the money is gone will be hard for democracies to choke down. Still, push is coming to shove. Either before or after a new “extension,” the Greeks will get shoved out the door.

[1] Liz Alderman and Landon Thomas, Jr., “I.M.F. Recalls Negotiators as Deadline Looms for Greek Deal,” NYT, 12 June 2015.

[2] In exchange, the Greeks gained the transient psychic benefit of believing that they did not live in a banana republic.

[3] In all likelihood a relatively short span of time. Which should make Americans wonder whether anyone learned any lessons from our own “recent unpleasantness.”

[4] See: https://en.wikipedia.org/wiki/European_debt_crisis#Greece

Digging deeper.

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Sometimes, the investigation of one thing turns up evidence on something else. That’s one of the hazards—or pleasures—of historical research, journalism, and policing. That’s the case with the follow-on to a couple of recent traumatic events.

First, since the indictment of six Baltimore police officers in the death of Freddie Gray on 1 May 2015, Baltimore has suffered 55 murders.[1] That is twice the “normal” rate and the highest levels seen in the city since the very violent 1970s. Why the surge in homicides? African-American community leaders blame what amounts to a police strike since the indictment of the officers. The arrest rate dropped sharply. This alleged stand-down by the street cops “gave criminals space to operate.” This isn’t very credible as an explanation. Murder rates vary across months of the year, while the police presence remains basically stable. One kid living near a drug market told the New York Times that “Summertime: that’s when they do all the killing.” A more compelling explanation is the one offered by Baltimore police officials. During the riot in April 2015, 27 pharmacies were looted. Officials estimate that 175,000 doses of Oxycontin disappeared.[2] Oxycontin moves on the street for $30 a dose, so that’s $5.25 million of drugs that landed in the hands of dealers.[3] Because it was cost-free, it all represents pure profit after the distribution costs to the dealers. They key to profit, then, appears to be control of marketing outlets, rather than control over supply. That means a war for the corners and increased murders.

Second, the death of Eric Garner while being arrested in July 2014 reveals something about police-community interactions beyond the standard “broken relationship” trope.[4] In their longer-term context, police-community relations deteriorate when the community feels that it has been abandoned by the police to the criminals. Rebuilding that relationship requires the police to act effectively and to be seen to be acting effectively against crime. When William Bratton headed the New York Police Department (NYPD) in the 1990s, he introduced the “broken windows” strategy. This involved addressing the many small signs of social decay to clear away the underbrush that both shielded and could grow into serious crime. The NYPD also adopted a more analytical, statistics-based approach to targeting resources. Those approaches have remained in effect to this day. Crime rates have dropped dramatically, although people often contest claims that “broken windows” policing is responsible for the drop.

Tomkinsville Park on Staten Island had emerged as one area of statistical concern to police leaders. A little over half way through 2014, there had already been 696 calls to 911 about the area. There had also been 11 posts to the city’s hotline for complaints, called 311. Between March and June 2014, these reports had reached senior police commanders and the local commanders on Staten Island had been instructed to address the issue.

One of the 311 complaints came from Gjafer Gjeshbritaj, who owned an apartment building in the area. He complained of drug dealers hanging out in front of his building. His earlier efforts to disperse them had led to a physical confrontation. Moreover, Gjeshbitraj complained, the dealers used the people selling “loose” (illegal untaxed) cigarettes as cover for their own business.

This converged with the “broken windows” strategy and Mr. Gjeshbitraj belonged to the community of law-abiding citizens with whom the police were trying to build ties. Police visits to Tomkinsville Park increased and so did arrests, summonses, and warnings.

On 17 July 2014, a police lieutenant passing by noticed the crowd of cigarette sellers and others on the sidewalk near the park. He called the local precinct to tell them to send some men. All the rest followed.

[1] Richard Oppel, Jr., “Looking for Gains in Policing, Baltimore Finds Fewer Police,” NYT, 13 June 2015. Forty-two murders in May and 13 so far in June.

[2] I conjecture that large amounts of Sudafed disappeared as well. Following cultural stereotyping, I further conjecture that this all was unloaded to wholesalers in West Virginia and on the Eastern Shore.

[3] To get a sense of proportion, the Federal Government’s Small Business Administration announced a program to grant $1 million in small business loans in Baltimore following the riot. See: http://www.baltimoresun.com/news/maryland/baltimore-city/bs-md-ci-business-riot-recovery-20150529-story.html

[4] Al Baker, J. David Goodman, and Benjamin Mueller, “Beyond the Chokehold: The Unexplored Path to Eric Garner’s Death,” NYT, 14 June 2015.