We've started a new blog. We enjoyed PP, but we got busy. Further, the scope of PP - politics - was quite broad.
The new blog is called Real Diplomacy. Our focus is limited to foreign policy. We hope to use short, concise posts to analyze current events through the lens of realpolitik. We're avoiding the trap of nasty domestic politics. Most posts will be 3 paragraphs or less.
Get yourself a Wordpress ID and start commenting.
Wednesday, June 17, 2009
We've started a new blog. We enjoyed PP, but we got busy. Further, the scope of PP - politics - was quite broad.
Friday, February 6, 2009
The Obama administration continues to push the "stimulus" bill with the same lines we've heard all along.
Joe Biden: "Every economist, as I've said, from conservative to liberal, acknowledges that direct government spending on a direct program now is the best way to infuse economic growth and create jobs" (December, link).
Obama: "There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy" (January 9, link)
Obama: "Economists from across the political spectrum agree that if we don't act swiftly and boldly, we could see a much deeper economic downturn that could lead to double-digit unemployment and the American dream slipping further and further out of reach" (January 3, link)
Rahm Emmanuel: "Everybody, I think, from economists on the left to economists on the right realize that we must make critical investments at this time" (January 18, link).
Obama: "Every economist, even those who may quibble with the details in the makeup of the package will agree that if you’ve got a trillion dollars in lost demand this year and a trillion dollars in lost demand next year then you’ve got to have a big enough recovery package to actually make up for all those lost jobs and lost demand" (February 5, link).
During this entire time, economists "from across the political spectrum" have been voicing their disagreement, but His Hopeness keeps pushing the same line. Even many economists who favor the theory of fiscal stimulus (Feldstein, Sachs, etc.) are against this one because it is not a fiscal stimulus. It is a $1 trillion manifestation of long-time Democrat agendas being called a "stimulus" by its disingenuous proponents.
The word for this is dishonesty. In case Obama's disciples are still, after all this time, believing the lies coming out of his mouth, here are just a few of the economists who disagree with him:
- Hundreds of economists signed the CATO manifesto declaring their disagreement with the President (link).
- Of the IDEAS world's top 20 economists, 6 have opined against the stimulus and only 2 in favor (link).
- Greg Mankiw has been keeping a list, which includes himself, Burt Malkiel, Alberto Alesina, Robert Barro, Gary Becker, John Cochrane, Eugene Fama, Robert Lucas, Kevin Murphy, Thomas Sargent, Harald Uhlig, and Luigi Zingales (link), Martin Feldstein, Alice Rivlin, Harold Cole, Lee Ohanion, and Doug Irwin (I'm sure I've missed some).
- Other's I've noticed: Arnold Kling, James Hamilton, Nouriel Roubini, Jeffrey Sachs, and William Easterly (anyone familiar with the development literature knows that a Sachs/Easterly agreement is a big deal).
So, as it turns out, not "every economist" agrees with the Pork Plan, and Obama knows it. So why does he keep being dishonest? Is this Change We Can Believe In?
Wednesday, February 4, 2009
One of the most intelligent statements Obama has ever made was when he urged Republicans to stop listening to Rush Limbaugh. Today I came across economist Menzie Chinn's rebuttal to a recent WSJ article by Limbaugh which contained some pretty embarrassingly faulty economics. Said Limbaugh:
Keynesian economists believe government spending on "shovel-ready" infrastructure projects -- schools, roads, bridges -- is the best way to stimulate our staggering economy. Supply-side economists make an equally persuasive case that tax cuts are the surest and quickest way to create permanent jobs and cause an economy to rebound. That happened under JFK, Ronald Reagan and George W. Bush. We know that when tax rates are cut in a recession, it brings an economy back.
Of course, long-time PP readers know that the case of supply-side economics (as the term is usually understood) is anything but persuasive. Chinn deals with Limbaugh's ridiculous assertions:
I know that proof by repeated assertion without data is a time honored tradition by some individuals, but Mr. Limbaugh's first assertion is truly an amazing. In terms of aggregate demand, while tax cuts might get to the individual households quickly, actual spending will be spread out over time. This is illustrated in the dynamic multipliers from the OECD's macro model.
My take: the problem here isn't about the debate between tax cuts and government spending. The issue is that the Left wants to argue that spending of any kind is necessary as an urgent fix to the recession, even though their proposals will spend the bulk of the money years from now and there is no indication that they are spending in the right places. The Right wants to argue that cutting taxes everywhere and all the time is a solution to every problem. Both proposals will add dramatically to our debt without really solving the problem. The real solution:
1. The "stimulus" package needs to be broken up into two parts: a stimulus, and a long-term Obama Improves America package. Each should be subject to their own, separate debate.
2. For the stimulus portion, we need to have a conversation about the best way to get the economy going. It will likely need to have a combination of temporary, carefully targeted spending and carefully targeted tax cuts. It should have a minimal, temporary effect on deficit spending. I believe that, at this point, Martin Feldstein has the best ideas. He criticizes both the tax cut portion and the spending portion of the current "stimulus."
3. For the long-term portion, Obama needs to give America the conversation it deserves. Future generations will be paying for his plans, so pushing them through under the banner of urgent recession treatment is deceptive and irresponsible. We need to talk about how to really fix our problems - a good list is in my last post - and Obama needs to keep his promises about listening to the experts. Most of all, this plan should be made parallel to a plan for reducing the national debt. No permanent expansions of government should be considered unless we have a binding plan for how to pay for them.
Obama can prove to us that he really is about Change. End the partisan games and listen to the experts to devise a plan that will actually work with minimal collateral damage.
Last week on Tom Keene's show, HBS professor Michael Porter:
America has some very important weaknesses; we all know what they are: they're public education, they're unnecessary complexity in costs of doing business, they're lack of a credible safety net that helps people through transitions in terms of pensions and healthcare. And we have not made any headway in dealing with those fundamental problems. . . .
Washington is fundamentally broken. There's literally no strategic thinking. There's no capacity to take coordinated long-term action... The stimulus is giving us one more reason not to address the real problems in America. . . .
We're making almost zero progress on all these issues, and yet there's this massive amount of talk and activity going on and all this money is being spent.
Other countries do a better job at this... They think strategically and they have long-term plans. We don't do that.
(transcribed by yours truly; emphasis mine)
Porter also gives the Obama/Dem "stimulus" a C-, and he discusses the weaknesses caused by MBA's not being able to do math.
If you aren't listening to Tom Keene's Bloomberg on the Economy podcast, start now.
Monday, February 2, 2009
I believe an important distinction should be made between a short-term “anti-recession package” (aka “stimulus”) and a more permanent shift of resources into public investment in future growth.
This is what I've been saying all along. The current Obama/Dems "stimulus" plan is not a recession package. It is a combination of (1) massive pork projects from its time in Congress (which Yes We Can Man promised wouldn't happen), (2) the realization of decades of Democratic government expansion agendas, and (3) a small amount of long-term growth investment and a smaller amount of actual STIMULUS. Obama's attempt to pass all this junk in the name of fighting the recession is (1) bad for the economy, because we have no chance to talk about the massive increase in US debt and its effects on interest rates and confidence, and the projects haven't met tests of efficiency; and (2) a confirmation that Mr. Changemaster is not the new-kind-of-politician he promised to be, since he is selling us a porkfest but calling it "stimulus."
I knew the imprisoned Nixon biographer Conrad Black was a fabulous and witty writer (read paragraph #2 of this), but until now I didn't know of his foreign policy analysis skills. In this article, he offers several approaches to Bush's Axis of Evil - basically North Korea and Iran - and suggests, brilliantly, that while Obama and his disciples think the Changemaker is Lincoln reincarnated, emulating Lincoln will not help Obama solve our current problems.
Barack Obama, who quotes Washington and Lincoln with the insight of an historian and not just a leader who has good researchers, could profitably borrow a few pages from Richard Nixon’s playbook. The Father of the Nation and the Saviour of the Union, for all their travails and distinction, never had to deal with such unfeasible characters as Ahmedinejad and Kim Jong-Il.
Black suggests using some linkage politics to persuade Russia and China to put more pressure on Iran. Read the article.
Friday, January 30, 2009
Big Obama and "Stimulus"* supporter Brad Delong has a major concern with Obama's Porkfest: the "Buy American" content.
In addition to being bad economics, demonstrating in his first month that the Obama Administration's word is not good--that it will keep treaties only when it feels like doing so--would be a very bad start for the foreign policy of the Obama administration.
This should not surprise any PP readers. During the campaign, I consistently complained that Obama's shady NAFTA promises, which contributed substantially to his support in the Midwest, were bad foreign policy. The Canadians agreed, which is why they met with Obama's econ guy (which Obama denied until he was caught).
It's all part of the Obama game. He intentionally got elected by promising everything to everyone, regardless of costs to US economic and foreign policy standing. Now he has to find some way to keep everyone happy, even though he knows he was lying 90% of the time. Change We Can Believe In.
* From now on, I'll refer to the "Stimulus" in quotes, since evidence continues to mount indicating that it is not stimulus, but simply legislation of long-time Democrat agendas being disingenuously sold as "stimulus" by the Changemaker &co. I adopt this notation from David Henderson, who says that the bill "is likely to destroy wealth." Incidentally, he voices concern over the Buy American provision in the same post.
Thursday, January 29, 2009
Several weeks ago, 538 published a list of top 20 economists (give or take) and their positions on the current stimulus bill. The list needs updating, both because many have opined since then and also because Silver wasn't entirely honest. A new list, as best I can tell, is below (though I preserve unchanged elements from Silver's list). Stimulus proponents are in blue; opponents are in red; and green are hard to tell:
1. Joseph E. Stiglitz. Favors big/bigger stimulus, but the current bill doesn't meet his criteria (link).
2. Andrei Schleifer. I'll call him against it, since he says Obama is "weak on economic understanding, is not listening to his economic team, or his economic team is not providing solid advice." (link).
3. Robert J. Barro (link).
4. James Heckman
5. Robert Lucas. Skeptical, thinks monetary tools still exist (link).
6. Peter C.B. Phillips
7. Edward Prescott (link).
8. Martin Feldstein (link).
9. Jean Tirole
10. Daron Acemoglu. Supports idea of stimulus, but is leaning against the specific bill for fear of adverse effects on innovation, growth, and attitudes towards markets (link).
11. Larry Summers. Member of Obama economic team, favors stimulus (link).
12. John Y. Campbell
13. Oliver Blanchard. No direct support, but insinuates such (link).
14. Mark Gertler
15. Paul Krugman. Thinks action is needed drastically, worried stimulus won't be large enough. (no specific link; see daily tirades at NYT)
16. Christopher F. Baum
17. Thomas Sargent. Skeptical, thinks stimulus math is based on outmoded economic models (link)
18. Maurice Obstfeld
19. Stephen Turnovsky
20. Nicholas Cox
This makes the current score six against, three for, and two who are uncertain (but their leanings are split, for/against). I have suspicions about several others (having read their academic work), but I can't draw conclusions yet. If anyone finds links to any others, let me know.
Martin Feldstein still has considerable political credibility. He argues that the tax cuts in the bill won't increase consumption, and the spending won't increase employment (in other words, why are we doing it?). Other items he discusses:
It would be better for the Senate to delay legislation for a month, or even two, if that's what it takes to produce a much better bill. We cannot afford an $800 billion mistake. . . .
On the spending side, the stimulus package is full of well-intended items that, unfortunately, are not likely to do much for employment... Has anyone gone through the (long) list of proposed appropriations and asked how many jobs each would create per dollar of increased national debt? . . .
The plan to finance health insurance premiums for the unemployed would actually increase unemployment by giving employers an incentive to lay off workers rather than pay health premiums during a time of weak demand. And this supposedly two-year program would create a precedent that could be hard to reverse. . . .
All new spending and tax changes should have explicit time limits that prevent ever-increasing additions to the national debt. Similarly, spending programs should not create political dynamics that will make them hard to end.
The problem with the current stimulus plan is not that it is too big but that it delivers too little extra employment and income for such a large fiscal deficit. It is worth taking the time to get it right.
This is essentially the position I've arrived at. This is a bill that (1) will not cause meaningful increases in consumption or employment, (2) is loaded with pork and long-time democratic agendas rather than targeted fiscal response, (3) is a massive increase in debt which will undermine confidence in government and put future policymakers in a fiscal straitjacket, and (4) is nearly certain, due to political capture, to mean a permanent expansion of government that hasn't been properly advertised or vetted as such by its proponents. Much like Bush used the 9/11 crisis to slide unrelated projects past the American people (like Iraq), Obama and the Dems are now using this crisis to impose massive unrelated liberal agendas which will be paid for by me and my unborn children. These permanent changes to the structure of government deserve a debate on their own merits, not a hasty, disingenuous defense using, inaccurately, the financial crisis as an excuse for immediate action. Mr. Obama's administration has even made claims that all economists agree about this stimulus.
This isn't what we were promised from Mr. Obama. He has replaced a partisan, right-wing government with a partisan, left-wing government, when we were promised a consensus-based, Change We Can Believe In government.
Wednesday, January 28, 2009
According to a Russian official, “The new US Administration is not pushing ahead with the plans to deploy the US missile defence system in Poland and the Czech Republic. Russia does not need to deploy Iskanders in Kaliningrad if the US does not install missile defence facilities in Eastern Europe.”
After a phone call between Presidents Obama and Medvedev, the White House yesterday released this statement, “The presidents agreed that, as they were both new leaders from a post-Cold War generation, they have a unique opportunity to establish a fundamentally different kind of relationship between our two countries.”
Serious rapprochement with Russia would be smart of Obama. He has nothing to gain from continued antagonism with Russia and will need their help to deter Iran's nuclear ambitions, reform the UN Security Council, and (who better?) help turn the tide in Afghanistan. Cozying up to Russia would also silence gadflies like Chavez and Castro, and give credibility to Obama's efforts to recast the US as a friendly nation willing to "extend a hand if you are willing to unclench your fist."
What would Obama have to give up for better relations? For one, NATO expansion into Georgia and Ukraine would probably be off the table. Additionally, relations with Eastern Europe, and by extension, Brussels, would likely take a hit. Lastly, it might have to tone down criticisms of Russia's continued autocratic tendencies. But these are small costs for the US to persuade Russia to become a reasonably reliable international ally.
I know my readers (both of you) are now tired of stimulus discussion, but I'm not. So on we go.
Arnold Kling juxtaposes the famous Larry Summers dictum that fiscal stimulus should be "timely, targeted, and temporary" with a description of the current stimulus efforts: partisan, pandering, and permanent. He channels sources indicating that (1) the unemployment we're facing is in sectors that won't really be affected by the stimulus bill; (2) though he doesn't use the word, political capture will ensure that the spending increases are permanent, and (3) the government will now have dramatically increased involvement in education.
James Hamilton says that no lawmaker should vote yes on a bill they haven't read. The current stimulus bill is 647 pages (I think his econometrics textbook is about the same length). Hamilton proposes an alternative bill, two paragraphs long, which simply gives money to states.
In FT (remember it's free, just sign up), Jeff Sachs opines:
The US debate over the fiscal stimulus is remarkable in its neglect of the medium term – that is, the budgetary challenges over a period of five to 10 years. Neither the White House nor Congress has offered the public a scenario of how the proposed mega-deficits will affect the budget and government programmes beyond the next 12 to 24 months. Without a sound medium-term fiscal framework, the stimulus package can easily do more harm than good, since the prospect of trillion-dollar-plus deficits as far as the eye can see will weigh heavily on the confidence of consumers and businesses, and thereby undermine even the short-term benefits of the stimulus package. . .
What we need is a medium-term fiscal framework, one that lays out an anticipated schedule of taxes and spending consistent with the needs of the economy and government functions. Rather than soundbites about ending pork-barrel projects or scouring the budget for waste, or about the relative multipliers of tax cuts versus spending increases (both of which depend on expectations about the future, a point mostly overlooked in the debate), we should be reflecting on certain basic fiscal facts, the most important of which is that the US government faces huge and potentially debilitating structural deficits as far as the eye can see.
Lest you think it's all negative, Angry Bear describes the economics profession as being divided between freshwater and saltwater economists. He argues that the freshwater group (think laissez-faire) is noncredible. Keep in mind, however, that he lists among the saltwater economists Greg Mankiw, a moderate stimulus skeptic.
Finally, the NYT econ guy David Leonhardt:
First of all, the package really is stimulus. It will quickly give money to the people who have been hardest hit by the recession and who, not coincidentally, will be most likely to spend that money soon.
This is a funny claim to make so cavalierly, considering the huge debate surrounding the stimulus (proof by deity, I guess, since it's Obama's plan). But then again, the NY Times is not famous for its unbiased political credibility.
Today's NY Times was full of stories that will make libertarians and deficit hawks cringe. The stimulus bill is including large increases in health care: people currently receiving unemployment benefits can now qualify for Medicaid, regardless of income.
Republicans wanted to deny the premium subsidies to people who had annual incomes of more than $100,000 or assets of more than $1 million. They also wanted to prevent people with more than $1 million of family income from taking advantage of the Medicaid option for the unemployed.
Democrats voted down those proposals.
Meanwhile, in a commendable move, Obama met with Republican lawmakers to discuss the stimulus. Unfortunately, he continued the old fallacy he and Dems have been using all along: “The statistics every day underscore the urgency of the economic situation,” he said, which has been his only defense of his stimulus plan. But as I've written before (here and here), there is considerable debate about whether the stimulus will be worth its massive cost in political capture and deficit spending. While everyone agrees we have an "urgent economic situation," Obama and the Dems still haven't made the case for their particular plan, which seems to be turning into a pork fest (and the timing is not consistent with Obama's promises, according to the Congressional Budget Office).
Part of the plan is supposed to improve our failing infrastructure, a worthwhile goal. Of course, this is not the greatest time to be worrying about this: Clinton and Bush both dropped the ball on using budget surpluses for public investment. Since it will be financed entirely by deficit spending, which will be paid for by the unborn in terms of higher taxes and lost growth, I think the infrastructure issue merits more national dialog. Also included in the stimulus is a more than doubling of the federal education budget.
My bottom line is this: to keep his promises about consensus politics (and Change), Obama must separate economic stimulus from permanent government expansion (Bill Clinton's budget director agrees with me). Pushing through long-time Democrat agendas in the name of economic relief is disingenuous. The economics of fiscal stimulus themselves are subject to enough disagreement already - and Obama has yet to defend that plan - so permanent changes to entitlements or other spending should be a separate discussion.
As a background note, readers should remember that, despite his reputation, the vast majority of Bush's foreign policy was not unilateral. His approaches to Russia, Iran, North Korea, Israel/Palestine, and Afghanistan were all multilateral.
That said, Obama is taking a good look at Afghanistan, with Robert Gates having "openly criticized the United States' NATO allies for not fulfilling their promises." During the campaign, amidst Obama's promises of a new, cooperative United States, nobody forced him to explain what made him think our partners would suddenly want to help us despite decades of expecting us to shoulder the burdens of world peacemaking.
For Iran and North Korea, we have more evidence that Bush was already doing the multilateral thing, and that the Obama administration plans to continue the same agenda. "Mrs. Clinton did not disclose the options under consideration for reaching out to Iran, beyond mentioning the existing multilateral talks," says the Times. Translation: Iran will proliferate on Obama's watch, because Iran sees proliferation as a national interest, and talking does not deter states from pursuing their interests. From the same article, "As for North Korea, Mrs. Clinton said the administration was committed to existing multilateral talks over its nuclear program." Change we can believe in.
I've before discussed the catch-22 Obama made for himself by promising to dramatically change the US international image. This week, he spoke to the Islamic world community. The Times and Obama people would like us to think that this "signaled a shift... from the Bush Administration." Wouldn't that be nice; but anyone who has been alive since 2001 will remember that Bush made similar statements about the US not being an enemy of Islam. Currently, it seems that a large portion of the Islamic world believes Obama, but this cannot last: (1) Leaders in radical Islam have incentives to make Obama look like Bush, so they will try their best to do so; and (2) every time Obama pursues a US interest that runs counter to Arab or Persian interests, the radicals will score PR points - and Jihad will continue. Failing to understand this might be Obama's biggest foreign policy mistake.
Some random other thoughts: in a strange statement, Hillary Clinton has implied that Bush's econ-central approach to US-China relations was somehow flawed. Newsflash, Hillary: China sees virtually all of its national interests in terms of economics. If we want to do diplomatic business with China, we must do so based on economics. There will be no change in policy here. Also: there is some talk of Russia suspending plans to deploy missiles in Kaliningrad. I've before discussed Obama's tricky catch-22 with missile defense and Russia.
(1) While Russia has announced a 27% increase in defense spending for this year, falling oil revenues will limit such plans, especially for things that aren't central to Russian security. Since Russia internally knows that American BMD in Europe is not a real threat, the missile plans might have to be axed.
(2) Putin continues to use Obama's promises as a way to force the hand of the US. This is yet another incentive for Obama to reverse Bush's BMD policies; but once he does so, as Putin hopes he will, Putin scores major domestic points and makes the US look like a Russian pawn. Such behavior will incent Russia to push for more US concessions in Eastern Europe.
If Obama is smart (he is) and as pragmatic as he claims (I doubt it), he will recognize that the key to US-Russia relations is lower oil prices, which can only be effectively achieved with a gas tax.
In summary, it is looking like the Obama policy will be little different from Bush's. Multilateral delegation on Afghanistan, North Korean, and Iran; attempts to balance our image in Islam with national security; continued withdrawal from Iraq made possible by the Surge and political progress (which Obama predicted would never happen).
Tuesday, January 27, 2009
The blogosphere debate about the stimulus continues. At least among the economists I read, since Tyler Cowen's scolding there has been a noticeable decline in name-calling polemics.
Regardless, there are some good explanations out now. The best comparison of views I've seen today comes from Arnold Kling. He explains the debate between Kevin Murphy and Brad DeLong, breaking down their assumptions in "plain english." You can judge for yourself who is using better assumptions.
Greg Mankiw posted the CBO's breakdown of the spending timeline, which might surprise you (unless you share my cynical view of Congress). The amount that will actually be spent this year is very, very small, considering the sense of urgency that stimulus proponents want to instill in us. This certainly violates Larry Summers' argument that government interventions should be "timely, targeted, and temporary." Of course, Krugman defends the lags here, but I just don't buy it. Despite its urgency, most of the effects of the stimulus will certainly not be felt for years. This will continue to stoke fears of a permanently expanded government, which is not something Obama wants to do so early in his tenure (considering his promises of consensus politics).
Menzie Chinn is one of my favorite economists. He discusses (and criticizes) five key reasons to believe the stimulus won't work here. Be sure to read the comments; he's a pretty fair observer.
Monday, January 26, 2009
Reader Matt K. recently returned from Egypt and agreed to write a book review with insights from his visit.
Arabs: Journey Beyond the mirage
by David Lamb
The best travelers are those who have prepared for a journey by learning about their destination and the people who live there. Read a book, watch a movie, talk to friends, family, acquaintances, do some research; all of these are great ways to prepare for a trip. In the hope of learning about Egypt before my arrival, I read several journal articles, followed the country through the papers and the television news, and upon arrival in early December, I began reading this book: “The Arabs: Journeys Beyond the Mirage” by journalist David Lamb. The book was originally written in 1987 (during a particularly bad time between Israel and Palestine), and was revised and updated in 2002 following the 9/11 attacks. Lamb notes that, in rereading and updating, he is struck by how much remains the same. That was in 2002. I can attest to the fact that its truth remains these 7 years later, even as time lessens the horrors of the latest Arab-Israeli conflict in the Gaza Strip...
Lamb is a premier journalist (a thorough bio is to be found in the book) and a tremendous writer. His illustration of the Middle East (plus Egypt), and the Arab people and their culture is intimate and informative. He is skeptical while being optimistic, and deeply acquainted with a culture that is so different than ours. Equally helpful is his understanding of the way that many Americans feel about Middle Easterners (not particularly well, to be exact), and his surprising reassurance which goes something along the lines of “hey, these people are actually very much like you and me.” Let’s get into a couple of the discussions that the Lamb’s “Arabs” has to offer.
Lamb starts by speaking of that very problem: two very different cultures caught in an ever-shrinking world more homogenous and material by each passing day. To religiously conservative Arabs, he explains, this is simply not a priority. In truth, it is uncomfortable to them, and threatening to the Godly existence that they seek for themselves and their families. Religiously, Lamb reminds us that, when compared to American societal norms, Arabs are starkly different- women are to remain covered in public, are to avoid eye contact with men, and up until recently have been limited to only certain roles in society. The Koran, says Lamb, describes every activity in life, and prescribes exactly how it should be dealt with or performed. Unfortunately, as one can tell, this often produces problems. In much the same way that a prescriptive religion can turn lives around, it can also spawn groups of individuals who take those principles to an extreme. Forced into a corner through a variety of struggles- troubled childhoods, financial problems, or the need to feel acceptance and righteousness- many youth have turned to extremist groups. Some percentage of these teens are convinced that their lives would be best spent killing infidels.
It is important to dig deeper into this religious/cultural collision, however, and this is exactly what Lamb proceeds to do. How about considering the history of our respective countries and regions? Egypt, for one, is the Nile. That is to say, Egyptian civilization would not exist were it not for the Nile. In fact, 99% of the population lives on 4% of the land (that which is in proximity to the Nile). The population of Egypt is growing so fast that the country is experiencing growing problems, even while maintaining a net export of its people (about 4% of its population leaves every year, I believe). Egypt is in all likelihood the cradle of civilization (despite what they say about the Fertile Crescent). As far as I can tell, the Greeks learned about architecture from the Egyptians, the Romans about warfare. In some areas, ancient Egypt came close to stages of development that modern day “developed” countries have only recently achieved. Considering the history of the Middle East alone, one can understand why the people are so proud of their heritage. If Egyptian civilization as we comprehend it was a blip in the screen of the earth’s history, then American history (post colonization) is imperceptibly small. Even North America’s “ancients” like the Cliff Dwellers, the Mayans, the Aztecs, etc, simply pale in comparison.
This strong sense of identity can explain the guardedness with which the Arabs approach Westernization. When coupled with the unabashed hostility that America has shown over the last century to Arab nations, one can see why some of the more extremist organizations are able to justify escalations of violence. It is a fact- America has often meddled in the dealings of the Middle East, and at a high cost (of money, and life). Lamb discusses a few of these circumstances, many of which will be familiar. In the 70’s, hoping to stem the expansion of the Soviet Union, America supplied weapons to the Afghans. At the same time, Egypt, in dire need of agricultural productivity (just as it remains today), was bidding out a major construction project – the High Dam at Aswan, which was soon to create the vast Lake Nasr. America jousted, while maintaining a “Cold” distance, with the Soviets on these and many other issues. But if one goes back to the end of World War II, probably the most divisive issue is revealed- the creation of Israel. As it is literally carved from within Palestine, the abhorrence of Israel among Middle Easterners is well publicized, and no matter what they say or do, one can assume that “true” Middle Easterner Muslims will always feel betrayed by the US for our support of the Israelis.
Lamb describes it all in detail, and with surprising deftness. US support for Israel has continued to this day. Egypt was the victim in the US-Israeli collaboration in the 1967 Six Days War, referred to by Egyptians as “an-Naksah” (The Setback), when an armed Israel proceeded to obliterate the Egyptian forces on the Sinai Peninsula. Egyptian President Abdul Nasser would publicly hope that America would “choke on its own pride” shortly after the Egyptians were routed from the Sinai Peninsula.
In my travels in Egypt, I spoke with a cabbie who drove a truck in the second war with Israel on October 6, 1973, as Egypt fought to regain the Peninsula in a surprise attack. His mission was to drive a semi truck with a tank on a trailer behind it to the battle front for delivery to Egyptian forces. In a scene that I imagine playing out like something from an Indiana Jones movie, Madi saved his own life by diving from his truck to avoid the bullets of an Israeli jet as they destroyed his vehicle, heroically ran to another truck, pulled a dead compatriot from the driver’s seat, and fulfilled his mission to deliver a tank to the battle front. Americans miss out on these kinds of stories from the eyes of the Arabs.
Luckily, Lamb provides many of them. Whether it be through his description of the vivid sectarian violence between Palestinians during an Israeli invasion, or his sketch of the warring factions of Saudis as a result of oil and its influence, or even his assessment of the dramatic societal upheavals that Arabs are subjected to as a result of violent fluctuations in the oil markets, Lamb’s reader is led into a world that can at once terrify, uplift, reassure, and puzzle. If you have any hope of travelling to the Middle East in the future, or even if you want to develop a mature perspective on the situation, this one should be required reading. Compared to many books on the subject, should you be required to read it, consider yourself blessed. The book, obviously does not cover the post-2002 conflicts in the region. What may or may not surprise readers is how little has changed even since the first iteration of Lamb’s book was written in the late 1980’s.
Sadly, yesterday I caught a few minutes of Glenn Beck's new show on Fox (pictured above with Rush Limbaugh, who admitted that he wants President Obama to fail - so much for all that support the president stuff we heard 8 years ago). He was railing on Obama's pick for Treasury Secretary, Tim Geithner. One of Beck's arguments against the pick is that since Geithner employed an illegal immigrant in his home, he has "bad judgment" and is, therefore, a bad choice for the job. I can't find the actual video - he went on and on and on about this - but here's another source from last week saying the same thing.
Beck supported Mitt Romney in the Republican primaries. His support was so dogmatic that he was one of the people who promised to vote for a Democrat if John McCain was nominated. But readers may recall that at a debate in Florida on November 28, 2007, it was revealed that Romney employed illegal immigrants as landscapers. Did Beck consider this a sign of bad judgment which should disqualify Romney? The very next day, Beck had Romney on his show and only asked him one question about the issue. Read the text here. Glenn asked him one kid-gloves question then let the matter rest, supporting Romney throughout the rest of the primaries.
If you didn't know already, you do now. In addition to being ignorant and ridiculous, Beck is a hypocrite who plays team politics. He's not interested in whether the new Treasury pick is qualified for the job - Beck admits that he is - but only cares that he was chosen by a Democrat - the other team.
Saturday, January 24, 2009
Michael Lewis, author of Liar's Poker (the book that made me decide against going into I-banking), on the demise of Wall Street:
In the two decades since then [Liar's Poker], I had been waiting for the end of Wall Street. The outrageous bonuses, the slender returns to shareholders, the never-ending scandals, the bursting of the internet bubble, the crisis following the collapse of Long-Term Capital Management: Over and over again, the big Wall Street investment banks would be, in some narrow way, discredited. Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces? . . .
There was an umbilical cord running from the belly of the exploded beast back to the financial 1980s. A friend of mine created the first mortgage derivative in 1986, a year after we left the Salomon Brothers trading program. (“The problem isn’t the tools,” he likes to say. “It’s who is using the tools. Derivatives are like guns.”). . .
The public lynchings of Gutfreund and junk-bond king Michael Milken were excuses not to deal with the disturbing forces underpinning their rise. Ditto the cleaning up of Wall Street’s trading culture. The surface rippled, but down below, in the depths, the bonus pool remained undisturbed. . . The changes were camouflage. They helped distract outsiders from the truly profane event: the growing misalignment of interests between the people who trafficked in financial risk and the wider culture. . .
No investment bank owned by its employees would have levered itself 35 to 1 or bought and held $50 billion in mezzanine C.D.O.’s. I doubt any partnership would have sought to game the rating agencies or leap into bed with loan sharks or even allow mezzanine C.D.O.’s to be sold to its customers. The hoped-for short-term gain would not have justified the long-term hit.
No partnership, for that matter, would have hired me or anyone remotely like me. Was there ever any correlation between the ability to get in and out of Princeton and a talent for taking financial risk?
Anyone remotely familiar with the world of investment banking knows that it is a culture of greed. As such, it attracts bright (but greedy) minds away from professions that might have actually provided some social benefit. One would hope that the current disaster will cause some to change their minds.
h/t J Lybbert