Monday, June 30, 2014

Motyl: How Ukraine & the West must react to unpredictable Putin

As Alexander Motyl points out, Russia's president Vladimir Putin has made so many ridiculous, conflicting statements about Ukraine that, in a rational world, they would limit his options now -- assuming Putin must appear rational and consistent, which he probably doesn't. The West would only be relieved if Putin did a complete 180 and too happy to let him save face; while the Russian public could probably be bamboozled by Russian state media into believing anything. 

Putin has maneuvered himself, and Russia, into a position of Zugzwang—a chess term denoting a condition in which one’s king has to move, but cannot, because any move would result in check.

Putin has twisted himself into policy as well as rhetorical knots as a result of his absurd insistence that Ukraine’s post-Yanukovych government is unconstitutional. 

So how should Ukraine react to this enigmatic autocrat [emphasis mine]?:

If states cannot calculate how an adversary will behave, they have no choice but to hope for the best and prepare for the almost-worst and the worst: the almost-worst is Russia’s full embrace of a cold war, while the worst is a hot war. Ukraine and the West must assume that Putin is unreliable, unpredictable, and dangerous—and plan accordingly. For now, Ukraine’s short-, medium-, and long-term priorities are threefold.

First, it must safeguard its own security. [...] Ukraine need not be able to defeat Russia; it need only deter it and crush the terrorist assaults that form a large part of Putin’s strategy to keep Ukraine unstable and thus pliable.

Second, Ukraine must jump-start its economy with radical economic reforms. A strong economy is the only long-term guarantee of a strong military, which is the sine qua non of Ukraine security. [...]

And third, in order to remain democratic in a tough neighborhood dominated by a neo-fascist bully, Ukraine will have to embed itself in the West. Membership in the European Union is the ultimate prize, but any form of affiliation that promotes the deeper Westernization of Ukraine’s culture, education, laws, and institutions will help ensure survival.

And what does the future hold for Ukraine and Russia, according to Motyl?:

Over time, some combination of cold war, cold peace, and hot war will transform Ukraine into a South Korea, Taiwan, or Israel. Ukraine will have to live with the permanent threat of Russian aggression, but that threat could have a silver lining: compelling it to become a vigorous democracy with a strong economy and a strong army.

Russia’s future is less clear. If Putin stays in power for another twenty years, it could become an impoverished garrison state such as North Korea. If Putin departs well before he becomes an octogenarian, Russia could become a second China. More likely than not, Putin will keep on posturing, and Russia will remain an ossified and increasingly unstable petro-state like Saudi Arabia.

By Alexander J. Motyl
July/August 2014 | World Affairs

Brzezinski: How to confront Russian chauvanism

Seasoned Russia expert Zbigniew Brzezinski offered remarks on "the Ukraine problem" at the Wilson Center on June 16.  Here are the most important excerpts, [emphasis mine]:

It follows from what I’m saying that the Ukrainian problem is a challenge that the West must address on three levels. We have to effectively deter the temptation facing the Russian leadership regarding the use of force. We have to deter the use of force, simply put.

We have to, secondly, obtain the termination of Russia’s deliberate efforts at the destabilization of parts of Ukraine. It’s very hard to judge how ambitious these goals are, but it is not an accident that in that one single portion of Ukraine in which the Russians actually predominate, the use of force has been sophisticated. The participants in the effort have been well armed, even with tanks, and certainly with effective anti-aircraft weaponry. All of that is something that even disagreeable, disaffected citizens of a country to which they feel they do not belong would not be storing somewhere in their attic or in their basement. These are weapons provided, in effect, for the purpose of shaping formations capable of sustaining serious military engagements. It is a form of interstate aggression. You can’t call it anything else. How would we feel if all of a sudden, let’s say, the drug-oriented gangs in the United States were armed from abroad, from our southern neighbor, by equipment which would promote violence on that scale on a continuing basis? So this is a serious challenge. So that is the second objective.

And the third objective is to promote and then discuss with the Russians a formula for an eventual compromise, assuming that in the first instance the use of force openly and on a large scale is deterred and the effort to destabilize is abandoned. That means, in turn, the following: And I will be quite blunt regarding my own views on the subject. Ukraine has to be supported if it is to resist. If Ukraine doesn’t resist—if its internal disorder persists and the state is not able to organize effective national defense, then the Ukraine problem will be resolved unilaterally, but probably with consequential effects that will be destabilizing in regards to the vulnerable states and to the East-West relationship as a whole. And the forces of chauvinism inside Russia will become more strident. And they do represent the most negative aspects of contemporary Russian society: a kind of thirst for nationalism, for self-fulfillment, gratification of the exercise of power. Something which is not pervasive in the new middle class, which is the longer range alternative.

Importantly, he adds, 

There’s no point trying to arm the Ukrainians to take on the Russian army in the open field: thousands of tanks, an army organized for the application of overwhelming force. [...]

Accordingly, I feel that we should make it clear to the Ukrainians that if they are determined to resist, as they say they are and seemingly they are trying to do so (albeit not very effectively), we will provide them with anti-tank weapons, hand-held anti-tank weapons, hand-held rockets—weapons capable for use in urban short range fighting. This is not an arming of Ukraine for some invasion of Russia. You don’t invade a country as large as Russia with defensive weaponry. But if you have defensive weaponry and you have access to it and know it’s arriving, you’re more likely to resist. 

And finally, on Ukraine's eventual joining in the EU, and the future of NATO:

I think it’s relatively simple: Ukraine can proceed with its process, publicly endorsed by an overwhelming majority of the Ukrainian people, of becoming part of Europe. But it’s a long process. The Turks have been promised that outcome, and they have been engaging in that process already for 60 years. In other words, it’s not done very quickly. Therefore, the danger to Russia is not imminent and the negative consequences are not so destructive.

But at the same time, there should be clarity that Ukraine will not be a member of NATO. I think that is important for a variety of political reasons. If you look at the map, it’s important for Russia from a psychological, strategic point of view. So Ukraine will not be a member of NATO. But by the same token, Russia has to understand that Ukraine will not be a member of some mythical Eurasian Union that President Putin is trying to promote on the basis of this new doctrine of a special position for Russia in the world. 

I guess it's so fundamental it goes without saying, but... Brzezinski doesn't mention that any compromise must allow Putin to save face, since his adventures in Ukraine are primarily about boosting his public support at home, not securing any strategic military or economic objectives abroad. There is no party, politburo, public or parliament behind Mr. Putin whom the West may appeal to, or appease.  To me this is the West's biggest problem, because in Putin we face a charismatic autocrat whose image as a "strong Russian standing up to the West" is more important to him than any stretch of land or increase in GDP.

By Zbigniew Brzezinski 
June 27, 2014 | The American Interest

Saturday, June 28, 2014

Milbank: Boomers are terrible political leaders

Everything wrong with U.S. politics is the Baby Boomers' fault [emphasis mine]:

Boomers inherited a system based on compromise and sacrifice — and they gave us the current standoff. They received a United States victorious in the Cold War and atop the world economy — and they gave us the Iraq war and the Great Recession. They are the parents of the first generation in U.S. history — the millennials — to have a lower standard of living than previous generations. And, in retirement, they will probably break Social Security and Medicare.

“Boomers are the scorched-earth, values-driven generation,” said Neil Howe, who with William Strauss chronicled the recurring patterns of generations in the United States. “They invented the culture wars and they’re taking it with them as they grow older, which is this complete polarization and gridlock. It’s very hard to compromise over values.” 

By Dana Milbank
June 27, 2014 | Washington Post

Friday, June 27, 2014

'Sharing-economy' workers moving toward unions

The more things change.... Uber's business model of making taxi drivers into "independent contractors" is -- surprise, surprise! --leading more and more of those drivers to the conclusion that they must unionize and organize to protect their rights and wages [emphasis mine]:

Uber’s disruption of the cab industry has been welcomed by nearly everyone except those who rely on the cab industry for their livelihoods. It’s arguably made on-demand car rides easier, cleaner, safer, more accessible and, in some cases, even cheaper.

Indeed, such disruption is overdue. The high prices of regulated taxi medallions have kept a small number of bosses in control, while drivers pay high gate fees in order to access their cars and wages. Uber is right that the traditional system is not well suited to drivers’ or customers’ needs.

But the new boss is not so different from the old boss. Uber’s revolution is not actually its technology but its market power. It has disrupted the cab industry in ways so many others can only dream of by leveraging the labor of thousands of workers who are exceptionally underprotected. 

[...] Only four years after the service debuted in San Francisco, Uber drivers nationwide are getting organized and demanding better treatment.  And this could have huge implications for the trajectory of the peer-to-peer economy. As work changes, so will the ways workers seek to protect themselves and their livelihood.

Recently, one of my main bearded liberal economists Dean Baker wrote about the new "sharing economy" embodied by Uber and Airbnb that may seem like a good deal for consumers but is actually a net ripoff.

Thankfully, it seems that just as fast as Uber has disrupted the old model, actual workers and common sense are moving to disrupt Uber.

By Susie Cagle
June 27, 2014 | Al Jazeera

Beinart: Cheney openly disparages 'Bush Doctrine'

Here's recent revisionist history, revised by the guy who recently made history, Dick Cheney! Peter Beinart explains [emphasis mine]:

It’s worth recognizing how directly Cheney is repudiating Bush’s vision. Bush’s core point—repeated by a thousand supportive pundits—was that when Middle Eastern dictators don’t allow democratic dissent, jihadist terrorism becomes the prime avenue for resistance. Egypt today is a textbook example. The Muslim Brotherhood won a free vote. In power, it ruled in illiberal ways. But Egypt was still due for additional elections in which people could do just what Bush had urged them to: express their grievances democratically. Instead, the military seized on popular discontent to overthrow the government, massively repress freedom of speech, and engineer a sham election. And just as Bush predicted, Egypt’s Islamists are responding by moving toward violence and jihadist militancy.

But it’s Cheney’s view, not Bush’s, that is ascendant on today’s right.  It’s now common to hear hawkish pundits declare that Brotherhood parties should be barred from running anywhere in the Middle East, which represents a full embrace of the authoritarian-stability argument that Bush devoted his second inaugural to arguing against.

Because Obama’s rhetoric about freedom and democracy is less soaring than Bush’s, the media often calls him a realist.  But as Obama’s Egypt policy shows, he’s actually proved far more willing to risk relationships with dictatorial American clients than most of his conservative critics would like.

Obama’s foreign policy is only “realist” in comparison to the vision Bush laid out in 2005—a vision now being trashed widely in his own party.  If there remains any significant faction in today’s Republican Party willing to risk America’s relationships with friendly Arab tyrants in the name of democracy, it is headquartered in Dallas, where a former president seems content to express himself merely through art.

Real historians will be studying Dick Cheney for decades. They'll eventually decide, I predict, that he was a malicious influence in the White House who parroted his President's foreign policy line when he couldn't get his way, while seeking to undermine it in practice. Now Cheney is repudiating Dubya out in the open. 

I for one agree that democratization is the only future for the Middle East, but that means Saudi Arabia, firstly, and then Egypt, Iran, Israel and Turkey. The rest will follow suit. But democracy can't be established at the point of a U.S. gun -- especially when it must be preceded by national liberation. Recent experience has asserted, once again, that national liberation is primarily the job of those who would be liberated. (And we're talking about countries that were drawn up by outside Western powers; the people inside those borders might not agree with those lines).  The U.S. can assist only at the fringes.

By Peter Beinart
June 27, 2014 | The Atlantic

War Nerd: ISIS conquering empty desert; and bless the Kurds

You gotta love Gary for writing stuff that only he would write, such as this:

Actually, topography has everything to do with what’s gone well or badly for I.S.I.S. in this latest push. If you know the ethnic makeup of the turf they’ve taken, their “shocking gains” don’t seem so shocking, or impressive. After all, we’re talking about a mobile force–mounted on the beloved Toyota Hilux pickup truck, favorite vehicle of every male in the Middle East—advancing over totally flat, dry ground in pursuit of a totally demoralized opponent. In that situation, any force could take a lot of country very quickly. It’s just a matter of putting your foot on the accelerator, moving unopposed on the long stretches of flat desert, then dismounting at the next crossroads town for a small, quick firefight against a few defenders who didn’t get the memo to flee. Once they’re dead, you floor it again until the next little desert town.

So this isn’t the second coming of Erwin Rommel by any means. Everything has conspired to push the Sunni advance, from the lousy opponent they’re up against to the terrain, which is a light mechanized commander’s dream.

Gary has a long-time soft spot for the Kurds, the strongest fighting force in Iraq and a soon-to-be state (one of three) formed from the crucible of Old Iraq:

Something wonderful came out of the horrors of 20th century Iraq, among the Kurds of the Northern hills. They became the only non-sectarian population in Iraq, and perhaps the only such group between Lebanon and India.

[...] Of all the hill tribes, the Sunni Kurds are doing best in this chaos. It’s allowed them to take Kirkuk, which they always needed and wanted, and it also just so happens to put the one and only “supergiant” oilfield in the North (5 billion gallons) totally inside Kurdish territory.

I’m happy as Hell for the Kurds. I love them anyway, and miss Suli a lot—but more than that, it’s simple justice that they get a break for once. The Kurds have paid their dues. Saddam’s murderers in uniform killed nearly 200,000 Kurds, and the man from Tikrit was supposedly very disappointed he hadn’t been able to wipe them out completely.

At the moment, I.S.I.S isn’t even trying to pick a fight with the Pesh Merga—a fight they would lose very quickly if it ever did happen. But then Sunni jihadis have always liked softer targets, the softer the better.

Upshot: Gary's little article should serve to calm some of those Nervous Nellies in Congress, the White House and the U.S. foreign policy establishment about "ISIS overrunning Iraq."  Yeah, they might overrun fellow Sunni areas of Iraq, but that's about it.  The Kurds and Iran (Shiites) will step in and stop them cold elsewhere... but wait, that's what a lot of U.S. fear is really about: letting Iran get even more influence in Iraq, and solving this ISIS problem without our help, making them look strong and us, well, the opposite of strong.  

Beyond that, I still think the real enemy is the Saudis, who prop up all these jihadists all over the world with money, crazy clerics, weapons and asylum. Yet the House of Saud plays nice with Texas oil billionaires and Israel, so we Americans for some reason can't love 'em enough!....

UPDATE (22.07.2014): Here's a continuation at Pando of Gary's coverage of the lame ISIS "invasion" of Iraq: "I.S.I.S. and the Western media: Groping each other in public like a Kardashian Thanksgiving." 

By Gary Brecher
June 23, 2014 | Pando Daily

Eric Liu: Coates is right, we need a study on reparations

Hear, hear!  For those who didn't bother to read Ta-Nehisi Coates' provocative, thought-provoking essay on reparations in The Atlantic,  Eric Liu underscores Coates' main point [emphasis mine]:

Coates is not quite making a case for reparations. He's making a case for a discussion of reparations. He doesn't pretend to spell out all the operational policy choices that would have to be made to put reparations into effect. The closest he comes to a legislative recommendation is to tout a perennially neglected bill that Rep. John Conyers, D-Michigan, introduces every session of Congress, which calls simply for a public study of the possibility of reparations.

This isn't a shortcoming of Coates' argument; it is its purpose. What we need to do is to study the issue in earnest. To have a hearing, in the deepest sense. To listen to the difference between Americanness and whiteness, and to notice the manifold ways that whiteness was (and is) an identity fabricated from the myth of blackness.

To be sure, every ethnic group that's not called white has experienced suffering in American life. But the experience of African-Americans is exceptional in its systematic, multigenerational, reverberating effects.  And it's exceptional in its centrality to the founding and building of our nation.  No experience reveals more than the African-American experience both the hypocrisy and the possibility of our national creed.

I characterized the way most critics have jumped on Coates' essay a case of "leaping from justice to practicalities," as in, some would like to anticipate and dismiss the possible terms of a settlement on reparations, and so doing, dismiss the case for reparations itself.  

Recently on The Colbert Report, Ta-Nehisi Coates half-jokingly told Colbert he would forget about reparations for slavery if the U.S. would seriously study and consider a reckoning for Jim Crow and everything that happened after, including FHA "redlining policies," etc.  Indeed, it's a further injustice to African-Americans to say that the injustices stopped with the emancipation of black slaves. That was just the beginning of a long journey for black equality that continues to this day.

UPDATE:  My conservative friends and family just couldn't let it go, they immediately asked me, "Well, how much would you be willing to pay?"  That was my Uncle T.  So here's what I wrote him:
Oh, please. You want me to name a dollar figure, as if that's the key issue here? OK, fine.  Seventy-two percent of Americans are of European ancestry, let's say 30% of them are adults, that's more than 68 million white adults.  If each of them was asked to give $200, that would be a fund of almost $14 billion.  Put partially in trust, and partially into targeted scholarships, housing loans, job training programs, etc., that money could do a hell of a lot of good.  And that's just me throwing out a dollar figure, since that seems to matter to you more than anything.
Believe it or not, (you'll choose not to), there are very rich families and companies still living well on the money made from slavery. No less than Bloomberg said it, if you recall:
So I for one would be in favor of companies that made money off slavery that still exist today paying more than I would as an individual.  
I'm aware that a fund of about $14 billion would break down to a bit over $350 for every African-American alive today. That "small" sum is not an argument against reparations, to my mind; rather -- and this is just my opinion -- I think that money would be better spent pooled and targeted to specific programs over which blacks would have significant or total say-so in how it was spent.

And my Republican buddy Rusty asked me, "Do you agree that the only people who should be required to pay them are the descendants of slave owners?"  

To which I replied: "No, I think we all should pay it, everybody except blacks, but that's just my opinion. You're still jumping from the verdict (=reparations are morally warranted) to the settlement terms (= $$??), and then using that hypothetical settlement to determine the justice of of the verdict, which is not the way American justice should or does work in any kind of class-action suit."

To which I should have added that many Northerners and non-slave owners benefited from slavery, including the Lehman Bros. and JP Morgans, et al, of the financial community, as described by Bloomberg. And to a great extent slaves and Jim Crow-era blacks built this country, and so all citizens of the U.S owe them a debt of gratitude.

Rusty thought the idea of asking Mexicans and Asian-Americans to pay reparations was "truly insulting," but I don't necessarily agree, since all Americans today benefit from the country that slaves and Jim-Crow era second-class citizens built for us.  

By Eric Liu
June 27, 2014 | CNN

Tuesday, June 24, 2014

Real gun issue is mental health, not the NRA?

[Sigh] Yes, well:

If a family member, law enforcement officer or mental health professional is concerned about the well-being of an individual, they should be able to have that individual held for a mental health evaluation.

And what if somebody is just posting anti-government screeds on forums or You Tube, is that good enough? As if that weren't difficult enough judgment call to make for a third party to make, wait, says Robbins:

But connecting the dots [with mental health records] won't help unless every gun sale is subject to an instant background check imposed on all licensed gun retailers.

Well, gee, the NRA is the #1 opponent of universal, instant background checks, citing the red herring of "insufficient funding" for the National Instant Criminal Background Checks System (NICS), so this whole idea is dead in the water and we're back to square one: we can't do mental health checks; nor can we do universal background checks.

If the NRA really wanted the NICS to be funded then it would be 100% funded in a heartbeat; anybody who thinks otherwise is naive or a partisan hack.

By Mel Robbins
June 24, 2014 | CNN

Russia's corrupt resource economy behaves opposite Western expectations

It runs absolutely counter to our Western intuition and sense of justice, but as Vladislav Inozemtsev points out, Russia's corrupt officials actually benefit in times of global economic crisis, both in terms of their personal wealth and public support.

Concludes Prof. Inozemtsev in this op-ed in the Moscow Times [emphasis mine]:

Today's Russia is not a normal country. A significant portion of people who can adequately assess the situation either left the country or are leaving it right now. Many entrepreneurs sold their businesses to bureaucrats and pulled money out of the country, realizing the futility of their labors.

[...]   Of course, the problems are piling up — so sometimes they will come out. But both the speciality of Russia's situation and its difference from these in democratic market economies lies in the fact that the first alarm signals will sound when it will be too late to react. We will probably see a repetition of the dramatic events of the late 1980s — but, of course, this may not happen for awhile. Time during which economic problems will not preoccupy the Russian president — leaving him free to surprise the world once and again with his political follies.

It's well worth reading in its entirety to understand today's very strange Russia!

By Vladislav Inozemtsev
June 24, 2014 | The Moscow Times

Sunday, June 22, 2014

On 'tax inversion', Apple, and what makes a 'U.S.' company

Continuing on a pet theme of mine, I want my readers to consider just what is a "U.S. company" (for tax purposes). What comes to your mind?  Do you even know what the formal definition is? Does that definition meet your moral-reasonable expectations of an American company?

Pearlstein objects to those American companies that want to have their cake and eat it to, that want...

...all the rights and privileges of being an American company without the full complement of responsibilities that go along with it.

You want the peace and security guaranteed by a muscular military and intelligence apparatus that make it possible for you to operate and market in all the advanced economies of the world. You want the world’s most sophisticated and enforceable patent system to protect your intellectual property. You want a fair and efficient judicial system to enforce contracts.

You want a well-educated workforce to design and make your products, based on basic research done through an extensive network of government-funded institutes and laboratories. You want modern ports and highways and airports to ship your products to market, and an efficient border operation to speed them through customs.

You want an honest, efficient financial system that can provide you with cheap and plentiful capital. You demand a professional, credible regulatory agency that can expeditiously evaluate your products and ensure customers that they are safe and effective. And you insist on government-funded health care for the poor, the elderly and the disabled that will pay you more for your devices than any other country in the world.

In related news that my fellow Americans are probably not paying attention, the European Commission is investigating Ireland, and other known EU tax havens for their soft treatment of Apple, Google and other well-known US companies. 

Now, the EU isn't trying to help the USA collect more tax from these "American" companies, no sir.  They are threatening potential punishments for handing out what amount to subsidies to home businesses -- an unfair trade practice that decreases the competitiveness of other EU states. It will be very interesting to see how this plays out!....

By Steven Pearlstein
June 20, 2014 | Washington Post

Krugman reviews Geithner's book 'Stress Test'

I don't care much about Tim Geithner or his financial memoir Stress Test. But Krugman's review of the book features many teachable moments so the review is well worth reading, especially as revisionist historians would like to distort what really happened.  Here's the first one:

Quite early on, two somewhat different stories emerged about the economic crisis. One story, which Geithner clearly preferred, saw it mainly as a financial panic—a supersized version of a classic bank run. And there certainly was a very frightening panic in 2008–2009. But the alternative story, which has grown more persuasive as the economy remains weak, sees the financial panic, while dangerous in its own right, as a symptom of something broader and deeper—mainly a large overhang of private debt, in particular household debt.

Krugman obviously and correctly goes with the latter story. The overhang of private debt -- particularly mortgage debt among the middle and lower class, and more recently, student debt, now about $1 trillion -- is the real anchor weighing down our economy today.

Next, Krugman points out that the FIRE sector is not synonymous with the U.S. economy, something that CNBC and Wall Street types seem to forget sometimes [emphasis mine]:

Whatever the reasons, however, the stress test pretty much marked the end of the panic. ...[S]everal key measures of financial disruption—the TED spread, an indicator of perceived risks in lending to banks, the commercial paper spread, a similar indicator for businesses, and the Baa spread, indicating perceptions of corporate risk. All fell sharply over the first half of 2009, returning to more or less normal levels. By the end of 2009 one could reasonably declare the financial crisis over.

But a funny thing happened next: banks and markets recovered, but the real economy, and the job market in particular, didn’t.

That's because the Great Recession wasn't just a mega run on banks that the "confidence fairy" could restore, via cheap money for banks from the Fed. Rather, the Great Recession was a problem of too much private debt dragging down aggregate demand and hence economic growth, in a vicious cycle:

The logic of a balance sheet recession is straightforward. Imagine that for whatever reason people have grown careless about both borrowing and lending, so that many families and/or firms have taken on high levels of debt. And suppose that at some point people more or less suddenly realize that these high debt levels are risky. At that point debtors will face strong pressures from their creditors to “deleverage,” slashing their spending in an effort to pay down debt.  But when many people slash spending at the same time, the result will be a depressed economy. This can turn into a self-reinforcing spiral, as falling incomes make debt seem even less supportable, leading to deeper cuts; but in any case, the overhang of debt can keep the economy depressed for a long time.

And here's where we get down to the brass tacks of the federal government's response, and the Fed's position (Geithner's) on that response:

Unlike a financial panic, a balance sheet recession can’t be cured simply by restoring confidence: no matter how confident they may be feeling, debtors can’t spend more if their creditors insist they cut back. So offsetting the economic downdraft from a debt overhang requires concrete action, which can in general take two forms: fiscal stimulusand debt relief. That is, the government can step in to spend because the private sector can’t, and it can also reduce private debts to allow the debtors to spend again. Unfortunately, we did too little of the first and almost none of the second.

Yes, there was the American Recovery and Reinvestment Act, aka the Obama stimulus, and it surely helped end the economy’s free fall. But the stimulus was too small and too short-lived given the depth of the slump: stimulus spending peaked at 1.6 percent of GDP in early 2010 and dropped rapidly thereafter, giving way to a regime of destructive fiscal austerity. And the administration’s efforts to help homeowners were so ineffectual as to be risible.

And Geithner, who was in the middle of Obama's inner circle of trusted economic advisers, opposed both stimulus and debt relief, notes Krugman:

Geithner also makes some demonstrably false statements about the public debate over stimulus. “At the time,” he declares, “$800 billion over two years was considered extraordinarily aggressive, twice as much as a group of 387 mostly left-leaning economists had just recommended in a public letter.” Um, no. A number of economists, including Columbia’s Joseph Stiglitz and myself, were warning that the package was too small; so was Romer, internally. And that economists’ letter called for $300 to $400 billion per year. The Recovery Act never reached that level of spending; even if you include tax cuts of dubious effectiveness, it only briefly grazed that target in 2010, before rapidly fading away.

And then there’s the issue of debt relief. Geithner would have us believe that he was all for it, but that the technical and political obstacles were too difficult for him to do very much. This claim has been met with derision from Republicans as well as Democrats. For example, Glenn Hubbard, who was chief economic adviser under George W. Bush, says that Geithner “personally and actively opposed mortgage refinancing.”

Krugman takes exception to Geithner's victory dance on ending the crisis and the Great Recession:

To the rest of us, however, the victory over financial crisis looks awfully Pyrrhic. Before the crisis, most analysts expected the US economy to keep growing at around 2.5 percent per year; in fact it has barely managed 1 percent, so that our annual national income at this point is around $1.7 trillion less than expected. Headline unemployment is down, but that’s largely because many workers, despairing of ever finding a job, have stopped looking. Median family income is still far below its pre-crisis level. And there’s a growing consensus among economists that much of the damage to the economy is permanent, that we’ll never get back to our old path of growth.

There's more to this story that Krugman forgivingly overlooks, such as why Geithner was so solicitous to Wall Street banks and not Main Street Americans. After all, Geithner "met more often with Goldman Sachs CEO Lloyd Blankfein than Congressional leaders, including the Speaker of the House and the Senate Majority Leader," in his first few months in office.  Why??

By Paul Krugman
June 10, 2014 | The New York Review of Books

Thursday, June 19, 2014

Russian law to ban 'foreign' words

So lemme get this straight:  It's not okay when Ukraine, the only country in the world where Ukrainian is spoken, wants to protect its national language -- in fact it's "Fascism;" but it's just dandy when Russia discriminates against other languages -- going so far as to exorcise "foreign words" from public speech and writing!

This is worse than days of the Soviet Union, folks.  

Looking deeper, the fact that many commonly used terms simply don't exist in Russian reflects that the world's cultural, scientific and commercial dynamism is centered in the West... and eventually makes its way to Russia, where it is transliterated naturally by Russian first adopters who find it simpler to use the original word than invent a tongue-twisting Russian equivalent.  

Indeed, the casual use of foreign words is a status symbol among Russians; it implies the speaker is cosmopolitan, liberally educated, well-read and -traveled.  However, these are not the kind of folks the Kremlin likes: it wants Russians (minus the very elite, of course) to be parochial, state-educated, monolingual and stay at home.

June 19, 2014 | Moscow Times

The backwards South is moving backward

It's strange and pathetic how the today's Southern states promotes themselves to businesses and investors as a kind of third-world enclave within the United States -- not only low-tax but also low-wage, and of course no unions.

Maybe that strategy is OK for Bangladesh, but touting oneself as low-wage is not a long-term winning strategy for the US of A.  Lower wages and incomes mean a lower tax base, leading to poorer schools, less infrastructure and hence weaker long-term economic growth.

Indeed, the poorest and most miserable U.S. states are located in the South.

By Nelson Lichtenstein
June 18, 2014 | Reuters

We used to call it the “New South.” That was the era after Reconstruction and before the Civil Rights laws — when the states of the old Confederacy seemed most determined to preserve a social and economic order that encouraged low-wage industrialization as they fought to maintain Jim Crow.

What was then distinctive about the South had almost as much to do with economic inequality as racial segregation. Between roughly 1877 and 1965, the region was marked by low-wages, little government, short lives and lousy health — not just for African-Americans but for white workers and farmers.

The Civil Rights revolution and the rise of an economically dynamic Sun Belt in the 1970s and ‘80s seemed to end that oppressive and insular era. The Research Triangle in North Carolina, for example, has more in common with California’s Silicon Valley than with Rust Belt manufacturing. The distinctive American region known as the South had truly begun to vanish.

This is the thesis of economic historian Gavin Wright’s new book on the economic consequences of the civil rights revolution,Sharing the Prize. Ending segregation, Wright argues, improved the economic and social status of both white and black workers The South became far less distinctive as wages and government-provided benefits increased to roughly the national level.

But the New South has returned with a vengeance, led by a ruling white caste now putting in place policies likely to create a vast economic and social gap between most Southern states and those in the North, upper Midwest and Pacific region. As in the late 19th century, the Southern elite appears to believe that the only way their region can persuade companies to relocate there is by taking the low road: keeping wages down and social benefits skimpy. They seem to regard any trade union as the vanguard of a Northern army of occupation.  

Exhibit A is the refusal of every Southern state except Kentucky and Arkansas to expand Medicaid under the Affordable Care Act. Senator David Vitter (R-La.), running to replace Bobby Jindal as Louisiana’s governor, made headlines Monday when he announced he would consider adopting the Medicaid expansion.

In 2012 the Supreme Court gave states the right to back out of this part of Obamacare. The South rushed to take this opportunity — despite the loss of billions in federal dollars. Now 5 million poor Southerners are consigned to health insurance purgatory

The Republican Party as a whole has made opposition to Obamacare virtually a fetish. But outside the South, Republican governors from Arizona and Nevada in the West to Iowa, Ohio, and New Jersey further East, have seen the economic logic and social utility of taking the federal money. After the 2014 elections, when Democrats look likely to oust Republicans from statehouses in Pennsylvania and Maine, those states will do the same. 

Southern states also keep wages low by neglecting to raise their state minimum wage standards. In the North and West, a movement to dramatically increase wages — to $10, $12 or even $15 dollars an hour — has caught fire. Seattle just mandated a $15 minimum wage that will kick in over the next few years.

Today 21 states have raised minimum wages higher than that of the federal standard of $7.25 an hour. But only two of these states, Missouri and Florida, border on the South.  As in the New South era, when textile factories were enticed to flee the North for the low-wage Piedmont region, Southern states now trumpet not just low taxes and an absence of trade unions, but low wages.

Although Oklahoma joined the Union in 1907, it immediately joined the ranks of the Jim Crow South with its strong segregation and anti-union policies. This continues today. In April, for example, when Oklahoma City residents sought to put a municipal wage increase on the November ballot, the state legislature quickly enacted a law banning any city or town from raising the local minimum wage or requiring that employees have a right to sick days or vacation, either paid or unpaid.

Of course, such regressive social policies, including voting rights limitations, are supported by a fierce white partisanship. The solid South has returned in full force. Black voters there are overwhelmingly Democratic, whites of almost every income level equally determined to vote Republican.

The presence of an African-American in the White House plays a large role in this racial-political polarization on the ground in Dixie. But not even Southern-born white Democrats, like former President Bill Clinton and former Vice President Al Gore, have been able to transcend this Southern partisanship. Despite for their cultural affinities and Southern accents, they could not persuade Southern whites to vote Democratic.

This is, however, not just a product of racial fears and resentments. Instead it appears to reflect an increasingly inbred Southern hostility to the exercise of economic regulatory power on virtually any level.  As in the 19th century, many in the South, including a considerable proportion of the white working-class, have been persuaded that the federal government is their enemy.   

As in the New South era, Southern whites, both elite and plebian, have adopted an insular and defensive posture toward the rest of the nation and toward newcomers in their own region. Echoing the Jim Crow election laws promulgated by Southern states at the turn of the 20th century, the new wave of 21st century voting restrictions promise to sharply curb the Southern franchise, white, black, and brown.

The new New South rejects not only the cosmopolitanism of a multiracial, religiously pluralist society, but the legitimacy of government, both federal and state, that seeks to ameliorate the poverty and inequality that has been a hallmark of Southern distinctiveness for more than two centuries.

The Civil War has yet to be won.

Wednesday, June 18, 2014

Zakaria: It was Maliki who lost Iraq (with Dubya's help)

You can check out  Fareed Zakaria repeating his points from the Washington Post on CNN:

This week I heard Rush Limbaugh ranting that Obama "owned" what's happening in Iraq. He kept repeating that word, "owns," like it was a GOP talking point. 

What does that mean though?  It comes from the CEO-managerial culture where the top guy accepts ultimate responsibility for whatever happens on his watch.  Except, of course, the analogy falls short here, because CEOs don't take the blame for stuff that happens in other companies, or indeed, in other countries where the company doesn't even operate. 

So now the GOP wants to recycle the same old "solutions" that didn't work in Iraq before: a small U.S. ground force; training the Iraqi army; more airstrikes; and even regime change (!) of Prime Minister Nouri al-Maliki.  Forget it.

By Fareed Zakaria
June 12, 2014 | Washington Post

It is becoming increasingly likely that Iraq has reached a turning point. The forces hostile to the government have grown stronger, better equipped and more organized. And having now secured arms, ammunition and hundreds of millions of dollars in cash from their takeover of Mosul — Iraq’s second-largest city — they will build on these strengths. Inevitably, in Washington, the question has surfaced: Who lost Iraq?

Whenever the United States has asked this question — as it did with China in the 1950s or Vietnam in the 1970s — the most important point to remember is: The local rulers did. The Chinese nationalists and the South Vietnamese government were corrupt, inefficient and weak, unable to be inclusive and unwilling to fight with the dedication of their opponents. The same story is true of Iraq, only much more so. The first answer to the question is: Prime Minister Nouri al-Maliki lost Iraq.

The prime minister and his ruling party have behaved like thugs, excluding the Sunnis from power, using the army, police forces and militias to terrorize their opponents. The insurgency the Maliki government faces today was utterly predictable because, in fact, it happened before. From 2003 onward, Iraq faced a Sunni insurgency that was finally tamped down by Gen. David Petraeus, who said explicitly at the time that the core element of his strategy was political, bringing Sunni tribes and militias into the fold. The surge’s success, he often noted, bought time for a real power-sharing deal in Iraq that would bring the Sunnis into the structure of the government.

A senior official closely involved with Iraq in the Bush administration told me, “Not only did Maliki not try to do broad power-sharing, he reneged on all the deals that had been made, stopped paying the Sunni tribes and militias, and started persecuting key Sunni officials.” Among those targeted were the vice president of Iraq and its finance minister.

But how did Maliki come to be prime minister of Iraq?  He was the product of a series of momentous decisions made by the Bush administration. Having invaded Iraq with a small force — what the expert Tom Ricks called “the worst war plan in American history” — the administration needed to find local allies. It quickly decided to destroy Iraq’s Sunni ruling establishment and empower the hard-line Shiite religious parties that had opposed Saddam Hussein. This meant that a structure of Sunni power that had been in the area for centuries collapsed. These moves — to disband the army, dismantle the bureaucracy and purge Sunnis in general — might have been more consequential than the invasion itself.

The turmoil in the Middle East is often called a sectarian war. But really it is better described as “the Sunni revolt.” Across the region, from Iraq to Syria, one sees armed Sunni gangs that have decided to take on the non-Sunni forces that, in their view, oppress them. The Bush administration often justified its actions by pointing out that the Shiites are the majority in Iraq and so they had to rule. But the truth is that the borders of these lands are porous, and while the Shiites are numerous in Iraq — Maliki’s party actually won a plurality, not a majority — they are a tiny minority in the Middle East as a whole. It is outside support — from places as varied as Saudi Arabia and Turkey — that sustains the Sunni revolt.

If the Bush administration deserves a fair share of blame for “losing Iraq,” what about the Obama administration and its decision to withdraw American forces from the country by the end of 2011? I would have preferred to see a small American force in Iraq to try to prevent the country’s collapse. But let’s remember why this force is not there. Maliki refused to provide the guarantees that every other country in the world that hosts U.S. forces offers. Some commentators have blamed the Obama administration for negotiating badly or halfheartedly and perhaps this is true. But here’s what a senior Iraqi politician told me in the days when the U.S. withdrawal was being discussed: “It will not happen. Maliki cannot allow American troops to stay on. Iran has made very clear to Maliki that its No. 1 demand is that there be no American troops remaining in Iraq. And Maliki owes them.” He reminded me that Maliki spent 24 years in exile, most of them in Tehran and Damascus, and his party was funded by Iran for most of its existence. And in fact, Maliki’s government has followed policies that have been pro-Iranian and pro-Syrian.

Washington is debating whether airstrikes or training forces would be more effective, but its real problem is much larger and is a decade in the making. In Iraq, it is defending the indefensible.

Tuesday, June 17, 2014

Dems propose Net Neutrality bill that has not a chance in hell

I'd proudly call this a class warfare bill.  Net neutrality is one of those issues that separates the wheat from the chaff.  

So why isn't talk radio and Fox News going nuts over this bill, which should be known as the "Keep the Internet the Way It's Always Been Act"? 

Well, you see, it's much easier for conservative bloviators to foam at the mouth over alleged denials of tax-exempt status by the IRS for clearly political Tea Party groups that are most certainly not "social welfare organizations."  

Yeah, that's the ticket. None of these Tea Partiers are engaged in politics, no sir!....

By Elise Hu
June 17, 2014 | NPR

Studies: The more guns, the fewer museums and libraries

Well knock me over with a feather!  For some reason guns don't jibe with museums and libraries!

Let's stop pretending that gun owners are defenders of "freedom;" more likely, they are backwards bumpkins who lower our security and quality of life. 

By Christopher Ingraham
June 17, 2014 | Washington Post

On Iraq, Syria, Iran and U.S. engagement

For all my Fox News viewers, here is a quick primer on what really matters in Iraq (and Syria) now:

Where is the accountability on Iraq?, by Katrina Vanden Heuvel.

Piecing together the shattering Middle East, by David Ignatius.
Obama got it right on Iraq, by Eugene Robinson.

What's the upshot to all this?

First, actions have consequences. Some of those actions date back 100 years. The Middle East never had a system of nation-states with clear borders like Europe, that is until the Western powers drew them up. The invasion and regime change by the U.S. in Iraq has only served to question/break up those borders within Iraq. Iraq is now informally three or four states in one.

And actions to remove the dictator in Iraq had international consequences: it created a power vacuum that favored Iran. This did not start yesterday, or even since Obama became president.

Second, there is no military solution to this, in isolation of regional power politics. The Uncle T's of the world will say this is because Middle Easterners are not "reasonable rational people."  In fact, they are a diverse group of ethnicities, tribes and confessions that were lumped together under borders of somebody else's choosing. Now those borders are under question in Syria, Iraq, Yemen and elsewhere.  

This means that the U.S. must engage with Iran, the Shi'ite heavyweight in the region, that has had significant influence in Iraq since Dubya's invasion in 2003.  This is not to mention Saudi Arabia and Turkey.  (Israel is a non-factor).  

Conservatives will talk about the "success" of the surge, blah-blah-blah, but clearly the surge was not sustainable, and it did not take into account events in Syria.  

The hallmark of the surge was more U.S. boots on the ground.  Are Republicans seriously advocating for that?  No.  They should clearly state what they are for, instead of simply criticizing our commander-in-chief.