Recommended : Pax Corleone

The current issue (No.94, Mar/Apr 2008) of The National Interest has a brilliant article entitled “Pax Corleone”, in which the authors use Francis Ford Coppola’s The Godfather as a metaphor for today’s America. It is well worth reading. For the moment, it can be accessed at The National Interest’s website, at http://www.nationalinterest.org/Article.aspx?id=17008, though it will probably be removed in a month or two when the next issue comes out.

In essence, the authors compare America’s 9/11 attack to the hit on the aging Vito Corleone early in the movie. Like todays’s world for America, the Corleone’s world is changing: they are no longer the dominant power, new challengers are arising (China, Russia. India, etc) and new upstarts are causing trouble (Iran, Iraq, North Korea, etc).

In the movie, there is a tense conference after the hit among the three brothers. The authors compare the responses of the three brothers, Tom Hagen (the negotiator, similar to liberal internationalists in the Democratic Party), Sonny (the militant, similar to the neoconservatives in the Republican Party), and Michael (the realist, similar to whom these days on the political scene??).

In the movie, Tom and Sonny both approach the problem blindly with outdated assumptions, assumptions still based in the old days when the Corleones were the unquestioned dominant power, just as America was in the cold-war days. Tom wants to negotiate, not understanding that he no longer negotiates from a position of strength. Sonny wants to retaliate unilaterally, not understanding that this destroys the alliances that have kept the Corleones in power for so long. Michael, on the other hand, sees the nature of the changing order and power realignment and adapts flexibly to it, mixing negotiation with force pragmatically on a case-by-case basis, and working to revise the playing field so that his allies have strong incentives again to support him.

The lessons the authors draw from The Godfather are well worth pondering. It does seem to me that neither the liberal doves nor the militant hawks in today’s American politics have workable approaches, and that it is high time some foreign policy realists re-emerged.

The anti-war movement

These days I have to drive down to Santa Fe five days a week, and almost every day on one of the main intersections I pass a small, rather pathetic-looking group holding anti-war signs. Now I’m in agreement that war is inevitably wasteful and destructive, and to be avoided whenever possible, and it is certainly legitimate to question whether a particular war (like the one in Iraq or in Vietnam) was really necessary or wise. On the other hand, I never have understood those who oppose war no matter what.

Indeed, these anti-war protestors are safe in their public demonstrations precisely because so many Americans have fought to preserve the right of peaceable public assembly. There are many countries around the world even today where their protest would be broken up in minutes by the local secret police or some religious vigilante group, and they themselves carted off never to be seen again. It has always seemed to me that those who were not prepared to defend their rights had no real rights.

I saw a car the other day with two bumper stickers. On one side was a sticker that said “No War”, and on the other side a sticker that said “Free Tibet”. Noble sentiments, without a doubt, but just how did the owner of that car think anyone was ever going to free Tibet from China’s grip without war? Reason sweetly with the Communist Chinese government? I don’t think so……

In my graduate school days I was briefly involved in a campus anti-war group led by some of the faculty. But I dropped out after a few meetings when I realized that this anti-war group was dogged by bitter infighting among the leaders – they wanted peace in the world but were incapable of peace even among themselves!

One certainly hopes that human civilization finds its way toward non-violent resolutions of its internal differences, but it is a cause that deserves better supporters than the idealists who seem to be its main supporters today. Any realistic attempt to reduce war is going to have to confront the reality that there are always unscrupulous, ambitious, charismatic, power-hungry thugs about – people like Hitler and Saddam and Alexander the Great and Attila the Hun and a whole string of European and Asian monarchs through the ages, and not a few Popes and Imams and other religious leaders – and any useful and realistic anti-war policy has to have a credible way of dealing with them and their ability to brainwash whole nations into following them.

Until then, I think the 2000 year old advice from the Roman writer Publius Flavius Vegetius Renatus still applies: "Let him who desires peace prepare for war". Nothing assures peace better, from the neighborhood bully or the bellicose leader of a powerful nation, than the knowledge that you are at least as strong and determined as they are.

Junk thought and junk science

I’ve been reading Susan Jacoby’s new book The Age of American Unreason (see booklist on the sidebar). She has a whole chapter on “junk thought”, that sort of popular mythology that, among the public, passes for intellectual or scientific thought, but is really based on mythology or religious beliefs or people’s agendas rather than fact.

I was still thinking about this as I was reading this morning about an outbreak of measles in San Diego among a classroom of young children, many of whom had never been vaccinated because their parents object to vaccinations. I grew up in the generation that was relieved when vaccines eliminated the scourge of diseases like polio and whooping cough and diphtheria. Apparently enough time has passed that we have a new generation of parents who have no idea what adult-onset measles can do to people, but who have bought into the junk thought idea that all vaccines are dangerous and might produce autism in children.

Vaccines are indeed dangerous, in the same sense that crossing a street is dangerous. There will be the odd individual who has an atypical biochemical system and has a bad reaction to a vaccine, perhaps one individual in a thousand or in ten thousand. All life is odds, and all medical procedures (indeed all actions in life) carry risks, however small. One plays the odds – if there is one chance in ten thousand that a vaccine might harm me, but one chance in ten that unvaccinated the disease will harm me, clearly the odds are better with the vaccine. These parents seem to have bought into the junk thought and misperceived the odds, since they apparently have no idea how bad measles can be for an adult.

Nor, apparently, are they aware that, despite the claims of the anti-vaccination crowd, there is no (zero, zilch, nada!) credible clinical evidence to support the junk thought theory that vaccinations cause autism, and indeed there is a very large recent clinical study from Denmark, where they keep meticulous health records for the whole population, that shows no correlation at all between vaccinations and autism. That doesn’t stop authors, a few of them even doctors, from writing popular books citing anecdotal evidence and coincidences to push their theory (and sell their books and get them lucrative speaking and TV appearances).

Junk thought and junk science (the process of cherry-picking scientific results to find the ones that support one’s theory and ignoring results that don’t support it) appear in all fields of endeavor, but seem to me to be especially prevalent in fields such as education (often fed by racial or gender agendas), social policy (often fed by political or religious agendas), diet plans (fed by the American obsession with looks) and alternative medicine (apparently fed by a deep suspicion of “the establishment”, whatever that is). Conspiracy theories thrive on this sort of junk thought, especially if it appeals to and seems to support our existing prejudices.

One wonders how a modern technologically-based society can long survive with a population addicted to such junk thought.

Moral Hazards – Again!

Bear Stearns Investment Bank is one of many banks that allowed greed to get the better of common sense over the past decade and invested heavily in “subprime” mortgages (ie – loaned money for people to buy houses larger than they could really afford). Now of course the chickens have come home to roost, so that all these banks are in serious financial trouble, which has prompted the government to temporarily bail out Bear Stearns with a short-term federal loan funneled through J.P. Morgan Chase and Co.

The argument for such help is reasonable enough – if Bear Stearns is forced into bankruptcy it will essentially have to sell its weak and bad subprime loans at bargain basement prices, which will force down the value of every other bank’s subprime loan portfolio, forcing more banks into bankruptcy and perhaps starting a collapse of the whole financial system.

Nonetheless, there is a fundamental problem here. The government has created yet another moral hazard. In essence, Bear Stearns has profited handsomely over the past decade from the (unwise) risks it took, and now is being saved from the consequences of its poor management with what in the end are really taxpayer dollars. Senior Bear Stearns management have made fortunes in personal income on this unwise risk over the years. For example, Samuel L Molinaro Jr ,Executive VP/CFO/COO at The Bear Stearns Companies, Incorporated, earned $250,000 in salary, $12,967,500 in bonuses, and $13,336,250 in long-term compensation, for a total of $26,553,750 for the year 2007, not counting some $22 million more in unexercised stock options, for making such unwise decisions! Yet he will bear little or none of the costs of his poor judgment. Bear Stearns investors will share some of the pain for their own poor judgment, but not as much they should in a truly free market system.

Its not that I’m against the government stepping in to prevent a collapse of the financial system (though one might ask why the government didn’t regulate bank practices better in the first place), it’s that I think those who profited handsomely over the years by the risk-taking ought to bear some substantial portion of the pain of recovery. It’s true the senior managers may find themselves out of a job soon, if Bear Stearns is taken over by someone else, but they will be multimillionaires out of a job, forced to spend their idle days in one of their various houses or on one of their various boats, or sitting on the Boards of Directors of other companies at handsome retainers.

Somehow this doesn’t seem right. If I can take unwise risks with the assurance that the government will bail me out when things get bad, clearly I have an incentive to take those unwise risks. There is a large upside for me and a very small downside. That is a moral hazard.

Asymmetric reporting

The Palestinian militant group Hamas fires dozens of rockets daily into Israel, in a form of asymmetric warfare. In recent weeks these have begun to include longer-range Iranian-made rockets targeted deeper into Israel, hitting Ashkelon, a city of 120,000 people. These facts are reported dispassionately by the world press.

Israel, in response, has been trying to hit back at the Hamas militants, and in the process sometimes hits civilians as well, since of course the militants are quite deliberately firing from the midst of civilian settlements. These civilian deaths are reported in the world press in all their gory detail, with as much emotional overlay and moral indignation as possible.

Is this asymmetric reporting a form of subtle anti-Semitism? There really is no moral comparison between the two actions. Israel is trying to defend its people from these rocket attacks by hitting the militants when it can. Hamas, in contrast, is firing deliberately and indiscriminately at civilian population centers (when it isn’t sending suicide bombers into Israeli shopping centers and schools), hoping for the maximum carnage among civilians. Israel sometimes hits civilians by mistake. Hamas targets civilians deliberately.

Yet this distinction seems to be largely lost, not only in the world press but among some of the American liberal columnists, who apparently have bought into the Palestinian’s propaganda and somehow seem to equate the bloodthirsty, hate-driven Hamas militants with a form of glorified “freedom fighter”.

This one-sided press coverage has repeatedly led world leaders to condemn Israel’s retaliations, while saying nothing about the Hamas provocations. It has led them to ask that Israel restrict itself to “proportional” responses. Of course, a truly “proportional” Israeli response would be to fire dozens of rockets daily indiscriminately into the civilian population of Gaza. Is that what these world leaders really think they want?

I can’t help but wonder if these journalists and op-ed writers would feel the same if American border cities were being bombarded daily by rockets from Canada or Mexico. I doubt it. The last time militants killed American civilians in America we took down the entire government of Afghanistan, and then for good measure the government of Iraq as well.

There seems to be lots of moral outrage at Israeli attempts to halt these rocket attacks. Why is there not worldwide moral outrage at the Hamas militants who are firing them in the first place?

The President That We Deserve

In 1997 Martin Walker, a British journalist who has at times been Editor in Chief of United Press International and European Editor of The Guardian, wrote “Clinton: The President they Deserve”, a book more widely read in Britain and Europe than in America. In this book he dissected fairly accurately the way both Clintons manipulated the facts and the press to gain and hold power.

That book may prove to be relevant again if Hillary Clinton can ever get her campaign organized enough to overcome Barak Obama’s current lead. But whether that happens or not, the subtitle of the book “The President They Deserve” is certainly relevant to America these days.

Americans might be forgiven for choosing the current holder of the office in 2000 over a very wooden Al Gore whose heart really wasn’t in the race (he plays much better in his current role, because his heart is in it). But succumbing to the scare tactics of the 2004 election and repeating that mistake by re-electing Bush really did give us the President We Deserved., though helped no doubt by the abysmal campaign of John Kerry. And we have reaped what we sowed – giving us among other things wiretaps without legal warrants, an impossible war in Iraq even while the Taliban recover their power in Afghanistan, a massive increase in government debt (from the party that is supposed to be the more fiscally responsible!), massive subsidies for things like corn ethanol that actually waste more energy than just using oil, and a general loss of our bargaining power and influence throughout the world.

Now we get another chance in 2008 to try and get it right. If we are foolish enough to just take the political pap and insincere promises that both political parties will feed us, and if we are foolish enough to let them manipulate us with simple-minded slogans and catch phrases, if we are dumb enough to succumb to negative campaigning, and if we are naïve enough to vote mindlessly along party lines or on the basis of sound bites, we will again get The President That We Deserve.

In British politics, candidates have to go to rallies and field hard questions from real voters. Something quite different from the “staged” debates in our country with softball questions from moderators, or the rousing set piece campaign speeches, or the “town meetings” packed with supporters and shills. I don’t think any presidential candidate we have had since, perhaps, Truman could stand up to the sort of hard questioning that is normal in British politics.

A friend has just alerted me to Lee Iacocca’s 2007 book “Where Have All the Leaders Gone?”. Iacocca wonders why we, the American public, are not mad as hell about what is going on. He wonders why we aren’t in total revolt against both dysfunctional political parties. He wonders why we have passively let the politicians lead us into this morass. He wonders why we haven’t made heads roll in Congress and the White House.

I too wonder. Will we again get The President That We Deserve?

The whale in the room

There is a whale in the room this election year that everyone in political life seems to be trying to ignore (I would have used an elephant, but I want to avoid the political overtones). What everyone in both political parties is trying so studiously to ignore is the absolutely overwhelming and crushing future debt that social security and Medicare are set to build up in our nation. Fundamentally, both of these programs were designed in the days when there were very few retired people whose benefits were being carried by a great many workers. Now as our population ages and people live longer in retirement, that ratio is falling drastically and both programs are headed rapidly towards insolvency.

Jagadeesh Gokhale and Kent Smetters, two economists working at the Federal Reserve at the time, wrote a series of papers starting in 2003 outlining the problem. For those who want the details see, for example, Fiscal and Generational Imbalances: New Budget Measures For New Budget Priorities (http://irm.wharton.upenn.edu/WP-Fiscal-Smetters.pdf). All told, the two programs, as presently constituted, were estimated in 2003 to be short about $44 trillion dollars over the next 75 years. $44 trillion is about 10 times the current national debt. In 2003, in order to achieve current solvency, the government would have had to raise payroll taxes by 68.5%, beginning immediately. Alternatively the government could have cut Social Security and non-Medicare outlays by 54.8% immediately and forever. By now (2008) the fiscal imbalance has reached $54 trillion. To reach solvency at this point, taxes would have to increase by 73.7%.

Social Security does in fact have a trust fund which currently holds about $1.6 trillion in surplus, but there is just one little catch. As these excess funds were accumulating, Congress kept draining them out to pay for pet programs, so all the trust fund really holds is $1.6 trillion in Treasury notes, or IOUs, which the government will have to find and put back into the trust fund someday.

What is interesting is that the Republicans, after an abortive little effort to create private retirement accounts at the beginning of Present Bush’s first term, dropped the issue. The Democrats went even further, officially denying there was a problem and accusing Bush of creating a scare. This was pretty cheeky, since in the Clinton years they did think it was a real problem and Clinton even chartered three separate commissions to look at the issue (though in the end he didn't follow any of their recommendations).

Now what is really annoying is that a few very minor changes in the system, made now, could avert the whole problem. Such things as a small increase in the payroll tax, lifting the payroll tax cap (SS currently collects payroll tax only on the first $102,000 earned each year), and changing the Social Security formula for annual cost-of-living increases to track price inflation instead of wage inflation would help to make the system solvent over the long term. None of these measures alone solves the problem, but in combination, they go a long way toward solving the shortfall. Unfortunately, neither political party is willing to take on the hard choices, so we are doing nothing. Ten years from now, it will take much more drastic and unpopular measures to get the system solvent again.

Well, I guess politicians are just following their motto – “never solve today what you can leave as an unsolvable problem for your opponents tomorrow”.