Inequality

I have been reading a book, Why Nations Fail: The Origins of Power, Prosperity, and Poverty, by Daron Acemoglu and James Robinson, which I shall no doubt recommend shortly. The authors explore why some nations are prosperous and other poor, examining all the current reasons proposed by various academics for these differences – cultural, geographic, historical. They conclude that in the end it is political differences that account for the diversity – nations with a political elite who rule an extractive economy (think of North Korea, for example, or the old Soviet Union) simply do far worse than nations with a pluralistic political system in which individuals have an incentive to work hard, without fear that some privileged elite will confiscate their profits or prevent their new innovation from being marketed.

So much seems obvious, and our American nation has prospered because of the accidents of history that gave us a government adequately constrained so that no privileged elite could rise to power and then hold power indefinitely.

One has to wonder, though, if that is changing. When it changed in Rome after the fall of the Republic it led to centuries of civil war until an enfeebled state fell to a fairly puny force of barbarians.

The rising inequality in America is due in part to the emergence of a fairly incestuous ruling elite of politicians, lobbyists, CEOs, and others who have enough political power and wealth to gain special favors from the government.  Think of Monsonto’s increasing grip on farming, using their wealth and political influence to force farmers to use their genetically modified seeds. Or think of the massive farm subsidies each year which go almost entirely to a small group of politically powerful megafarmers. Think of the defense industry which contrives, with sweetheart deals for select politicians, to build ever more expensive weapons systems with little obvious purpose. Think of the current Obamacare law, which is a windfall for well-connected insurance companies. Think of the well-connected Wall Street managers who managed, after tanking the economy, not only to avoid any significant consequences, but even to have their losses covered and their bonuses funded by taxpayer money.

Yes, the current Tea Party shenanigans in Congress are stupid.  But the Tea Party itself is in part a sort of disorganized peasant revolt, and it exists in part because of increasing frustration by the majority at the increasing income inequality between most people and a small well-connected elite in the nation who are perceived to be (and may actually be) abusing their power and position. Could we be on a path similar to Rome’s?  It’s worth pondering.

This is stupid

This impending government shutdown is stupid, and in fact both parties share the blame equally, whatever the public perception turns out to be.

It is stupid for the Tea Party to try to defund Obamacare – yes, it’s a ridiculous piece of legislation that the Democrats saddled us with that does nothing effective to address the health care issues, but trying to defund it in the face of a Democrat-controlled Senate and Presidency just isn’t a tactically smart way to deal with it.

It was stupid in the first place for Democrats to push through such a controversial piece of legislation (and with such hardball tactics) without bipartisan support.  It has poisoned the air in Washington politics ever since, produced the Tea Party, and made President Obama’s job just about impossible.  

It is stupid for the Democrats to refuse to address the growing federal deficit and debt, or even acknowledge that there might be a problem with borrowing so much money every year just to run the government.

It is stupid for the president to try to handle this situation by just making confrontational White House statements to the press, rather than getting his hands dirty negotiating with the Republicans to try to find some acceptable middle ground.

As near as I can tell, stupidity reigns supreme throughout Washington these days.

Recommended: How Civilizations Die

The criteria for inclusion in my book list (see sidebar) is that the book has provided me with some new and unexpected insight, or proposed a new way of looking at an issue. The problem with the commonly received wisdom in a society like ours is that it can suffer from “groupthink” – a belief is wrong, but since everyone believes it there is a self-reinforcing factor in play that maintains the belief, even in the face of evidence that it is wrong. That is why I am always looking for books that argue cogently for alternative positions.

David Goldman’s new book How Civilizations Die: (And Why Islam Is Dying Too), meets the criteria of proposing a new and different way of looking at the world. David Goldman is a polymath (economist, investment banker, harpsichordist, music critic and music teacher, and prolific author) who has authored the widely-read “Spengler” column in the Asian Times for some years. In his 2011 book How Civilizations Die he lays out the demographic evidence that many major nations will essentially disintegrate in the next 50-100 years, as their low reproductive rate leads to an ever aging population supported by every fewer young until eventually the existing social and political system is no longer supportable.

Goldman writes from a decidedly Judeo-Christian perspective. That doesn’t mean his arguments require religious faith to accept. Instead, he argues that current foreign policy and political science fail to understand the current world because they are thoroughly secular in outlook – they ignore the profound effect that a culture’s religious beliefs can have on the choices that culture makes. He explores just why some nations are suddenly depopulating themselves, and suggests it may have to do with their reaction to the realization that their comfortable and familiar culture is in danger of disappearing in the modern world.

It has certainly been clear for decades now that US policy makers don’t understand other cultures very well. The current Democratic administration has stumbled repeatedly by misreading the political dynamics of other nations, and the Republican administration that preceded it wasn’t any better. This book is worth reading and thinking about because it proposes another way to try to interpret and predict the actions of other cultures.

Recommended: John Green's online video about health care

This is a first. I am recommending a short on-line video: His First 4 Sentences Are Interesting. The 5th Blew My Mind. And Made Me A Little Sick.. One of my daughters put me on to this, and it is well worth watching.

Green explodes, with data, many of the simplistic explanations about why US health care costs so much. He also talks fast. Also, the links for further data that he points us to are worth following.

How stupid can people get?

The new “Miss America” was crowned a few days ago.  She is of Indian descent, and fairly dark-skinned, though completely American,  Yet  her crowning was followed by a few  bloggers accusing her of being an “Arab terrorist”, apparently unable to distinguish between an Indian and an Arab (and where did the "terrorist" label come from??).  One does have to wonder how stupid people can get!

Actually, most people are fairly shrewd in their own short-term self- interest, but sharply limited otherwise by their cultural upbringing.

One only has to look around at the range of utterly implausible religious beliefs in the world to see this. Or the range of equally implausible political beliefs and ideologies. Or the astounding naiveté of most people about financial matters.  There is a reason why the Nigerian scam (we have a million dollar inheritance to send you, if you will just supply us with your bank account details so we can deposit it) continues to be run.  There is a reason why we all still get email spam about increasing one’s penis size with a pill. There is a reason why Bernard Madoff was able to build such a large Ponzi scheme and run it for so long. There is a reason why we continue to elect politicians who promise things which are clearly impossible to deliver. It’s because enough people are taken in by these scams to make it worth running them.

Part of our nation’s problems right now are due to the culturally-limited vision of our ruling elite – the (largely Washington and New York) politicians, CEOs, and think-tank advisers who set the nation’s policy. Many of them have no idea how the rest of the nation lives – they can (perhaps) sail their yacht, but not fix a lawnmower . In fact, many probably don’t even own a lawnmower – their gardening service handles that. When then-president Bush discovered that he didn’t know how to go through a self-check line at a supermarket, one got a glimpse of this sort of cultural isolation.

In the absence of real-world experience they substitute ideology – great sounding ideas (like the minimum wage idea discussed in my last post) that have little or no root in the real world.  This infects the ruling elite of all persuasions – right and left alike, conservative and liberal alike.  And since people tend to associate with. work with and live among people like themselves, these ideologies get reinforced every day, even if they are obviously not working and obviously at odds with the real world.

There really is nothing to be done about this. We are all primates, shaped by our evolution and our environment and the cultural milieu we grew up in. In fact, given these limitations, it really is remarkable that we have survived as a nation as long as we have. More and better universal education would certainly help, but in fact even the educational system is constrained by these same cultural limitations and myths.

It’s a problem worth thinking about.

Recommended: Minimum Wage Madness

Thomas Sowell has written another of his economics articles going right to the common-sense core of the problem. His piece today in RealClearPolitics entitled Minimum Wage Madness makes the same point I made a month or so ago - if the minimum wage is more than the worker is worth, they simply don't get jobs.

The minimum wage idea is not an economic idea; it is an ideological idea. Like so many ideological ideas, it sounds great on paper, but it doesn't fit with reality. As the old saying goes, "the road to hell is paved with good intentions".

This is one of those cases. Sowell provides some interesting statistics which seem to support the argument that unemployment, especially of the youth, is far lower in places and at times with no minimum wage than when a minimum wage law is present. That is common sense. If, for example, children delivering newspapers had to be paid minimum wage, there simply would be no paperboy jobs for youngsters to earn pocket money, and more important, to learn valuable work habits.

Recommended: Strategy, Ideology and the Close of the Syrian Crisis

Geroge Friedman at STRATFOR has written an ongoing series of incisive analyses of what has been happening with the Syrian question. His latest posting,Strategy, Ideology and the Close of the Syrian Crisis, is a good example, and worth reading.

The Shoes begin to drop

This January is when "Obamacare" really begins to come into force, and now the shoes are beginning to drop. President Obama, back when he was pushing for passage of his massive health care bill, promised that "if you like your current insurance plan, you can keep it". Sure! As an IBM worker and now retiree, I have been on IBM's health care plan for decades, and I like it. Guess what? January 1, 2014 IBM stops offering a health care plan and we are all dumped off to a health care exchange.

So much for President Obama's sales pitch! So much for how great Obamacare is going to be for all of us!

A Syrian deal that just might work

The sudden emergence of a new proposal last night for Syria to turn over its stock of chemical weapons to international control for destruction is a deal that just might work, and might get President Obama out of the uncomfortable box he has gotten himself into.  It might work because all the principle players have the maximum incentive to make it work.

Syria will probably agree in order to avoid having its military further crippled. For all its bluster in recent days about retaliation for an America attack, President Assad’s regime is just barely hanging on in the civil war, and certainly doesn’t want to be weakened further.

Russia will support the proposal because (a) they don’t want to see Assad fall, (b) it gives them international prestige for having played a significant role in resolving the issue, and (c) because they don’t want a precedent set for international intervention that someday might be used against them.

China will probably go along for much the same reasons.

President Obama and Congress will agree because it gets the president out of the box he put himself into, and Congressional anti-war Democrats can avoid a very difficult vote – to vote against their president or vote against war.

The Arab League will agree because it avoids yet another incursion by America forces, and because it addresses one of their real concerns – Assad’s chemical weapons.

The UN will agree because it gets to play a significant role again in resolving the issue.

And in fact the proposal, if it is really carried out, does address the only real America national  interest in this whole civil war – eliminating the chance that Assad’s chemical weapons will fall into the hands of terrorists who might use them elsewhere.

Deals like this work (a) because it is in the self- interest of all the parties to make it work, and (b) because the consequences of its not working (an American attack on Syria) are worse than the consequences of making it work.   It is only fair to note that a proposal like this wouldn’t stand a chance without the threat of America military action to make it more appealing.

In the oriental game of Go an important tactic is to place stones in threatening positions, which forces the opponent’s hand and restricts his/her play options. The lesson is that military power is best and most efficiently used when it isn’t used, but just threatened.  Of course, if the bluff is called, one must be prepared to follow through, or the threat ceases to be believed.  That is where President Obama got himself into trouble in the first place.

Recommended: United States Is Enabler of Global Irresponsibility

Scott Rasmussen , writing in RealClearPolitics yesterday, has a thought-provoking article entitled United States Is Enabler of Global Irresponsibility. He argues that over the past half century the United States has played the role of the world policeman, thereby allowing friend and foe alike to stand aside from their own responsibilities and just posture for the world press and their own people.

And Syria, he argues, is a case in point. Yes, something ought to be done about the appalling slaughter going on there, and the use of chemical weapons, but it doesn't follow that the US has to be the one to intervene.  Syria's neighbors are much more at risk here, and so it ought to be Syria's neighbors that take on the task. Or failing that, Europe. But the willingness of the Americans to do it lets them all off the hook.

It is an interesting thesis, worth considering.We spend a lot more on our military than other nations (more, in fact, than the next 14 nations combined), and part of that is because our allies depend on us for a lot of their military needs (like logistics and air-to-air refueling), letting them cut their own defense budgets while we increase our to pay for them.

Recommended: How to save the Republican Party, courtesy of two Democrats

William A. Galston and Elaine C. Kamarck have an especially good article in today's Washington Post: How to save the Republican Party, courtesy of two Democrats.  They point out that today's Republican Party is in the same situation the Democratic Party was in 25 years ago, out of power and losing elections, and that it needs to apply exactly the same measures to recover.

Like the Democratic Party of 25 years ago, there are not enough people in the party base to win elections - the party needs to attract moderate and independent voters as well.  Like the Democratic Party of 25 years ago, it is dominated by its extreme end, and needs to move back to the center. 

This is a good article.

Obama vs Carter

It is still much too early to be sure how history will rate President Obama’s administration, and in fact there are many months yet of that administration to run and it may yet produce some unexpected victories.  But at this point I am beginning to wonder if there are some uncomfortable parallels between President Carter’s record and President Obama’s.

President Carter was certainly one of the most decent and moral of our recent presidents, yet he was largely ineffective and naïve in both his domestic and his foreign policy. President Obama was, and still is, a thoroughly likable individual, yet he too has stumbled repeatedly in both his domestic and foreign policy.

In domestic policy, after campaigning on being a bipartisan president, he wasted a year and half and most of his political capital pushing through “Obamacare” without any bipartisan support when he should have focused more on restoring the economy.  As a result, the economy is still lagging badly and “Obamacare” has become a nightmare to implement and produced a vigorous political backlash among Republicans that has stalled almost everything else he has wanted to do.

A more astute president would have understood that it was politically unwise to push through a major program like Obamacare without at least some bipartisan support, and certainly not by the sort of steamroller “in your face” political maneuvering that House leader Nancy Pelosi used. A more astute president would have known better than to leave the construction of such a bill entirely to Congress, without some presidential oversight. A more astute president would have focused more in the early days on measures to restore the economy, realizing that until the economy improves there simply won’t be enough tax revenue to fund all the liberal dreams.

In foreign policy he followed his campaign promises to try to “reset” relations with Russia and Iran and draw down the wars in Afghanistan and Iraq. For those promises he won the Nobel Peace Prize, though by now the Nobel committee must be regretting the day they fell for the rhetoric. But in fact his “reset” attempts met with complete failure in both cases, largely because he was naïve about what the real dynamics were in both those relationships.  And although we are – finally – beginning to get out of those two wars, in the meantime he intensified them with a surge of troops, kept us in them for another six years, and has been vigorously killing militants (and civilian bystanders) with an aggressive drone program of questionable legality.

A more astute president would not have been so naïve about the dynamics of Russian and Iranian foreign and domestic politics.  A more astute president would not have believed for so long the persistent liberal fairy tale that Iraq and Afghanistan can be converted to democracy if only we “hang in there” a bit longer. In fact, when we leave both will no doubt quickly revert to exactly the same sort of distributed tribal government they have had for thousands of years. A more astute president would have realized by now that his drone program was helping the terrorists immensely in their recruiting efforts.

And now we have the current debacle about Syria, in which the professional foreign policy establishment has just about reached consensus that President Obama's administration has bungled the matter right from the beginning, and is making it worse day by day with one unenforced "red line" after another, and this confused and delayed response (almost Keystone Cops) to the latest use of chemical weapons.

I certainly hope for America’s sake as well as his own that President Obama gets some more successes in the remainder of his term, but based on past performance I am not optimistic.

Recommended: The Failed Grand Strategy in the Middle East

The Wall Street Journal a week or so ago (August 24) had a very well-reasoned and thoughtful article by Walter Russell Mead: The Failed Grand Strategy in the Middle East.  I highly recommend it.

Mead argues that the administration had a well-thought out, consistent and plausible (from the American viewpoint) strategy for the Middle East, and followed it pretty consistently, but that it has failed because of some fundamental misunderstandings among the Washington policy elite about the real situation and political dynamics in that area of the world.  He goes on to analyze these misunderstandings in some detail.

The Middle East will never be a place that Americans understand well.  There is simply too much cultural difference between us to be bridged with anything less than a lifetime of serious study. People in the Middle East, except possibly for some few educated in the West, simply see the world differently - neither better nor worse, but just differently.  They value different things, they have a profoundly different world view, they have different social and political expectations, etc, etc, etc.

American attempts to impose a Western-style democracy on such cultures, and especially to expect to do so in a generation or less, are simply unrealistic and naive.  Yet Washington ruling elites in both parties continue to believe in the possibility.  There is no doubt that more democratic systems would be good for Middle Eastern cultures, but democracy requires a whole series of culture prerequisites (see Fareed Zakaria' s 2003 book  The Future of Freedom: Illiberal Democracy at Home and Abroad for a good discussion of this) which would take a generation or more to establish under the best of circumstances, and far longer so long as the Middle East continues to be ruled by repressive authoritarian or theocratic governments.

Mead's article is well worth reading.