A few months ago I wrote about the possible death of the Democratic Party due to the divisive nature of the primary campaign. However, the party seems to have coalesced nicely and any animosity has been marginalized. While watching this campaign play out, it has become increasingly apparent to me that the Democrats, in fact, can achieve Jesse Jackson's dream of a rainbow coalition. They have a broad appeal and an inclusive culture that seemingly fights for the everyman, instead of pretending to be the everyman. The latter of which is what the Republicans do.
The McCain campaign this past week has decided to intensify its attacks on Senator Obama by bringing up his relationship with radical domestic terrorist William Ayers. Apparently Ayers held a housewarming party for Obama when the latter was running for state senate. They live in the same neighborhood and have been involved on some educational committees within that community. Ayer's last bombing, or bombing by his group the Weather Underground, occurred when Obama was eight years old.
So the connection is pretty tenuous. Ayers has since become a professor at the University of Chicago and Chicago citizen of the year. Apparently the entire city of Chicago are terrorist sympathizers. However, none of this stops the Republicans from attacking Senator Obama for the association. And in turn, they risk unleashing a culture clash that may ultimately destroy their party.
If you noticed the television during the Republican convention, there was an abundance of one thing. Old white people. And, conversly, the lack of another - minorities and young people. Maybe the young people there looked older because they wore khakis and old man shirts. Anyway, what became apparent is that the GOP is a dying breed. Minorities will outnumber the white majority by 2030 or so. But party association by racial lines is not the Republican Party's direst threat.
This culture war that the Republicans have played since the era of Nixon is finally beginning to catch up with them. The GOP has, for the past 40 years, prospered on the disdain of the elite intellectual class, aka the college educated bunch. They have espoused "small town values" (whatever that means) at the cost of appealing to the educated person. By making smart people look stupid, the GOP has alienated a good portion of its base. Lawyers now donate to the Democrats at a 4 to 1 ratio over the GOP. Doctors and bankers are at 2 to 1. Yes, bankers! How the GOP managed to do that, well I'll tell you.
Every time Sarah Palin talks about Senator Obama hating American because he "palls around with terrorists", she gets an standing ovation from her crowd (along with yells of "Kill Him!" and racial epithets thrown at black members of the press corps). Sure, this may fire up the base and get a positive response from the people who vote Republican because its the party of Jesus, but it makes the GOP the party of the redneck. And that has as much appeal to professional people as going to college has to rednecks. It is self defeating. The GOP has aliented the educated regions of the United States. But they are also alienating another branch of American society.
Whatever populist rhetoric the GOP puts out there this campaign season, it is completely countered by their history and policies. They speak fighting for the common family but only cut taxes for the very wealthy. They talk about providing jobs for "Joe Six Pack" (whoever that is) yet provide tax incentives for outsourcing (which I agree with as sound macroeconomic principle but is still a valid example of hypocrisy). The truth is that the GOP is held hostage to the principles of big business. They adhere to the failed Reagan policy of "trickle down economics" where tax cuts and benefits to the very wealthy somehow will translate into more opportunities for the middle class. With economics such a huge issue in this election, the middle class are paying more attention to these policies and are moving away from the GOP.
The GOP basically disdains the culture of the educated class yet provides policies that are tailored to those same people. They espouse the values of small town America in election years but fail to support their needs when in office. They appeal to prejudice and fear to fire up their base, yet do nothing to allay fears from minorities and "liberals". This is a very dangerous path the GOP and the McCain camp are choosing to walk. By unleashing the tide of a culture war, they not only threaten their very existence, but threaten any racial and civil harmony this country has built during the latter half of the 20th century.
Friday, October 10, 2008
Tuesday, October 7, 2008
The End of an Era: The Financial Crisis and the Washington Consensus
Since the end of the second world war, the United States has been the primary source of economic and military might throughout the world. The Soviet Union was a worth challenger for a portion of the Cold War but ultimately doomed to failure due to its strict adherence to Communist philosophy. During that time, the United States formulated the policy of Containment which sought to bolster any regime willing to oppose Soviet influence. This, theoretically, would prevent the spread of the Red Scare and avoid direct confrontation with the Soviet Union. To achieve such an end, the United States provided almost unlimited funds to nations in exchange for economic concessions. After the Cold War and into the era of globalization, there were political concessions involved with nation building. This was the Washington Consensus.
The Washington Consensus was a cornerstone of US foreign policy during and immediately after the decline of the Soviet Union. Western leadership believed that open markets would necessarily translate to open politics, also knows and democracy. Essentially, the European Union's path to membership is a successful heir to the Washington Consensus. The goal was to bring developing nations under Washington's umbrella through economic integration. The United States and the Bretton Woods institutions, the World Bank and International Monetary Fund (IMF), would essential loan nations money on certain conditions. Usually these conditions required low tariffs, free trade agreements, low interest rates, and a transparent political system.
There was no inherent problem with the ideas behind the Consensus. However, its implementation had mixed results. When a nation applied the tenements of the plan, their markets usually grew very quickly. In fact it resulted in hypercapitalism, or, rapid growth with little restraint. This looks great on paper and on government fiscal statistics, but it wreaks havoc socially. The result of this quick capitalsim was that it actually increased the income gap in already divided developing countries. Although the poor were getting richer, they were getting richer at a slower rate than the already rich. So while a poor Argentine could now afford a car, the wealthy class bought planes and influenced politics. This inequity in income led to social movements across many of the nations that implemented the Washington Consensus. The result is the leftist movement, with anti Americanism, sweeping South America.
That was the first knell sounded for the Consensus. The second was the success of economies that rejected Washington's plan. China refused to take part in the trade liberalization that Washington demanded. Instead they devised an authoritarian capitalist model that succeeded on tight corporate regulation and government directed growth. This ran almost completely counter to Washington. The Chinese took their economic growth slowly and carefully integrated their markets in to the world's financial system. Their economy succeeded because the government has absolute power and can direct spending any way it wants. The difference between the Chinese and nationalized movements of the past was that the Chinese understood how to use capitalist markets to make money efficiently. They were brutal in implementation and profitable in result.
This is not an advocacy of the Chinese model of growth. However, it is an example of a nation that has become, in less that 15 years, an economic powerhouse by following exactly the opposite of what the Washington Consensus demanded. A counter to the Chinese model is the Indian model. India actually implemented all the provisions of the Washington Consensus and has succeeded in becoming the fastest growing nation in the developing world. However, their revolution is one that comes from the people instead of from the government. It is bottom up as opposed to top down. The social and political change that hypercapitalism brought upon India has forced the government to listen to the people and adapt to their needs intead of manipulating the people and making them adapt to the will of the government. The enormous beauracracy and slow moving democratic process in India actually helps the country remain stable and adopt to changes as they occur. Success stories like India's are very rare. It only proves that the Washington Consensus can really only work in nations were democracy is practiced and its values are revered. That is why the type of capitalism espoused by Washington works in the United States and India. They share the same democratic values.
The success of China and the petroeconomies (Russia, Venezuela, and Saudi Arabia) has given the world another model to strive for: authoritarian capitalism (or, facism). What is interesting is that these models, for the majority, are based on the sale of one commodity, oil. The petro nations are the beneficiaries of the ultimate cash crop. However, their economies are a house of cards compared to the likes of China, India, and Brazil. Once the reliance on oil weakens, or the market price goes down, these economies will face fiscal crisis. They already spend too much of the profits on government spending and not enough on corporate development. This means that while Russia uses its profits from oil to build tanks, Gazprom can't afford to develop new natural gas or oil fields. China uses corporate profits to expand and develop their industries instead of solely bolstering military power. What this all means is that more and more developing countries will use this model for future economic growth instead of a more realistic model. As a result, fewer countries in the developing world will be inclined to implement a democratic model if the authoritarian one can provide financial stability.
In effect, the Washington Consensus was a failure before this financial crises even started. However, the recent collapse of American financial institutions and the contested bailout plan effectively buried the Washington Consensus in the graveyard of history. Now the American model of capitalism, once the paragon of economic development, is now ridiculed as the ultimate flop. Every nation across the world that has been touched by the Washington Consensus or that has no stake in international finance probably feels a bit of Schadenfreude. But what is worse is that America's best tool for spreading democracy was its economic prowess, not its military force. And now we have no justification for our system, no moral authority, and a military that is handcuffed. If our isolation wasn't complete before, it may be now.
The Washington Consensus was a cornerstone of US foreign policy during and immediately after the decline of the Soviet Union. Western leadership believed that open markets would necessarily translate to open politics, also knows and democracy. Essentially, the European Union's path to membership is a successful heir to the Washington Consensus. The goal was to bring developing nations under Washington's umbrella through economic integration. The United States and the Bretton Woods institutions, the World Bank and International Monetary Fund (IMF), would essential loan nations money on certain conditions. Usually these conditions required low tariffs, free trade agreements, low interest rates, and a transparent political system.
There was no inherent problem with the ideas behind the Consensus. However, its implementation had mixed results. When a nation applied the tenements of the plan, their markets usually grew very quickly. In fact it resulted in hypercapitalism, or, rapid growth with little restraint. This looks great on paper and on government fiscal statistics, but it wreaks havoc socially. The result of this quick capitalsim was that it actually increased the income gap in already divided developing countries. Although the poor were getting richer, they were getting richer at a slower rate than the already rich. So while a poor Argentine could now afford a car, the wealthy class bought planes and influenced politics. This inequity in income led to social movements across many of the nations that implemented the Washington Consensus. The result is the leftist movement, with anti Americanism, sweeping South America.
That was the first knell sounded for the Consensus. The second was the success of economies that rejected Washington's plan. China refused to take part in the trade liberalization that Washington demanded. Instead they devised an authoritarian capitalist model that succeeded on tight corporate regulation and government directed growth. This ran almost completely counter to Washington. The Chinese took their economic growth slowly and carefully integrated their markets in to the world's financial system. Their economy succeeded because the government has absolute power and can direct spending any way it wants. The difference between the Chinese and nationalized movements of the past was that the Chinese understood how to use capitalist markets to make money efficiently. They were brutal in implementation and profitable in result.
This is not an advocacy of the Chinese model of growth. However, it is an example of a nation that has become, in less that 15 years, an economic powerhouse by following exactly the opposite of what the Washington Consensus demanded. A counter to the Chinese model is the Indian model. India actually implemented all the provisions of the Washington Consensus and has succeeded in becoming the fastest growing nation in the developing world. However, their revolution is one that comes from the people instead of from the government. It is bottom up as opposed to top down. The social and political change that hypercapitalism brought upon India has forced the government to listen to the people and adapt to their needs intead of manipulating the people and making them adapt to the will of the government. The enormous beauracracy and slow moving democratic process in India actually helps the country remain stable and adopt to changes as they occur. Success stories like India's are very rare. It only proves that the Washington Consensus can really only work in nations were democracy is practiced and its values are revered. That is why the type of capitalism espoused by Washington works in the United States and India. They share the same democratic values.
The success of China and the petroeconomies (Russia, Venezuela, and Saudi Arabia) has given the world another model to strive for: authoritarian capitalism (or, facism). What is interesting is that these models, for the majority, are based on the sale of one commodity, oil. The petro nations are the beneficiaries of the ultimate cash crop. However, their economies are a house of cards compared to the likes of China, India, and Brazil. Once the reliance on oil weakens, or the market price goes down, these economies will face fiscal crisis. They already spend too much of the profits on government spending and not enough on corporate development. This means that while Russia uses its profits from oil to build tanks, Gazprom can't afford to develop new natural gas or oil fields. China uses corporate profits to expand and develop their industries instead of solely bolstering military power. What this all means is that more and more developing countries will use this model for future economic growth instead of a more realistic model. As a result, fewer countries in the developing world will be inclined to implement a democratic model if the authoritarian one can provide financial stability.
In effect, the Washington Consensus was a failure before this financial crises even started. However, the recent collapse of American financial institutions and the contested bailout plan effectively buried the Washington Consensus in the graveyard of history. Now the American model of capitalism, once the paragon of economic development, is now ridiculed as the ultimate flop. Every nation across the world that has been touched by the Washington Consensus or that has no stake in international finance probably feels a bit of Schadenfreude. But what is worse is that America's best tool for spreading democracy was its economic prowess, not its military force. And now we have no justification for our system, no moral authority, and a military that is handcuffed. If our isolation wasn't complete before, it may be now.
Wednesday, September 10, 2008
Point Proven
Last week, before the Republican National Convention, I wrote a piece (directly below) which espoused the hypocrisy of the Republican Party. It was, admittedly, a biased account of why I personally think the GOP is the party of hypocrisy. However, in watching the RNC and trying to remain as objective as possible, there was no short of grand old hypocrisy coming from the lectern for three nights.
Lets start by going at Mitt Romney. Romney famously declared that "we need change alright. Change from a liberal Washington to a conservative Washington!" Obviously the crowd was delighted to hear that.
One thing though: the White House has been held by one of the most conservative presidents in modern history and Congress has been dominated by Republicans for the last 6 of 8 years.
In that time the government has ballooned the deficit by simultaneously cutting taxes and waging two wars. It has increased the size of the bureaucracy and has overseen the most extensive truncation of civil liberties in this nation's history with the Patriot Act.
Romney then goes on to espouse the importance of keeping the "Eastern Elite" out of government, effectively starting the culture war that this election is turning into.
The last time I checked, Romney was the governor of Massachusetts and the former CEO of a private equity firm. Not to mention that he was born into a society were his father was a successful American businessman whose friends were hotel magnates. Sure, Romney has a lot in common with the middle class of America.
I could stop there, but no, I have to move on to Rudy Giuliani. He stated "I guess Barack Obama doesn't think Governor Palin's hometown is...cosmopolitan enough." Great jab from a pro gay, anti gun, thrice married mayor of New York City. This is a guy who used city funds to trip weekend getaways with his mistress to the Hamptons. He knows so much about small town family values.
Obviously, it doesn't stop there with Rudy. "He was...a community organizer. What?" And chuckled very smugly afterwards. I guess dedicating a part of your life to making the world around you a better place is laughable. Tell that to the NYPD and FDNY, Giuliani. They stood by him after 9-11 and he milked it politically as far as possible. Too bad they abandoned him after he tried to extend his mayorship by suspending elections due to being in a state of emergency and mongering fear among the citizens of New York. Hitler, anyone?
Sarah Palin echoed these sentiments in her speech. Right after she espoused the importance of family values and small town communities. So, I guess we should place family and community at the utmost importance but...do nothing about it? Yeah that sounds about right.
Senator Obama only graduated from Harvard Law School and turned down a mulit-million dollar career on Wall Street to travel to one of the worst neighborhoods in the United States to help people find housing, get jobs, and an education. Sure, that's very cosmopolitan and elitist. He's definitely out of touch with that community, even though he still lives there.
I can go on and on here, but I think you get the point. These guys will say anything to win the White House and stay in power. They will exploit the deaths of 3000 Americans to scare you into thinking that they are the only party capable of defending this country. This would make Goebbels proud. McCain's advisers recently disclosed that Palin probably wouldn't have been on the ticket had Hillary Clinton been nominated as VP. Really?
So the Republicans chose a candidate, who could potentially be president, based on a political calculation instead of concrete qualifications. They are in it for their own survival and are willing to sacrifice the leadership and future of the United States for it. Country first, huh?
Sunday, August 31, 2008
Grand Old Hypocrisy
I'm going to make some disclaimers before formally starting this post that are aimed at mitigating any sort of anti-Republicanism that my respected colleagues might garner from reading what is below. I'm a registered Democrat. My values and politics are aligned most strongly with that party more so than with the Republicans.
This is so even in the face of the fact that I grew up in Ohio, had friends that owned guns, and have voted Republican in the past. Yes, you heard that right. On top of that, I voted for George W. against John Kerry. What makes me Democrat is that I don't cling to religion very strongly and I'm a minority (which some may argue shouldn't matter, but it does realistically).
So, in essence, I'm not some bleeding heart liberal who detests George W. Bush because it is the popular thing to do. Think of me more as a pragmatic center leftist who believes in social equality and the power of the free market. I am, despite my self loathing(but accepting my fate as time progresses), more Bill Clinton than Ted Kennedy. What I am not is some self indulgent populist who thinks the Republicans are evil and should be vanquished across the River Styx.
All that being said, the GOP, for all its tradition and successful leadership of the past (during the Cold War, not the past 8 years) has become a hub of hypocrisy in American politics.
They are the party that has convinced the American people that the Democrats are big government socialists who are willing to take away your rights, mainly Second Amendment ones, at the drop of hat. However, they are the same party that has increased government spending, bloated the deficit, and has overseen the biggest truncation of civil liberties in the history of the United States with the Patriot Act. They allow possession of firearms but allow the authorities to arrest you under charges of terrorism and tap your phone conversations with no evidence.
What choice to the Democrats want to take away from the American people? What rights are they curtailing? If the possession of firearms are on the same fundamental plane as the rights guaranteed by the First Amendment, then the people of this nation have a lot more introspection to do. If conservatives want to control the media, then its all right as long as people in rural American can keep their guns? Is it also alright, then, to limit the choice a woman has during an unwanted pregnancy? Is it in the spirit of Democracy to say that a victim of rape or failure of contraception MUST have the child?
And isn't it impressive that the party that always seeks to maintain its images as the one that protects America is the party that has lead to a policy that makes us seem weak and feeble? Sure September 11th was a national tragedy on an unprecedented scale. And sure the war in Afghanistan was completely warranted. But what about the rest of our foreign policy decisions during the Bush years? We've acted more like a cowering bully who was finally confronted by the kid he was oppressing. We took our bloody nose back to our house, cried to our mommy, and came back with a blinding fury.
Hardly appropriate for the nation which claims to be the great savior of a superpower in a troubled world. The "beacon of light" against an "axis of evil", if you will. All this has led to continuous unilateral action that has alienated our nation on the international scene and diminished our relevance in international affairs. Bush's policies have completely ignored history and turned our nation into a tyrant in the eyes of the world instead of the gentle giant that Kennedy, Kissinger, and Reagan had built.
The Republican hypocrisy goes further than policy making. It goes into election battles as well. Why is it alright for Republicans to question the service of a Democratic candidate when their own candidate dodged a draft? And why is it that only Republican presidents would be strong enough to lead in the face of adversity. Both World Wars were presided over by Democratic presidents and during the hottest flash point of the Cold War, a Democrat went toe to toe with the Chairman and bought the world from the brink of nuclear war. Hell, the only nuclear weapons ever detonated in battle were ordered by a Democrat.
They shouldn't have a monopoly on national security because they didn't do anything to earn that reputation. Reagan was a great speaker but his policies were hardly responsible for the fall of the Soviet Union. The United States knew, in the 60s with the Long Telegram, that the Soviet model for economic development was unsustainable. Therefore, all that needed be done was contain the empire. But somehow the Republicans ride this false legacy, and the Second Amendment, into making the American people believe in their supposed machismo.
John McCain is running for president on the fact that he was a soldier in the Vietnam war and was held in captivity for five years. The Democrats are too soft to attack this platform (with the exception of General Clark) and the Republicans have become masters at pulling the strings for this type of candidate. Let me ask you conservatives this: what does being a POW bring to the table in terms of being the president of the United States? I'll answer that for you: very little. Sure we should honor his service and sympathize with his imprisonment, but does that mean we should give him the most powerful executive position in human history?
Simply put, getting shot down in battle is not a ticket to the White House. It doesn't give him any of the executive experience he claims to have. Senator Obama doesn't have much executive experience either, but I'd say he has as much as McCain does. But the Republicans always try to bolster these macho attributes in their candidates because they lack any other back story. McCain can't even use the Internet. He has admitted to not knowing anything about the economy. Would it be appropriate, then, to elect him the leader of the free and globalized world? Yes, the Republicans would say, because he spent 5 years in the Hanoi Hilton about 40 years ago learning how to govern his cellmates.
So, America, if you want to be duped again in to voting for the "most qualified candidate," vote McCain. He knows nothing about economics, doesn't know how to use 21st century technology, and still thinks the Cold War is active. But, he'll let you keep your guns, was a POW for 5 years, cut taxes for everyone making over $200,000 a year, and recreate the Cold War for nostalgia's sake with his League of Democracies.
I mean, who wants a top tier Ivy League graduate with a degree in law and international relations who turned down potentially millions of dollars from Wall Street to dedicate his life to service as their president anyway?
This is so even in the face of the fact that I grew up in Ohio, had friends that owned guns, and have voted Republican in the past. Yes, you heard that right. On top of that, I voted for George W. against John Kerry. What makes me Democrat is that I don't cling to religion very strongly and I'm a minority (which some may argue shouldn't matter, but it does realistically).
So, in essence, I'm not some bleeding heart liberal who detests George W. Bush because it is the popular thing to do. Think of me more as a pragmatic center leftist who believes in social equality and the power of the free market. I am, despite my self loathing(but accepting my fate as time progresses), more Bill Clinton than Ted Kennedy. What I am not is some self indulgent populist who thinks the Republicans are evil and should be vanquished across the River Styx.
All that being said, the GOP, for all its tradition and successful leadership of the past (during the Cold War, not the past 8 years) has become a hub of hypocrisy in American politics.
They are the party that has convinced the American people that the Democrats are big government socialists who are willing to take away your rights, mainly Second Amendment ones, at the drop of hat. However, they are the same party that has increased government spending, bloated the deficit, and has overseen the biggest truncation of civil liberties in the history of the United States with the Patriot Act. They allow possession of firearms but allow the authorities to arrest you under charges of terrorism and tap your phone conversations with no evidence.
What choice to the Democrats want to take away from the American people? What rights are they curtailing? If the possession of firearms are on the same fundamental plane as the rights guaranteed by the First Amendment, then the people of this nation have a lot more introspection to do. If conservatives want to control the media, then its all right as long as people in rural American can keep their guns? Is it also alright, then, to limit the choice a woman has during an unwanted pregnancy? Is it in the spirit of Democracy to say that a victim of rape or failure of contraception MUST have the child?
And isn't it impressive that the party that always seeks to maintain its images as the one that protects America is the party that has lead to a policy that makes us seem weak and feeble? Sure September 11th was a national tragedy on an unprecedented scale. And sure the war in Afghanistan was completely warranted. But what about the rest of our foreign policy decisions during the Bush years? We've acted more like a cowering bully who was finally confronted by the kid he was oppressing. We took our bloody nose back to our house, cried to our mommy, and came back with a blinding fury.
Hardly appropriate for the nation which claims to be the great savior of a superpower in a troubled world. The "beacon of light" against an "axis of evil", if you will. All this has led to continuous unilateral action that has alienated our nation on the international scene and diminished our relevance in international affairs. Bush's policies have completely ignored history and turned our nation into a tyrant in the eyes of the world instead of the gentle giant that Kennedy, Kissinger, and Reagan had built.
The Republican hypocrisy goes further than policy making. It goes into election battles as well. Why is it alright for Republicans to question the service of a Democratic candidate when their own candidate dodged a draft? And why is it that only Republican presidents would be strong enough to lead in the face of adversity. Both World Wars were presided over by Democratic presidents and during the hottest flash point of the Cold War, a Democrat went toe to toe with the Chairman and bought the world from the brink of nuclear war. Hell, the only nuclear weapons ever detonated in battle were ordered by a Democrat.
They shouldn't have a monopoly on national security because they didn't do anything to earn that reputation. Reagan was a great speaker but his policies were hardly responsible for the fall of the Soviet Union. The United States knew, in the 60s with the Long Telegram, that the Soviet model for economic development was unsustainable. Therefore, all that needed be done was contain the empire. But somehow the Republicans ride this false legacy, and the Second Amendment, into making the American people believe in their supposed machismo.
John McCain is running for president on the fact that he was a soldier in the Vietnam war and was held in captivity for five years. The Democrats are too soft to attack this platform (with the exception of General Clark) and the Republicans have become masters at pulling the strings for this type of candidate. Let me ask you conservatives this: what does being a POW bring to the table in terms of being the president of the United States? I'll answer that for you: very little. Sure we should honor his service and sympathize with his imprisonment, but does that mean we should give him the most powerful executive position in human history?
Simply put, getting shot down in battle is not a ticket to the White House. It doesn't give him any of the executive experience he claims to have. Senator Obama doesn't have much executive experience either, but I'd say he has as much as McCain does. But the Republicans always try to bolster these macho attributes in their candidates because they lack any other back story. McCain can't even use the Internet. He has admitted to not knowing anything about the economy. Would it be appropriate, then, to elect him the leader of the free and globalized world? Yes, the Republicans would say, because he spent 5 years in the Hanoi Hilton about 40 years ago learning how to govern his cellmates.
So, America, if you want to be duped again in to voting for the "most qualified candidate," vote McCain. He knows nothing about economics, doesn't know how to use 21st century technology, and still thinks the Cold War is active. But, he'll let you keep your guns, was a POW for 5 years, cut taxes for everyone making over $200,000 a year, and recreate the Cold War for nostalgia's sake with his League of Democracies.
I mean, who wants a top tier Ivy League graduate with a degree in law and international relations who turned down potentially millions of dollars from Wall Street to dedicate his life to service as their president anyway?
Monday, August 18, 2008
Russia One Year Ago
The following is an essay I wrote on Russia and her relationship with the West in June of 2007. Will this be enough to get me into SAIS? Please? S'il vous plait? Min fadlak?
Global Cooling
The
With the Group of 8 Conference in full swing, the majority of public focus is on the issue of global warming. However, perhaps some attention should be paid to the cooling relations between two of the world’s largest military powers. Although the rivalry between the
The Russian economy has fared well recently due to the increase in the global demand for fossil fuels. This economic success has led the Kremlin to become more aggressive in its foreign policy. Specifically, the Russian government has made a recent push to reestablish its influence in former Soviet bloc areas. Russian military movement in the former Soviet republics is frequent and rarely questioned. For example,
Yulia Tymoshenko, the leader of
The
The West’s neglect of
Monday, August 11, 2008
Twenty First Century Realpolitik
Otto von Bismark used to quip that foreign policy should not be chained by the cumbersome constructs of ideology and morality. He believed in ruthless pursuit of foreign goals through any means possible. He was, in essence, a poster child for Machiavelli. And as a result, he led Germany to continental dominance in the mid to late 19th century.
Contrast this with the current Republican administration which relies heavily on the neoconservative school of governance. The Bush White House has dramatically shifted the foreign policy paradigm of their party to the other side. They are idealists. They believe in good vs. evil, and right vs. wrong. They split the world into "good" democracies and an Axis of Evil. Idealists fore go practical considerations in favor of value considerations (see Iraq War). This is a sharp break from the Republican tradition of Kissinger, Reagan, and elder Bush who conducted foreign policy based on cold calculation and protection of interests.
But now we have an old enemy turned new ally playing the geopolitical game of the 19th century. By retaliating against Georgian aggression in South Ossetia and pushing their forces into Georgia proper, the Russians are displaying the sort of Machiavellan intuition that led to the rise of Germany in the late 19th century.
Will they be the next troublesome world power? Probably not. But then again, Germany grew in a world utterly dominated by Great Britain, so there's no definite answer to that question.
However, we can draw certain historical parallels and place them in modern context to accurately judge how the United States should approach the problem of a more assertive Russia.
Honestly, it was only a matter of time before Russian petrodollars translated into military force. Many political scientists have recently started comparing post Soviet Russia to the Weimar Republic of the interwar years. Both nations had a shattered economy and a population that heavily resented the fall of their respective empires. Both nations then saw an authoritarian leader take power under the guise of democracy and lead them to economic prominence. It doesn't matter that Russia was more fortunate than Germany because of the high price of oil, all that matters for this comparison is that both nations rose to economic prominence seemingly out of nowhere.
What is even more interesting is that the invasion of Georgia parallels the Nazi takeover of Danzig and the Sudentenland. Hitler justified his actions by saying that he was merely protecting German peoples from prosecution in those areas. Sound familiar? The Russian autocracy's main justification for the use of force was that Russian peacekeepers in South Ossetia were killed by Georgian aggression.
A bigger concern is that the citizens of South Ossetia and the breakaway Georgian province of Abkhazia hold Russian passports. Therefore any attack on them could provide a just war justification for the Russians. Sure that may give the Russians justification to drive the Georgians out of those regions, but not to push further into Georgia proper.
However, we're not dealing with a government that bases its decisions on morality. We are dealing with a government that sees the world through the eyes of 19th century power politics and realpolitik. The Russians saw their chance to put an end to a country that has been a thorn it their side for some time now. After this disastrous altercation, there is very little chance that NATO or the EU would risk granting Georgia full membership.
Mission accomplished.
But no. The Russians seemingly want to go further and topple the current democratic regime, not just prevent it from joining the EU and NATO.
So what is the West to do?
Traditionally, negotiating with a power that plays realpolitik and uses force to do so has been considered appeasement. Neville Chamberlain anyone?
Up to this point, the United States and EU have played a pretty even hand with Russia. They have diffused any potential situations be using diplomacy and cunning to keep the Russians content; mainly because they think they need Russian support on a host of world issues ranging from Iran to nuclear non-proliferation. However, this is probably one situation were diplomacy and carrots won't be as effective as some version of the stick.
However, is war with Russia an option?
The EU won't risk its short term energy future to fight Russia over Georgia.
The United States won't risk opening another front for its already battle fatigued forces.
However, the Western allies have to play a little power politics themselves to force Russia to stand down. The Russians currently have everything in their favor. Georgia is a small nation in the center of the Oil Road. It does not have any strategic allies in the region and cannot count on Western forces to aid it effectively due to geographical isolation. Soft power won't be enough to deter Russia.
All of this is setting a dangerous precedent for the region. If Russia can have its way with a neighboring country and effect regime change by brute force, then what's to stop her from pursuing that strategy in other nations. The Baltic states and Ukraine have the most to lose here. They are not only democratic institutions on the path towards EU membership, but also have been outspoken critics of Putin's administration. They have, so far, been an effective check on the territorial ambitions of the Russians. However, depending on how this war ends, they may become more timid in their accusations in the near future.
More important is the effect this aggression may have on the Russian political psyche. They have outmaneuvered the West completely in this conflict. We cannot do anything but sit, watch, and hope Moscow signs some sort of cease fire agreement. By not being able to pursue a military option, NATO has effectively been neutered in the Caucuses area and the United States' military limits have been exposed.
Most importantly, the Russians know that the West is unwilling to challenge them militarily or isolate them diplomatically.
So what is the solution to this mess?
Only time can tell.
One option includes extending NATO membership to Georgia and Ukraine as a deterrent to future Russian aggression. Russia would not dare attack a NATO member and incur the wrath of the entire alliance. And they would have the security of knowing that NATO could not launch a preemptive strike. After all, where would NATO member states get their oil from?
Another option includes defending the right of Georgia to exist. This means that the United States defend the the capital, Tbilisi and force the Russians to make a decision: either turn back or find themselves in open conflict with the United States.
Both of these paths pretty much pave the way for another Cold War. But if Russia favors becoming a 19th century power player over a 21st century global moderator, then there are very few options.
There are a few reasons diplomacy won't work in this situation. First, the Russians really don't offer the West much in the way of being effective world leaders. They've continually refused to place santions on Iran and even provide them with nuclear materials. They also refuse to impose any sort of incursion into Sudan to prevent the genocide in Darfur. So what do we bargain for? Apparently the status quo, and that's not much of a chip. Second, as explained above, the Russians have all the leverage in the situation and no incentive to negotiate.
Whatever happens though, one thing is certain: Russia has finally asserted itself in a manner that we thought extinct. They have resurrected the power politics of the 19th and 20th centuries that many pundits and experts thought long dead. We might be on the verge of witnessing the dangerous rise of twenty first century realpolitik from a nation that has once again found power and is eager to use it.
Contrast this with the current Republican administration which relies heavily on the neoconservative school of governance. The Bush White House has dramatically shifted the foreign policy paradigm of their party to the other side. They are idealists. They believe in good vs. evil, and right vs. wrong. They split the world into "good" democracies and an Axis of Evil. Idealists fore go practical considerations in favor of value considerations (see Iraq War). This is a sharp break from the Republican tradition of Kissinger, Reagan, and elder Bush who conducted foreign policy based on cold calculation and protection of interests.
But now we have an old enemy turned new ally playing the geopolitical game of the 19th century. By retaliating against Georgian aggression in South Ossetia and pushing their forces into Georgia proper, the Russians are displaying the sort of Machiavellan intuition that led to the rise of Germany in the late 19th century.
Will they be the next troublesome world power? Probably not. But then again, Germany grew in a world utterly dominated by Great Britain, so there's no definite answer to that question.
However, we can draw certain historical parallels and place them in modern context to accurately judge how the United States should approach the problem of a more assertive Russia.
Honestly, it was only a matter of time before Russian petrodollars translated into military force. Many political scientists have recently started comparing post Soviet Russia to the Weimar Republic of the interwar years. Both nations had a shattered economy and a population that heavily resented the fall of their respective empires. Both nations then saw an authoritarian leader take power under the guise of democracy and lead them to economic prominence. It doesn't matter that Russia was more fortunate than Germany because of the high price of oil, all that matters for this comparison is that both nations rose to economic prominence seemingly out of nowhere.
What is even more interesting is that the invasion of Georgia parallels the Nazi takeover of Danzig and the Sudentenland. Hitler justified his actions by saying that he was merely protecting German peoples from prosecution in those areas. Sound familiar? The Russian autocracy's main justification for the use of force was that Russian peacekeepers in South Ossetia were killed by Georgian aggression.
A bigger concern is that the citizens of South Ossetia and the breakaway Georgian province of Abkhazia hold Russian passports. Therefore any attack on them could provide a just war justification for the Russians. Sure that may give the Russians justification to drive the Georgians out of those regions, but not to push further into Georgia proper.
However, we're not dealing with a government that bases its decisions on morality. We are dealing with a government that sees the world through the eyes of 19th century power politics and realpolitik. The Russians saw their chance to put an end to a country that has been a thorn it their side for some time now. After this disastrous altercation, there is very little chance that NATO or the EU would risk granting Georgia full membership.
Mission accomplished.
But no. The Russians seemingly want to go further and topple the current democratic regime, not just prevent it from joining the EU and NATO.
So what is the West to do?
Traditionally, negotiating with a power that plays realpolitik and uses force to do so has been considered appeasement. Neville Chamberlain anyone?
Up to this point, the United States and EU have played a pretty even hand with Russia. They have diffused any potential situations be using diplomacy and cunning to keep the Russians content; mainly because they think they need Russian support on a host of world issues ranging from Iran to nuclear non-proliferation. However, this is probably one situation were diplomacy and carrots won't be as effective as some version of the stick.
However, is war with Russia an option?
The EU won't risk its short term energy future to fight Russia over Georgia.
The United States won't risk opening another front for its already battle fatigued forces.
However, the Western allies have to play a little power politics themselves to force Russia to stand down. The Russians currently have everything in their favor. Georgia is a small nation in the center of the Oil Road. It does not have any strategic allies in the region and cannot count on Western forces to aid it effectively due to geographical isolation. Soft power won't be enough to deter Russia.
All of this is setting a dangerous precedent for the region. If Russia can have its way with a neighboring country and effect regime change by brute force, then what's to stop her from pursuing that strategy in other nations. The Baltic states and Ukraine have the most to lose here. They are not only democratic institutions on the path towards EU membership, but also have been outspoken critics of Putin's administration. They have, so far, been an effective check on the territorial ambitions of the Russians. However, depending on how this war ends, they may become more timid in their accusations in the near future.
More important is the effect this aggression may have on the Russian political psyche. They have outmaneuvered the West completely in this conflict. We cannot do anything but sit, watch, and hope Moscow signs some sort of cease fire agreement. By not being able to pursue a military option, NATO has effectively been neutered in the Caucuses area and the United States' military limits have been exposed.
Most importantly, the Russians know that the West is unwilling to challenge them militarily or isolate them diplomatically.
So what is the solution to this mess?
Only time can tell.
One option includes extending NATO membership to Georgia and Ukraine as a deterrent to future Russian aggression. Russia would not dare attack a NATO member and incur the wrath of the entire alliance. And they would have the security of knowing that NATO could not launch a preemptive strike. After all, where would NATO member states get their oil from?
Another option includes defending the right of Georgia to exist. This means that the United States defend the the capital, Tbilisi and force the Russians to make a decision: either turn back or find themselves in open conflict with the United States.
Both of these paths pretty much pave the way for another Cold War. But if Russia favors becoming a 19th century power player over a 21st century global moderator, then there are very few options.
There are a few reasons diplomacy won't work in this situation. First, the Russians really don't offer the West much in the way of being effective world leaders. They've continually refused to place santions on Iran and even provide them with nuclear materials. They also refuse to impose any sort of incursion into Sudan to prevent the genocide in Darfur. So what do we bargain for? Apparently the status quo, and that's not much of a chip. Second, as explained above, the Russians have all the leverage in the situation and no incentive to negotiate.
Whatever happens though, one thing is certain: Russia has finally asserted itself in a manner that we thought extinct. They have resurrected the power politics of the 19th and 20th centuries that many pundits and experts thought long dead. We might be on the verge of witnessing the dangerous rise of twenty first century realpolitik from a nation that has once again found power and is eager to use it.
Sunday, July 20, 2008
A Word On InBev and Budweiser
Sure my "independent " blog has Barack Obama propaganda littered throughout it, but that does not mean I formulate my opinion on party lines. My social values are quite "liberal" (in the sense that Americans use the word) and are in tune with most Democratic policies. But my views on economics and finance tend to side with the Republicans (which, ironically, are classically liberal).
During this presidential race the Democrats have played the populist card by bashing free trade and blaming globalization for the ills of the working class. They blame speculators for the high price of oil and immigrants for loss of jobs. This was John Edwards platform in his brief stint and it soon became Hillary Clinton's trump card in the blue collar rust belt states. Demonizing globalization and open borders is a dangerous game for the Democrats to play. Protectionist measures will only accelerate the spiral we are in. This is one path I hope Senator Obama does not pursue.
If we start redacting free trade agreements and impose import tariffs on consumer goods, the greatest suffering will come from the middle class and very poor. Things we take for granted (mainly 90% of the shit at WalMart) will only get more expensive for the average consumer. Sure, you or I may not consistently shop there, but the majority of Americans do. And if we impose import tariffs on foreign goods, then everything in WalMart that is made in China becomes as expensive as the stuff made in the US. Now, you may argue that this is a good thing because it keeps American goods competitive. Sure, it might. But it takes away something fundamental - choice.
The advantage of having a diverse and open economy is that it leaves us with choices. Some people want the cheaper foreign good because, in all honesty, it may perform as effectively as the domestic brand. By taking away that choice, we force everyone to pay higher prices and create a homogeneous market. This will invariably lead to a decrease in quality of domestically made goods as American companies seek to widen profit margins because the government protects them from competition. Basically, the market will be flooded with expensive low quality goods and middle America will bear the brunt. Isn't this exactly what the Democrats are trying to protect against?
Here is a real life example of why globalized trade benefits the blue collar worker. Although high paying labor jobs have been more difficult to find and therefore wage earnings have dipped, the overall price of goods in the market have either remained the same or become cheaper. Think about everything that can be outsourced ie. shoes, electronics, toys, anything. These consumer goods have gained in quality and have become cheaper at the same time over this period of globalization. Cars, flat screen televisions, clothes, are all cheaper than they were 10 years ago. Even if you take into consideration the 3% annual rate of inflation, the prices of consumer goods have remained equivalent numerically to their 1998 cost. DVDs in 1998 cost $20. Now the price is actually lower and the worth of the dollar has decreased. So the real cost of the DVD is actually lower than its numerical price.
And consider this: the price of services that cannot be outsources have gone up tremendously in the United States. Can anybody say college tuition and movie tickets? Movie tickets on average cost about $3-4 dollars more now than they did in the 90s. That is due to the fact that we don't outsource movie making. The same with college tuition. There is virtually no global competition when it comes to a post secondary education. Nobody is going to send their kids abroad for a cheaper education. However, I can get a Benz now for around $30k, which was unthinkable back in the early to mid 90s.
Now lets look at an industry, probably one of the very few global industries, that still suffer from tariffs and government subsidies: food. Food prices have risen dramatically over the past 2 years. There are variety of causes such as an increase in demand from developing nations and various environmental factors, such as an unusually long Australian drought. But one of the biggest reasons food is getting more expensive is because countries are becoming more protectionist. Of course this is only natural because national governments have a duty to provide for their citizens first. Export tariffs keep food in the country for domestic consumption and curb supply internationally, therefore driving up costs. However, I'm not looking to solve the world food problem, but only pointing out that the high price of food can be attributed to protectionism.
Here's an example. If India is the world's largest exporter of rice and puts trade restrictions on its farmers, then less rice will enter the global market. This automatically increases the price of rice because supply has been cut off. In an atmosphere of high demand, this will only make the impact of the restrictions more dramatic. Now other nations who depend on Indian rice exports have to restrict exports on their foodstuffs in order to maintain domestic stocks. So a positive feedback loop has started where less food enters the market and prices skyrocket because other nations who can't find food on the open market restrict their exports.
Now, a lot of people have had reservations about foreign investment in the United States. They cry about China buying a US natural gas company, or Mercedes buying Chrysler. But in a global economy we will have to buy or be bought to survive. InBev's purchase of Anheuser Bush is one in a natural course of events in a globalized world. InBev decided that they needed a bigger distribution outlet in North America and made the decision to purchase AB. However, this is not a one way deal. AB will also have InBev's distribution in Europe and South America. This means that Budweiser can increase its market share globally and increase profits for AB, which will still be based in America. At the same time, we can get InBev's products in North America for less. And InBev will most likely consider brewing their most popular products in the United States to cut costs, contributing to the creation of local jobs (which is even more realistic now because of high transportation costs).
Some may argue that the consumer is duped because the quality of the beer will get worse a la Mercedes Benz after the merger with Chrysler. However, economics doesn't deal with the highest quality for the lowest amount of people. Sound economics yeilds the highest quality for the highest amount of people. After Benz merged with Chrysler, there were reports that the overall quality of the Mercedes brand vehicle declined. It probably did. But what was more important, to the consumer and Mercedes, was that an entirely untapped market was now able to purchase their product. The American middle class could spend their money buying "superior German engineering". And for the rich who wanted to spend $100k on a Benz, they could get the higher end models. But what was important was that more people were enjoying Mercedes vehicles at a lower cost. It provided a quality vehicle to the American people and wider profit margins to Dialmer Chrysler.
In the end the United States will be the crossroads for the global economy, that much will never change. But what must change is how we look at the world and how we operate within it. We have to accept that fact that globalization has put is at the pinnacle of the world economy and is doing the same for other nations around the world who embrace its principles. If we yield to the demands of populists and protectionists, then not only will the world lose its biggest consumer market, but those who the populists and protectionists seek to protect will be the first to feel the wrath of asinine economic policy.
During this presidential race the Democrats have played the populist card by bashing free trade and blaming globalization for the ills of the working class. They blame speculators for the high price of oil and immigrants for loss of jobs. This was John Edwards platform in his brief stint and it soon became Hillary Clinton's trump card in the blue collar rust belt states. Demonizing globalization and open borders is a dangerous game for the Democrats to play. Protectionist measures will only accelerate the spiral we are in. This is one path I hope Senator Obama does not pursue.
If we start redacting free trade agreements and impose import tariffs on consumer goods, the greatest suffering will come from the middle class and very poor. Things we take for granted (mainly 90% of the shit at WalMart) will only get more expensive for the average consumer. Sure, you or I may not consistently shop there, but the majority of Americans do. And if we impose import tariffs on foreign goods, then everything in WalMart that is made in China becomes as expensive as the stuff made in the US. Now, you may argue that this is a good thing because it keeps American goods competitive. Sure, it might. But it takes away something fundamental - choice.
The advantage of having a diverse and open economy is that it leaves us with choices. Some people want the cheaper foreign good because, in all honesty, it may perform as effectively as the domestic brand. By taking away that choice, we force everyone to pay higher prices and create a homogeneous market. This will invariably lead to a decrease in quality of domestically made goods as American companies seek to widen profit margins because the government protects them from competition. Basically, the market will be flooded with expensive low quality goods and middle America will bear the brunt. Isn't this exactly what the Democrats are trying to protect against?
Here is a real life example of why globalized trade benefits the blue collar worker. Although high paying labor jobs have been more difficult to find and therefore wage earnings have dipped, the overall price of goods in the market have either remained the same or become cheaper. Think about everything that can be outsourced ie. shoes, electronics, toys, anything. These consumer goods have gained in quality and have become cheaper at the same time over this period of globalization. Cars, flat screen televisions, clothes, are all cheaper than they were 10 years ago. Even if you take into consideration the 3% annual rate of inflation, the prices of consumer goods have remained equivalent numerically to their 1998 cost. DVDs in 1998 cost $20. Now the price is actually lower and the worth of the dollar has decreased. So the real cost of the DVD is actually lower than its numerical price.
And consider this: the price of services that cannot be outsources have gone up tremendously in the United States. Can anybody say college tuition and movie tickets? Movie tickets on average cost about $3-4 dollars more now than they did in the 90s. That is due to the fact that we don't outsource movie making. The same with college tuition. There is virtually no global competition when it comes to a post secondary education. Nobody is going to send their kids abroad for a cheaper education. However, I can get a Benz now for around $30k, which was unthinkable back in the early to mid 90s.
Now lets look at an industry, probably one of the very few global industries, that still suffer from tariffs and government subsidies: food. Food prices have risen dramatically over the past 2 years. There are variety of causes such as an increase in demand from developing nations and various environmental factors, such as an unusually long Australian drought. But one of the biggest reasons food is getting more expensive is because countries are becoming more protectionist. Of course this is only natural because national governments have a duty to provide for their citizens first. Export tariffs keep food in the country for domestic consumption and curb supply internationally, therefore driving up costs. However, I'm not looking to solve the world food problem, but only pointing out that the high price of food can be attributed to protectionism.
Here's an example. If India is the world's largest exporter of rice and puts trade restrictions on its farmers, then less rice will enter the global market. This automatically increases the price of rice because supply has been cut off. In an atmosphere of high demand, this will only make the impact of the restrictions more dramatic. Now other nations who depend on Indian rice exports have to restrict exports on their foodstuffs in order to maintain domestic stocks. So a positive feedback loop has started where less food enters the market and prices skyrocket because other nations who can't find food on the open market restrict their exports.
Now, a lot of people have had reservations about foreign investment in the United States. They cry about China buying a US natural gas company, or Mercedes buying Chrysler. But in a global economy we will have to buy or be bought to survive. InBev's purchase of Anheuser Bush is one in a natural course of events in a globalized world. InBev decided that they needed a bigger distribution outlet in North America and made the decision to purchase AB. However, this is not a one way deal. AB will also have InBev's distribution in Europe and South America. This means that Budweiser can increase its market share globally and increase profits for AB, which will still be based in America. At the same time, we can get InBev's products in North America for less. And InBev will most likely consider brewing their most popular products in the United States to cut costs, contributing to the creation of local jobs (which is even more realistic now because of high transportation costs).
Some may argue that the consumer is duped because the quality of the beer will get worse a la Mercedes Benz after the merger with Chrysler. However, economics doesn't deal with the highest quality for the lowest amount of people. Sound economics yeilds the highest quality for the highest amount of people. After Benz merged with Chrysler, there were reports that the overall quality of the Mercedes brand vehicle declined. It probably did. But what was more important, to the consumer and Mercedes, was that an entirely untapped market was now able to purchase their product. The American middle class could spend their money buying "superior German engineering". And for the rich who wanted to spend $100k on a Benz, they could get the higher end models. But what was important was that more people were enjoying Mercedes vehicles at a lower cost. It provided a quality vehicle to the American people and wider profit margins to Dialmer Chrysler.
In the end the United States will be the crossroads for the global economy, that much will never change. But what must change is how we look at the world and how we operate within it. We have to accept that fact that globalization has put is at the pinnacle of the world economy and is doing the same for other nations around the world who embrace its principles. If we yield to the demands of populists and protectionists, then not only will the world lose its biggest consumer market, but those who the populists and protectionists seek to protect will be the first to feel the wrath of asinine economic policy.
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