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November 25, 2007

WRFest 25Nov07:...the Beat Goes On

The melody continues with several continued and reinforcing themes from the last WRFest posting. The good news from Iraq continues due to the new counter-insurgency strategy combined with a better understanding of Iraqui tribes and closer cooperation in the field. Sadly that painfully developed awareness and adaptation in Iraq is not reflected in our understanding of how the various sub-cultures in Pakistan shape that society and influence our diplomacy. A very interesting article of the difficulties Europe is having and facing with adjusting the large and growing Muslim sub-culture and the critical importance of doing so is in the Values section.

And the Int'l Affairs section has good articles on China, Russia, Australia, Mexico, Japan and France. It's interesting to note that Germany under Merkel and, now, France under Sarkozy are finally coming to grips with the need for the deep changes that Britain started under Thatcher and continued to the present day. We'll see how they do. Meanwhile of course Russia has gone thru even deeper changes and now "that the pride is back" is feeling its' oats with an increasingly aggressive foreign policy and defense buildup. While not all the postings are ones I agree with they're all mostly thoughtful and worth your time, though most align with my own views. In this case the posting on Russia's military buildup highlights a strategic threat which is real but misreads Russia's intentions and purposes - somethine we hope to dive into deeper in the future.

Speaking of profound change consider China and India. More people have better off and moved away and even out of poverty in the last two decades than at any time in human history. They have done so largely on the strength of their adoption of market-oriented socio-economic reforms. This is a critically important and historic milestone and one we hope continues. A result that's beginning to emerge is the growth of better-off middle classes with significant disposable income. That's a transition that really only happened broadly in the US post-WW2 and defined the shape of our society today. It happened in Europe and Japan as the result of the "Wirtschaftswunder", the economic miracle of the late 50s and 60s when their economies were not only rebuilt but transformed (in Europe in particular largely thru the impetus and aid and guidance of the Marshall Plan). As another sidebar worth exploring the role of the US in creating the benign environment for some of the greatest advances in recent history is worth keeping in mind; aside from Europe and Japan it was US influence, support, defense protection and spending that allowed South Korea and Taiwan to stabilize, grow and prosper. 

On the other hand we certainly aren't solely responsible nor have we been as effective elsewhere, in the Middle East for example where progress has been hampered unlike any in the rest of the world by bad attitudes and ideological, almost religious, mis-perceptions that have PREVENTED adoption and adaptation. More than one person has argued that at a high level the mental game is 90% of winning among elite atheletes. Well culture, ideology and value systems seems to be equally  important for countries.

An arguement we're in the process of continuing to evaluate and test in our primary elections processes where clear leaders have emerged but where they remain vulnerable and no great vision has emerged that addressed the challenges of our times. One of the occaisional shoutouts that wafts around is the threat to the middle class, the lack of new industries and engineers, and the lack of economic opportunity that's emerging. What's been true but they fail to mention is that it's not so much a lack of Engineers per se but a lack of science and engineering jobs. Equally an example of wrong-headed thinking based on a failure to dig thru the nature of things is the growing Ethanol bust. BtW - this is not a "black swan" - plenty of folks warned about these problems even before the legislation was passed.

Will this be our acide test as a society in the next decade or so - the ability to develop and implement innovative new social policies based on the best collective thinking ? And the cocomittan ability to suppress the pandering to narrow interest groups at the expense of the broader interests served by that best thinking ? What would we need to do get such changes in the way we do things ? Now there's a great challenge.

And until we answer it constructively and workably have we any grounds to wag our fingers at, for example, the Arabs and the Palestinians for being trapped in their old shibboleth bound mental prisons ?

Special & General

Petraeus's Iraq I've just returned from a week in Iraq with Gen. David Petraeus and his operational commanders. My intent was to look at events from an operational perspective and assess the surge. What I got was a soldier's sense of what's happening on the ground and, although the jury is still out on the surge, I came to the conclusion that we may now be reaching the "culminating point" in this war. The culminating point marks the shift in advantage from one side to the other, when the outcome becomes irreversible: The potential loser can inflict casualties, but has lost all chance of victory. The only issue is how much longer the war will last, and what the butcher's bill will be. Battles usually define the culminating point. In World War II, Midway was a turning point against the Japanese, El Alamein was a turning point against the Nazis and after Stalingrad, Germany no longer was able to stop the Russians from advancing on their eastern front. Wars usually culminate before either antagonist is aware of the event. Abraham Lincoln didn't realize Gettysburg had turned the tide of the American Civil War. In Vietnam, the Tet offensive proved that culminating points aren't always military victories. Culminating points are psychological, not physical, happenings. But successful counterinsurgency operations don't capture fixed objectives. They create what soldiers call "white spaces," areas devoid of influence, political vacuums that compel occupancy by either an enemy seeking to rebound after defeat or by legitimate government forces seeking to establish regional control. In Iraq now, the white spaces are being filled with a newly resurgent Iraqi military and clusters of Concerned Local Citizens Councils, which sprouted spontaneously as Sunni tribal sheikhs smelled both success and commitment from us. To be sure, Baghdad and the surrounding belts are not yet safe. But culminating points are psychological events. What I witnessed firsthand in Iraq was a shift in opinions and a transfer of will among Iraqis, not a classic military takedown. This change was palpable and unmistakable. Whether this military culminating point can translate into a political and economic culminating point remains to be seen. But the campaign that took place from spring until late summer reinforces the classic tenet of warfare, that success on the ground sets the conditions for diplomatic and political success. Retired Major Gen. Scales, a former commandant of the Army War College, is president of Colgen Inc., a defense consulting firm.

Values and Attitudes

Old Fears, New Threats Europe’s fears of Islam are reminiscent of the old anti-Semitism--but not as much as some people think. It is hard to avoid comparing this new animosity toward Muslims to the traditional manifestations of a much older hatred--anti-Semitism. The fear of a minority that practices an unfamiliar form of worship and is believed to be worming its way into Christian or Western culture, undermining its values, shaped the relationship between Europe and the Jews in its midst for hundreds of years. The temptation to draw parallels between past and present is unquestionably strong--but is it justified? There are certainly some notable points of similarity between prewar European anti-Semitism and the enmity directed toward the Muslim immigrants living in Europe now. However, there is a quintessential difference between the two: The fear of a Jewish conspiracy against European civilization had no basis in fact, whereas fear of the expansionist ambitions openly expressed by senior figures in the Muslim-Arab world, and shared by some ordinary Muslims, is not groundless. It is not, therefore, the specific external signs of the Muslim presence that arouse feelings of fear and aversion, but rather what they represent to the European collective consciousness. That is, it is the resonance projected onto them by non-Muslim Europeans. The explanation for Islamophobia is to be found, therefore, not in simple xenophobia, but in one of Islam's more abstract features, and one which it shares with Judaism: the fact that it is a religion and a nation capable of being imagined, even from afar. There is no escaping the obvious conclusion: From a purely ideological point of view, European fear of Islam is not mistaken. The Muslim believer living on the Continent is potentially exposed to an ideology that imposes upon him a religious and political duty to proselytize Christians and impose the rule of the Islamic nation everywhere possible, including Europe itself. But life is more complicated than the abstract theories of clerics. In the real world, most (though not all) Muslim immigrants in Europe are not rallying to the cause of the Islamic nation, or are rejecting it outright. One of the major reasons for this difference between theory and practice is the weak religious sentiments of many immigrants.

Int’l Affairs

Dissidents Take On Beijing Via Media Empire New Tang Dynasty TV started as an effort by U.S.-based Falun Gong members -- many immigrants from China -- to speak out against a government crackdown back home, but it has evolved into a broadcaster with big aspirations. New Tang Dynasty broadcasts to the U.S., Europe and Asia, including China. It is one of a growing number of media organizations run mostly by Falun Gong practitioners, including a radio station and a newspaper with editions in 10 languages. There is also a film-production company, a performing-arts school, dozens of Web sites and a Chinese cultural show, which has played around the world, including New York's Radio City Music Hall and the Kennedy Center in Washington. For Chinese officials and other Falun Gong opponents, the growing influence of NTD is evidence of their longstanding assertion that the group was never just a spiritual movement. NTD and its sister organizations report frequently on Falun Gong-related news and often focus on negative news out of China. They have also sometimes played up stories discredited by Western media and human-rights groups, such as China's alleged systemic harvesting of the organs of detained Falun Gong practitioners for use in transplants. At the same time, NTD's programs, broadcast in Chinese and English, address issues that remain largely off-limits to China's state-controlled media, from political corruption to the spread of the infectious disease SARS in the country in 2003.

China Stand on Imports Upsets U.S. Few American industries have had more success in selling goods to China than makers of medical devices like X-rays, pacemakers and patient monitors. Which is why a recent Chinese decree was so troubling. The directive, issued in June, called for burdensome new safety inspections for foreign-made medical devices — but not for those made in China. The Bush administration is crying foul. Even more worrisome to the administration is that the directive seems part of a recent pattern in which Chinese officials issue new regulations aimed at favoring Chinese industries over foreign competitors, despite efforts by Treasury Secretary Henry M. Paulson Jr. to ease economic tensions.

A Guerrilla Riddle in Modern Mexico The attacks by a shadowy Marxist guerrilla group on Mexico's gas pipelines reveal how beneath the country's apparent modernity lies an undercurrent of violence and mysterious subterranean allegiances. Mexico has made huge strides in the past two decades. It opened up its closed economy and signed a free-trade agreement with the U.S. and Canada. It scrapped 71 years of one-party rule under the Institutional Revolutionary Party, or PRI, for what is today a functioning democracy. It is now the U.S.'s third-largest trade partner, producing everything from cars to refrigerators. But sometimes breaking through the apparent modernity is an undercurrent of violence and mysterious subterranean allegiances, the so-called "Mexico bronco," or untamed Mexico. Spinning conspiracy theories is a favorite pastime here, and the EPR affair has generated many. Some suggest the group is being used to further the ends of drug lords or even the government itself. More than posing a parlor-game riddle, though, the EPR's resurgence presents big political and economic challenges. President Felipe Calderón already has his hands full trying to wrest back control of large areas of Mexico from powerful drug cartels. Now he must deal with this unexpected guerrilla resurgence in a political atmosphere that still simmers with anger over last year's closely fought election, lost by a hair by left-wing populist Andrés Manuel López Obrador. The EPR's campaign also exposes the vulnerability of Mexico's natural-gas infrastructure. State oil company Pemex was so stunned by the July attacks that it took several days to publicly acknowledge them. Natural gas is already in short supply in Mexico, which supplements its production with expensive imports from Texas. Vitro SA, a Monterrey-based glassmaker, says the EPR attacks halted production for a week, a $12 million stoppage that drove the company into the red for the third quarter.

The Soft Underbelly of Europe Though no longer the chief delinquent of Europe, and though not much thought is given to its strategic position, Germany is still Europe's center of gravity, territorially contiguous to more nations than any state other than Russia, with compact interior lines of communication, Western Europe's largest population, and Europe's leading economy. Facts like these assert themselves through every kind of historical fluctuation, even if America now sees Germany, the way stop for airlifters en route to Iraq and Afghanistan, as a kind of giant aircraft carrier with sausages. But Germany is no doubt the subject of far deeper consideration on the one hand by Russia and on the other by Jihadists. But as Western Europe dismantles its militaries, Russia builds, encouraged as much by European pacifism as by the Russian view of America's struggle in Iraq as a parallel to the Soviet's fatal involvement in Afghanistan. Like Germany between the wars, Russia is now eager and determined to reconstitute its forces, and with its new-found oil wealth, it is doing so. How fortuitous for it, then, that the United States is expending military capital without replenishment, and Europe has spiritually resigned from its own defense, with Germany, for example, now devoting only 1.4% of its GDP to the task. Having been deeply humiliated in recent years, Russia is sure to seek redress if not in action then at least in the power to act. Nations behave this way, it has always been so, and as the balance of power in Europe and the world is shifting, Germany, the strategic gate to Western Europe and by its nature and position that which stabilizes or disrupts the continent, sleeps and dreams unaware.

Sarkozy Gains Upper Hand as Striking Transit Workers Return to Their Jobs French President Nicolas Sarkozy may be gaining the upper hand in his confrontation with striking transit workers -- a fight he can ill afford to lose. More employees reported to work on the walkout's third day today, train and bus service increased and union leaders expressed a willingness to negotiate over Sarkozy's proposal to rein in their pension benefits. The president is staking much of his economic agenda on the battle, which he says is essential to his plans for increasing France's competitiveness. The outcome is likely to set the tone for similar struggles still to come. While an extended dispute would further sap his popularity -- even before the strike snarled train service, his approval ratings dropped to their lowest levels since he took office in May -- making too many concessions to gain a quick settlement would convey a message of political weakness. At issue now is Sarkozy's proposal to make employees in the transport, energy and some smaller industries work 40 years instead of 37.5 to earn full pensions. About 500,000 workers out of France's total workforce of about 27 million enjoy the lesser requirement. Most others are covered by a 2003 labor-contract overhaul that included the 40-year requirement. The pensions are part of a more ambitious Sarkozy agenda aimed at loosening work rules, simplifying France's tangle of more than two dozen labor contracts, increasing competition in several industries and making civil servants more publicly accountable.

Strike Is Referendum on Sarkozy, Unions As France's national transit strike enters its eighth day, the standoff is shaping up as a contest over whom French people detest more: their new president or the entrenched labor unions that have ground the country to a near halt. Railway, bus and metro workers are protesting a government plan to curtail special pension benefits that allow them to retire at ages from 50 to 55 rather than the minimum cutoff of 60 that applies to most other French people. Although some workers have resumed duties, key train and metro lines weren't running yesterday. Both sides are at a crossroad. For Mr. Sarkozy, whose plans for sweeping economic changes look less palatable than originally thought, winning the transit-strike tussle is crucial to making progress on the rest of his economic agenda. Mr. Sarkozy, won office in May with a promise he would jolt France's sluggish economy into action through tax cuts, changes in labor law and other measures aimed at making companies more competitive. He has the political legitimacy to push for the changes; he won the vote with a clear lead, and his ruling UMP party holds a strong majority in Parliament.

Moving Up in Mumbai Tens of millions of Indians are taking their first steps into the salaried class by selling goods and services to the increasingly free-spending upper crust. Their swelling ranks represent a kind of swing vote in how far India can spread the fruits of its rapid expansion. At Pantaloon, they were brushing up against a lifestyle they hope to be fully part of some day. Equipped with new cellphones, the three men took to speaking to one other in English, a language they rarely used before. They also absorbed the latest Bollywood fashion trends, buying knock-off designer jeans from street markets rather than paying Pantaloon's prices of $20 to $70 a pair. On weekends after work, they would hang outside dance clubs, anxious to see the clubbers' outfits. "I will spend money like them someday," said Mr. Bhatade. Such basic sales jobs, unremarkable and often derided in the West, are providing careers, confidence, and a shot at entering the consumer class to millions of impoverished young men and women across India. As their ranks swell, these children of slum dwellers, servants, sweepers and others low on the socioeconomic totem pole are forming a new stratum of workers. They are likely to play an important role in determining the future of the world's second-most-populous nation. Until recently, much of the new wealth in India went to college-educated computer programmers, consultants and call-center workers. While they have made the country's technology industry a new pillar of global commerce, the total number employed by the software industry is still only about two million -- less than 0.2% of India's 1.1 billion population. At the other end of the spectrum, India still has more than 200 million people who live below the poverty line, mostly farmers. Between the two are tens of millions of Indians, mostly city dwellers in their 20s and 30s, who are taking their first steps into the salaried class by selling goods and services to the increasingly free-spending upper crust. They represent a kind of swing vote in how far India can spread the fruits of its rapid expansion. Annual economic growth has averaged more than 8.5% for the past four years, but much of the benefits have accrued to the old industrial families and the tech-savvy few.

Capturing China's Middle Market When "good enough" is best. Attention global corporations: China wants to boost its internal consumption, a lot. That's the message from Chinese Prime Minister Wen Jiabao, who recently opened the National People's Congress with a set of growth policies aimed at speeding up economic progress in remote provinces. These moves should only intensify the pressure on Western firms to build a strong position in a key market. Historically, multinationals have focused on China's premium market. But the playing field over the last few years has changed rapidly. Multinationals sticking with a premium-only strategy are increasingly under attack from emerging Chinese champions with a compelling offering: fairly reliable products at prices low enough to attract China's growing ranks of mid-level consumers. Indeed, China's middle market is growing faster than both the premium and low-end segments. In some categories, the "good enough" space already accounts for nearly half of all revenues. Eight out of every 10 washing machines and televisions now sold in China, for instance, are "good enough" brands. After succeeding in their domestic market, emerging Chinese champions' next stop is the global stage. Success in China has therefore become a global strategic priority for multinationals -- both offensive (winning in what is rapidly emerging as a top-three global market in every industry) and defensive (preventing new competitors from emerging).

China Uses `Tai Chi' Diplomacy to Build Influence, Challenge U.S. Power The source was China's Office of the Chinese Language Council International, which has opened 135 Confucius Institutes worldwide. The office is part of a broad campaign involving investment and diplomacy as well as cultural outreach, all aimed at hastening China's progress toward great-power status. The campaign, combined with China's economic growth and military modernization, forms a challenge that U.S. politicians are starting to notice and policy makers will likely be fending off for years. It is a classic example of what Harvard University professor Joseph Nye has dubbed ``soft power'': building authority through persuasion rather than coercion.

Jacek Rostowski, a U.K.-born economics professor who now finds himself finance minister of Poland, is seeking calm amid a job-seeking exodus of two million Poles. Now, the graduate of the London School of Economics and economics professor at Central European University in Budapest must make good on Mr. Tusk's pledge to deliver an "economic miracle" that will slow and eventually reverse a job-seeking exodus of two million Poles to Western Europe. The recipe would be a mixture of public spending curbs, tax cuts and a downsized and deregulated public sector. "I like the idea we picked an economist of the British school," said Civic Platform's Hanna Gronkiewicz-Waltz, who ran Poland's central bank for most of the 1990s and is now mayor of Warsaw. "He'll reduce the fiscal deficit, like Gordon Brown did as chancellor of the Exchequer, but not in a way that will hurt economic growth." However, this program must be squared with Mr. Tusk's campaign promises to lift wages for underpaid teachers and doctors, while replacing a crumbling road system with a thousand miles of gleaming motorway as part of vast infrastructure investments co-financed with the European Union.

 

Howard's End Another great prime minister who didn't know when to quit. For Mr. Howard's career is ending in failure, if ever one did, and there is no way now that he can "walk free." That's right. The 12-year-old government of John Winston Howard -- Australia's second longest serving prime minister and patron saint of conservatives in the Antipodes -- faces political annihilation this Saturday. So much so that the 68-year-old Houdini of politics down under is in danger of losing the very seat he has held for nearly 35 years. It was not supposed to end like this. When he celebrated a decade in power 20 months ago, Mr. Howard was widely praised as a legendary figure on the global stage, with an approval rating of 64%. The high praise, to be sure, was justified. In 1995, Mr. Howard had inherited a party that had chalked up its fifth election defeat, only to lead it to win four elections on the trot. In power, the man President George W. Bush dubbed the "man of steel" fundamentally transformed the political landscape. He cut taxes, reformed welfare, balanced the national books, wiped out government debt, loosened organized labor's grip on business, and presided over the longest economic boom since the gold rushes of the 19th century. In the culture wars, he aligned himself with the silent majority against the metropolitan sophisticates. Under his leadership, Australia led the 1999 peacekeeping effort in East Timor and has been deeply involved in countering terrorism in Australia's local neighborhood and in farther flung areas, like the Middle East and Afghanistan. That was back then -- March 2006. The public's admiration and respect for him has today turned into boredom or, in some cases, outright hostility. Words such as "sad," "petty," "arrogant," "desperate," "tired" and "out-of-touch" are freely used to describe him. Economic growth is now so strong that the nation's central bank keeps hiking interest rates, aggravating many swing voters who are mortgaged to the hilt. In conservative circles, there is much sighing and shaking of heads. If ever there were a political conundrum, this is it. Australia is the envy of the industrialized world. Unemployment, at 4.2%, is at historic lows; commodity exports are booming; and Aussies are fat and happy. Pace Tony Blair's 1997 campaign theme, things can hardly get better. And yet Aussies are about to throw out a colossus. Why?

Kanseifukyo Threatens Koizumi Prosperity as Japan Embraces Re-Regulation Little more than a year after Junichiro Koizumi stepped down as prime minister, his legacy of deregulation and a revitalized economy is eroding as Japan's bureaucrats adopt new rules that may strangle growth. New regulations that discourage construction and business lending add another burden to an economy already weighed down by slowing growth in the U.S., Japan's biggest export market. That's giving investors reason to shun Japan, whose Topix stock benchmark is Asia's worst performer this year, down more than 14 percent. The Bank of Japan lowered its growth forecast after new Land Ministry regulations in June tightened the building-permit process, sending housing starts to a 40-year low. Japan has had 29 prime ministers since World War II, and 11 since an asset-price bubble burst in 1990. The turnover at the top has created a climate in which career government officials wield great influence over policy. Koizumi, 65, managed to break -- or at least sidestep -- the pattern. Inheriting an economy in recession in 2001 and a banking system teetering on collapse, he cut public-works projects, forced banks to dispose of bad debts and privatized the post office. That paved the way for a period of growth that, while averaging only 2 percent, is the country's longest expansion since the war. The relative prosperity allowed politicians and officials to move out of crisis mode. The new wave of regulations ``reflects a shift in priorities as the economic pressures stemming from the 1990s fade, allowing attention to turn to other areas,'' says Richard Jerram, chief economist at Macquarie Securities Ltd. in Tokyo. The shift contributed to the plunge in construction, which Jeff Kingston, a political science professor at Temple University in Tokyo, calls a case of ``good intentions, unintended consequences.''

ME

The Perils of Engagement The U.S. can't prevent the Palestinians and their Arab backers from making poor choices.It is increasingly de rigueur around the world and, for that matter, in certain segments of the Democratic Party, to place responsibility for all international crises on the U.S. government. Unsurprisingly, therefore, when it comes to the Arab-Israeli conflict, it has attained the level of high fashion to ascribe the persistent absence of peace to a lack of adequate U.S. "engagement" in resolving it. This analysis, simple and neat, and for so many so satisfying, would seem at odds with the historical record. The problem is that all too often, those who blame the U.S. for failing to deliver Mideast peace are some of the world's most culpable enablers of Mideast violence -- and those who are themselves actually responsible for erecting the fundamental roadblocks to a resolution of the conflict. This is so obvious as to almost go without saying -- except that the penchant for placing the blame on the U.S. is so widespread and so addictive that it goes largely unsaid. It was, of course, the Arab bloc, including the Palestinian leadership, that decided to reject the U.N.'s 1947 partition of Palestine into two states, Arab and Jewish, living side by side. Instead it invaded the nascent Jewish state rather than coexist with it, spawning the conflict that has so burdened the world for the last 60 years. This was not a decision made by the U.S. We are also not responsible for the Arab world's choice not to create a Palestinian Arab state in East Jerusalem, Gaza and the West Bank from 1948 to 1967, when it easily could have done so -- before there were any Jewish settlements there to serve as the public object of Arab grievance.

 

LEADERSHIP: Sunni Warlords Reconsider The centuries old battle between Sunni and Shia Moslems in Iraq has just shifted gears. Sunni Arab groups that have been fighting since 2003 to regain power, have renounced their 2004 alliance with al Qaeda and sought to eliminate al Qaeda militias in their territory. What is unclear, both to foreigners and the Shia dominated government of Iraq, is what the Sunni Arab warlords will do next. Now, this is the critical thing that many Americans don't understand, or even know. When Saddam was deposed in 2003, most (well, many) Sunni Arabs believed they would only be out of power temporarily. This sort of thing you can pick up on the Internet (OK, mostly on Arab language message boards, but it's out there). Saddam's followers (the Baath Party) and al Qaeda believed a few years of terror would subdue the Shia, and the Sunni Arabs would return to their natural state as the rulers of Iraq. U.S. troops quickly figured out what was going on . That's because, since Sunni Arabs were the best educated group, most of the local translators the troops used were Sunni Arabs, and even these guys took it for granted that, eventually, the Sunni Arabs would have to be in charge if the country were to function. The Sunni Arabs believed the Shia were a bunch of ignorant, excitable, inept (and so on) scum who could never run a government. Four years later, the Shia have proved the Sunni Arabs wrong. Now many Sunni Arabs want to make peace, not suicide bombs. But there are still basic differences about how the country should be run. Many Iraqis believe only a dictator can run the country, and force all the factions to behave. However, a majority of Iraqis recognize that dictatorships tend to be poor and repressive, while democracies are prosperous and pleasant. The problem is that the traditions of tribalism and corruption (everything, and everyone, has their price) do not mesh well with democracy. This doesn't mean democracy can't work under these conditions, many do. It does mean that it takes more effort, and the results are not neat and clean, as Americans expect their democracies to be.

Give The Future a Chance  The war in Afghanistan is all about a few Pushtun tribes trying to maintain their independence, retain lost powers or gain control of the national government. While that sounds contradictory, it makes sense in Afghanistan. The term "Taliban" has come to be the term for the several million Pushtun tribesmen who oppose the current national government. Such tribal coalitions, and their rebellious behavior, are nothing new in Afghan history. This is normal for Afghanistan, although the current round of violence is also part of a long term trend to curb tribal power. And "long term" is not what the current allies (NATO and the U.S.) of the national government want to hear. But without the foreign troops, Afghan would be partitioned, and embroiled in a civil war between the Pushtun tribes, with the non-Pushtun tribes standing aside, or taking part, as their own internal politics dictated. All this would be paid for by the sale of heroin. That would irritate Afghanistan's neighbors (particularly Iran and Pakistan, which already have a serious drug addiction problem), as well as the rest of the world. You either take care of it now, or deal with it later. The Pushtun Civil War

THE U.S.'S NO. 2 DIPLOMAT will try to push Musharraf back on a democratic path, but officials are mapping out other scenarios should the Pakistani leader ignore Washington's counsel. America's No. 2 diplomat arrives in Pakistan today in a high-profile bid to push the country's military ruler, Gen. Pervez Musharraf, back on a democratic path. But behind the scenes, a number of current and former U.S. officials are mapping out other scenarios for the nuclear-armed South Asian nation should its leader ignore Washington's strategic counsel. In the worst case, U.S. strategists increasingly fear Pakistan could become a pariah state where Gen. Musharraf's  repressive policies drastically feed an Islamist uprising, one that derails Islamabad's place as a pro-Western state set in the strategically important pivot point between China and Central Asia. The analogy they commonly cite is Iran, whose pro-American leader, Shah Reza Pahlavi, was overthrown in 1979 and replaced with a revolutionary Islamist government that has destabilized the region, exporting terrorism and anti-Western policies for nearly three decades.

Turning point for Turkey For nearly a month, Turkey has been on the brink of launching a military offensive into northern Iraq. Such an incursion, if and when it happens, has the potential of damaging relations with the west and jeopardizing this country's hard-won role as an emerging economic power. With a booming economy, Turkey is attracting unprecedented levels of foreign direct investment. After years of dysfunctional coalition governments, it finally attained some political stability in 2002 when the Islamist-rooted AKP Party formed a single-party government committed to fiscal discipline. A predominantly Muslim country, Turkey has strong secularist traditions and maintains strict separation between church and state. The median age of Turkey's 72 million people is 28.

Politics and Policies

Poll Suggests Clinton Is Vulnerable Democrats enter the 2008 election campaign with powerful political advantages but face a tough and unpredictable battle because of the vulnerabilities of front-runner Hillary Clinton and the Democratic-controlled Congress. A Wall Street Journal/NBC News poll shows that Americans have turned sharply away from President Bush and toward domestic issues favoring his partisan adversaries. Majorities believe the Iraq war can't be won and want most U.S. troops withdrawn by the dawn of a new president's term in 2009. But offsetting that demand for change in the presidential contest are reservations about Sen. Clinton's truthfulness and ideology, even as Americans applaud her experience and leadership qualities. The result: She is in a virtual dead heat with leading Republican candidate Rudy Giuliani when the two are matched up.

Clinton, Democratic Rivals Praise Balanced Budgets, Plan Spending Spree Hillary Clinton and her rivals for the Democratic presidential nomination are promising new domestic programs, tax cuts for the middle class and a return to balanced budgets. One problem: Their numbers don't add up. The top candidates, Clinton, Senator Barack Obama of Illinois and former Senator John Edwards of North Carolina, all propose more than $150 billion a year in tax breaks for middle- income earners and new federal spending on health care, energy and education. They also pledge ``fiscal responsibility,'' a phrase Clinton used seven times during an Oct. 30 debate. While vowing to rein in the alternative minimum tax, they won't say how they would fix the levy, which is set to raise $400 billion over five years, increasingly ensnaring the middle class. They also rely too much on rolling back tax cuts for the wealthy and overestimate savings from closing loopholes and improving health-care technology, budget experts say.

 

Comparative Health Care The Left's story of health international health care comparisons is the following:
  1. The U.S. system is flawed.
    2. Other countries' systems work much better.
    3. The U.S. system relies on the free market.
    4. There are two systems of health care in the developed world--ours, and the one every other country uses

Beyond Those Health Care Numbers., Paul Krugman, Your Doctor Is Calling

The U.S. Doesn’t Lack Engineers, It Lacks Engineering Jobs

The tech sector and academe constantly warn that a shortage of engineers and scientists threatens the U.S.’s competitiveness, but the U.S. actually has a glut of science professionals, say some researchers quoted in the Chronicle of Higher Education. The federal dollars pumped into university science departments has created more scientists and engineers than the market wants, said Michael S. Teitelbaum, vice president of Alfred P. Sloan Foundation, which sponsors research, at a hearing in Congress last week. Mr. Teitelbaum said the federal government should find a way to adjust how it funds university research so that university departments don’t end up using the extra money to add graduate students and postdoctoral fellows. Engineers and scientists have started to grumble about poor job prospects. Many advise their children against going following in their footsteps, says Harold Salzman, who has interviewed engineers at technology firms as part of his work for policy think tank the Urban Institute. The problem isn’t the supply of trained engineers but firms’ difficulties in paying them a competitive salary, he says. As a result, talented science graduates are finding it easier and more lucrative to land nonscience jobs after college, as are engineers in the middle of their careers.

Ethanol Bust Makes Losers of Bush, Gates, Archer Daniels Midland in 2007 Ethanol, the centerpiece of President George W. Bush's plan to wean the U.S. from oil, is 2007's worst energy investment. The corn-based fuel tumbled 57 percent from last year's record of $4.33 a gallon and drove crop prices to a 10-year high. Production in the U.S. tripled after Morgan Stanley, hedge fund firm D.E. Shaw & Co. and venture capitalist Vinod Khosla helped finance a building boom. Even worse for investors and the Bush administration, energy experts contend ethanol isn't reducing oil demand. Scientists at Cornell University say making the fuel uses more energy than it creates, while the National Research Council warns ethanol production threatens scarce water supplies. As oil nears $100 a barrel, ethanol markets are so depressed that distilleries are shutting from Iowa to Germany. An investor who put $10 million into ethanol on Dec. 31 now has $7.5 million, a loss of 25 percent. Florida and Georgia have banned sales during the summer, when the fuel may evaporate and create smog.

 

November 11, 2007

WRFest 11Nov07:Adaptation, Local Issues and Malware

A set of themes we've been pushing here is the need to take a systematic and systemic look at the rapid evolution of the new global system and the local adjustments and adaptations to it. If the era of the Cold War was modeled as fields of force around the two poles (US, Russia) of a magnet and, briefly, ironically and mistakenly, the post-Collapse decade of the 90s modelable as a planetary system with the US as the sun of a sole hyper-power then then next epoch should be thought of as a molecule. That is with a lot of major pieces which are all inter-connected and inter-acting. More accurately it's a bio-evolutionary system with multiple "molecules" inter-acting in a complex environment in complicated ways. Amusingly, at least to me, we're returning in effect to a multi-polar world that more closely resembles the world of the 19thC. Or even more accurately to the world of the 10th and 11thC when the world was an inter-linked and BALANCED system of large-scale, semi-detached system with the independent oecumenes of China, SE Asia, India and Europe. All of which were linked by a world trade system that was a major albeit hidden influence on their seperate evolutions.

Willy-nilly that's a world we're returning to except this time the inter-connections are huge relative to the independent pieces but the pieces are still critically important. The strategic hope is that we'll find a new world architecture that promotes balance and adjustment while sustaining growth. At the same time the inter-dependencies mean that local crisis and maladjustments will spread rapidly thru the rest of the system.

Several years ago the notion of Meme was developed to capture the idea that culture's ideas about how the world worked were as important as biology or economics. We're getting some harsh lessons in what happens when good memes go bad or bad memes, like bad viruses, spread. Below you'll find some perfect examples three of which are especially worthy of note:

  1. Pakistan Domestic Breakdown - the internal divisions of Pakistani society were on view in Nov. when the three-part conflict between the military/Mushareff, the "modern" politicians and the Islamicist radicals were on view. This is my candidate for the geo-political story of the year. And if we don't handle it correctly the Century. Why ? Because by insisting on viewing Pakistan thru the lens of our own experiences and meme frameworks we badly mis-understand what's going on. The last time we took the domestically driven "high-road" of moral righteousness and the policy pursuit of mistaken shibboleths was when we "encouraged" the Shah to withdraw from power in Iran. In case you didn't know it was James Earl Carter who basically told the Shah to get out of town and set the foundations for the ME that's about to blow up in our faces today. If we don't ensure/insure that a stable but progressive regime is established in Pakistan with it's nuclear weapons, primitive tribesman and Islamic radicals the 911/alQuedea/Taliban disaster will look like a tempest in a teacup. This is the real deal indeed.
  2. Understanding foreign cultures - the US and the rest of the West can no longer afford to pursue their own models of how the world works based on their isolated histories. We need to understand the internal dynamics and structures of the foreign societies actually work - not how we wish they'd work. It's called facing reality. In particular we need to make a significant effort to understand these cultures from the inside, the way their members do and use that understanding to inform and shape our thinking and policie. We can no longer afford to pursue our lives in blissful ignorance, isolation or narrowness. Talk about Greek tragedies several are in the making here. It's called Hubris !
  3. Meme Malware in World Politics - meanwhile in various parts of the world the old policy software and errors continues to re-surface...and re-surface...and re-surface so on ad infinitum. Cases in point are Mexico's on-going troubles but in particular the return of populist/socialist ideologies in Latin America. Now some countries, e.g. Brazil are making the transition to a more developed view of things but Argentina has never gotten over it's Peronist history. Granted it's also never gotten over it's oligarchic DNA where the powerful landowners have run Argentina for their own benefit unless thrown out of power by the Peronistas. But the damage to the general well-being of the country has been severe and repeated. Chavez is mimicing these problems and worse. In this brave new world we need to ask ourselves can we afford to tolerate these breakdowns ? And what would be do about it ?

In addition to these readings you'll find extensive excerpts in Int'l Affairs that support our overall themes as well the preceeding arguments, more on the ME where progress in Iraq is sufficient to have apparantly taken it off the table as major club to beat the opponents with in the US election, more on the candidates & their positions and on various major policies. In the Politics & Policy section three articles are very noteworthy - all in the name of understanding the real data. One is on the real nature of tax numbers and cuts, another on the real numbers behind the health care debates and then several related ones on how our collection of candiates faces an unhappy electorate but isn't talking to the deep concerns with credible approachs and vision.

In the Science and Culture section you'll find some fascinating material on history and Picasso and in the Values section three excellent links on just how ideas develop, propogate and the problems with changing them. If the lesson isn't clear let me suggest two things:

  1. Today's actions, choices, preferences and institutions are often the unknown but deeply embedded legacy of prior choices. In other words societies are their histories and to help understand where they're going you need to understand where they've been, how they're structured and how they moved and over what pathways to where they are now.
  2. The most difficult thing in the world is to change an unconscious set of assumptions, become aware of what they are and then consciously evaluate and change them. Yet many of the political and policy debates in the US are today's victims of yesterday's beliefs, popular myths and failed/flawed analysis. It's often enormously easier to work 7 X 24 than it is to pause and examine things. The first only takes blind effort - the 2nd takes moral and spiritual re-thinking. For societies as well as individuals.

Special & General

Pakistan Gets My Vote for a Black Swan Event Washington is obsessed with the war in Iraq, the danger of Turkish troops clashing with Kurdish militants and President George W. Bush's possible showdown with Iran over its nuclear weapons ambitions. Yet the larger threat may be a so-called Black Swan event, something that is both far outside conventional expectations and of such extreme consequence that it might shift not only U.S. electoral dynamics but also the global security calculus. The odds are rising of such an event growing out of Pakistan, whose status as the most dangerous place on earth was further confirmed by President Pervez Musharraf's declaration of emergency rule on Nov. 3. His suspension of the constitution, dismissal of the chief justice, restrictions on free speech, and roundup of some 1,500 lawyers, judges and political activists do little to change the nation's frightening course. Jihadist and extremist groups sympathetic to the Taliban and al-Qaeda have grown in frontier provinces and spread to Pakistan's main cities. Secular leadership is faltering in a nuclear-armed country. As Musharraf put it during an address to the nation: ``Inaction at the moment is the suicide of Pakistan, and I won't allow this country to commit suicide.'' What to watch is whether the emergency measures, which Musharraf's opponents say are aimed more at personal than national preservation, reverse these forces or merely push them underground to explode in the coming days and weeks. For now, what has died is a peaceful evolution toward secular, democratic rule through a power-sharing arrangement between the military- led regime and former Prime Minister Benazir Bhutto. Intact is the nightmare scenario: Musharraf's failure or death allows extremists, some of them certainly in the state security services, or ISI, to gain control of the country and its nuclear arsenal of 50 to 100 weapons.

U.S. Needs to Understand How Politics, Religion Mix Abroad The U.S. has been remarkably successful at balancing religion and civic life at home, but it has largely failed in its attempts to understand and address religious politics abroad, says Economist editor-in-chief John Micklethwait. Addressing that gap will be crucial to resolving some of the world’s most pressing problems, he says in a lengthy survey of religion and politics. In many parts of the world, with the notable exception of much of Western Europe, religion is playing a greater role in public life. For tradition-minded people everywhere, faith has served to soften the rapid pace of change. For the more prosperous, religion sometimes serves as a “lifestyle coach,” says Mr. Micklethwait—consider the enormous U.S. popularity of Pastor Rick Warren’s book, “The Purpose Driven Life.” Meanwhile, religious people have become more vocal in many fields, most notably business and politics. Yet despite a thriving religious pluralism at home, the U.S. government often has failed to stress religious freedom in its foreign policy. That is especially true in places like Egypt, where a secular but authoritarian government has been supported at the expense of religious parties. At the same time, the U.S. has neglected to trumpet its own Muslim community. “Playing down the role of religion in public life also means missing out on many potential solutions,” says Mr. Micklethwait. “For once religion is part of politics, it must also be part of the solution.”  Some Western policy makers were caught off guard by the revival of religion in the public sphere. Mr. Micklethwait concedes that his own publication came to recognize the shift belatedly—the Economist published an obituary of God in its millennium issue, long after it now says public faith had begun its resurgence.

Cry for Me, Argentina (and Russia and China) Price controls are so last-century. The notion of central planners telling private entities how much they should charge for goods and services seems about as dated as that "Government and Politics of the Soviet Union" course I took in 1987. Only the world's dwindling tanks of anticapitalist moonbats, led by Venezuela's Hugo Chávez, still employ them. But price controls haven't been completely vanquished. Rather, they've lain dormant, waiting to be revived by the strong odor of inflation. Several years of synchronous global growth, powered by surging economies in Asia and dissolute monetary and fiscal policies (thanks, Messrs. Greenspan and Bush) are combining to push prices higher. The United States has dealt with the rise of inflation in a typically American way: by spinning it out of existence. Price controls, food subsidies, greater state control of the economy, a governor named Romney running for president. It seems like 1967, not 2007. And, of course, price controls create powerful disincentives for people and companies to invest in the sort of production capacity that could, in time, create the sort of competition that would help bring prices under control. This isn't a good time to invest in a cattle farm in Argentina, a cheese plant in Russia, or a gasoline refinery in China. If the price controls continue much longer, these economies could see the revival of another distressing factor that defined socialist economies in the 20th century: rationing.

Values and Attitudes

The Ghosts We Think We See That idea helps explain a number of supernatural beliefs, he argues: "The idea of spirits and souls appearing in this world becomes more plausible if we believe in general that the nonphysical can transfer over to the physical world." And believe it we do. A Gallup poll found that only 7 percent of Americans do not believe in telepathy, deja vu, ghosts, past lives or other supernatural phenomena, which may have more than a little to do with the soaring popularity of Halloween. Even eminent rationalists such as Alfred Russel Wallace, who discovered natural selection (prompting Darwin to speed up his own work), believed in ghosts, haunted houses, levitation and clairvoyance. But "supernatural"—anything that cannot be explained by laws of physics or biology—also encompasses more mundane phenomena. It includes the belief that you can feel someone staring at you from behind, and that if you think about someone he is more likely to phone you (this doesn't work for getting first dates to call you for a second, however). Far from being pathological, the ubiquity of such beliefs is actually a clue to how the normal mind works, cognitive scientists now realize, for belief in the supernatural arises from the same mental processes that underlie everyday reasoning and perception. Chief among those normal processes is our neurons' habit of filling in the blanks. The brain takes messy, incomplete input and turns it into a meaningful, complete picture.

Apocalypse No The New Republic's editors seem to have mistaken Vietnam movies for real life. I'll jump here, or lurch I suppose, to something I am concerned about that I think I am observing accurately. It has to do with what sometimes seems to me to be the limited lives that have been or are being lived by the rising generation of American professionals in the arts, journalism, academia and business. In terms of personal difficulties, they seem to have had less real-life experience, or rather different experiences, than their rougher predecessors. They grew up affluent in a city or suburb, cosseted in material terms, and generally directed toward academic and material success. Their lives seem to have been not crowded or fearful, but relatively peaceful, at least until September 2001, which was very hard.But this new leadership class, those roughly 35 to 40, grew up in a time when media dominated all. They studied, they entered a top-tier college, and then on to Washington or New York or Los Angeles. But their knowledge, their experience, is necessarily circumscribed. Too much is abstract to them, or symbolic. The education establishment did them few favors. They didn't have to read Dostoevsky, they had to read critiques and deconstruction of Dostoevsky. I'm not sure it's always good to grow up surrounded by stability, immersed in affluence, and having had it drummed into you that you are entitled to be a member of the next leadership class. To have this background in the modern era is to come from a ghetto, the luckiest ghetto in the world, a golden ghetto beyond whose walls it can be hard to see.

Lessons From Stock Market Wizards One of the first books I read in this business oh-so many years ago was Stock Market Wizards. It had a profound impact on my thinking about trading, psychology, risk, capital preservation, etc. Sometime ago, I came across a good discussion of the lessons from the book at Simply Options Trading. What follows is my edited adaptation of those rules he derived from Stock Market Wizards:

Int’l Affairs

U.S. on the Sidelines of Global Trends? …regardless, it is a very unusual experience for an American to be sitting listening to the foreign minister of another country, and a very small country at that, talk at some length about major global trends as if the United States didn’t exist. Unusual, and salutary. After all, many other countries endure that treatment from us. The Russians simply dropped off the map for almost a decade after the end of the Cold War. And Singapore has just had to endure President Bush’s last-minute cancellation of a planned summit with the ASEAN (Association of Southeast Asian Nations) leaders in Singapore on his way to Sydney for the APEC (Asia-Pacific Economic Cooperation) meeting (he went to Iraq instead). Yeo spoke about the phenomenal rise of Chinese cities and manufacturing areas, not only on the east coast of China but also in the interior. He spoke of China’s rise in the context of Asia’s rise, of a whole region finally coming into its own in world affairs, or rather returning to its historic importance. He described the burgeoning contacts between Asia and the Middle East — described rather as West Asia — and concluded with a review of ties between Asia as a region and the EU.

Combustible Countries From Pakistan to Lebanon to Russia, entire regions could explode. Combustion happens when fuel combined with oxygen, usually at high temperature, releases heat. While U.S. foreign policy has focused on so-called failed states, it should be concentrating on those countries with the right combination of high-temperature ingredients not just to implode, but to combust. Take Beirut. The atmosphere in this buzzing but beleaguered city is tense. The endless power-jockeying between sectarian factions and the constant threat of violence within Lebanon mean that there will always be one group for which it will be politically advantageous to goad Israel. Currently, that group is Hezbollah, against which Israel waged a war last year. Until the almost intractable sectarian divide within Lebanon is resolved, the country's combustibility will ensure the region's combustibility as well, threatening Israel's security and U.S. strategic interests. Another such combustible case is Pakistan, where U.S. ally President Pervez Musharraf just narrowly averted a full-scale insurrection by relinquishing his role as chief of the armed forces and allowing exiled opposition figures to return to the country. In the little time before the next challenge to his administration, he must focus on the parts of the country the central government does not effectively control. The third combustible state may at first seem surprising, but it presents the greatest threat to U.S. strategic interests in the long term. According to the conventional view, Russian President Vladimir Putin's growing authoritarian grip has brought stability and prosperity -- hence his sky-high approval ratings -- even as vast sections of the economy are effectively nationalized and the opposition and media are quashed. These developments create a stable, if overly confident Russia in the short term. But they are also a sign of Russia's underlying combustibility.

The Perils of Petrocracy Can Hugo Chávez’s ‘‘oil socialism’’ show resource-rich countries the way to stability and prosperity? Or is it just the old oil curse in a new guise? Who holds the world’s oil? You might assume it’s in the hands of big private oil companies like ExxonMobil. But in fact, 77 percent of the world’s oil reserves are held by national oil companies with no private equity, and there are 13 state-owned oil companies with more reserves than ExxonMobil, the largest multinational oil company. The popular perception in the United States is that if leaders of oil countries nationalize their oil, they are bucking a global trend toward privatization. In reality, nationalized oil is the trend. And the percentage of oil controlled by state-owned companies is likely to continue rising, mainly because of the demographics of oil. Deposits are being exhausted in wealthy countries — the ones that exploited their oil first and generally have the most private oil — and are being found largely in developing countries, where oil tends to belong to the state. Now as the record high price of oil has made exploitation worthwhile even in places that are remote or geologically complicated (Chad comes to mind), more underdeveloped countries have to choose what to do with their oil. Those that have long held oil must decide how to spend the incomprehensible amounts of money oil is now bringing them. Historically, almost every country dependent on the export of oil has answered this question in the same way: badly. It may seem paradoxical, but finding a hole in the ground that spouts money can be one of the worst things to happen to a nation. With one or two exceptions, oil-dependent countries are poorer, more conflict-ridden and despotic

 

RUSSIA: The Threat  The current government, led by former KGB official Vladimir Putin, is very popular. Former KGB officers predominate, and they are well educated and capable. The KGB was always the place to be, in the old Soviet Union, if you were bright, ambitious and not troubled with an overactive conscience. Putin's people have got the economy going (at six percent, Russia has one of the lowest unemployment rates in Europe), cracked down (but certainly not eliminated) on the lawlessness and corruption, and played to the popular affection for "restoring Russia's place in the world" (becoming a superpower again.) What worries the West the most is that Russian democracy has been modified to suit local tastes. That means a concentration of power. This scares most other democracies, because it makes it easier for the supreme leader to do something rash. Without a separation of powers (executive, legislature and courts balancing each other), the top guy can easily start trouble the country cannot afford. But most Russians prefer this concentration of power. Old customs die hard. Russians see themselves as victims, having been swindled out of their former wealth, glory and real estate by foreign plotters and exploiters. All this seems irrational to Westerners, but it means something to many Russians, although often at a subconscious level. This leads to an "anything goes" attitude towards foreigners. That explains Russian refusal to crack down on Russian hackers who are plundering Western businesses via the Internet. It also explains Russia's casual use of energy embargoes against countries (usually weaker ones that cannot.

·         Putin Builds Network of Allies to Help Him Retain Post-Presidential Power Vladimir Putin is doing his best to make sure he'll have friends in high places to help him wield power after he gives up Russia's presidency in May. In addition to his recent appointment of longtime friend and former aide Viktor Zubkov as prime minister, Putin has placed allies -- many with links to each other -- at the head of key government agencies and state-owned companies

 

Living Larger in the New Russia The Starodubovs' ascent from the hand-to-mouth existence of the 1990s to relative security today helps explain why President Vladimir Putin is perceived so differently in Russia than he is in the West. For many here, he is a hero. After nearly two decades of crazy desperation and living from one day to the next, the relative calm of the Putin era feels like such a tremendous achievement that for many in Russia, it's more than enough to earn their loyalty. Since Mr. Putin took office in 2000, about 20 million Russians have been lifted above the official poverty line (another 20 million remain in poverty, according to government figures). An oil-fired economic boom has brought long-awaited stability after a string of crises in the 1990s and more than doubled average incomes, adjusted for inflation, since 2000. A middle class is growing, but so is the gap between rich and poor. Still, the government is scrambling to pour tens of billions of dollars into rebuilding Russia's crumbling roads, power networks, hospitals and schools, all of which have seen little investment since the collapse of the Soviet Union in 1991.

Gates's China Talks Yield Understanding Without Producing Shifts in Views Two days of talks between U.S. Defense Secretary Robert Gates and Chinese leaders in Beijing produced what both sides called a deeper understanding of each other's views. The meetings didn't produce any shifts in those views. Gates and other U.S. officials shrugged off the lack of movement and said progress would be a long-term project requiring patience. The visit was a success, they said, simply because the two sides aired their views in greater depth than ever before. Gates, 64, came to Beijing for his first visit as defense secretary saying he was seeking clarity about China's decade- long drive to modernize its military. U.S. defense officials have complained for years that what they call China's lack of transparency about its military was giving rise to fears that the modernization program was aimed at changing the balance of power in Asia. U.S. officials addressed China's reluctance to step up pressure on Iran over its nuclear program because of the Chinese need for energy supplies to fuel economic growth. China relies on imports for almost half of its oil. Iran is the Middle East's second-biggest producer of crude, topped only by Saudi Arabia.

Sarkozy Seeks French-U.S. Harmony in Bush Talks, Ending `Crisis' Over Iraq Visiting Washington this week for the first time as president, Nicolas Sarkozy will depict France as a reliable U.S. ally once again, even as differences over exchange rates and trade simmer beneath the surface. Sarkozy's talks with President George W. Bush, starting with dinner at the White House tonight, will focus on shared opposition to Iran's nuclear program and on support for Kosovo's push for independence from Serbia

Skull-and-Dagger Image of Elite Rio Cops Has Recruits Clamoring to Join Brazilian director Jose Padilha set out to expose the tactics used by the most heavily armed unit of Rio de Janeiro's police force in his film ``Elite Troop.'' He didn't intend to inspire converts. Young police officers are flocking to join the Battalion of Special Operations, known as Bope, which uses snipers and heavy weapons to handle the state's most dangerous cases, such as hostage negotiations and fighting gangs for control of slums. Since the movie came out, stores have been selling out of costumes that bear the special squad's emblem of a skull with a dagger piercing its crown in front of two crossed handguns.

 

ME

WINNING: Bin Laden Admits Defeat in Iraq On October 22nd, Osama bin Laden admitted that al Qaeda had lost its war in Iraq. In an audiotape speech titled "Message to the people of Iraq," bin Laden complains of disunity and poor use of resources. He admits that al Qaeda made mistakes, and that all Sunni Arabs must unite to defeat the foreigners and Shia Moslems. What bin Laden is most upset about is the large number of Sunni Arab terrorists who have switched sides in Iraq. This has actually been going on for a while. Tribal leaders and warlords in the west (Anbar province) have been turning on terrorist groups, especially al Qaeda, for several years.  While bin Laden appeals for unity, he shows only a superficial appreciation of what is actually going on in Iraq. Al Qaeda?s Score Card

The Empty Chair at the Iraq Hearings Effective foreign policy requires paying close attention to economics, not just security and politics. Policy often falters in practice because the economic or financial aspect is overlooked.Recall the hearings on Capitol Hill in September concerning progress in Iraq. Testifying on security issues was Gen. David Petraeus, offering his expertise on counterinsurgency warfare in theory and in practice. Next to him was Ambassador Ryan Crocker, able to answer virtually any question, no matter how detailed, on the political machinations within Iraq. And next to them was the seasoned expert on economic issues in Iraq. Oops. Actually, no one was next to them. An empty chair, perhaps. But had an expert been at the witness table, the testimony might have gone. . . . Empty Chair: I am happy to report that the central bank has implemented the recommendations of the Baker-Hamilton commission in this area. It has raised the interest rate all the way to 20 percent to control inflation, and through such actions the inflation rate has come down sharply. The new Iraqi dinar, which was introduced in 2003, has proved popular and has appreciated nicely in the past year. The Central Bank of Iraq now has $21 billion in reserves, many times more than it had just after Saddam Hussein stole a billion dollars from its vaults in March 2003. This summer the Baghdad Stock Exchange opened to foreign investors, rose 85 percent in July and held its own in August. As the closely watched Grant's Interest Rate Observer noted Sept. 7, "Iraq has turned into a capital magnet. . . . Money is sometimes misinformed, but it is never insincere. Something is afoot in Iraq." So there are measurable signs of economic and financial progress.

NBC WEAPONS: NBC: Loose Nukes In Pakistan With the recent chaotic events in Pakistan, one has to ask what sort of options the United States has. The state of emergency in Pakistan has derailed plans for democracy, and risked the security of  Pakistan's nuclear weapons. This is one of the classic situations where American ideals and American interests may diverge big time. The big issue in all of this is the fact that Pakistan is a nuclear power, with as many as 95 nuclear warheads. Many of these designs are far more powerful than the first-generation devices the United States used in 1945, killing 140,000 people in two attacks. This is why stability and rationality in the Pakistani government is important. The problem is that stability may not be guaranteed. The in the 1990s, the Afghan Taliban regime was set up with the help of at least some elements of the Pakistani intelligence service. The other problem is Pakistan's history of coups. These can be bad enough due to the uncertainty of where a new government stands. Now, add the fact that nukes are involved.

For months, Pakistan's economy seems to have existed in a parallel universe to the country's turbulent politics. Despite street protests, militant attacks and legal challenges to the legitimacy of Pakistan's military strongman, nothing seriously dented the rise of the stock market or slowed one of Asia's fastest-growing economies. Over the past five years, Pakistan's economy has averaged 7% annual growth, and the economy is expected to expand about as fast this year. The benchmark index has risen 18% from a year ago even after yesterday's drop. So far this year, it is up 32%.

Pakistan's economy seems to have existed for months in a parallel universe to the country's turbulent politics. But emergency rule may be different. The economy has continued to hum despite some of the country's worst unrest in years. But the outlook is no longer so rosy, economists say. For one thing, billions of dollars in foreign assistance might be in jeopardy after Gen. Musharraf's veering away from a planned transition to civilian rule angered allies such as the U.S. It has sent nearly $11 billion in aid to Pakistan since the Sept. 11, 2001, attacks, mostly to the army to fight militants. Before those attacks, Pakistan was struggling to pay off international loans, and sanctions for nuclear testing had frozen U.S. aid. The U.S. is the largest investor in Pakistan, accounting for nearly one-third of the country's foreign direct investment from July to September this year, according to Pakistan's Ministry of Finance. Yesterday, credit-ratings agency Moody's Investors Service changed the outlook to negative, from stable, on the B1 government foreign- and local-currency bond ratings and placed a negative outlook on Pakistan's B2 foreign-currency country ceilings for bank deposits. The outlook for Pakistan's Ba3 foreign-currency country ceiling for bonds was unaffected and remains stable.

Politics and Policies

Voters angry, but Democrats get pass Republicans are being forced to play defense in 2008 elections. A bloody and unpopular war and worries about middle-class pocketbooks have left President Bush's approval ratings hovering near historical lows. But Congress, where Democrats last fall rode voter discontent to sweep to majorities in the House and Senate, fares even worse. In line with other national polls, a Washington Post/ABC News survey conducted Oct. 29 to Nov. 1 showed Bush's approval rating at a meager 33%, while Congress stood at 28%. Voters continue to believe the country is on the wrong track, with only 24% telling the Washington Post/ABC News poll the country is moving in the right direction compared to the 74% who said it was moving the wrong direction -- a finding that also tracks other recent nationwide surveys.

This Won't Be The Iraq Election The Presidential campaign has jostled this way and that, contenders have risen and fallen, but the one fixture in the political firmament has been Iraq. Polls have consistently said Iraq would be the central issue of the 2008 campaign. The candidates have developed elaborately studied and rehearsed positions on the war. But what if the subject moves off center stage? In the new NEWSWEEK Poll, the economy now tops Iraq as the issue that voters say will most influence their choice for president, 22 percent to 19 percent. When the president announced the surge last January, I wrote a column arguing that it was likely to succeed militarily (by providing better security) but would probably fail politically (because of a lack of political reconciliation). I was both right and wrong. More U.S. troops have meant better security. But they are not at the heart of current improvements in Iraq. The key is that Petraeus has been willing to do what no American official has until now: accept Iraq for what it is and not what Washington wants it to be. Searching for a stable order, Petraeus has allied himself with whoever, within reason, could produce that order.

Pessimism Spells Trouble for Republicans In a sign of how demoralized GOP voters have become, a focus group of a dozen Virginia Republicans expressed doubts about the country's economic prospects and their party's slate of presidential candidates. It's almost un-American to believe that your children's generation won't be better off than your own. Yet that is just what a dozen Virginia Republicans unanimously agreed to when they gathered here Thursday night for a political focus group. That break with what has traditionally been the bedrock belief of an optimistic America was bad enough, from a Republican's standpoint. It captured how demoralized the party is these days, what with an unpopular Republican president waging an increasingly unpopular war amid rising gas prices. But what was worse: These Republicans didn't see a savior in the big field of candidates vying for their party's nomination to succeed George W. Bush.

Hillary Reveals Her Inner Self In the latest debates, Hillary Clinton reveals her inner self, writes Peggy Noonan.The story is that she talked about policy. Not talking points, but policy. In talking about it she seemed, for the first time, to be revealing what's inside. It was startling. It's 1993 in there. The year before her fall, and rise. I spent a day going over the transcripts so I could quote at length, but her exchanges are all over, it's a real Google-fest. Here, boiled down, is what she said. She has been accused of doubletalk and she has denied it. And she is right. It was triple talk, quadruple talk, Olympic-level nonresponsiveness. And it was, even for her, rather heavy and smug. Her husband would have had the sense to look embarrassed as he bobbed and weaved. It was part of his charm. But he was light on his feet. She turns every dance into the polka. And it is that amazing thing, a grim polka. But the larger point is that her policy approach revealed all the impulses not of the New Centrism but the Old Leftism. Her statements were redolent of the 1990s phrase "command and control." They reflect a bias toward the old tax-raising on people who aren't rich, who aren't protected, the old "my friends and I know best, and we'll fill you dullards in on the details later." What Mrs. Clinton revealed the other night was more than an unfortunate persona. What I think she revealed was that her baseline thinking has perhaps not changed that much since the 1990s, when she was a headband wearing, power suited, leftist-who-hadn't-been-wounded-yet.

·         Clinton Surge Sparks Party Debate on '08 Prospects, Impact on Other Races While national polls give Clinton a commanding lead for her party's nomination, some Democratic officials and officeholders fret that those surveys mask negative feelings about her. They say those perceptions raise questions about her ability to defeat a Republican nominee, and may cause trouble for other Democratic office-seekers in swing states like Missouri and in the South. Clinton's opponents for the party nomination are fanning the flames. In a debate last week, Connecticut Senator Christopher Dodd questioned whether she is ``electable'' and ``can bring the country together.'' In an October memo, the campaign of Illinois Senator Barack Obama said she would damage ``the hopes of other Democrats seeking office.''

A Conservative Sees Obama Ending the Culture Wars What is significant about Barack Obama’s presidential candidacy isn’t his policies or his experience, says Andrew Sullivan in the Atlantic. It is that the Illinois senator is the only major candidate not locked in a culture war that baby boomers have been fighting since 1968. Mr. Sullivan is well-placed to recognize an attempt to transcend party lines. As a political commentator, he raises the ire of people on the left and the right. A self-professed conservative, he nevertheless has endorsed Bill Clinton and John Kerry, as well as Bob Dole and George W. Bush. A Catholic, he has been outspoken about gay rights. He fervently backed the U.S. invasion in Iraq, but lately has recanted his initial support. For Mr. Sullivan, one of Mr. Obama’s chief merits is his youth. At 46, Mr. Obama is the only major presidential candidate whose roots aren’t linked to support of or opposition to the Vietnam War. The current polarization of American politics has its origins in that era, and the gulf has widened since, through events such as the Robert Bork hearings, the Clinton impeachment, the 2000 election and the Iraq war. “It was and is a toxic cycle, in which the interests of the United States are supplanted by domestic agendas born of pride and ruthlessness on the one hand and bitterness and alienation on the other.” Mr. Obama offers a way out of that mindset, says Mr. Sullivan. He doesn’t see Iraq as another Vietnam. He discusses his religious faith openly, but in a way that appeals to more-secular voters. Finally, on race, Mr. Sullivan says Mr. Obama’s mixed parentage and his self-conscious embrace of black identity in his 20s best represents the complex ways that his generation have shaped their identity in modern America. None of this means that Mr. Obama “will be the president some are dreaming of,” says Mr. Sullivan, or that he is even likely to beat Hillary Clinton in the primaries. But for Mr. Sullivan, Mr. Obama is the candidate who best understands how to bridge America’s political divide.

 

Lawmaker Rebuilt Hometown on Earmarks If John Murtha were a businessman, he'd be the biggest employer in this town. The powerful U.S. congressman has used his clout on Capitol Hill to create thousands of jobs and steer billions of dollars in federal spending to help his hometown in western Pennsylvania recover from devastating floods and the flight of its steelmakers. More is on the way. In the massive 2008 military-spending bill now before Congress -- which could go to a House-Senate conference as soon as Thursday -- Mr. Murtha has steered more taxpayer funds to his congressional district than any other member. The Democratic lawmaker is chairman of the House Appropriations Subcommittee on Defense, which will oversee more than $459 billion in military spending this year. Johnstown's good fortune has come at the expense of taxpayers everywhere else. Defense contractors have found that if they open an office here and hire the right lobbyist, they can get lucrative, no-bid contracts. Over the past decade, Concurrent Technologies Corp., a defense-research firm that employs 800 here, got hundreds of millions of dollars thanks to Rep. Murtha despite poor reviews by Pentagon auditors. The National Drug Intelligence Center, with 300 workers, got $509 million, though the White House has tried for years to shut it down as wasteful and unnecessary. Another beneficiary: MTS Technologies, run by a man who got his start some 40 years ago shining shoes at Mr. Murtha's Johnstown Minute Car Wash. A review by The Wall Street Journal of dozens of such contracts funded by Mr. Murtha's committee shows that many weren't sought by the military or federal agencies they were intended to benefit. Some were inefficient or mismanaged, according to interviews, public records and previously unpublished Pentagon audits. One Murtha-backed firm, ProLogic Inc., is under federal investigation for allegedly diverting public funds to develop commercial software, people close to the case say. The company denies wrongdoing and is in line to get millions of dollars more in the pending defense bill.

 

 

Plain Truth About Taxes and Cuts There are big philosophical questions about taxes that facts alone can’t answer. How important is it to let people keep the money that they earn? Will higher tax rates cause more cheating? How important is it to ensure that take-home pay is rising for every group of Americans?  But there are also some basic facts that ideology can’t change. If you keep these five in mind, you will have an easier time keeping up with the debate: As a group, the rich pay a greater share of taxes than in the past. There are two strange facts about corporate taxes. Everyone from Mr. Rangel on the left to Fred Thompson on the right is saying that high corporate taxes are hurting American companies. But the effective corporate tax rate isn’t any higher than it has been on average over the last 25 years, and it’s far lower than it was in the 1960s and ’70s. Put it all together — less corporate tax collection and lower individual tax rates, combined with more income for the people who face the highest tax rates — and the trends mostly cancel each other out. The taxes that the federal government took in last year equaled 18.4 percent of the gross domestic product, almost exactly the average since 1980. The overall tax burden rose in the 1990s, fell during Mr. Bush’s first term and has drifted up in the last few years as corporate profits and upper-end incomes surged. The obvious conclusion is that moderate shifts in taxes don’t dictate economic growth.

Clinton's Right on Delaying Social Security Fix: Some major decisions are going to have to be made over the next three years about the federal government's tax and spending policies. Those decisions, however, don't include dealing with Social Security's limited long-term funding problems caused by the nation's changing demographics. The program is nowhere near ``bankrupt,'' as President George W. Bush claimed a few years ago when he proposed partially privatizing it. To the contrary, Social Security is running annual surpluses that Bush and many members of Congress have used to justify income tax cuts and added spending. Until the politically explosive decisions are made about all these provisions, it makes no sense to try to get an agreement about what to do about Social Security's future because the two sets of issues are inextricably intertwined. Nevertheless, Senator Barack Obama and former Senator John Edwards have criticized Senator Hillary Clinton, one of their competitors for the Democratic presidential nomination, for refusing to spell out now what she would do to fix Social Security. Clinton has defended herself by saying, ``Personally, I am not going to be advocating any specific fix until I am seriously approaching fiscal responsibility.'' In other words, until a broader path for federal tax and spending policies is determined. Interestingly, a new issue brief from the Treasury Department makes much the same point.

Beyond Those Health Care Numbers  WITH the health care system at the center of the political debate, a lot of scary claims are being thrown around. The dangerous ones are not those that are false; watchdogs in the news media are quick to debunk them. Rather, the dangerous ones are those that are true but don’t mean what people think they mean. Here are three of the true but misleading statements about health care that politicians and pundits love to use to frighten the public… Even if the rise in health care spending turns out to be less than they forecast, it is important to get reform right. Our health care system is not perfect, but it has been a major source of advances in our standard of living, and it will be a large share of the economy we bequeath to our children. As we look at reform plans, we should be careful not to be fooled by statistics into thinking that the problems we face are worse than they really are.

Heathcare Q & A In response to my recent NY Times piece on health care, I received numerous questions via email. Let me paraphrase and answer some of them:
 

Science and Culture

A Maritime Pompeii So far the excavation has turned up 39 ancient shipwrecks buried under nine centuries of silt, which preserved extraordinary artifacts. The copper nails and ancient wood are still intact, and in many cases cargo is still sealed in the original terra cotta amphorae, the jars used for shipment in the ancient world. They have also found a cask of the ancient Roman fish condiment known as garum and many mariners' skeletons—one crushed under the weight of a capsized ship. One ship carried scores of pork shoulder hams; another carried a live lion, likely en route from Africa to the gladiator fights in Rome. What's most dramatic about the discovery of this maritime graveyard is that the ships date from different centuries both before and after the advent of the Christian era, meaning the shipwrecks did not happen simultaneously but over time in the same area. The shipwrecks represent a significant piece of a puzzle that archeologists and anthropologists have struggled to understand for centuries. Studying the oldest boats' contents and the way those ships were built, archeologists now better understand just who the Romans and Etruscans traded with and how they lived and utilized the Mediterranean Sea. Some of the oldest ships belonged to the Greeks and the Phoenicians, which implies that the mysterious and little-understood Etruscans were in fact active traders. One ship carried amphorae sealed with sand from both Spain and from the volcanic regions of Campania in Italy, giving scientists vital clues to where these ships traveled.

'The Discovery of France' France is not a unified cultural monolith, but rather “a vast encyclopedia of micro-civilizations,” each with its own long history, intricate belief systems and singular customs. The moral of the story, as Graham Robb’s “Discovery of France: A Historical Geography From the Revolution to the First World War” makes clear, is that France is not a unified cultural monolith, but rather “a vast encyclopedia of micro-civilizations,” each with its own long history, intricate belief systems and singular customs. Yet according to Robb, who has written biographies of Victor Hugo, Honoré de Balzac and Arthur Rimbaud, these microcivilizations “were not formless planetoids waiting to be swallowed by a giant state,” and their inhabitants didn’t constitute “a shapeless mass of human raw material, waiting to be processed by the huge, mutating machine of political interference and turned into the people conveniently known as ‘the French.’” With exhaustive research and a witty, engaging narrative style, Robb corrects this misconception by showing how, even as modern developments like democracy and the steam engine transformed France from “a land of ancient tribal divisions” into a centralized nation-state, a wealth of regional particularities persisted in “disparate, concurrent spheres.” In its pivotal years between the revolution and World War I, France emerges in Robb’s telling as a land where the past did not morph seamlessly into the future; a land where diversity existed in a permanent tug of war with uniformity; “a land in which mule trains coincided with railway trains, and where witches and explorers were still gainfully employed when Gustave Eiffel was changing the skyline of Paris.”

'A Life of Picasso: The Triumphant Years, 1917-1932' The comparison to God, like the use of the third person, was deliberate, of course. As John Richardson reminds us in the third installment of his magisterial and definitive biography, Picasso not only worshiped the gods Dionysius, Priapus and Mithra (the god of light and wisdom), but also regarded himself as their confrère — an artist so prodigally talented, so daring and so virtuosic that he could reinvent the universe. He was a Nietzschean shaman who regarded art as a mysterious, magical force, offering the possibility of exorcism and transfiguration; a chameleon who effortlessly moved back and forth between Cubism and classicism, irony and sentimentality, cruelty and tenderness; a wily, self-mythologizing sorcerer who inhaled history, ideas and a cornucopia of styles with fierce, promiscuous abandon — all toward the end of exploding conventional ways of looking at the world and remaking that world anew. Mr. Richardson’s Picasso is not the destructive, misanthropic egomaniac portrayed in the Merchant-Ivory film “Surviving Picasso” or the heroic hipster artist depicted in Norman Mailer’s “Portrait of Picasso as a Young Man.” Rather his Picasso is a mass of contradictions, a savage artist, who was often horribly cruel to his friends like Cocteau but who also “had a very loyal, if sometimes paradoxical heart”; a deeply superstitious trickster, who loved paradox in both his work and life, playing “volumetric representationalism off synthetic Cubist flatness, much as he enjoyed playing Olga’s conventionality against his own instinctive iconoclasm.”  Picasso once observed that his work was a kind of diary of his life, and in this continuing biography (of which there is one more volume to come) Mr. Richardson expertly explicates that diary for readers, showing us how the artist encoded his day-to-day relationships with women in his work; how his homes, his surroundings and his cannibalistic study of other painters’ work informed individual canvases and sketches.

November 05, 2007

WReadfest 4Nov07: Middle Class Demise, the New War and Shibboleths

Well we have another structured potpourii of interesting readings with this post plus a bit of a title change: for now Weekly Reader (bring up memories or am I just dating myself ?) becomes WReadfest est thereby leaving more room for fun titles. In the prior post we also sketched out the implict framework employed here of looking for a reach and range of topics tied together by the cental question of how do societies perform, evolve and innovate ? And how do people function in those socio-economic systems ? In other words true to our name we're looking at what are the key, critical components and how a System emerges - Parts to Wholes (Systems intelligence,Systems thinking,List of types of systems theory). And also last time we found a common theme for that post's listings in Change and Adaptability. This time we could continue that theme reinforced but add to it the question of how specific societies moving ? And are a lot of the common headlines which in fact are partly fact and partly bad analysis but have become shibboleths (Shibboleth) of popular and political discussion grounded in reality ?

Enjoy ! 

We've brought up to the special section a couple of interesting articles that dig into the common misperception that the middle class is dying (which argument we gave considerable attention to last time on the other side). In fact there are deeper currents running which will define what we become over the next several decades. Also highlighted is a consequence of the emergence of a new world system in military affairs - the re-discovery of Counter-Insurgency operations.

Which turns out to be working remarkbly well in Iraq - largely because the US military has re-discovered what it already knew; and also because we're re-learning that one must understand and adapt to the local culture. Speaking of which there's a nice set of articles outlining the extraordinary, real difficulties facing Pakistan based on things as they are, not as our policy makers would wish them to be. Another example of pursuing policy based on what one thinks should be true rather than the facts on the ground, in the ME section.

Speaking of adaptation one of the most momentus will be China's, as well as the world's reations to China. Internally China faces THE fundamental challenge of re-inventing its institutional infrastructure. Assumming they can hold it together though, the region around them will be forced willy-nilly into new economic patterns as they re-emerge to the level of economic power that was traditionally their's thruout history.

Other areas of the world aren't doing as well as China - in particular our neighbors to the South are rapidly being forced to confront the lack of investment in their oil fields as revenue was diverted to support social programs. Argentina appears to be embarking on a similar path. In some ways Mexico's challenges, because of physical proximity, are among the most important we'll have to deal with.

On the domestic front Healthcare is moving to the front of the line as a major policy issue (as it darn well should) in this election and there's a nice survey of the different candidates positions and proposals. Turning to Culture and Science there are some very interesting articles.

Perhaps the biggest new wave to emerge in biology is in fact based on systems thinking - that is don't disassemble the car and try to extrapolate the vehicle from the battery. This holds as much promise for future new industries and changes in our ways of life and well-being as any other single change going on.

On the other side there's a fascinating historical portrait of the late Ming period from a gentlemen's memoirs - written by a Chinese mandarin of wealth and distinction who lived thru the collapse of the Ming, a great dynasty, thru more attention going to poetry and theatre than actually running a good army. In the same section are two articles on the history and evolution of modern classical music. Talk about the sadness of refusing to adapt ! Should we wonder how well our modern societies will do in pursuit of our Shibboleths ?

Has it ever struck you that music is a good mirror of society - on both the popular and the high culture level ? That it captures and represents key believes and is itself a set of Shibboleths of sorts ? Popular, or folk, music captures the concerns of the broader population. Art music represents the outlook of the folks who shape a societies thinking. And 20th C classical music reflects all the sturm und drang of the century.

Special & General

 The Myth of Middle-Class Job Loss Americans are doing just fine adjusting to the loss of heavy manufacturing work. Economic change is a messy process. New technologies open up many opportunities for those prepared to take advantage of them. At the same time, old firms and their workers are displaced and forced to start over. In 1900, for example, 40% of the U.S. work force was involved in agriculture. Today, that figure is less than 2%, and no serious observer would argue that we are worse off as a result of this transformation. Yet many of today's most prominent politicians and pundits are making an updated version of precisely this argument. Here's the bottom line: For three-quarters of the workforce (women and the top half of male earners), economic growth translated into earnings gains. But for male workers in the bottom half of the earnings distribution, the decline of unionized manufacturing employment has led to the drying up of some middle-class jobs for those with no post-secondary education. For the clear majority of the workforce, then, the job market has become more welcoming, not less so. But where are these jobs? Undeniably, some people have been left out of this middle-class workforce expansion and need help in making the transition to the new economy. In particular, the last six years have seen very little wage growth for the bottom 80% of the workforce. But we should bear in mind that real gross domestic product per person is up over 60% since 1979, and our goal for the job market should not be simply to keep pace with where things stood nearly three decades ago. Higher levels of unionization and increasing the minimum wage would help, but they don't address the more basic need, which is to provide people with the necessary skills for the modern marketplace. The economy can expand and provide more good jobs as long as workers have the education and training required to succeed.

  • Has Middle America Stagnated? Americans have experienced steady, gradual improvement in their standard of living since nearly the founding of the country. Each aging generation has regaled its children with nostalgic stories of difficult childhoods before the latest advances and income gains made life better. Even the Great Depression was only a temporary, though traumatic, pause in this progress—income per person was 50 percent higher by 1949 than it had been in 1929. Most Americans have long taken it for granted that their children's lives would be better than their own. Has this agreeable tradition come to an end? Numerous recent commentaries conclude that it has, at least for “middle America”—the broad swath of people who live well above poverty but well below opulence. But perhaps the past 30 years haven't really marked the end of two centuries of steady progress for average Americans. Statistics summarizing performance of the national economy tell a very different story. Gross domestic product per person, one of the mostly widely cited proxies for standard of living, has nearly doubled since 1975. Other measures of national economic performance, such as personal income, compensation of employees and the amount of goods and services consumed, have also risen substantially.

After smart weapons, smart soldiers Western armies will have to adapt if they are to overcome the odds that history suggests they are up against. Modern Western armies cannot, as the Romans did, make a wasteland and call it peace. Modern wars are complex affairs conducted “among the people” and, as Sir Richard Dannatt, head of the British army, put it recently, “in the spotlight of the media and the shadow of international lawyers”. Such bewildering conflict is regarded by some military thinkers as the “fourth generation” of warfare, distinct from those of previous eras: the first generation, of line and column, which culminated with the Napoleonic wars; the second, of machinegun and artillery, which brought about the slaughter of the first world war; and the third, of manoeuvre with tanks and aircraft, which stretched from the second world war to the 2003 invasion of Iraq. Fourth-generation warfare, according to Thomas Hammes, a retired colonel in the American marines, involves loose networks, made more powerful and resilient by information technology. It does not seek to defeat the enemy's forces, but instead “directly attacks the minds of the enemy decision-makers to destroy the enemy's political will”. Such arguments are a hot topic at Western military colleges, especially in America. More has been written on counter-insurgency in the past four years than in the previous four decades. The study of small wars was largely abandoned by the United States army in the 1970s as commanders promised “no more Vietnams” and concentrated instead on how to defeat the massed Soviet armies.

Int’l Affairs

Dalai Lama Grabs Spotlight From China's Leaders Whether by coincidence or design, the U.S. Congress gave Tibet's spiritual leader its highest civilian award the same week China hosted its National Congress. President George W. Bush defied Chinese protests to become the first sitting U.S. president to appear in public with the Dalai Lama. China was not amused, particularly with Bush urging it to welcome back to Tibet the Nobel Prize winner who's lived in exile since 1959. Officials in Beijing said U.S. support for what they see as the Dalai Lama's ``splittist'' mission could have ``an extremely serious impact'' on U.S.-China relations. ``China is great at coming up with slogans -- lots of slogans,'' Michael Witt, a professor at business school Insead, said at an Oct. 19 conference in Singapore. ``It's not as good at explaining how it plans to implement its economic ideas.'' Hu, for example, is talking more and more about promoting a ``harmonious society'' and achieving it with something called a ``scientific outlook on development.'' To China watchers, that's a lofty way of saying narrow the gap between rich and poor in a way that doesn't worsen the nation's environmental challenge. Hu has offered few specifics on how to do it -- just slogans. The main headline coming out of Beijing is how Hu solidified his power and made way for younger leaders. Yet so far, Hu's been anything but a reformer -- he's been a status-quo-er. His plan seems to be to talk about change, while maintaining the status quos on China's currency, export-led growth, insatiable demand for resources and dual bubbles in stocks and pollution that are inflating further by the day.

China Curbs Imports From Asia as Korea, Malaysia, Singapore Lead Job LossThe U.S. isn't the only country watching jobs and manufacturing migrate to China. Increasingly, so are China's closest neighbors. The nation is reducing its reliance on imports from the rest of Asia as it makes more of the higher-value-added intermediate and capital goods it previously bought from abroad. That is threatening growth in countries whose export sales are already in danger of erosion from the U.S. slowdown. More than 13,500 electronics-product workers in Singapore have lost their jobs since 2004, according to Ministry of Manpower statistics. The International Monetary Fund last week forecast Singapore's growth rate will fall to 5.8 percent in 2008 from an estimated 7.5 percent this year and sees weaker expansion in the Philippines, Malaysia, Taiwan and South Korea. ``China is moving up the supply chain,'' says T.J. Bond, chief Asia economist at Merrill Lynch & Co. in Hong Kong. ``The view that China produces labor-intensive goods but purchases high-value-added goods from abroad may be roughly correct today, but it need not last forever.''

China in the Year 2020: Three Political Scenarios Progressing toward the year 2020, China's political structure is unlikely to develop along a direct, linear trajectory. Just as China's rapid economic development and global integration shocked the world over the past two decades, so too might the country's future political course defy projected expectations. Three possible scenarios for 2020 are presented in this essay. Which road China ultimately takes will depend on the interplay of current political trends, key players in decisionmaking roles, and demographic factors that will be important in the future.

Weak Mexican Peso Shows Oil Monopoly Undermining Growth, Reducing Surplus Mexican President Felipe Calderon is delivering a grim message: The largest oil producer in Latin America is running out of crude. The ban on private investment in its oil monopoly is depriving the nation of the benefits of record high prices and contributing to a slowdown in economic growth. Production of crude, Mexico's biggest export, has fallen 8 percent since 2004 to a seven-year low, data compiled by the government show. Mexico is being punished for its inefficiency in the foreign-exchange market. The peso fell 0.08 percent against the dollar this year, the worst performance among the 16 most-traded currencies. New York-based Goldman Sachs Group Inc. and Credit Suisse Group in Zurich say the slump will deepen. The drop in production is hurting economic growth by reducing funds to improve highways, bridges and ports, Cervera said. Oil provides 40 percent of government revenue and the slowdown contributed to a 47 percent decline in the nation's surplus in August, according to the Finance Ministry. Mexico's economy has grown at an average annual pace of 2.8 percent since 2002, down from 4.4 percent during the previous five-year period. Output has dropped to a seven-year low of 3.12 million barrels a day as the state monopoly Petroleos Mexicanos fails to develop new reserves to offset dwindling production at Cantarell, the world's largest offshore field

The Price Of Suspicion. The French are more distrustful than almost any other nation. A pair of economists tallies the costs. According to surveys cited by the economists, Yann Algan and Pierre Cahuc, the French more easily justify accepting or paying bribes, buying stolen goods or collecting state handouts they aren't entitled to. They are more distrustful of powerful institutions like the judiciary, Parliament and unions. And only 21 percent of the French "trust other people"—a statistic that puts France 24th out of 26 countries surveyed. Only Portugal and Turkey are more suspicious of their fellows. This wariness, they argue, manifests itself in virtually every sector of life, including employment and personal finance. Indeed, in their book, "La Soci?t? de D?fiance" ("The Society of Distrust"), Algan and Cahuc argue that this French "trust deficit … shackles the capacity to adapt, reform, and innovate." Distrust translates into a fear of competition itself—and the demand for protection generates a tangle of stifling legislation. They figure that if the French were as insouciant of others' intentions as the Swedes, the most trusting among nations surveyed, French unemployment, now at 8 percent, would be three percentage points lower. The nation's economy would be 5 percent larger, or €1,500 wealthier per person.

Russian Attacks on Foreigners Grow Along With Economy's Need for Workers As Russia's booming economy creates greater wealth and aspirations among its citizens, it is also forcing them to confront issues more familiar in the West: discrimination, harassment and even violence aimed at foreign workers like Kuram, who see economic opportunity in taking jobs Russians can't or won't do. A shrinking local workforce complicates matters, as oil- powered economic growth fuels demand for offices, apartments and shopping malls -- along with people to build and maintain them. Russian economic growth has averaged 6.7 percent a year since 1999. Meanwhile, Russia's population fell to 143.8 million in 2006 from 148.7 million in 1992 and continues to slide by almost 1 million a year, government statistics show. The workforce decline is dramatic. According to the Health and Social Development Ministry, it will drop 12 percent to 65.5 million by 2010 from 74.5 million now because of low fertility rates and the high number of alcohol-related deaths.

·         Welcome to Russian Consumer Democracy How are bloggers giving birth to a vigorous consumer democracy in Russia, of all places?

Common sense victorious The election returns more predictable politicians—and brings relief in Europe. THE era of the terrible twins is over. That is the upshot of the election on October 21st in which the ruling Law and Justice party, a populist and nationalist outfit, was swept aside by a more moderate and pro-European party, Civic Platform. On the highest turnout since the collapse of communism in 1989, almost 54% of Poles voted, including for the first time large numbers from the diaspora in western Europe. Civic Platform, under its leader, Donald Tusk (above), polled just over 41%, winning 209 seats in the 460-member lower house of parliament, an increase of 76 seats on the 2005 elections (see chart).

  • Poland Wakes Up from a Bad Dream After the October 2007 elections, is Poland finally ready to stop tearing itself apart from the inside?Poland is a country with a difficult, often tragic, past. But at a rare moment in its history when it faced no threats from its larger and more powerful neighbors, Poland had to endure a modern-day tragedy perpetrated from the inside — by those at the highest levels of government. After the October 2007 elections, is Poland finally ready to stop tearing itself apart from the inside? At various stages over the past thousand years, Poland has found itself abused by neighboring Germany and Russia, which alternately — and sometimes even collectively — took advantage of their smaller neighbor. Another part of this unfortunate saga is that, at critical stages, Poland’s nobility was distinguished by being particularly undistinguished. Compared to their counterparts in other countries throughout Europe, they lacked a sense of national purpose and cohesion.

Economic Reckoning Looms in Argentina Cristina Kirchner's leftist bid to succeed her husband as Argentina's president could affect policy choices around Latin America, amid a split between free-market and populist economies. Argentina has often been a standard-bearer for economic trends in Latin America. In the 1990s, it was a leader in the wave of free-market capitalism that swept the region. That ended in a harrowing collapse in 2001. This decade, the Kirchner government has moved toward greater state control over the economy alongside several Latin American countries, including Venezuela, Bolivia and Ecuador. With Latin America divided between those populist governments and countries pursuing free-market economics, the fate of Ms. Kirchner and Argentina could affect policy choices around the region. As Argentina's governing faction tries to prolong the country's roaring economic recovery -- and maintain its grip on power -- it is waging an increasingly desperate battle to contain inflation. The government's tainted figures put the annual figure at 8%, while most independent economists peg it around twice that high. Rather than cooling off the economy and fixing bottlenecks to future prosperity, Mr. Kirchner's government has been intervening in markets and prices with a heavy hand. The moves are often proving ineffective and sometimes sow distortions in the economy that could make lasting solutions even more difficult.

ME

Iran Seeks to Exploit U.S.-Turkish Tensions Over Kurdish Attacks From Iraq Iran may reap a political bonanza from increased tensions between Turkey and the U.S. sparked by Kurdish guerrilla attacks on Turkish forces near the border with Iraq. Iran's radical Islamic government, eager to expand its regional influence and resist U.S. efforts to isolate it, is wooing the Turks by showcasing its bombardment of the camps of Kurdish fighters along its border, according to experts on the region. The Iranians draw a pointed contrast between their willingness to act and what Turks see as a failure by the U.S. and its Iraqi partners to move against other Kurdish camps in northern Iraq.

IRAQ: Waiting For A Miracle To Show Up The sharp drop in violence (about 70 percent nationwide versus a year ago) is being seen as the result of the Sunni Arab terrorist organizations collapsing in defeat. Most of the Sunni Arab tribes have turned against the terrorists, and the al Qaeda organization, which is responsible for most of the suicide bomb attacks, has been torn apart. Most al Qaeda leaders are dead, captured or spending most of their time trying to avoid that fate. The system of safe houses and skilled technicians (bomb makers, trainers, supervisors) has been disrupted or destroyed. Before the Summer ended, it was possible to shift many American combat units to the battle against Shia warlords. There are two of these, both backed by Iran; the Badr Brigades, and the Mahdi Army. While Iranian backed, the two organizations are still Iraqi, and keen to see a strong and independent Iraq (run by a religious dictatorship, with one of the two warlords pulling strings behind the scenes.)

AFGHANISTAN: The Pushtun Civil War While the Taliban are seen as the major problem in Afghanistan, that is not really the case. The big problems are poppies, corruption and Pushtun tribal politics. All three of these combine to produce the Taliban. But to eliminate the Taliban, you have to destroy the highly profitable drug business, curb the corruption and deal with the Pushtun problem. None of these solutions are easy to implement.

MURPHY'S LAW: Pakistan Has a Plan, And It's Working The unrest in Afghanistan for the last three decades is mainly the result of unruly, and fractious Pushtun tribes living on both sides of the Afghan-Pakistan border. There are about 40 million Pushtuns involved, belonging to about a hundred different tribes and major clans. Ethnically, the Pushtuns are related to the Iranians, and many speak a closely related language, usually as a second language. Like the Kurds (another group related to the Iranians), the Pushtun tribes never united long enough to establish a nation. Currently, 70 percent of Pushtuns live in Pakistan, where they comprise 15 percent of the population, while most of the remainder live in Afghanistan, where they make up 40 percent of the population. Thus the Pushtuns are a dominant force in Afghanistan, but a major nuisance in Pakistan. The Pakistanis have known, since the country was created in 1948, that they had to eventually take control of the Pushtun tribal territory, and gradually, since the 1950s, they have been doing that. Recently, the tribes have begun to notice. They are not happy with this creeping control. The Pushtuns have made their situation worse by allowing al Qaeda to hide out among them, forcing the Pakistani government so speed up their control program.

  • Honour among them Thieves, murderers, rapists; and how the Pushtuns' ancient tribal code is fighting for survival against radical Islam

Politics and Policies

Rudy May Yet Hear an Amen From Values Voters Amid the booths pushing abstinence (``Pet Your Pet'' T-shirts), commandment-of-the-month bumper stickers and religious statues the size of aircraft carriers, the attendees at last weekend's Values Voters Summit are more open to heresy than I would have thought. As they hung out around the Starbucks kiosk outside the Washington Hilton ballroom, these evangelical Christians were willing to give former New York Mayor Rudy Giuliani points just for showing up. It's not that he told them what they wanted to hear -- he didn't -- but that he wanted to be heard at all. With no one candidate grabbing a halo, the right is carefully leaving the door to Rudy ajar. They are willing to give outsized points for movement in their direction. Polls show that social issues are now secondary to many on the right, after national defense and someone who can beat a Democrat. Many know they are never going to win the war against abortion and gay marriage even with those politicians who promise they will do so. If they settle for a warrior instead, they might just find their way to Giuliani.

Do Candidates’ Health-Care Plans Make the Grade? In the din of presidential campaigns, the nitty-gritty of candidates’ proposals on important issues often gets overlooked. But National Journal is having none of that. The weekly trade magazine for the political class has assembled a panel of 10 experts, drawn from across the ideological spectrum, to study and grade the leading White House contenders’ ideas on health care. The newsweekly’s goal was to gauge each proposal on five key criteria — quality of care, government spending, consumer costs, employer-based insurance, and effect on the uninsured — while avoiding eliciting partisan views on whether a given plan was the best approach. Quality of care wasn’t a big issue during the last presidential campaign, but that has changed, says National Journal’s Marilyn Werber Serafini. On the panel’s scorecard, Democrats Hillary Clinton, John Edwards and Barack Obama all won higher marks in this area than the three leading Republicans who have put forth health-care plans, but the GOP’s John McCain drew praise for “innovative approaches” to delivering health care. Republicans Mitt Romney, Rudolph Giuliani and Sen. McCain predictably all fared slightly better in the judges’ assessments of who would fund reform with existing health-care dollars. But the Democrats nudged out all but Sen. McCain on whether the government would get its money’s worth from their respective proposals.

Consumers generally would see lower expenses under the Democrats’ plans, but the Clinton, Obama and Edwards campaigns do less than their GOP rivals to encourage patients to seek value for their money. The panelists found a similar partisan division on how the candidates’ plans would affect employers’ health-care costs. On extending health coverage to the uninsured, Democrats drew far higher scores than Republicans on an issue that Ms. Clinton and Messrs. Obama and Edwards have made a centerpiece of their campaigns. Still, the panelists complained that many elements of the proposals were vague, impractical or too costly.

Science and Culture

All systems go A powerful way of studying biology looks set for take-off. A central tenet of most scientific endeavour is the notion of reductionism—the idea that things can best be understood by reducing them to their smallest components. This turns out to be immensely useful in physics and chemistry, because the smallest components coming from a particle accelerator or a test tube behave individually in predictable ways. In biology, though, the idea has its limits. The Human Genome Project, for example, was a triumph of reductionism. But merely listing genes does not explain how they collaborate to build and run an organism. Nor do isolated cells or biological molecules give full insight into the causes and development of diseases that ravage whole organs or organisms. A complete understanding of biological processes means putting the bits back together again—and that is what systems biologists are trying to do, by using the results of a zillion analytical experiments to build software models that behave like parts of living organisms.The pharmaceutical industry stands to gain much from this approach. Around 40% of the compounds that drug companies test cause arrhythmia, a disturbance to the normal heart rate. Drugs such as the anti-inflammatory medicine Vioxx and the diabetes treatment Avandia have been linked with an increased risk of heart disease. The result is that billions have been wiped off their makers' share prices. Not surprisingly, the pharmaceutical industry has sought out Denis Noble of Oxford University, the creator of the beating-heart model, to help. Dr Noble is now part of a consortium involving four drug firms—Roche, Novartis, GlaxoSmithKline and AstraZeneca—that is trying to unravel how new drugs may affect the heart. Virtual drugs are introduced into the model and researchers monitor the changes they cause just as if the medicines were being applied to a real heart. The production of some proteins increases while others are throttled back; these changes affect the flow of blood and electrical activity. The drugs can then be tweaked in order to boost the beneficial effects and reduce the harmful ones. Systems biology thus speeds up the drug-testing process.

Ulrike's Pickled Brain Yields Clues to Red Army Faction's Orgy of Killing All told, Red Army Faction violence between 1970 and 1993 left more than 60 people dead, including some 20 members of the group itself. A gruesome fascination with the gang lingers. Winkler, who writes for Munich newspaper Sueddeutsche Zeitung, understands the importance of context. The strength of his book lies in showing that terror didn't emerge in a vacuum. How did the street protests of middle-class students -- the children of dentists, historians, clergymen and lawyers -- degenerate into bank robberies and bloodshed? Consider Germany's Nazi past, Winkler says: The anger of the Baader-Meinhof Gang, expressed in outrage over the Vietnam War and Israel's treatment of the Palestinians, originated in shame of their parents' complicity in the Holocaust, he argues. Only a handful of radicals made the leap of logic required to countenance armed revolt in a democracy. Che Guevara, Jean- Paul Sartre and the German-born philosopher Herbert Marcuse helped them cross that line, Winkler says. Marcuse and Sartre theorized that minorities had a right to defend their positions with violence. Che demonstrated how guerrilla warfare could foment revolution. The scope of this book is ambitious, presenting an alternative portrait of postwar Germany. Yet Winkler never falls into the trap of condoning terrorism. Born in 1957, he has enough distance from the generation that spawned the group to judge it, yet enough proximity to understand it.

Return to Dragon Mountain: Memories of a Late Ming Man People of an age of peace, who cannot imagine that the world they enjoy could ever be overthrown, have a particular fascination with accounts of the violent fall of empires and the experiences of those who lived through the ruin of their good lives. Zhang Dai's life spanned the end of the Ming Dynasty in all its eccentric opulence, the subsequent trauma of the Manchu conquest, and the early decades of the Qing Dynasty, when many intellectuals of the old order tried to understand what had happened to the Ming Dynasty and why. Apart from a simple rise-and-fall narrative, the historical whole did not hang together any better than the late Ming polity did. Zhang Dai was, in Spence's terms, "a late Ming man," even though he lived almost half his life under the Qing. The late Ming lacked an effective "plot"; it could not mobilize its vast resources into some integrated plan whose effective implementation would be a narrative of the dynasty's survival. It was politically impotent in the face of Manchu armies, but still victorious in the retrospective imagination as a lost world of engrossing detail. It is easy to sympathize with the late Ming elite's cult of fascination with the individual and absorption in the particular, with its contempt for the conventional and its resistance to the totalizing state. The culture's values were the negative image of the Ming state's own egregious failures, most of all its inability to inspire a sense of collective enterprise and to support that enterprise. If the elite were absorbed in passions for their hobbies, they were also subjects of a dynasty one of whose recent emperors had given up all pretense of governing for cabinet-making. If they were given to theatrical absorption, one of their earlier emperors had decided to play the military hero and had created a state crisis by getting captured by the Mongols. Although it was only one of their multi-ethnic imperial roles, the new Qing rulers on the whole represented Han Chinese orthodox values far more effectively than their Ming predecessors. Perhaps the Manchu rulers, too, were only acting; but as with their armies, they were professionals.

Music, war and politics intertwined The turbulent years of the 20th century, as seen through its music. Awed by Berg, Gershwin hesitated at the piano one night, nervous about playing his catchy songs before one of the deconstructors of conventional harmony. Berg sternly encouraged him: “Mr Gershwin, music is music.” If only it were that simple, writes Alex Ross, the New Yorker's music critic, in his history of music in the 20th century. He notes that musical life in the past 100 years has “disintegrated into a teeming mass of cultures and subcultures, each with its own canon and jargon.” The cultures may sometimes meet on affable terms, but the results can be comic in their incongruity. In the 1930s, when much of the European artistic elite was holed up in Hollywood, Fanny Brice, a comedienne, strolled over to Schoenberg at a dinner given by Harpo Marx: “C'mon, professor, play us a tune.” It would be hard to imagine a better guide to the maelstrom of recent music than Mr Ross, who worked on this book for a decade. He has an almost uncanny gift for putting music into words. No other critic writing in English can so effectively explain why you like a piece, or beguile you to reconsider it, or prompt you to hurry online and buy a recording. And his reporter's nose and exhaustive research result in more telling vignettes and notable anecdotes per chapter than any reader has a right to expect.

Classical Music Fans Are Killing Classical Music Classical music is in danger of seeing its popularity shrink even further, and its most ardent supporters are to blame, says Richard Taruskin, a music historian and critic, in the New Republic. The genre’s fans, bloggers and musicians all tend to blame the downfall of classical music on a siege from the forces of pop culture, ignorance and commercialism. When commuters earlier this year passed by one of the world’s top violinists whom the Washington Post asked to play in a subway station, some classical-music bloggers assailed commuters for their supposed indifference to high art. Classical music’s defenders portray the genre as the last bastion of refined civilization, a view echoed in three books reviewed by Mr. Taruskin in the New Republic. Classical music is purely spiritual, and pop, purely commercial, the thinking goes. It is morally superior; it is the only musical form that can express the composer.

Mr. Taruskin says these are exaggerations and, worse, hurt classical music’s chances of success beyond music schools and subsidized concert halls. Classical supporters need to imagine ways the music can fit into pop culture and cultivate its commercial potential. Mr. Taruskin cites classical music’s varied use in movies as proof that it can thrive in contemporary culture. He also points to Sergei Prokofiev’s grandson, Gabriel, who composes electronic music, punk rock and string quartets. Instead of criticizing Washington, D.C., commuters who ignored a world-class violinist, classical fans should fault the decision to play near a busy station entrance, as opposed to the train platforms where savvy classical buskers have always made money.