Take a look at the cartoon (click to enlarge) on the Bear-Sterns rescue and tell me/us/yourself how you react to. Right on brother ? Yeah, yeah, sure, sure ? Well there are some elements of truth in the argument but more that are missed, wrong-headed and fundamentally dangerous. And by dangerous we're talking about the collapse of civilization dangerous - with not too much hyperbole. First off the bank's not getting bailed out the Fed is guaranteeing debts that suddenly turned into nearly worthless to keep BSC from declaring bankruptcy. And the real central truth is that Bear was involved in so many other links to other banks and financial institutions that if they had much of their paper would have followed, we'd have had a cascading run on the financial system and we'd have re-created the factors that led to the Great Depression. We'll diagnose that and related economic problems some other time. Though if you want some wonky disucssions you can try these (Five "Funny" Things on the Way to the Market,Continuing the Dialog: Facing Realities in the Credit Market).

What we'd like to focus on is the unintended consequences of well-meaning policy choices that turn out to cause longer-term and deeper problems than they purported to solve and didn't solve the problems they were targeted at. Instead they created new ones. In fact much of the last forty years of domestic policy has turned out to be social engineering on a grand scale and almost all of the consequences have turned out badly. We're going to explore that some more here with some examples and start with an illustration from wildlife management in Yellowstone Park where the restoration of the wolf population has re-created a natural and healthy balance.

Over the weekend we got involved in three major threads of exchanges about the economy, credit collapse, the dangers of inner city collapse, social policy and on and on. There were three constant struggles common to all: 1) figuring out what the facts were, 2) figuring out how to analyze the problems and 3) figuring out why most people seem to willfully ignore those in favor of simple, ideological choices. The latter is the most important because the policy failures that are causing us so much trouble are largely of our own choosing - that is politicians gave us simple solutions to complex problems because that's what we wanted. Interestingly many of my discussants weren't entirely immune from the problem when it gored their own ox. So one of our key challenges is to find a way to explain these things simply enough to be grasped without damaging the accuracy. And the bigger challenge is to do so in a compelling and convincing fashion that causes folks to setp back. We're still looking for the magic beans that make that possible, let alone easy, but in the meantime let's start with at least explaining some of the cases. Just to set the stage though you might find this essay by Paul Graham a worthy introduction to the art of reasoned discourse (How to Disagree)

Getting Started

We're going to start by introducing a series of "small-scale", that is mostly local, policy choices that are good examples of Unintended Consequences (UiC) and some key ways to think about them. Which you can see at right. When people and politicians complain about UiC sometimes it's reasonable because of the complexity. More often, in fact almost all of the time, it's because a simple solution that sounded "right" was adopted but not thought thru. Not because it couldn't have been. And there's actualy a simple way to think about it. Ask the question - "what happens next ?". In other words what are the rippling results from these choices. And usually the way to start answering the question is by asking how do the incentives for the players change - who benefits, who gets hurt and what are the costs and benefits. All driven by the oldest of economic physics - when the price goes up people want less and conversely. For example during the 80 years war with Spain during the Dutch Revolt the City of Antwerp, the commerical capital of northen Europe, was under siege by the Spanish Army but because so much food was being smuggled in they survived very well thank you. Then the city fathers passed a series of price controls that capped what could be charged, the smugglers were no longer compensated for their risks, the city began starving, the Army conquered and sacked the city and it was replaced ever since by Amsterdam. After years of holding out things were comletely reversed in months. Can't happen here you say ? Think again. They failed to work their way across the columns of the table.

Wolves in Yellowstone

Here's one example of of a fairly complex problem where supression of the wolve population led to a rise in the elk population in Yellowstone. When wolves were re-introduced a more natural ecological balance was re-created that led to the restoration of the original ecology. Which was and is much healthier, more stable and robust and more appealing.

Lessons from the Wolf Bringing the top predator back to Yellowstone has triggered a cascade of unanticipated changes in the park's ecosystem. In the dead of winter in 1995 the National Park Service and the U.S. Fish and Wildlife Service brought 14 wolves into Yellowstone by truck and sleigh. Gray wolves (Canis lupus) from Canada, these were the first to call Yellowstone home since the creatures were hunted out of existence there early in the 20th century. A year later 17 more Canadian wolves were added. Biologists hoped that the reintroduction would return the mix of animals to its more natural state. They expected, for instance, that the wolves would cull many of the elk that lived in the park. The wolf introduction has had numerous unexpected effects as well. The animals' impact on the flora and fauna in the park has been profound. Indeed, the breadth of change has been so far-reaching that researchers from around the country have come to study the alterations. The wolf-effect theory holds that wolves kept elk numbers at a level that prevented them from gobbling up every tree or willow that poked its head aboveground. When the wolves were extirpated in the park as a menace, elk numbers soared, and the hordes consumed the vegetation, denuding the Lamar Valley and driving out many other species. Without young trees on the range, beavers, for example, had little or no food, and indeed they had been absent since at least the 1950s. Without beaver dams and the ponds they create, fewer succulents could survive, and these plants are a critical food for grizzly bears when they emerge from hibernation. Although the jury is still deliberating the effects of wolves, early evidence strongly suggests that the canids are unwitting restoration biologists. By simply doing what they do--mainly preying on elk--they are visiting great changes on the Yellowstone ecosystem. Many of the changes are positive for those things humans value, and for experts to accomplish some of these same goals would be hugely expensive. Wolves have brought other lessons with them. They dramatically illustrate the balance that top-of-the-food-chain predators maintain, underscoring what is missing in much of the country where predators have been eliminated. They are a parable for the unintended and unknown effects of how one action surges through an ecosystem.

 Mis-guided Social Policies

Now let's consider several representative social policies that have badly damaged the economies of many major cities in this country and around the world. Always and without fail. The chart considers Rent Control, Corporate Taxes, Minimum Wages, Land Use Controls and Drug Laws. And for each we trace thru several stages of the what next question by examing how the incentives worked themselves out. If you'll look at each you can see, we believe, how none is a surprise. For example imposing rent controls increases demand but decreases upkeep because renters get below market prices while landlords can't get a return. As that keeps working less housing is built and the situation worsens and worsens until the inner city often looses affordable housing all together. Yet where luxury housing is often exempted the market leads to new construction. If you wondered why housing in NYC is expensive, scarce and limited to the high-end there you go. For some of the data and analysis behind this see either/both Basic Economics: A Common Sense Guide to the Economy and/or Applied Economics: Thinking Beyond Stage One by Thomas Sowell.

All Together Now

Worse yet these things work together synergistically. Rent control to create affordable housing does the oppositie, corporate taxes lead companies to quit investing and them move thereby eliminating many middle class jobs, minimum wages increase the demand for higher-skilled labor, make capital using technology more profitable and make it more difficult for under-educated minorities to get on the job ladder and develope skills and experience. And so and so on. When you put them all together you have the working folks driving hundreds of miles for minimum wage jobs as energy and food prices increase and those left in the city become an underclass prone to violence, gang warfare and never-existing opportunities. All because well-intenioned folks tried to do the "right" thing that really suited their own prejudices without examining the consequences.

Take a look at the "synergies" summary and see if our take on how all the pieces work together to get a vicious downspiral of socio-economic decay. All because of good intentions, bad judgement and intellectual laziness. 

The Parable of the Homeless Dog

A story that illustrates that attitude in part for me is a common experience we all have. Meeting a stray dog who wags his tail and after we pat him to make ourselves feel good starts to follow us home. Well we aren't prepared to acquire another responsiblity so we chase him away. The morally correct choice in my book would be to walk on by in the first place rather than raise the dog's hopes and then dash them. Now don't take this as condescending or patronizing - it's not. Or not intended that way in any case (hmm...more UiC ?). What it does is illustrate how doing the emotionally satisfying thing in the moment and walking away is irresponsible and immoral. If you really want to fix the dog's problems you need to find him a way to get fed and housed, preferably on a more permanent basis. 

For some good examples that use real world problems to depict consequences you might see some of the more interesting episodes of NUMB3RS.  Gang war in LA was and is a recurrant theme and we all "know" it and the associated crime levels are endemic. But it wasn't until hearing some of the stats that the extent of the problem came clear(er) to us.

• "The OG": When Don and his team are called to the murder scene of a Los Angeles gang member, they learn the victim is a fellow agent who had been working undercover.
• "Sacrifice":A researcher is murdered in his home, and Charlie must reconstruct data erased from his computer while Don investigates possible suspects.

The last one is a head fake, as Randy Pausch calls it, because it's based around the ability (hypothesized of course) to develop Sabermetrics for socio-economic analysis. We'd change the direction of the story to decide how and where to invest in bad areas not disinvest. And speaking of Pausch - a final note. Have you considered that besides all the other things we said in the prior post (Sunday Morning Reflections: Ramblin Randy's Rules of Life, Living and Love) that over and above everything else he was facing reality as it is. Not as he wants it to be.

Posted by dblwyo at 09:13 AM | Permalink | Comments (0)

Back last Sept. the WSJ broke a wonderful story about Randy Pausch, a Carnegie-Mellon compsci prof who was giving the Last Lecture. Now in a last lecture the idea is to distill down what you've learned in your career and life and want to pass on to your students and the rest of the world. In other words the most fundamental things you've learned about life, living and how to conduct yourself. There was one small difference, which you may already know. Randy Pausch had/has terminal pancreatic cancer, one of the most incurable, debilitating and painful cancers. His last lecture was in a very real sense truly a Last Lecture. The WSJ vidclip at right will give you a brief taste of an hour-long lecture but the whole thing is much more valuable and interesting. If that doesn't work try the hyperlink instead.

Randy's last lecture was so humorous, brave, entertaining and full of hard-bought practical wisdom that it tore around the internet and then the country like wildfire. The Journal was swamped with comments, ABC interviewed him and named him the person of the week and he eventually had a follow-up interview and reprised lecture on Oprah.

BTW - Randy is still hanging in there with ups and downs and you can follow them on his health update page here. So far so-so but he's far exceeded the limits of the original estimates and his upbeat approach to life and living have to be part of the reason. As he said you have to decide between being Eeyore or Tigger.

Randy's approach is an example for us all. The thing we wonder about though is how many of the thousands of people who watched the clips or his full lecture, who were greatly moved and filled to over-flowing with human sympathy actually turned the lecture to the purposes it was intended for. At least for us because Randy did it for his kids as a memory. 

We figured it was time enough that the intital emotional surge had both died down and passed away. Time in other words to re-visit the good Prof and see who we could bring with us. Because his words need to be though about carefully, mindfully and reflectively. You may not, and probably shouldn't take all his goals and rules exactly as your own. A view we suspect he'd agree with. What we'd suggest though is that a real legacy would be if you listened to this and went and thought thru your own values, goals and habits. And then used Randy's example as a spur to focusing on them.

Because a lot of people face challenges as severe as his, and many of those aren't anywhere near as fortunate in their innate talents, upbringing, or opportunities. Which takes nothing away from the Prof.'s accomplishments or messages. Quite the contrary. Ordinary people face "ordinary" challenges each and very day of living and if this lecture can help them develop ways to better cope, whether or not they're in extremis, that's a real legacy. 

We suggest, if you found our arguments at least intriguing or even a tad compelling, and the short 4-min WSJ clip helped that you work your way thru the ABC and Oprah interviews. But you'll be well repaid for listening to the whole thing. Very well repaid indeed IOHO. You can find the full lecture here: Randy's full "How to Live Your Life" last lecture. And the slides here.

But let's set the stage with a quote from the greatest of the Graeco-Roman Stoic philosophers Epictetus that, at least to us, puts a powerful context around it, tells us that we've been wrestling with this for a long time and points to other sources of wisdom.[MANUAL OF EPICTETUS (EPICTETOU ENCHEIRIDION) by Arrian]

What wouldst thou be found doing when overtaken by Death? If I might choose, I would be found doing some deed of true humanity, of wide import, beneficent and noble. But if I may not be found engaged in aught so lofty, let me hope at least for this—what none may hinder, what is surely in my power—that I may be found raising up in myself that which had fallen; learning to deal more wisely with the things of sense; working out my own tranquillity, and thus rendering that which is its due to every relation of life….

 Now the lecture is broken up into three parts, actually a fourth that never gets mentioned nor the attention it deserves. First is Randy's childhood dreams of which there are six and wonderful dreams they were. You'll have to listen to the full lecture to get them but he draws so many great lessons that it's worth the price of admission in and of itself. But we'll extract just one to get you going:

 Dreams are great things and good powerful ones are truly energizing. Now to be fair we don't all have Randy's talents, upbringing or opportunities but we can choose to develop his wonder at the world, his drive and discipline and his willingness to help others. Not sure about the courage but maybe that'd follow. But given that combination of talent and developed characteristics what did he do with it ? The second part of the lecture traces thru his career as he becomes a prof who helped make breakthrus in Virtual Reality and a major pioneer in Human-Computer Interfaces, moved to Carnegie where he co-founded one of the most innovative CompSci/Entertainment multi-disciplinary programs in the world and started a project called ALICE which developed a whole new programming platform to make it possible and ENTERTAINING for people to learn programming while learning to do other things. Quite a chain of breakthru accomplishments - all of which are living on after him. For any of you who play computer games Randy's work is a major part of your lives.

The final part of the lecture is where he draws it to a close with his lessons learned. And again we're going to tease and cheat. You have to watch it for yourselves - and we'd suggest more than once. In fact we'll go so far as to admit we've seen it so far 4-5 times and will be re-watching it later on. But we'll also reprise one to get you going as well:

Important Advice

• •Be good at something: it makes you valuable
• •Work hard … “what’s your secret?”
• •Find the best in everybody; no matter how you have to wait for them to show it
• •Be prepared: “luck” is where preparation meets opportunity

 But there's one final, almost subliminal lesson that's a big one and Randy doesn't mention nor have any of his commentators. Each of his major career milestones, any of which would be sufficient laurels for a whole career, had some key characteristics that we think are really important and, on reflection, are important at least to us.

1. They were all really...really hard. Both technically and organizationally. by which we mean politically. They crossed discipline and organizational boundaries and were cross-grained to the way the institutions he was in worked. And boy do we mean CROSS.
2. They all reached out to other people and found a way to get them involved, committeed and contributory.
3. And they all had and have larger implications and potential benefits for the well-being of the world. Other people in other words. As the Shakers say, "Hands to Work and Hearts to God".

Posted by dblwyo at 08:05 AM | Permalink | Comments (0)

In yesterday's post my argument was that Education was the single most important policy concern we face for the long-term health of the country. In a way I stand corrected because getting the Housing crisis under control, preventing a systemic collapse of the credit markets and then getting the economy re-grounded for the long-term is more important. Enormously so. There are so many moving parts to this that it'll take me a bit to sort them out and it probably won't be dead-on in the first couple of passes and will need some evolution. If you've been reading along with this blog you'll have noticed that we've elevated the Economy to a central place in our concerns for some time now.

The card that was inadvertently palmed was my constant seperation of policy issues into three big buckects: Domestic, Economic and International. Education is the most important domestic policy issue but the next President is going to face two driving concerns that swamp everything else. If they're "fixed" then we'll be in a good position to address all the other conerns. If they metastasize into major crisis they could each break us. One is the Economy and the other is the ME and both share a common characteristic - failure to find a stable and workable resolution could lead to major worldwide economic disruptions. And by major I mean collapse though that's NOT the probability it is the worst case downside risk. But managing crisis is what President's do, isn't it ? You can see our prior analysis and summaries of the ME and the Economy in their respective archives btw.

Let me present a quick and dirty summary of my views on strategic economic policy with an extract from an e-mail with an economist friend who seemed to think they were pretty sensible:

Hey Mike - we're pretty much on the same page. If it 'twer mine to control I'd set up three large-scale gov't programs. A real estate repair and recovery effort though you dodged the key question of resources and skills. A significant infrastructure investment effort and a massive national energy development effort on the scale of a "concerted national effort". All of which would have major macro-consequences. In addition the first would get us out of the RE mess. The 2nd would provide huge intermediate jumpstarts while also setting up a major l.t. investment that would improve productivity. The 3rd in addition to those benefits would provide a jumpstart to several goals. Reduced foreign oil dependencies, improved national security AND, the biggest, the creation of the next big thing for creating new industries, technologies and jobs.

Consider those three strategic policies as both blueprints and checklists. Blueprints as to what we need to do. And checklists to assess each of the candidates against. Anything that a) doesn't address those three or b) substitutes ideological wrong-headedness or popular posturing for serious, workable and pragmatic proposals is an indictment. Policies come in two flavors. First they are either Urgent or not. Second they are either Important or not (yes that's the Covey matrix). Education is critically Important but not Urgent. The Economy and the ME are both Important and Urgent. The trick is to work on things that are Important before they become crisis - unfortunately we've let the Economy slide for decades and have been self-interested, short-sighted and self-damaging on the ME for longer. 

So to focus on the Economic crisis it helps to understand it a bit.

Posted by dblwyo at 09:03 AM | Permalink | Comments (0)

Over the last two weeks there have been a bunch of interesting stories and announcements on major new findings and recommendations in the Education arena. Unfortunately Education hasn't recieved the attention it deserves in this election - which is, in turn, a fair and accurate reflection of the voter's interests. But not of their INTERESTS, using the word in the older sense of being "what's in your best interest". In our humble opinion Education is the single most important domestic policy issue facing us in this election and for the next several decades. Why ? Because it is the secret sauce without which we cannot continue to grow our economy - not the only one of course, there are several. But Education is the sine qua non - that without which there is no other. Without an educated work force our businesses cannot continue to grow and innovate because the supply of people qualified for new and more demanding jobs won't be sufficient.

Americans have always known this just as we've also always sneered at intellectuals - odd paradox that. In the early rise of civilization writing was the technology that allowed for the coordination and  management of complex societies and was as important as agriculture, the wheel or fire. Scribes who spent decades learning complex, difficult and arcane scripts and languages were a special, priveleged class in all early societies because without them the whole thing tumbled down. Well these days without a huge increase in the skill levels and a broadening that base we'll face similar challenges.

When the British Parliament sent special delegations to learn the secrets of Am. manufacturing in the early 19thC they found an emerging set of capabilities that exceeded those of England and would revolutionize the world. But what they found even more astounding was free public education i New England and the independence of thought, educational levels and skills and inventiveness of the workers. So unlike their own class bound societies. When the US transitioned from an agricultural society to an industrial one a key enabler was the widespread growth of good Am. high-schools.

In those days we took education seriously and knew that standards, efforts, innovation and inventiveness were to all our benefits. It's time to take Education as seriously again. And that means you not some vauge they. We need to get it as a central issue in this election, we need to make a concerted national effort, of the right kind of course, but most importantly good education follows from good and local community support. 

EDUCATION READINGS

School Choice Isn't Enough From City Journal: Instructional reform, not just markets, is the key to better schools. Looking back from today's vantage point, it is clear that the school choice movement has been very good for the disadvantaged. Public and privately funded voucher programs have liberated hundreds of thousands of poor minority children from failing public schools. The movement has also reshaped the education debate. Not only vouchers, but also charter schools, tuition tax credits, mayoral control and other reforms are now on the table as alternatives to bureaucratic, special-interest-choked big-city school systems. Yet social-change movements need to be attentive to the facts on the ground. Recent developments in both public and Catholic schools suggest that markets in education may not be a panacea--and that we should re-examine the direction of school reform. But sadly--and this is a second development that reformers must face up to--the evidence is pretty meager that competition from vouchers is making public schools better. What should we do about these new realities? Obviously, private scholarship programs ought to keep helping poor families find alternatives to failing public schools. And we can still hope that some legislature, somewhere in America, will vote for another voucher plan, or generous tuition tax credits, before more Catholic schools close. But does the school choice movement have a realistic Plan B for the millions of urban students who will remain stuck in terrible public schools? According to Ms. Hoxby and Mr. Peterson, perhaps the two most respected school choice scholars in the country, no such plan is necessary. In their view, the best hope for education improvement continues to be a maximum degree of parental choice--vouchers if possible, but also charter schools and tuition tax credits--plus merit-pay schemes for teachers and accountability systems that distinguish productive from unproductive school principals. That "incentivist" outlook remains dominant within school reform circles. But a challenge from what one could call "instructionists"--those who believe that curriculum change and good teaching are essential to improving schools--is growing, as a unique public debate sponsored by the Koret Task Force on K-12 Education revealed.

Is China Model Right for U.S. Kids? Chinese students like Jack are examples of why Microsoft's Bill Gates asked Congress today to spend more to improve American education in math and science. Unless more students can be attracted to those subjects, Mr. Gates warned, the U.S.'s competitive advantage will erode and its ability to create high-paying jobs will suffer. I know many Americans don't believe him. They argue that American kids may not be as good at math and science as Chinese and Indian kids, but they're more well-rounded. But that's increasingly untrue. For example, Jack isn't your stereotypical Chinese nerd. He's the captain of IMSA's sophomore basketball team and tried out for the tennis team today. Bob Compton, a Memphis-based venture capitalist, ran into many kids like Jack when he was traveling in China and India. They were two and three years ahead of his two teenage daughters -- not just in math and science, but in almost every other subject, too. That discovery prompted him to make a documentary called "2 Million Minutes," which followed students in the U.S., India and China to show how they spent their four years of high school -- which works out to about two million minutes. The film's conclusion: Chinese high-school students spend almost twice as much time on schoolwork as their American peers. (Indian kids spend half again as much time as Americans.) In Beijing, Jack used to average three or four hours of homework a day. In his Peoria high school, he spent less than an hour a day. At IMSA, homework demands around two hours a day, and Jack still has two hours to play basketball. He told me he's learning and happy.

Calculating a New Approach This week, after two years of deliberation, the National Mathematics Advisory Panel released their report aimed at improving math education in this country. And you could almost hear the sound of textbooks--that heavy one in your kid's backpack, and a stack of high-stakes math tests, the kind your kid take every year--landing in the garbage can with a thud. The advisory panel, made up of 24 educators and mathematicians, is all for textbooks and testing. In fact, the report specifically endorses regular math assessment. But after months of hearings, the panel was unequivocal that we need to change the way math is being taught--and the way we test it. Right now, it's simply too broad, too unfocused, repetitious and, in the end, treated too superficially. The findings of the panel come when international assessments show U.S. students rapidly falling behind other developing countries. A 2007 assessment found that 15-year-olds in the U.S. ranked 25th out of 30 developed nations in computation, problem solving and math literacy. The panel was convened in 2006 by President Bush to address concerns about the lack of homegrown mathematicians, engineers and scientists. At the same time, the report will provide momentum to the small but increasingly influential group of math researchers and educators who see the curriculum used in Singapore, often called Singapore Math, as the gold standard. Singapore math is very lean, says Charles Patton,  a software developer at SRI International and math-education researcher who is working with Singapore's National Institute of Education. The Singapore curriculum flows coherently from one subject to another, culminating in algebra.

Let's talk about figures More than most other sorts of knowledge, mathematics has always transcended the limits of time and space. The genius of ancient Greek geometry not only stands the test of time (Pythagoras's theorem is as valid now as when it was first proved); its discoveries can suddenly find new applications in the 21st century. Admittedly, there is less of a distinction these days between pure maths and the applied sort; that is one of the consequences of a world where all sorts of knowledge seem to spread and fuse in unpredictable ways. For example, the kind of theoretical maths that would terrify a layman has become an indispensable key to understanding the way that living things behave. Anything that grows and disseminates—from single-celled organisms to malignant tumours, from rainforests to the pigments that form stripes or spots in the animal kingdom—can be modelled with the latest computational tools. America has long masked its difficulty in educating enough mathematicians by importing lots of ready-made talent, especially from East Asia and the former Soviet Union. But the problems are real enough. http://www.heymath.com/

Idaho Turns to Chess as Education Strategy Idaho officials plan to make their state the first to offer a statewide chess curriculum as part of a pilot program for second and third graders. Tom Luna, the state’s superintendent of education, said participation by teachers would be voluntary, but if reaction to the pilot program is any measure, interest will be great. There are no studies showing that teaching chess has benefits for children, but there is anecdotal evidence, Mr. Luna said. “One of the things that we hear is that too much of what we do is based on rote memorization,” Mr. Luna said. “The part I really like about this program is that kids are thinking ahead.”

Principal Sees Injustice, and Picks a Fight With It At the behest of a new state law she detested, she looked for which ones listed a Social Security number and which did not. Without a number, it was virtually certain that a child was in America illegally. Ms. Watterson wound up with 38 names, many of them of boys and girls she had personally recruited to the school. Under the statute popularly known as Proposition 300, illegal immigrants could not receive in-state tuition at public colleges and universities in Arizona. Nor could school administrators like Ms. Watterson use state money to pay it. GateWay’s students, while still in high school, are able to take courses at a community college in the same building, with in-state tuition paid by the high school. Ms. Watterson knew her students could not afford to pay the out-of-state rate, generally $280 a credit. And without the college classes, there would be less reason to stay in school. So she made the list and sent letters home and began to call in the affected students one by one to tell them that their tuition was no longer subsidized. A girl named Karla crumpled to her knees in the principal’s office, and said, “But I’m a good person.” A few weeks later, Ms. Watterson heard, Karla was riding a bus back to Mexico. Yvonne Watterson vowed to do something so she would not lose any more of her students. She made the vow because of what happened every July 12 back in Antrim, Northern Ireland, her hometown. On that night, the local Protestants celebrated their forebears’ victory over a Catholic army three centuries earlier in the Battle of the Boyne. Even in the Arizona desert, Ms. Watterson remembered the sound of Loyalist anthems and the smell of burning tires and the sight of the pope being burned in effigy. Though she was a Protestant, even as a child she had always cringed imagining how July 12 felt to her Roman Catholic playmates up the block. “I thought, ‘Here we go again, segregating kids, putting kids on a list,’ ” Ms. Watterson, 44, said recently in her office at GateWay. “It’s that hatred. It’s that separation. Not having to look someone in the eye. It’s a horrible, cowardly — I don’t know what to call it. I wouldn’t have believed I was in America.”

Posted by dblwyo at 09:30 AM | Permalink | Comments (0)

Well the slugfest continues and gets pretty ugly but Barrack and Billary continue to be neck and neck. And it looks like it'll go on thru the Convention. Which, contrary to the recieved wisdom, isn't necessarily all a bad thing. First off it's not really giving McCain that big a leg up particularly since he's not running. In fact instead of lying low and doing prep work now would be a great time for him get a multi-month jump on the real campaign by coming out with serious policy proposals on education, healthcare and the economy. C'est la guerre. Second off we could be finding out both what the two Dimowhackic candidates stand for and what their policies might be. UNFORTUNATELY what we're getting is an increasingly ugly bar fight by two unskilled fighters who also think getting down in the mud is the way to go. Actually it's not that bad...yet.

Needless to say the cartoon at right - from a sample of 15-20 of the things, pretty well sumarizes the overall impression AND the level this is being discussed at. Except on Fox News of course where the descent into pre-Jurassic darwinian swamps is setting new lows. Now how many people actually listened to Obama's speech ? I consider it one of the great political speeches of our generation except for the minor detail that nobody appears to be paying attention. First off he refused to back away from his years long association with the Rev. bigmouth. Which if nothing else shows strong character. Second off he completely disavowed the Rev's statements while acknowledging their long-standing friendship. Taken all together that spells real character in my book.

But third, most importantly and completely ignored, the bulk and heart of the speech was as balanced, honest, look-em-in-the-eye look at Rascism in this country as I've read. Now to be fair here you need to understand I'm a very biased and bigoted person and highly discriminatory to boot. I don't care what your race, religion or politics nor if you're 3' tall with green spots and purple fronds. What I do care about is are you competent, honest, keep your word and deliver a fair day's work for a fair day's pay. So please bear in mind that I'm a victim of my terrible childhood upbringing out in Cowboy Country. Though not one myself.

Racism has been the not so secret DLS of this country since its' founding with the original Constitutional compromise being all that allowed the nation to be formed. It grew increasingly ugly in the early 1800s until the Southerners who were loosing the battle snuck thru a bunch of legal and regulatory reforms that made slavery legal in all states under any conditions. Don't let anybody kid you - the South caused the Civil War because they were loosing the economic one. After loosing the real war though they snuck back in the backdoor with the Jim Crow laws after Lincoln's assassination. Which was the law of the land and cultural practice until the Civil Rights legislation of the '60s. Who's passage was both an ornament of the Democratic party and it's undoing in the South as well as an underpining of the Reagan coalition. But we've still made enormous strides.

What Obama did was recognize, describe and acknowledge the legimate fears, grieveances and injusticies that blacks faced and still face as well as those that whites sufferred as we tried to social engineer our way out of the mess we'd created. Even better he spent as much time in his speech calling our Black compatriots to begin to take responsibility for themselves as he did explaining the historical reasons behind their anger. He spent equal time looking at the feelings and pressures on the white population and the growing socio-economic pressures on them that make the bulk of the middle class unsure of its' security and the future of their children.

The saying used to be "if we put a man on the moon why can't we cure poverty and racism ?". The answer is because the first was a simple engineering problem. And simple answers haven't worked for more complex social issues. If you discriminate against someone because they aren't qualified for a job is that discrimination ? But if you use a position of authority and power to keep that person from getting a job they can qualify for is it not ? What about if you use influence to keep that person from getting the qualifications and his children as well ?

What Obama did was set the table for the first serious discussion we could have on race, poverty and new approaches we've had in over forty years. Unfortunately that's being lost with all the ugliness and lack of attention. In no commentary, editorial or other forum have I seen anyone acknowledge the balance, fairness and justice of that speech. Nor suggest that we build on it.

Yet keeping people down is not only unjust but it's inefficient and ineffective. It costs in terms of crime, deterioration of our cities, drugs and violence and unecessary healthcare. It also costs us in terms of lost opportunities. When we create decent jobs for people who don't have them we increase the wealth of us all. In China, India and Africa they call that development. So what's served by not taking Obama's speech as a starting point and trying to figure out how to really address these problems.

You'll find the usual spate of excerpts below, one of which from Eastern Hemisphere takes you to some interesting comments by a black man AND a complete video. You'll also find some pointers to some of Lincoln's most important speeches which turn out to be historically informative and more relevant today than they should be.

Politics/Election Readings

Wyoming Serves as a Campaign Cue For a sign of the growing intensity of the Democratic presidential race, look no further than this city of 52,000 in one of the most solidly Republican states in the country. There are only 12 delegates at stake in Saturday's Wyoming caucuses, about one-half of one percent of the tally needed for the nomination. Yet both Hillary Clinton and Barack Obama staged rallies here Friday. Wyoming's new role in shaping the Democratic contest seems a little surprising, given that the state has voted solidly Republican in national elections for decades. It backed President Bush by a 40-point margin twice and hasn't elected a Democrat to Congress since 1976. The state grew only more Republican during the 1990s when the Clinton administration's environmental policies, which included more protections for endangered species and restrictions on land use, bred deep discontent. In 1994, Rep. Barbara Cubin won her seat in Congress in part by running against President Clinton and his "war on the West." But Democratic prospects in the state have improved recently as Republicans face an increasingly gloomy electorate.

Ready for round two John McCain readies himself for round two. Mr McCain still does not know who his Democratic opponent will be, but he promised in his victory speech “to make a respectful, determined and convincing case” that Americans should vote for him rather than “our friends in the other party”. His strategy is still evolving, but some outlines are becoming clear. Presidential candidates are judged on “their character and the whole of their life experiences”, he told supporters. Mr McCain has been shot at, stabbed, beaten and twice nearly killed for his country. His Democratic rivals have endured only metaphorical flak. The Democrats are already trying to blame Mr McCain for the “Bush-McCain” war in Iraq. Mr McCain says it is pointless to argue over whether America should have invaded. Since it did, the next president must explain how to bring the war “to the swiftest possible conclusion” without sparking genocide, destabilising the Middle East or empowering al-Qaeda. Hillary Clinton is right to argue that Barack Obama is ill-prepared to deal with a national-security crisis, say Mr McCain's aides—but she is no better. Though he is the only candidate who has dropped bombs on foreigners, Mr McCain is also the only one who embraces globalisation. While his Democratic rivals stoke popular fear of free trade, Mr McCain defends it stoutly.

Obama's Speech on Race Draws Parallels to 1960 Kennedy Address on Religion The Democratic presidential hopeful yesterday attempted in Philadelphia to quell a firestorm set off by incendiary sermons made in past years by his former pastor and adviser, and to challenge Americans to transcend racial prejudices. While the speech Obama delivered is unlikely to win over those who oppose his candidacy because of his race, it may serve a similar purpose as Kennedy's address to Protestant ministers in Houston in 1960 -- dispelling concerns among some voters about his core beliefs, analysts and historians said. In excerpts of past sermons, the Reverend Jeremiah Wright, 66, for two decades Obama's pastor at Trinity United Church in Chicago, suggested that an oppressive U.S. foreign policy had incited the Sept. 11 attacks and that the government had a role in spreading the AIDS virus in the black community. Obama, 46, who said he never heard such words from Wright, said in his speech delivered two blocks from the Liberty Bell, ``Reverend Wright's comments were not only wrong but divisive, divisive at a time when we need unity.''  He added, however: ``I can no more disown him than I can disown the black community. I can no more disown him than I can disown my white grandmother -- a woman who helped raise me'' and who also had made racist remarks that made him cringe. Obama said his own mixed heritage has taught him that ``we cannot solve the challenges of our time unless we solve them together -- unless we perfect our union by understanding that we may have different stories, but we hold common hopes.''

• Election 08: Full Obama Race Speech! By now most of you have come to know me as a person that is never at a loss for words, but in this case I really can't say much, other than this speech was special, one of those rare moments where reality met intellect. If this is the type of calm and thoroughness Barack Obama brings to his own personal crisis, then one could only imagine how he's going to respond when that red phone rings in the middle of the night. I don’t think anyone will question whether or not he has the chops for the job again. The sheer fact that he didn’t disown his pastor today says a lot about his character. It would have been much easier to run. For the last eight years we have been talked to like dummies, by a dummy, leaving us to over analyze ourselves and also act like dummies. It felt good being addressed like an adult again. I think Obama knows that most Americans “get it”.
• Obama's Problematic Pastor This is the whole truth. This flawed bigoted man saved my life. He took me from a life of despair to a life of hope, from a cynical indifference to a life of faith. He did this for me. He saved me. And this is why I never left his church. This is why I will always credit him as my mentor and friend. However, I did not go to him for his anti-American politics or his blatant racism. I went to him for personal guidance, for hope and for a way to Christ. To understand how that could be true I ask you, all of you who are listening to my words, to think about your own lives and your own mentors and teachers and family and friends.

Choose Or Lose Presents Clinton & Obama Answer Young Veterans Eight Iraq war veterans get the opportunity to grill Senators Hillary Clinton and Barack Obama on the issues affecting them.

Drawing the Candidates Every four years presidential candidates are given satiric makeovers and in this spirit I asked four caricaturist/illustrators to describe the most critical feature needed to achieve the likenesses of John McCain, Hillary Clinton and Barack Obama, and whether or not a single pose best defines the candidate.

Lincoln Speeches

•  A house divided

• Cooper's Union Speech

• First Inaugural Address

• Lincoln-Douglas debates of 1858 
  

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ME policy and events continue to be challenging for us all. Just because Iraq, and by extension, the ME have come off the front-page doesn't mean any of those challenges have gone away or been lessened. They continue as bad as ever and will be the #1 foreign policy challenge facing a new president. Not just because they are important but because they are also urgent. There are, of course, many other important problems who's long-term implications are even more profound. Primarily finding a way to involve the BRICs as contributing and supporting stakeholders in the new world structure that must emerge to provide a stable int'l framework. But before we get to that point, on which we a) aren't doing badly but b) which will have major up/downs and crisis, we have to pass thru the bottleneck of the ME. The graphic at right is borrowed from an earlier posting on Iraq's strategic consequence and context but will serve here to illustrate the complexities, puzzles and conundrums facing us.

Because the ME controls the available supply of swing oil reserves and production capacity the economies of the rest of the world cannot get by without secure and stable access to it. Anybody who thinks we can just walk away is dreaming. Aside from the minor detail of requiring a national energy policy that would be an effort on a par with the Space program in its' heyday, or perhaps the Manhattan project (& concievabley as important) there's the other DLS (dirty little secret). Changing from where we're at to where we should be, whatever that is, will take decades and $T's of investment. Our last real chance at this was in the '70s and early '80s but when the price of oil dropped people let it slide. So we're trapped in this box for the lifetime of your children.

How will we cope ?

 Any answer must NOT be in isolation but also recognize the importance of local initiatives. We've tried the "End of History" thingee and imposing culturally insensitive solutions but have re-learned painfully that culture matters. As our previous Iraq assessments show. Put that another way - your future well-being and moreso that of your children is critically dependent on the countries and societies of the ME finding workable paths forward to more stable, just and prosperous societies. NOT necessarily democracy, though that should and may come in time, after they've earned it.

READINGS

The pro-Westerners feel stumped too America's Arab and Israeli friends in the Middle East are finding diplomatic solutions hard to find or sell. NO STRANGER to crises, the Middle East is having to cope with several at once, ranging from bloodshed in Gaza and the stalling of Palestinian-Israeli peace talks to the struggle over Lebanon, Iraq's war and Iran's nuclear ambitions. But the puzzle's pieces are interlocked. Troubles in one place affect those in others, as local tussles increasingly reflect a wider regional contest that pits a fading American administration and its anxious allies against a robust “resistance” front aligned with Iran. Last week's bloody flare-up in Gaza, which left more than 110 Palestinians and two Israelis dead, was a case in point. The high Palestinian death toll and a widely aired threat by an Israeli minister to unleash a shoah—a Hebrew biblical term meaning holocaust—on the Palestinians in Gaza, had repercussions far beyond the Qassam rockets' range. America's secretary of state, Condoleezza Rice, had been expected to come to the region to nudge forward the talks between Israel and the rump Palestinian government in the West Bank. Instead, she arrived to find them suspended, though they will now resume. Gaza's agony cast a dark shadow in neighbouring Arab capitals too. In the lead-up to an annual summit of Arab leaders, scheduled for the end of this month in the Syrian capital, Damascus, America's allies had been manoeuvring to squeeze Syria, which they blame for meddling in Lebanon, for undermining Mr Abbas's peace efforts and for supporting non-Arab Iran. Egypt and Saudi Arabia had been corralling support from like-minded governments to boycott the meeting, unless Syria prompted its protégés in Lebanon to accept an Arab League plan to resolve the long-festering constitutional crisis over the choice of a Lebanese president. But the gory images from Gaza may have trumped such plans.

• The bloody conundrum of Gaza The Israelis and Palestinians are trapped in a lethal stalemate, and the Islamists of Hamas refuse to be destroyed
• Bracing for the big one Despite a short, tantalising lull in Gaza, a wider war may be on the way

Photographs unravel Turkey's ethnic tapestry Ever since Turkey became a state in 1923, it has been scrubbing its citizens of identities other than Turkish. In some ways, that was necessary as a glue to hold the young country together. European powers were intent on carving up its territory, a patchwork of remains from the collapsed Ottoman Empire, and Muslim Turkishness was a unifying ideology. But it forced families from different backgrounds, who spoke different languages, such as Armenian, Kurdish, Greek, Georgian, Macedonian, Bosnian, to hide their identities. Family histories, such as the crushing events of Turkey's genocide against Armenians in 1915, were never spoken of, and children grew up not knowing their own past or identity. "Memories like that were whispered into ears behind closed doors," said Fethiye Cetin, a lawyer who learned only in her 20s that her grandmother was Armenian. "There was a big fear involved in this, so the community itself perpetuated the silence." It is that locked past Durak and his colleagues seek to open. Their method is telling their own stories to audiences across Turkey as an accompaniment to exhibits of Durak's photographs to open a conversation about the past and chip away at stereotypes. The academic, Ayse Gul Altinay, an anthropology professor from Sabanci University in Istanbul, is a kind of national psychiatrist, identifying the most painful points from the country's past and offering a way to think about them that is most direct route to healing. She uses the Turkish art form, Ebru, the process of paper marbling that produces constantly changing interwoven patterns, as a metaphor for multiculturalism.

How far they have travelled  A Turkish-based movement, which sounds more reasonable than most of its rivals, is vying to be recognised as the world's leading Muslim network. The Pennsylvania-based sage, Fethullah Gulen, who stands at the centre of this network, has become one of the world's most important Muslim figures—not only in his native Turkey, but also in a quieter way in many other places: Central Asia, Indochina, Indonesia and Africa.With his stated belief in science, inter-faith dialogue and multi-party democracy, Mr Gulen has also won praise from many non-Muslim quarters. He is an intensely emotional preacher, whose tearful sermons seem to strike a deep chord in his listeners; but the movement he heads is remarkably pragmatic and businesslike. As a global force, the Gulenists are especially active in education. They claim to have founded more than 500 places of learning in 90 countries. A conference they staged in London last October was co-hosted by four British universities, plus the House of Lords. Its organisers produced a slick 750-page volume that included all the conference papers.

Letter from the Middle East The first Shawas came to Gaza from the Arabian peninsula 600 years ago with a herd of sheep and business sense, so the lore goes. Over time, they multiplied and became farmers and merchants, politicians and rebels, physicians and builders. For Khaled Shabaan Assad al-Shawa, his clan's saga is both a source of family pride and a reminder that the city was not always synonymous with despair, displacement and upheaval. Before thousands of refugees arrived and conflict between Israel and the Palestinians became endless, Gaza was a place of culture, trade and legend. Today it is hard to imagine Gaza as an ancient city, with markets and pagan temples tucked between sand dunes to the east and a hill to the west. Gaza was filled with orchards and schools of philosophy and even had a race track. One old district is called Tuffah, or apple, and another is Zeitun, olive - testaments to the area's verdant fertility. Chockablock gray apartment buildings now spill out of the valley and over dunes to the Mediterranean Sea. Many streets are unpaved. Gaza's population of about 35,000 in 1948, before Israel's independence war, has exploded to 450,000, including 80,000 in a beachfront refugee camp, according to the 2007 Palestinian Authority census. An adjacent area known officially as North Gaza has 270,000 residents; 40 percent are in the Jabaliya refugee camp. Both camps were established after the war. Reem Amr begins to wonder whether Gaza's unique identity will survive. With the conflict between Abbas and Hamas, the Palestinians have lost any sense of national purpose, she says. "History was supposed to take us to a state. We're going nowhere."

Analysis: Back to fundamentals The power to disqualify reformist candidates in elections has long been a useful tool for Iran’s interior ministry and its Guardian Council, the body that has the final say on whether candidates are loyal enough to the Islamic revolution and the constitution. But politicians such as Mr Jalaei-Pour see in this year’s move a wider message – a systematic attempt to drive reformists, who controlled the presidency from 1997 to 2005 and parliament from 2000 to 2004 – out of the political scene. The disqualifications, they argue, were aimed at creating a wave of despair among their supporters. They targeted senior figures including four ministers and dozens of deputy ministers who had served under Mohammad Khatami, the former moderate president, and tens of former MPs. There are also indications that the reformists could have staged a political comeback, having performed surprisingly well in last year’s municipal council vote. “We are facing an engineered election,” says Mr Jalaei-Pour. The rejection of reformist candidates has prevented their parties from competing in about 50 per cent of constituencies. It has all but handed the Iranian election to their rivals, the fundamentalists, who believe they are the only true upholders of the ideals of the 1979 Islamic revolution. Although reformists argue this has stripped the election of any substance, there is nonetheless a contest between various factions in the fundamentalist camp. The hardliners are united in their support for Ayatollah Ali Khamenei (below), who holds the real reins of power in the Islamic republic. They neither seek reform of the Islamic system nor question Iran’s dogged pursuit of a nuclear programme. But many fundamentalists see the governing style of Mahmoud Ahmadi-Nejad, the president who has defied the west over Iran’s nuclear programme and outraged the world with his rhetoric, as unnecessarily confrontational and his domestic management of the economy as irrational. Iranians vote in parliamentary elections, Parliamentary vote to test Ahmadi-Nejad

• Iran’s elite paper over the economic cracks Inflation and unemployment remain problems but the new generation of nouveaux riches are flourishing thanks to a sharp rise in house prices and record oil prices

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ROW stands for rest of world and after the break you'll find an interestint potpouri (sp ?) of international affairs readings that span the recent (almost) war in South America to election results plus associated major problems in Spain, Nigeria and Malaysia. We'll kick start it though with some good news immediately below the break. To wit - hopefully most people are increasingly aware that world economic growth has done more for more people than ever before. But when you look at GDP/capita it's even more interesting because the usual suspects aren't necessarily the ones doing well or for the reasons you might suspect.

Before diving in let's mention that these stories, again, share a common theme. Which is they're all about, one way or another, challenges to governance. So one of the key readings serendipitously is about the growing awareness of "Rule of Law" and economic development. We'll also mention the worst example of a breakdown where Chavez not only faces mounting domestic breakdowns in the economy but has allied himself with Narco-terrorists disguised as revolutionaries. AND it turns out he wasn't just supporting them but as more intel pops up was actively involved. So much for keeping faith with the people, eh ? Below the break are interesting stories about that war, Chavez and FARC, and elections in Spain, Nigeria and Malaysia. 

Grossly distorted picture If you look at GDP per head, the world is a different—and, by and large, a better—place.  WHICH economy has enjoyed the best economic performance over the past five years: America's or Japan's? Most people will pick America. The popular perception is that America's vibrant economy was sprinting ahead (albeit fuelled by credit and housing bubbles that have now painfully burst), whereas Japan crawled along at a snail's pace. And it is true that America's average annual real GDP growth of 2.9% was much faster than Japan's 2.1%. However, the single best gauge of economic performance is not growth in GDP, but GDP per person, which is a rough guide to average living standards. It tells a completely different story. GDP growth figures flatter America's relative performance, because its population is rising much faster, by 1% a year, thanks to immigration and a higher birth rate. In contrast, the number of Japanese citizens has been shrinking since 2005. Once you take account of this, Japan's GDP per head increased at an annual rate of 2.1% in the five years to 2007, slightly faster than America's 1.9% and much better than Germany's 1.4%. In other words, contrary to the popular pessimism about Japan's economy, it has actually enjoyed the biggest gain in average income among the big three rich economies. Among all the G7 economies it ranks second only to Britain.

• Monumental profits The economist's house is on the (free) market. IN MOST countries it would have been marked by a fanfare of press releases and a long roll of fund-raising drums. Not in Scotland. This week Edinburgh's city council put on the market the house where Adam Smith spent his last 12 years, from 1778 until 1790.

 Order in the jungle The rule of law has become a big idea in economics. But it has had its difficulties. The rule of law is usually thought of as a political or legal matter. The world's newest country, Kosovo, says its priority is to improve the rule of law in order to reduce corruption and build up the state. But in the past ten years the rule of law has become important in economics too. Indeed, it has become the motherhood and apple pie of development economics—which makes Mr Rodrik's confession the more striking. The rule of law is held to be not only good in itself, because it embodies and encourages a just society, but also a cause of other good things, notably growth. “No other single political ideal has ever achieved global endorsement,” says Brian Tamanaha, a legal scholar at St John's University, New York. But as a generalisation, the efforts of the past few years have thrown up mixed messages. They suggest the rule of law can be improved sharply; that rule-of-law reform is at root a political not a technical undertaking; and that it is linked to growth, if weakly in the short term. But they do not really bear out the assertion that the rule of law is an underlying prerequisite for growth. Rather, the more economists find out about the rule of law, the more desirable it seems—and the more problematic as a universal economic guide.

ROW Readings

Chavez Roils Latin America as Ally of Cocaine-Trafficking Colombia Rebels Last year, the Revolutionary Armed Forces of Colombia -- one of the world's oldest and biggest guerrilla groups -- was a fading insurgency. After a five-year Colombian offensive, the FARC had retreated to the jungles, its ranks thinned by casualties and desertions. Then Venezuelan President Hugo Chavez publicly befriended the group, negotiating freedom for some of its 750 hostages, helping disseminate its propaganda and touting his regular correspondence with FARC founder Manuel Marulanda. The intervention by Chavez, a self-described revolutionary socialist long suspected by Colombia of supporting the rebels, revived the FARC with a modicum of legitimacy. The FARC, which today is considered a band of terrorists by the U.S. and the European Union, was founded in 1964 as a rural, peasant, Marxist insurgency. To finance more recent operations, it has kidnapped and ransomed hundreds of hostages, while also holding prominent politicians and U.S. contractors as bargaining chips. The FARC traffics in cocaine for the bulk of its revenue, according to the U.S., which has sent Colombia $5 billion in the past seven years for its anti-insurgency campaign. The FARC controls most of Colombia's production of coca, a key ingredient of cocaine, the State Department says. More than 80 percent of the drug sold in the U.S. comes from Colombia.

The FARC Files Colombia's precision air strike 10 days ago, on a guerrilla camp across the border in Ecuador, killed rebel leader Raúl Reyes. That was big. But the capture of his computer may turn out to be a far more important development in Colombia's struggle to preserve its democracy. Reyes was the No. 2 leader of the Revolutionary Armed Forces of Colombia, or FARC, which has been at war with the Colombian government for more than four decades. His violent demise is a fitting end to a life devoted to masterminding atrocities against civilians. But the computer records expose new details of the terrorist strategy to bring down the government of Colombian President Álvaro Uribe, including a far greater degree of collaboration between the FARC and four Latin heads of government than had been previously known. In addition to Venezuelan President Hugo Chávez, they are President Rafael Correa of Ecuador, Nicaragua's President Daniel Ortega and Bolivian President Evo Morales. There is a third explanation for Mr. Chávez's panic when he learned of the strike: He was alarmed about the possibility that his links with Reyes would be exposed. Sure enough, when the Colombian national police retrieved Reyes's body from Ecuador, it also brought back several computers from the camp. Documents on those laptops show that Mr. Chávez and Reyes were not only ideological comrades, but also business partners and political allies in the effort to wrest power from Mr. Uribe. The tactical discussions found in the documents are hair-raising enough. They show that the FARC busies itself with securing arms and explosives, selling cocaine, and otherwise financing its terrorism operations through crime.

• COLOMBIA: FARC Leadership Crippled
• On the warpath Colombia is moving closer to breaking the FARC—unless Venezuela stops it

Another Chechnya While Russia has, over the past nine years, eliminated separatist and Islamic terrorists from Chechnya, they now find themselves with a potentially worse situation in neighboring Ingushetia. Smaller than Chechnya, and with half the population (about half a million), it has been hammered for the last year by many Islamic terrorists who fled the situation in Chechnya (where the Russians sent in 80,000 police and commandos, and made a deal with the strongest clan leader to run a pro-Russian government). Determined not to make the same mistakes they did in Chechnya, the Islamic radicals in Ingushetia promptly went after the local police. Their aim was to terrorize the local cops into leaving the Islamic radical groups (a few hundred men) alone. Then the Islamic radicals could use Ingushetia as a base for attacks into adjacent areas. This was what Chechnya was turned into during the late 1990s. In 1999 the Russians had had enough, and invaded with nearly 100,000 troops and police. The fighting led to the deaths, or disappearance,  of nearly 30,000 people. Russia does not want to apply that solution to Ingushetia, as the Ingush have never been as much of a problem as the Chechens (who have been fighting the Russians for over two centuries.) But unless they can reconstitute and revive the Ingush police force, the Islamic terrorists (and many guys who are basically Chechen gangsters) will be able to start another crime wave, like the one that came out of Chechnya in the late 1990s.

NIGERIA: The Empire Strikes Back Last April's elections were marked by violence (by armed gangs supporting candidates) and fraud. The anti-corruption movement had the support of the courts, and dozens of those elections have been challenged, many successfully. The political gangs have backed off, not willing to test the resolve of the police and army. Seven of 36 state governor elections have been overturned because of vote rigging. Up north, Islamic radicals are on the defensive, as polio cases declined 75 percent in the past year, the result of the vaccination campaign. Islamic radicals had, over the past few years, gotten many conservative clergy to preach against allowing children to get polio vaccinations. The vaccinations resumed last year, after vigorous efforts by Nigerian politicians, and the sharp drop in polio cases, is yet another setback for the Islamic conservatives who thrive on anti-Western paranoia. The IMF (International Monetary Fund) has come out and stated what most Nigerians already know, that Nigeria has wasted the first three decades worth of oil income. Corruption and ineffective spending decisions, up through the late 1990s, left the country with little or no infrastructure (roads, water works, power plants), and half the population still living in poverty. While the corruption has declined, poor spending habits persist. Using government "do-nothing" jobs as patronage (which is actually a form of corruption), is considered a useful make-work program, and is difficult to go after.

A crisis in store for Spain’s election victor The Spanish election this Sunday is too close to call. What is certain, however, is that the winner will spend the next four years cleaning up an economic mess of a scale not witnessed in Spain in modern times. The twin engines of the coming Spanish economic crisis are a collapsing housing market and a current account deficit, now at 10 per cent of gross domestic product. The two are related, of course, as the property bubble has been a driving force behind a credit-financed spending boom. The economic impact of this downturn in the housing cycle is going to be worse for Spain than for other countries. A truly staggering statistic about Spain is the fact that construction investment constitutes 18 per cent of the Spanish gross domestic product, according to the European Union’s Ameco database. In France and Germany, that proportion is about 10 per cent. When house prices fall, GDP will be hit in two ways: the first is the direct effect of a fall in construction investment, and the second is the indirect consumption effect, as people cannot extract new liquidity from their homes, which they could use for consumption spending. If the construction sector’s share of GDP were to shrink to 10 per cent gradually over a period of, say, four years, the direct effect on growth would be close to 2 percentage points per year. Add the consumption effect from lower house prices, and you easily get a half-decade of zero growth – perhaps longer, perhaps worse, perhaps both.

Malaysia's `New Dawn' Must Not Become Charade: Andy Mukherjee A wily challenger came upon a weak and lazy incumbent and pummeled him. That's how the shocking results of the recently concluded Malaysian elections are being caricatured in the media. One cartoonist portrayed the worst-ever performance by the ruling coalition as the outcome of a contest between Abdullah Ahmad Badawi, the mild-mannered ``never-mind'' prime minister, and Anwar Ibrahim, the tough ``mastermind'' of the opposition. The poll, however, was not only about personalities. It was also about the people of Malaysia and their disillusionment with a deeply entrenched culture of political and judicial corruption, cronyism and the resultant concentration of economic power. The unexpected loss of support for the Barisan Nasional coalition was also a testimony to the true extent of anger among the Malaysian Chinese and Indians over race-based entitlements for the majority Malay Muslims. Anwar, a former deputy prime minister under Mahathir Mohamad, hasn't been this important a figure in Malaysian politics since 1998 when he was unceremoniously sacked by his boss and imprisoned on sodomy and corruption charges.

·         Malaysian prime minister sworn in for second term, Opposition parties vow to end race-based policy in 5 Malaysian states

Posted by dblwyo at 05:46 PM | Permalink | Comments (0)

After the break you'll find a set of interesting excerpts on Japan, India and China. While not deliberately filterred they tell a common story. All three have done well or better for quite a while now but all three face certain struggles to keep on that are mounting. Not to stretch the points too far of course since Japan's situation is vastly different from China's and India's. But they do all face a single common problem - re-vamping their political appartus to deal with the challenges facing them.

In Japan's case they've never found their footing after the collapse of the 1980's boom but have instead just coasted along in a "Lost Decade (+)" due to governmental and interest group unwillingness to face hard choices. Over the last few years they're economy returned to growth but it was artificial. First with US stimulated growth and then piggybacking on top of China's amazing spurt. Now that things are slowing it's turning out that the fundamental structural changes were, under the surface appearance of good health, let go by.

India on the other hand just passed its' new budget which provided large subsidies for the farmers and other interest groups. Considering how close the former are to the wall that may not be a bad idea. India's fundamental challenge is to keep growth growing and extend it to the 90% of the population that hasn't benfited so far. Which in turns requires major investments in a creaking and decrepit infrastructure. Despite previous attempts it turns out that the creaking, inenpt and corrupt, as well as giant-sized, Indian klepto-bureacracy has been the major barrier to putting scarce resources where they'll do the most good.

International Readings

Why Japan keeps failing TEN years ago Japan was on the point of financial and economic meltdown, with a political establishment utterly incapable of facing up to the crisis. Those Japanese who cared coined a not altogether pleasing English phrase: “Japan passing”, implying not only that the world's second biggest economy was being passed by in a fast-changing world, but also that Japan could no longer even be taken seriously. Mr Koizumi forced banks and companies to clear up piles of bad loans. Companies, thus unburdened, started to make money once more, and from early 2002 the economy began to grow again. Mr Koizumi appeared to have weakened the special interests—farmers, the construction ministry, senior bureaucrats—to which his ruling Liberal Democratic Party (LDP) had long been in thrall and which had supported its near-unbroken rule over the past half-century. In effect, Mr Koizumi declared war on the old-style LDP. Despair is spreading among the political class responsible for the mess. If the opposition deplored the “absence of a framework to sustain economic growth”, you might take it with a pinch of salt. But the admission comes from none other than the economy minister, Hiroko Ota, who for good measure says that Japan can no longer be considered a “top-tier” economy. Although she identifies the problem correctly, she has disappointingly little to say about how to solve it.

• Japan 2028 May Put Bad Science Fiction to Shame As even Tasker, chief investment strategist at Arcus Investment Ltd., will tell you, the future isn't necessarily bleak. And the idea of ignoring Japan seems unrealistic in itself. It is home to some of the world's largest markets and prints Asia's only truly international currency. One of Tasker's long-term concerns is still worth exploring: the growing political and economic vacuum in Tokyo. ``We have reached the stage when even Japanese are ignoring Japan,'' said Garry Evans, a strategist at HSBC Holdings Plc in Hong Kong. ``But what makes us particularly pessimistic is that many of the recent problems represent not short-term issues but a deeper underlying malaise.''  The question is more about 20 years from now. Here, many observers have their doubts as fast-rising competition from China, India and Southeast Asia puts aging Japan on the defensive as never before. A major concern is the continued aversion to foreign capital and fresh thinking in an economy that suffers from an antiquated and rigid business model.

What's holding India back? Failure to reform a bloated civil service is putting the country's huge economic achievements at risk . In many ways India counts as one of liberalisation's greatest success stories. For years, it pottered along, weighed down by the regulations that made up the licence raj, producing only a feeble “Hindu” rate of growth. But over the past 15 years it has been transformed into a far more powerful beast. Its companies have become worldbeaters. Without India's strength, the world economy would have had far less to boast about. Sadly, this achievement is more fragile than it looks. Many things restrain India's economy, from a government that depends on Communist support to the caste system, power cuts and rigid labour laws. But an enduring constraint is even more awkward: a state that makes a big claim on a poor country's resources but then uses them badly. But India's 10m-strong civil service is the size of a small country, and its unreformed public sector is a huge barrier to two things a growing population needs. The first is a faster rate of sustainable growth: the government's debts and its infrastructure failings set a lower-than-necessary speed-limit for the economy. The second is to spread the fruits of a growing economy to India's poor. By the government's own admission, most development spending fails to reach its intended recipients. This is bound to stir up resentment—and risks causing a backlash against business.

China to shake up government, tame inflation China launched a shake-up of its bloated government bureaucracy Wednesday and ordered stern measures to tame inflation that threatens to erode the living standards of ordinary Chinese. Premier Wen Jiabao laid out the government's priorities for the year, saying that swelling treasury revenues from strong economic growth should be used to make sure inflation does not hurt the poor. Wen was speaking at the opening of the national legislature's annual session. He said subsidies would be increased for farmers, the poor and pensioners in a bid to prevent social tensions - caused by a widening income gap - from boiling over. On the public agenda for this year's two-week session were approval of leading economic posts - a follow-up to a reshuffling of the party leadership last fall - and a restructuring meant to streamline government agencies involved in transport, energy and the environment. The restructuring is vital to keeping economic growth and eliminating waste, Wen said. Though he provided few details, he said the reorganization would create several larger ministries "to resolve problems of overlapping responsibilities." The proposal was the latest in decades of efforts to slim down the bureaucracy and to make it more responsive to the leadership and public needs. The latest effort was given added impetus by a series of freak snowstorms that lashed southern and central China this winter, exposing gaps in the government's disaster response plans and problems in transportation systems.

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Let's go a tad off-center from the normal run of posts here and point to a deeper dive in the economic and credit market news. While we've posted several times on the economic outlook, both for its' own sake and because it's moved front and center as a political issue, we strongly suggest that on an individual basis this is worth your attention. Why ? Because, first, the economy underpins all the other issues we normally address. If you can't afford it you don't get it and lots of things are going to be unaffordable in the next few years. In fact the political agenda for the next President is being determined as we speak by events on Wall St. and in the Economy. Central to the accelerating economic malaise is the increased liklihood of a longer and deeper recession brought about by the unraveling of the credit markets. Now if you're like most folks you pay attention to the news that interests you, bears on your concerns and/or comes to your attention. Economics continues to be arcane and ignored. In fact my college roommates one summer, on finding out I was majoring in economics, came up with the classic summary: "as long as my paycheck shows up and clears I could care less".

Stop and think about that for a minute. If you don't see the humor, black as it is in general and specifically now, and the self-indictment the rest of what we have to say may not be meaningful. But if you'd like to at least be slightly aware of where your paycheck comes from then the health of you payor, it's "industry" and the economy as a whole matters a great deal to you. And right now the big problem is that the credit markets, which are the lubricant of the economy, and are as essential to its' healthy functioning as oil is to an engine. And fills a similar role. With all that preamble let us point you to a business affairs blog post on Bear-Sterns and the metastasizing credit market problems of which it is simply a sympton:

Run Away, Run Away: the Seriousnes of the Credit Crisis Earlier this week we put up two carefully considered posts  on the cascading credit crisis and early Thur. called the attention our network to them with a special e-mail. The title of the e-mail was "Brushed by the Wings of the Angel of Death" which wasn't entirely hyperbole. The core of the e-mail is reproduced below, idiosynchracies and all. Fri. morning the non-hyperbolic nature of that description was illustrated by the emergency rescue of Bear-Sterns by a combination of J.P. Morgan and the Fed, who were acting to prevent the disorderly collapse of the credit markets, not bailing out some miscreant investment bank.

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It's amazing how far National Security affairs have moved off the front page in general and as an issue in this election. The good news is that our guys are doing darn well. The bad that these are not issues that ever go away - as we hope the various candidates (aside from McCain) recognize, accept and are prepared to deal with. There will be a lot of 0300 phone calls and from "her" track record in the '90s it's not clear Hillary is anybody you want answering the phone.

After the break you'll find this week's collection of interesting story excerpts for your skimming or click-thru pleasure, as it may be. We start with an interesting study of Lt.Gen. Ray Odierno who was Petraeus' depty in Iraq and the man who made the new Counter-Insurgency strategy work. The article does as fine a job of any we've seen in going into detail and dissecting why and how. But that's not the only issue on the table. For a balanced overview we highly recommend this recent appearance on Charlie Rose of Adm. Mike Mullen, the Chairman of the Joint Chiefs. Aside from an informed and balanced overview of the major concerns two things struck us. One was that the head military guy has a broad appreciation and understanding NOT matched, or even close, by his civilian counterparts. Rather sad when the chief military guy has a deeper and more nuanced understanding than the "softside" guys. Interestingly he places great emphasis on soft power as part of the overall balanced toolkit that we need. You might also want to watch this shorter interview on the role that nation building now occupies in our evolving doctrine. (A conversation with Lieutenant General William Caldwell).

In addition you'll find the NYT's take on the emerging "War in Space" and some necessary objections to their "blame the US" perspective. The only good news is that at least they've noticed which doesn't counter-balance the profound lack of grasp and imbalance of their position. Actually very sad. The other two pieces are on specific aspects of these challenges. One on the strain of multiple tours of combat duty - which is unprecedented in American history and a tribute to the members of our armed services and their professionalism and dedication. The other is on the "Art of Interrogation" - which obviously needs some more work and investment 

National Security Readings

The Patton of Counterinsurgency With a sequence of brilliant offensives, Raymond Odierno adapted the Petraeus doctrine into a successful operational art. When General Odierno relinquished command of MNC-I on February 14, 2008, the civil war was over. Civilian casualties were down 60 percent, as were weekly attacks. AQI had been driven from its safe havens in and around Baghdad and throughout Anbar and Diyala and was attempting to reconstitute for a "last stand" in Mosul--with Coalition and Iraqi forces in pursuit. The Council of Representatives passed laws addressing de-Baathification, amnesty, provincial powers, and setting a date for provincial elections. The situation in Iraq had been utterly transformed. Odierno's tenure as commander of Multi-National Corps-Iraq was an astonishing period in American military history, and his contribution deserves note as he and his staff return home to new postings. Their efforts showed that there is a need even in sophisticated counterinsurgency theory for skillful combat operations, that traditional ways of thinking about war can be appropriately adapted to novel circumstances, and that it is possible to be a warrior, nation-builder, mediator, diplomat, economist, and role-model all at once. At least, it is possible for heroes like Ray Odierno and the soldiers, sailors, airmen, Marines, and civilians he commanded for 15 months at one of the most critical junctures in recent American history.

Al-Qaida's Fading Victory: The Madrid Precedent  Al-Qaida's dark genius had been to connect the Muslim world's angry, humiliated and isolated young men with a utopian fantasy preaching the virtue of violence. That utopian fantasy sought to explain and then redress roughly 800 years of Muslim decline. The rage energizing al-Qaida's ideological cadres certainly predated the post-Desert Storm presence of American troops in Saudi Arabia. In February 2004, al-Qaida's "emir in Iraq," Abu Musab al-Zarqawi, bluntly noted he faced defeat. Islamist radicals were "failing to enlist support" and had "been unable to scare the Americans into leaving." Once the Iraqis established their own democracy, Zarqawi opined, al-Qaida was lost. Moreover, a predominantly Arab Muslim democracy offered the Muslim world an alternative to al-Qaida's liturgy of embedded grievance. Zarqawi's solution to looming failure was to murder Iraqi Shias and ignite a "sectarian war." Politically inducing the withdrawal of coalition troops from Iraq was another route to thwarting Iraqi democracy. In spring 2008, the "Iraq Precedent" -- forged by the Iraqi people with American help -- looks increasingly persuasive. Will the Iraq Precedent sway the Muslim world's disenchanted? It has had some success, and al-Qaida knows this: An increasing number of Muslims consider al-Qaida to be a criminal gang. However, cultural and political change is slow. We will have a better idea in a couple of decades. But, golly gee, Obama may be spinning us -- you know, old-time campaign talk from the man promising change? Yes, his key foreign policy adviser Samantha Power has resigned (she called Hillary "a monster"), but before Power quit she suggested to the BBC's Stephen Sackur on March 6 that Obama's retreat pledge was iffy. "You can't make a commitment in March 2008 about what circumstances will be like in January of 2009," Power said. "He will, of course, not rely on some plan that he's crafted as a presidential candidate or a U.S. senator." It appears Obama is pandering to left-wing voters steeped in defeatism, and if elected president, come January 2009, he may suddenly discover the Iraq Precedent is a damn sight better than any other option.

Look Out Below. The Arms Race in Space May Be On. IT doesn’t take much imagination to realize how badly war in space could unfold. An enemy — say, China in a confrontation over Taiwan, or Iran staring down America over the Iranian nuclear program — could knock out the American satellite system in a barrage of antisatellite weapons, instantly paralyzing American troops, planes and ships around the world. Space itself could be polluted for decades to come, rendered unusable. The global economic system would probably collapse, along with air travel and communications. Your cellphone wouldn’t work. Nor would your A.T.M. and that dashboard navigational gizmo you got for Christmas. And preventing an accidental nuclear exchange could become much more difficult. The consequences of war in space are in fact so cataclysmic that arms control advocates like Mr. Kimball would like simply to prohibit the use of weapons beyond the earth’s atmosphere. But it may already be too late for that. In the weeks since an American rocket slammed into an out-of-control satellite over the Pacific Ocean, officials and experts have made it clear that the United States, for better or worse, is already committed to having the capacity to wage war in space. And that, it seems likely, will prompt others to keep pace.

• The Arms Race in Space (as Reported by the NYT) Analyzing the potential arms race in space, it’s hard to find reporting that’s more disingenuous than a piece that appeared in Sunday’s New York Times . Written by Steve Lee Myers, the article begins (accurately enough) by outlining the potentially devastating consequences of a war in space. Debris from destroyed satellites and kill vehicles would crowd the lower reaches of space, making it virtually unusable for commercial purposes. The global economy might collapse, and our military forces—heavily-reliant on space-based systems—would face paralysis. So, who does the Times blame for the militarization of space? If you answered the United States, give yourself a gold star and move to the head of the class:
• Major Policy Issues: Thinking About National Security All the major policy issues we're going to be facing in this election and dealing with for decades can, in our humble opinions, be grouped into three major categories: 1) Foreign Affairs, 2) Economics, 3) Social Policy. Some day we'll break those down into sub-topics and walk thru 'em but of now we'dlike to throw up the National Security sub-topic in FA and point to a selection of readings from StrategyPage.com that illustrate a bunch of stuff going on that never makes it to the MSM or general public discussion. Below you'll find selections on the War in the Heavens, the War in the (Cyber) Clouds and strategic posturings by Russia and China.

The Unstudied Art of Interrogation HOW do you get a terrorist to talk? Despite the questioning of tens of thousands of captives in Iraq and Afghanistan in the last six years, and a high-decibel political battle over torture, experts say there has been little serious research to answer that crucial question. There is the Army Field Manual 2-22.3, officially titled “Human Intelligence Collector Operations.” It eschews coercion and instead offers general advice on behavior (“People tend to want to talk when they are under stress and respond to kindness and understanding during trying circumstances”). It offers 19 approaches to interrogation that Congress wants the C.I.A. to stick to, … The principles are familiar to anyone who’s watched enough police procedurals. But the manual’s inherited wisdom has not been updated to reflect decades of corporate analysis of how to influence consumers. Behavioral economists have dissected decisionmaking, and academic psychologists have studied political persuasion, but their lessons have not informed the interrogator’s art either. Nor has there been a systematic effort to analyze the successes and blunders of the interrogations carried out since the attacks of 2001. Both Mr. Wittes and Mr. Kleinman occupy a middle ground of sorts in the standoff between Congress and the White House. They are outspoken opponents of the harshest methods used by the C.I.A. in 2002 and 2003. But they also argue that the Congressional bill imposing the Army’s methods would make bad policy in the long run by stifling creativity and deterring serious study of a critical subject.  Mr. Kleinman said he envisioned a new intelligence agency or subagency devoted solely to interrogation — sponsoring research, conducting training and building a team of sophisticated interrogators with linguistic and psychological skills. He speaks of creating a high-level interrogation center in the United States where settings could be customized for a particular suspect, Hollywood-style, “whether it’s a Bedouin tent or a suite at the Waldorf.”

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Here's last week's excerpt selection on policies. Another driving theme that's emerged in this election is "business-NOT-as-usual", that is we need to change. Which, if you haven't gathered, is a thesis we wholeheartedly agreed and agree with it. While our problems are not as serious facing prior generations, nor even the ones of serious structural challenge and malaise we faced in 1980, nonetheless we ARE facing major structural shifts on all fronts. The real questions are we prepared to face them ? And are we prepared to do it based on reality instead of political panderings and mis-percpetions. Those of course are always the questions and by-n-large in a Darwinian process we eventually come to workable answers, if not the best ones. What was it Churchill said ? "Eventually the idiots do the right thing after they've exhausted all the alternatives" or something to that effect. The problems we're facing wouldn't be as serious if we'd tackled them in the '90s. Nor are they as serious as they will be if wait for our usual decade+ until sufficient alarm and consensus builds up so that we "do the right things". The problems are the intervening years of pain, waste and problem buildup.

Remember the Greatest Generation didn't have to be that great if a few farer-sighted policies had been followed earlier. Personally being fearful, lazy and cowardly I'm all in favor of tackling things before they metastasize from crisis into catastrophe. But that's just me. After the break you'll find some interesting readings on Security, the Economy (& poitical manuverings therein), including looming retirement and medicaire problems, energy and more bad tradeoff choice-making and education. There is one particularly interesting story on Obama's truth-telling to his black brethern about the need to start bootstrapping themselves - a small indication that somebody somewhere is willing to start facing reality.

There are actually several interesting ones, including an excerpt from Tow Sowell on the history of the Rust Belt's economic problems and how self-inflicted they were and are by sustained inabilities to face reality combined with politicians willingness to substitute wrong-headed slogans for correct analysis. But the two most interesting, which tie together all these others, are one on the lost opportunity in the late '90s after Clinton already had a failing/failed presidency when he and Newt almost did the right thing. You know the part about work on your problems before they become crisis. As we said earlier by all means let's judge Hillary by their experiences.

But here's the excerpt for the one story that frames them all, one story to rule them and in the blindness ruin them:

Can Broken Washington Be Fixed? The war. Healthcare. Airline delays. Americans are fed up with inaction--and demanding change. It's the constant refrain from the presidential candidates, political scientists, and, most important of all, everyday Americans: Washington is broken. Rancorous partisanship has nearly paralyzed the government. The nation's leaders have lost touch with the people. Above all, it's time for a change. Historians and pollsters say the zeitgeist is clear. Americans are more frustrated with their government today than they have been in a long time, even more so than during the Watergate scandal. And those negative feelings have become the subtext of the 2008 presidential race. "Distrust of politicians and politics are part of American culture," says Princeton historian Julian Zelizer. "But the distrust is getting worse." With good reason. The government can't seem to solve any of its major problems, from reforming Social Security to illegal immigration. The Democrats and Republicans are increasingly relying on their base voters and aren't reaching out to anyone else, making compromise nearly impossible. Corruption scandals have increased public cynicism. The 24-hour news cycle emphasizes conflict and wrongdoing more than ever. The Iraq war has deepened the nation's anxiety. President Bush and Congress endure record-low approval ratings. In fact, 7 out of 10 Americans now say the country is headed in the wrong direction. The need for change is such a dominant theme that all the main presidential contenders are calling for an end to business as usual.

READINGS 

How Monica Killed a Clinton-Gingrich Pact In public, they were oil and water. As president, Bill Clinton distrusted then House Speaker Newt Gingrich, and the Republican felt the same way about Clinton. But in a shocking revelation, we're learning that the political foes—desperate for a heroic legacy—made a secret pact to fix the nation's most problematic programs like Social Security. The plan crashed, however, in the Monica Lewinsky scandal. "Monica changed everything," says former Clinton Chief of Staff Erskine Bowles. It was in 1997, when the budget was flush and partisanship at a lull, says Steven Gillon, a History Channel host and University of Oklahoma professor who reveals the deal in his upcoming page-turner, The Pact. "This was a moment where everything came together to create this possibility in 1997-98," he says. "Those circumstances will probably never be duplicated." Using Gingrich's notes and interviews with Bowles and other Clintonistas, he describes months of meetings leading to a face-to-face in the Treaty Room on Oct. 28, 1997. The plan: Clinton would propose fixing Social Security and Gingrich would back it. Both would work their sides to pass it after the 1998 elections. Other deals would follow. But the Lewinsky saga broke first, returning partisanship. "It really did matter, and it destroyed this moment of bipartisanship that both of them had worked hard for," says Gillon.

READINGS

Commander warns of al-Qaida threat to US Al-Qaida terrorists may be plotting more urgently to attack the United States to maintain their credibility and ability to recruit followers, the U.S. military commander in charge of domestic defense said. Air Force Gen. Gene Renuart, chief of the U.S. Northern Command, also told reporters Thursday he has not seen any direct threats tied to the U.S. presidential elections. But he said it would be rash to think that such threats are not there. "We need only to look at Spain and see that they're certainly willing to try to do something that is significant that could affect an election process," Renuart said. "I think it would be imprudent of us to let down our guard believing that if there's no credible threat that you know of today, there won't be something tomorrow." While he said that U.S. authorities have thwarted attacks on a number of occasions, he said terrorist cells may be working harder than ever to plot high-impact events. He did not point to any specific intelligence that authorities have received but said the "chatter" they are hearing "gives me no reason to believe they're going to slow down" in their efforts to target the U.S.

Democrats Tie Up Bush on Economy President Bush is working to prevent a recession, but the group of advisers meant to help him achieve this vital goal is woefully understaffed. In fact, the three-member Council of Economic Advisers is limping by with just a single adviser. The reason: a lingering impasse between Senate Democrats and the Bush administration regarding the choice of nominees. Some economists worry the impasse could affect the administration's ability to respond to the economic downturn. For more than six months, the president has been unable to fill the vacancies because top Democrats are refusing to approve his nominees until the White House agrees to the Democrats' choices for vacancies at the Securities and Exchange Commission. The conflict over the CEA vacancies reached a tipping point last week when Senate majority leader, Harry Reid of Nevada, wrote a letter to the White House chief of staff, Joshua Bolten, accusing the administration of being increasingly intractable in talks over the confirmation of nearly 200 nominees to various federal boards and agencies. Among those agencies with vacancies are the Consumer Product Safety Commission, the Federal Election Commission, the National Labor Relations Board, and the Chemical Safety and Hazard Investigation Board. Of the pending nominees, 30 have been waiting for confirmation for more than a year, and about half have been waiting for more than 100 days — including three nominees to the Federal Reserve Board of Governors, the body that makes recommendations to ensure stability in the financial system.

How to Stop the Mortgage Crisis The unprecedented combination of rapid house-price increases, high loan-to-value (LTV) ratios, and securitized mortgages has made the current housing-related risk greater than anything we have seen since the 1930s. House prices exploded between 2000 and 2006, rising some 60% more than the level of rents. The inevitable decline since mid-2006 has reduced prices by 10%. Experts forecast an additional 15% to 20% decline to correct the excessive rise. The real danger is that prices could fall substantially further if there are widespread defaults and foreclosures. Irresponsible lending created new mortgages with LTV ratios of nearly 100%. By the end of 2006, the fall in prices caused 7% of mortgages to have LTV ratios above 100%. A further 20% of mortgages had LTV ratios over 80% and will shift to negative equity as prices decline. Most mortgages are no longer held by originating lenders, but are securitized and sold to investors world-wide. More significant, mortgages are used to create complex, asset-backed securities that are central to current credit-market problems

Rescuing the Rust Belt When the American automobile industry was the world's leader in its field, many people seemed to think that labor unions could transfer a bigger chunk of that prosperity to its members without causing economic repercussions. Toyota, Honda, and others who took away more and more of the Big Three automakers' market share, leading to huge job losses in Detroit, proved once again the old trite saying that there is no free lunch. Like the United Automobile Workers union in its heyday, unions in the steel industry and other industries piled on costs, not only in wage rates having little relationship to supply and demand, but in all sorts of red tape work rules that added costs. State and local governments in what later became the rust belt also thought that they too could treat the industries under their jurisdiction as prey rather than assets, and siphon off more of the wealth created by those industries into state and local treasuries with ever higher taxes -- again, without considering repercussions. In the short run, you can get away with all sorts of things. But, in the long run, the chickens come home to roost. The rust belt is where those rising costs have come home to roost. While American auto makers are laying off workers by the thousands, Japanese auto makers like Toyota and Honda are hiring thousands of American workers. But they are not hiring them in the rust belts. They are avoiding the rust belts, just as domestic businesses are avoiding the high costs that have been piled on over the years by both unions and governments in the rust belt regions. In short, the rust belts have been killing the goose that lays the golden eggs.

Retirement crisis: From bad to worse You've been hearing about a looming Social Security problem for years, but it's not the only big trouble facing boomers and the generations behind them. Baby boomers and the post-boomer generations are facing a retirement crisis. And it now goes way beyond the worries about a collapse of Social Security that so preoccupied us before housing prices headed south. The crisis I'm talking about is a result of economic and monetary policies that have turned a pattern of boom-bust-boom-bust into business as usual in the U.S. economy. The 2007-and-counting collapse of the housing, mortgage and debt markets isn't an isolated disaster but part of a decade-long shift away from saving and investing toward speculation and gambling with our future. There's no evidence that we're cranking up the financial discipline, however, and plenty of evidence that we're rolling the dice. How we'll react to the housing bust of 2007 isn't yet known. But the evidence from how we reacted to the 2000-02 bear market doesn't fill me with confidence. According to the Federal Reserve's 2004 survey of consumer finances, the percentage of families that save anything at all went down to 56.1% in 2004 from 59.2% in 2001. (The Fed does these every three years, and the 2007 survey isn't out yet.) The Employee Benefit Research Institute reports that the number of people participating in defined-contribution plans, including IRAs and 401(k)s, declined to 52.2 million in 2004 from 52.9 million in 2002. The housing boom certainly didn't have any of the trappings of a disciplined attempt to reach retirement goals. As home values rose, homeowners withdrew money from these vital retirement assets to use on current consumption. In the early stages of the boom, 2001 through 2004, the average homeowner's equity fell from 58% of home value to 55%.

Medicare: A $34 trillion problem Medicare is poised to wreak havoc on the economy. And our presidential candidates are avoiding the issue. Twice I have asked Alan Greenspan what he considers the greatest threat to the U.S. economy, and both times he has answered immediately with a single word: Medicare. He isn't so worried about the trade deficit and the housing crash; he figures market forces will sort them out. But Medicare is something else - a multitrillion-dollar problem that's about to get dramatically worse, and one that nobody wants to talk about. You'd think that the greatest threat to America's economy would be Topic A for the presidential candidates. But it's actually a topic they hate to touch. Especially now. An analysis of their speeches shows that last year Senators Hillary Clinton, John McCain, and Barack Obama would occasionally mention the Medicare mess. But recently, with the economy slowing and voters feeling insecure, all three candidates have turned more populist: Their economic talking points are about feel-good reassurances, not about facing hard realities. Unfortunately the day of reckoning is imminent. Sometime in the next President's first term, Medicare Part A (hospital insurance) will go cash-flow-negative, and it's all downhill from there. Medicare provides a wide range of services and subsidies to more than 40 million old and disabled Americans. As the country ages, Medicare and Medicaid (for those of any age with low incomes) will devour growing chunks of U.S. economic output. So will Social Security, but its cut of GDP should stop increasing around 2030. The federal budget has averaged about 18% of GDP over the past several decades. If that average holds and if the rules of our social insurance programs don't change, then by 2070, when today's kids are retiring, Medicare, Medicaid, and Social Security will consume the entire federal budget, with Medicare taking by far the largest share. No Army, no Navy, no Education Department - just those three programs.

Loans Program for Coal Plants Suspended The federal government is suspending a major loan program for coal-fired power plants in rural communities, saying the uncertainties of climate change and rising construction costs make the loans too risky. After issuing $1.3 billion in loans for new plant construction since 2001, none will be issued this year and likely none in 2009, James Newby, assistant administrator for the Rural Utilities Service, a branch of the Department of Agriculture, said Tuesday. The program's suspension marks a dramatic reversal of a once-reliable source of new coal plant financing. It follows the announcement last month that several major banks will require plant developers to factor in climate change when seeking private funding.At the time of the suspension, at least four utilities had been lined up for loans totaling $1.3 billion -- for projects in Kentucky, Illinois, Arkansas and Missouri. A project in Montana was denied funding last month. Two more were recently withdrawn: last October in Wyoming and earlier this week in Missouri. Newby said material and labor costs for new coal plants have been rising 30 percent a year, even as utilities struggle to pinpoint future costs of controlling greenhouse gas emissions. The 2 billion tons of those gases produced annually by coal-fired plants in the United States exceed the emissions of any other source. Newby said those uncertainties prompted the White House's Office of Management and Budget to ask that new loans be put on hold until risks can be better quantified. Rural utilities provide power to about 40 million customers across the nation. More than 60 percent of that electricity comes from coal.

Education Panel Lays Out Truce in Math Wars A presidential panel is expected to back a variety of back-to-basics changes to mathematics education, including the promotion of "quick and effortless" recall of facts in the early grades. A presidential panel, warning that a "broken" system of mathematics education threatens U.S. pre-eminence, says it has found the fix: A laserlike focus on the essentials. The National Mathematics Advisory Panel, appointed by President Bush in 2006, is expected to urge the nation's teachers to promote "quick and effortless" recall of arithmetic facts in early grades, mastery of fractions in middle school, and rigorous algebra courses in high school or even earlier. Targeting such key elements of math would mark a sharp departure from the diverse priorities that now govern teaching of the subject in U.S. public schools. The panel took up its work amid widespread alarm at the sorry state of math achievement in America. In the most recent testing by the Program for International Student Assessment, released late last year, U.S. 15-year-olds achieved sub-par results among developed nations in math literacy and problem-solving, behind such countries as Finland, South Korea and the Netherlands. The math panel's draft report comes amid the so-called math wars raging in the nation's public classrooms. For two decades, advocates of what has come to be known as "reform math" have promoted conceptual understanding over drilling in, say, multiplication and division. The draft of the final report declines to take sides, saying the group agreed only on the content that students must master, not the best way to teach it. The group said it could find no "high-quality" research backing either traditional or reform math instruction. The draft report calls a rigid adherence to either method "misguided" and says understanding, which is the priority of reform teachers, and computation skills, emphasized by traditionalists, are "mutually supported."

Obama Delivers Tough-Love Parenting, Nutrition Message to Black Audiences Democratic presidential candidate Barack Obama stood before a largely black audience in Beaumont, Texas, last week and delivered tough love to thunderous applause. Riffing off the line in his standard stump speech about responsible parenting, he ad-libbed a three-minute mini-sermon: turn off the TV, get involved in homework, prepare healthy meals. Obama, 46, who routinely says he won't ``just tell you what you want to hear, but what you need to hear,'' is driving that point home before black audiences from South Carolina to Texas, one of four states where he's dueling with Democratic presidential rival Hillary Clinton in primary contests today. His message to blacks has been consistent while his delivery has changed. In a June 15, 2007, Father's Day speech in Spartanburg, South Carolina, Obama read from a prepared text, telling the mostly black audience: ``There are a lot of men out there who need to stop acting like boys; who need to realize that responsibility does not end at conception.'' In Beaumont, caught up in the moment, he hammered at the homework issue for several minutes. ``When a child misbehaves in school, don't cuss out the teacher, do something with your child!'' he said, then added: ``All right, everybody sit down, we're having too much fun here.'' This week in Carrollton, Texas, Obama lectured his audience on sensitive issues like racial profiling and the stereotypes perpetuated by rap music. ``I listen to Jay-Z once in a while, but I have to say so much of the culture glorifies bling and violence and is disrespectful to women and we've got to counteract some of those cultural influences,'' Obama said Monday.

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Well Hillary clawed back from the apparnt abyss of 11 Obama victories in a row last week with victories in Ohio and Texas. Unfortunately she's not ahead in popular votes or the delegate count. So despite staying alive in this election, barely, she's not managed to establish a resounding recovery. If anything the Democrats are establishing themselves, yet again, as opening the door wide for a Republican return to power. Yet, though there are substantive differences among the three candidates they all converge more on the center in this campaign than at any time in several. In fact when you did thru the positions a bit Barrack and Hillary's positions are nearly identical. The primary differences being in tone & vision and in mechanism. Hillary's still got that old-time religion of the '60s New Liberalism, big government is THE answer. And the taxes and bureaucracies that go with it. Obama seems to share her policy goals but is much more open to alternative mechanisms, recognizes the good that market-oriented policies do and is much less doctrinaire. A bit of progress IMHO.

This interesting election will continue to play out for some time. I'm just waiting for Obama to offer her the VP slot. One has to take the unsubtle hints both she and Bill dropped as both a manuver and a major sign of weakness. 

One thing that's given credit for her recovery, other than an SNL appearance, is her appeal to populism and anti-trade rhetoric. Another is her "3 A.M. Phone Call". Given that the Clintons (takng her at her word that she was a major influence on policy during her husband's administration) were largely reponsible for the deterioration of US foreign policy and national security in the '90s that strikes me as amusing at best. And more accurately disingenous and deceptive. The book to read is Halberstam's War in a Time of Peace: Bush, Clinton, and the Generals. In it you'll find a foreign policy and national security policy sufferring from willful neglect on the grounds that we didn't have to worry about all that anymore. The other major Clinto proactive policy initiative was the Healthcare shambles, with a program who's scope, bureaucratic encumbrances, and size resemble her current proposals by all means let her claim that experience. Let's hold the referendum on Bill's presidency that never got held. And the resulting postponement until now of the serious re-construction of things like Social Security, Healthcare, Medicaire, etc. etc. By all means let's judge her on her experience ! :)

Politics

How She Won Clinton showed her sense of humor; Obama was slowed by leadership questions. Just as a teary moment in New Hampshire turned into an unexpected success in that state, Sen. Clinton's show of vulnerability and a sense of humor in the final days before the Texas and Ohio contests seemed to resonate with voters. The Clinton campaign put a big last-minute effort into portraying Sen. Clinton as the ultimate national security candidate and a strong commander-in-chief. But her victories may have more to do with poking fun at herself and showing a seldom-seen softer side, than it did with the 20-plus uniformed generals standing behind her at events. For more than a year the Clinton campaign has grappled with how it should portray Sen. Clinton, the first viable female presidential candidate. Chief strategist Mark Penn has advocated for presenting Sen. Clinton as a tough commander-in-chief by emphasizing her "strength and experience" and her deep knowledge of issues. But chief ad maker Mandy Grunwald and others worried that the campaign was overlooking the fact that many voters disliked Sen. Clinton. They argued that the campaign's message should humanize her and present her as a more personable, likeable candidate. These dueling messages were clearly playing out in the final days before the contests. At an event in Parma Heights, Ohio, a student told Sen. Obama that after Sept. 11 she felt afraid, and asked him how he was going to respond to terrorists. The candidate, who spends most of his time on foreign policy discussing his opposition to the war, offered a response that did little to reassure terrorism fears, and seemed strained in its hard-nosed realism. As the campaign entered its final stretch, Sen. Obama stopped filling up arenas for rallies where he received a rock star's welcome, and reverted to smaller town halls that gave him a chance to show his detailed knowledge on a range of issues. But at one such event in Duncanville, Texas, people headed for the exits when they realized the rah-rah yes-we-can speech had given way to a discussion of ten-point plans. Clinton Revives Candidacy, Prolongs Race With Texas, Ohio Wins Over Obama

• State Profiles Dig deeper into statewide results to see how vote totals relate to demographics.

Alive! Tuesday's exciting presidential primaries were about momentum, delegates and second looks. In the Republican contest, these factors gave victory to the Lazarus candidate. John McCain's campaign nearly collapsed eight months ago in a mass of debt and missteps. Tuesday, Mr. McCain became the GOP's standard-bearer by passing the 1,191-delegate threshold needed for nomination. It was a remarkable comeback and personal triumph of character, grit and persistence.

The Democrats saw Hillary Clinton come back from the abyss for the third time this year. What is it about the Clintons living life on the political edge? As exciting as Tuesday night was, the Democratic contest has not shifted to advantage Mrs. Clinton. Mr. Obama still has a healthy advantage. There are 611 delegates to be elected in 12 future contests, 349 superdelegates have yet to commit, and 12 delegate spots from Tuesday's primaries are still not allocated. To win, Mrs. Clinton must take 58% of these outstanding delegates. That's a tall order. The big development to watch is not the rise of the "Obamicans" -- Republicans who are backing the charismatic Illinois senator. The interesting electoral phenomenon is the emergence of the "McCainicrats" -- Democrats backing Mr. McCain. It's not just Sen. Joe Lieberman. In three recent polls, (Fox, LA Times/Bloomberg and Gallup), almost twice as many Democrats support Mr. McCain as Republicans support Mr. Obama. Three times as many Democrats support Mr. McCain as Republicans back Mrs. Clinton.

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Here's the rest of last week's int'l news ranging from some coverage of the Russian elections to the Colombian-Venzualian border drug war to Iran and Iraq. No surprise that Putin's hand-picked successor was chosen and Putin will likely be the next Prime Minister. A result decried by all right-thinking Western pundits and roundly applauded by the Russian people. Two facts which are also widely noticed but not analyzed. It doesn't seem to occur to the pundits that peace and stability verses the virtual collapse of Russian society that Putin inherited, coupled with economic progress (largely but not entirely driven by energy) go a long way toward justifying a certain level of support. What we should've learned but haven't yet is that the blind imposition of Western style democracy on a society without the right cultural under-pinnings is rather difficult.

But South of the border Chavez of Venezuela continues his comic opera tragedies. In case anybody was wondering it turns out he's been supporting FARC - the ex-Marxist guerillas turned drug lords - in their attempts to overthrow the legitimate government of Colombia for some time. Speaking of legitimacy challenged governments that of Iran continues to watch its' economy turn into a shambles. Meanwhile as Iraq stays off any page of American news, except for the occasional bombing of course, significant progress continues to be made.

One of the growth industries internationally is NGO's, or Non-Governmental Organizations. Originally intended to help with disaster relief, famine prevention, medical care etc. as they've grown hugely in numbers they've also morphed into socio-political change agents; or so they think. But the end result of their agend-driven acitivities has been to disrupt local societies without making much progress. One wonders. 

A Putin-shaped throne The real selection of Dmitry Medvedev took place last December, when Vladimir Putin announced him as his successor, while promising also to become Russia's next prime minister. The balloting on March 2nd, when 70% of voters endorsed Mr Putin's choice, was mere ritual. It was not so much the election that was rigged (though figures were massaged), but the whole political process leading up to it. Had Mr Putin picked anyone else, the result would have been the same, for this was his election. Even if Mr Medvedev has liberal instincts, he has no independent power base and is certainly more of a team player than a maverick. This means he will only be as liberal as Mr Putin and the system will allow him to be, at least for now. Another question, less discussed, is not how much independent power Mr Putin will grant his successor, but how much of it Mr Putin actually wields. Neither dictatorship nor democracy, Mr Putin's system is dysfunctional. Yulia Latynina, a Russian commentator, argues that his wishes have often not been carried out, particularly when they have run against the interests of other Kremlin clans. Mr Putin is certainly responsible for political developments in Russia, but he may be a hostage of the system he created:

The Great Memory Purge Today marks 55 years since the death of Joseph Stalin. But in Russia, his terrible legacy will receive scant attention and will not be subject to repudiation by those at the apex of power. This is because, under Vladimir Putin, official assessments of Stalin and the Soviet past have become rooted in amorality and studied ambivalence, not the unequivocal condemnations that characterized the Yeltsin years. As Mr. Putin prepares to hand the Russian presidency -- though not the full reins of power -- to his protégé Dmitry Medvedev, there are few signs this legacy will be reversed. As confusing as Mr. Putin's ambivalent assessments of Stalin and the Soviet system may be, the roots of his thinking are readily apparent. As a former KGB operative, he is unapologetically proud of the historical role played by the Soviet security services. And his view of Stalin is likely influenced by his paternal grandfather's service as a cook for Stalin and Lenin. More surprising is that Mr. Putin's pronouncements are closely in line with the views of ordinary Russians. In a May 2007 poll by the respected Levada Center research group, 54% of Russians said Stalin did "more right than wrong." And half of those polled deemed Stalin a "wise leader." This moral muddle has suited the post-Soviet zeitgeist. The collapse of Soviet rule created a paradoxical and complex world populated by people, including Mr. Putin, who had been compliant, if ambivalent, cogs in a repressive system. For them, a painful acknowledgment of collaboration with evil is a difficult psychological step.

Behind the Colombia-Ecuador-Venezuela Border Fracas The real news behind South America's latest border fracas is Colombia's looming victory in its own narcotics-powered civil war. This is a victory Colombia's chief international antagonist, Venezuelan caudillo Hugo Chavez, fears -- for several calculating reasons. Let's start with Colombia's slow and grueling democratic accomplishment. On Feb. 5, hundreds of thousands of Colombian citizens marched in the capital, Bogota, in a mass protest against crime and terrorism. Their anger had an explicit political target: the Revolutionary Armed Forces of Colombia, better known by its Spanish acronym, FARC. The jam-packed demonstrations impressed reporters and correspondents who have followed Colombia's brutal two decades of "The New Violence." The protests provided in-your-face media evidence that security in Bogota had indeed improved dramatically and that public confidence in local and national institutions had revived. Seven years ago, Colombia was being kidnapped, murdered and blown to shreds. This week, Colombia launched a strike against a FARC base in Ecuador. Tired of terrorism, Colombia is not going to let FARC thugs hide in Ecuadorian or Venezuelan jungles. Moreover, the Colombian government now says FARC intended to attack Colombia with "dirty" (radioactive) bombs in a desperate blitz to cow the populace. Colombian president Alvaro Uribe said, "We cannot allow terrorists who seek refuge in other countries to spill the blood of our countrymen."  Ecuador and its ally, Venezuela, responded by threatening Colombia with war. Despite their blatant thuggery, both Chavez and FARC still have "progressive" apologists in Europe and among American leftists. Chavez claims Fidel Castro's "anti-Yankee" legacy, which polishes his "progressive" appeal. Add this to the flammable mix: Ecuador's president is a personal ally of Chavez and something of a protege. The conventional wisdom says Chavez is bluffing.

• The war behind the insults Yet this is the most serious diplomatic conflict in South America for more than a decade. Political brinkmanship could easily tip over into shooting. Its root cause is the FARC, a guerrilla army founded in the 1960s whose anachronistic Marxist language conceals its degeneration into a predatory mafia of kidnappers and drug traffickers. In the 1990s it came close to making Colombia ungovernable. Then three years of talks—during which the FARC kidnapped many of the hostages who now constitute its main weapon—showed that it had no interest in peace or democracy. Colombia's elected leaders turned to the United States for military aid to match the cash that American drug consumers were giving the FARC and other mafia armies.

IRAN: Blood In The Streets Over A Naked Ankle The war in Iran is on the streets. In poor neighborhoods, drug addiction and unemployment supply a growing number of gangs with ruthless and brutal recruits. The police respond with public whippings and up to ten executions a day. So far this year, 48 have been executed, compared to 298 for all of last year. Opium and heroin continues to come in from Afghanistan, feeding millions of addicts. The war against the drug smugglers on the Afghan border leaves hundreds dead and wounded each year, as it has for a decade. The Afghan gangs have found it easier to bribe the border police, forcing the government to send more of its "Revolutionary Guards" (Islamic radicals forming a palace guard for the clerics running the country) to deal with the corrupt police as well as the well armed smugglers. Meanwhile, police continue to expend a lot of effort on terrorizing the middle and upper class neighborhoods in the cities. Merchants, professionals and corrupt government officials still live pretty well, and their kids like to dress up. The Islamic lifestyle police are running into public resistance while enforcing conservative dress codes. Iranian president a hostage to his promises

• US under fire over Iran N-plan report A US intelligence report into Iran’s nuclear arms programme was on Wednesday subjected to strong criticism by a senior UK diplomat, who claimed the assessment had been too categorical in ­stating that Tehran halted work on building an atomic weapon in 2003. The remarks from the ­diplomat, who has been involved in Iran policy, came as Britain prepares to argue that the European Union should act to consolidate the sanctions agreed by the United Nations Security Council this week. They also coincided with a call by Danny Yatom, a senior Israeli figure, for renewed pressure on Iran.

Remember Iraq?  Remember Iraq?  You know, the war we lost?  The big failure we were wasting our lives and "treasure" on?  Yeah, that one.  Haven't heard much about it lately, right? That's because Iraq has disappeared off the international radar, and for good reasons.  Enemy activity levels are at the lowest levels in years.  The Iraqi Police and military is growing in leaps and bounds.  Half of the country has been turned back over to Iraqi control and next month, Anbar Province will become the tenth province turned over.  So what has been going on there anyway? Politically, the Iraqi Parliament has been passing landmark legislation on Baathist (Sunni Arab) reconciliation, oil revenues, and provincial elections.  They even passed a budget.  Numerous political parties have come together and compromised to move the country further.  The economy continues to grow and the people are prospering. What was once the resistance has woken up and become the Sahawa Movement or the "Awakening".  They became Concerned Local Citizens (CLCs), now Sons of Iraq (SoI).  They number over 80,000 today and approximately one quarter will go on to join the Iraqi Police or Army.  Other members will work in the public sector.  Others will go back to work.  

NGOs Gone Bad There are many problems with NGOs, and more are becoming visible to the public. The Western employees of NGOs, while not highly paid, and infused with a certain degree of idealism, do come  to disaster areas as a bunch of outsiders who have a higher standard of living, and different, sometimes dangerous (according to the locals) ideas. Several years ago, all these outsiders brought with them was food and medical care. The people on the receiving end were pretty desperate, and grateful for the help. But NGOs have branched out into development and social programs. This has caused unexpected problems with the local leadership. Development programs disrupt the existing economic, and political, relations. The local leaders are often not happy with this, as the NGOs are not always willing to work closely with the existing power structure. While the local worthies may be exploitative, and even corrupt, they are local, and they do know more about popular attitudes and ideals than the foreigners. NGOs with social programs (education, especially educating women, new lifestyle choices and more power for people who don't usually have much) often run into conflict with the local leadership.

Posted by dblwyo at 10:43 PM | Permalink | Comments (0)

Here's last week's interesting stories (some anyway) on China and India. Some of our constant themes have been the rapid re-shaping of the world political system as the result of their rise, the adoptions and adaptations required by this and the impacts on various players. We should add two more major ones that'll be playing out. One is the internal challenges to all these players as the changes strain their internal capacities. The other is the resurgance of ancient cultural and tribabl artifacts - the end of history indeed ! Which shouldn't take anything away from what either China or India have been able to accomplish - which have indeed been technocratic miracles. But they're on cusp points of major shifts needing to be made to create new institutional frameworks to hold their socieites together to adjust to these pressures and keep themselves on track. And recent news has exposed a great number of fault lines which highlight certain fragilities that are under stress.

China, on the whole may be better placed as it has set out over the last 30 years to create a sustained path of socio-economic development. Which has resulted in major economic progress but is now straining the fabric of social stability as income disparities grow. [For a very good introduction to Chinese history, culture and changes see Knowing China. And for a more detailed examination of how economic transformation was undertaken, how it was done, where it's likely to go and what the fault lines are consider the richer but more technical China's Economic Transformation. Both by Gregory Chow]. When/if you consult those works some recurrant characteristics show up: the Chinese leadership has been technocratic and skilled, they've done what they said they would, the recognize the problems they have (as the stories below illustrate) and they've been careful, wise and thoughtful. Which is not to say that China isn't beset by corruption, shortfalls in civitas, and other problems.

India on the other hand has only under-takem market-oriented reforms in the last ten years and their creaky democracy makes them subject to interest group politics and corruption. All of which is reflected in the most government budget. On the other hand they too have a huge problem with bringing an impoverished peasantry into the 20thC while other segments of the economy are full particpants in the 21st ! Again they've got some very smart people doing their best but are still victims of their own backward-looking ideologies and interest groups.

As the old Thai saying goes - "May You Live in Interesting Times" !

China

Wen’s words hint at pro-market leanings For those with an interest in the workings of China’s politburo, Wednesday’s speech by Wen Jiabao, the premier, at the opening of the country’s legislature scattered tantalising clues about the direction of political debate. Mr Wen called on delegates to “liberate their thinking”, a phrase which out of context would seem to be little more than a meaningless communist slogan. But the words have become a catchphrase for officials and scholars attempting to push pro-market reforms through a system, and Communist party, that still has large, resistant redoubts. This year, the debate will be fought out on the battleground of the 30th anniversary of the launch of Deng Xiaoping’s transformation of China, when he introduced market-based reforms.

LEADERSHIP: China Rising China is increasing its defense spending this year to $57 billion, a 17.6 percent increase from last year. The U.S. Department of Defense insists that China only publicly acknowledges as little as a third of its actual defense spending. But even using the worst case estimate, U.S. defense spending is still nearly three times as much as Chinas. This sort of thing can get complicated, but one thing that is certain is Chinese military growth and modernization. Especially modernization. While China is a police state, it also has a market economy which makes it difficult to keep people from wandering all over the place with cell phone cameras. Then there's the Internet, where those digital photos of new military gear quickly appear. Finally, there are Internet resources like Google Earth, which make it difficult for any military organization to hide things, especially large things (like warships and large quantities of tanks or aircraft). Whatever the Chinese are up to, it involves lots of new ICBMs, nuclear submarines and modern jet fighters. Oh, the Pentagon recently came out and said that China was responsible for the large number of hacker attacks on military and government networks, in the United States and elsewhere in the West, last year. Something's up, besides Chinese defense spending, and no one but China knows exactly what it is.

Brazil’s lesson for China: do not ignore inequality  Next door to my office in Shanghai is one of the most luxurious shopping malls I have ever seen. The English name, Plaza 66, does not give much away but in Chinese it is called “Forever Prosperous”. Only the most exclusive brands are allowed and at weekends you have to queue to get into Louis Vuitton. I was reminded of Plaza 66 on a recent trip to Brazil when I was taken to Daslu, the country’s snootiest shop. We had to drive there – you cannot simply walk in from the street – and a valet ushered us inside, where the same designer clothes were on display. There is one big difference. Daslu is often disparaged for being a symbol of Brazil’s perceived ills, the playground of a spoilt elite. Columnists mock its clientele. Yet Plaza 66 appears in many accounts of modern Shanghai as a badge of success, a magnet for the rising young, moneyed generation. Maybe we have got Plaza 66 wrong. To travel back from São Paulo to Shanghai is to sense the real risks that China is taking with its growth-at-all-costs model. There is a distinctly Latin American feel about some parts of Chinese society today that goes beyond nouveau riche brashness. In the late 1960s and 1970s, when Brazil was a dictatorship and the economy booming, social policy was neglected. “Grow the cake now, divide it up later”, became the mantra. For the past 20 years, China has sometimes adopted a similar approach. One of the less well-known features of China’s boom is the state’s withdrawal from providing health and education.

• Chinese lose patience in long march home
• Analysis: China wishes its manufacturing masses a happy new year

Factories face survival of the fittest What is happening is a survival-of-the-fittest struggle affecting primarily smaller factories in relatively low-tech, labour-intensive industries. In other cases, companies are redistributing some lower value, less time-sensitive tasks to new production facilities in cheaper inland areas. Reflecting China’s resilience, last month the country’s national trade surplus surged 23 per cent year on year to $19.5bn. Large factories that have shifted some of their operations to China’s interior, as Huajian has done, usually retain sizeable facilities in Guangdong, which are better at turning around higher value orders with shorter lead times.

China's new intelligentsia We are used to China's growing influence on the world economy—but could it also reshape our ideas about politics and power? This story of China's intellectual awakening is less well documented. We closely follow the twists and turns in America's intellectual life, but how many of us can name a contemporary Chinese writer or thinker? Inside China—in party forums, but also in universities, in semi-independent think tanks, in journals and on the internet—debate rages about the direction of the country: "new left" economists argue with the "new right" about inequality; political theorists argue about the relative importance of elections and the rule of law; and in the foreign policy realm, China's neocons argue with liberal internationalists about grand strategy. Chinese thinkers are trying to reconcile competing goals, exploring how they can enjoy the benefits of global markets while protecting China from the creative destruction they could unleash in its political and economic system. Some others are trying to challenge the flat world of US globalisation with a "walled world" Chinese version.

India 

Devil of India's Budget Lies in Missing Details In his Feb. 29 budget speech in parliament in New Delhi, Chidambaram announced a 600 billion-rupee ($15 billion) debt waiver for farmers. This sum, which amounts to a staggering 10 percent of the government's tax revenue in the current fiscal year, would have sufficed to create 15,000 megawatts of new power-generation capacity, enough to significantly reduce the country's perennial and debilitating electricity shortages. There's no denying that farming in India is facing a crisis. Productivity gains have stalled. The overall economy has grown an average of 8 percent per annum since 2002, adjusting for inflation. In this six-year period, real agricultural output has expanded 2 percent annually with high year-to-year volatility.

When economics yields to politics  There were no gasps of surprise when Palaniappan Chidambaram, Indian finance minister, unveiled a populist budget aimed at boosting the chances of the Congress-led governing alliance in the general election due by May 2009. Even so, the details announced on Friday were disappointing for economists concerned about inflation and alarming for investors in Indian banks. Mr Chidambaram’s pre-election handouts included more than $15bn loan relief for farmers and higher thresholds for income tax. Bank shares have since fallen sharply, partly because it is not clear how the loan waivers will work in practice and because the plan favours small farmers in arrears over those who have diligently paid what they owed. The Indian government – which believes economic growth will slow to 8.7 per cent in the fiscal year to March 31 from 9.6 per cent the previous year – can argue that it remains fiscally prudent in spite of the stimulus provided by this budget. The official fiscal deficit for 2008-09 is forecast to fall to 2.5 per cent of gross domestic product from 3.1 per cent a year earlier. Unfortunately, that is not the whole truth. The central fiscal deficit number is flawed because it excludes expensive subsidies for oil, food and fertiliser and does not take into account the deficits of the Indian states. Even the relatively modest official economic growth forecasts may prove too ambitious. Just as it has shied away from necessary reforms to liberalise the labour market and the financial sector, so the Congress-led coalition has failed to invest heavily in the roads and schools that India desperately needs. Instead, the surging revenues arising from a period of rapid economic growth have been channelled into wasteful subsidies and make-work schemes and often skimmed off by corrupt officials.

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Some time ago we made the acquaintence of William James, the powerful, famous and almost unknown and under-appreciated American philosopher. Who we read and re-read and find more relevant to the issues of the day from psychology to religion to philosophy every time. Imagine our delight and surprise to find that Steven Pinker, one of the great modern thinkers in psychology and mind-science, when asked by the WSJ to come up with his five best books on human nature came up with the following list:

Books That Explore Human Nature Five best books on Human Nature. 1. The Principles of Psychology By William James. You'd think that a subject as rich as human nature would inspire a cornucopia of great science writing. But it's easier to find readable masterpieces from fields like mathematics and evolution than it is from scientific psychology. Still, a few works endure that are both intellectually meaty and written with panache. William James's "The Principles of Psychology," for instance, has stood the test of time. In this two-volume work of more than 1,000 pages, he shows how humans are at once governed by habits of mind and emotion but also free to act as they see fit. James is the Mark Twain of psychology, fun to read and a source of zingy quotes for every occasion. "To the broody hen the notion would probably seem monstrous that there should be a creature in the world to whom a nestful of eggs was not the utterly fascinating and precious and never-to-be-too-much-sat-upon object which it is to her." 2. The Strategy of Conflict By Thomas C. Schelling. 3. Yanomamö By Napoleon A. Chagnon. 4. The Nurture Assumption By Judith Rich Harris. 5. Words and Things By Roger Brown

We also find the rest of the list somewhat amusing as well since #2 is a book on game theory by an economist and #3 by a cultural anthropologist talking about the most primitive & violent tribe discovered - talk about going back to fundamentals. To appreciate this you ought to have some idea of how important a thinker Pinker is so we recommend his Wiki profile but especially his Edge bio (btw - Edge serves as a gathering place for the New Humanists. Scientists and other thinkers determined to tackle the hardest problems and renew our investigations of them from a multi-disciplinary perspective. You ought to consider subscribing to their regular e-letter). 

After the break you'll find a potpouri of reading excerpts  that cover a gamut from religion in history to Bill Mauldin, the WW2 cartoonist who drew life on the frontline as it really was to interesting selections on enduring truths, the changes in popular views of the Antarctic explorers, to French eating habits and attitudes and a bit on the pscyhology of prejudice. What they all have in common though is they're different aspects of human nature as reflected in values, choices and culture. And we wholeheartedly agree with Pinker on the value and depth of James. In fact another source of amusement for us is that modern psychology is just returning to the issues he wrestled with over a 100 years ago and his work on the biological basis of human nature and on brain function (he was the inventor of neuroplasticity which is rapidly becoming the big new thing in cognitive neuroscience after being ignored for most of that time for example) is turning out to be prescient, largely because it was ignored and neglected. As was his work on refreshing religion and philosophy.

We were introduced to James via a passing reference by Jacques Barzun, the great polymathic cultural historian, educator and critic in his majisterail work From Dawn to Decadence: 500 Years of Western Cultural Life 1500 to the Present . His introduction to James (A Stroll with William James) is well worth your time. And at some point we dearly hope you pick up James for yourself. There is a recent biography that is magnificent (William James: In the Maelstrom of American Modernism). But for an introduction to James we recommend his Talks to Teachers. In it, while he talks about applying Psychology to teaching he embeds much of his understanding of the subject and on human nature in those talks. His chapters on Habit and self-development are worth the price of entry alone.

Culture and Science

And The Winner Is... Human beings have never lacked for things to fight over, but for the last two millennia, they have fought the most over ideas involving the divine. Politics, technology, military capacity, and diseases have all played decisive roles in shaping history, yet it is impossible to understand the rise and fall of empires, the clash of civilizations, and the evolving balance of power without appreciating the unique fervor that religion inspires, and the speed with which new religions can spread. Christianity, a minority sect during much of the Roman Empire, became a world religion with a vast following after the Emperor Constantine converted to it, in the fourth century A.D. Then came Islam, in the seventh century: just a hundred years after Muhammad’s death, in 632, the religion he founded reached beyond the Middle East to Africa, India, and significant parts of Spain and France. The Protestant Reformation of 1517 quickly engulfed half of Europe, migrated to the New World, and fueled the Counter-Reformation in the remaining Catholic states on the Continent—by 1618, the Thirty Years’ War had begun, resulting in the devastation of large swaths of western Europe and the death of some 30 percent of Germany’s population. Every new outburst of religious passion, while producing ecstasy and revelation for some, has disrupted established loyalties, fueled intolerance, and led to violence between the chosen and the damned.

The Cartoonist Who Drew Fire Bill Mauldin was born in 1921 in New Mexico, spending a hardscabble Depression-era youth as his father shuttled around the Southwest in search of work. Mauldin requested a transfer to the infantry, shocking his colonel, who said: "Nobody -- absolutely nobody in the entire military history of the world -- ever voluntarily transferred out of the quartermasters into the infantry." And into, it turned out, the American pantheon. Mauldin was assigned as a rifleman to the 45th Division and began drawing cartoons for the 45th Division News. He was shipped overseas in 1943 in advance of the invasion of Italy and was wounded in Cassino (a "barber's nick" he called the mortar injury) as the Army fought its way up the boot of Italy. But Mauldin's real weapon was a pen. Willie and Joe, Mauldin's pair of poorly shaven, weary, sardonic cartoon soldiers, became of staple of the GIs' newspaper, Stars and Stripes, and soon immortalized the image of the American soldier as a reluctant warrior, inclined to gripe about the brass, long for a pair of dry socks and dream of home even as he fights to victory. In 1956, in the course of running for Congress (unsuccessfully, as it turned out), Mauldin gave a Memorial Day speech at a cemetery. He told the crowd that, for survivors of war, "Memorial Day is every day." He wondered aloud: "By what right did some stray piece of steel go sailing past OUR heads and hit THEM?" Mauldin seemed to carry the question all of his days, until his death in January 2003 at age 81. As Mauldin lay dying, lost in a haze of Alzheimer's disease, Mr. DePastino relates, "the old soldiers began to come... day in and day out to sit by his bed for a while... He remembered nothing about his marriages or career. But he seemed to know them. They were the source of his sovereignty, the ones who'd exalted him to an office no government or institution could grant."

·         The Human Face Of Armed Forces; Bill Mauldin Captured the GI In His Willie and Joe Cartoons  Among the great American archetypes of the 20th century, two cartoon figures still stand large. Their names are Willie and Joe, and they're slogging through the mud with rifles and packs. They're the ragged and exhausted "dogfaces" of World War II, the infantrymen who did the fighting and hated it but did it anyway and whose spirit remains with us despite the death Wednesday of Bill Mauldin, their Pulitzer Prize-winning creator. In a sense, the cartoonist didn't really create these guys at all. Like any gifted journalist, he simply perceived a reality and reported it with as much depth and nuance as he could. The elusive quality that Mauldin was exploring -- through Willie and Joe -- was the subtle but defining existential quirk at the heart of the American character, a duality that is being acted out again today on the national stage: Americans really, really hate war. But sometimes they gotta do it. So they do it well, but they still keep on hating it. Mauldin's genius was that he could get that down with a few brush strokes. "The surest way to become a pacifist," he explained in "Up Front," "is to join the infantry. I don't make the infantryman look noble, because he couldn't look noble even if he tried. Still there is a certain nobility and dignity in combat soldiers and medical aid men with dirt in their ears. They are rough and their language gets coarse because they live a life stripped of convention and niceties.

Enduring Truths and Notions Gertrude Stein once described Ezra Pound as a "village explainer," which, she said, was fine if you were a village, "and if not, not." Arthur Goldwag, seeing the global village crowded with abstractions, wants to do some explaining of his own. The result is "-Isms and -Ologies," a lexicon of more than 450 enduring truths, cast-off notions, newly minted ideas and historical chimeras, from Abolitionism to Zoroastrianism. Mr. Goldwag arranges his knowledge-survey -- definitions that range from a long paragraph to a few pages -- under broad headings: Science, Politics & History, Philosophy & the Arts, Economics. Religion gets the lion's share of entries while Sexual Perversions, thank goodness, gets a bare minimum. In a certain way, "-Isms and -Ologies" may be seen as an attempt to codify the curricular contents of a post-World War II liberal education. Anyone in need of a brief refresher course -- what the educated person ought to know -- could not do much better.

Polar Opposites, Shifting Fame The two expeditions, with their dramatically different outcomes, are classics of polar exploration. Yet as Stephanie Barczewski observes in "Antarctic Destinies," the meaning of the tales -- along with their moral lessons and cultural appeal -- has shifted over the course of a century. "In 1912," she writes, "many people saw Scott as a hero. Today, many people see him as a bumbling idiot whose incompetence resulted in his own death as well as the deaths of his four companions. In 1916, many people saw Shackleton as admirable on some level but not quite trustworthy. . . . Today, many people see him as one of the greatest leaders in human history." Her book attempts to show, as she puts it, "the malleability of heroism." Why was Shackleton so suddenly ascendant? Ms. Barczewski notes that his Endurance experience matches three popular genres: man against nature, maritime adventure and polar survival. Shackleton, in short, could be recast as a prototypical action hero for the late 20th century, not least for Americans. The new Shackleton, Ms. Barczewski writes, "combined optimism and pragmatism in a stereotypically American way: he united an eternally sunny outlook and 'can-do' spirit with a hard-headed assessment of the obstacles that must be overcome.

Why Don't The French Get As Fat As Americans? Answer: they use internal cues -- such as no longer feeling hungry -- to stop eating, reports a new Cornell study. Americans, on the other hand, tend to use external cues -- such as whether their plate is clean, they have run out of their beverage or the TV show they're watching is over.

Posted by dblwyo at 08:25 PM | Permalink | Comments (0)

Back in the day I had been a Bill Bradley supporter even going so far as to make a contribution but more importantly suggesting that he, if he were serious, needed to differentiate himself by staking out a unique position. The position - a pragmatic and centrist one where in my book centrist was tackling serious issues with workable approaches. With his background and track record he struck me as just the mean to speak truth to power, i.e. the voters. After all why not ? As a traditional candidate he didn't stand a chance but by introducing a new note into the national debates he could strike off on a whole new pathway. Well unfortunately Bill turned out to be a terrible speaker and not able to translate his pratical experiences in the Senate into either a vision, policy or pragmatics. After we squandered the golden opportunities of the '90s on a binge while the Brits kept moving forward under the Thatcher-Major-Blair sequence it was, IMHO, more than time for a change.

Worse as Bradley's results deteriorate his willingness to pander to special interests accelerated accordingly. Now that the state of the economy has moved back to center stage we're seeing the same with both Billary and Barrack competing to attack trade, globalization and the fat cats. Despite having good economic policy teams no less. Now a lot of this is necessary tactical manuvering, especially in the primaries. And when you listen carefully you can hear a lot of caveats and realisms.

The catch is which is the reality ? The pandering or the reasonableness ? Ah, said the Bard, there lies the rub. The Economy is moving back to center stage for damm good reasons but it's NOT because of things that happened just in the last few years. No, we're facing the aftermath of decades of accumulated bad policy. Much of which stands a really good chance of getting much worse. So bear that in mind as you review the readings after the break. When you get to the readings just to grasp the seriousness of these issues and the gap between realties and these rhetorics pay careful attention to the except on "rescuing the Rust Belt" vs "Japan's Lost Decade". You won't like it but you need to understand it !

Let's set the stage, define the context if you will with the following excerpt:

Economic Policy Readings

Economy: Who the candidates listen to You might think that being part of a presidential candidate's brain trust would mean high-level meetings in plush quarters with good food. Not exactly. There are high-level meetings - but they're more likely to be conducted by phone or on the fly between stump speeches. As for the food, when asked what surprised him most about campaign life, John McCain adviser Douglas Holtz-Eakin said, "How much I like eating out of vending machines." But of course, with an economy to save and crowds to sway, who has time for dinner? The economy is front and center in people's minds, and the leading presidential candidates are relying on economic experts to help them win the pocketbook persuasion game. Here's a look at the top economic advisers to the leading candidates.

Doing the Math Obama's economic plan adds up, probably. Let's face it. Hillary Clinton is a wonk. Barack Obama is a phenomenon. As his eloquence and charisma propel his candidacy, scrutiny of the policies behind his speeches will and should intensify. One challenge is to tally up his tax cuts and spending increases to see whether they're matched by tax increases and spending cuts, as he says they are. To skip to the bottom line: Sen. Obama's probably do. Capping carbon emissions and auctioning off tradable rights to emit carbon, as he proposes, can raise a lot of money if the next president has the political moxie to implement such a program. Similarities between the two Democrats' proposals and projected savings are greater than their differences; no surprise because they rely on many of the same experts. "Those four more than pay for everything he has proposed in both tax cuts and spending increases," says Austan Goolsbee, Sen. Obama's economic adviser. That's plausible, though it can't be verified without more specifics than Sen. Obama's speeches and Web site offer. Mr. Goolsbee says the senator's goal is to finance initiatives with roughly equal proportions of reduced spending and higher revenue. All this offers a sharp contrast to Sen. McCain, who would extend the Bush tax cuts and enlarge them by cutting corporate-tax rates. He would thus rely on tighter restraints on government spending than Sen. Obama would. And, in the end, there are parallel risks, particularly if the next president inherits a weak economy. It isn't just about adding up promises; it's about implementing painful parts as well as pleasant ones. Sen. Obama will have trouble keeping his pledge to be fiscally responsible and keep his promises, particularly that middle-class tax cut, unless he can get Congress to raise taxes on upper-income Americans, including on capital gains and dividends, and implement a cap-and-trade plan that amounts to a tax. And Sen. McCain will have trouble delivering on his tax promises unless he can get Congress to embrace stiffer spending cuts than it has so far.

The Audacity of Data Despite Obama's reputation for grandiose rhetoric and utopian hope-mongering, the Obamanauts aren't radicals--far from it. They're pragmatists--people who, when an existing paradigm clashes with reality, opt to tweak that paradigm rather than replace it wholesale. Sociologically, the Obamanauts have a lot in common with the last gang of Democratic outsiders to make a credible run at the White House. Like Bill Clinton in 1992, Obama's campaign boasts a cadre of credentialed achievers. Intellectually, however, the Obamanauts couldn't be more different. Clinton delighted in surrounding himself with big-think public intellectuals--like economics commentator Robert Reich and political philosopher Bill Galston. You'd be hard-pressed to find a political philosopher in Obama's inner wonk-dom. His is dominated by a group of first-rate economists, beginning with Goolsbee, one of the profession's most respected tax experts. A Harvard economist named Jeff Liebman has been influential in helping Obama think through budget and retirement issues; another, David Cutler, helped shape his views on health care. Goolsbee, in particular, is an almost unprecedented figure in Democratic politics: an academic economist with a top campaign position and the candidate's ear. Obama's foreign policy advisers tend to look at the world the way a behaviorist looks at economic policy.

Obama’s free-trade credentials top Clinton’s While Barack Obama and Hillary Clinton are locked in combat for the Democratic party’s presidential nomination, commentary on the front-running Mr Obama’s policy agenda, especially on trade, has become faintly ludicrous. On the one hand, David Wessel declared in the Wall Street Journal recently, as others have, that the two had no disagreements on trade policy. On the other hand, Mrs Clinton has assaulted Mr Obama for having no policy agenda at all, a charge that John McCain, the Republican frontrunner, has eagerly embraced. Both views are wrong. Mr Obama has specifics and they differ in important respects from those offered by Mrs Clinton. The only question is: of the two, which is likely to be friendlier as president to the cause of multilateral free trade? Careful scrutiny suggests that the odds are in favour of Mr Obama. To be sure, all Democratic candidates must face the reality that their party has gravitated towards protectionism, overt and covert, in the past decade. The number of Democrats voting for trade deals has steadily declined. The North American Free Trade Agreement was a turning point that deeply divided the party and then a succession of bilateral free trade agreements, many paltry, has steadily eroded the political capital of free-trade Democrats as they were forced repeatedly to go in to bat for trade in sceptical constituencies. The Democrats have also had to face the problem that the antiwar groups that have helped lift the party’s fortunes also overlap often with anti-globalisation and hence anti-trade groups, so the party tends to be propelled into an anti-trade position willy-nilly. This time, however, it is the labour unions that have come to dominate the scene. The close race for working-class votes, the latest in Ohio, has meant that the witless fear of trade as the source of distress had to be indulged. Yet at least five reasons make Mr Obama a less disturbing prospect.

The Politics of Trade in Ohio Watching Barack Obama and Hillary Clinton compete with each other to say the nastiest possible thing about the Nafta trade deal has made me think about the politics of abortion. Now come Mr. Obama and Mrs. Clinton, campaigning across Ohio with a similar kind of tough talk about foreign trade. Based on what they’re saying, you’d have to conclude that they believe that Nafta and other trade agreements have caused Ohio’s huge economic problems. The first problem with what the candidates have been saying is that Ohio’s troubles haven’t really been caused by trade agreements. When Nafta took effect on Jan. 1, 1994, Ohio had 990,000 manufacturing jobs. Two years later, it had 1.03 million. The number remained above one million for the rest of the 1990s, before plummeting in this decade to just 775,000 today. A more important cause of Ohio’s jobs exodus is the rise of China, India and the old Soviet bloc, which has brought hundreds of millions of workers into the global economy. New technology and better transportation have then made it easier for jobs to be done in those places and elsewhere. To put it in concrete terms, your credit card’s customer service center isn’t in Ireland because of a new trade deal. All this global competition has brought some big benefits, too. Consider that cars, furniture, clothing, computers and televisions — which are all subject to global competition — have become more affordable, relative to everything else. Medical care, movie tickets and college tuition — all protected from such competition — have become more expensive. So what can be done for Ohio? There is actually a fair amount of agreement among economists on this question. The solution should involve more government investment in infrastructure, the medical sciences, alternative energy and other areas that could produce good new jobs. A more strategic approach to investment, one less based on the whims of individual members of Congress, would also help.

Dr Obama's patent economic medicine  BUILD a better mousetrap and the world will beat a path to your door. The chap building inferior mousetraps, however, will go bust. Many people want the benefits of technology and trade without the disruption. Politicians often feed this delusion. Barack Obama is no exception. He is not against technology, of course. That would sound stupid. Nor is he against Americans trading with other Americans. Nor, even, does he oppose trade with foreigners. But he has found an artful way of signalling to those who do that he agrees with them: he denounces NAFTA (the North American Free-Trade Agreement). To many ears, this sounds like shorthand for denouncing globalisation—though that is not what Mr Obama actually says. More important, because NAFTA was signed by Bill Clinton, Mr Obama can blame his wife for it.  He does so in a reassuring tone of voice but in hysterical terms. Mrs Clinton was right in the 1990s and is wrong now. Trade hurts some people, but helps many more. It raises overall income and allows Americans to buy a wider range of better goods more cheaply. And NAFTA has helped make Mexico less poor, which has contributed to its stability and democracy—something that should matter to Americans. Mr Obama understands economics better than he lets on. In his book “The Audacity of Hope”, he recognises that a tariff on imported steel may provide temporary relief to American steelmakers, but it will also make every American manufacturer that uses steel, from carmakers to housebuilders, less competitive. When put on the spot and asked whether he would repeal NAFTA, he says that would cause more job losses than gains.

Rescuing the Rust Belt Since "fair" is one of those words that can mean virtually anything to anybody, what this amounts to is that politicians can pile on whatever restrictions they want, in the name of fairness, and still claim to be for "free trade." Clever. We will all have to pay a cost for political restrictions and political cleverness, since there is no free lunch. In fact, free lunches are a big part of the reason for once-prosperous regions declining into rust belts. When the American automobile industry was the world's leader in its field, many people seemed to think that labor unions could transfer a bigger chunk of that prosperity to its members without causing economic repercussions. In the short run, you can get away with all sorts of things. But, in the long run, the chickens come home to roost. The rust belt is where those rising costs have come home to roost. While American auto makers are laying off workers by the thousands, Japanese auto makers like Toyota and Honda are hiring thousands of American workers. But they are not hiring them in the rust belts. They are avoiding the rust belts, just as domestic businesses are avoiding the high costs that have been piled on over the years by both unions and governments in the rust belt regions. In short, the rust belts have been killing the goose that lays the golden eggs.

Lessons from Japan's 'Lost Decade' Washington and the financial sector would do well to study the past — to avoid repeating the errors of 1980s bad-loan crisis in Japan. With profits at U.S. banks and thrifts at a 16-year low in the fourth quarter and U.S. consumer expectations at a 17-year low in February, financial headlines often read more like history lessons. As American banks dig out from under their mountain of bad debt, analysts say policymakers would do well to remember Japan's string of mistakes as it grappled with its own bad-loan crisis, after the late 1980s bubble economy burst and left financial institutions burdened with massive levels of bad loans. The bungled cleanup plunged Japan into its so-called "Lost Decade" of stop-and-go recession. There are no quick fixes, say bankers. And counting on one could well make matters worse. "Lessons of what not to do from it are far more plentiful than the what-to-do sort," said James Malcolm, now a London-based strategist at Deutsche Bank. He was a Tokyo-based economist with a different investment bank at the height of Japan's crisis in the late 1990s. "Basically, it's inevitable that people want a quick and painless fix, but the reality is, it's going to be slow and painful so you've got to provide a supportive policy environment, and push forward with restructuring the markets." It's critical that U.S. banks and government policymakers face up to facts, analysts say. Recent data make it hard not to. Is US entering Japan's nightmare?

Posted by dblwyo at 03:36 PM | Permalink | Comments (0)

The immediate prior international news readfest focused on the outlook for the next several decades as the world is forced to adopt a new architecture with the rise of the rapidly developing economies, especially the BRIC countries. We'll keep on top of that because it's one of the, if not THE, most important themes facing us all. Just to review the bidding our point, from the readings, was that continuing to sustain growth and the associted improvements in human welfare was beginning to severely straing the socio-political frameworks of the BRICs. As a result of which new and increasingly fragile fault lines are being exposed to increased pressures which may result in major collapses. They are certainly leading to major policy challenges.

The other side of the coin is how are the "old powers" adapting to these deep structural changes. And the answer is not well at all. Of the three major European powers (Britain, France and Germany) only Britain has demonstrated a sustained capacity for adopting new strategies and adapting behaviors to make those strategies reality. On the other hand with the rise of Merkal in Germany and Sakozy in France both countries began to face the new realities. Unfortunately the resulting strains and/or personal failings of the leadership have expoed old fault lines which are beginning to crack.

Just, again, to review the bidding consider Britain. We used to talk about the British disease - the looking to the past, the failure to adopt and adapt and being emeshed in a regulatory and bureaucratic nightmare that prevented change. If you want a superb implicit portrait of the results just go watch The Hitchhiker's Guide to the Galaxy (Full Screen Edition). The "evil enemy" were the Borglon - who lived poetry, lunch breaks and rules. It was Thatcher who ran a stent thru the Brit arteries and turned an organoscelrotic system into a dynamic one. John Major who kept it going and began to adapt it to a more human form and Tony Blair who brought Labor to the middle, continued Major's policies and may have helped set the tone that might sustain Britain.

As you can from the readings below neither France or Germany are rising to the challenges particularly well. Aside from general interest and fascination with other's problems you care because ? Because both countries are still vitally important to the world economy as well as being delightful places to visit. How go these countries will determine how Europe re-shapes itself. How Europe reshapes itself will help determine what the world we get to live evolves. Their successes will be, in part, our successes.

The question is can they face reality and adopt and adapt ? The jury's out.

International Readings (Europe) 

France Admits Obama Only Good to Football as Politics Preclude Immigrants The rise of Illinois Senator Obama, 46, to front-runner for the U.S. Democratic presidential nomination is holding a mirror to France as its citizens prepare to vote next month for mayors in its 36,781 municipalities. While Europe's third-largest economy has the region's biggest population of Sub-Saharan and North African immigrants and their descendents, it doesn't have any black or Arab mayors currently in office, says Adil Jazouli, a sociologist and adviser to a government committee on urban affairs. There also aren't any deputies in the National Assembly from France's first-or second-generation immigrant population, he adds.

On death and dying THE reaction of Germany's political class to the demise of their four-party system is reminiscent of Elisabeth Kübler-Ross's “five stages of grief”. First came “denial”. In 2005 the Left Party won enough seats in Germany's parliament to stymie the two usual coalition options: a right-of-centre one between the Christian Democrats (CDU) and the liberal Free Democrats (FDP), or a left-leaning pairing of the Social Democrats (SPD) with either the FDP or the Greens. Instead, the CDU and SPD were forced into a “grand coalition”, from which each fervently hopes to escape after next year's federal election. Now comes “bargaining”.

European Readings

Posted by dblwyo at 09:55 AM | Permalink | Comments (0)

Next up is some variant readings from around the world on the outlook and status for the ME. Interestingly but hopefully not surprisingly they care as much or more about our elections than we do. In fact, just as a sidebar, an online poll at the Singapore Straits Times found 55%+ of the respondents were more concerned with the US elections than the ones across the Strait in Malaysis. Unfortunately the reverse, or obverse ain't true. That is we don't pay much attention to what they think about things. I started out to put some context around the readings after the break - to wit, why we really....really should care about the ME - but ended up with so much that they'll become seperate posts.

Briefly though 1) the ME is the major source of oil for the world economy and will be more important in the future, 2) the ME has been under growing socio-demographic pressures from rising populations and a lack of development which is escalating exponentially, and 3) US policy continues to be self-interested, quasi-benign neglect but uninformed, un-sophisticated and too short-term to serve our own interests. Put that all together and you have the ingredients for a major implosion which could be catastrophic if not addressed. Which makes resolving these challenges favorably is probably THE major short- to intermediate-term US foreign policy requirement.

It always amuses me that toward the end of their last terms US Presidents seem to want to leave a legacy of resolving the ME into some nice, neat, stable and peaceful package. So they try and slam dunk something. That's been going on since Jimmy the Peanut with Clinton and Bush II taking big passese at. This is too intractable, severe and complex a problem for amateur hour however, which is what we keep insisting on its' being. Think worst American Idol moments only this time it's American Idiots. The catch is that it isn't just a peace and stability problem it's also a major national security problem, which is closely coupled to the need for a rational, forward-looking and innovative strategic energy policy AND a major economic problem. That's true because we keep importing oil and exporting depreciating declining dollars, which are not independent trends, and re-cycling those dollars into sovereign wealth fund investments is also becoming a painful challenge.

Aside from amusement our bumbling around needs to be fixed and soon. My favorite take which captures a lot of the confusion, self-deception, political narrow-mindedness, lack of grasp of reality and inability to face the world as it is is captured in Syriana. Which IMHO was a great movie though not for the usual reasons. If you actually pay attention what you see is America pursuing an "Oil at Any Cost" policy, struggling to keep the lid on the status quo, and lackng a willingness to find alternatives, i.e. a coherent national energy policy. In other words you and me folks ! You also see where political correctness, mis-represantation of who's doing what to whom and plain old wishful thinking get us into trouble. For example the mythology about the Iranian moderates moving the country to a more progressive outlook. Or the willingness to sacrifice key personnel to political expediency while also failing to build, develop and maintain an adequate and competent intelligence capability. If you click thru the picture you'll get Wikipedia's excellent summary. The underlying realities are even more tellingly depicted in Robert Baer's book on which the movie was loosely based:See No Evil

Middle East Readings

Why is the EU lenient on Arab democracy? When the EU deals with its southern neighbors, it often lacks detailed information and clear analysis of the situation. After all, Brussels praised Morocco's "new electoral framework," which was already in use during the 2002 elections. The only significant difference was the re-districting of some constituency boundaries, which, if anything, increased the already high inequality of votes in favor of conservative rural districts. Knowledge of such simple facts is often the result of expert analysis and reporting. In Eastern Europe these facts are usually picked up by election observation missions of the Organization for Security and Cooperation in Europe (OSCE) or the Council of Europe - staple suppliers of expert analysis to which the EU regularly refers. In contrast, southern EU neighbors like Morocco evade such scrutiny, because no international expert organizations are at work in that part of the world. But it is such detailed analysis that makes democracy promotion effective, because it increases the onus on governments that want to benefit from democratic legitimacy. Short of new institutional arrangements, there are other ways for the EU to become more focused when promoting democratization among its Arab partners. First of all, Brussels should dismiss the rhetoric of cultural relativism: All southern neighbors have ratified the International Covenant on Civil and Political Rights, a legally binding United Nations document that contains the fundamental ingredients of a functioning democracy. Opinion polls show that Arabs support these values.

·         A time for fresh American eyes in the Middle East

·         A poll that disproves Western myths about Muslims

Wake up Arabs, Obama may be a menace A widespread impression increasingly evident in the Middle East is that the election of the Democratic candidate Barack Obama in the American presidential election will serve the Arabs' best interests. This is false. Any US president will have to tackle three main issues in the region. According to American priorities, these are Iraq, a nuclear Iran and the Palestinian-Israeli conflict. On Iraq, Obama has so far promoted one idea, popular among Americans, though not necessarily wise: He plans to withdraw US troops from the country according to a predetermined timetable, regardless of realities on the ground. Americans have become exhausted with losing lives and treasure. Many Iraqis place "national honor" above anything else. Yet only a few on either the American or the Iraqi side actually support Obama's rigid withdrawal plan. In the United States, both supporters of the war and opponents know that a withdrawal from Iraq would harm Iraqis, the region and perhaps the world. American decision-makers, both Republican and Democrat, agree that the US should not "cut and run" and should clean up the Iraqi mess it caused, despite the high cost. As former Secretary of State Colin Powell used to say about countries the US intervened in: You break it, you own it.  A majority of Iraqis, their elected Parliament and Cabinet also oppose a hasty American withdrawal. Realizing the dangerous consequences of a vacuum, Iraqis don't seem in a hurry to demand an American withdrawal, even if they are not enthusiastic about the US presence in their country. On Iran, Obama has made it clear that he would reverse the current administration's policies by sending American officials to negotiate with Tehran over its nuclear program. But then what?

Turkish raid strains U.S.-Kurd ties The intermittent offensive against the Kurdistan Workers' Party (PKK) reached a crescendo Thursday when ground troops crossed into Iraq in a campaign involving nearly 8,000 soldiers. Officials here say it is Turkey's most significant strike against the rebels in more than 10 years. Frustration over the Turkish incursion cuts across the spectrum. Many average Iraqi Kurds sympathize with the PKK rebels' aim to form an independent Kurdistan and officials say Turkey's real goal is to destabilize its semiautonomous government, the leaders of which have long been American allies. Kurdish anger toward US for providing assistance to Turkey, its NATO ally, in its bombardment of suspected PKK targets has been simmering since last fall. It has led to public outbursts and now it appears to have become more serious, threatening one of the most important partnerships for the US in Iraq at a time when Washington is anxious to translate security gains into more lasting stability. Adding to the stakes is the fact that US forces, with the help of Iraqi forces dominated by Kurdish contingents, continue to battle Al Qaeda-linked militants and other insurgents in areas such as Mosul and Kirkuk, which border Kurdistan and have significant sectarian and ethnic tension. Metehan Demir, a veteran defense correspondent now with the Hurriyet newspaper in Ankara, says the Turkish operation was carried out now, in the winter season, to catch the PKK off guard. "Everybody was expecting this operation to be carried out in the spring – as well as the PKK.... Such a move by the Turkish Army destroys the PKK's [spring defensive] plans because it was carried out in this season." He says that while there has been much criticism for the operation among Kurdish officials in Iraq, it will not have much impact on the military decisionmaking in Ankara, Turkey's capital. He says senior Turkish politicians and generals have laid the groundwork with the US and Iraqi governments, and even Iraqi Kurds, to minimize criticism.

KURDISH WAR: Digging For Dirt Among The Rubble The PKK has built a dozen or so camps and headquarters operations along the Turkish and Iranian border. From these bases, the PKK recruits and trains fighters, and plans terror attacks into Turkey and Iran. The loss of these bases will slow down PKK violence. The use of commandos is apparently an effort to capture documents and PKK members, or at least identify bodies. The Turks say about 150 have died in four days of operations, 90 percent of them PKK. The Turks want documents, and other evidence, showing the extent of PKK criminal activities in Europe. Turkey has been trying to get European nations to stop allowing the PKK to use Europe as a base for exiled PKK leaders, and to halt PKK fund raising among Kurdish migrants, and the locals. If the Turks can prove lots of PKK criminal activity, the PKK will lose some of its European sanctuaries.

ElBaradei is quietly managing to disarm Iran It is a popular parlour game in Washington’s corridors of power and European chancelleries to deride Mohamed ElBaradei as a quixotic bureaucrat determined to subvert the western strategy of restraining Iran’s nuclear programme. The latest International Atomic Energy Agency report suggesting progress has been made by Iran is quietly disparaged by the Bush administration as another clean pass for the rash theocracy. The point that Mr ElBaradei’s critics miss is that he is judiciously achieving the goals that they seemingly desire – the disarmament of the Islamic Republic. The IAEA process, particularly the adoption last year of a “work plan” to investigate suspect activities, has been criticised by many Americans. The latest report shows, however, that process is working. The investigation and inspections – even the limited ones the IAEA is currently able to conduct – have, in effect, shut down direct weapons work and resolved many of the outstanding historical questions. In sum, the IAEA investigations have produced enough circumstantial evidence to support the view that Iran probably conducted nuclear weapons research in the past. But the evidence to date also indicates, as the US National Intelligence Estimate on Iran concluded last November, that Iran stopped this direct weapons work. The path now is to recognise this success, deepen it, find a way for Iran to come clean safely on its past work and to prevent Iran from developing capabilities that could allow it to produce weapon material in the next decade.

• An interesting perspective on Iran, Russia and other problems is in this short interview with Nicholas Burns of the State Dept. on Charlie Rose. You'll be surprised at what you might learn about whom is helping or hurting whom. 

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