In light of yesterday's column, I've been giving considerable thought to the Cold War. I decided to download the Soviet National Anthem on iTunes but, of course, I don't speak Russian. I located English translations of the text and something piqued my curiosity. The word: "Freedom" is a predominant theme in the text. I began to wonder what the word means in that context as opposed to what it means in ours.
Historically speaking, both cultures have extraordinary differences in how they encountered freedom. I'll begin with the U.S.
As many of us are well aware, we were a colony of the British Empire whose governmental model was a monarchy bound by a constitution. As our revolution approached, a new idea was circulating among western intellectuals pioneering what is referred to as the Enlightenment. Along with the Social Contract and the Vindication of the Rights of Man (and Woman), The Wealth of Nations arose to speak of the next stage of Western Economy -- Capitalism. Until then the model was primarily Mercantilism, which followed what one of my professors once called: "The Golden Rule: Which is, he who has the gold makes the rules." Colonialism was a foreseeable offspring to this model.
Kings sent merchants under their flag to set up shop in foreign lands. Initially, the project was for these merchants to gather as much gold as they could, but this quickly morphed into other valuable commodities. Spices, for instance, were a major factor in King Ferdinand's and Queen Isabella's financing of Christopher Colombus' journey to the East just as ivory was a major factor in the Belgians' interest in the Congo.
Anyway, Adam Smith posited that the nation which would triumph under such a model, would be that nation which allowed their colonists to operate with as much free reign as possible -- something made much easier with the shrinking influence of the Catholic Church. This is not to say that Smith was promoting any inhumanity -- he's strictly speaking of economic freedom. Minimal tax requirements, minimal restriction of the trade that allowed colonists to make their living, and minimal restriction of the freedom to engage in enterprise for private gain -- were all ingredients to building a Nation's Wealth. But the most essential restriction to be kept to a minimum was that on capital. With capital flowing freely, more opportunities for growth would emerge. For Adam Smith, capital meant labor, labor meant production, and production meant wealth -- so long as there was demand for the thing being produced.
When the Magna Carta was drafted and "No Taxation Without Representation" became the law of the land, it was done so for the purpose of sowing economic freedom in the rule of law -- though this occurred before Adam Smith. So when colonists became frustrated with the King's taxation policies (expecting a more capitalist model than mercantilist), they had no voice since they were not represented in Parliament.
The underlying gripe with the colonists was that the Social Contract had been broken through this taxation. After much discussion and deliberation, we declared our independence knowing that such an action was certain to bring war. But we did it for freedom. Patrick Henry framed it in an existential context when he said: "Give me Liberty, or Give me Death!"
We won our independence from Great Britain, and the conversation has been going on internally ever since. Our earliest cultural history tells us that freedom means outside the realm of absolute state control. To preserve this freedom, we constructed our own representative government and gave it oversight and limits on the degree to which it may interfere with the private affairs of its citizenry.
Then, the industrial revolution came. This led to a population shift with the development of urban centers as an alternative to agrarian and small-town merchant communities. The U.S. experience is that this all happened under a representative governmental model defined by a constitution. Although, some have argued that this model became corrupted by large monied interests.
This experience was far from Universal. Not every Western nation had a government in whom the citizens placed legitimacy. I'm thinking of Russia. For Russia, the industrial revolution came about in the world while that nation was still ruled by an absolute monarch. Thus as urban centers developed (though small in the still largely agrarian landscape), the industrial system was seen by the people as a tool of governmental oppression -- specifically at the hands of the Tsar. Rather than viewing industrialization as the means toward a free state (as the U.S. did), it was viewed by the Bolsheviks as a barrier to it.
Though this was not necessarily the case of all Bolsheviks. In the 1920s, following the revolution, there was an interesting event in the world of bilateral trade agreements: The Anglo-Soviet Trade Pact. Essentially this was an oil deal between Great Britain and the Soviet Union, which was met with great controversy among party hardliners such as Joseph Stalin. It, along with other pieces of Lenin's "New Economic Policy," was seen as appeasement to the Bourgeois West and treason of Communist ideology. Though Lenin warned against the dangers of isolationism, coupled with his death in 1924 and the exile and subsequent murder of Leon Trotsky -- Stalin and the hardliners prevailed and pioneered the Command Economy adhering to a Five-Year Plan. This was the birth of what came to be known as Stalinist Communism.
How could the West communicate effectively with the Soviets about policy when each had a different understanding of the concept of "freedom"? Because neither side could agree on this concept, each side was met by the other with immediate suspicion.
Peculiarly enough, I once came across an article in Foreign Affairs that was attempting to re-frame U.S. relations with the Middle East. The article said something I had never heard before -- that the English word "freedom" (as we understand it) does not have a direct translation in Arabic. According to the article, when our word "freedom" is translated into Arabic it is often done with a word that comes closer to our meaning of "justice". It also said that the idea of "free" in Arabic culture is simply associated with not being owned or not being a slave.
I've often wondered to what degree this disagreement of meaning has contributed to our current conflict.
Tuesday, September 23, 2008
Monday, September 22, 2008
The New Communist States of America
I hope the reader doesn't mind, I'm taking a few days off from "The Interests" -- I'm trying to determine my next issue in line with my priorities. But with the massive overhaul this weekend this is what has been on my mind...
The wheels are off now, Jackson! $700 billion for the sheisters and hornswogglers on Wall Street. Goldman Sachs and Morgan Stanley have just been approved as holding companies...what's that mean? It means they were on deck to have their asses paddled by our economy's daddy -- the Invisible Hand, and went crying to mommy -- the Fed. She assuages daddy's rage with a blow-job and a beer, meanwhile junior doesn't learn a damn thing except someone will always be there to take it on the chin...or the eye, or the neck, or wherever. Junior now has spanking insurance financed by no one but the Bureau of Engraving and Printing.
But, so much for free enterprise -- sorry but it's been squandered away. This is the new global economy -- not entirely state-run, not entirely private, but the indistinguisable and inseparable union of the two. We're following the Russo-Sino-Venezuelo model now! Why not? The Chinese have been more successful at globalization than anyone. A scholar (the name escapes me, now) once said that there was a compromise in Chinese culture after Tiananmen Square and it was this: "Beijing wouldn't let us be free, but they would let us be rich." And thus forth emerged the Chinese yuppie -- just like an American yuppie, but with a work ethic.
What happened here? There are many theories and will continue to be many theories, but the metaphor I find most suitable is that we became a nation of jugglers. Then once the Soviet Union fell, we put on rollerskates too. Then after 9/11, we blindfolded ourselves. We were headlining for the world's largest three-ring circus and it was only a matter of time before we fell off the tightrope with only elephant dung to break our fall.
The good news? Our dollar is going to be so cheap we'd no doubt be a prime labor market for European investment -- if they survive. Imagine somebody actually outsourcing to us. But it's not all good: At best, we'd be the prodigal son of Western Civilization hoping for the slaughter of the fatted calf -- at worst, the calf itself. What's worse is our government will make the deal but there'll be no place for unions or workers' rights -- not if we'd want to compete with China. And if we get too competitive with China, there's no telling what might happen. War? Maybe, or perhaps we'd just go to them to finance our factories using pounds of our children's flesh as collateral.
Hold on to your socks, folks!! We may need them for toilet paper.
The wheels are off now, Jackson! $700 billion for the sheisters and hornswogglers on Wall Street. Goldman Sachs and Morgan Stanley have just been approved as holding companies...what's that mean? It means they were on deck to have their asses paddled by our economy's daddy -- the Invisible Hand, and went crying to mommy -- the Fed. She assuages daddy's rage with a blow-job and a beer, meanwhile junior doesn't learn a damn thing except someone will always be there to take it on the chin...or the eye, or the neck, or wherever. Junior now has spanking insurance financed by no one but the Bureau of Engraving and Printing.
But, so much for free enterprise -- sorry but it's been squandered away. This is the new global economy -- not entirely state-run, not entirely private, but the indistinguisable and inseparable union of the two. We're following the Russo-Sino-Venezuelo model now! Why not? The Chinese have been more successful at globalization than anyone. A scholar (the name escapes me, now) once said that there was a compromise in Chinese culture after Tiananmen Square and it was this: "Beijing wouldn't let us be free, but they would let us be rich." And thus forth emerged the Chinese yuppie -- just like an American yuppie, but with a work ethic.
What happened here? There are many theories and will continue to be many theories, but the metaphor I find most suitable is that we became a nation of jugglers. Then once the Soviet Union fell, we put on rollerskates too. Then after 9/11, we blindfolded ourselves. We were headlining for the world's largest three-ring circus and it was only a matter of time before we fell off the tightrope with only elephant dung to break our fall.
The good news? Our dollar is going to be so cheap we'd no doubt be a prime labor market for European investment -- if they survive. Imagine somebody actually outsourcing to us. But it's not all good: At best, we'd be the prodigal son of Western Civilization hoping for the slaughter of the fatted calf -- at worst, the calf itself. What's worse is our government will make the deal but there'll be no place for unions or workers' rights -- not if we'd want to compete with China. And if we get too competitive with China, there's no telling what might happen. War? Maybe, or perhaps we'd just go to them to finance our factories using pounds of our children's flesh as collateral.
Hold on to your socks, folks!! We may need them for toilet paper.
Wednesday, September 17, 2008
The Interests -- Securing the Homeland
Update on Previous Entry. Since writing the previous entry on my economic perspective, three financial firms have been in the news: Lehman Bros. is filing for Chapter 11, Merryl Lynch has been acquired by Bank of America, and AIG has been given an $85 billion loan from the Federal Government -- this was done at what analysts have determined to be an 11% interest rate along with the Federal Government now owning stock in the company. Personally, I don't see how this can be done without legislation generating from the House of Representatives. And since when do we have any government ownership of a private corporation? So, this is how the Red Revolution comes -- not in the streets, but in the boardrooms.
The ultimate irony here was that I became aware of this story listening to NPR while driving home from hearing Tom Friedman speak at Heinz Hall. He was talking about a friend of his who thought government mandates pertaining to energy conservation was the best way to conserve. His response was: "So you want to be China for a day?" Unbeknownst to us, that's exactly what Hank and Benny were up to at the exact moment those words were uttered. I want to have Mr. Friedman's crystal ball for a day.
Homeland Security. How are we best able to secure the homeland? Curiously, this isn't really a new topic. It just used to be called National Defense. What has changed is not the issue, but the antagonist. We do face a new enemy, but I have always found it odd that we insist on fighting this new enemy as if it was an old one. There seems to be an admission that this is a new threat to be combatted in new ways, yet the current administration and John McCain insist that the way to defeating our new enemy and preventing their attacks is by having a strong military. This is wrong on so many levels.
First, let me say that I am not a passivist. Not since Adolf Hitler has the world faced a more severe threat than Islamic Extremism. That is not to say, however, that Usama bin Laden (UBL) poses a threat identical to that of Nazism. While the two appear comparable in severity, they are most incomparable as far as tactics, and even further apart when considering strategy (without argument Islamic Extremism is a far more capable adversary).
Similarities:
The ultimate irony here was that I became aware of this story listening to NPR while driving home from hearing Tom Friedman speak at Heinz Hall. He was talking about a friend of his who thought government mandates pertaining to energy conservation was the best way to conserve. His response was: "So you want to be China for a day?" Unbeknownst to us, that's exactly what Hank and Benny were up to at the exact moment those words were uttered. I want to have Mr. Friedman's crystal ball for a day.
Homeland Security. How are we best able to secure the homeland? Curiously, this isn't really a new topic. It just used to be called National Defense. What has changed is not the issue, but the antagonist. We do face a new enemy, but I have always found it odd that we insist on fighting this new enemy as if it was an old one. There seems to be an admission that this is a new threat to be combatted in new ways, yet the current administration and John McCain insist that the way to defeating our new enemy and preventing their attacks is by having a strong military. This is wrong on so many levels.
First, let me say that I am not a passivist. Not since Adolf Hitler has the world faced a more severe threat than Islamic Extremism. That is not to say, however, that Usama bin Laden (UBL) poses a threat identical to that of Nazism. While the two appear comparable in severity, they are most incomparable as far as tactics, and even further apart when considering strategy (without argument Islamic Extremism is a far more capable adversary).
Similarities:
- Both strive/have striven for the complete annihilation of "the other". For Islamic Extremists, "the other" is Western Civilization. For Nazis, "the other" was anyone not of the Aryan race.
- Both have/had extraordinarily effective propaganda campaigns rooted in vengeance for prior humiliations. For Islamic Extremists, the humiliation stems from Western support for Israel, our propping up of regional dictatorships such as the Shah of Iran, Hosni Mubarak, Saddam Hussein, and the Saudi Royal Family, as well as our military presence in the region. For the Nazis, it was the brutal and excessive punishment visited upon Germany (by Great Britain, France, and the US) in the wake of the First World War.
- Both have/had direct access to the tools they need(ed) to bring about the realization of their vision. For the Nazis, it was the ability to mass produce conventional armaments. For Islamic Extremists, it is the emergence of the global civilization with world travel and world communication becoming more available than ever before (this characteristic, in turn, has contributed to a more efficient global black market that not only provides weapons but funding as well).
Differences:
- State-based Organizational Structure vs. Corporate Organizational Structure. Germany built its Axis among countries and formed an overt conventional threat. Islamic Extremists build their structure based on a communication network among individuals and benefit from their anonymity.
- Isolated Propoganda Campaign vs. Multilateral Propoganda Campaign. The scope of Hitler's rhetoric was isolated among a specific group of people -- those of Aryan descent. Consequently, it was inherently confrontational to anyone not included in that group. While UBL's rhetoric is also aimed at a specific group of people -- Muslims, it also possesses something Hitler's did not -- invitation. In nearly every one of UBL's addresses, he asks Westerners to convert to Islam and makes the case for everyone to rise up against the West.
- Reckless Fortitude vs. Patient Measuring. Hitler had done many things throughout the course of his chancellorship to telegraph the Second World War. His flaw however, was in his determination to conquer Russia at any cost (even the cost of victory itself, ironically) and his constant waffling over whether to grab the oil in Baku or sack Moscow. Hitler eventually became a victim of his own obsession. I don't know if that can yet be said about UBL. In the current framework, the Islamic Extremists don't need to do much more than just stand by as we kill countless civilians in their pursuit.
When the 9/11 attacks occurred, I was struck by how much media coverage was devoted explicitly to the body counts, destruction, and devastation. It shaped the event in the public's mind simply in the context of an act of war that demanded retribution. While that's true, it's perhaps the smallest truth of what occurred that day. The real story was in asking the following question: What, through this act, was UBL trying to achieve? This question was not only ignored, but ridiculed.
When Mayor Guiliani spoke to the UN on October 1, 2001 he said: "Let those who say that we must understand the reasons for terrorism come with me to the thousands of funerals we are having in New York City..." In essence, let's defeat this enemy while at the same time remaining willfully ignorant of them. Never in the whole course of human history has a war ever been won on the basis of ignorance and lack of understanding. This mentality was precisely what UBL was hoping would prevail because it statistically would render our victory less likely.
The primary strategic goal of these attacks was to provoke a US invasion of Afghanistan (read Michael Scheuer's Imperial Hubris). Something we waited nearly a month to do. The idea from their perspective was to draw us into a conflict similar to the one which defeated the Soviet Union, so that they could sow outrage among the Arab community and future generations of Muslims. As of right now, we have been there for nearly seven years and the enemy is regrouping and waging far more formidable attacks against our troops and the US-backed Karzai administration. We have now only been there just half as long as the Soviets (who, incidentally, not only shared a border, but could afford to be far more ruthless than the US) and yet we insist on muddling through -- the opportunity cost for a horendously executed invasion of Iraq.
So, what is missing from our efforts? Let me start by first identifying what's present: We have a prolonged overt military presence in the Middle East, a surveillance program (allbeit a controversial one), and probably some covert or clandestine activities which are not available for public scrutiny. I want to make clear that, generally, I don't have any problems with the aforementioned approaches. I do find it believable that our military presence in the Middle East probably has pre-occupied Islamic Extremists from pulling off successful attacks in the US, though it does not seemed to have helped Europe. I also believe that some kind of surveillance program is warranted, though not without judicial (or, at least FISA) oversight -- when we ignore the Constitution, we divide ourselves to the point of dangerous vulnerability. And, finally, covert or clandestine action/infiltration is the most efficient way to defeat this enemy -- I hope we do a great deal of this, but I doubt we are doing so effectively considering the blatant lack of funding.
What's missing are our propoganda efforts, our educational efforts, and our diplomatic efforts. I'll take the last two first, but really they are all intimately connected. Read Jennifer Bremer's article from October 16, 2005 in the Washington Post and you'd be amazed to learn just how few of our Foreign Service Officers (FSOs) are proficient enough in Arabic to address large groups of people. As of right now, FSOs being dispatched to the Middle East get only a two-week course in language training -- not much has changed in 3 years. Without sufficient foreign language education, there is no hope for effective diplomacy in the region. How can we forge collaborative relationships when hardly anyone can speak the language?
Of course, there are many English-speaking Arabs -- yet, we don't even forge those relationships. One of the greatest missed opportunities over the past 5 years was in Iraq, and was the major reason why I initially supported the invasion. We had the opportunity to correct something we should have been corrected a generation ago, our support for the most ruthless dictator since Pol Pot (read Peter W. Galbraith's End of Iraq). We could have approached Iraq in such a way that would have made it impossible for anyone to deny its importance and necessity -- we needed penitent diplomacy. If we had approached Iraq with an open book saying: "Yes, we helped this madman because we were too focused on the Ayatollah. We unwittingly helped him slaughter innocent Shias, we unwittingly helped him slaughter innocent Kurds, we unwittingly helped him establish himself as the scourge of all things good and holy and we are heartily sorry for having offended thee." If that had been the talking point in the lead up to Iraq, not that we would have changed bin Laden but we would have rendered him rhetorically impotent.
Finally, where's our propoganda? So many talk about this being a "different kind of war" almost to the point where it becomes a cliche. That's unfortunate, because it's probably the greatest truth that's ever been spoken of it. It is a different kind of war...it's almost characteristic of a vendetta -- something that goes on and on for generations with no end in sight. To ignore the trans-generational aspect of this endeavor, is to ignore the most obvious path to victory and this is where we need to temper our military involvement. How do you convince a 15 year-old kid not to succumb to Islamic Extremism after a family member becomes collateral damage in an Israeli, US, or British air-strike? What happens when that 15 year-old kid has children of his own? What stories will he tell them? Will he tell him about the time a US Marine gave him a candy bar, or when his life was turned upside down by a B-2 bomber?
That, my fellow citizens, is the true threat. Do we need military prowess to fight terrorists? Sure, those lost souls who have already started down that path are beyond reform and unfortunately violence is our only option for dealing with them. However, we need get to those who have not yet strayed -- that's where the audience is. Without attacking the root of terrorism, it will never be defeated.
Sunday, September 14, 2008
The Interests -- Economy
I honestly believe that my interests align with the interests of our nation. I therefore consider myself a patriot.
I have a stake in:
Securing the US Economy. As a result of this interest, I have acquainted myself with the issue through the following reading material: The Prize by Daniel Yergin, A Biography of the Dollar by Craig Karmen, Secrets of the Temple by William Greider (unfinished), Wealth of Nations by Adam Smith (unfinished), The Protestant Ethic and the Spirit of Capitalism by Max Weber, The Dialectic of Enlightenment by Max Horkheimer and Theodore Adorno, and Jihad Vs McWorld by Benjamin Barber (this was published prior to 9/11/2001).
This is not to say I agree wholeheartedy with all of these authors' policy recommendations, just that their impression of "the world as it is" has often matched and helped to shape my own impression. For instance, I love capitalism. I honestly think it is the best we have so far, despite my lack of disagreement with the Marxist worldview. Any disagreement with Marxists is purely one of policy. A fully state-controlled resource management system would be, and has proven, positively disastrous. A free market built through unimpeded access, not only to the procurement of goods and services, but also to their production is the only feasible way to manage resources fairly. I hold this pretty firmly, if you disagree with this statement -- you and I will have very little to discuss.
My committment to capitalism is not to say that I am not class conscious. In fact, my committment to capitalism, is the very basis for my class consciousness. The reason most Republicans and other pseudo-laissez faireists, disdain discussions of class is because their idea of capitalism is one that ignores class since class is the very institution capitalism seeks to subvert. This begs the unbeggable following question: Has capitalism, as it exists now, accomplished this goal? If your answer is "Yes", I have very little to say to you as well. If you say "No", then you and I agree on two points thus far.
If you answered "Yes", I will only pose this question: What evidence do you have that class structures across the globe eroded after the fall of the Soviet Union? I am of the opinion that class structures (in the US at least) became reinforced by the current attempt at Global capitalism; and while we see rising middle classes in the nations of China and India, we see a dwindling middle class in our own. More and more of our population is falling into poverty and without a discussion on this topic -- mass civil unrest will be the only foreseeable outcome.
In the meantime, the Nos and I shall discuss what is preventing capitalism from reaching this goal of class elimination. Is it too much regulation or too much freedom? We need to discuss the disparities between classes. I posit that human meddling in the form of regulation plays a large part in income disparity. In other words, contrary to popular opinion, the wealthiest among us love a certain type of regulation -- one that insulates them from market fluctuations. A true capitalist should find this attitude offensive. The Federal bail-out of Bear Sterns and the "takeover" of Fannie Mae and Freddie Mac (I put takeover in quotes because the government took them over the minute they were created) signify a dangerous exacerbation of the already suspiciously lustful relationship between government and private enterprise. They should have been permitted to fail and were given unfair preferential treatment by our government at the expense of, not only the taxpayer, but the investor as well.
That being said: In a free market, an individual is just as capable of unfairly influencing the marketplace as the government. Therefore, it is not government intervention alone that true laissez-faireists must fear -- but private intervention as well. I think this scenario of private interventionism becomes more likely when private businesses start to outgrow nations.
So if both forms of intervention are possible (even likely), which one is preferable? It's tempting to ask that, but that suggests a mutually exclusive relationship. I think, instead, that a better question is: What are our means for defending against unfair intervention? How do we defend against the government's unfair interventions? And how do we defend against unfair intervention by private businesses? Here we arrive at a paradox. Theoretically, the market should defends us from unfair interventions but this is never possible when the market itself becomes manipulated. So, we rely on the government to intervene when these things happen -- hence we have departments such as the SEC.
My position is that the bulk of public regulation ought to be aimed at intervening in instances of market manipulation. When government gets out of hand at any level: local, state, federal, legislative, or executive -- we can always vote the bastards out! Most of us don't get to vote on whether CEOs keep their jobs unless we own substantial shares of a given company's stock. I think it would be fair to say that there is good regulation and bad regulation, bad regulation aims at insulating private entities from market fluctuations and good regulation aims at prevention of private intervention.
To some extent, the government has to play the role of referee in trade. In a global context, this is a perplexing phenomenon. One of the points Thomas Friedman makes in The World is Flat, is that while there is a global economy, there is no global governance. Who regulates the trade amongst governments? This consequence of absent governance is, in my opinion, what has aided the current US middle class collapse. Governance needs to be aimed at allowing capitalism to disrupt the class structure rather than permiting the class structure to disrupt capitalism.
There are many sectors to our version of capitalist economy: Energy, Financial, Technological, and many others. While all sectors are crucial in their own way, there's one that sticks out with some particularly odd characteristics -- I'm thinking of the Financial Sector. It is the only sector of the economy that deals with the very means of growth for that economy -- money. Consequently it is, and rightly so, its most heavily regulated sector.
You see, our economy is based on a fundamental deception -- that money has value. Allbeit a necessary deception, it does have drawbacks. For instance, in order for money to be valued it needs to be in demand -- just like any other product. A person needs money so they go to a bank (the supplier) and get a loan or a line of credit. A bank meets that person's demand based on that person's credit history and that person's willingness to pay whatever interest rate their credit affords. When a person defaults, that bank now has to obtain that cash somehow; often by borrowing from other banks or from the Fed. When banks start to demand more money than they supply to the public, we have a credit crisis -- banks are no longer profiting from the credit they have extended to the public. Simply printing more money is always a last resort. The more cash that's available, the less buying power that cash has -- this leads to inflation. See Greider here, he offers cites some interesting insights into the effects of inflation on class structure.
Inflation, consequently is the enemy for most central banks. Our Federal Reserve System, however wears two hats. Not only do they battle inflation, but they also work to stimulate our economy. Greenspan's idea of lowering interest rates to help the economy after 9/11 was an effort in the latter arena. Some claim that it is conflicting for a central bank to act as both a regulator and a stimulator. The historic analogy many have used to describe the Fed is that they take away the punchbowl just as the party gets started. See Greider. It seems logical why some critics may argue that the Fed, lately, has taken on the task of forcing punch down our throats. I think this is definitely a debate worth watching -- it will have far reaching implications for global commerce.
I'd encourage people to read Jim Jubak any chance they get. He's often talked about how the different approaches of the European Central Bank (ECB) and the Fed, have led to the Euro's overtaking the US Dollar. He has greatly improved my understanding of the Financial Sector.
Essentially, while our Fed dabbles in both inflation protection and stimulation, the ECB concerns itself only with inflation.
So low interest rates accompanied by a grown government debt has contributed quite directly to the devaluation of our Dollar. With more debt, more money needs to be printed to meet that debt, and with the shrinking US tax base resulting from the current economic contraction (some say recession, but I'm not sure if that's "official" yet) it makes no sense to keep taxes where they are. Our government needs to increase taxes to keep the dollar bouyant as it has recently made gains against the Euro thanks to falling oil prices, thanks to rising inventory levels, thanks to people not driving as much, thanks to the high oil prices.
No changes to US taxes means further erosion of the dollar in global financial markets, more oil price spikes, and subsequent price spikes in any commodity sold in dollars. On top of this, further falling home prices could lead to a boomerang effect bringing last winter's economic crisis back for round 2.
Some may say that if we drill for more oil, a price spike won't happen because there will be a supply to meet world demand. That remedy would make sense if the previous price spike occurred as a result of supply crises, but it did not. I'm prepared to argue that the price spike occurred simply because oil became more valuable than the cash people were willing to pay for it. In short, the fiscal deception that money has inherent value -- was becoming more transparent, and people were starting to value oil (and rice, soy, corn, copper, etc.) more than money (much like Russians valued vodka more than roubles when the Soviet system collapsed in the early 1990s). Now that oil has been horded, and nations like China have decided to expose their public to gas price fluctuations by cutting subsidies, the dollar is making gains because it is now being absorbed and recirculated by the financial markets preventing the need for printing money.
How to Secure the US Economy. Because I believe that increasing taxes will have a more positive impact on the economy than keeping them the same, we can't vote for John McCain in 2008. Barack Obama seeks to increase taxes on those making more than $250,000 and cut taxes for those making less, this will pull in more revenue for the treasury since the tax base is shrinking. John McCain's outdated sense that tax cuts for the wealthy lead to employment growth has been rendered historically impotent as we are now facing higher unemployment rates. Obama's plan can provide funding in the event of a recession.
If you disagree, I request your participation.
I have a stake in:
Securing the US Economy. As a result of this interest, I have acquainted myself with the issue through the following reading material: The Prize by Daniel Yergin, A Biography of the Dollar by Craig Karmen, Secrets of the Temple by William Greider (unfinished), Wealth of Nations by Adam Smith (unfinished), The Protestant Ethic and the Spirit of Capitalism by Max Weber, The Dialectic of Enlightenment by Max Horkheimer and Theodore Adorno, and Jihad Vs McWorld by Benjamin Barber (this was published prior to 9/11/2001).
This is not to say I agree wholeheartedy with all of these authors' policy recommendations, just that their impression of "the world as it is" has often matched and helped to shape my own impression. For instance, I love capitalism. I honestly think it is the best we have so far, despite my lack of disagreement with the Marxist worldview. Any disagreement with Marxists is purely one of policy. A fully state-controlled resource management system would be, and has proven, positively disastrous. A free market built through unimpeded access, not only to the procurement of goods and services, but also to their production is the only feasible way to manage resources fairly. I hold this pretty firmly, if you disagree with this statement -- you and I will have very little to discuss.
My committment to capitalism is not to say that I am not class conscious. In fact, my committment to capitalism, is the very basis for my class consciousness. The reason most Republicans and other pseudo-laissez faireists, disdain discussions of class is because their idea of capitalism is one that ignores class since class is the very institution capitalism seeks to subvert. This begs the unbeggable following question: Has capitalism, as it exists now, accomplished this goal? If your answer is "Yes", I have very little to say to you as well. If you say "No", then you and I agree on two points thus far.
If you answered "Yes", I will only pose this question: What evidence do you have that class structures across the globe eroded after the fall of the Soviet Union? I am of the opinion that class structures (in the US at least) became reinforced by the current attempt at Global capitalism; and while we see rising middle classes in the nations of China and India, we see a dwindling middle class in our own. More and more of our population is falling into poverty and without a discussion on this topic -- mass civil unrest will be the only foreseeable outcome.
In the meantime, the Nos and I shall discuss what is preventing capitalism from reaching this goal of class elimination. Is it too much regulation or too much freedom? We need to discuss the disparities between classes. I posit that human meddling in the form of regulation plays a large part in income disparity. In other words, contrary to popular opinion, the wealthiest among us love a certain type of regulation -- one that insulates them from market fluctuations. A true capitalist should find this attitude offensive. The Federal bail-out of Bear Sterns and the "takeover" of Fannie Mae and Freddie Mac (I put takeover in quotes because the government took them over the minute they were created) signify a dangerous exacerbation of the already suspiciously lustful relationship between government and private enterprise. They should have been permitted to fail and were given unfair preferential treatment by our government at the expense of, not only the taxpayer, but the investor as well.
That being said: In a free market, an individual is just as capable of unfairly influencing the marketplace as the government. Therefore, it is not government intervention alone that true laissez-faireists must fear -- but private intervention as well. I think this scenario of private interventionism becomes more likely when private businesses start to outgrow nations.
So if both forms of intervention are possible (even likely), which one is preferable? It's tempting to ask that, but that suggests a mutually exclusive relationship. I think, instead, that a better question is: What are our means for defending against unfair intervention? How do we defend against the government's unfair interventions? And how do we defend against unfair intervention by private businesses? Here we arrive at a paradox. Theoretically, the market should defends us from unfair interventions but this is never possible when the market itself becomes manipulated. So, we rely on the government to intervene when these things happen -- hence we have departments such as the SEC.
My position is that the bulk of public regulation ought to be aimed at intervening in instances of market manipulation. When government gets out of hand at any level: local, state, federal, legislative, or executive -- we can always vote the bastards out! Most of us don't get to vote on whether CEOs keep their jobs unless we own substantial shares of a given company's stock. I think it would be fair to say that there is good regulation and bad regulation, bad regulation aims at insulating private entities from market fluctuations and good regulation aims at prevention of private intervention.
To some extent, the government has to play the role of referee in trade. In a global context, this is a perplexing phenomenon. One of the points Thomas Friedman makes in The World is Flat, is that while there is a global economy, there is no global governance. Who regulates the trade amongst governments? This consequence of absent governance is, in my opinion, what has aided the current US middle class collapse. Governance needs to be aimed at allowing capitalism to disrupt the class structure rather than permiting the class structure to disrupt capitalism.
There are many sectors to our version of capitalist economy: Energy, Financial, Technological, and many others. While all sectors are crucial in their own way, there's one that sticks out with some particularly odd characteristics -- I'm thinking of the Financial Sector. It is the only sector of the economy that deals with the very means of growth for that economy -- money. Consequently it is, and rightly so, its most heavily regulated sector.
You see, our economy is based on a fundamental deception -- that money has value. Allbeit a necessary deception, it does have drawbacks. For instance, in order for money to be valued it needs to be in demand -- just like any other product. A person needs money so they go to a bank (the supplier) and get a loan or a line of credit. A bank meets that person's demand based on that person's credit history and that person's willingness to pay whatever interest rate their credit affords. When a person defaults, that bank now has to obtain that cash somehow; often by borrowing from other banks or from the Fed. When banks start to demand more money than they supply to the public, we have a credit crisis -- banks are no longer profiting from the credit they have extended to the public. Simply printing more money is always a last resort. The more cash that's available, the less buying power that cash has -- this leads to inflation. See Greider here, he offers cites some interesting insights into the effects of inflation on class structure.
Inflation, consequently is the enemy for most central banks. Our Federal Reserve System, however wears two hats. Not only do they battle inflation, but they also work to stimulate our economy. Greenspan's idea of lowering interest rates to help the economy after 9/11 was an effort in the latter arena. Some claim that it is conflicting for a central bank to act as both a regulator and a stimulator. The historic analogy many have used to describe the Fed is that they take away the punchbowl just as the party gets started. See Greider. It seems logical why some critics may argue that the Fed, lately, has taken on the task of forcing punch down our throats. I think this is definitely a debate worth watching -- it will have far reaching implications for global commerce.
I'd encourage people to read Jim Jubak any chance they get. He's often talked about how the different approaches of the European Central Bank (ECB) and the Fed, have led to the Euro's overtaking the US Dollar. He has greatly improved my understanding of the Financial Sector.
Essentially, while our Fed dabbles in both inflation protection and stimulation, the ECB concerns itself only with inflation.
So low interest rates accompanied by a grown government debt has contributed quite directly to the devaluation of our Dollar. With more debt, more money needs to be printed to meet that debt, and with the shrinking US tax base resulting from the current economic contraction (some say recession, but I'm not sure if that's "official" yet) it makes no sense to keep taxes where they are. Our government needs to increase taxes to keep the dollar bouyant as it has recently made gains against the Euro thanks to falling oil prices, thanks to rising inventory levels, thanks to people not driving as much, thanks to the high oil prices.
No changes to US taxes means further erosion of the dollar in global financial markets, more oil price spikes, and subsequent price spikes in any commodity sold in dollars. On top of this, further falling home prices could lead to a boomerang effect bringing last winter's economic crisis back for round 2.
Some may say that if we drill for more oil, a price spike won't happen because there will be a supply to meet world demand. That remedy would make sense if the previous price spike occurred as a result of supply crises, but it did not. I'm prepared to argue that the price spike occurred simply because oil became more valuable than the cash people were willing to pay for it. In short, the fiscal deception that money has inherent value -- was becoming more transparent, and people were starting to value oil (and rice, soy, corn, copper, etc.) more than money (much like Russians valued vodka more than roubles when the Soviet system collapsed in the early 1990s). Now that oil has been horded, and nations like China have decided to expose their public to gas price fluctuations by cutting subsidies, the dollar is making gains because it is now being absorbed and recirculated by the financial markets preventing the need for printing money.
How to Secure the US Economy. Because I believe that increasing taxes will have a more positive impact on the economy than keeping them the same, we can't vote for John McCain in 2008. Barack Obama seeks to increase taxes on those making more than $250,000 and cut taxes for those making less, this will pull in more revenue for the treasury since the tax base is shrinking. John McCain's outdated sense that tax cuts for the wealthy lead to employment growth has been rendered historically impotent as we are now facing higher unemployment rates. Obama's plan can provide funding in the event of a recession.
If you disagree, I request your participation.
The Mission
It's a warm windy night in Pittsburgh and the Steelers are away in Cleveland.
It's the second quarter and I'm lost in a labyrinth of pensiveness...unable to concentrate while the Steelers make an incredible first down...go Santonio. Woo Hoo. The unpredictable stuttering of the radio has created an all too fragmented experience for yours truly. Winds from Ike seem to be interrupting my game. "You Fuckers!!" I yell into the maelstrom, "Not only have you compromised their passing game, but you've denied me my civil right to a free press!" I hate fascist hurricanes.
Strange that Pittsburgh and Cleveland have similar weather on a pivotal game such as this, 2-0 would be a hell of a start! Hines Ward just put us on the board. "Take that you miserable son-of-a-bitch tropical depression!! Your mother, Hannah, was a two-bit whore!" Whoa, he's quiet now.
I enjoy listening to the radio coverage of football, sometimes I think sports reporting is the only truly objective journalism. Not that Tunch and Billy are impartial, but they are at least scholarly enough to appreciate good play when they see it despite their allegiances. It's easy enough to be honest (I don't like "truthful", too many definitions) with something that matters very little to life and death issues -- such as sports. It's difficult to be honest with something that matters a great deal to life and death issues...like politics.
Granted we are all, to some degree, creatures of interest. Our interests certainly do inform our opinions. I am a big believer that complete objectivity is a fantasy. With this in mind, my best bet is to lay my interests out on the table and I suggest that if my interests match your interests than our opinions should be similar. If one of our opinions is right and one is wrong yet our interests match up, than one of us has opinions that are inconsistent with our interests. It is under such conditions that opinions must change -- otherwise our rationality is rightfully brought into question.
I hereby open myself to that scrutiny.
It's the second quarter and I'm lost in a labyrinth of pensiveness...unable to concentrate while the Steelers make an incredible first down...go Santonio. Woo Hoo. The unpredictable stuttering of the radio has created an all too fragmented experience for yours truly. Winds from Ike seem to be interrupting my game. "You Fuckers!!" I yell into the maelstrom, "Not only have you compromised their passing game, but you've denied me my civil right to a free press!" I hate fascist hurricanes.
Strange that Pittsburgh and Cleveland have similar weather on a pivotal game such as this, 2-0 would be a hell of a start! Hines Ward just put us on the board. "Take that you miserable son-of-a-bitch tropical depression!! Your mother, Hannah, was a two-bit whore!" Whoa, he's quiet now.
I enjoy listening to the radio coverage of football, sometimes I think sports reporting is the only truly objective journalism. Not that Tunch and Billy are impartial, but they are at least scholarly enough to appreciate good play when they see it despite their allegiances. It's easy enough to be honest (I don't like "truthful", too many definitions) with something that matters very little to life and death issues -- such as sports. It's difficult to be honest with something that matters a great deal to life and death issues...like politics.
Granted we are all, to some degree, creatures of interest. Our interests certainly do inform our opinions. I am a big believer that complete objectivity is a fantasy. With this in mind, my best bet is to lay my interests out on the table and I suggest that if my interests match your interests than our opinions should be similar. If one of our opinions is right and one is wrong yet our interests match up, than one of us has opinions that are inconsistent with our interests. It is under such conditions that opinions must change -- otherwise our rationality is rightfully brought into question.
I hereby open myself to that scrutiny.
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