Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

31 May 2011

One of Us


[I hate to upstage my essay on the future of armed forces, but this one’s for the here and now.]

Sometimes it takes a while for things to sink in. It’s been over three weeks now since we got bin Laden. In our manic 24/7/365 news cycle, the ripples from that stone in the pond seem to have died down.

But deep below, in the murky depths of the human psyche that often govern politics, something is moving. It’s one of those tectonic shifts that goes unnoticed but alters the landscape forever.

Your can feel it in the air. You can sense it in the on-line comments. Many still call the President a “Marxist” or a “socialist.” More than a few still spit out the words “community organizer” like an epithet. But the vitriol is gone. The wind is out of the sails. The anger and resentment just aren’t there any more.

To understand what has happened, you have to understand Republicans’ strategy since the first day it dawned on them that Barack Obama would be the Democratic nominee.

They had nothing. Large parts of our electorate hadn’t yet realized it, but their ideology had become a complete failure. Not only had it weakened every institution in our great nation and deprived millions of pensions and health care. It had also brought on the worst economic collapse since the Great Depression.

To add to that “inconvenience,” their candidate was an irascible, unstable old man, whose chief political asset was the uncommon courage he had shown as a prisoner of war over thirty years before. He knew (and knows) nothing about economics, and he had a history of being on the wrong side of every economic issue.

Unfortunately for the GOP, the coming election was to be all about economics. “It’s the economy, stupid!” was the cry. And their candidate was an economic illiterate.

So what to do? Well, when you haven’t got substance and you haven’t got expertise, go after the person. “Ad hominem,” they roared, as they mounted their steeds and leveled their campaign lances.

Barack Obama had, and has, two undeniable characteristics. First, he’s half black. Second, he’s an ex-professor and an intellectual who likes to solve problems by reason. He doesn’t shout. Most people in our country, especially working people, are not like that. So the unspoken GOP campaign theme became as simple as tribalism: “He’s not one of us.”

The GOP were hardly subtle about it. Like apes hurling their own excrement, they threw every turd at him they could find.
“He’s black. He’s not a natural citizen. He’s a Kenyan, an African tribal chieftain. He associated with a couple of Marxists decades ago, so he must be a Marxist. He wants to keep destitute people off the streets, so he’s a socialist. He lived in an Islamic country as a child and once had an Islamic stepfather. So he’s a Muslim. Some of his distant acquaintances in his youth were domestic leftists who engaged in minor acts of terrorism. So he’s a terrorist. And, with his Islamic background, he must be an Islamist terrorist. And by the way, did you know he is black?”
They even called him a “fascist” for trying to use the political power of his office to do the things we had duly elected him to do.

Then, when all that wasn’t enough, they smeared his actual personality. “He’s well-educated and smart,” they said. “So he’s an elitist. He’s not like you.” No doubt they hoped to keep alive the “appeal” of George “Dubya” Bush, with his limited intelligence and crude ability to ape the common man, despite the fact that he had just nearly destroyed the economy.

To people like me, it was all absurd. More than that. It was the most outrageous, unfair, illogical, atavistic, preposterous, obnoxious, smart-ass, imbecilic, puerile, nonsensical and counterproductive campaign in the history of human democracy. It was un-American.

But not everyone is like me. Deep down in the recesses of our minds, in places we don’t like to think about, we all have some vestiges of tribalism. It’s part of our social evolution—a dark and nasty part, which we are slowly and painfully trying to overcome with reason.

At first the turd-hurling didn’t work. We Americans take pride in our slow and painful progress in racial equality—especially Americans of my generation. Barack Obama won the presidency by a solid majority, and by a landslide in our most productive states. Except in its most backward places, the nation rejoiced at what it assumed would be a transition from Dubya’s catastrophic ignorance and stupidity to something better.

But the GOP stuck to their plan. They knew it had taken nearly two generations of Southern Strategy and cartoon ideology to reduce the nation to its present sorry state. So it would take more than a couple of years to set it right. They knew that things would inevitably get worse, probably much worse, before they got better.

So rather than abandon their cartoon ideology and stop hurling their own excrement, they doubled down. And that’s where they’ve been since the last presidential election.

As things indeed got worse, some of the turds started to stick. Fear makes people irrational. And there was plenty of fear, which the GOP did its best to kindle and exaggerate. Jobs falling. Unemployment rising. Houses foreclosed. Neighborhood decaying. Deterioration in Afghanistan; very painful and costly progress in Iraq. And there was Osama bin Laden, our worst enemy, still out there, thumbing his long nose at us.

The type of hurled turds changed with time. Racism didn’t play very well outside the Old South, so the GOP toned it down. They tried to cover their tracks by accusing the President himself of being racist. But that, too, didn’t play well where people work and create wealth.

“Elitism” and more subtle tribalism worked better. “The President’s not one of you,” they whispered. “He’s in league with all those gilded experts from Goldman Sachs. He bailed out the banksters with your tax money. He’s only making progress in Iraq and Afghanistan because the generals and the Pentagon forced him to. We all know what Barack Hussein Obama—that crypto-Muslim, half-black terrorist sympathizer with the funny name—would really like to do.”

Then, all of a sudden, the game was up. Osama bin Laden lay dead. Al Qaeda acknowledged his passing. And there was a sober but confident President, fully in charge, explaining how he had done it.

It was no coincidence that the President had released his long-form birth certificate just a short time before. He knew that the “birther” movement had never been about certificates or legalities. And he knew he could never answer it with paper, but only with deeds.

Now the deed is done. Bin Laden is dead. The President got him, with a courageous, thoughtful, careful and effective plan. He got him in the best of all possible ways, with modern ninjas in person, undeniable evidence of his death, and a treasure trove of intelligence with which to mop up the rest of Al Qaeda Central. And he didn’t start another unnecessary, bloody and horribly expensive war in an irrelevant third country to do it.

And now we all know. Our President with the unusual ancestry and the funny name is indeed one of us. Not only that. He’s among the best of us. He did what neither of his two predecessors could do. And he’s built up a big, secret corps of modern ninjas as the best answer to the bad guys in the age of terrorism.

“You want to kill our soft, unprepared, untrained, innocent civilians?” our ninjas tacitly say. “Well, we’ve got thousands of big, tough, smart, superbly trained, and ruthless killers, the best of a pool of 307 million people, armed with modern weapons and technology that you never dreamed of, coming after you.”

At the end of the day, none of the turds hurled at the President stuck. They missed and lie in the dust. Already the winds of change are burying them.

All that remains is the stench of a once-great American party with no principles, ideas, or scruples. And we can smell the fear of its sacrificial lamb, Mitt the Jerk, Mitt the Frat Boy, who will give it the coup de grace or, if he can rise to the occasion, begin its renaissance. Re-evolving from turd hurlers to Homo sapiens is likely to take it a long time.

P.S. For those who could see below the surface, it was clear long before the last presidential election that Barack Obama could best keep us safe from terrorists. Here’s why.

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29 May 2011

Why Do We Need Armed Forces?

Introduction
Two Changes that Raise the Question
The Nuclear Deterrent
Changes in Government
So What Are Armed Forces Good for, Anyway?
Conclusion

Introduction

There are times in world history when we can ask fundamental questions and expect serious answers.

When Louis XIV of France declared, “L’etat c’est moi!” (“I am the state”), the French people asked “why?” Why should the French (or anyone else) tolerate a system of government that lets a vain, stupid, selfish and cruel tyrant succeed a wise and benevolent leader, simply because of death and heredity? Why shouldn’t ordinary people, who must suffer a leader, have a say in who he is?

We humans are still trying to answer that question. Today we have at least three contending answers: (1) English-style parliamentary democracy, (2) American-style two-party democracy; and (3) a Chinese- or Japanese-style bureaucratic state, based on the consensus-seeking, decades-long meritocratic struggle of would-be leaders up the ladders of a huge party apparatus. Right now, models (1) and (3) appear to be leading the pack, but the tale is not yet fully told.

For most of human history, the question “why do we need armed forces?” would have seemed foolish. The answer was obvious: because others have them and, if we don’t, they will invade us, take our land and wealth, and kill or enslave us. End of discussion.

Human nature hasn’t changed. There are still people who would like to conquer, rob, oppress, kill and enslave others. Perhaps there always will be. But two other things have changed dramatically during and since the twentieth century, one technological and one sociopolitical. This essay explores those changes and attempts to answer the question “Why do we need armed forces?” in the modern world.

Two Changes that Raise the Question

If you had asked the question “Why do we need armed forces?” at any time before the end of World War II, you would have evoked howls of derision. And you would have deserved them. Virtually every war in history started when the leader of one state or army decided it would be useful to have the land, location, resources, or wealth of a neighbor and set out to take it by force.

That was true even of the most recent, greatest spasm of war: World War II. Germany wanted “Lebensraum,” or living space, plus better seaports. Japan—an island nation with few natural resources but wood—wanted more space and more resources. Both felt they had been excluded from (1) the joys of colonial exploitation by history and (2) full participation in the coming global economy, Germany by reparations for its role in World War I and Japan by the Smoot-Hawley tariffs and racial discrimination.

Today we know the grievances that motivated World War II because it is the most recent. But basically the same story had repeated itself since the dawn of history. One nation wanted what another had, justified that want with moral or historical grievances, felt it was strong enough to take what it wanted, and tried. That, any informed realist would have said, is why we need armed forces.

But two things have changed since World War II. One was immediate, but its effects are just beginning to be understood. The other was a much slower change, still in progress, but equally decisive in the long run. The first was the nuclear age, and the second was (and is) a gradual, global transition from rule by single leaders (nearly always men) to rule by consensus.

The Nuclear Deterrent

I have written a long essay on the historical and logical consequences of the nuclear age for warfare, and I won’t repeat it here. Suffice it to make and elaborate two points.

First, since nuclear weapons fell on Hiroshima and Nagasaki in 1945, there has been no major armed conflict among major powers anywhere in the world.

There have been limited conflicts inside third countries—wars by proxy, if you will. These include: (1) the Korean War, a civil war in which the US and China took part directly; (2) the Vietnam War, another civil war, in which the US participated directly and China and the Soviet Union by proxy; and (3) the first war in Afghanistan, in which the Soviet Union participated directly and the US, NATO powers and some Arabian countries by proxy.

The very names of these wars reflect their geographical limitations. But these limited conflicts, in part by proxy, should not obscure an essential truth. Over 65 years have now elapsed since 1945. If you take the decade-longer time period immediately preceding, from 1870 to 1945, you can count at least five major conflicts between major powers fighting on their own territory: (1) the Franco-Prussian War (1870-1871), (2) the First Sino-Japanese War (1894-1895), (3) the Russo-Japanese War (1904-05), (4) World War I (1914-1919), and (5) World War II (1939-1945). If you count the Sino-Japanese part of World War II, which some historians call the Second Sino-Japanese War (1937-1945), that makes six.

Furthermore, during this entire period the nature of war had been changing for the worse. The Franco-Prussian War, World War I and World War II were on the path to “total war” in which large civilian populations were fair game. The end result was the feared nuclear holocaust that never came (but almost did in October 1962), in which the vast majority of US and Soviet populations were targets and would have been slaughtered in any mistake. There is even credible evidence that our entire species might have perished in an irrational act of self-extinction.

Not surprisingly, the notion of “total war” with nuclear weapons became too sui-genocidal for rational people to accept, no matter how greedy and selfish they might be. As a result, we have had no major armed conflict involving major powers fighting on their own territory since 1945. The increasingly nasty progression of imperial wars that had characterized the period 1870 through 1945 stopped as if turned off by some celestial switch.

That switch was the nuclear deterrent, and we are still coming to grips with its consequences. We just beginning to understand that nuclear weapons are not offensive weapons because their first use will cause either: (a) utter annihilation of the first user’s society or (b), in the worst case, utter annihilation of our entire human species.

Slowly, by degrees, the world’s armed forces and civilian leaders are coming to understand this truth. They ken that nuclear weapons are effective defenses, but not aggressive weapons. They are now beginning to view the development, construction, maintenance and care of nuclear weapons for possible aggressive purposes (or for a first strike) as an enormous waste of time, money, resources and talent, not to mention an extraordinary threat to a clean and safe environment.

China and France are the clearest thinkers here. With its huge population, China never considered maintaining more than a small nuclear arsenal to deter direct aggression against its territory. France, with its much smaller population, developed an independent nuclear “Force de Frappe” (“Strike Force”) for similar purposes. Only the US and the Soviet Union (now Russia), in a paroxysm of mutual paranoia, manufactured world-destroying quantities of nuclear weapons—a bit of insanity from which they are now slowly recovering, under the Start II Treaty.

The simple fact is that no nation needs more than a few dozen nuclear weapons, plus the means to deliver them, to deter direct attacks on its territory. Anyone who doubts this point has only to visit the Peace Museum in Hiroshima to be convinced. And the Japanese, who have every right and motivation to tell their story, should remind us all constantly, lest we forget.


Changes in Government

We humans learn slowly. Often it takes us decades or centuries to see effects and their causes unfolding right under our noses.

So it is with government. Although less dramatic than the advent of nuclear weapons, global changes in government since World War II have been no less revolutionary, especially insofar as concerns the risks of major wars.

If you looked at the world in 1945, you could easily justify a good despond. The two most powerful military tyrannies in human history—Nazi Germany and Imperial Japan—had just been defeated. Stalin and his Terror ruled Russia and its imperial dominions with more “totalitarian” oppression than Louis XIV ever could have imagined. China was splintered and ruled largely by ruthless warlords. It was about to be unified by Mao, who would duplicate Stalinist Terror there and later (in the “Great Leap Forward”) add an element of irrational capriciousness worthy of Nero. Decaying colonial empires and ancient dynasties ruled much of the rest of the world with varying degrees of stupidity and oppression. India’s promise lay dormant in the failing grip of a decaying and increasingly inept British Empire.

Today, a mere 65 years later, the global picture is infinitely brighter. Germany and Japan are model democracies, running orderly and productive societies as the world’s fourth and third largest economies, respectively (excluding the EU as a whole). Europe, although the locus of much of the worst warfare from 1870 to 1945, is at peace, democratic and productive, albeit with some economic difficulties. China, a unified, highly successful bureaucratic state, has become the world’s second-largest economy. Britain and Russia have abandoned their empires, and Russia has adopted a form of democracy and assured a worthy successor (Medvedyev) to its most effective leader (Putin) since Peter the Great. The Islamic world is awakening from a half a millennium of slumber and its idle imperial dreams. Even large parts of Africa are emerging from varying degrees of tyranny and oppression into the sunlight of democratic or effective collective rule.

With so many examples of improvement to study, we can begin to assess what makes good government. It doesn’t, as we Americans often insist, require “democracy,” whatever that means. In fact, our own present national troubles may soon show conclusively that a two-party “democracy” is not better than single-party rule.

The really key ingredients for successful government appear over and over again, in societies with vastly different histories and cultures. The first and most important is limitations on the personal power of individuals, in both time and extent.

Not only does absolute power corrupt absolutely, as Lord Acton observed. Most people, including political leaders, don’t get better as they age. They age like eggs, not wine.

Mao, for example, was a great military leader and the unifier of modern China. If he had stepped down after performing his historic role, as George Washington did, he would have remained one of human history’s greatest leaders. Instead, he made himself the last emperor of China. With deficient understanding of economics, business and peacetime necessities, he set China’s economic development back decades and taught its people to become slaves. Whatever you may think of China’s current leaders, they have been systematically but cautiously unwinding Mao’s worst mistakes, while worshipping his memory. They’ve been doing that since Deng Xiaoping.

To me, the most important features of China’s current government are: (1) collective rule, and (2) term limitations. China’s highest ruling body is a nine-member committee called the Plenum of the Communist Party Central Committee. China’s president and prime minister are sitting members, as are their expected successors.

Thus China makes any important decision, including any decision to go to war, by a consensus, if not unanimity, of nine people, not one. And among those people will be China’s two highest leaders and their designated successors. So the same people who might have to clean up a mess will have a role in any decision to make it. What a good idea!

China’s term limitations are equally important. Although apparently not enshrined in written law, China’s Communist Party has a tradition that its top leaders (president and prime minister) change every ten years, i.e., with every second five-year plan.

That’s just two years longer than our own constitutional limit of two four-year presidential terms. Even more important, each of China’s two top leaders serves an “apprenticeship” on the Central Committee before assuming his top office. So each has at least five years—often ten—to learn the ropes, or for the Committee to change its mind and appoint others if he doesn’t measure up during the “apprenticeship.” In comparison, consider this table showing the relative experience of a number of our presidents.

Russia today has perhaps the most precarious governmental system of any major power. It is a democracy in constitutional form, but the Kremlin largely controls it. Top leaders have effective power to pressure elected representatives, appoint regional governors, and control the electronic media.

In addition, Vladimir Putin sidestepped constitutional term limits on the presidency by securing his own election as prime minister. His anointment of Dmitrii Medvedyev, a lawyer and rule-of-law advocate, as his successor as president is promising, but longer-term plans for succession are unclear. All in all, the future of Russia’s government in practice, as distinguished from theory, is far less clear, stable and predictable than China’s. (No doubt Russia has similar qualms about us as it considers the prospects, however remote, of people like Sarah Palin or Donald Trump holding the “Football” with the secret codes to our thousands of strategic nuclear weapons. Thus does truth that is stranger than fiction provide fodder for continuing mutual paranoia.)

Outside of Russia and China, every other major power in the world today enjoys a true constitutional democracy with term-limited top leaders. Brazil, Britain, Canada, France, Germany, India, Italy, Japan, Korea (South), and Spain do. So do smaller powers that have varying degrees of global economic importance: Argentina, Australia, Chile, Ireland, Israel, Portugal, Thailand, Turkey and New Zealand, for example. Vietnam is following in China’s footsteps on the path of carefully managed capitalism, under the leadership of a misnamed “Communist” party.

The second key element of good government is information. Absolute freedom of speech, as under our First Amendment, is not absolutely necessary. Some control of information may be permissible and even helpful, especially in curtailing local gangsterism and inter-ethnic violence. But citizens, lower levels of government and especially local and regional leaders have to know what is going on in their own country and the rest of the world in order to make wise decisions. Therefore freedom of speech and information, at least to some degree, is essential to good government.

Here again, progress in the last 65 years has been enormous. All of the constitutional democracies named above have virtually complete freedom of speech. China tolerates the Internet and nearly complete freedom of commercial and business speech. But it limits speech that its leaders deem “political,” and they construe that term far too broadly. Russia largely controls the electronic media from the Kremlin by various means, but it allows virtually complete freedom in its printed press (which unfortunately only intellectuals read much). Al Jazeera has introduced British-style professional reporting to Arabia and much of the Islamic world.

All in all, the news media have freedom approaching the ideal in almost every society with significant military or economic impact worldwide, except for North Korea and China. The Internet has much assisted and vastly accelerated this process. This is good.

What does all this mean for the likelihood of war? Plenty. Almost all the great wars of the last two centuries bear the stamp of an individual leader, usually a tyrant of one form or another. Napoleon invaded Russia twice. The German Kaiser bears much responsibility for World War I, Hitler almost sole responsibility for the greatest war in Europe, and Tojo for Japan’s wars (and atrocities) in the Pacific. Stalin made vassal states of most of Eastern Europe but was smart enough not to start a major war with major powers. Mao did much the same with North Korea and Vietnam, but again was smart enough not to start a major war with major powers.

Conventional wisdom holds that democracies don’t start wars. But that’s not precisely true. We Americans invaded Iraq with no rational justification, other than to depose the tyrant Saddam. We also invaded Afghanistan with scant justification (9/11) and extended the war far beyond that justification, in both extent and time. Argentina started a war with Britain over the Falklands, but it did so under the rule of the Galtieri military junta, which had seized power in a coup d’etat.

Rather than say that democracies don’t start wars, it’s more accurate to say that the worst and most needless wars in human history were the creations of individual leaders, mostly tyrants, who had few checks and balances on their power and no term limits. The German Kaiser, Hitler and Tojo certainly fit that mold.

It’s hard to see anything of the sort happening today. It is inconceivable, for example, that China’s nine-member Plenum, with rotating leadership every ten years, would start a major war of its own initiative. In fact, China’s Plenum—with its collective decision-making and ten-year “apprenticeship” for top leaders—is probably the most conservative, cautious and stable ruling body in any country anywhere in the world, with the best guarantee of experienced group leadership. Given China’s minimal participation in war since World War II and its own revolution—only in countries very close to its borders—and the utter absence of any Chinese invasion of peaceful neighbors (Korea and Vietnam were in civil war), major Chinese military adventures are highly improbable.

As for Russia, now that its Cold-War bluster is gone, it seems as averse to war as is appropriate for the nation that suffered the most from it in World War II. Its 2008 invasion of Georgia was brief and limited, lasting only weeks, and has not been repeated. Russia seems to have learned its lesson in Afghanistan, just as we are learning our lesson there and have learned it in Iraq. Major powers, with term-limited and collective governments, just don’t seem to have the appetite for war that imperial tyrants used to have.


So What Are Armed Forces Good for, Anyway?

In two ways our present epoch is unique in human history. Previously, every new military technology tempted civilian leaders to war. From the ancient Greeks with their early version of napalm, to the twentieth-century German and Japanese war machines, foolish leaders often thought that a technological edge would let them take, without much pain, what was not theirs.

But nuclear weapons are the ultimate technology of war. There is no way to “improve” upon complete annihilation. So the answer to any current improvement in military technology runs along the following lines:
“You may have faster and stealthier planes than I. But if you start a war with me, I will turn all or at least several of your big cities into radioactive rubble, uninhabitable for decades or centuries.”
That argument is hard for any rational leader to reject. A few dozen missiles in silos or (better yet) hidden under the sea in constantly moving submarines, can provide unanswerable deterrence to invasion.

And leaders, with the possible exceptions of the Kims and Robert Mugabe, are indeeed getting more and more rational. The global spread of democracy is not the only cause. Collective leadership and term limits, as in Russia and China, insure rational leadership whether or not the results can be characterized as fully democratic.

Under these circumstances, the chief traditional role of armed forces—protecting the homeland—has become virtually obsolete. So what then are armed forces good for? Do we still need them, and, if so, why and what for?

For the first time in human history, these are no longer stupid questions. They deserve thoughtful answers. But before attempting to answer them, we must explore the values of armed forces and their troops.

In an increasingly secular, business-oriented and wealth-obsessed world, the primary value of armed forces may not be their weapons or military power, but their culture. That culture is unique in several respects.

First, no other institution in the modern world expects its participants to risk their lives, and often lay them down, instantly on orders from superiors. That spirit of obedience, selflessness and self-sacrifice is utterly unique and uniquely invaluable.

Hand-in-hand with that spirit is a sense of discipline.

Much of the squalor and horror of our modern world arises from the fact that there are no longer many, if any, lines that people won’t cross. Politicians lie like thieves, justifying their falsehoods with a quest for power, the lame excuse that “others do it,” or a generally lax disregard for truth. The media quote them as if they were oracles, on the theory that even lies are “news,” and what looks like news sells. Venerable financial institutions swindle and gamble with complete abandon, justifying their moral laxity and crimes with specious claims of “shareholder value.” Lawyers twist the truth in public fora and private tribunals, justifying their dishonesty with the call of “zealous advocacy.” Everywhere, in almost every profession, it seems, truth, honor and integrity have become malleable.

Every profession but one, that is. Death is still final and can’t be “spun.” So the military, which is set up to deal with death, still instills respect for truth and duty, however painful and inconvenient they may be.

Troops do lie. After all, they are human. But when their lies become known they are demoted or punished, and they expect demotion or punishment. No other institution in our society—not organized religion, not government, and certainly not business or corporations—honors these basic human values so deeply in rhetoric and in practice.

Besides self-sacrifice and discipline, military institutions have one other extremely practical value. Because they have a clear chain of command and enforce complete obedience, they can work fast.

When disaster strikes, when people and machines need to move far and fast to make a bad situation better, there is no substitute for military training, discipline and self-sacrifice. That fact became clear in Japan’s recent unprecedented earthquake, tsunami and consequent nuclear meltdown. Corporate “leadership” under Tepco was slow, inefficient and lame. Japan’s government was little better. Real leadership in the first few weeks came from Japan’s own self-defense forces and what little help from the US military Japan’s government would allow.

In natural disaster after natural disaster worldwide, military forces—especially our own—have proved themselves the only institution equal to the task. Our own military saved the day (what was left of it) in the drowning of New Orleans, the great BP Oil Spill, and the devastating earthquakes in Pakistan and off Sumatra.

Finally, there is tradition. No society can exist without roots. Based as they are on combat and human mortality, armed forces’ roots are narrow. But they are deep. Military institutions keep the best traditions of many societies alive, things like personal discipline, honor, duty, truth and self-sacrifice. According to his autobiography, it was these things that attracted Colin Powell to military service at an early age.


Conclusion

World-historical developments have created an opportunity and an enigma. The traditional role of our armed forces is protecting the homeland. But we don’t need armed forces for that any more. A small number of nuclear weapons is sufficient to deter conventional war. And anyway conventional invasion—of any major power, including us—is far less likely today than at any time in human history.

So armed forces’ traditional role is beginning to look superfluous.

Not only is this point true in theory. We also recognize it in practice. In the US, we have created and staffed the Department of Homeland Security to recognize and deal with threats posed by terrorists and other non-state actors. According to news reports, we have spent over one trillion dollars on homeland security since 9/11. Only a fraction of that expense went to conventional armed forces.

On the other hand, we have these wonderful institutions called our Army, Navy, Air Force, Marines, and Coast Guard. They instill invaluable culture in the youth of an increasingly selfish, self-centered and morally dissipated society. As many in the media constantly remind us, our troops represent the best among us, although they are often paid the least and most abused.

So what do we do with these unique resources?

We certainly can and should downsize their hardware. World War II and the Cold War are not coming back. So we can dispense with the latest, greatest fighter planes, more aircraft carriers, amphibious landing craft and other high-tech marvels and divert their much-needed money into our industrial infrastructure, education and general economic revival. All we really need to secure our homeland are our nuclear deterrent, which we should keep operational but small, a small but potent force of unmanned aerial vehicles, and stealthy means of delivering our modern ninjas on their secret missions. We could probably make do quite well with one-third our current personnel and one-fifth our current budget.

But what about all the people and institutions comprising our armed forces? What about those young men and women, superbly disciplined and trained and imbued with a spirit of honor, cooperation and self-sacrifice? What are we to do with them?

Are we to pay them to spend their time idle, in barracks, waiting for a balloon that never goes up? Are we to dismiss them en masse into a commercial world that neither needs nor understands their unique values? Or are we to find other missions for them, more noble and useful than risking their lives and killing primitives in far-away places, that will preserve their unique values and do some good in the real world, as distinguished from the world of paranoid fantasy?

These questions should torment every politician and policy maker who cares about our nation and social progress in the world. Our official timetables have us out of Iraq by the end of this year and out of Afghanistan in another three. Barring totally unforeseen catastrophes, neither our budget nor our people will support any new foreign military adventures, unless they are indisputably necessary for our national survival. That “unless” is unlikely.

So what, if anything, do we do with our troops, especially those who have made a career out of military service? Do we throw them out on the street and upon the tender mercies of an ailing economy, thereby exacerbating unemployment? Or do we try to preserve their value and their unique culture by finding them a new mission, one which will both help our ailing economy and have a genuine impact on the world that is, not the one that was?

Several new missions are possible. Our armed forces could: (1) build schools, hospitals and other civilian infrastructure here and abroad; (2) respond to natural disasters; (3) teach professionalism and other military values to foreign forces; (4) decommission surplus nuclear weapons and obsolete nuclear power plants under conditions of military security and (if necessary) secrecy; (5) expand the international scope of commerce and the Internet by building roads, fiber optic networks, and microwave and cell-phone towers; and (6) perform peace-keeping roles for, as part of, or in place of NATO and UN forces.

Two generations ago, almost every American political leader had served in our armed forces. Today, only a tiny fraction has. The difference is palpable.

Civilian leaders who have never served in the armed forces have a difficult time making good decisions on military matters. They expect too much of the military. They misunderstand its mission and its limitations. They don’t know how to work with military leaders. And, most of all, they have no personal conception of the horrors of war or the suffering of troops and civilians in wartime.

They therefore can lose our troops’ respect and make terrible mistakes. Dick Cheney is the worst example, but every one of our three most recent presidents lacks military experience (unless you count Dubya’s ducking the Vietnam War in the Texas Air National Guard).

In addition to reducing unemployment and preserving a unique institution, finding useful work for our armed forces in what looks like an extended time of peace might motivate future politicians to consider a stint in the armed forces as part of their early careers. That service might restore the role of citizen-soldier that made every democracy work since Greece and Rome. It might also keep our civilian leaders from drifting into errors of foreign policy that personal and real military experience might have avoided.

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25 May 2011

Individual Responsibility: the Salvation of Our Species?


[For a brief note on the capture of Ratko Mladić in Serbia, click here.]

I don’t mean to slight Ireland’s heartwarming reception for our President, or the GOP’s attempt to turn the economic equivalent of a nuclear holocaust—a financial default by the world’s leading economy—into a political football. But something else is going on in the world today. It is so important that, for me at least, it dwarfs everything else.

It lives in the Arab Spring, which is one reason why I’ve devoted so much ink to Arab Liberation (see, for example, 1, 2, 3 4, and 5). But what I have in mind is only a part of that movement, and its implications go far beyond the Arab and Muslim world. If it continues on its present course, it will change human history forever, and much for the better.

It got its modern start at Nuremberg, at the end of World War II. There the victorious Allies tried and convicted the top leaders of Nazi Germany—at least those who had survived the war and had not committed suicide—for crimes against humanity.

The greatest legal minds in America participated in the trial. They collected and painstakingly recorded evidence of Nazi leaders’ crimes and broadcast it to the world.

But what were the crimes? Were they starting a war and prosecuting it with uncommon cleverness and vigor, although ultimately losing? Were they belatedly seeking colonial power and additional territory for the “Fatherland,” i.e., Lebensraum (German for “[more] living space”)?

Not really. Humans had being doing those things throughout recorded history. That’s why many Germans at the time dismissed the Nuremberg trials as just another example of victors writing the records.

But the skeptics, both inside and outside of Germany, missed the point. The Nuremberg trials focused on something else entirely: the deliberate and massive slaughter of innocent noncombatants, in what we now know as the Holocaust. The chief goal of the Nuremberg trials was to show the world that: (1) the Holocaust actually happened; (2) it was not a figment of fevered imaginations or the victors’ propaganda; and (3) surviving top Nazi leaders were personally responsible for it, i.e., had known about it and in most cases had approved, ordered, or even planned it.

The Ten Commandments say, “Thou shalt not kill.” Yet war was (and still is) a tacit exception. Tribalism and nationalism have “justified” murder since we humans lived in caves in clans. But killing innocent civilians, let alone “your own,” is different. It’s murder, plain and simple, under virtually every code of military justice since the Renaissance.

The last century saw a lot of killing of innocents. Hitler and Stalin murdered tens of millions of their own people for no greater purpose than consolidating their absolute or “totalitarian” political power. Both the Axis and the Allies murdered hundreds of thousands of innocent enemy civilians in “blitzkrieg” or bombing campaigns—the Germans in their rape of Eastern Europe and V-2 attacks on London, the Japanese in their rape of China, and we and our Allies in the fire-bombing of Dresden and Tokyo and the nuclear attacks on Hiroshima and Nagasaki.

The morals of the times could and did excuse these attacks. In the context of “total war” prevailing at the time, civilian casualties—even in huge numbers—were a regrettable but unintended consequence, what we today would call “collateral damage.” And anyway, weren’t civilian makers of such things as munitions and military vehicles as much a apart of the war effort as soldiers?

But killing one’s own always was (and is) different.

Make no mistake about it. Notwithstanding their (mostly) Jewish religion, the vast majority of the six million deliberately murdered in the Holocaust were Germans. The murdered Jews spoke German and Yiddish, which resembles German more than any other language and is practically a dialect of German. They loved German science, poetry, music and literature. They had worked hard to become an integral part of the commercial culture of a vibrant, capable and hard-working people.

That’s why so few German Jews fled Nazi Germany in time to save themselves. They could not believe—practically until they stepped into the ovens—that the efficient, educated and supremely civilized country and culture that they had adopted, and that had in turn adopted them, would turn against them so savagely and without good cause.

So however much Nazi propaganda tried to set the Jews apart as scapegoats for internal political purposes, they were Germans. And therefore the Holocaust was human history’s most egregious example of killing your own. The fact that this mass murder of one’s own people occurred during the greatest armed conflict in human history merely obscured the issue. But the Nuremberg trials recognized and illuminated the distinction.

Nazi Germany was not entirely alone. Stalin murdered millions of innocent Russians and other Soviets citizens before, during and after World War II. Pol Pot’s sui-genocide of the Cambodian people is still under investigation and trial. And Mao also murdered millions of noncombatant Chinese, although he had the plausible excuse of civil war and its aftermath for many of his homicides.

In light of these horrible precedents, what is now happening in the Arab Spring is truly extraordinary. Ordinary people, en masse, are beginning to hold tyrants personally to account for murdering innocents among their own in much, much smaller numbers. That’s why the upcoming trial of Hosni Mubarak and his sons in Egypt has world-historical significance comparable to Nuremberg’s.

There are, of course, more recent precedents than Nuremberg. International courts have chewed on murders of their own people by such strongmen as Slobodan Milošević, Charles Taylor and Laurent Gbagbo. But, while the International Criminal Court itself marks a vital advance in human civilization (nonetheless for our refusal to join it), what is about to happen in Egypt goes yet a step further.

There Egypt’s own people will hold a tyrant who was a legitimate and long-time national leader personally responsible for attempting to maintain his power by murdering innocents among his own. Not even China, with its exaggerated respect for national sovereignty, could object to such a proceeding, for its impetus is internal, not foreign.

Does this trial portend the end of national government? Does it threaten anarchy, rule by rabble? Of course not. If this precedent “takes,” it will reflect only a narrow new consensus among our species. It will make mass murder of innocents among one’s own people, for political purposes, a crime against humanity. It does not even address “softer” means of maintaining tyranny, such as the numerous detentions and house arrests now common in China and Myanmar.

Nevertheless, this innovation has signal importance. It recognizes the strength of the human spirit and the fragility of the human body.

Nelson Mandela emerged from nearly 28 years in prison to lead his nation from Apartheid to an imperfect but thriving democracy. Imagine what South Africa would be like today if some misguided tyrant had had him murdered in prison!

Murder is different from any other crime because it is irrevocable. There is no calling a dead innocent back, no matter how sincere the perpetrator’s regret or how genuine his change of heart. And there is no telling what dead innocent might have emulated Nelson Mandela and become one of human history’s greatest leaders.

So murder in numbers for political purposes requires a unique and uniquely forceful societal response. It needs outlawing.

Nuremberg and the International Criminal Court suggest that the response may be international. That’s all well and good. But the response is best if it arises from the very people whom the murders abused. That is precisely what Egypt’s new government proposes to do.

I have written how the advent of nuclear weapons has made war obsolete, at least major wars among major powers. Of course there may be smaller wars among minor powers, most likely (still) in the Middle East. Or a rogue non-state actor like bin Laden may precipitate a war by murdering innocents (which is why our recent assassination’s example of personal responsibility is salutary).

But the nuclear deterrent is likely to prevent any repetition of the enormous, senseless carnage of the last century. If Egypt can establish the principle of individual accountability for internal political murder at scale, then we humans can begin to conceive of a world in which reason and persuasion replace homicidal terror as tools of politics.

Every child studies ancient Egypt as part of human history. The Pharaohs had a high level of civilization for their time, but ordinary people had no say in it. It would be fitting and proper—a sort of closing human circle—for modern Egypt to establish the principle that leaders, no matter how powerful or accepted, cannot maintain their power by murdering their own, and that if they do so, they must bear personal, individual responsibility for their acts, just as at Nuremberg.

Another Butcher Faces Trial

No, I don’t have inside information. My posting the foregoing essay the night before news broke of Ratko Mladić’s capture was sheer coincidence. But what a beautiful coincidence!

Mladić, you may recall, was the last holdout among the Serbian butchers’ triumvirate. Slobodan Milošević, the prime mover behind ethnic cleansing in the Balkans, died in prison awaiting trial for war crimes at the Hague. Radovan Karadžić, who is about to be tried for war crimes by the International Criminal Tribunal for the former Yugoslavia (ICTY), was president of Republika Srpska. He is accused of attempting to “purify” that nascent nation ethnically by making war, primarily upon unarmed civilians.

Mladić was the reportedly talented general who actually carried out the program of ethnic cleansing. He is accused of killing ten thousand in the siege of Sarajevo and of ordering the massacre of nearly 8,000 bound and unarmed Bosnian men and boys, all Muslims, after promising they would not be harmed. My own mid-2008 essay gives a pale reflection of just how bad these three were.

While Mladić’s capture may give survivors of his victims some comfort, there are three reasons why it is far from a pure example of personal accountability. First, it took fifteen years to capture him. It is simply inconceivable that, in a country as small and as close-knit as Serbia, the authorities did not know where he was. Apparently a significant number of Serbs, even today, view this beast as a national hero.

Second, Serbia’s impending turnover of Mladić to international justice hardly reflected deep understanding of the benefits of individual accountability for political mass murder. Serbia wants—and desperately needs—admission to the EU for economic and social reasons, and the EU has insisted on delivery of war criminals as the price of admission. An EU emissary was on her way to Serbia, probably to emphasize that condition, when Mladić’s capture was announced. In addition, the chief prosecutor at the ICTY was due (in June) to issue a written report citing Serbia for dragging its heels in meeting that condition.

Thus, while it’s always good to see political mass murderers brought to justice, Mladić's case is hardly evidence of Serbia seeing the light. Rather, it’s evidence of the effectiveness of economic pressure, tantamount to bribery, that more civilized parts of the world can bring to bear on isolated, primitive societies still wistful about the Middle Ages.

Egypt’s proposed trial of its tyrant and his sons remains the one to watch. Unlike Serbia’s butchers and even the Nazis, Mubarak lacked the lame excuse of ethnic differences for killing one’s own. There is no question that nearly all the hundreds of demonstrators murdered by forces loyal to him were Egyptians and Muslims. More important, no one outside is imposing the upcoming trial in Egypt on the Egyptian people. It’s their own idea.

So Egypt promises the “pure case.” On their very own initiative, a people with a distinguished ancient history will bring to account political mass murderers of their own. And they will do so without the complications of ethnic or religious sectarianism. This pure example is sure to make history and advance the cause of human civilization.


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19 May 2011

Further Signs of Greatness


A little less than seven years ago, Barack Obama was an obscure state senator from Illinois when the Democratic Party anointed him as keynote speaker at its nominating convention. Virtually no one outside of Illinois, including me, knew who he was.

Those of us disillusioned with Hillary Clinton as heiress apparent to the Clinton Dynasty began to pay him some attention. We read his two books. We watched him rise from unknown wannabe, through serious candidate, then leading candidate, to the Democratic nominee on the strength of common sense, personal dignity, respect for himself and others, and a focus on real issues, in one of the longest and dirtiest campaigns in Democratic Party history. Then we watched him win the White House, in an equally filthy presidential campaign loaded with irrational jeers and racism.

By this time, we had some idea that Barack Obama was a man apart, and not just because of his unusual name and background. Those of us, like me, who look for character, wisdom, quiet dignity, concern for ordinary people and a sense of perspective began to see in him a touch of greatness.

He hasn’t had much time to show those qualities since then. A microsecond after his election, the GOP declared making him fail their primary goal. Lesser men than he began to devote all their energy to that end. They still do.

It was and is extraordinary to see a major party in a nation that prides itself on businesslike cooperation and human advancement pursue such mean, negative and narrow goals. But that’s what Republicans did.

In any proper human society, John Boehner and Mitch McConnell would be mid-level accountants in stagnant, unimaginative businesses. So far as I know, neither has ever had a single goal besides accumulating political power at the rest of government’s expense. Neither has ever had a single policy idea besides saving money by nixing other people’s ideas. McConnell is so ignorant of his own country’s relevant history that he claimed the mantle of two previous presidents (Reagan and Clinton) in debt reduction, only to have Jim Lehrer point out that both had raised taxes for that purpose.

To say that Boehner and McConnell don’t measure up to the giants of American history—to Washington, Adams, Jefferson, Lincoln, the two Roosevelts and Kennedy—would be an understatement of Obamanian proportions. They are rodents nipping at the President’s heels.

But they represent far larger forces arrayed against the President. There is history’s greatest propaganda machine and its millions of Fox zombies. There are the billions in donations made by rich people and businesses that, having given no serious thought to the future, look only for short-term gain, including tax savings. And there is the legacy of thirty years of cartoon ideology—“private money good; government bad”—that prevents tens of millions even from seeing their own personal experience.

All these things trapped the President in the political quicksand of filibusters, Senate holds and our other national dysfunctions. He bogged down so deeply in domestic politics that he was barely able to prevent the Crash of 2008, which his predecessor’s stupidity and negligence had caused, from triggering a second Great Depression. His historic health-insurance reform got watered down to the point where private insurers are raising rates and still denying claims, and no one can do anything about it.

So Obama’s supporters and neutrals alike began to judge him by his sworn enemies and their lies. Even his strongest supporters began to lose heart.

But, as I’ve pointed out before, there’s one field on which our dysfunctional national structure does not prevent a president from acting: foreign policy. The President is a thoughtful and deliberate man. He took two years to learn the ropes, get to know his advisors, and work and consult with them endlessly. Now he has started to move.

His first major achievement was killing bin Laden. His detractors say it was the Seals that did it. Of course they did, and their performance was superb. But who made the decision to train them, prepare them for this mission, and give them the go-ahead to proceed, despite considerable risk? And who properly calculated that an in-person killing, with a body and witnesses, plus a treasure trove of intelligence, would do more than a far easier Predator strike, which might leave nothing but building and bone fragments, civilian casualties, no intelligence, and nagging doubt?

Most important, who understood best that a man-to-man assassination was something that every culture in the world, including the most extreme Islamic ones, could understand and respect?

That was just the President’s first move. His second came today. He put our nation solidly behind the most important human development globally in over two decades, namely, the Arab Spring. In the process, he anchored our foreign policy to fundamental principles from which it had gone adrift.

His speech showed that the President gets it. “[W]e have,” he said, “a stake not just in the stability of nations, but in the self-determination of individuals.” He thus made our national policy at home and abroad congruent, based on the principle that ordinary people matter. That’s the same principle recited (in slightly different words) in our Declaration of Independence: “Governments . . . deriv[e] their just powers from the consent of the governed[.]"

He also recognized the obvious, that nations like Tunisia, Egypt and Syria are not going to resemble Switzerland for a long time, if ever. The issue is not democracy, but self-government, the right of people to have a say in their own future and not to be jailed or killed for speaking out. That’s perhaps a long way from democracy, but no democracy can stand without it. And we ought to remember that South Korea and even Spain spent decades in that in-between status.

More important, self-government gives people a chance to improve their own lives. In so doing it decreases their interest in killing or fighting others, against whom tyrants try to direct their justified rage and helplessness.

There is much, much more in the President’s speech today, all of which deserves careful reading. The speech contains a comprehensive blueprint for supporting human rights and self-determination throughout the Middle East as means to peace and prosperity. In addition to the Arab Spring, it covers protecting journalists and freedom of information, trade assistance and expansion of commerce, and of course the Israeli-Palestinian conflict.

Many will focus on the President’s call for a two-state solution with Israel within its 1967 borders. But many may neglect to mention that he explicitly called for land swaps, too. Israel’s final border will not be precisely along its 1967 lines, and some settlements outside those lines may remain part of Israel. But if Palestinians accept swaps, they will have a contiguous land mass, with room for transit, inside their territory, from anywhere in Gaza to anywhere in their part of the West Bank.

The key point is not just that the President—a good friend of Israel—called for the obvious. Just as friends don’t let friends drive drunk, good friends don’t let friends pursue unsustainable and misguided foreign policies and miss golden opportunities for peace and progress.

The policies announced in the President’s speech do neither. Like the policies of any great leader, they seize the moment, two moments in this case. Bin Laden’s death gave the President much greater credibility, both at home and in the Islamic world. His seizing the Arab Spring reflected his world-historical competence.

Ever since Francis Fukuyama laughably declared the “end of history” after the Cold War, the human race has faced three real and fundamental problems. The first is integrating the quarter of the human race that is Chinese into the global economy and polity. The second is doing the same for another quarter of the human race that follows Islam. The third and final great problem is finding new sources of energy that can maintain our standard of living, avoid wars over resources, and not despoil the planet on which we evolved.

The President’s predecessors since Nixon have had good policies for the first problem, and the President wisely followed them. For the second, his immediate predecessor started a war in Iraq on false pretenses and proposed supporting “democracy” in the Middle East by that war and otherwise. But George W. Bush didn’t have the faintest idea how to win that war or achieve that goal.

The President does. He understands that some form of “self-determination” is both more important and more achievable than “democracy.” And his knows that achieving it requires American support, financing, trade and other assistance, but only rarely (as in Libya) direct military force. As for the third problem, we’ll have to wait and see, for that one involves our domestic quicksand.

We Americans call any president who solves a major problem “great.” Washington won us our independence and nationhood. Lincoln freed the slaves and kept us whole. FDR helped defeat two foreign military tyrannies and brought us out of our worst economic depression. If Obama can keep us on the road to integrating Muslims and Arabs into the global economy peacefully, and if he can help bring the 63-year-old Israeli-Palestinian dispute to a peaceful close, he will deserve a place among these great leaders.

Stymied by pygmies in the House and Senate, he has made his bid for greatness in foreign policy. It is a dangerous field, loaded with pitfalls. But we have not had such a thoughtful, wise and careful president since Kennedy, perhaps since FDR.

The President also has foreign pygmies to deal with, including Netanyahu. But there is nothing that our domestic pygmies can do to stop him from solving one of the three great global problems remaining, using all the resources of what is still the world’s first economy and global power. My bet is on him.

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17 May 2011

Commodities Today: How to Make a Bad Situation Much, Much Worse


The Real and The Symbolic
All that Matters is not Gold
Why Prices Are Rising
How Financial Markets Can Make a Bad Problem Worse
Possible Solutions
Conclusions

Markets today are all agog about commodities. Some say the stock market is falling because commodities’ prices are rising, stressing the consumer and killing her buying power. Recently commodities prices crashed a bit. That, they say, reflected a coming slowdown in the general economy, which the stock market is supposed to predict, cutting demand for commodities. The stock fallback might also reflect the markets’ response to the GOP threat to throw the United States into default to get its way.

Who’s up? Who’s down? Who’s on first? Our financial markets, which we suppose to be our national, capitalistic pride and joy, are acting like comedians in a 1920s slapstick routine. Maybe 1929 specifically.

To get your mind around commodities, you need to know a few things. But most of them follow from two basic principles.

The Real and the Symbolic

That most important principle is simple but profound. Commodities today are the only real thing in our entire cockamamie financial system.

I don’t mean futures and other so-called “derivatives.” I mean the commodities themselves: things like a barrel of oil, a pound of copper, or a bushel of wheat stored right now in a clean, dry granary somewhere.

Let me explain that. The long-form explanation is in a post I wrote some time ago, entitled “Conservation of Money, or Why the Fed Should Manage Derivatives.” But for those who don’ t have the time or interest to read it, I can summarize its basic message.

Money is a symbolic or imaginary commodity. It used to be as disposable as paper, but now it’s even more evanescent than that. It’s just electronic records in a computer somewhere or, if you like, magnetic domains on a hard drive.

The only reason these intangible symbols have any value at all is agreement. Governments that issue them and the people who use them agree on what their value is. And as long as they continue to use the symbols for trading, they have the agreed value. (Foreigners help keep us honest by saying what our money is worth in their money, for which we can buy things and services they produce.)

Commodities are different, or at least some of them are. They have intrinsic value, not just exchange or symbolic value. If you want to run your car, nothing but oil and its refining product, gasoline, will do. If you want to wire your house, you’ll have to have copper. You can try aluminum, which also will work, but it won’t work as well and is incompatible with copper.

The second important principle is that commodities are not all alike. Some have symbolic as well as real value, and the ratio of symbolic to real value varies depending on the commodity.

Take gold and silver, for example. Most of their extraordinary value today comes from what they used to be, not what they are today.

As explained in detail in my earlier post, they used to serve as money. Once sovereigns used them as money because they are scarce and hard to duplicate, as well as heavy and hard to steal. As the world switched to paper money for greater liquidity and convenience, we tried to “back” our paper with sold and silver, first dollar for dollar and later by an increasingly small percentage (sort of like our banking reserve requirements today).

But today the gold standard is gone. So is whatever silver standard may have existed at one time. Today, gold and silver are just like paper or those magnetic domains. They are worth only what governmental authorities say they are worth, and then only when markets go along.

If we ever have another real depression, in which food, transportation and shelter become scarce or unavailable, you will see how quickly the “value” of gold and silver evaporate. What starving person wouldn’t hock a gold earring, for example, for a week of solid meals, or even a single good meal, although the earring once may have been “worth” a small fortune?

Maybe that’s what happened recently with the mini-crash in silver. People are beginning to realize that its price had and has no more rational means of support than does the price of dollars themselves. And if that could happen in silver, could gold be far behind?

All that Matters is Not Gold

The reason gold and silver are different is that many of us never got over their use as a medium of financial exchange quite divorced from their intrinsic value. But today they have little intrinsic value. They can be used to make jewelry. People value that jewelry a bit more than, say, similar items made of jade or onyx, for the same reason: they think they can hock it for more if times get tough.

But that whole concept of “value” stands on a house of cards. Everyone is betting, in effect, that some day gold will become a medium exchange again, maybe the medium of exchange.

Don’t hold your breath. We got rid of gold and silver as media of exchange because they were too inflexible for a modern, diverse and dynamic capitalistic economy. That was the gist of William Jennings Bryan’s famous “Cross of Gold” speech, which dates back to the nineteenth century. If gold and silver were too limited and inflexible for a nascent nineteenth-century America, they’re surely too small for the dynamic global economy we have today. We’ve been there and done that, and we ain’t goin’ back.

So what are gold and silver “really” worth today? Who knows? Gold sure as hell isn’t worth $1,500 per ounce, which is what gold futures got close to recently. The only thing we know gold and silver are worth is their value in their very few real uses, in jewelry (itself largely of symbolic value), corrosion-free but expensive electrical contacts, and a few rarer, more exotic industrial uses. If gold’s price ever falls to that level, most commodity enthusiasts will long since have declared bankruptcy.

The truth is that history and our linguistic metaphors got it all wrong. Oil is not “black gold.” Rather, gold is “brassy oil.” There is no question today which has greater real worth and which commodity’s trajectory is surely and unequivocally up.

Not all commodities are like silver and gold. Some have a value that is directly tied to industrial and commercial reality. Oil is like that, probably more so than any other commodity. Even food has some slop in it, at least here in the US. Demand for food is elastic because it comes in so many varieties, and because so many of us are obese. Its supply is elastic because there is always more land we could convert to agriculture.

But oil is running out, and when it’s gone you can’t run your car. If you have a Hummer you can gain a little elasticity by buying a Prius. But when mosts of us have done that, as we’re (belatedly) in the process of doing, we’ll meet another stone wall.

As Will Rogers said of land, “They ain’t makin’ any more oil.” So as it runs out, it will get more and more expensive and we will have to find substitutes to survive, both financially and industrially. And from now on it’s going to run out quicker and quicker as the rest of the world embarks on faster and faster development, which depends heavily on oil.

So what’s important is not what’s happening, or may soon happen, to the prices of gold and silver. It’s what’s happening to the prices of oil, copper, iron, uranium and lithium for the good batteries that will run our electrical economy.

Why Prices are Rising

When you think about commodities whose value is real, not symbolic, their future prices are not hard to see. Again, Will Rogers is the guru. Just take his famous bon mot, “They ain’t makin’ any more land,” and substitute the name of your favorite real commodity for “land.” It’s still true.

Food is a bit different, but only a bit, because you can often eat less or grow more. But the amount of oil and minerals in the Earth’s crust where we can reach them was fixed a long time before we humans evolved. Absent a global catastrophe like the one that extinguished the dinosaurs, it won’t change for millions of years.

So when we run down, we run down. And when we finally run out, we run out. And as we get down toward the bottom of the figurative barrel, when every unit takes more and more effort, wastes more and more energy, and creates more and more pollution to extract, the costs may exceed the benefits.

Of course we aren’t there yet. The extractive industries are still booming, including the oil industry.

But think about the last time you heard of a really big “strike,” a huge discovery of oil or any other intrinsically valuable commodity. No, I don’t mean the discoveries of minuscule reserves that oil companies and their shills in Congress constantly rehash to justify offshore drilling. I mean the discovery of a single field that, all by itself, increases global reserves by 5% or more.

If you think about it and do a bit of research, you’ll find out that that sort of “strike” happens only a few times a decade, and for all intrinsically valuable commodities together.

What does this mean? Put bluntly, it means that we are approaching, if we haven’t already passed, Peak Copper, Peak Uranium and Peak Lithium, just as we already have passed Peak Oil.

Now the law of supply and demand is no fiction. It’s about as good and reliable a principle as exists in any science, let alone economics. When supply is strictly limited and maybe declining, and demand is increasing as the 90% of humans who don’t live in the US, Europe or Japan go through a process of rapid economic development (incredibly rapid, in the case of China and India), prices do one thing only. They go up.

Nothing can stop this secular rise except a catastrophic decline in human population. But nuclear war is a far more drastic solution than using less and finding substitutes. So that’s what we humans have to do, or go without. And prices will rise continually as we do so.

How Financial Markets Can Make a Bad Problem Worse

Now we are in a position to understand why the gamblers and swindlers in our financial sector are doing exactly the wrong thing, not just for finance, but for all of us.

When some financial genius invented futures, we were far from our current commodities regime of decreasing supply and rapidly increasing demand for the foreseeable future. In those halcyon days, we had plenty of untapped resources right here in our own country, including oil, copper and other minerals.

So we didn’t invent futures to deal with some real, ineluctable shortage of commodities with high intrinsic value. We invented them to deal with cruel fate and human folly.

Specifically, we invented them to save farmers from the depredations of weather and financial speculators in New York City and Chicago. The gamblers and swindlers were having a field day with agricultural commodities like wheat, corn, and pork bellies. Some tried to drive prices up by cornering the market, then sold out fast. Others drove prices up by speculation, leaving farmers to the mercy of the inevitable crash.

So our political geniuses decided to fight fire with fire. They forced the speculators to trade on an open, regulated market, on which farmers and their cooperative associations could trade, too. If the gamblers drove the price of wheat futures up without reason, for example, the farmer could withhold his wheat from the current market, store it, and sell it for future delivery at the higher price.

This futures regime did two things. First, it prevented speculators from swindling farmers as a group by driving current prices up or down, regardless of fundamentals, by betting on future prices. Second, it gave farmers a way to protect themselves against natural vicissitudes of drought, inclement weather, heat waves and the like by “hedging” in the futures market. The nascent futures market probably gave farmers as a group the upper hand, at least for a while, as they, not bankers in New York, were the experts on crops, weather, and local growing conditions. (Now that slight advantage may have disappeared due to the Internet and financial specialization.)

Similar reasons for having futures markets applied to oil and mineral commodities. Just as futures soften the blows of fickle weather and pests on farming, so they reduced the impact of fortuitous oil and mineral exploration on drillers and miners. Why bankrupt a business that invests soundly in a perfectly good and productive mine simply because miners of the same mineral in Chile hit a bonanza? In both cases―farming and mining―futures serve to protect competent, reliable and prudent businesses from the unpredictable twists of fate. Second, by putting financial speculation in the open, under regulation and on recognized public exchanges, they attempt to quell market manipulation and speculative booms and busts, although of course they don’t aways succeed.

But now we have a new problem that falls in the “none of the above” category. We humans are reaching the Malthusian limitations of our single environment, our Planet Earth. Those physical limitations, coupled with ever-increasing economic development and population, create an unavoidable, secular trend of ever-increasing prices for commodities whose real value predominates over their symbolic value.

What good are futures in this new, threatening economic regime? They can’t stop increases in human population or economic development, except perhaps indirectly and sporadically, by creating destructive booms and busts. And they won’t quell gambling and swindling by increasing it or its frequency.

And while on this subject, let’s spend a few lines on the ever-increasing volume and frequency of our speculation. The last decade or so has seen the rise of the day trader and the computer as programmed trader, not only in the stock market, but also in commodities markets. Yet real changes in the “hard” commodities markets, such as new mineral finds or new engineering means of conservation and efficiency, hardly occur in a single day, let alone a microsecond.

So this new capability of trading by the day or microsecond does nothing for the original purposes of futures. It just increases the frequency and risks of gambling and swindling which, on the stock market, led to the Flash Crash of May 2010.

In essence, then, we have a very simple but profoundly important problem. We have too many people seeking too rapid economic growth for the limited supplies of “hard” commodities like oil and minerals to comfortably support. According to well understood and widely accepted laws of basic economics, these circumstances promise steadily increasing commodity prices, without limit (with perhaps some deviations due to irrational exuberance and bubbles popping).

Nothing in the theory or purpose of futures addresses such a solid, reliable and fully predictable secular trend. There is no fickleness or uncertainty about it, no vagary of fortune to avoid. Trying to solve a real and fundamental physical problem like this with financial manipulation is about like going out to gamble because a tornado destroyed your house. The “solution” not only won’t work; it’s almost sure to be counterproductive.

But that’s what our nation is apparently trying to do, with its ruling class of business people in the lead. The notion is that gambling and swindling on an appropriately configured market for futures or other, more exotic derivatives can make the real and ineluctable problem of scarcity go away. It can’t and it won’t.

Possible Solutions

So how do we prevent more widespread gambling and swindling from making a bad situation much worse? Aye, there’s the rub! There are some things we can do, but there’s no silver bullet.

Why not make money by buying a life insurance policy on the old, sick, irascible widower in your neighborhood, whom everybody hates? He’s going to go sooner or later anyway, and most of your neighbors think sooner would better. Meanwhile, he’s just helping raise the price of health care for everyone by overusing medical resources in an ultimately vain attempt to prolong his life.

The short answer is the law won’t let you. We regulate insurance at the state level, but every state has a so-called “insurable interest” requirement. You can’t buy insurance on the life of that irascible old coot―unless he happens to be your spouse or father―because the law doesn’t want speculators betting on the life and death of strangers. Financial pressures could motivate them to step over the line and speed the inevitable demise along.

Just so, we might help keep speculators from destroying our commodities markets with unnecessary boom-and-bust volatility by imposing a restriction on trading in commodities. We might require some sort of legitimate business interest in speculation as a condition for engaging in it. For example, we might limit speculation in grain futures to farmers and makers of farm equipment, or speculation in oil futures to drillers, refiners and heavy users like airlines.

That’s probably a good idea, but it’s no panacea. Take airlines, for instance. They should know by now that their fuel prices, over the medium and long term, are going nowhere but up. They should know also that there’s no way to “hedge” against that secular and inevitable price rise. It’s not itself a product of speculation. Nor does it arise out of vagaries of weather or fortuitous oil “strikes.” Rather, it arises from economic fundamentals, namely, limited and declining supplies of oil and ever-increasing global demand.

So the right ways for airlines to “hedge” against the secular increase in oil prices are: (1) to buy more efficient and less wasteful aircraft like Boeing’s Dreamliner and (2) to raise their fares periodically to compensate for the increasing real cost of air travel, thereby encouraging flyers to conserve and seek substitutes for travel less wasteful of fossil fuels. The wrong way is to delude themselves into thinking that financial legerdemain can solve the real and growing problem of scarcity of a key commodity.

But think a bit about restricting airlines’ hedging. How would you do it? Airlines have a legitimate need to hedge against fortuitous rises and falls in the price of oil, such as those caused by the civil war in Libya. They also have a need to protect themselves against others’ speculation. How can the law let them to do that without throwing the baby out with the bath water? It’s a bit like trying to parse the “insurable interest” of a spouse or child, who may, for very personal reasons, want the insured dead.

The law is a blunt instrument incapable of making such fine distinctions in motivation. So just as we let husbands and children take out life-insurance policies on their wives or fathers, respectively, even though they may have murder in their souls, we can’t keep airlines from speculating in oil vainly or for the wrong reasons. The law can stop people from doing really bad or really stupid things, but it can’t make them moral or sensible.

In the end, probably the most we can do is educate managers about economics and curtail an avalanche of speculation by refusing to permit ever-more-powerful instruments of speculation and ever-more-rapid trading in them. That’s why we need strong financial regulation, especially in “derivatives” beyond simple futures contracts. We should make sure that financial “innovation” doesn’t explode out of control, as it did in the mortgage market in 2008, and subvert the whole system. For that we need constant, expert and attentive regulatory guidance and control.

Conclusions

We don’t need more futures and ever more risky and exotic derivatives. People like me, with no legitimate business interest, who want to gamble on the inevitable Malthusian trend can do so by buying ordinary shares in producers of hard commodities likely to be or become in short supply. If we want leverage, we can purchase naked call options on those shares. There is absolutely no need to let such speculators muck up the futures markets, let alone the markets for the commodities themselves, for example, by hoarding. Allowing them to do so will only make things worse, much worse.

And there’s another reason not to let gambling and swindling control the prices of commodities. According to classical economics, markets are very good (but not omnipotent!) at rationalizing the use of scarce commodities for maximum efficiency. As a commodity gets scarcer and more in demand, its price goes up, forcing people who can to pay more or find substitutes, and people who can’t to do without. In this sense, markets are partially self-correcting, although they can never entirely compensate for the increasing scarcity of a vital commodity like oil.

That’s the widely accepted and generally understood function of pricing in free markets. Among many other things, it motivates a lot of research and development in conservation, efficiency, and (for scarce metals) recycling. By disturbing that all-important pricing mechanism in a quixotic quest to make a real problem go away, financial manipulation destroys the very value of free markets in commodities, in theory as in practice. It converts what should be an economic “governor” on volatility into a runaway throttle.

There will always be people who see the inevitable and try to profit from it, even if their speculation causes others misfortune. And there are always ways for them to do so, like the purchase of stock in commodities producers and options on that stock. There is no need for yet more exotic options for gambling and swindling, which inevitably depend on secret, insiders’ knowledge for profit.

If we continue to run down the road of ever more complex and obscure financial instruments, traded ever more frequently by ever greedier gamblers and swindlers, we will not only distort and debase our free-market economy. We will undermine its moral and psychological underpinning by making it easier and more profitable to gamble and swindle using financial abstractions than to run businesses that use real commodities to make real things. That’s what happened in the mortgage market in 2008; we ought to make every effort to insure it doesn’t happen again, especially not in the market for a vital commodity like oil.


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13 May 2011

High Noon on PBS


Yesterday the PBS News Hour aired an extraordinary interview, which every American citizen should watch. It bore more than a passing resemblance to the classic movie “High Noon.”

Released in 1952, “High Noon” was the cultural apotheosis of American individualism. It portrayed the struggle between good and evil as a personal one, with good and evil each having its own live avatar.

Gary Cooper plays a retired and aging marshall in the Old West. Alone and abandoned by his town, he faces a “fast draw” killer. The climactic gun battle takes place on the town’s deserted dirt main street at noon. The title is now a metaphor for any dramatic personal confrontation.

In this case the “marshall” was Jim Lehrer, one of the founders of the PBS News Hour and perhaps the most honest and professional anchor in all of television news. His antagonist was Mitch McConnell, the Senate minority leader and senior Republican senator from Kentucky, who has made a career shilling for economic bullies. The subject was the coming “High Noon” in Congress, in which the GOP will attempt to extort drastic cuts in social programs that keep ordinary Americans alive and healthy by threatening not to raise the debt limit and thereby to throw our nation into fiscal default.

At first glance, Lehrer and McConnell seemed far from the Wild West. Both have built their careers on soft voices and low keys. Lehrer loosens up his interview subjects with a mild, stumbling, “aw shucks” manner and simple, everyday English. McConnell so lacks emotion as to make you think he takes a hit of Versed before going on TV.

So you might think the interview would have been devoid of drama. If so, you would be wrong. High-definition TV has given us a whole new world. You can see every bead of sweat, every pulse of vein, every licking of lips, and every narrowing of eyes, as if you were there in person, standing right in front of the speaker. You can imagine that you can get right inside his mind.

McConnell started the interview with a pointed reference to Lehrer’s plan to retire―which Lehrer had not yet announced but had planned to do at the end of the show. No doubt McConnell intended the remark as a friendly ice-breaker, the politician’s staple before shoving home the knife.

But McConnell has been a soft-spoken bully all his life. It would have taken a far better actor than he to make his comment on Lehrer’s impending retirement seem friendly.

Both men knew, of course, that McConnell has led the charge to defund PBS, Lehrer’s life’s work. McConnell knew as well that the PBS audience, unlike the Fox zombies who are McConnell’s natural constituents, knew also.

So the exchange came off as McConnell no doubt intended it deep in his heart. It was a bully’s taunt.

“I’ve got you,” McConnell seemed to say with his eyes. “We’re going to cut your funding and dismantle your life’s work. You’re too old and tired to fight us, and our power is growing. Once you’re gone, we’re going to make our own reality on our own TV. And the bullies I work for are going to rule this country unhindered. There’s nothing you can do about it.”

If you don’t think that’s what was going on at some level in both men’s minds, watch the video. You can see it in their eyes.

Lehrer shrugged the taunt off and went on with the interview like the consummate professional he is. There wasn’t much substance to cover, for McConnell kept repeating his boring talking points over and over, regardless of what question Lehrer had asked.

He had the gall at one point to say, “Jim, you're a smart guy, but I'm not going to let you answer for me.” Of course Lehrer wasn’t trying to answer for him. He was just trying to get him to answer the question he had been asked, rather than repeating GOP talking points for yet a third time.

McConnell never seemed to ken an important difference between PBS viewers and the Fox zombies to and for whom he usually speaks. We don’t like incessant repetition. We can get it the first time, Mitch. But then, McConnell rarely has to deal with a well-educated big-city audience.

The interview did have a little substance. McConnell made two clear predictions. First, he claimed that the President would cave and accept cuts in spending without any tax increases. Second, he said the resulting cuts would be in the trillions, not billions, using the plural. That means at least two trillion dollars of reductions in Social Security, Medicare, and Medicaid, without any offsetting increase in taxes, which McConnell repeatedly rejected according to his party line.

The climax―the “High Noon” moment―came when Lehrer asked, in his best folksy way, “[A]re you saying that you, if you all don't get what you want, you're not going to vote to raise the debt ceiling?”

McConnell never gave a straight answer. But what he did say made clear the answer was “yes.” Responding to a question about the catastrophe of a probable national default that failing to raise the debt ceiling would cause, McConnell said:
“I believe what would be catastrophic is to leave ―to miss this opportunity, presented by the president’s request to raise the debt ceiling, to do something genuinely significant about the debt.”
Fox zombies might have missed the point. But PBS’s educated audience could hardly. In this exchange McConnell was self-evidently threatening the President with presiding over a national default, and the public with suffering one, in order to cut safety-net programs on which ordinary Americans have relied for as many as eighty years, without any increase in taxes, even on the richest of the rich.

It was a bully’s extortion threat, despite McConnell’s usual catatonic manner. And the high-def TV showed it.

You could see a whirlwind of emotions pass over McConnell’s face. First, there was the bully’s resentment at facing his nemesis, a man smarter and better than he in every way. Then came the bully’s triumph: having made the bald threat he secretly had always wanted to make. Finally, there was a slow dawning of realization of the possible consequences: a national default for which voters might blame the party actually responsible, namely, McConnell and his GOP crew of bully nihilists.

You could almost see as well the slow recognition of his audience. Too late, McConnell realized that he was speaking to educated voters on PBS, not the conditioned zombies to whom he usually speaks. Too late, he began to see that the people to whom he was speaking might take his threat not with a bully’s delight, but with horror. At that point, you could almost see him gulp like a bully on the playground anticipating his teacher’s rebuke or his father’s spanking.

Was all this my imagination? Judge for yourself. Watch the video.

If you come to the same conclusions as I did, you will see the interview in the same way. In his low-key, aw-shucks manner, Jim Lehrer showed Mitch McConnell for exactly what he is, a bully and a shill for bullies who revels in raw power and will stop at nothing to get his way.

That’s about all any newsman can do. Wringing McConnell’s neck on camera would have been impolite, not to mention a crime.

It remains to be seen what the President will do. Will he cave and decimate our nation’s safety nets for seniors and the poor? Or will he call the GOP’s bluff and let them put us in or close to default? So far he hasn’t been the strongest poker player in Washington.

But he is a master of timing and the public mood. He may have tipped his hand at a rally in which he spoke of a “debate” about national priorities that will likely last several years. Apparently the President believes it will take real hardship and pain for the electorate to abandon their thirty-year infatuation with conservative nonsense.

I can hardly quibble with that approach, since I’ve said much the same thing myself. We have too much ignorance and stupidity abroad in the land for voters to wise up without a lot of suffering. The Greeks said it best, over two millennia ago: “the suffered is the learned.”

It took over thirty years, from Reagan to today, to destroy the public reputation of government, replace it with a religion of private profit and greed, and build up the broadest and most effective propaganda machine in human history to support the switch. No one is going to unwind those carefully constructed national tragedies in two years.

We all had hoped the President would. But he’s just a man like his predecessors, albeit a very skilled and good one. He’s not a miracle worker.

It took the Soviets seventy years to abandon their nonsensical ideology, and the Chinese almost thirty. It’s even harder in a democracy, where not just a few leaders, but the people, have to change. People have to feel real consequences in their personal lives before they wise up; and they have to feel them strongly and starkly enough so that clever propagandists cannot shift the blame, as they did for the 2008 Crash.

So fasten your seat belts and calm your nerves. The next few years are going to be an ugly, wild ride. And if you want to see the type of ruthless bully who will be driving our national juggernaut, watch the video. It’s all there: the ignorant man’s resentment of his betters, the threat, the bully’s fleeting triumph at extortion, and the slow-dawning realization that maybe a near-default to make the rich richer and the poor poorer is not the highest road to national resurrection.

But bullies never back down, if only for fear of “losing face.” For the GOP to give a single inch would admit how its governing ideology has dragged America from the top of the world to its current sorry state in a mere thirty years. The fleeting look of triumph on McConnell’s face as he mouthed his implied threat of default told the tale. He and his ilk must be beaten and undone, and it’s going to take a lot more than a revealing interview to do that.

So the real “High Noon” is yet to come. We’re in for the struggle of our national life, whose outcome will determine whether we rise from our national decline, and maybe whether we remain a democracy. In that struggle, Jim Lehrer’s retirement is a real loss, but I hope not a decisive one.

Anyway, now is the time to open your wallet and support PBS. Our brave new world is one ruled by propaganda financed by bullies with lots of money. If you want the truth on TV, you’re going to have to pay for it. Or you can join the Fox zombies and pay a much higher price later.

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