Monday, February 23, 2009

The moral courage of the Darfuris

Nicholas D. Kristof presents the story of Suad Ahmed, a refugee from Darfur now living in Eastern Chad. Suad saved her little sister, Halima, from a Janjaweed attack only to lose track of her later when Halima left to rescue their parents. Kristof tells her story and about the continuing slaughter in Dafur while the international community is preoccupied elsewhere in his Sunday column in the New York Times.

He writes:
The slaughter in Darfur has continued for six years largely because world leaders have been complacent and preoccupied. In the coming weeks, the International Criminal Court is expected to issue an arrest warrant for Sudan’s president, Omar Hassan al-Bashir, for orchestrating the killings — and that will give the world a new opportunity to end the slaughter.

But to seize that opportunity, world leaders will have to summon some of the same moral courage that Darfuris show all the time.

Saturday, February 21, 2009

The American habit of self-congratulation and the temptation of optimism

Interesting commentary by Daniel Larison (via Andrew Sullivan) about optimism, responsibility, the American habit of self-congratulation, and dismissing critics for “blaming America first”:

… many of us still today remain critical of or even hostile to certain episodes in American history, because so many of these episodes derived from this habit of self-congratulation and were valorized in historical memory as part of the same habit to glorify ourselves as exceptional. Many of us are more skeptical of the ‘Good Wars’ in our past because we see plainly how the mythology of the ‘Good Wars’ covers over gross injustices and feeds into national self-righteousness that is in turn used to justify other exercises of power.


… If Americans have had a habit of self-congratulation, we also prefer it when our politicians flatter us. Perhaps that is an inescapable part of democratic or quasi-democratic politics. No one likes to hear that he is contributing to grave national problems, much less that he must change something about himself rather than demand action from the government on his behalf. Private irresponsibility hardly fuels demands for public probity and prudence, but instead seems to give license to reckless policies. The old stump speech boilerplate about making the government’s budget more balanced and like a household budget will still win applause, but when private indebtedness is so great it means nothing.

One of the most tired accusations is that so-and-so “blames America first,” which in a more sane world would be understood as taking responsibility for one’s own flaws. One would think that a more damning charge would be to say that someone never blames America, and so refuses to take responsibility for anything done in her, our, name, but even this use of the word blame is misguided. In fact, most of the people who “blame America first” go to great lengths to identify the flaws of America only with the parts of the country unlike theirs and only with the people on the other side of cultural and political divides. The more comprehensive the critique, the fewer people there are who want to hear it. When making a cultural critique of private habits, the resistance becomes even more fierce. The more prophetic and less convenient the warning, the less political traction it has because it unites more enemies against it. To call for self-restraint, rather than self-congratulation and self-rewarding, from everyone is necessarily to be a voice in the wilderness.

You can read his entire piece here at The American Conservative.

Friday, February 20, 2009

The Anglo-Saxon model of supervision and regulation of the financial system has failed

Promoters of the laissez-faire economics have successfully chipped away at a range of regulations and enforcement of regulations of our financial institutions over the past several years. Their argument has been that the markets will somehow self-regulate and, when things go bad, correct themselves. The assumption is that an economy is not man-made but ruled by laws of nature. It also makes negative economic impact on people as a secondary concern, if a concern at all. And, as we have witnessed with the downward spiral of economies around the world, the idea that markets will self-regulate is a real stretch. Financial institutions have been given a free hand and look where we are.

Nouriel Roubini believes the Anglo-Saxon model of supervision and regulation of the financial system has failed and needs to be addressed:

To paraphrase Churchill, capitalist market economies open to trade and financial flows may be the worst economic regime--apart from the alternatives. However, while this crisis does not imply the end of market-economy capitalism, it has shown the failure of a particular model of capitalism. Namely, the laissez-faire, unregulated (or aggressively deregulated), Wild West model of free market capitalism with lack of prudential regulation, supervision of financial markets and proper provision of public goods by governments.

There is the failure of ideas--such as the "efficient market hypothesis," which deluded its believers about the absence of market failures such as asset bubbles; the "rational expectations" paradigm that clashes with the insights of behavioral economics and finance; and the "self-regulation of markets and institutions" that clashes with the classical agency problems in corporate governance--that are themselves exacerbated in financial companies by the greater degree of asymmetric information. For example, how can a chief executive or a board monitor the risk taking of thousands of separate profit and loss accounts? Then there are the distortions of compensation paid to bankers and traders.

This crisis also shows the failure of ideas such as the one that securitization will reduce systemic risk rather than actually increase it. That risk can be properly priced when the opacity and lack of transparency of financial firms and new instruments leads to unpriceable uncertainty rather than priceable risk.

It is clear that the Anglo-Saxon model of supervision and regulation of the financial system has failed. It relied on several factors: self-regulation that, in effect, meant no regulation; market discipline that does not exist when there is euphoria and irrational exuberance; and internal risk-management models that fail because, as a former chief executive of Citigroup put it, when the music is playing, you've got to stand up and dance.

Furthermore, the self-regulation approach created rating agencies that had massive conflicts of interest and a supervisory system dependent on principles rather than rules. In effect, this light-touch regulation became regulation of the softest touch.

Thus, all the pillars of the 2004 Basel II banking accord have already failed even before being implemented. Since the pendulum had swung too much in the direction of self-regulation and the principles-based approach, we now need more binding rules on liquidity, capital, leverage, transparency, compensation and so on.

But the design of the new system should be robust enough to counter three types of problems with rules. A tendency toward "regulatory arbitrage" should be kept in mind, as bankers can find creative ways to bypass rules faster than regulators can improve them. Then there is "jurisdictional arbitrage," as financial activity may move to more lax jurisdictions. And, finally, "regulatory capture," as regulators and supervisors are often captured--via revolving doors and other mechanisms--by the financial industry. So the new rules will have to be incentive-compatible, i.e., robust enough to overcome these regulatory failures.

You can read his entire article here.

Thursday, February 19, 2009

Putting gay prayers to a vote

It seems many Oklahoma legislators don't like prayers – if they are delivered by gay clergy. This from David Waters:

Oklahoma legislators demonstrated the divisive power of state-sponsored prayer last week when -- apparently for the first time there -- a routine motion to enter an opening prayer in the official record was met by opposition.

The prayer was delivered by Rev. Scott H. Jones, pastor of Cathedral of Hope in Oklahoma City. Jones paraphrased the so-called Prayer of St. Francis, asking God to give "these elected representatives of your people courage and wisdom, that they might be instruments of your peace, sowing love where there is hatred, pardon where there is injury, union in place of discord . . . "

The discord began even before Jones began to pray. In his opening remarks, he acknowledged people in the gallery -- "dear friends, my wonderful parents, and my loving partner and fiance, Michael." Jones is gay. So is state Rep. Al McAffrey, Oklahoma's only openly gay legislator, the man who invited Jones to pray and who made the motion to enter the prayer in the record.

It all was a bit much for state Rep. John Wright who objected. The prayer was then put to a vote. Sixty-four representatives voted to include the prayer, 20 voted to strike it from the record, 17 abstained -- so it's now official.

Afterward, Wright told the The Oklahoman newspaper that his motion was "not meant to be derogatory nor divisive nor in any way trying to cause diminishment of someone's sense of self-worth . . . My actions were motivated by the faith." He didn't elaborate on which faith he considered The faith, but presumably it's his.

McAffrey, a legislator for three years, said he's never heard anyone object to entering a prayer in the official record. "I'm sure that because most of Scott's congregation are gay people and Scott is gay himself, I'm sure that's the reason why there were negative votes on it," McCaffrey said.

The House's action drew a rebuke from Rev. John H. Thomas, General Minister and President of the United Church of Christ. "As the leader of Rev. Jones' denomination, I am deeply offended by the treatment he received from the legislature and dismayed by the message of intolerance it sends to the citizens of Oklahoma and beyond," Thomas said.

"It is comforting, however, to remember that our prayers are judged at the throne of grace and not in the halls of petty principalities."

If elected officials can vote on whose prayers are acceptable, will they next vote on whose faith is acceptable? The Oklahoma House's opening prayer is ceremonial. Like the House itself, shouldn't it be open to all faiths and preachers?

The issue of anti-gay bigotry aside, this is a good example of why religious observances should be avoided completely by governmental institutions. When it is easier to get a vote approving a prayer in the Oklahoma legislature than it is to get a vote approving a budget in the California legislature then something is out of whack with our system of government.

Monday, February 16, 2009

Did the Cold War end by Reagan standing tough or by offering a gesture of peace?

When Republicans tout their idol Ronald Reagan as the model for American Presidents it is only fair to ask which Reagan they had in mind. Reagan’s ideas and approach to those ideas, like those of many political leaders, changed over time. The path of the end to the Cold War did not begin with Reagan’s belligerent rhetoric during his first term as conservatives like to mythologize but during Reagan’s more reconciliatory second term.

Fred Kaplan reviews James Mann’s upcoming book on Reagan (excerpted in Vanity Fair):

When President Barack Obama starts stepping out on the world stage, trying to strike deals with foreign leaders, a chorus of Republicans and right-wing pundits will implore him to take his cues from Ronald Reagan, who—the popular history has it—brought the Soviet Union to its knees through military strength and iron will.

In anticipation of these urgings, everyone should read the excerpt in this month's Vanity Fair (online edition only) from James Mann's forthcoming book The Rebellion of Ronald Reagan, which reveals that the hard-liners' hero was, in fact, a babbling nut job who was lucky that Soviet President Mikhail Gorbachev, a genuine reformer desperate for Western assistance, was on the receiving end. Mann also shows conclusively that, in the end, Reagan won the Cold War not by standing tough but by offering a gesture of peace.

The lesson that Obama and his team ought to take away from the tale is that Reagan should not be regarded as a model of any sort—and that his Republican champions continue to distort his true legacy.


At their first one-on-one talk, Gorbachev tried to talk substance, but Reagan kept telling interminable anecdotes and anti-Soviet jokes, leading Gorbachev at one point to mutter, "On boltayet yeshchyo" ("He's babbling again"). The next day, in a larger meeting that included 34 U.S. and Soviet officials, Reagan repeated the performance, causing Secretary of State George Shultz to scold him afterward. "Mr. President, that was a disaster," Shultz said. "You can't just sit there telling jokes."

The following May, in their face-to-face talks at the summit in Moscow, Reagan spent an astonishing amount of time trying to convince a clearly annoyed Gorbachev of God's existence. (The National Security Council's Soviet affairs director, Rudolf Perina, who took notes at the meeting, told Mann, "Reagan thought he could convert Gorbachev, or make him see the light.")

And yet the real dirty secret about Reagan—the one that Republicans would rather not remember or, in many cases, never knew—is that, at heart, he had no stomach for war and detested nuclear weapons. (This point was persuasively made in Paul Lettow's underappreciated 2006 book, Ronald Reagan and His Quest To Abolish Nuclear Weapons, which also noted that Reagan's top aides went to great lengths to keep his feelings on the subject under wraps.)


… After one of their meetings, Reagan and Gorbachev took a walk through Red Square. A reporter asked Reagan if he still believed the Soviet Union was an "evil empire." Reagan famously replied, "No, I was talking about another time and another era." The next day, at a press conference, he elaborated, marveling at the "profound changes" that Gorbachev had brought into being.

Mann writes that these comments—which were seen as an answer to Dobrynin's plea—strengthened Gorbachev's hand at the Communist Party congress a few weeks later, allowing him to argue that his next round of reforms could be passed, and further steps toward disarmament taken, without any danger.

In his first term, from 1981-85, Reagan escalated East-West tensions, spoke in bellicose rhetoric, and jacked up military spending to 30-year highs. This is the Reagan whom Republican chieftains worship and insist that all subsequent presidents emulate. But in his second term, which coincided with Gorbachev's rise to power, Reagan flipped, making dramatic diplomatic overtures to Moscow and accepting equally dramatic proposals in turn.

Few remember, but many of the Republicans who now tout Reagan's accomplishments pummeled him at the time for "betraying" his followers and their Cold War ideology.

The pressures of those first four years—combined with the spiraling collapse of the Soviet system, which Gorbachev was keen to detect—helped bring Moscow to the table. But if Reagan had kept up his hard line (or if either of Gorbachev's ailing predecessors, Yuri Andropov or Konstantin Chernenko, had lived a little longer), the tensions would only have grown fiercer.

Ultimately, it was Reagan's reversal—the softening of his rhetoric, the willingness to negotiate, the reassurance of respect that Dobrynin had requested—that opened the way to the crucial rapprochement and the Cold War's finale.

When Republicans tell Obama to act more like Ronald Reagan, a suitable response might be: "Which one?"

You can read the entire piece here.

Friday, February 06, 2009

Washington has lost sense of what’s at stake

The economic stimulus package is slowly making its way through congress. President Obama had hoped to build a bi-partisan coalition to confront the current economic crisis. However, the Republican leadership seems stuck in denial as if their oversight of the economy over most of the past decade and the rigid ideology that framed that oversight and management played no part what so ever in the resulting mess. Remarkably, despite the repudiation of the Republican Party at the polls in November and the dire straights the country is in, the Democrats seem almost on the defensive.

If the Republican leadership prefers to fiddle while the country burns then it is time to move on without them. This is from Paul Krugman in today’s New York Times:
A not-so-funny thing happened on the way to economic recovery. Over the last two weeks, what should have been a deadly serious debate about how to save an economy in desperate straits turned, instead, into hackneyed political theater, with Republicans spouting all the old clich├ęs about wasteful government spending and the wonders of tax cuts.

It’s as if the dismal economic failure of the last eight years never happened — yet Democrats have, incredibly, been on the defensive. Even if a major stimulus bill does pass the Senate, there’s a real risk that important parts of the original plan, especially aid to state and local governments, will have been emasculated.

Somehow, Washington has lost any sense of what’s at stake — of the reality that we may well be falling into an economic abyss, and that if we do, it will be very hard to get out again.

It’s hard to exaggerate how much economic trouble we’re in. The crisis began with housing, but the implosion of the Bush-era housing bubble has set economic dominoes falling not just in the United States, but around the world.

Consumers, their wealth decimated and their optimism shattered by collapsing home prices and a sliding stock market, have cut back their spending and sharply increased their saving — a good thing in the long run, but a huge blow to the economy right now. Developers of commercial real estate, watching rents fall and financing costs soar, are slashing their investment plans.

Businesses are canceling plans to expand capacity, since they aren’t selling enough to use the capacity they have. And exports, which were one of the U.S. economy’s few areas of strength over the past couple of years, are now plunging as the financial crisis hits our trading partners.
Meanwhile, our main line of defense against recessions — the Federal Reserve’s usual ability to support the economy by cutting interest rates — has already been overrun. The Fed has cut the rates it controls basically to zero, yet the economy is still in free fall.

It’s no wonder, then, that most economic forecasts warn that in the absence of government action we’re headed for a deep, prolonged slump. Some private analysts predict double-digit unemployment. The Congressional Budget Office is slightly more sanguine, but its director, nonetheless, recently warned that “absent a change in fiscal policy ... the shortfall in the nation’s output relative to potential levels will be the largest — in duration and depth — since the Depression of the 1930s.”

Worst of all is the possibility that the economy will, as it did in the ’30s, end up stuck in a prolonged deflationary trap.

We’re already closer to outright deflation than at any point since the Great Depression. In particular, the private sector is experiencing widespread wage cuts for the first time since the 1930s, and there will be much more of that if the economy continues to weaken.

As the great American economist Irving Fisher pointed out almost 80 years ago, deflation, once started, tends to feed on itself. As dollar incomes fall in the face of a depressed economy, the burden of debt becomes harder to bear, while the expectation of further price declines discourages investment spending. These effects of deflation depress the economy further, which leads to more deflation, and so on.

And deflationary traps can go on for a long time. Japan experienced a “lost decade” of deflation and stagnation in the 1990s — and the only thing that let Japan escape from its trap was a global boom that boosted the nation’s exports. Who will rescue America from a similar trap now that the whole world is slumping at the same time?

Would the Obama economic plan, if enacted, ensure that America won’t have its own lost decade? Not necessarily: a number of economists, myself included, think the plan falls short and should be substantially bigger. But the Obama plan would certainly improve our odds. And that’s why the efforts of Republicans to make the plan smaller and less effective — to turn it into little more than another round of Bush-style tax cuts — are so destructive.

So what should Mr. Obama do? Count me among those who think that the president made a big mistake in his initial approach, that his attempts to transcend partisanship ended up empowering politicians who take their marching orders from Rush Limbaugh. What matters now, however, is what he does next.

It’s time for Mr. Obama to go on the offensive. Above all, he must not shy away from pointing out that those who stand in the way of his plan, in the name of a discredited economic philosophy, are putting the nation’s future at risk. The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge.

Thursday, February 05, 2009

“Finishing the job” in Afghanistan

The United States invaded Afghanistan three weeks following the September 11th attacks in 2001. The Taliban ruled government had hosted Al Qaeda, the organization responsible for the 9-11 attacks on the U.S., and continued to provide safe haven for them. President Bush stated that U.S. policy would not distinguish between Al Qaeda and those that harbored them.

However, after the Taliban was toppled and some degree of success seemed to be within grasp Washington lost interest in the conflict and turned its attention towards Iraq. In the meantime the conflict simply spilled over the border into Pakistan, destabilizing that country, and the Taliban resurged in Afghanistan threatening its stability.

President Obama campaigned to turn American attention back towards Afghanistan and the fight against Al Qaeda – to “finish the job” left undone by the Bush administration. The problem is windows of opportunity have shut and the situation on the ground has become much more complex in the past six-to-seven years while Afghanistan was a second tier priority for the Bush administration. Finishing the job will not be as simple as it would have been in 2002 or 2003.

Rosa Brooks has these thoughts on “finishing the job”:
… we ignore Afghanistan at our peril. If Afghanistan implodes and becomes a haven for Al Qaeda again, U.S. and global security will be threatened.

And if the violence in Afghanistan continues to spill over into nuclear-armed Pakistan and triggers the collapse of that country's fragile civilian government, the dangers are even greater.

The problem with "finishing the job" in Afghanistan is that it's no longer entirely clear what the "job" is, or what it would mean to "finish" it.

As the Bush administration rushed to war in Iraq, Afghanistan became America's orphaned war. U.S. troops in Afghanistan struggled to get resources, equipment and the attention of policymakers. Planned reconstruction projects languished, and early military gains began to erode. Afghan civilian support slipped. With too few ground troops, the U.S.-led coalition began to rely more and more on close air support (in 2005, there were 7,421 close air support missions; in 2008, there were 19,603). But the increase in aerial bombing dramatically increased unintended civilian deaths (bombs don't discriminate between terrorists and children). Civilian support eroded further.

As NATO redoubled its efforts to drive the Taliban and Al Qaeda from the Afghan mountains, militants operating in Afghanistan took refuge in neighboring Pakistan's ungoverned border regions. From there, they increasingly staged cross-border raids into Afghanistan, disrupted NATO supply lines between Pakistan and Afghanistan and carried out attacks on targets linked to the unpopular Pakistani government.

As a result, the U.S. war in Afghanistan gradually bled over into Pakistan. The U.S. has responded to militant attacks from within Pakistan with intermittent airstrikes against targets in Pakistani territory, but these have also caused unintended civilian deaths, increasingly radicalizing the Pakistani population and further jeopardizing the future of Pakistan's shaky secular civilian government.

So at this point, how we "finish the job" in Afghanistan isn't clear anymore.

Send more troops to Afghanistan, as President Obama intends to do? With more and more of Afghanistan falling back under the control of the Taliban, additional troops are clearly necessary in the short term just to protect major population centers from Taliban predation. More ground troops will also reduce the need for close air support, which will help minimize civilian casualties.

But without a broader strategy, extra troops alone won't help in the long run. Eradicating the Taliban and Al Qaeda from Afghanistan does the United States little good if Pakistan (with its nuclear prizes) solidifies as the new staging area for regional and global terrorism. But the U.S. can't add a full-scale war in Pakistan to the two wars we've already got.

In the longer run, a better strategy would be to deny the militants the popular support they need to survive, by helping both the Afghans and the Pakistani people get the roads, schools and economic and governance infrastructure they need. But there's a chicken-and-egg problem: A military solution won't work without substantial investment in the civilian sector, but civilian reconstruction projects can't get done in the midst of terrible insecurity.

In 2002, "finishing the job" in Afghanistan would have been a (relatively) feasible plan. Today, just keeping Afghanistan and Pakistan from sliding jointly into chaos will require a comprehensive approach, melding military and development strategies and addressing the broader regional dynamics at play. (Pakistan's long-simmering tensions with India reduce its willingness to put serious resources into counter- terrorism, for instance, while U.S. tensions with Russia and Iran reduce opportunities for regional cooperation.)

But that doesn't mean the administration won't be able to make progress in Afghanistan. Obama is doing what he should in these first weeks, calling for a comprehensive strategy review and listening to experts whose views differ.

Meanwhile, probably the best thing his team can do is finish off the "finish the job" metaphor. We're nowhere close to finishing, and there's no single "job." Restoring stability in Afghanistan and Pakistan will be a long, multifaceted process involving many players in addition to the U.S. -- and that process is just getting started.