It’s hard to hold the high ground this way

The Associated Press has revealed a covert program in which the U.S. Agency for International Development “sent nearly a dozen neophytes from Venezuela, Costa Rica and Peru to gin up opposition in Cuba”. According to AP, the recruits “posed as tourists…”, to “recruit young Cubans to anti-government activism.”

No doubt there are many who think this is fighting the good fight. Maybe it is.

Surely the USAID operation was a small one. But it comes on the heels of other “good fights” that wound up destabilizing regions, from covertly arming the Afghan mujahedeen to covertly organizing civil disobedience in Eastern Europe. Which is possibly because realpolitik quickly ends up being about careerism, about playing cowboys and Indians in other corners of the world, and riding off into the sunset after we’ve notched up another ‘win’.

If all is fair in realpolitik, then there are no other principles. All are trumped by whatever the people operating in secrecy deem to be “the good fight”. USAID. The CIA. The NSA. Politicians in Congress. Pentagon bureaucrats. The notion of a world order founded on peaceful sovereign states who respect borders and work through international institutions, so beloved of Western pontificators at the moment (see “Ukraine”), remains a bit of propaganda-fluff, useful to rally masses of people who might think it is actually intended to mean something.

So European.

In light of the epic disasters of Afghanistan (pre- and post-9/11) and Iraq, one has to wonder if Vladimir Putin’s designs on Ukraine could possibly be worse.


Plan B

Probably to no one’s surprise, a US Magistrate has ordered the seizure of 1 million barrels of Kurdish oil parked 60 miles outside the Port of Galveston. US Marshalls will seize the tanker should it enter the US territorial limit, which it would now be foolish to do.

What is Plan B for the not-quite independent republic of Kurdistan? Well, they have sold oil to Israel in the past. But now that Baghdad has seen what lawyers are capable of, if the Kurds attempt to repeat this trick, it will undoubtedly land in an Israeli court. Baghdad claims the oil is stolen property. As much as the Israeli government might like to thumb its nose at the US, it doesn’t seem likely their courts could find a way to allow the importation of stolen goods.

Unless Kurdistan were to declare independence. They would need at least one major state to recognize it. And it could only be a state with poor relations with the West.

One comes to mind. But could the Kremlin make any hay out of the breakup of Iraq? Possibly. If Mr. Putin suddenly became the peacemaker in Iraq and Syria.

Something to think about.


Kurdistan Showdown

The United Kalavrvta has been cleared by the Coast Guard to begin offloading 1 million barrels of Kurdish oil in Galveston. As it threatened to do, Iraq has filed suit asking US Marshalls to seize the oil.

As I mentioned in a previous post, Kurdistan took one step closer to independence while Baghdad was reeling from ISIS victories on the battlefield, by signing a separate export agreement with Turkey, a NATO member, despite Baghdad’s assertion of sovereignty over all of Iraq.

It seems likely Baghdad will prevail in court. If so, and the oil is seized, the regional government of Kurdistan, now desperately short of cash, will have its back against the wall. You have to wonder what their Plan B is.


On Friday the European Commission put a draconian round of what it euphemistically calls “restrictive measures” against Russia up for approval by EU member nations. The measures are intended to inflict damage. They will be interpreted by the Kremlin as belligerent, and they are likely to be approved.

It is difficult to see how the Kremlin can back down. And if the EU launches sufficiently crippling measures, it is difficult to see what the Kremlin loses by taking the next step and openly occupying a non-NATO country on its border.

Perhaps a number of western governments will actually welcome this as an opportunity to make the “restrictive measures” permanent. So much for the reset.

While we were patting ourselves on the back for our forays into Eastern Europe in the mid-2000s, in the name of democracy, many Russians were probably remembering the 600,000 Red Army soldiers lost defending Kiev from Hitler’s invasion, and sourly noting that Ukraine only came into existence as a state with the fall of the Soviet Union. Others were undoubtedly chafing over obstructionism against the ambitious South Stream pipeline project on the part of influential members of the EU.

Which is not to defend Vladimir Putin. It is only to point out that the momentum building toward disaster in Eastern Europe is not the consequence of a single man. We might have hoped for a Russian leader who would have found a way to stifle Russian ambitions and muffle grievances, a kind of Slavic Mahmoud Abbas, but we can hardly complain that they picked one who speaks their own cultural language.

Maybe this is all inevitable. If so, if this is the best that can be done, then one shudders at the eventual collision between the West and China.

But what to do about it?

In a previous post I tried to point out that there are areas in any modern economy where markets don’t operate reliably, or don’t operate at all. Market meaning something that works through supply and demand to optimize society’s allocation of resources.

Sometimes this is because what constitutes supply (let’s say savings) and what constitutes demand (say business investment) don’t actually meet directly in a marketplace,  but go through an intermediary (institutions like banks, etc.) with its own motivations. Sometimes it’s because one side (say skilled labor) can not change rapidly in response to the other (say factories relocating overseas).

Why should we care? Because in a market for coffee sweeteners, for example, all sides can adjust fluidly to the best balance of prices that makes consumers happy and is profitable for business. Which is presumably a good thing for society. Where markets can not accomplish this, the consequences may be very much to the detriment of society. (See the Great Depression.) Waiting for a generation of people to die off is not an acceptable way to optimize the use of resources.

I still don’t like the term income inequality, for reasons I’ve already explained, but fortunately there are people seriously studying the effects of income imbalance. I just discovered this short paper, published earlier this year. From the paper:

[T]here is a strong negative relation between the level of net inequality and growth in income per capita…and there is a weak (if anything, positive) relationship between redistribution and subsequent growth

[T]he things that governments have typically done to redistribute do not seem to have led to bad growth outcomes, unless they were extreme. And the resulting narrowing of inequality helped support faster and more durable growth

It’s a growing consensus. Beyond a certain point, income imbalance hurts the economy. And many economies are beyond that point. The question is, what can we do?

Income what?

The phrase “income inequality” has been all the rage. Economists study it. Talking heads rant about it. Politicians debate it. And it has become another litmus test in the Great Liberal-Conservative Theater of the Absurd.

But “income inequality” can not possibly mean what it suggests, that those who think it is a problem believe that all incomes should be equal. I’ve known some Marxist firebrands in my time, and even they would have paused before suggesting such a thing.

So why employ a term that poisons the discussion at it’s start? The usual left-wing laziness, I suppose, abetted by the usual right-wing ambush mentality.

But there is something real here.

For years, economists have thought of such inequality in part as a side effect of policies that fostered the country’s economic dynamism…But economists’ thinking has changed sharply…The concentration of income in the hands of the rich might not just mean a more unequal society…It might mean less stable economic expansions and sluggish growth.

Income Inequality May Take Toll on Growth – NYT 10/16/2012

While the steady or slightly accelerating global growth rates predicted by the IMF is the most likely outcome, it may not be achievable because of three imbalances: social, geographical and demographic. These seem deeply embedded in the structure of global capitalism today. They are weakening demand, creating excess savings and driving the buildup of borrowing and lending that has been both a cause and consequence of the global financial crisis…

If too much of the income created by capitalism’s capacity to increase production flows to people who are already rich and likely to save rather than spend, then crises of under-consumption become almost inevitable…

Karl Marx was right – at least about one thing – Reuters 6/11/2014

Granted that any or all of these opinions may turn out to be wrong (although I am doubtful of that), it is important to distinguish between the technical questions concerning national and global economies, and the political questions surrounding who should get what.

So I propose we stop talking about “income inequality”, because the converse is something no one wants or expects to achieve, and think instead in terms of “income imbalance” — the converse of which at least stands a chance of having meaning.


Would you fight?

As I mentioned in a recent post, the collapse of the Iraqi army in the face of ISIS should not be laid at the feet of the troops. The rot was centered in weak and inept senior officials, the result of a weak and inept government.

A piece today gives a view from the ground. One excerpt:

The brigade left Basra on June 14 with the important mission of reinforcing Qaim, its officers said. The troops had only the food and water they carried. Daytime temperatures hovered near 120.

Several officers said the system the Interior Ministry had devised to supply its forces was suited for peacetime, and predictably failed in war. They said it relied on contracts with businesses that would deliver supplies to the troops’ main garrisons. But as the border-police convoys headed for territory under militant influence or control, the vendors would not follow…

By June 17, the brigade was in position around Qaim, with hopes of blocking ISIS fighters’ free passage to and from Syria. But supplies were so depleted the troops could barely fight. Its members said they were given only a small piece of cake and about 10 ounces of water a day…

With supplies almost gone, the brigade commander, Brig. Gen. Sadiq Rasheed Abdilal, left Qaim to complain to senior officers, his troops said. They have not heard from him since.

There’s more in the original. Read it. There may be some cowardice in the ranks of the Iraqi army. But the real story is a government incapable of governing. And the US political leadership that put that government in place.

The political court

The Hobby Lobby decision, in case you’ve  been on retreat the last few days, is a recent decision by the US Supreme Court that allows closely-held (non-public) corporations to claim exemption under the Religious Freedom Restoration Act of 1993.

According to Justice Alito, the requirement to provide coverage for contraception imposes a “substantial burden” on the religious liberty of closely-held corporations whose owners object on religious grounds.

Naturally, the decision is a rallying cry for liberals as well as conservatives, but it continues the apparent trend in Court decisions regarding corporations. Not just the trend regarding the “personhood” of legal entities, which is often cited  by talking heads, but the trend of dissolving the wall between the corporation and its shareholders, closely-held or not.

Ironically, this is a wall erected by state business laws, although it goes to the long-established nature of the corporate entity. You have probably heard the term “creature of the state”. A corporation (or any other limited-liability entity) is not just the free association of individuals often depicted by libertarians; it exists by virtue of state laws that shield owners and operators from liability for the obligations of their enterprise. There would be no value otherwise, and no purely private arrangement could achieve the same thing.

But the price for that shield is a wall of separation, and if you fail to maintain that wall, for example by using the corporation as a personal checkbook, a creditor can “pierce the veil”, legalese for asking a judge to set aside the corporation and allow a creditor to proceed against its owners personally.

In other words, the corporation is an entity on its own, established by law. Those who form the entity give up their interest in its assets, even as they escape its liabilities. They may receive a share of corporate proceeds, but creditors have priority. Assets must be held separate. Records must  be kept, the form maintained.

Which brings me to my point. If the corporation has “personhood”, then the wall must be in place. Even a closely-held corporation must not be an alter-ego for its owners, or it is a sham without legal standing.

The personhood is a creation of the state. Unlike a natural person, it exists for the convenience of others. There is no right to life. No right to vote. And since the corporate person is incapable of faith, as it is incapable of emotion, there is no conceivable right to religious liberty.

The owners of Hobby Lobby may decry what they see as sinful or objectionable in society, including the sexual activities of their employees. But the business corporation they asked the state to charter is not an extension of their own persons, and the Hobby Lobby decision is a political one that allows certain owners the privilege of reaching into their corporations in a way rightfully denied to others.

No, they didn’t

Khaled al-Qazzaz, an imprisoned official from the Morsi government overthrown by Egypt’s military a year ago, asks in an article smuggled from prison, “Why are you so silent about me?”

He’s right to ask. As the readers’ comments make clear, the Muslim Brotherhood did not enjoy much popularity in the West, nor, probably, should it have. But that is beside the point. The US is about to restore military aid to Egypt, after that country went from Mubarak’s autocracy to Morsi’s elected government, and then to General Sisi’s military coup and the slaughter and arrest of political opponents. We will probably restore aid with a resigned shrug and some lame mumbling about human rights.

Dick Cheney has been making the rounds again, this time accusing the Obama administration of “abandoning” Iraq. It’s an election year, and it’s not surprising to see partisans take to the talk shows to stump for their side and denounce the opposition, but Mr. Cheney adopts the persona of the wise old policy hand lecturing the irresponsible Obama, as well as his ex-Secretary of State and presumptive presidential candidate Hillary Clinton. It’s not at all clear whether Cheney himself could have rolled Iraq’s Prime Minister Maliki into granting immunity to US troops and thus prolonging their presence, but it’s a good bet that the institutions of Iraqi government would not have benefited from the experience.

And this is the point. Democracy is about institutions. Elections and constitutions are important, but without functioning institutions they are window-dressing. The institutions of Iraq’s democracy do not function, and the institutions of Egypt’s short-lived one were not permitted to.

It is especially poignant that we in the US were persuaded by leaders like Cheney to pay such a high price going to war in the name of democracy. You don’t have to dig deep in our own history to grasp the importance of democratic institutions; our own failed disastrously 75 years after the Constitution was ratified, leading to years of blood-letting and the grinding, catastrophic defeat of Old Dixie.

The fact that we don’t much care for Sunnis in general, or the Islamists of the Brotherhood, should not be an excuse to turn our backs on democratic institutions. If we do indeed care about democracy, then we’d better be prepared to deal with people we don’t like in order to support the growth of functioning institutions. Otherwise, we hang a leering epitaph over thousands of US dead: “They died for Dick.”

A laboratory for democracy?

ISIS-fatigue is setting in.

News stories are dropping out of the headlines and lower down the page, or relegated to the “World” section, even as one crack after another appears in what was supposed to be the Iraqi state. Kurdistan took over Kirkuk and started doing business as though it were a sovereign state. The Maliki government explicitly recruited Shiites to defend Baghdad, further alienating Sunnis, until Moktada al-Sadr (remember him?) recently declared that his Shiite followers in the Mahdi Army would not answer to the central government.

Maliki looked to Iran for support, and Secretary of State Kerry apparently put out feelers in that direction. Now Saudi Arabia is warning Iran off.

Tens of billions of dollars in equipment and training for tens of thousands of soldiers in the Iraqi army were not enough. And before you blame Iraqi soldiers for the failure, consider they have been fighting for months, ignored by Western news media, while their commanders were replaced with inept Maliki loyalists and their cause apparently abandoned by the same Maliki government now pointing its finger at them.

“Political power” is something we in the West hold in disdain. (See the Netflix series House of Cards.) Beyond achieving office and steering legislation for their campaign donors, it is something our politicians regularly misunderstand and neglect. Look at Iraq. This is what the lack of political power looks like.