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Two Links on Political Economy

Friday, August 19th, 2011

That are complementary:

Fabius MaximusOur fears are unwarranted. America is in fact well-governed.

….America is in better shape than Europe and Japan.  We have good demographics, sound fundamentals, relatively easily solved problems, and no powerful enemies.  Why the constant sense of crisis?  QE2, hyperinflation, climate armageddon, Obama the socialist, AIDS, alar on apples, jihadists, debt, swine flu – a constant drumroll of doom, explained by Peter Moore in “The Crisis Crisis” (Playboy, March 1987).   Answer:  elites govern a weak people by exploiting their fears.  For example, look at the “government is broke” panic.

  • The Federal government’s net debt is only 2/3 of GDP, well below the 100% of GDP “red line” (that Italy reached many years ago).
  • The short-term deficit is mostly the result of the recession.  The medium-term deficit results from the Bush tax cuts.
  • Social security’s funding gap is small vs. GDP and easily fixed.
  • The massive funding gap is mostly Medicare, easily fixed by adopting features from the mixed public-private systems in Europe.

Panic pushes Americans to allow cuts to popular social services plus increased and highly regressive taxes.  No matter who wins, after the 2012 election our representatives will implement the necessary policy changes:  raising taxes, cutting expenditures, rebuilding our infrastructure, and beginning the long process of reforming health care.  It will be another morning in America.  There is no crippling polarization, just distracting noise masking a consensus between both parties about the key points of economic and foreign policy.

We do not see this long-standing pattern (see the previous post for details) because our collective OODA loop is broken (see section 6 here).  That makes us easier to lead.  Relying on wealth-based elites to run the country has a cost.  They take a large share of the pie; we take a small slice….

Global Guerrillas –JOURNAL: Global Financial Cancer

….A couple of years ago, I wrote that the underlying structure of the global financial system was a “bow-tie.”  Here’s what I said (it’s worth going back and reading the entire article and this paper on bow-ties from John Doyle at Caltech):

If we look at this new global system from a distance, its architecture is something called a bow-tie. This is a universal control system architecture that underlies complex systems from the Internet to cell metabolism.

Bowtie

What is a Bow Tie?

The bow-tie is a very powerful approach to organizing a complex system (it’s a system design that is used by controls engineers.)  Visually, it starts with complex inputs (the left side of the bow-tie), boils them down into simple build blocks (the knot), which then allows the construction of complex outputs (the right side of the bow-tie….

….Unfortunately, as I mentioned in the earlier article, bow-ties are vulnerable to organisms that attach themselves to the knot at their center (like the way cancer uses the body’s metabolism system).  These organisms relentlessly use the bow-tie’s knot to for selfish ends (rapid growth).  The end result is typically death for the system.  My suggestion was that the instability we were seeing in the financial system was an indication that it had been co-opted by a malicious, self-serving organism.

Of course, at the time there wasn’t much data to support this systemic analysis.  That has been rectified with a new paper, The Network of Global Corporate Control by Vitali et. al. from ETH in Zurich.  This paper finds, through extensive network analysis, that a small group of tightly intertwined financial institutions control the bow of the global financial system.  It is in effect, the world’s first super-organism….

They are both right. Probably not perfectly, the American economy, even more the world’s, is too complex a subject, but right enough.

FM is right that the emerging class of people I have been calling “the Oligarchy” the past couple of years do not intend to deliberately implode the system that is working outrageously to their benefit. They are currently in the stage of trying to come up with an arsenal of tax-farming schemes that will pass political muster (i.e. – not provoke uncontrollable, “Arab Spring” street demonstrations or a successful populist electoral revolt  that would eject their sycophants from government en masse in a single election) and are quietly, methodically and strategically neutering the capacity of the populace to resist their rule over the long term. It is there that we see seemingly unrelated measures as the coordinated political attack on public education and university education, restrictions on the ability of citizens to get courts to review arbitrary actions of Federal agencies, imposition of laws to permit total surveillance of US citizens and acquisition of their personal information and so on.

The elite, who are not completely cohesive or formally organized, are supremely confident in their ability to manage the technocratic economy they are putting into place, or if bumps in the road appear, to squeeze sufficient new leverage from the populace through inflation, devaluation and other forms of expropriation. Unfortunately, I am not confident that these folks are nearly as competent as they imagine themselves to be. Nor am I sure that the global system that they have built, a high-performance, deeply complex, ultra-leveraged, financial sector dominant political economy isn’t as fragile and dangerously unstable as people like John Robb and Nassim Nicholas Taleb have maintained it is. The system might not just crash, it could crash to extreme depths with unprecedented speed with unforseen consequences (financial systems also ensure the reliable and continuous logistical flow of *food* and *power* to population centers).

The Debate over the Influence and Extent of “Realism”

Tuesday, August 16th, 2011

 Kudos to Dan Trombly of Fear, Honor and Interest. Why?

First, for drawing attention to the debate between Dan Drezner and Anne-Marie Slaughter over, hmm, “Real-world Realism” in American foreign policy:

Dan DreznerMeet the new foreign policy frontier…. same as the old foreign policy frontier

….Well, this is… this is… I’m sorry, I got lost among the ridiculously tall strawmen populating these paragraphs.   I’ll go out on a limb and posit that not even Henry Kissinger thinks of the world the way Slaughter describes it.  Just a quick glance at, say, Hillary Clinton’s recent speech in Hong Kong suggests that actual great power foreign policies bear no resemblance whatsoever to that description of “traditional foreign policy.” 

Slaughter knows this very well, given that she was Clinton’s first director of policy planning.  She also knows this because much of her writing in international relations is about the ways in which traditional governments are becoming more networked and adaptive to emergent foreign policy concerns.  

Rebuttal time…..

Anne-Marie SlaughterThe Debate Is On! A Response to Dan Drezner

….I’ll take that bet. I think it’s exactly how Henry Kissinger still thinks of the world. Indeed, he has just published a book on China — of course, because from the traditional realist perspective China is by far the most important foreign policy issue in the 20th century, as it is the only possible military and economic competitor to the United States. Hence, as realists/traditionalists never tire of repeating, the U.S.-China relationship is the most important global relationship of the 21st century: what matters most is ensuring that as both nations pursue their power-based interests they do not collide catastrophically. Never mind that an avian flu virus that is both fatal and aerosol-borne arising anywhere in Asia could do far more damage to global security and the economy than China ever could — just see the forthcoming movie Contagion.

The second reason for giving Mr. Trombly props is that his excellent post in response to the above was a lot more interesting and substantive than their pleasantly jocular and Friedmanesque exchange:

Old School realism and the problem of society

….Waltz cares about states because states, in the time periods he examines, are the primary bearers of power. Power, not the state, is likely the more long-standing differentiation between the liberal/idealist and realist schools of international affairs. Realists generally care more about who has power, and particularly coercive power, because in the realist view, it is the power to control – not to collaborate, connect, or convince – which is the final arbiter and source of other forms of  socio-political-economic behavior.

For most of the history of thinkers identified with realism, the state did not exist, nor did the conception of the state as a unitary actor. Thucydides, long identified as one of the fathers of Western realism, was not a Waltzian structural realist in the slightest. As most early realists did, he cited the origins of political behavior in irrational and rational drives, which originate in the hearts and minds of men. There were no states in Thucydides’s day, but city-states, empires, and various other forms of political organization which did not survive to the present day. Thus one had to be quite conscious not just of particular parties and factions, but even individuals, who, in a polis such as Athens could completely upturn the designs of the Athenian state. In his description of the varying governments and systems of organization at play, Thuycdides actually shows a keen awareness of how regime types and the social composition can influence international politics, but only insofar as it involves the exercise of power. The exchange of goods, culture, and ideas matters far less to him. Slaughter does offhand mention that an Avian flu could kill far more than a war and be more likely. Interestingly enough, the plague of Athens does play an important role in Thucydides’s history

….This pessimism about the dangers of those lacking political virtue, or restraint of their passions, from acquiring power colors, in one way or another, much of the subsequent 2,500 years of realist thought. Ultimately, the interactions and aims of the various interest groups that Slaughter describes, and Drezner dismissed, are not necessarily prescriptively ignored but the subjects of active disdain, fear, and scorn

Much to like in this fairly lengthy post, which  I recommend you read in full.

Now for my two cents.

First, as a factual matter, it would not be hard to establish that Dr. Slaughter is correct and Dr. Drezner is not that Henry Kissinger does think like that. He most certainly did while he was in power, as is amply recorded in the National Archives, Kissinger’s memoirs and secondary works by historians and biographers who made Kissinger their subject. To all appearances, Brent Scowcroft, Kissinger’s protege thinks the same way, as did Kissinger’s master, Richard Nixon, whose private remarks regarding the unimportance of ephemeral actors to geopolitics were brutal. The UN, for example, Nixon dismissed as a place for “just gassing around” and Nixon was happy to use the UN (and George Bush the Elder) as unwitting props in his China Opening.

Policy makers do not think like IR academics do, even when they are IR academics like Dr. Slaughter or Dr. Kissinger. They don’t have the time or luxury of remove from events. The cool, detached, analytical, Harvard intellectual who wrote Nuclear Weapons and Foreign Policy became the emotive, egoistic, domineering, slightly hysterical, bureaucratic operator and diplomatic tactician as National Security Adviser. I suspect a six days a week, sixteen hour days of crisis management culture as Policy Planning Director at State likewise tempered Slaughter’s time for theorizing speculations.

That said, there is some room present for Dr. Drezner’s skepticism and Mr. Trombly’s “active disdain, fear and scorn”of non-state actors (which I think is a spot on gestalt of the Metternich-worshipping Henry the K).

The state as an organization of coercion and defense is unrivaled in human history by any other political form except the tribe. The state is fine-tuned to be a beast of prey and open challeges to the state, in all it’s panolpy of might, without a long preparatory period of eroding it’s legitimacy and attriting it’s will to power, seldom turn out well unless the challenger is another state. Non-state actors who challenge state authority tend to survive and thrive initially only by being elusive, deceptive, adaptive, faster and by inflicting moral defeats until they accumulate enough armed power to co-opt, thwart, deter or topple the state by force. This requires the challenger engaging the state in such a way that it habitually reacts with excessive restraint punctuated by poorly directed outbursts of morally discrediting excessive violence ( see Boyd’s OODA Loop)

When non-state actor challengers gain sufficient political momentum and break into a full-fledged armed insurgency, a dangerous tipping point has been reached because insurgencies are generally very difficult, expensive and bloody to put down, often representing a much larger pool of passive political discontent. The advantage begins to turn to the challenger because the mere existence of the insurgency is itself an indictment of the state’s competence, authority and legitimacy. Some states never manage to regain the initiative, slipping into state failure and co-existing with the insurgency for decades or being ignominously defeated.

We live in an era of state decline, or at least an era of erosion of the state’s willingness to use force in self-defense with the unconstrained savagery of a William Tecumseh Sherman or a Curtis LeMay. While overall, the zeitgeist favors the non-state actor, challenging the state a much harder trick when it is ruled by a charismatic sociopath, an authoritarian lunatic or when the machinery of security is organized on the basis of extreme and homicidal paranoia. Very little political “room” exists in such circumstances for non-state actors of any size to emerge because the state has used terror to atomize society and dissolve natural bonds of social trust; dissidents, if they are to be effective, often must rely upon external support and patronage.

This is not to say that the power Dr. Slaughter commends, to “collaborate and connect” is unimportant. Far from it, as it represents a very formidible long term threat to the omnipotence of states by permitting a highly networked and wealthy global civil society to self-organize to check their power. At the inception though, “collaboration and connection” is very fragile and vulnerable to state interdiction. Representing oneself as a political challenge to the state before power is acquired to any significant degree is unwise; if empowering civil society in tyrannies through “collaboration and connection” is the goal of the USG, it ought to be done under the radar with plausible pretexts and without an obvious affiliation to American sponsorship.

That would only be…..realistic.

Descent into Barbarism

Wednesday, August 10th, 2011

London burns for four days as UK authorities dealt timidly and uncertainly with semi-organized swarms of brazen thugs, causing rioting to spread to other cities. What have we seen so far?

* The British government and police acted with moral uncertainty in the face of violent challenge from swarming tactics by “underclass youth” rioters.  The BBC was filled with interviews of victimized citizens complaining about how police were unwilling to intervene to stop acts of looting, assault and arson. Police behavior fed the cycle of rioting and encouraged fence-sitters to join in and swell the ranks of the mob, as did early talking head comments in the British media that argued that the rioters were “justified”

* The British government was politically paralyzed by the crisis and needed three days and a Cabinet meeting to begin to organize an effective anti-riot strategy, distribute proper equipment, summon additional manpower, change police ROE and marshal a rhetorical narrative against the rioters.  All the halmarks of excessive top-down control by out of touch technocrats and politicians.

 John Robb summed up this kind of anti-leadership beautifully in his review of Rebecca Solnit’s A Paradise Built in Hell  :

…In contrast to the people on the ground, she shows that the only people that actually do panic during disasters are the elites — from those with wealth to those running the government’s response (I’m not talking about the first responders actually on the ground doing good work).  They panic over the loss of control a disaster brings.  This often results in extreme actions that only serve to make things worse: from martial law authorized to use deadly force against looters (often just people trying to survive the situation) to arbitrarily hearding people into locations that aren’t able to support large groups of people.  

What This Means

The lesson here is that during an extreme disaster, the people you may most need to fear are those in charge, particularly if their motives are focused on protecting elite interests put at risk by the disaster

* The Cameron government’s legitimacy is at risk, being currently blamed for everything connected to the riot from the underlying “root causes”, to their initial total lack of interest in defending ordinary Britons to the bad impression made of having senior ministers being on vacation while the capitol of the UK was ablaze. Earnest and repeated assertions by government officials that no political or racial motives were behind the rioting conflicted with the reality being broadcast live by the government’s own news service in the first hours and days of the riot.

Handling a riot properly is state power 101. The Prime Minister has about two days to turn this situation and the political perceptions created around or he will begin an irreversible downward spiral to an early retirement.

Book Review: The Profession by Steven Pressfield

Monday, July 25th, 2011

The Profession by Steven Pressfield

We should begin this review with “Full Disclosure“:

I just finished reading The Profession by Steven Pressfield, which I enjoyed a great deal. Steve sent me an earlier draft doc of the book and I consider Steve a friend. Furthermore, in an extremely gracious gesture, Steve granted me (or at least zenpundit.com) the novelist’s equivalent to a walk-on cameo appearance in his book. Therefore, if you the reader believe that I cannot review this book objectively…well….you are right. It’s not possible 🙂 . Here are some other reviews by Shlok Vaidya, Greyhawk of Mudville Gazette and Kirkus if you want greater impartiality.

Nor am I going to delve into the mechanics of the plot structure and action sequence in The Profession. For one, I think too much of the story in a review of a work of fiction spoils the enjoyment for the group of readers who would be most interested. And you can get the blow by blow elsewhere.

Instead, I would like to draw your attention to how Pressfield has written this novel differently. And why that matters.

There is plenty of action in The Profession and the book really moves. It is violent, but not at a Blood Meridian level of cruelty and the murky political intrigue that surrounds the hero, the mercenary’s mercenary and “pure warrior” Gilbert “Gent” Gentilhomme, is a nice counterpoint to physical combat and technical military details. Many people will enjoy the novel on this level and The Profession would make for an exciting action film. Or perhaps a series of films along the lines of The Bourne Identity or those Tom Clancy movies with Harrison Ford. All well and good. But that is not why The Profession is worth reading – that’s merely why it is fun to read.

What surprised me initially about The Profession was how unlike Killing Rommel it was. Killing Rommel also had war and adventure, but it was a deep study in the character development of Chap, the protagonist, who had enough of a textural, cultural, authenticity as a young gentry class British officer of the WWII period as to make Killing Rommel seem semi-biographical. As a reader, I didn’t much care if Chap and his men succeeded in killing Rommel, only that I would be able to continue to see the story unfold from Chap’s perspective. Many artists believe characters and character interaction are the most important element in a story, from Saul Bellow to Quentin Tarantino. Their stories are captivating even though their narratives are not always particularly logical or centered on a grand conflict.

The Profession is not like that at all. In my view, Pressfield turned his creative energies, his knowledge for military affairs and his formidible ear for history away from character development and toward theme. This difference may or may not explain his own reports of difficulty in wrestling with this novel.

Reaching back to the lessons learned from late Republican Rome, Thucydides, Xenophon and seasoning it liberally with Machiavelli, Pressfield’s 2032 near-future is also jarringly allegorical with America of 2012. Like Rome of the 1st century BC or Athens after it’s defeat in the Peloponnesian War, America in The Profession is strategically paralyzed, politically polarized and teetering on the precipice of decay and decline. These historical inspirations have been mashed up with a dystopian 4GW world, filled with mercenary PMCs like Force Insertion and The Legion, terrorists, drones, tribes, criminal corporations and and a devious and cowardly global financial elite. A future more evenly distributed from the present.

The antagonist against whom the plot is structured is not the story’s nominal villain terrorist, but Gent’s Homeric father-figure, former Lieutenant General James Salter, USMC,  “the crawling man” who was martyred, disgraced, exiled and redeemed as the new master of Force Insertion’s Mideast deployed “armatures” (combined arms divisions) and the book’s geopolitical apex predator, who boasted:

” I was obeying a more ancient law” 

This marks a drastic shift in Pressfield’s use of characters from people existing in themselves with humanistic nuances to their use as philosophical archetypes to better express the theme, more like the technique of Fyodor Dostoyevskii, Victor Hugo or Ayn Rand.

The interplay between the kinetic Gent and the increasingly totemic Salter elucidates a theme that is creating tectonic political shifts in America and the world; a theme which is expressed explicitly to Gent at one point by the ex-Secretary of State, Juan-Estebaun Echevarria. The ex-Secretary plays Cicero to Salter’s Caesar, but Gent is ultimately cast in the role of a very different Roman by the manipulative Salter. Pressfield, in honing the various characters, including AD, Maggie Cole, El-Masri and others, is also drawing on Alcibiades, Critias, Livy, Homer, Robert Graves, Joseph Conrad and the pattern of mythic epics. Salter is at once a pagan chieftain and a philosopher-king, a civilized Kurtz or a barbaric John Galt, who after continuous dissembling, in a brutally honest speech, gives his followers, his enemies, Gent and even himself, no opportunity to morally evade what he has become or his reasons for what he proposes to do. A speech that resonates with the negative trends we see today.

The Profession is a cautionary tale outfitted in kevlar.

Possible Shifts in AfPak

Tuesday, July 12th, 2011

afpak.jpg

On Pakistan policy, credit where credit is due: the Obama administration has found the stones to respond to evidence of systemic and brazen bad faith on the part of our Pakistani “allies” and show their displeasure by witholding $ 800 million dollars in aid from Islamabad. There are already squeals of Pakistani unhappiness at this modest decrease of aid that all too frequently gets diverted to preparing to make war on India or, for that matter, on American soldiers and Marines. Former dictator General Pervez Musharraf, who cannot go back home to Rawalpindi for fear his brother officers will assassinate him, told a well appointed crowd in Houston that the aid cut “will be disastrous….if Pakistan is weakened, how will it fight terrorism?“.

Cynics might note that we could replace “fight” with “fund” in the former Pakistani ruler’s question and achieve greater historical accuracy.

On Afghanistan, it might be advisable for the new American commander, Lieutenant General John Allen, in carrying out his extremely difficult mission of “Afghanization” and “punitive raiding” the Taliban, to first ponder history and  “Remember Herat“.

In 1979, before the Soviet invasion of Afghanistan, the entire garrison of Soviet advisers in Herat was slaughtered, including the dependent women and children, by an angry mob that was aided by the local Afghan Communist Army units who, led by Ismail Khan, conveniently revolted and turned on their Russian allies. If British military history is more to Lt. General Allen’s taste, the Afghans massacred British garrisons in Kabul twice in the 19th century, Major Cavagnari’s in 1878 and that of Sir William McNaghten and Sir Alexander Burnes in 1841, though most of the British died to all but the last man on the retreat to Jalalabad in 1842.

The cape wearing, election-stealing, lotus-eater whom we thanklessly prop up, may be more incompetent than Nur Mohammed Taraki and less legitimate a client than Shah Shuja, but he has a demonstrated talent for inciting anti-western violence exceeded only by his enterprise in looting aid money. Is crazy Karzai above lighting a match to a tense situation the US military itself has already described as a “rapidly growing systemic threat“? Not in my view.

When the American drawdown begins in earnest, General Allen will need to watch the backs of his troops

ADDENDUM:

Ahmed Wali Karzai, the notorious fixer and feared enforcer of the Afghan regime and the brother of President Hamid Karzai was assassinated today. The Taliban claimed credit, but AWK has too many enemies to be certain yet.


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