June 03, 2003

Time to Bang My Head Against the Wall Once Again

Back when George W. Bush "won" the presidential election of 2000, I said that there was at least one bright spot: under the Clinton administration making progress on freeing up world trade had been a very hard slog. Republican administrations, I said, have a much easier job advancinge the free trade ball because of their different constellation of key domestic interest groups they must appease.

I was, once again, an idiot. I had no grasp of how incompetent and how substance-free George W. Bush and the key members of his team were. I really don't understand why Bob Zoellick hasn't quit his job as Special Trade Representative yet: he could make more money, enhance rather than diminish his reputation, and do more to put pressure on George W. Bush and company to liberalize trade from outside the administration than it appears he can from inside.

Today's Wall Street Journal has some details on the latest missed opportunity:


WSJ.com - World Leaders End Summit; Farm Funds Stymie Progress: EVIAN, France -- While world leaders gathered here insisted consumers and firms should be more optimistic about the global economy, they failed to make headway on an issue that would make them feel that way: reviving the trade liberalization talks.

Heads of state at the annual Group of Eight economic summit hoped to show that they could overcome the acrimony over the Iraq war and cooperate on key economic matters, namely breathing life back into the so-called Doha round of trade talks, which focus on development issues such as agriculture subsidies.

Despite the smiles, handshakes and statements of common views on a range of issues, this didn't happen, raising concerns the talks will remain deadlocked and miss a series of impending deadlines.... "Unfortunately I have to admit that. Our American friends agreed Europeans should lower their forms of agricultural support, but not their own forms of support."

Developing countries, which are heavily dependent on farming, have argued that reducing agriculture subsides in developed countries would boost their impoverished economies.... "This was a missed opportunity," said Douglas Irwin, a professor of economics and a trade expert at Dartmouth College, in New Hampshire. The U.S. could have told the Europeans it was willing to cut its farm subsidies if the Europeans did the same, or indicate it was mulling legislation to undo some of the support, Mr. Irwin said. "This wouldn't have cost the Americans anything and would have created some good will," Mr. Irwin added. "But they didn't want to do that for some reason."...

Posted by DeLong at June 3, 2003 11:52 AM | TrackBack

Comments

There is simply no Republican constituency that feels an interest in encouraging trade, other than for oil or mineral resources, with the developing countries of Africa or Latin America. As long as there are no industrial lobbies working for increased agricultural imports from Brazil or Kenya or Ghana, there is no chance the Administration will act on principle.

Posted by: anne on June 3, 2003 12:26 PM

GWB can't afford to lose the vote of Middle America if he's to win re-election. Killing farm subsidies is one sure way to do exactly that...

Posted by: Unseelie on June 3, 2003 12:37 PM

Obviously you don't feel much pressure from Indian economics professors looking for work at Berkeley. So I suggest driving south into Sunnyvale and asking a few of those former free-trade-online-libertarian-type engineers how they feel about it NOW. Don't worry about what time of day you drive down - it's not like they have to go to work or anything.

Posted by: IssuesGuy on June 3, 2003 12:51 PM

Why are we still issuing special work visas for Indian technologists? This seems far different than encouraging trade liberalization coupled with aid when workers are displaced because of trade.

Posted by: jd on June 3, 2003 01:01 PM

Hmmm... what I wonder is, how widely distributed is special interest, protectionist favoritism? Farmers, of course, are subsidized, and steel workers, and a lot of things, but are most industries left out of the loop?

I mean, the question is, is the problem that we're all trying to get special favors from the feds and succeeding, but collectively in a conspiracy to keep ourselves poor and stupid even as we individually accrue porky gains from the government, or are a few, select special interest groups getting concessions from the government as the rest of us are getting screwed.

I don't know which is worse. With the first scenario, we COULD make Kaldor-Hicks trade/subsidy improvements in a such a way that enough people get better off at once that it would be politically possible to do so through compromises, but then we're even bigger asses for not being able to do so. If the second's true, at least we have an excuse for following such (collectively) irrational policies without looking like idiots, but at the same time, it looks like it's impossible (or very hard) to change.

I have a feeling that for the near-ish future, the ideals of free trade and capital mobility will fade into the background politically and we'll enter a more militaristic, protectionist age. Then again, I'm so uninformed that it gives me some comfort that I'm feeling pessimistic since I'm so likely to be wrong in my predictions.

Posted by: Julian Elson on June 3, 2003 01:23 PM

I personally consider what Bush did in Afghanistan and Iraq the Right Thing, but it is indeed starting to look like the stopped clock was right twice this administration.
-------------------
Oh yes, those H1-B's are still rolling in, they're still replacing whole teams at Motorola in Phoenix with them. The attitude seems to be "It's a tech downswing, so we don't have to pay folks as much; but hey, those H1-B's can't hiccup funny or we can get them deported."

The only thing better than cheap labor, is indentured servants!

H1-B's made sense to encourage professors in under-taught languages to move here, but ye gods, how many of us computer folk are out of work?

I'm generally in favor of free trade, including in labor markets, but H1-B's are not free market. When your employer can fire you for no reason, and you then get deported (the case with H1-B's), it's damnably close to slavery.

--------------------

And if Clinton would have paid sufficient care to terrorism and foreign policy in general, I would have been more than happy for him to pass NAFTA, do nothing else and sleep with whoever he pleased and repeal the 22nd Amendment in the bargain.

The more I read this site and things linked from it, the only difference on domestic policy I have with Brad and most of the denizens here is how large govt. should be, not on how to manage whatever size it is determined is right by the voters.
-----------------------
Hell, I'm a naked Imperialist, and fiscal and civil rights issues are making me start to loathe this administration (Christ, at least the Romans had "Romanus civus sum"; as Dr. Pournelle would say, what is the friggin' POINT of Empire that grants no benefit to it's citizens? That's what I'm afraid the Bushes are building, Incompetant Empire).

Posted by: David Mercer on June 3, 2003 01:57 PM

From a security standpoint, it doesn't seem wise to move the majority of US food production off shores. It seems even more foolish to put it in the hands of unstable African countries. There needs to be a balance between open trade and self sufficiency in this area.

I am sure the above reason has absolutely nothing to do with any administration's farm subsidy policy. Especially considering a large portion of agricultural subsidies wind up in corporation pockets. ADM to name one.

Posted by: james on June 3, 2003 02:06 PM

How do E.U. ag subsidies and U.S. ag subsidies compare? Are they of comparable size?

Posted by: back40 on June 3, 2003 02:18 PM

To be clear I was talking about the export of jobs, not H1B visas. I don't see how free trade benefits non-CEO Americans if it is not accompanied by assurances of labor and environmental protections in the countries we trade with.

Posted by: IssuesGuy on June 3, 2003 03:10 PM

Again I am surprised that there is a surprise. Why this optimistic first approximation? It isn't just an American cultural thing, because the same optimism out of nowhere was shown by the British Max Hastings, in another context in another post. Why on earth don't people start as I do, extending the new people rope but looking at them with clear eyes and no expectations? Any assumption about their capacities and intentions is unfounded, a working hypothesis at best, until we know more. Sure, we should let them start doing things as otherwise we just lock everything up - but why project our hopes and fears onto them?

Posted by: P.M.Lawrence on June 3, 2003 04:07 PM

I spotted an article in the Independent about this issue 2 days ago. I had my doubts about its' veracity, but it appears the article was indeed correct.

http://news.independent.co.uk/world/politics/story.jsp?story=411560

The Independent article seems to throw some light on the motivations behind what might seem to have been a pointless waste of a good opportunity. There isn't anything very mysterious about it at all - it was just a good chance to "teach" Chirac a lesson (on the backs of African farmers).

Posted by: Abiola Lapite on June 3, 2003 05:00 PM

>Obviously you don't feel much pressure from Indian economics professors looking for work at Berkeley

On the contrary, there is intense pressure for jobs from "foreign" economists, and India has been a traditional exporter of talent. I don't know the numbers at Berkeley but it is not at all uncommon for economics departments at major research universities to have large numbers and often majorities of non-native economists on faculty. Foreign students squeeze out Americans for positions in graduate schools, fellowships, and faculty positions. And because the foreign applicants are better than the Americans they displace, those graduate programs and departments are better for it.

Posted by: David Hummels on June 3, 2003 05:11 PM

That cotton thing - it's usually bad for the poorest elements in a country when export cash crops like coffee or cotton do well; that sort of crop draws on other resources, like land or water, and the older institutional strucures don't always spread the costs and benefits evenly.

Yes, farmers in those countries do indeed benefit in aggregate (not counting as farmers people who get squeezed off the land). However the marginalised usually find themselves with changing opportunities (i.e., fewer opportunities until the transition is complete), and with more cash-expensive food sources and fewer offsetting subsistence resources (which don't show in cash income measures of poverty).

That's a typical and not an inevitable scenario, and it does lead to eventual improvement for either the survivors or their remote descendants, so it's very mixed. But it can't be ruled out on the grounds that "it didn't happen that way for us". Actually, it did.

Posted by: P.M.Lawrence on June 3, 2003 06:09 PM

The rural way of life is under attack (allegedly) - and the protest movement is simply remarkable. The protest against banning the fox hunt in the UK turned into a giant rainbow coalition of rural malcontents. Jean Bovet's granstanding and manure spraying is obviously to protect the French farmers. Examples abound in Canada too. I'm a little less familiar with the US details, but those subsidies are incredible.

IMO, agricultural policy is social policy - keep the people of the land on the land regardless of technology at home, costs of production in LDCs and other economic factors. It's pure politics.

Question is, what is the long-term cost of crushing agriculture in LDCs?

Posted by: Stephane on June 3, 2003 08:47 PM

Prof. Delong,

Rich industrial nations will get rid of agricultural subsidies as soon as I can take daytrips to the moon in my ethanol powered flying car. For God's sake we still have fricking mohair subsidies.


William Utley

Posted by: WIliam Utley on June 3, 2003 09:21 PM

Sooo, Brad's preaching that old time "free trade" religion again. Hmmmmmm...

One auspicious day (17 March 2003) not long ago, I tried SEVERAL times to shave some of the hair off of THAT hoary old chestnut (You can taste the proof of that hasty pudding under the heading:

"Why No Free-Trade First Downs?-- http://www.j-bradford-delong.net/movable_type/2003_archives/001192.html "

I'll be referring to that "topic" copiously AND exclusively in references to my own remarks which follow.)

Because it's important, I'm gonna roast that dogmatic politicaleconomic chestnut AGAIN--"by the numbers" this time--explaining and expounding upon but NOT revising my comments:

1.(A)
"Free trade?

Isn't that the thing that happens when some analyst/investment banker touts an overpriced, "globalized" telecom stock because he wants to get his kid into the best nursery school in town and HIS minders want to get out of it "at the top"?..."

Posted by: Mike on March 17, 2003 06:48 PM http://www.j-bradford-delong.net/movable_type/2003_archives/001192.html


It's no secret that the United States has been running "dual"--trade AND (Federal) budget--deficits for MOST of the years since Reagan's bunch "took" the White House. (THAT'S quite a "story" too: "The Election Story of the Decade", by Gary Sick; http://www.fas.org/irp/congress/1992_cr/h920205-october-clips.htm , but I digress)

What ISN'T so well understood is the plutocratic politics...

"INTRODUCTION

Almost ten years after Ronald Reagan left office as president, the legacy of his administration continues to be studied. What is almost indisputable is that the changes in public policy that were implemented during the 1980s were sweeping and marked a turning point in American domestic policy. Faced with increasing competition from overseas, American business found it necessary to alter the social contract. This would require a realignment of the political economy so as to weaken labor unions and the social safety net. In Reagan, the Right found a spokesman capable of aligning conservatives, centrists, and working class whites. With this coalition, Reagan was able to bring about a number of reactionary changes in public policy (Alford, 1988).

This paper provides an illustration of this co-optation...

...THE ECONOMY

In the aftermath of World War II, the United States experienced a period of dramatic economic growth. The industrial economies of Western Europe and Japan were by and large devastated by the war. As a result, American firms found little competition abr oad in an expanding world market. The implementation of the Marshall Plan under President Truman provided American goods and services on credit to the war ravaged economies. During this period of economic hegemony, American companies were able to make con cessions to labor in regard to wages and fringe benefits. Thus, the postwar political economy of the United States was characterized by relative peace between management and labor. With record corporate profits and rising standards of living, the United States government passed a series of liberal reforms throug hout the period. Among these reforms was the passage of the Civil Rights Act, various social welfare programs, the construction of the interstate highway system, and the deinstitutionalization of the mentally ill.

During the late 1960s and early 1970s, the rebuilt economies of Europe and Japan began to give American companies stiff competition in the world marketplace. The growth experienced by American firms during the previous two decades began to slow, and profit margins were deemed to be too low (Barlett and Steele, 1996; Gruchy, 1985). In order to increase profits, many American firms attempted to become more comp etitive by trimming labor costs through layoffs and the relocation of factories (Bluestone, 1990; Bluestone and Harrison, 1982; Gruchy, 1985; Harrison and Bluestone, 1988; Moriarty, 1991; Perrucci et al, 1988; Sassen, 1991; Wallerstein, 1979). In addition , the reduction of corporate taxes was pursued with a renewed vigor (Barlett and Steele, 1994).

In order to reduce corporate taxes, it was necessary to reduce the size of the welfare state. This objective was carried out by the Reagan administration (Abramovitz, 1992). After taking office in 1981, the administration set out on a course to alter t he (relatively) labor sensitive political economy to be more business friendly. Reagan appointed anti-union officials to the National Labor Relations Board, "implicitly [granting] employers permission to revive long shunned anti-union practices: decertify ing unions, outsourcing production, and hiring permanent replacements for striking workers" (102). Reagan himself pursued such a policy when he fired eleven thousand striking air traffic controllers in 1981. Regulations designed to protect the environment , worker safety, and consumer rights were summarily decried as unnecessary government meddling in the marketplace (Abramovitz, 1992; Barlett and Steele, 1996). Programs designed to help the poor were also characterized as "big government," and the people who utilized such programs were often stigmatized as lazy or even criminal. With the help of both political parties, the administration drastically cut social welfare spending and the budgets of many regulatory agencies.

The new emphasis was on "supply side" economics, which essentially "blamed the nation's ills on 'big government' and called for lower taxes, reduced federal spending (military exempted), fewer government regulations, and more private sector initiatives " (Abramovitz, 1992, 101). Thus, to effect a change in the political economy, Reagan was able to win major concessions regarding social policy that continue today. By taking away the safety net, the working class was effectively neutralized: workers no lo nger had the freedom to strike against their employers or depend upon the social welfare system as a means of living until finding employment. Business was thus free to lower wages, benefits, and the length of contracts. The overall result was that the av erage income for the average American dropped even as the average number of hours at work increased (Barlett and Steele, 1996; Schor, 1992).

It should be understood that a realignment of the political economy did not require the complete dismantling of the welfare state -- although ideally this would be the case. Rather, the welfare state had to be rearranged in a way favorable to business. The concept of the new federalism would perform this function. The new federalism was an outgrowth of the debate over the appropriate role of the federal government relative to that of the states. While liberal Democrats argued that social welfare progra ms and governmental regulation fell within the purview of the federal government, many conservatives argued that such powers should be reserved for the individual states. Since the new environment supported conservative ideologues, the federal government was seen to have improperly assumed powers it had not been granted in the Constitution. The new federalism required that individual states create their own social policies tailored to their own particular needs. Thus, each state would have its own regulat ory and social welfare system. As each state tried to pay for such programs, this would mean fifty different state taxation policies. This effectively pitted states against each other in competition for the most favorable business climate..."

"Ronald Reagan and the Commitment of the Mentally Ill: Capital, Interest Groups, and the Eclipse of Social Policy", Alexandar R Thomas: http://www.sociology.org/content/vol003.004/thomas.html

...AND the DECEITFUL, if not down-right DELUSIONAL, "thinking" BEHIND all that red "Free Trade" ink (I'll leave the subject of the BUDGET red ink alone--for now)...

[This paper dates from early 2000 so "the numbers" are incomplete. But the undrerlying economics upon which the discussions, arguments and conclusions rest are "axiomatic"--and have been for decades, if not centuries...]

1. The United States has a balance of payments deficit worth nearly 4 percent of GDP and negative net foreign assets (or foreign debt) worth nearly 20 percent of GDP. If U.S. growth is sustained in the medium term, it is quite likely that the balance of trade in goods and services will not improve. The United States is the only major country, or country "bloc," to have a substantial trade deficit and this is proving of great advantage to the rest of the world.

2. If the balance of trade does not improve, there is a danger that over a period of time the United States will find itself in a "debt trap," with an accelerating deterioration both in its net foreign asset position and in its overall current balance of payments (as net income paid abroad starts to explode). Such a trap would call imperatively for corrective action if it is not at some stage to unravel chaotically.


"Interim Report: Notes on the U.S. Trade and Balance of Payments Deficits", Wynne Godley; http://www.levy.org/docs/stratan/stratan.html


1.(B)

(You don't have to answer that, if the answer might tend to incriminate you ;?)..."

[Also] Posted by: Mike on March 17, 2003 06:48 PM http://www.j-bradford-delong.net/movable_type/2003_archives/001192.html

See, the deal is, while we have been pursuing a national macroeconomic "policy" of importing like there's no tomorrow for 23 years now, we've ALSO been exporting jobs--LOTS of jobs, entire INDUSTRIES, if you want to know the truth, AND the communities, populations, states, etc. they once served. But we've been exporting too, Armaments mostly, but also boatloads Wall Street's only "real" contributions to the global economy: hot air, blue sky and paper--LOTS of paper:

"...Balance of Payments Deficit as Net Investment

The current balance of payments, as it appears in Table 4.1 of the NIPA, is described as "net foreign investment." "Investment" in this context means nothing more than that foreigners are net lenders of the funds the United States must borrow to cover the excess of its spending over its income. It is clear from evidence presented to the Trade Commission that there exists an influential line of argument that would equate this "investment" with fixed capital formation in the United States that would not otherwise have happened. Hence, the argument continues, the deficit is benign because it leads to an enlargement of the capital stock, raises productivity, raises the U.S. growth rate, etc., etc.

This argument was made clearly, explicitly (and influentially) by Herbert Stein in an article published in The Wall Street Journal on May 16, 1989 ("Don't Worry about the Trade Deficit"). According to Stein, if foreigners had not been buying government bonds, U.S. residents would have had to buy them instead, so that there would have been correspondingly fewer funds available for domestic investment.

It is certainly true that if there were no deficit, total domestic expenditure would have to be lower absolutely, by the amount of the deficit, than it actually now is; some items of domestic expenditure would have had to be replaced by net exports. But there is no reason to suppose that any of this reduction in domestic expenditure--let alone the whole of it--would take the form of fixed investment. Aggregate demand could be the same in each case, so the general incentive to invest need not be lower. At the same time, in order to generate a switch of demand in favor of net exports, the exchange rate and interest rates would probably both have had to be lower than they have actually been--but these are both factors that would have tended to increase investment.

In the "alternative" position in which there is no deficit (which is to be compared with the present, actual situation), it has to be the case, by the balance of payments identity (B), that the financial surplus of the private and public sectors combined would be higher (by the full amount of the deficit) than at present. There would therefore be additional financial funds available from domestic sources (including the government) on exactly the scale needed to replace funds from foreign investors; foreign funds would no longer be forthcoming, but they would also no longer be needed.

Herbert Stein makes no mention of the fact that, since U.S. domestic expenditure has for years exceeded GNP by large and growing amounts, the United States has become "the world's largest debtor." Yet it is the cost of servicing this debt that is now the main cause for concern...."

ibid.

See? Now do you "get it"?

The "bad news" is: "rich" old Uncle Sam has been "hocking" the "family jewels", YOUR "family jewels", FOR YEARS.

The "good news" is: SOME people--ecomomists even-- are "on to him":

1.(C)

..."By the way, did anybody see this?


IMF-no clear proof globalization helps the poor

Monday March 17, 6:15 pm ET

By Anna Willard

WASHINGTON, March 17 (Reuters) - The International Monetary Fund sounded more like its critics on Monday when it admitted there is little evidence globalization is helping poor countries.

The IMF, which has often been the target of violent anti-globalization protests, in a new study found economic integration may actually increase the risk of financial crisis in the developing world.

"Theoretical models" show that financial integration can increase economic growth in developing countries, the research found, but in practice it is difficult to prove this link.

"In other words, if financial integration has a positive effect on growth, there is as yet no clear and robust empirical proof that the effect is quantitatively significant," the new report said.

An overview of the study, which was put together by four researchers including the fund's chief economist Kenneth Rogoff, describes the conclusions as "sobering"...."

http://biz.yahoo.com/rf/030317/economy_imf_globalization_1.html

[Also] Posted by: Mike on March 17, 2003 06:48 PM http://www.j-bradford-delong.net/movable_type/2003_archives/001192.html

But "bulls", being what they are, aren't scared of "the big bad wolf" howling now at EVERYBODY'S door....

1. (D)

..."P.S. I note the bulls were running again today. (Seemed just like old times--only lower: A LOT lower ;-)"

[Also] Posted by: Mike on March 17, 2003 06:48 PM http://www.j-bradford-delong.net/movable_type/2003_archives/001192.html

"The Great Depression was the worst economic slump ever in U.S. history, and one which spread to virtually all of the industrialized world. The depression began in late 1929 and lasted for about a decade. Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade. The maldistribution of wealth in the 1920's existed on many levels. Money was distributed disparately between the rich and the middle-class, between industry and agriculture within the United States, and between the U.S. and Europe. This imbalance of wealth created an unstable economy. The excessive speculation in the late 1920's kept the stock market artificially high, but eventually lead to large market crashes. These market crashes, combined with the maldistribution of wealth, caused the American economy to capsize...."

"Main Causes of the Great Depression",
Paul Alexander Gusmorino 3rd; http://www.gusmorino.com/pag3/greatdepression/index.html


[Three more of mine from that same thread--for the road:]

2.

"Free trade is a high-minded economic abstraction with a small-minded politcal obstruction.

Lets set up a 'toy economy' to illustrate the problem. Shall we?

Say Alcatraz is a tropical prison camp/country with lots of dirt roads, bananas and disposable, powerless peasants.

And say 'Zion' is a temperate industrialized state with lots of theaters, universities, hospitals, sanitation-transportation-communication (& etc.)'infrastructures', civil/criminal legal institutions and other such 'luxuries'--as well as a people who are justifiably proud (though not especially jealous or vigilant about) their hard-won prosperity and/or so-called 'rights'.

Now, say Zion's commercial elite grew tired of the ceaseless struggle with its surly employees and decided it could do a lot better by its capital if it moved the labor intensive part of its operations down to the 'business friendly climate' of Alcatraz and shipped its wares back to Zion. Say too, that the economic costs of relocation and shipping (as well as the political costs of bribes to the political 'elites' in both courntries necessary to make the scheme work) were small compared to the increased profits they stood to reap on the new arrangement.

How long would it take Zion to degenerate into just another Alcatraz?"

Posted by: Mike on March 18, 2003 07:16 AM http://www.j-bradford-delong.net/movable_type/2003_archives/001192.html

3.

"andres says:

'...much of the supposed improvement was in China and India, two countries which did not fully follow globalization prescriptions). At the same time, the need for corporations to secure resources leads them to lobby the state to project its power in previously stagnant regions of the world, but the inhabitants of such regions may not be happy. Thus we get Subcomandante Marcos, or less benignly, Osama Bin Laden. The resulting backlash from some of the dominant states then starts to undermine the political cohesion of the developed countries.

The current international political crisis resembles the start of WWI in so many ways that it's not even funny. It is very fortunate that there are no countries currently powerful enough to call the U.S. on its interventionism, though they can refuse to go along.'

Interestingly, [China] accounts for [approximately]$100 b/yr of the currently $400+b/yr US 'trade deficit.' ('Off-hand,' I don't know the India 'number' but I wouldn't be surprised if it was similar.)

Ironically, if 'professional Democrats' hadn't squandered the political opportunity (and economic resources) afforded them by the demise of the Reagan/Bush regime (and the end of the 'Cold War'), we might now be a whole lot farther along the road to a (more) mutually beneficial, sustainable, peaceful and prosperous international 'Hydrogen economy' AND a healthier, happier more 'cohesive' planet as well as 'body politic' here at home.

Unfortunately for EVERYBODY, the path of least (political) resistance was (and still is) to pander to the rich/powerful and propagandize the 'hoi poloi'...."

Posted by: Mike on March 18, 2003 07:26 PM http://www.j-bradford-delong.net/movable_type/2003_archives/001192.html

4.

"Jason McCullough writes:

'Why wouldn't Alcatraz's income go up?'

To which I reply:

Doubtless Alcatraz's trade surplus vs. Zion (and probably its GNP as well--depending on the vagaries of the two countries' tax laws, accounting gimmicks & etc.) would go up.

But why on Earth should anybody imagine the 'powerless, disposable peasants' of 'Alctraz' would realize even a significant fraction of the income lost to the hapless citizens of 'Zion'?

In fact, 'Zion's commercial elite's' entire 'small-minded' scheme depends upon the fact that they WOULDN'T....."

Posted by: Mike on March 19, 2003 01:28 PM http://www.j-bradford-delong.net/movable_type/2003_archives/001192.html

Posted by: Mike on June 3, 2003 11:16 PM

As between Alcatraz and Zion, there is another effect. Some of Alcatraz's improvements go out again as return on capital, depending on how much of its capital was actually supplied by Zion. To the extent that this represented real capital inflows generating real production increases, this was a fair deal. But a proportion was purely nominal, done by some of the extra production of Zion's fiat currency sent overseas ("exporting inflation"). When that sort of capital inflow happened, it was only Zion mobilising Alcatraz's own resources and getting revenue outflows in exchange.

This is not hypothetical. It was deliberately engineered by the Dutch when they set up their "culture system" in the East Indies, and it was present in Nazi Germany's financial exploitation of Vichy France and its possessions, just as it was in France's own exploitation of North Africa and of late 18th century European puppet republics.

Posted by: P.M.Lawrence on June 3, 2003 11:37 PM

IssuesGuy wrote: "Obviously you don't feel much pressure from Indian economics professors looking for work at Berkeley. So I suggest driving south into Sunnyvale and asking a few of those former free-trade-online-libertarian-type engineers how they feel about it NOW. Don't worry about what time of day you drive down - it's not like they have to go to work or anything."

Well, as someone who supports free trade (and free movement of labor!) *and* worked in the software industry here in Austin, I'll tell you that I still support these things.

You know, it is possible for people to hold to principled positions even when it affects them adverserly. Hard to believe, but true.

Posted by: Keith M Ellis on June 4, 2003 05:56 AM

True, Keith, but academia has barely begun to feel the effects of free trade/managed immigration. For example, bringing in 'professors' on special temporary visa's, moving whole departments offshore, or shutting down the government-funded research programs ('if it's worth doing, the market will pay for it'). The first is really unnecessary, due to adjuncts; the second would approximate what the 1970's were to manufacturing; the last would bring academia up to the present time.

Posted by: Barry on June 4, 2003 06:15 AM

P.M. Lawrence says:

"...This is not hypothetical. It was deliberately engineered..."


I say:

"Yeah. You know what they say P.M., the more things change..."

[The following is originally from: "Note: Don't Forget Lunch" http://www.j-bradford-delong.net/movable_type/2003_archives/001539.html ]

Posted by: Mike on May 28, 2003 02:33 AM http://www.j-bradford-delong.net/movable_type/2003_archives/001539.html

"I keep looking at some of the bash-the-"fascist"-"left", blame-the-victim, trust-us-we-know-what's-good-for-you rhetorical drek Brad sometimes puts up on this site and I can't help wondering WHO'S buying HIS lunch.

(Bottoms up, Bubba http://www.j-bradford-delong.net/movable_type/2003_archives/001481.html THIS one's for you ;!).

[See my comment under "New Modes and Orders" alluded to there: Posted by: Mjke on May 16, 2003 01:47 PM http://www.j-bradford-delong.net/movable_type/2003_archives/001481.html

'The Problem With "Representative Democracy" in the United States

Is that it is, in effect, nothing more than a duopolistic machine, "representative" of nothing (save for the interests of a tiny hand full of big contributors) and NO ONE--except the "will to power" of a few professional insiders of two "grand-fathered" political parties, both of them utterly corrupt: One shamelessly so, the other aimlessly so.

It ALL goes back to the pernicious effects of The Electoral College (and Electoral College Politics). But that's a long story...

And anyway, BOTH "entrenched" parties are more interested in their OWN interests (and their own partisans) than they are in the national interest. So, he asked rhetorically, why should anybody bother telling it here? The "mob" WILL, eventually, sort it all out FOR them.

And Brad, You can take THAT to the bank.'

(And/or google "Peru", "Colombia", and "Beer") if THAT "inside joke" went over your head ;-]

'Peru Declares State of Emergency Amid Protests

Wed May 28, 1:31 AM ET

By Missy Ryan

LIMA, Peru (Reuters) - Unpopular President Alejandro Toledo on Tuesday declared a state of emergency across Peru, promising to send out the armed forces to help rein in a wave of violent strikes that has crippled transit and public services in a new challenge to a stormy presidency.

"We have decided to declare a national state of emergency for 30 days so that people can exercise their personal liberties and travel freely," Toledo said in a televised address.

"The country cannot be shut down. Democracy with order and without authority is not democracy," said Toledo, elected in 2001 on promises he would restore transparency and true democracy to Peru following the corrupt, authoritarian regime of ex-President Alberto Fujimori.

But the U.S.-educated leader's presidency has been far from rosy as social unrest mounts from poor Peruvians who complain he has not delivered on campaign promises. Toledo's approval rating now stands at an all-time low of 14 percent.

This week, thousands of farmers and health workers joined teachers who have taken to the streets, marching angrily through the capital, occupying state buildings in provincial cities, stranding passenger buses and trucks loaded with food as they block key highways with rocks and burning tires...'..."


You'll find THIS there ("Don't Forget Lunch") too:

Posted by: Mike on May 29, 2003 07:43 AM http://www.j-bradford-delong.net/movable_type/2003_archives/001539.html

"Blowing in the Wind...

...What do those peasants know about economics? NOTHING. That's what. Wall Street LOVES the guy. THAT ought to be good enough for us....


...How many times must a man look up
Before he can see the sky?
Yes, 'n' how many ears must one man have
Before he can hear people cry?
Yes, 'n' how many deaths will it take till he knows
That too many people have died?
The answer, my friend, is blowin' in the wind,
The answer is blowin' in the wind...


...Meanwhile--back at that big antebellum manor house in Washington D.C.--Mr. Massa and his chums are simply, divinely, delerious...


'Caught in the Squeeze

By BOB HERBERT

One of the things President Bush knows best is when to turn on the klieg lights, and when to keep them off.

On Tuesday, with no fanfare, he signed a bill increasing the federal debt limit by nearly a trillion dollars. You don't want a lot of coverage when you're mortgaging the future.

But yesterday it was high-fives all around as Mr. Bush signed the third-largest tax cut in history at a grand ceremony in the East Room of the White House.

I suppose if your income is large enough, there is every reason to celebrate. After all, the tax cut could save Dick Cheney $100,000 a year, or more.

But given the economic realities in the U.S. right now, I thought the East Room celebration was in poor taste. The enormous tax-cut package (which is coupled with budget deficits that are lunging toward infinity) is a stunning example of Mr. Bush's indifference to the deepening plight of working people.

The economy has lost more than a half-million jobs already this year, and well over 2 million since payrolls peaked two years ago. More than 8.7 million American men and women are officially counted as unemployed. And that figure is artificially low because it does not count those who have become discouraged and stopped looking for work.

The fallout from the continued hemorrhaging of jobs and the swollen ranks of the unemployed is spreading'..."

Posted by: Mike on June 4, 2003 07:01 AM

"Obviously you don't feel much pressure from Indian economics professors looking for work at Berkeley."

Anybody who thinks academics, especially ineconomics, math and natural science departments don't feel the pressure of immigrant competition has not really looked very hard at the composition of the graduate student or faculty bodies of top universities. FYI, you don't get tenure at Berkeley or Harvard unless your record stands out internationally: it is as close to a worldwide search as you are ever going to get so if Brad feels no pressure from indian Economics professors now it is because he was obviously better than any of them who wanted to come work at Berkeley at his tenure time.

In top universities at the graduate student and faculty level H-1s, J-1s, F-1s abound. This is unambiguously a good thing. Anybody who thinks that we should shut down the inflow of the best and brightest minds of Russia, China and India to the United States so that those people can instead go to the U.K, Australia, New Zealand or (gasp) France and Germany is incredibly short-sighted.

""I'm generally in favor of free trade, including in labor markets, but H1-B's are not free market. When your employer can fire you for no reason, and you then get deported (the case with H1-B's), it's damnably close to slavery."

H-1B s need approval from the labor department and be paid "market wages". Employers can always fire you, if employers fire an H-1B for reasons that would let them file suit in court, they can file suit just like anyone else. To call H1-Bs slavery makes no sense at all.

"True, Keith, but academia has barely begun to feel the effects of free trade/managed immigration. For example, bringing in 'professors' on special temporary visa's, moving whole departments offshore, or shutting down the government-funded research programs"

Economic research is among the purest of all tradable goods: no tariff or quota barriers, costless to transport, and does not require expensive lab equipment unlike top level physics or biology research. A good PC, a pen, a paper and a brain will get you started and journals are willing to consider papers from anybody in any country. To argue that economists are hypocrites because they advocate free trade while being protected from it is just as laughable as the two premises that came before.

Posted by: achilles on June 4, 2003 07:11 AM

Ol' 'Honest Abe' saw this sh** storm coming--LONG ago:

"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. . . . corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."

-- U.S. President Abraham Lincoln, Nov. 21, 1864
(letter to Col. William F. Elkins)
Ref: The Lincoln Encyclopedia, Archer H. Shaw (Macmillan, 1950, NY)

The thing(s) he didn't (couldn't) know is (are):

It would take TWO "globalized" military conflagarations (one complete with new-fangled nuclear weapons), AND a "globalized" economic melt-down...

"The Economic Consequences of the Peace", John Maynard Keynes: http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/keynes/peace.htm

"Main Causes of the Great Depression",
Paul Alexander Gusmorino 3rd; http://www.gusmorino.com/pag3/greatdepression/index.html


...AS WELL AS a bunch of hysterical CRAP about "the red menace" BEFORE those "money power(s)" BEHIND those "corporations" he so RIGHTLY "trembled" about:


"Georgia Declaration of Causes of Secession"
http://extlab1.entnem.ufl.edu/olustee/related/ga.htm

"The Presidency of Ulysses S. Grant"
http://saints.css.edu/mkelsey/presid.html

"Hayes-Tilden Election (1876)"
http://www.pbs.org/wnet/jimcrow/stories_events_election.html

...could affect their coup--when they, at long last, hit upon the "trick" of "cloaking" their PURELY coincidentally, of course, plutocratic (AND, as it happens, also TRANSNATIONALLY CORPORATELY FUNDAMENTALISTICALLY) "utopian", geostrategic/military, psycho-social, politicaleconomic NONSENSICAL "vision" (as well as their MOSTLY murderously malevolent machinations) behind a bunch of CRAP about "National Security".

National Security Council [NSC]

Truman Administration [1947-1953]


The National Security Council was created by Public Law 80(253, approved July 26, 1947, as part of a general reorganization of the U.S. national security apparatus. The function of the NSC as outlined in the 1947 act was to advise the President on integration of domestic, foreign, and military policies relating to national security and to facilitate interagency cooperation. At the President's direction, the NSC could also assess and appraise risks to U.S. national security, consider policies, and then report or make recommendations to the President.

In his retirement President Truman denied any responsibility for "cloak and dagger operations" but it was during his Presidency that covert intelligence operations in support of foreign policy objectives was undertaken on an ever broadening scale...."

http://www.fas.org/irp/offdocs/nsc-hst/

The "bottom line" fortunately, is most definitely NOT a state secret:

"...This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence – economic, political, even spiritual – is felt in every city, every Statehouse, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together..."

--Dwight Eisenhower

http://mcadams.posc.mu.edu/ike.htm

Now, the question of whether

1. the corrupt jokes currently hanging at "elite" watering holes in and around Washington,

2. the pampered poohbahs presently pushing "very important" paper around the corporate penthouses on Wall Street AND the other capitals of capital around the planet

3. OR more than a hand-full of those fearsome specters of fearlessly independent intellectual freedom currently haunting the hallowed halls and ivory towers of academia

4. are prepared to risk casting off their "tenuous" tethers to political, economic and/or academic "tenure"

and

5. "face up to" that "bottom line":

6. Well now, THAT'S an ENTIRELY different question.......

Posted by: Mike on June 4, 2003 08:25 AM

>

Yep, that quote EXPLAINS A LOT about economics "research". I see the good PC, a pen, and a paper, and ABOVE ALL, be sure to avoid coffee break WITH OTHER SCIENTISTS and be sure to AVOID ALL FIELD TRIPS to avoid any unpleasant clashes with real world. You guys need some GRANT WRITING EXPERTISE so that you can include A TRAVEL BUDGET. Plus, all that travel will HELP OUT THE ECONOMY. HAHA

Posted by: northernLights on June 4, 2003 10:10 AM

Glad to be of amusement Northern Lights. Now get back to work before those evil H-1Bs come to take your job away

Posted by: achilles on June 4, 2003 12:35 PM

So boys and girls, the NEXT time Mr. Massa, Prince Alan and/or one of the LESSERLY deep thinking Branch Dickweedians in charge goes into one of their stock "free trade/strong dollar" sermons, THINK! Think about what is unfolding right before your eyes AND right under your nose.

THINK. AND REMEMBER.

REMEMBER THIS:

"The Coming Decline in the Dollar" May 04 2003 http://www.j-bradford-delong.net/movable_type/2003_archives/001399.html

[Posted by: Mike on May 4, 2003 08:15 PM]

"TransNational Corporate Fundamentalism and the Strong Dollar

I. Leaving aside:

1.A. The dickweed administration's* sudden, overpowering desire to adopt Iraq

[Our New Baby, Thomas Friedman
http://www.nytimes.com/2003/05/04/opinion/04FRIE.html ]

1. B. and make life an earthly paradise
for those INEXPLICABLY poor, downtrodden heartlandish Iraqi people,

[A Tyrant 40 Years in the Making, Roger Morris http://www.bpamoco.org.uk/world/03-03-14nyt.htm ]


2.A. Exxon & etc.'s designs on the world's second largest proven reserves of one of the world's most important, finite

[THE END OF CHEAP OIL, Colin J. Campbell and Jean H. Laherrθre (Scientific American, March 1998)

http://dieoff.org/page140.htm ]


2.B. AND dangerous commodities,

[Melting of Earth's Ice Cover Reaches New High, Lisa Mastny http://www.worldwatch.org/alerts/000306.html ]

[As Trees Die, Some Cite the Climate, By Timothy Egan (New York Times) http://www.fs.fed.us/rm/main/pa/newsclips/02_06/0625_trees.html ]

[A Closer Look at Global Warming, National Research Council http://www4.nas.edu/onpi/webextra.nsf/web/climate?OpenDocument ]


3. Halliburton, Bechtel & etc.'s desire to make a few "inputs" off the business of putting back up every(non-living)thing the Pentagon's OTHER clients (Lockheed-Martin & etc.) made off of the business of selling the Pentagon what it needs for its "outputs": bomb craters & dead bodies,

[Weighing the Price of Rebuilding Iraq, Thomas R. Pickering and James R. Schlessinger http://www.nytimes.com/2003/04/12/opinion/12PICK.html ]

4. Ariel Sharon's intriguingly "well-connected" Washington advocates for HIS Likudnikish plan to "pacify" Islam,

[Can We Talk?, Eric Alterman http://www.thenation.com/doc.mhtml?i=20030421&s=alterman ]

5. A. and the DEMONSTRABLE economic FACT that our hallowed "strong dollar" policy DOESN'T "work" for the VAST majority of us non-ultrarich, non-corporate fundamentalist, non-"transnational" Americans,

[Notes on the U.S. Trade and Balance of Payments Deficits, Wynne Godley http://www.levy.org/docs/stratan/stratan.html ]


5.B. as well as the DEMONSTRABLE economic FACT that the "strong dollar" mantra HASN'T "worked" for the VAST MAJORITY OF AMERICANS for TWENTY PLUS YEARS NOW,

[Table 1. U.S. International Transactions: Balance on current account

(Millions of dollars)

1970 2,331
1971 -1,433
1972 -5,795
1973 7,140
1974 1,962
1975 18,116
1976 4,295
1977 -14,335
1978 -15,143
1979 -285
1980 2,317
1981 5,030
1982 -5,536
1983 -38,691
1984 -94,344
1985 -118,155
1986 -147,177
1987 -160,655
1988 -121,153
1989 -99,486
1990 -78,965
1991 3,747
1992 -48,515
1993 -82,523
1994 -118,244
1995 -105,823
1996 -117,821
1997 -128,372
1998 -203,827
1999 -292,856
2000 -410,341
2001 -393,371
2002 -503,427

http://www.bea.doc.gov/bea/international/bp_web/simple.cfm?anon=153&table_id=1&area_id=3 ]


II. It should be noted that, in addition to:

1.A. Restocking the black market for antiquies,

[And Now: 'Operation Iraqi Looting', Frank Rich http://query.nytimes.com/gst/abstract.html?res=F00916FB3A5E0C748EDDAD0894DB404482 ]

1.B. and those much discussed but STILL undetected WMD's Saddam was SUPPOSED to be sitting on,

[Bush Convinced U.S. Will Find Iraqi Weapons
http://story.news.yahoo.com/news?tmpl=story&u=/nm/20030503/ts_nm/iraq_bush_dc_8 ]

1.C.1. we ALSO sacked Iraq FOR the dollar...


"Muslims eye euro as new oil currency

April 22 2003

Since 1901, when drillers unleashed a Texas gusher and created the modern oil industry, barrels of oil have been sold for greenbacks. Whether they buy oil in Alaska, Norway or Bahrain, today's customers pay in US dollars...

...The US benefits from the global use of "petrodollars" because countries that import oil must have dollars on hand. This global demand for dollars helps keep the US currency strong.

Having a strong dollar lets US consumers buy imported goods for less, which helps hold down inflation.

At the same time, countries that export oil receive dollars, which they in turn invest directly in US securities to avoid currency fluctuation risks. Because these oil exporters are willing to purchase huge amounts of US Treasuries, interest rates also are kept low.

When Arabs first started looking for ways to harm the US economy in the 1970s, there was no real competitor to the US dollar. That changed on January 1, 2000, when about 300 million Europeans in 12 nations exchanged their national currencies for the euro.

This campaign against petrodollars was launched by Iraq's ousted leader Saddam Hussein himself. In September 2000, his regime announced it would no longer accept dollars for oil being sold under the United Nation's "oil for food" program. A government statement said that to confront the "daily American-Zionist aggression", oil would have to be paid for in euros. While that move had a negligible impact on the US economy, it gave Iraq a boost when the euro appreciated by 30 per cent against the US dollar in recent months.

Now that US military forces control Iraq, that nation is expected to once again accept greenbacks for its oil..."

http://www.smh.com.au/articles/2003/04/21/1050777210439.html


1.C.2. the dollar according to Wall Street, that is. Yes, THAT Wall Street:

[Notes From a Little Fish, R. Foster Winans http://www.nytimes.com/2003/05/03/opinion/03WINA.html ]


III. All of which is NOT to say that sacking Iraq actually did the dollar, ANYONE or ANYTHING (outside of Iraq) a DAMNED bit of NON-IMAGINARY good...


"Dollar Closes Slightly Higher, Down Sharply for Week

Fri May 2, 2003

The dollar took a pause in its downward trek Friday, finishing the day little changed against its major rivals but down sharply since Monday.

After a steep decline earlier in the week, the U.S. currency managed to halt its slide at least temporarily as traders booked profits and adjusted positions ahead of a long weekend for the London and Tokyo markets.

"It was largely technical trading in a thin market," said David Leaver, senior trader at Gain Capital.

The dollar garnered some support from the U.S. employment report for April and the subsequent rally for U.S. equities, while unimpressive economic data from Europe tarnished the euro and worries over Japanese intervention capped the yen, traders said.

However, the underlying trend remains bearish for the dollar, with the euro remaining at four-year highs versus its U.S. counterpart. The common European currency is still in demand, said Mr. Leaver, especially from accounts based outside the U.S...."

http://story.news.yahoo.com/news?tmpl=story&u=/dowjones/20030502/bs_dowjones/200305021920000582


"Sold as economic cure, tax cuts hike deficit instead

Thu Apr 24,

Lost amid the good news of the April 9 fall of Saddam Hussein's regime was a troubling economic report: The Congressional Budget Office (CBO) said the deficit for just the first half of this fiscal year was a record $248 billion, nearly twice as big as a year ago.

At that pace, the federal government is on track to accumulate an unprecedented shortfall of $400 billion this year -- or $3,600 for every family -- after the bills for the Iraq war arrive. And it would saddle taxpayers with higher interest payments on a ballooning national debt, just as the government must finance the retirement of the huge baby-boom generation that starts in 2011.

Yet the dire forecast seems to have been lost on the Bush administration, too. Instead of responding responsibly to congressional fears about the exploding deficit, it is maneuvering to paint its outsized tax-cut plan as something it is not: an affordable tonic for an ailing economy.

The positive portrayal by an administration eager to show it is doing all it can to buoy the economy before the 2004 election makes sense politically. But the economic policy it masks doesn't..."

http://story.news.yahoo.com/news?tmpl=story&u=/usatoday/20030424/cm_usatoday/5098629


"EU Ponders Handling U.S. Hyperpower

(04 May 2003)

By Paul Taylor, European Affairs Editor

KASTELLORIZO, Greece (Reuters) - On the love boat that hosted Prince Charles and Princess Diana's honeymoon, European Union foreign ministers this weekend contemplated how to salvage their troubled marriage with the United States.

Cruising off an idyllic Greek island, ministers from the 25 present and future EU states tried to draw lessons from their rift over the U.S.-led war in Iraq and Washington's drive to reshape the world along its own lines with or without United Nations (news - web sites) authority.

"We all agree that, yes, there is a crisis or at least a problem in our transatlantic relationship," Greek Foreign Minister George Papandreou told reporters after chairing the discussion aboard the private luxury yacht Alexander.

Participants described two schools of thought around the table: those who believed the U.S. shift toward using pre-emptive force unilaterally if necessary was a temporary aberration, and those who detected a long-term shift under way even before President Bush's election and the September 11, 2001, attacks on the United States.

European External Relations Commissioner Chris Patten shocked some ministers by arguing that, but for a handful of disputed votes in Florida in the 2000 presidential election, there might never have been a war in Iraq, EU sources said...

http://story.news.yahoo.com/news?tmpl=story&cid=586&ncid=586&e=1&u=/nm/20030504/wl_nm/eu_usa_dc


Posted by: Mike on June 4, 2003 02:46 PM

Remember THIS too:


"A Strange Form of Anti-Americanism" http://www.j-bradford-delong.net/movable_type/2003_archives/001357.html

[Posted by: Mike on April 28, 2003 01:20 PM]


David Lloyd-Jones Writes:

"...Have these writers no shame? Nope. An Organized Hate is under way."

I think it's actully more of a 'directed' ad hoc self-organizing affair, David--a kind of extended lynch mob deal....

"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. . . . corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."

--Abraham Lincoln

Brad comes by HIS contempt for everyone who, like Pilger, dares to stray off the "master narrative" honestly enough--he (and WE) inherited that habit of mind from a famous AND faithless (big AND little "D") democrat AND haberdasher--Harry Truman.

See, the deal is, 50 year ago, or so, "Give 'Em Hell Harry" a few other D.C. "deep thinkers" concluded that old fashioned, honest "checks and balances" style Constitutional government was just too "inefficient" to effectively counter the worldwide onslaught of "Godless communism", so, he and a few of his doubtless well-intentioned best political "friends", formally established "Corporate Fundamentalism" as The Official Religion of America.

"Vatican City?": The White House Basement...


"...The National Security Council was created by Public Law 80(253, approved July 26, 1947, as part of a general reorganization of the U.S. national security apparatus. Proponents of the reform realized that no institutional means for the coordination of foreign and defense policy existed, and that the informal management techniques employed by President Roosevelt during the war and President Truman after the war were not suitable for the long haul...

...For those, especially in Congress, who doubted Truman had adequate experience in foreign affairs or even doubted his abilities in general, the NSC offered the hope of evolving into a collegial policy-making body to reinforce the President.

Truman was clearly sensitive to this implied criticism and jealous of his prerogatives as Chief Executive. He did not like the idea of Congress legislating who could advise him on national security. Truman, therefore, kept the NSC at arm's length during its first 3 years...

...Initially, Truman named the Secretary of State as the ranking member of the Council in his absence and expected the Department of State to play the major role in formulating policy recommendations. This decision disappointed Defense officials...

In 1949, the NSC was reorganized. Truman directed the Secretary of the Treasury to attend all meetings and Congress amended the National Security Act of 1947 to eliminate the three service secretaries from Council membership...NSC standing committees were created to deal with sensitive issues such as internal security...

...Even Truman's overhaul of the machinery in 1949 did not create a National Security Council that fulfilled the role originally envisioned. Truman was partly to blame. He insisted on going outside NSC channels for national security advice, relying directly on his Secretaries of State and Defense, and increasingly on the Bureau of the Budget....

...In 1949, events reinforced the need for better coordination of national security policy: NATO was formed, military assistance for Europe was begun, the Soviet Union detonated an atomic bomb, and the Communists gained control in China. The Department of State seized the opportunity to review U.S. strategic policy and military programs, overcoming opposition from Secretary of Defense Louis Johnson and his allies in the Bureau of the Budget. Initially sidestepping formal NSC channels, State won approval of an ad hoc interdepartmental committee under its Policy Planning head, Paul Nitze. Their report, NSC 68, was submitted directly to Truman in February 1950, who sent it to the NSC for a cost analysis. An NSC committee authorized to consider costs and broader implications of NSC 68 began its work, but before it could be completed the Korean war broke out.

The war in Korea dramatically changed the functioning of the NSC under Truman. Thereafter the Council met every Thursday and the President attended all but 7 of its 71 remaining meetings. Truman limited attendance to statutory members plus the Secretary of the Treasury, the Chairman of the JCS, the Director of Central Intelligence, two special advisers (Averell Harriman and Sidney Souers), and the NSC Executive Secretary....

...Truman made additional structural changes in the NSC in late 1950 and in 1951...

...In 1951, the Psychological Strategy Board (PSB), made up of the deputies at State and Defense and the Director of Central Intelligence, was created to coordinate the response to Soviet unconventional Cold War tactics. The PSB worked closely with the NSC in managing America's covert psychological counterattack. In his retirement President Truman denied any responsibility for "cloak and dagger operations" but it was during his Presidency that covert intelligence operations in support of foreign policy objectives was undertaken on an ever broadening scale. The NSC's first action (NSC 1/1) authorized covert action in the Italian elections. The formal institutionalization of covert actions was established as NSC 4 in December 1947, and NSC 10/2 of June 1948.

During Truman's last year, the Council and the Senior Staff met less frequently and NSC activity abated...."

Excerpted from: History of the National Security Council, 1947-1997

http://www.whitehouse.gov/nsc/history.html


Anyway, long story short, US foreign policy has just been getting creepier and creepier ever since.

Case currently in point--Iraq:


(This ran in the NY Time several weeks ago)

A Tyrant 40 Years in the Making

This history is known to many in the Middle East and Europe, though few Americans are acquainted with it, much less understand it. Yet these interventions help explain why United States policy is viewed with some cynicism abroad. George W. Bush is not the first American president to seek regime change in Iraq. Mr. Bush and his advisers are following a familiar pattern.

By ROGER MORRIS


SEATTLE — On the brink of war, both supporters and critics of United States policy on Iraq agree on the origins, at least, of the haunted relations that have brought us to this pass: America's dealings with Saddam Hussein, justifiable or not, began some two decades ago with its shadowy, expedient support of his regime in the Iraq-Iran war of the 1980's.

Both sides are mistaken. Washington's policy traces an even longer, more shrouded and fateful history. Forty years ago, the Central Intelligence Agency, under President John F. Kennedy, conducted its own regime change in Baghdad, carried out in collaboration with Saddam Hussein.

The Iraqi leader seen as a grave threat in 1963 was Abdel Karim Kassem, a general who five years earlier had deposed the Western-allied Iraqi monarchy. Washington's role in the coup went unreported at the time and has been little noted since. America's anti-Kassem intrigue has been widely substantiated, however, in disclosures by the Senate Committee on Intelligence and in the work of journalists and historians like David Wise, an authority on the C.I.A.

From 1958 to 1960, despite Kassem's harsh repression, the Eisenhower administration abided him as a counter to Washington's Arab nemesis of the era, Gamal Abdel Nasser of Egypt — much as Ronald Reagan and George H. W. Bush would aid Saddam Hussein in the 1980's against the common foe of Iran. By 1961, the Kassem regime had grown more assertive. Seeking new arms rivaling Israel's arsenal, threatening Western oil interests, resuming his country's old quarrel with Kuwait, talking openly of challenging the dominance of America in the Middle East — all steps Saddam Hussein was to repeat in some form — Kassem was regarded by Washington as a dangerous leader who must be removed.

In 1963 Britain and Israel backed American intervention in Iraq, while other United States allies — chiefly France and Germany — resisted. But without significant opposition within the government, Kennedy, like President Bush today, pressed on. In Cairo, Damascus, Tehran and Baghdad, American agents marshaled opponents of the Iraqi regime. Washington set up a base of operations in Kuwait, intercepting Iraqi communications and radioing orders to rebels. The United States armed Kurdish insurgents. The C.I.A.'s "Health Alteration Committee," as it was tactfully called, sent Kassem a monogrammed, poisoned handkerchief, though the potentially lethal gift either failed to work or never reached its victim.

Then, on Feb. 8, 1963, the conspirators staged a coup in Baghdad. For a time the government held out, but eventually Kassem gave up, and after a swift trial was shot; his body was later shown on Baghdad television. Washington immediately befriended the successor regime. "Almost certainly a gain for our side," Robert Komer, a National Security Council aide, wrote to Kennedy the day of the takeover.

As its instrument the C.I.A. had chosen the authoritarian and anti-Communist Baath Party, in 1963 still a relatively small political faction influential in the Iraqi Army. According to the former Baathist leader Hani Fkaiki, among party members colluding with the C.I.A. in 1962 and 1963 was Saddam Hussein, then a 25-year-old who had fled to Cairo after taking part in a failed assassination of Kassem in 1958.

According to Western scholars, as well as Iraqi refugees and a British human rights organization, the 1963 coup was accompanied by a bloodbath. Using lists of suspected Communists and other leftists provided by the C.I.A., the Baathists systematically murdered untold numbers of Iraq's educated elite — killings in which Saddam Hussein himself is said to have participated. No one knows the exact toll, but accounts agree that the victims included hundreds of doctors, teachers, technicians, lawyers and other professionals as well as military and political figures.

The United States also sent arms to the new regime, weapons later used against the same Kurdish insurgents the United States had backed against Kassem and then abandoned. Soon, Western corporations like Mobil, Bechtel and British Petroleum were doing business with Baghdad — for American firms, their first major involvement in Iraq.

But it wasn't long before there was infighting among Iraq's new rulers. In 1968, after yet another coup, the Baathist general Ahmed Hassan al-Bakr seized control, bringing to the threshold of power his kinsman, Saddam Hussein. Again, this coup, amid more factional violence, came with C.I.A. backing. Serving on the staff of the National Security Council under Lyndon Johnson and Richard Nixon in the late 1960's, I often heard C.I.A. officers — including Archibald Roosevelt, grandson of Theodore Roosevelt and a ranking C.I.A. official for the Near East and Africa at the time — speak openly about their close relations with the Iraqi Baathists.

This history is known to many in the Middle East and Europe, though few Americans are acquainted with it, much less understand it. Yet these interventions help explain why United States policy is viewed with some cynicism abroad. George W. Bush is not the first American president to seek regime change in Iraq. Mr. Bush and his advisers are following a familiar pattern.

The Kassem episode raises questions about the war at hand. In the last half century, regime change in Iraq has been accompanied by bloody reprisals. How fierce, then, may be the resistance of hundreds of officers, scientists and others identified with Saddam Hussein's long rule? Why should they believe America and its latest Iraqi clients will act more wisely, or less vengefully, now than in the past?

If a new war in Iraq seems fraught with danger and uncertainty, just wait for the peace.


Roger Morris, author of "Richard Milhous Nixon: The Rise of an American Politician," is completing a book about United States covert policy in Central and South Asia.

http://www.informationclearinghouse.info/article2225.htm

For what it's worth, Eisenhower must have sensed the nature of the beast he and Harry had created. On his way out the door, along with "farewell", he said:


"...Crises there will continue to be. In meeting them, whether foreign or domestic, great or small, there is a recurring temptation to feel that some spectacular and costly action could become the miraculous solution to all current difficulties. A huge increase in the newer elements of our defenses; development of unrealistic programs to cure every ill in agriculture; a dramatic expansion in basic and applied research – these and many other possibilities, each possibly promising in itself, may be suggested as the only way to the road we wish to travel.

But each proposal must be weighed in light of a broader consideration; the need to maintain balance in and among national programs – balance between the private and the public economy, balance between the cost and hoped for advantages – balance between the clearly necessary and the comfortably desirable; balance between our essential requirements as a nation and the duties imposed by the nation upon the individual; balance between the actions of the moment and the national welfare of the future. Good judgment seeks balance and progress; lack of it eventually finds imbalance and frustration.

The record of many decades stands as proof that our people and their Government have, in the main, understood these truths and have responded to them well in the face of threat and stress.

But threats, new in kind or degree, constantly arise.

Of these, I mention two only.

A vital element in keeping the peace is our military establishment. Our arms must be mighty, ready for instant action, so that no potential aggressor may be tempted to risk his own destruction.

Our military organization today bears little relation to that known by any of my predecessors in peacetime, or indeed by the fighting men of World War II or Korea.

Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But now we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations.

This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence – economic, political, even spiritual – is felt in every city, every Statehouse, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together....

http://mcadams.posc.mu.edu/ike.htm


"Whoever fights monsters should see to it that in the process he does not become a monster. And if you gaze long enough into an abyss, the abyss will gaze back into you."

Friedrich Nietzsche


Posted by: Mike on June 4, 2003 02:58 PM

AND, assuming accountability WILL, eventually, become "fashionable" again here in America, you MIGHT want to remember where you FIRST saw THIS too...

"A Strange Form of Anti-Americanism" http://www.j-bradford-delong.net/movable_type/2003_archives/001357.html

[Posted by: Mike on April 29, 2003 01:39 PM]

Leaving aside essentially theological questions having to do with whether or not unalloyed "evil" (or "good") actually exists in THIS world; and ignoring (for the sake of argument) sactimonious fools of the sort who would be "morally certain" of the cheesy nature of the lunar surface (and utterly contemptuous of anyone who begged to differ) if ANY of their designated leaders happened to say it was so, a fair reading of the record after all, does show:

1. There ARE deplorable (for varying reasons)governments scattered here and there around the world, Iraq (is/was) one such place.

2. Certain elements (within and without BOTH major US political parties) have, for various reasons (few of which have ANYTHING to do with morality and MOST of which are frankly contemptuous of international law) LONG been advocating for "regime change" in Iraq.

3. Despite its numerous pious pronouncements to the contrary, AND for all of its continuously shifting rationales in favor of its policy, the current US administration* has, for more than a year AT LEAST, been DETERMINED to invade Iraq--no matter what.

4. (A) Despite the fact that Iraq WAS cooperating with the UN weapon inspections,

and

(B) despite the fact that a CREDIBLE immediate and/or compelling threat (from Iraq) to the US and/or its allies and/or its interests sufficient to justify resorting war has NEVER been shown to exist,

and

(C) in spite of ALMOST universal opposition--within the UN, on the part of Iraq's neighboring governments (and THEIR populations), on the part of MOST of the govenments AND peoples of MOST of the nations of the world, AND in the face of CONSIDERABLE (and, by some standards, LITERALLY unprecedented) resistance here at home (both inside the government and outside of it),

(D) The current US administration* (together with the governments of Britain and a smattering of other countries) invaded Iraq anyway.

5. This act wasn't JUST a short-sighted, ill-considered, expensive, rash AND intemperate thing to do (though it WAS all of those things), it was also a CRIME--a crime against the international order--a war crime:


"To initiate a war of aggression, is not only an international crime; it is the supreme international crime differing only from other war crimes in that it contains within itself the accumulated evil of the whole..."

...according to the Jurists of the Nuremberg Tribunal.

Posted by: Mike on June 4, 2003 03:05 PM

Are YOUR "eyes glazing over" ;?)

WELL, speaking pre-emptively now, you know what "they" say: "Fish rot from the head down."

AND "Americas's Fishiest First Family" http://www.buzzflash.com/farrell/03/05/06.html has been up to its ghoulish EYEBALLS in the "rotten business" I've been explicating here AT LEAST since that "spooky" blue-blooded-fratboy-cowboy-wannabe, Prescott Bush, brought Geronimo's head "safely" back to "the Tomb" at Yale http://www.post-gazette.com/columnists/20000923roddy.asp : THAT'S in Connecticut...

Posted by: Mike on June 4, 2003 03:41 PM

Ah! if only we could export paranoid idiots
we would run a trade surplus

Posted by: achilles on June 4, 2003 03:58 PM

I feel so crowded out. With friends like these... well, I doubt if my own message is getting through.

Posted by: P.M.Lawrence on June 4, 2003 04:31 PM

Getting back to the farm subsidy issue- I think that a Republican government is reluctant to cut subsidies because they favor wealthy Republican farmers that are the backbone of their support in the rural states. A Democratic government would be more likely to cut the farm subsidies, but only in favor of smaller farmers over larger farmers. I would be very surprised if a Republican government ever cut these subsidies. It is a myth that most farmers are Democrats.

Posted by: northernLights on June 4, 2003 09:31 PM

"Ah" achilles, if only snide insults and/or self-pity P.M., were coherent, consistent arguments (or political platforms) you guys and your "friends", might have something more than a snowball's chance in Hell of actually "ruling" the pseudointellectual, psyhchosocial, politicaleconomic, geostrategic, "great unwashed" natural world...

(Hint fellas: Experience, imagination and a smidgen of courage--as well as an attention span somewhat greater than that of a gnat--WOULD help YOUR cause ;-)

Posted by: Mike on June 5, 2003 09:47 AM

Mike, the clarity of your arguments, such as they are, hardly allow you to make any judgements about coherence, intellect, clarity etc. Imagination, I will grant, you have in spades.

There are some posters on this blog with whom i disagree with politically yet whose opinions I am willing to consider, there are a few whith whom I disagree with politically and whose opinions I don't have much respect for yet read and occasionally respond to. You and David Thompson, however, rank as the two posters who consistently spout incoherent drivel, so forgive me if I don't take any advice from you about how to help my 'cause'.

Posted by: achilles on June 5, 2003 12:23 PM

STUPID IS AS STUPID DOES

Achilles:

As you OUGHT to know if you don't, it's rather difficult (even for a guy as reasonable as ME ;-) to respond rationally to utterly irrelevant insults such as YOUR comments on MY comments without seeming as ignorant, inane and petty as yourself. If you'd be so kind as to declare which part of my argument isn't clear to you, I'd be more than happy to straighten you out.

If THAT request is beyond YOUR intellectual "pay grade" bubba, just SAY so.

Posted by: Mike on June 8, 2003 05:31 AM
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