A Capitalism for the People?

A CAPITALISM FOR THE PEOPLE
Recapturing the Lost Genius of American Prosperity
By Luigi Zingales
(Basic Books 2012)

In contemporary American political economy, we have two boxes: laissez-faire conservatism and liberal Keynesianism. This book thinks outside both boxes. That is its merit. Its weakness is that it falls between them.

Luigi Zingales is an Italian by birth who came to the United States to study economics and now is the Robert McCormack Professor of Entrepreneurship and Finance at the University of Chicago. His Italian roots are central to his argument: he holds that while Italy is dominated by crony capitalism, the United States has historically been more open to enterprise. However, the U.S. has moved in recent decades increasingly in the direction of crony capitalism. This book is his attempt to show the way back.

GOING TO TEHRAN

Why the United States Must Come to Terms with the Islamic Republic of Iran
Flynt Leverett and Hillary Mann Leverett
(Henry Holt & Co. 2013)

John Peeler

We seem to be edging ever closer to war with Iran, a war that is being actively supported by the Israeli right wing and American neoconservatives who think we just gave up too soon in Iraq and Afghanistan. President Obama is resisting: he’s devoted considerable effort to extracting us from the two Bush wars he inherited, and he clearly doesn’t relish starting another than would be an even bigger quagmire.

Yet Obama has failed to articulate an alternative view of Iran that could justify not going to war. Virtually the entire foreign policy and national security establishment in this country thinks that the Islamic Republic of Iran is a rogue state that must be taken down. Obama has not disagreed with that, but, characteristically, he refuses to act on it, either.

Flynt and Hillary Leverett, almost alone among the Washington foreign policy elite, have for a decade been making the case for serious diplomatic engagement with the Islamic Republic. They did so within the government in the early George W. Bush years, but both were forced out in 2003 because of their disagreement with the Bush posture on Iran. Since then, they’ve been voices crying in the wilderness of Academe, where you can say whatever you want, but nobody who’s anybody listens.

This is a book by people who have lost all hope of influencing the Movers and Shakers. They name most of them in the course of a systematic, passionate critique of American policy toward Iran since 1979. In their view, the two dominant camps (neoconservatism and liberal internationalism) share the fundamental assumption that it is appropriate and desirable for the United States to exercise political, economic and cultural hegemony across the world because our values are universal. They argue, indeed, that Theodore Roosevelt was the last president who did not subscribe to one or the other of these viewpoints.

Teddy was, they argue, the last “realist” president, a camp with which they associate themselves. The Realist perspective in international relations posits that governments are rational actors that seek to serve their national interests as they understand them. Governments then deal with each other by rational negotiations over conflicting interests. Only in the worst case do conflicting interests lead to war. Mostly, governments pursue their interests by either cooperating with or balancing against other governments. This was the classic “balance of power” that (mostly) kept the peace in 19th century Europe.

The Leveretts make three major points: (1) that the Islamic Republic is a rational actor in its foreign policy, not an ideologically driven, messianic theocracy (as most of the American foreign policy establishment sees it); (2) that the Islamic Republic is a legitimate state which represents, as far as we can tell, the political will of a large majority of Iranians; and (3) that American administrations of both parties have consistently aimed at the destruction of the Islamic Republic as the most significant obstacle to American hegemony in the Middle East. They conclude by using Nixon’s opening to China as an example (a unique example) of how a president could break through the established myths and paradigms of US China policy to make a truly strategic shift.

In the first part, they make a strong case that Iranian foreign policy since 1979 has indeed been rationally devoted to furthering Iranian interests, by seeking to protect themselves from external threats (such as Saddam Hussein’s prolonged war against them in the 1980s), trying to increase their influence in the greater Middle East, and supporting Shi’a populations in neighboring countries. They don’t say much about the seizure of hostages at the US Embassy, which surely poisoned relations between Iran and the US thereafter. But it is hardly unprecedented for a new revolutionary regime to countenance such a provocation as a way of bolstering internal support.

The second part makes the case that the political order of the Islamic Republic is what it purports to be: a clerically guided electoral regime that has broad (not universal) popular support. They rely heavily on a few public opinion surveys that they consider methodologically sound, which show that a solid majority approve of the political institutions, and that poll results match closely with election results. They underrate the hazards of survey research in a fundamentally authoritarian setting, where significant numbers of respondents may say what they think the authorities want to hear. They also minimize the problem with oversight of elections and elected officials by the unelected Supreme Leader and the Guardian Council. It is true that every polity, including the US, has means of filtering out “extreme” candidates and programs. But in Iran, an essentially self-selected group of clerics and their allies are endowed with this role by the constitution.

Still, the Leveretts may well be correct that most Iranians, especially non-elites, are ok with this arrangement. And in any case, the realist perspective that they represent essentially says that a country’s internal arrangements are nobody’s business but its own.

The third part is an extended critique of the failure of successive US administrations to seriously engage with Tehran since 1979 (with the flawed exception of Reagan, who did work out the arms-for-hostages deal that exploded into the Iran-Contra scandal). The penultimate chapter makes the case that both Democratic and Republican administrations (including Obama’s) have bought into seeking hegemony in the Middle East: within that program, the Islamic Republic is the principal obstacle and must be defeated or destroyed. The problem is that the United States cannot actually achieve hegemony, and the more it tries, the worse its position in the region becomes.

The concluding chapter sets up Nixon’s opening to China as a model for the kind of radical reorientation that they advocate with Iran. There are indeed parallels, but China in 1970 was a far bigger fish than Iran today. Absent the Cold War, a reset with Iran ought to be easier. But ask the Cubans about that.

This book is at one level a vendetta against scores of insiders of both parties’ foreign policy establishments, for their failure to see what the Leveretts see about the true interests of the United States in Iran. And it is as such an entertaining window into the backstabbing paranoia of official Washington and its private auxiliaries.

At a higher level, though, it is a passionate and deeply knowledgeable window on a perspective that has been almost completely silenced in Washington, the conviction that we and the Iranians can deal with each other rationally and avoid war. Progressives who are working to oppose the war agenda will do well to pay attention, even to these two exiled Cold Warriors. The advocates of war certainly pay attention, and do their best to discredit and silence them.

Gullible’s Travails

Gullible’s Travails:
Abuse and Scandal Around Obama

John Peeler

President Obama is in a heap of trouble, which is not of his own making, but for which he is responsible. First we have the ongoing dispute over security at the Benghazi consulate at the time of the terrorist attack, and the alleged attempt to manage the framing of that attack. Then there is the outrage in conservative circles over the selective focus of the IRS on the tax status of Tea Party and other right-wing groups. Finally, this just in: the Justice Department got a court to subpoena phone records of the Associated Press, without telling its management, in pursuit of information about who might be leaking confidential information about a CIS operation in Yemen.

Obama is responsible for all these problems because he’s the president: as Harry Truman said, “The buck stops here.” Yet it is highly unlikely that Obama had any personal involvement in any of these issues. In very general terms, he certainly let it be known that he wanted leaks stopped, and that he wanted our diplomatic stations to be as secure as possible within fiscal constraints imposed by Congress. It is, on the other hand, quite unlikely that there was any policy direction from Obama to the IRS about putting pressure on the Tea Party. What you have in all three cases was the bureaucrats, supposedly the docile instrument of the president, operating instead with considerable autonomy. The government cannot be successfully micromanaged.

Obama is twice gullible, and that is the source of much of his difficulty here. First, as someone who had limited executive experience before becoming president, he seems to have a hard time taking measures to maximize his control over his supposed subordinates (“Since the buck stops here, you need to do what I say”), or alternatively, insulating himself from the effects of their actions (“The buck never got to me”). As a manager, he’s just not all that good.

He’s also gullible in failing, after more than four years, to grasp just how obsessed the Republicans are with making him fail, without regard to the consequences for the country. With the Republicans in control of the House (and likely to keep it in 2014), with Republican control of the Senate quite possible in 2014, he is just not going to get anything of substance out of this Congress, but he will have Republicans snapping at his heels about any malfeasance, real or imagined. It is Obama’s imperative to give them as little to snap at as possible.

Of the three current controversies, that of Benghazi has the least potential to hurt Obama. It is pretty clear that officers well below the grade of Secretary of State (much less President) made decision that probably seemed reasonable at the time, but events proved them wrong. Such loss of life is tragic, but hardly unprecedented: dozens of US embassy personnel were killed in the line of duty during the George W. Bush administration.

The IRS controversy is currently drawing a lot of attention. George Will has likened it to Watergate, and used it to justify continued Republican control of at least one house of Congress. And it’s clearly not good to have any administration specifically targeting its political opponents. But there are many politically active groups across the spectrum that carefully skirt the line that allows them to keep their donors private, while engaging significantly in political advocacy. This is a legitimate line of inquiry for the IRS, but they should not have been so obtuse as to focus only on the Tea Party groups. Again, it is highly unlikely that Obama had anything to do with this abuse of power, but he will be held accountable for it nonetheless.

Substantively, the most troubling of these controversies is that of covertly accessing the AP’s phone records. If this had been done by the Bush administration, progressives and Democrats would be livid. This is exactly the sort of abuse of power at the expense of the freedom of the press that many of us feared when Bush pushed through new national security legislation after 9/11. And many of us warned at the time that Democrats would be as likely as Republicans to be the violators (see my 2006 piece: ).

One of Obama’s surprising political strengths has been his firm commitment to use the tools he has to advance US national security (conventionally defined). Thus he has been far more aggressive than Bush in the use of drone strikes, and more aggressive as well in combating leaks of classified information. This is not always a bad thing, but progressives need to be ready to condemn his abuses just as strongly as they would those of Bush.

This is one of those cases.

Skepticism on Tire-burning Plant is Reasonable

Proponents of the proposed tire-burning plant in Watsontown tell us not to worry – the technology they are using puts the emissions well within the safe limits determined by the DEP and EPA. Some imply that the concern expressed by “deeply invested groups” is exaggerated, likely to raise alarm rather than encourage a cool appraisal of the facts.

A cool appraisal of the facts, however, is likely to raise, not lower residents’ concerns about the project. When it comes to environmental regulation, the effect of the “deeply invested groups” has consistently been to underplay the environmental hazards of industrial production, endangering workers, community members and threatening to destabilize the balance of nature on which we all depend.

Regulation of industry has been under attack for the past thirty-five years. Proponents of deregulation wrongly believe that market incentives will prevent corporations from taking actions that will harm us. They claim that regulations are onerous intrusions on our personal freedom, products of a nanny state intent on depriving us of liberty.

The exploding fertilizer factory in West, Texas and the collapsing factory in the Bangladeshi sweatshop that killed those poor workers are grim evidence that effective regulation is absolutely necessary to protect us from corporate shortsightedness. Financial incentives encouraged these firms to ignore the safety regulations that would have saved these workers lives. Every day in the U.S., thirteen workers fail to return home from work due to dangerous working conditions that could be mitigated with reasonable regulation. Deregulation kills people. Full stop.

In the case of environmental legislation, corporations have worked relentlessly to disable our once-effective system of regulation. Dick Cheney, as Vice President under George Bush, worked to ensure the energy industries were exempt from important provisions of the Clean Air and Clean Water Acts. As a result, natural gas drilling companies do not have to disclose what chemicals they are using to fracture shale. Without this information, we cannot take the reasonable steps to protect our natural environment from being destroyed.

Not only have these corporations pushed for the dismantling of regulation, they have also pushed for the elimination of funding necessary to enforce the meager regulation that remains. As a result we now have a weak set of environmental and safety regulations that is poorly enforced.

So when the National Gypsum Company tells us that it is using the latest technology to burn tires and that the pollution is well within the limits set by the EPA and DEP, it is reasonable to be skeptical. It is reasonable to ask whether those limits are indeed safe. It is reasonable, too, to ask if the additional toxic load to our environment, whether or not it is deemed to be at a “safe” level when considered independently from other toxins, won’t in fact cause more chronic illness in our community when added to the toxins to which we are presently exposed. In the absence of effective regulation that is adequately enforced, we should err on the side of caution and insist that if Gypsum wants to generate renewable energy, they should invest in technologies, like solar, that don’t pollute, instead of trying to convince us that tires can be burned without endangering our health.

It is not the “deeply invested” environmental groups that ought to concern us. It is the shortsighted decisions of corporate interests that are inadequately regulated and poorly enforced.

Damn Moochers Who Pay No Marginal Income Tax

You know who does not pay INCOME taxes in America? Mitt and Ann Romney. On their 2011 tax return there is no INCOME, so no income tax. All of their federal axes are capital gains and interest.

Wed Market Highlights Week 1

Hi all.My one volunteer effort in this election cycle is to person the table at the Wed Market from 12-1 each week.
I have modest goals but a big vision.  How do we turn a red state blue?  Or more accurately, how do we grow local progressives? This has been on my mind since 2004.

Here is a brief summary I posted on FB on the UCDC’s Facebook page.

During my hour and a quarter at Wed Market:

Roughly 10-12 visitors. No one said unregistered. All said they know about photo ID.

One Mifflinburg supporter asked me “Do you believe in the NEw World Order?” “The Bildenburg Group?” “Have you seen Jesse Ventura’s video about the six FEMA camps?”

When I didn’t jump on her conspiracy theory bandwagon she said “You’ll probably laugh at me.” I told her I would not. I pointed out that FEMA probably makes camps to help people for disasters.

I tried to say that the powerful are rigging the system, but they don’t need to meet in secret club and smoke cigars to do it.

Then a couple tried to do a drive-by insult fest. “Are you better off now than four years ago?” “We have to get rid of BHO!”

I crossed the ten feet and tried to engage them in discussion. “What is BHO?”(I thought it was a government agency).

The pair, mostly the man continued on about how their small business is being crushed, how we should be ashamed for supporting Obama, how we should be doubly ashamed since we were next to the prayer tent (not sure what that meant and I apologized to the nice prayer folks after), how ACA will cost $2,200 per person, how the economy is in the tank. They left with a final “Baby killers!” insult.

I tried to engage the man saying “Let’s talk about policy, about issues.”

Barbara said “You will never convince people like that.” I know. But my point is how did it look to the watchers? TO the people around there? I have no idea if it will work, but if we can use the Wed Market to find ways to talk progressive values in local speak, we will do more to make America a freer place than we may know.

Ryan and Marino are Delusional about the Budget

English: Official portrait of US Rep. Tom Marino. (Photo credit: Wikipedia)

Letter submitted to Daily Item.  We shall see.

 

“What do Paul Ryan and our PA-10 Representative Tom Marino have in common?   They both believe in magical budget fairies.

Paul Ryan is famous for his budget blueprint making him a “fiscal conservative.”  That has got to be one of the most famous boondoggles in history.  According to his own estimates, he balances the budget (teh annual budget, not the debt) around 2063!  Clinton, that poster boy of fiscal conservatism, got to a balanced budget in 8 years!

So, it is a joke that Ryan is a fiscal conservative.  He believes in a government that does almost nothing outside of defense.

Tom Marino proudly trumpets his support for this joke of a budget.  On his website, Rep Marino says: “The budget blueprint I supported today keeps that promise and boldly confronts the challenges we face.”

That is very bold of you.  To balance the budget in 50 years.  That is like boldly putting out a fire by studying the farmer’s almanac for the next rain day.”

 

Sources, fwiw.

Marino: http://votesmart.org/candidate/119478/tom-marino?categoryId=10

Budget estimates from Matt Miller (former OMB guy) : http://www.politifact.com/truth-o-meter/statements/2011/mar/03/matt-miller/matt-miller-blasts-deficit-debt-implications-paul-/

Another former OMB guy: http://www.nytimes.com/2012/08/14/opinion/paul-ryans-fairy-tale-budget-plan.html

Oh yeah, Paul Ryan gives out party favors.  Donations to Marino: http://campaignmoney.org/blog/2012/08/15/paul-ryans-donations-members-congress

Related articles

• You Made the People Dumb (boomantribune.com)
• Paul Ryan, in a nutshell (donemmerich.blogspot.com)
• Paul Ryan on his budget, “I don’t know exactly what the balance is, we haven’t run the numbers” (freakoutnation.com)
• Paul Ryan, Deficit Dove (andrewsullivan.thedailybeast.com)

Kill List

KILL LIST

John Peeler

The New York Times recently http://www.nytimes.com/2012/05/29/world/obamas-leadership-in-war-on-al-qaeda.html?pagewanted=all published an extensive story about the Obama administration’s secret “Kill List” that is used for selecting targets for strikes by unmanned drones.

It has been clear for some time now that President Obama is making far more use of such drones that President Bush did, even as Obama systematically winds down more conventional warfare in both Iraq and Afghanistan. Most strikes have occurred in Afghanistan (of course), in Pakistan, and in Yemen.

The President is not delegating the responsibility for selecting targets, and insists on having the final word on whether a strike goes ahead. An extensive interagency review process considers whether particular persons ought to be on the list of targets, and how high they should rank. Those recommendations then go to the President, in a meeting with his top national security advisers; it is the President who has the final word.

There has been considerable dispute about the administration’s method of counting civilian casualties: the assumption is that any adult male killed or injured in a strike is in fact an al-Qaeda collaborator, unless there is concrete evidence after the fact to the contrary. Thus, effectively only women and children are counted as civilians. Critics (including some in the government) argue that this seriously understates death or injury among civilians. The administration counters that in the situations they are dealing with, adult males would not be casually or accidentally present: given the activities observed, all males present can reasonably be assumed to be combatants.

There was at least one instance when the President was informed that a strike on a high-value target was certain to entail civilian casualties; Obama ordered the strike anyway, killing not only the head of the Pakistani Taliban, but also his wife and possibly other relatives.

Many readers will recall the 2011 killing of Anwar al-Awlaki, an American citizen who was a public voice of al-Qaeda in Yemen. There was evidence that Awlaki was not merely preaching violence and speaking for al-Qaeda; he had a command role in setting up the mission of Umar Farouk Adbulmutallab, the so-called “underwear bomber” on December 25, 2009. Armed with an opinion of the Office of Legal Counsel that the due process rights of an American citizen do not necessarily entail court proceedings, Obama ordered the assassination after the internal reviews described above had found that Awlaki posed an imminent danger.

It is then clear that Obama has not only followed Bush’s precedents in stretching presidential powers and restricting the rights of presumed terrorists, including those of American citizens, he has gone further. In lieu of the Bush policy of capture and indefinite imprisonment without charges, Obama imposes death sentences without judicial proceedings, based only on administrative deliberations about intelligence findings.

Ironically, the very monstrosity that is the detention system at Guantánamo seems to have driven Obama to this extreme so as to minimize the continuing embarrassment of detentions that are seen around the world as contrary to international law. Dead men need not be detained with limited rights, nor need they be put on trial.

As Bush defended the Guantánamo detentions, Obama defends the drone strikes as within the “war powers” of the president as commander-in-chief. They have plenty of company: presidents John Adams, Abraham Lincoln, Woodrow Wilson, Franklin Roosevelt, Harry Truman, Lyndon Johnson, Richard Nixon, and Ronald Reagan all substantially stretched their prerogatives under the pressure of war. And certainly both Bush and Obama knew that tenderness about individual rights would do them no good in the event of another successful attack like 9/11.

However, like “body counts” in the Vietnam War, or numbers of detainees under Bush, drone strikes can be deceptive: you can take out the leaders at a cost in lives and money far lower than conventional or counterinsurgency warfare. It’s easy to see and tabulate the results. But it’s also easy to lose sight of the bigger questions: (1) are we addressing the fundamental causes of these attacks on us? and (2) are we destroying freedom by defending it in this way?

The most bitter irony is that we must ask these questions about Obama.

Fuel Prices

Fuel Prices:
How Much Blame Does Obama Merit?

John Peeler

It is a quadrennial ritual for the opposition to attack the incumbent president for failing to keep fuel prices under control. In the current campaign, Republicans routinely accuse President Obama of not doing enough, and specifically for failing to approve enough new drilling for oil and for temporarily blocking construction of a new pipeline to carry Alberta oil-sand slurry to Houston for refining. Many actually seem to blame the president for not exerting more control over prices.

This is quite a strange line of attack from people who are incessantly demanding a return to untrammeled free markets. Do they really want Obama to impose price controls?

Presidents, of course, actually have very limited leverage over the short-term fluctuations of fuel prices: they are primarily a result of global market forces. Changes in fuel prices in the US run directly parallel to those in Europe and elsewhere. The Europeans pay a lot more because they have higher taxes than we do (which they use to maintain their infrastructure better than we do).

A big part of the current spike in oil prices has to do with nervousness about the prospects of war with Iran, which would certainly disrupt supplies and thus send prices up. So buyers are bidding up the price now in anticipation of such a crisis in the Persian Gulf.

Another factor is the tentative recovery that is occurring in the US economy, along with continuing strong demand from emerging markets such as China, India and Brazil. When more people in the United States have jobs, as they now do, more people will buy gasoline. Rising price at the pump is a downside of economic recovery.

The President and Congress do have the capacity to affect our long-term energy posture. How have we been doing on this level? In short, Obama’s not doing too badly. He has adopted an “all of the above” energy policy that promotes everything from drilling for oil and gas to all sorts of alternative and renewable energy. Specifically on petroleum, US production is up substantially on Obama’s watch, while, for the first time in years, less than fifty percent of the oil we use now comes from foreign sources. We are doing better than we were under Bush.

In the short run, because we continue to suck up as much oil as we can get, we have no choice but to “suck it up” and deal with the higher prices. Oh, it would help if the hawks stopped talking up an attack on Iran.

In the long run, Obama’s “all of the above” policy promises to reduce our dependence on petroleum and enhance the role of renewable energy.

In the even longer run, all of this may be too late to stop the catastrophic impact of global warming. But the upside of that is that the worldwide economic disruption that would result will certainly reduce demand for fuel.

So it might all work out. Are you relieved?

Free Riders

SourceURL:file://localhost/Users/johnpeeler/Documents/Manuscripts/OpEds/FREE%20RIDERS.doc

FREE RIDERS

Why is Health Care Any Different from Food Stamps?

 

John Peeler

 

I was talking to some friends recently who said that they were disturbed by people “gaming the system,” maneuvering to get benefits that they shouldn’t be entitled to.  Common examples are people who get welfare or food stamps even when they really have enough income so that they shouldn’t qualify.  Or take those who keep getting extended unemployment compensation while turning down jobs that they don’t like.

 

Let’s leave aside the question of how common cases like these might be.  Most conservatives will be sure that such abuses are widespread, and most liberals will be convinced that the problem is greatly exaggerated, and that the vast majority of those who receive such benefits are qualified, and deserve them.  We’re not going to settle this question here.

 

My initial response to my friends was to point out that we live in a society where the rich and the big corporations routinely “game the system” to get out of paying their fair share of taxes or to avoid bothersome regulations.  They acknowledged that I had a point.

 

However, I failed to make another point, concerning the Affordable Care Act of 2009 (now known colloquially, for better or worse, as ObamaCare).  Republican challenges now before the Supreme Court are based on the argument that the federal government lacks the authority to require citizens to purchase health insurance.  The problem, of course, is that if many people hold off getting insured until they get sick, the costs will go up for the rest of us who do have insurance.  This is the classic problem of the “free rider,” the person who takes something without paying for it.  In this case, that something is health care.  We all pay the costs of very expensive emergency room care for the uninsured: it’s built into our health insurance premiums and hospital bills.  The Affordable Care Act intends to fix that problem by requiring everyone to have insurance.

 

Republicans are up in arms about this and have taken their case to the Supreme Court.  We’ll know how they rule later this year.  But what I would like to know is why getting extra food stamps amounts to fraud if not outright theft, while refusing to buy health insurance when you can afford it is a constitutional right.  A free rider is a free rider.  Does the Constitution really protect the right to be a free rider?  That would be a right that just isn’t right.