February 2003 Archives
February 25, 2003
Representative Dennis Kucinich, (D-0hio) trotted out these tired lines on this weekend's "Meet the Press": "If I may, there is no evidence that Iraq represents an imminent threat to the United States," and "Containment has worked." I believe the concepts of imminence and containment are holdovers from the Cold War and are meaningless in the current environment. Imminence used to be measured by forces marshalled and missles deployed, but now it is literally impossible to verify imminence--and so the concept has no meaning. Same holds for containment--you can't contain an asymetrical threat like terrorism because it is too amorphous.
There was "no proof," as many like to say about Iraq today, on September 10th, 2001 what would happen the next day and who would have taken seriously that the Taliban weren't "contained," or "in their box." Yet a threat was imminent without any sign or proof of that fact and the Taliban, while physically isolated, supported a regime of mass terror.
One may legitimately feel that the risks of going to war outweigh the risks of not going to war, but it is folly to place faith in the outdated concepts of "imminence" and "containment."
On this weekend's "Meet the Press" presidential wannabe Representative Dennis Kucinich, (D-0hio) again made his outrageous claim that the Bush policy in Iraq is based on oil. It was gratifying to see Richard Perle from the American Enterprise Institute and Chairman of the Defense Policy Board take him to task on this. Here is an excerpt from the transcript:
MR. RUSSERT: Congressman, you made a very strong charge against the administration and let me show you what you said on January 19. “Why is the Administration targeting Iraq? Oil.” What do you base that on?Perle did not directly respond to Kucinich's absurd statement that "no other case has been made to go to war against Iraq...." Excuse me? Kucinich may not agree with it, but the President has certainly made a case for war against Iraq--on many fronts. What is this guy thinking? Well of course this is the same man who after a career in politics just decided to flip-flop his stance on abortion. My question is why? I have a better chance of winning the Democratic nomination for president than Dennis Kucinich for goodness sake. Why abandon your principles to tilt at windmills? Dennis is a menace--but mostly to himself.
REP. KUCINICH: I base that on the fact that there is $5 trillion worth of oil above and in the ground in Iraq, that individuals involved in the administration have been involved in the oil industry, that the oil industry certainly would benefit from having the administration control Iraq, and that the fact is that, since no other case has been made to go to war against Iraq, for this nation to go to war against Iraq, oil represents the strongest incentive. ...
MR. PERLE: ... I find the accusation that this administration has embarked upon this policy for oil to be an outrageous, scurrilous charge for which, when you asked for the evidence, you will note there was none. There was simply the suggestion that, because there is oil in the ground and some administration officials have had connections with the oil industry in the past, therefore, it is the policy of the United States to take control of Iraqi oil. It is a lie, Congressman. It is an out and out lie. And I’m sorry to see you give credence to it.
Dick Gephardt, who couldn't even beat Michael Dukakis for the Democratic nomination in 1988, is at it again--the blue-collar entry in a field of would-be Democratic challengers to George W. Bush's re-election bid. Since Gephardt is supportive of Bush's Iraq policy on the whole, he has to make a name for himself in the Democratic base on the economic front--and this means intellectually dishonest rhetoric. He has therefore pledged a platform based on "trickle-up economics." Economist Steven Landsburg ably derides this speciosity in this piece published today. Excerpt:
The Democrats have been using it [the phrase "trickle-down economics"] to bash Republicans at least since 1932. It seems to refer to any Republican policy that has any chance of benefiting anyone other than the desperately poor. The underlying reasoning seems to go something like this: "We all know that governments should exist only to help the poor. But these Republicans are doing something that might help the rich. Therefore they must believe that helping the rich can help the poor. Ha ha ha."
To which the right responses, of course, are: "No, governments do not exist only to help the poor; they exist, ideally, to preserve the rights of all citizens, regardless of their income." And: "Anyway, whaddya mean, 'ha ha ha'?"
But to those who still buy the old line that supply-side policies, such as capital gains tax cuts, amount to "trickle-down economics" first should realize that "there has never been any school of economists who believed in a trickle down theory. No such theory can be found in even the most voluminous and learned books on the history of economics. It is a straw man." This according to the economist Thomas Sowell who does a tremendous service by clearing up this issue in this piece written in 2001. Supply-siders don't believe in "trickle-down"--they are only said to believe in it by liberals.
This excerpt from Sowell's piece explains why supply-side, Reaganomics does NOT equate to trickle-down economics (and why if Gebhardt truly wanted a "trickle-up" economic platform he should support the Bush plan):
Those who imagine that profits first benefit business owners -- and that benefits only belatedly trickle down to workers -- have the sequence completely backward. When an investment is made, whether to build a railroad or to open a new restaurant, the first money is spent hiring people to do the work. Without that, nothing happens.
Money goes out first to pay expenses and then comes back as profits later -- if at all. The high rate of failure of new businesses makes painfully clear that there is nothing inevitable about the money coming back.
Even with successful businesses, years can elapse between the initial investment and the return of earnings. From the time when an oil company begins spending money to explore for petroleum to the time when the first gasoline resulting from that exploration comes out of a pump at a filling station, a decade may have passed. In the meantime, all sorts of employees have been paid -- geologists, engineers, refinery workers, truck drivers.
Nor is the oil industry unique. No one who begins publishing a newspaper expects to break even -- much less make a profit -- during the first year or two. But reporters and other members of the newspaper staff expect to be paid every payday, even while the paper shows only red ink on the bottom line.
In short, the sequence of payments is directly the opposite of what is assumed by those who talk about a "trickle-down" theory. As for capital gains, some countries don't tax capital gains at all. They tax a business' earnings, but not capital gains, which are harder to define and sometimes illusory.
There tends to be a lot more worry about the trade deficit then there is understanding of what it actually is or what reveals about the underlying global economic reality. This piece from WSJ shed's needed light. Excerpt:
Pundits claim that "financing" the U.S. current account deficit requires that foreigners purchase some $1.5 billion in U.S. assets a day, and warn darkly of the time when that need cannot be met. But the current account deficit is by definition the inverse of net capital inflow. So it can very easily be argued that U.S. assets are in such demand, even with Treasury yields at historic lows and after three down years in the U.S. stock market, that Americans have to find $1.5 billion a day worth of foreign goods just to spend all the money that's coming in.
U.S. Treasury Secretary John Snow, who made his G-7 debut in Paris this weekend, put the case plainly. The American economy is growing, and the Bush Administration, through its tax-cut proposal, is doing what it can to encourage even faster growth. If Europe is truly concerned about American "sustainability," it could do the same, cutting taxes and reforming labor markets to spur its own anemic growth.
As I've written before (see this on a proposal for a telcom act for 2003 and this for thoughts on the regulatory meltdown), now that the tech industry's fate is tied to the growth of bandwidth more than microprocessor power the regulatory issues concerning telecom will become all important. One of the key fronts is the regulation of local phone lines--and whether the FCC should not only deregulate but ban the states from regulating or whether the federals should just kick the can down to the states. This pits two libertarian principles against each other: federalism vs. deregulation. Peter Huber convincingly argues that we should "forget federalism" in this piece from National Review Online. Excerpts from Huber's piece:
when Congress passed the 1996 Telecommunications Act ... ordinary, local and long-distance wired voice calls still generated 90 percent of the telecom industry's total revenues, with wireless and data evenly splitting the rest. Today, the numbers are about 40-30-30; in five years, they'll be 20-40-40.
This profound shift in the structure of telecom markets now threatens to topple century-old regulatory bureaucracies. But the regulators are fighting back. ...
For much of the last century, Washington regulated railways, trucks, and airlines; when deregulators finally gained the upper hand, they passed federal laws that preempted reactionary state regulators, too. Most conservatives are federalists, and reflexively oppose made-in-Washington solutions because experience teaches that they generally don't work. But regulatory swamps created in Washington have to be drained there too. The federalists lost the fight for a "more granular" approach to telecom regulation in 1996. They shouldn't want to win it now.
This is what SHOULD have been done--to see what was done, read this. In short, the FCC did the right thing when it came to broadband but has left the states to regulate local phone service. Not only is this bad news for RBOCs, and I believe consumers, it's going to be particularly bad for folks who live in regulation loving states like California and New York. The real story here is that California, already hostile to business from a regulatory standpoint and expensive from a tax standpoint, might become more and more inhospitable to the kind of entrepreneurial forces that have made it the economic powerhouse it has become.
February 24, 2003
From the White House Writers Group:
Fighting on Two Fronts. Last Thursday, February 20th, the Wall Street Journal Europe editorial page carried an article by WHWG friend and associate, Rupert Darwell. In it, Mr. Darwell lays out with greater clarity and insight than we have seen elsewhere France's motivations for resisting the U.S.'s efforts to disarm Iraq and the political forces buffetting Tony Blair as he stands up to them. He writes:
"Mr. Blair rejects the old rules of the European game, which say that Europe must be led by the Franco-German duumvirate. The letter written by the eight European leaders published here last month is a direct challenge to French authority. If the views of the signatories of that letter were to prevail, it would mean the end of France's hegemonic role in Europe. It is a battle President Chirac has to win. And his main obstacle is Tony Blair....
"Thus the U.N. Security Council has become a theater onto which has been projected, to borrow the title of a celebrated history book, the struggle for the mastery of Europe. The longer this goes on, the more it weakens Tony Blair and other leaders such as Jose Maria Aznar and Silvio Berlusconi."
We believe that this article deserves an American as well as European readership. To read a version of the article that appeared in the Wall Street Journal Europe, please click here.
Rupert Darwall was a special adviser to the Chancellor of the Exchequer in the Major Government. His pamphlet, "Paralysis or Power?" was published by the Centre for Policy Studies, a London-based think tank started by Lady Thatcher, and he is affiliated to Reform, which campaigns for market solutions to government failure in Britain.
The White House Writers Group is a high-stakes corporate communications and public policy strategy firm based in Washington, DC.
February 18, 2003
As a social ideal, equality of income is far less admirable than equal treatment, universal self-betterment, and mutual respect for individual differences. The paramount good of a good society is this: To bring everybody together, so that the lives of all may be improved no matter what their station or wealth.
February 17, 2003
Here is a worthwhile speech given by James R. Woolsey, former Director of the Central Intelligence Agency (with an introduction by Congressman Bob Barr) at the Restoration Weekend on November 16, 2002. The entire transcript is worth a read but I'll excerpt the concluding remarks:
I don’t believe this terror war is ever really going to go away until we change the face of the Middle East. Now, that is a tall order. But, it’s not as tall an order as what we have already done. In 1917, Europe was largely monarchies, empires, and autocracies. Today, outside Belarus and Ukraine, it is largely democratic, even including Russia.
These changes that have taken place over the course of the last 85 years are a remarkable achievement. The ones that still have to be undertaken in a part of the world that has historically not had democracy, which has reacted angrily against intrusions from the outside, particularly the Arab Middle East, presents a huge challenge.
But, I would say this. Both to the terrorists and to the pathological predators such as Saddam Hussein and to the autocrats as well, the barbarics, the Saudi royal family. They have to realize that now for the fourth time in 100 years, we’ve been awakened and this country is on the march. We didn’t choose this fight, but we’re in it. And being on the march, there’s only one way we’re going to be able to win it. It’s the way we won World War I fighting for Wilson’s 14 points. The way we won World War II fighting for Churchill’s and Roosevelt’s Atlantic Charter and the way we won World War III fighting for the noble ideas I think best expressed by President Reagan, but also very importantly at the beginning by President Truman, that this was not a war of us against them. It was not a war of countries. It was a war of freedom against tyranny. We have to convince the people of the Middle East that we are on their side, as we convinced Lech Walesa and Vaclav Havel and Andrei Sakharov that we were on their side.
This will take time. It will be difficult. But I think we need to say to both the terrorists and the dictators and also to the autocrats who from time to time are friendly with us, that we know, we understand we are going to make you nervous.
We want you to be nervous. We want you to realize now for the fourth time in 100 years, this country is on the march and we are on the side of those whom you most fear, your own people.
February 11, 2003
Suppose we (the UK and US) do ignore all the pressure and last-minute
finagling and do actually attack Iraq, which I think now is virtually
Suppose we win, which is absolutely certain.
And suppose, once we've done so, and have occupied Iraq and have full
(really full, not UN full) access to Iraq's records and can truly find
what they have, that we find that everything we've been saying about
their WMDs is really true; that they have chem and bio weapons and
banned delivery systems, and are near to developing nukes, which I also
think is extremely likely.
One more and the most important: suppose that the records also show that
during the 1990's companies in France or Germany (or both) actively and
deliberately broke the sanctions and sold equipment and supplies to Iraq
which helped it to create these things, and that the governments of
Germany and France knew and approved of this and actively helped.
If they (Chirac and Schröder) know that they face the scenario I
described above after we invade, that would definitely explain their
behavior, because preventing Anglo-American occupation of Iraq is the
only conceivable way they could prevent it. If this is the case, then
since no other way exists to avoid this fate and since the consequences
of it are dreadful, it would make sense to continue the lost cause of
trying to prevent our attack.
So the more they persist even as it becomes ever more hopeless, the more
I find myself worrying that they are trying to cover up something
really, really big.
I do hope I'm wrong, though.
February 5, 2003
“Mr Bush, like Ronald Reagan before him, travels badly. The qualities that make him a highly effective political operator at home—in particular, his directness and the apparent simplicity of language he employs—grate terribly on British ears. For many here, Mr. Bush is the quintessential naïve but overbearing American. Nothing the prime minister says can shake that perception.”
Translation: the British don't like Bush primarily because they are snobs.
Sounds about right.
February 2, 2003
Andrew Sullivan "fisks" a recent fatuous editorial in the New York Times.
But this war should be waged only with broad international support. To go it alone, or nearly alone, is to court disaster both domestically and internationally.
So let's get this straight. Even if Saddam has chemical and biological weapons; even if he is in clear violation of U.N. resolutions; even if he and his proxies amount to a dire threat against the lives of Americans, the U.S. president should do nothing unless the French, Germans and Russians agree. This isn't foreign policy. It's the abdication of foreign policy. And it's certainly a direct assault upon the credibility of the United Nations.
The Times believes that Saddam is evil; that he is a real threat to the region and the West; that he has and is trying to gain more wepaons of mass destruction, and that the U.N. inspectors cannot disarm him. But the Times also believes that, even after eleven years of Saddam's defying the U.N., that war should not be an option, that diplomacy can remove Saddam, that the French and Germans should have a veto over American foreign policy, and that time is on our side. That's their position. It is as incoherent as it is cowardly; as weak as it is afraid.
One of the key arguments of those who say we can't go it alone is that we will need the support of many countries to "win the peace." Everyone acknowledges that, with a few exceptions for convenience sake, the US doesn't really need anyone's help to win the actual war (we already have more US soldiers in the guld than are in the entire British Army, for example)--though it'd be nice. But winning the peace will be a long struggle that allies could surely play a useful role in. But here is the point: what country would refuse to aid in the rebuilding of post-war Iraq simply because they didn't pre-approve the war? It seems to me that there are a myriad of examples of the UN and countries all around the world who step in to help in war torn countries rebuild even though they didn't support the war. In fact, this seems to be the rule, not the exception. So this idea that we need allies to win the peace just doesn't seem rational--we may need them, but we'll get them.
Two worthy articles from Thomas Friedman on why liberals fail to appreciate the value of removing Saddam Hussein and why conservatives underestimate the risks of removing Saddam Hussein. I tend to agree with both.