Since early August, when Russian tanks pierced the mountain passes of South Ossetia and rumbled into the Georgian heartland, we have found ourselves in an oddly familiar place. It is like one of those moments when you return to your old neighborhood after decades away. As you walk the streets, there is a warm feeling of familiarity. A sense of comfort, of a time when life was simpler and the rules were clear.
Oh, for the Cold War and the remembrances of things past. It was a time moral clarity, when partisanship ended at the water's edge, of the Marlboro Man and enemies in black hats.
If the Cold War ended one evening in December 1991—when then-Russian President Boris Yeltsin and his compatriots conspired to topple the Soviet state—perhaps the uni-polar world of American power that ensued ended this month. This is not to say that Russia has reemerged as a counterweight to American power, but rather that Russia’s willingness to push back against the West’s determined policy of encirclement has illuminated the limits of American power, and perhaps of American judgment.
The emergence of our new conflict with Russia has come with breathtaking swiftness and the verbal invective has been startling. Condi Rice publicly mocked Vladimir Putin and labeled Russian behavior bizarre. Zbigniew Brzezinski likened the Russian aggression to Hitler’s Germany. Across the political and media class we are assured that we are witnessing unwarranted and irrational aggression. Russian conduct has undermined US-Russian relations and threatens to plunge the world into a new Cold War.
But if there is a surprise here, it is that there is such surprise here. After all, Putin has decried NATO expansion for several years and his concerns have been largely ignored. When Russian tanks rolled into Georgia, Putin's objective was not territorial aggression, but rather to waken the West—and America in particular—to Russia's anger at the continuing policies of encirclement. Ironically, Putin's objective was not to get into a debate about the future of Georgia and South Ossetia, but rather—no doubt clumsily—to elevate bi-lateral discussions to the strategic level.
But as the crisis deepens, as American politicians of all stripes pile on, and as Russia deepens her diplomatic isolation, one has to ask if this is the direction that we want go. Is it really in our interest to play a game of chicken with a nuclear-armed and paranoid adversary?
It did not have to come to this. In the wake of 9/11, the event that was supposed to change everything, Putin made his case for a grand alliance with America. After the planes hit, Putin was the first international leader to call George Bush and pledge his nation’s solidarity and support. Russia provided critical support to US efforts in Afghanistan—where the US had few intelligence assets on the ground—including helping the CIA build critical alliances in Afghanistan and supporting the development of US bases in the former Soviet states in Central Asia. Beyond Afghanistan, Putin proposed to be a partner in dealing with Iran, whose radical Islamism was a vital threat to Russia, within and without.
For Russia’s part, Putin asked that we recognize Russian strategic concerns along with our own. First, he asked that we temper our response to Russia’s internal struggles with Chechen terrorists. Second, he asked that we curtail the expansion of NATO into Georgia, and particularly into Ukraine. Finally, he asked that we not locate missile defense systems in Eastern Europe.
Russia’s fears of America were not irrational, despite our political and media consensus to the contrary. After all, in the wake of the dismantling of the Soviet Union, American policy remained overtly hostile to Russia. Despite assurances to the contrary from Presidents Reagan and Bush, the US supported NATO expansion to Russia's borders; Neoconservatives targeted Russia and Putin for regime change; and mainstream policy advisors argued that US policy must now promote the dismemberment of the Russia.
Putin, it should be noted, was and remains immensely popular in Russia. He has brought stability and pride to the Russian people, after the pain that ensued with the dismemberment of the Soviet empire as Russian people lived through debasement at the hands of their archrival; the destruction of their currency, personal saving and standard of living; environmental degradation through chemical and nuclear contamination; a dramatic decline in mortality; years of internal bombings and terrorism in the nation’s capital at the hands of national separatists; and the plundering of national wealth at the hands of their elected leadership.
Intelligence analyst George Friedman argues that the defining provocation by the West was the Kosovo conflict in 1999. That action—heralded as a success in the West—was implemented under the auspices of NATO after Russia blocked UN action. That event marked the ascendency of NATO—an organization in which Russia has no voice—as an international body empowered to act in support of separatist movements without preexisting legal authority to do so. That authority was vested in the United Nations, which embodied two principles. First, that borders were defined and frozen. Second, that action to change borders could not be undertaken without UN sanction.
For Russia, a country with literally hundreds of ethnic groups, regions and languages, the Kosovo issue and the negation of UN authority threatened to undermine its control of its own borders and state. The West’s support of Kosovo’s declaration of independence earlier this year marked the final step in the undermining of international institutions and rules governing international relations, borders and sovereignty. From the Russian perspective, with Kosovo, the West had laid the legal groundwork for actions not simply to contain Russia, but to begin to break it apart.
When Georgia launched its assault on South Ossetia, Putin seized the moment to raise the question: What rules are going to govern international law and sovereignty in the years ahead? Will the UN rules and the notion of fixed borders apply, as his neighbor to the Georgia claimed in justifying its invasion, or were we going to live under the new Kosovo rules, that the Americans and the West had now embraced, when might would replace right? If NATO could usurp UN authority and christen Kosovo a state, Russia could do the same.
When American Secretary of Defense Robert Gates promptly announced that under no circumstances would America come to Georgia’s aid militarily, he was simply affirming what Putin knew to be the case: In the wake of two long wars and a debased currency, the US has become long on hubris and short on stick, and would not come to Georgia's defense. The era of American uni-polar authority was pronounced to be a dead letter.
Seven years ago, when we were stronger and Russia was weaker, Putin proposed a partnership with America, but we demurred. Yet today, as we face a hostile and expansionist Iran, and a resurgent Taliban, Russia continues to share our interests in controlling Iran and Jihadism. Today, as before, Russia’s cooperation is critical to our efforts in Afghanistan. And today, Russia has become a critical source of energy to Europe and a true partner in the world economy. Today, the logic of US policy that seeks to further destabilize Russia is not apparent. Perhaps, given the challenges we face in the world, and the real threats to our national and economic security, we should consider setting aside our animus toward Russia, just for a little while.
The irony is that Putin does not want the Kosovo rules or a war with the West. The Russian leader knows well that a new arms race will undermine Russia’s future and ability to build a real economy. Sending Russian tanks into Georgia was not a provocation. Quite the contrary. Vladimir Putin was just trying to get our attention.
Perhaps it is time that someone listens.
Saturday, August 30, 2008
Saturday, August 09, 2008
Ivan's ghost
I call on all governments to join with the United States and the community of law-abiding nations in prohibiting, investigating, and prosecuting all acts of torture and in undertaking to prevent other cruel and unusual punishment… Nowhere should the midnight knock foreshadow a nightmare of state-commissioned crime. The suffering of torture victims must end, and the United States calls on all governments to assume this great mission.
President George W. Bush. June 26, 2003
When Dan Levin was appointed to head the Office of Legal Counsel—the Deputy Attorney General whose legal judgments determine what is legal and what is not—in 2005, it fell to him to address the question that loomed as a brewing crisis deep inside the Bush Administration: What constituted torture, and were the interrogation practices that had come to be accepted as permissible at the CIA Black Sites and Guantanamo Bay—but which were rejected as torture by the FBI and many in the military—illegal under US and international law?
Levin, a meticulous lawyer, ultimately determined that he could only parse the meanings of suffering and pain, and offer guidance on the outer limits of suffering that agents of the United States government could legally inflict on prisoners, if he subjected himself to the interrogation practices that his opinion sought to judge. And so he did.
Levin’s actions defined the seriousness of purpose that characterized those who put their professional integrity and careers on the line to oppose the power of the Vice Presidency in the Bush Administration, and oppose the policies and practices that characterized the Dark Side of the Global War on Terror.
All Americans should read The Dark Side, Jane Mayer’s new book on the GWOT, and the battle that it depicts for the hearts, minds and soul of America that was fought between and among senior members of the Bush administration. Try as one might to view this as partisan treatise, one comes to the inescapable realization that it is about the seductive quality of retribution.
This is not a partisan issue for the simple reason—as Mayer has noted about her own post-9/11 sympathies—that in the early days following 9/11, New Yorkers—and Americans—of all political stripes, were little concerned by thoughts that our nation might overstep the bounds of legality, propriety and moral conduct in the GWOT that would unfold.
The apparent fact is that the interrogation practices at issue yielded little if any actionable intelligence. Now, we are left to look into the mirror as Americans and ponder the excesses that were done in our name, and that we condoned in the wake of the fear and moral outrage brought on by the 9/11 attacks. Excesses that were condoned and embraced as the price of fighting this new type of war that demanded extraordinary measures, even as those within the Administration with experience in these matters argued—almost to a man—the methods employed would not be effective.
This book forces the reader to consider questions far beyond the simple question of the effectiveness of torture as an intelligence tool—justified under the ticking bomb rationale and the popularity of the TV show 24. What about kidnapping and torturing an innocent bystander? Would intent or lack thereof suffice to provide protection against criminal charges or war crimes prosecution? What if the information gleaned from torture was not critical, or proved unreliable? What if years passed and the ticking bomb argument had long faded? What if at every step of the way, dissenters at senior levels argued that the actions were illegal? What if the FBI as an institution dissented and declined to participate, and the military leadership and legal counsel argued that the entire infrastructure put in place following 9/11 was a legal and moral violation of the nation’s history and purpose?
Now, as we recognize the passing of Alexander Solzhenitsyn, we have to consider where we go from here. Where do we go as a nation that willfully embraced inhumane and illegal actions not in pursuit of information, but for the satisfactions of retribution. As we recall the Life of Ivan Denisovich—the iconic symbolic of a government’s abuse of power—we must now consider our complicity in the life of Khaled el-Masri, a German citizen who was kidnapped, flown to a secret prison and tortured—his life destroyed—all while his American overseers believed him to be innocent. Not Masri because he was one person caught up in Kafka’s nightmare, but because he was but one person caught up in a system of our creation that to this day the public believes was justified.
He who does battle with monsters needs to watch out lest he in the process becomes a monster himself. And if you stare too long into the abyss, the abyss will stare right back at you.
Frederich Neitzsche. Beyond Good and Evil
Read Mayer’s book. Consider the comment of a CIA official involved in the Masri affair when George Tenet, Condi Rice and Colin Powell debated the need to tell the German government what they had done to one of their citizens, “For guys who are basically running ‘Kidnap Inc.’ they sure were pretty squeamish.”
How squeamish will we be when forced to come to grips with the events that transpired? What happens when on a trip to Europe, Dick Cheney or Alberto Gonzales or one of many others is arrested and presented with an indictment on war crimes or criminal conspiracy charges by Germany, on behalf of Khaled el-Masri, or some other nation whose citizens were caught in our web? How will the American President lead the nation through the outrage that will ensue?
For all of the talk of post-partisanship, the demands on America’s new president to lead us through the recriminations that will ensue will be trying. The true test of leadership will be how the president we select is able to temper the emotions of their own partisans, and lead us as a nation through an acceptance of the facts and a resolution of the direction forward. John McCain or Barack Obama may face challenges on the economy and the wars, but the greatest challenge may well be leading us through the miasma of emotions and politics that will ensue as we finally come to grips with what has become of us.
President George W. Bush. June 26, 2003
When Dan Levin was appointed to head the Office of Legal Counsel—the Deputy Attorney General whose legal judgments determine what is legal and what is not—in 2005, it fell to him to address the question that loomed as a brewing crisis deep inside the Bush Administration: What constituted torture, and were the interrogation practices that had come to be accepted as permissible at the CIA Black Sites and Guantanamo Bay—but which were rejected as torture by the FBI and many in the military—illegal under US and international law?
Levin, a meticulous lawyer, ultimately determined that he could only parse the meanings of suffering and pain, and offer guidance on the outer limits of suffering that agents of the United States government could legally inflict on prisoners, if he subjected himself to the interrogation practices that his opinion sought to judge. And so he did.
Levin’s actions defined the seriousness of purpose that characterized those who put their professional integrity and careers on the line to oppose the power of the Vice Presidency in the Bush Administration, and oppose the policies and practices that characterized the Dark Side of the Global War on Terror.
All Americans should read The Dark Side, Jane Mayer’s new book on the GWOT, and the battle that it depicts for the hearts, minds and soul of America that was fought between and among senior members of the Bush administration. Try as one might to view this as partisan treatise, one comes to the inescapable realization that it is about the seductive quality of retribution.
This is not a partisan issue for the simple reason—as Mayer has noted about her own post-9/11 sympathies—that in the early days following 9/11, New Yorkers—and Americans—of all political stripes, were little concerned by thoughts that our nation might overstep the bounds of legality, propriety and moral conduct in the GWOT that would unfold.
The apparent fact is that the interrogation practices at issue yielded little if any actionable intelligence. Now, we are left to look into the mirror as Americans and ponder the excesses that were done in our name, and that we condoned in the wake of the fear and moral outrage brought on by the 9/11 attacks. Excesses that were condoned and embraced as the price of fighting this new type of war that demanded extraordinary measures, even as those within the Administration with experience in these matters argued—almost to a man—the methods employed would not be effective.
This book forces the reader to consider questions far beyond the simple question of the effectiveness of torture as an intelligence tool—justified under the ticking bomb rationale and the popularity of the TV show 24. What about kidnapping and torturing an innocent bystander? Would intent or lack thereof suffice to provide protection against criminal charges or war crimes prosecution? What if the information gleaned from torture was not critical, or proved unreliable? What if years passed and the ticking bomb argument had long faded? What if at every step of the way, dissenters at senior levels argued that the actions were illegal? What if the FBI as an institution dissented and declined to participate, and the military leadership and legal counsel argued that the entire infrastructure put in place following 9/11 was a legal and moral violation of the nation’s history and purpose?
Now, as we recognize the passing of Alexander Solzhenitsyn, we have to consider where we go from here. Where do we go as a nation that willfully embraced inhumane and illegal actions not in pursuit of information, but for the satisfactions of retribution. As we recall the Life of Ivan Denisovich—the iconic symbolic of a government’s abuse of power—we must now consider our complicity in the life of Khaled el-Masri, a German citizen who was kidnapped, flown to a secret prison and tortured—his life destroyed—all while his American overseers believed him to be innocent. Not Masri because he was one person caught up in Kafka’s nightmare, but because he was but one person caught up in a system of our creation that to this day the public believes was justified.
He who does battle with monsters needs to watch out lest he in the process becomes a monster himself. And if you stare too long into the abyss, the abyss will stare right back at you.
Frederich Neitzsche. Beyond Good and Evil
Read Mayer’s book. Consider the comment of a CIA official involved in the Masri affair when George Tenet, Condi Rice and Colin Powell debated the need to tell the German government what they had done to one of their citizens, “For guys who are basically running ‘Kidnap Inc.’ they sure were pretty squeamish.”
How squeamish will we be when forced to come to grips with the events that transpired? What happens when on a trip to Europe, Dick Cheney or Alberto Gonzales or one of many others is arrested and presented with an indictment on war crimes or criminal conspiracy charges by Germany, on behalf of Khaled el-Masri, or some other nation whose citizens were caught in our web? How will the American President lead the nation through the outrage that will ensue?
For all of the talk of post-partisanship, the demands on America’s new president to lead us through the recriminations that will ensue will be trying. The true test of leadership will be how the president we select is able to temper the emotions of their own partisans, and lead us as a nation through an acceptance of the facts and a resolution of the direction forward. John McCain or Barack Obama may face challenges on the economy and the wars, but the greatest challenge may well be leading us through the miasma of emotions and politics that will ensue as we finally come to grips with what has become of us.
Saturday, May 17, 2008
Endgame
Could there be a worse idea from the Obama campaign than declaring victory on May 20th? Maybe, but for a campaign that has ridden successfully through some very rough waters, you would not imagine they would save their tactical miscues for the all-important endgame. Or pronounce them with such fanfare in advance.
Clearly, the campaign leadership is tired, and hoping to bring this long saga to an end. But what they suggest as an event to provide closure will do exactly the opposite.
This has been a long and dramatic campaign. Indeed, through all of the drama and the sweep of the narrative—from the early predictions of an all-New York contest pitting Clinton against Guiliani, to Michael Bloomberg’s flirtations, Mark Warner’s non-flirtations and Fred Thompson’s failed flirtations, to these final months of the resurgent Clinton drive—two things have proven out. First, public opinion polling is a ragged science. Second, hubris will not go unpunished.
Which brings us back to May 20th.
Barack Obama has won the Democratic nomination. Barring the tsunami that remains the whispered hope of Terry McAuliffe, Howard Wolfson and Harold Ickes, the race is over. They held a primary in West Virginia, and no one cared.
What is left in the Democrat race is the denouement of Hillary Clinton’s campaign and the beginning of the reconstruction of the spirit and determination of a divided party. The Hudna, if you will, when emotions calm in advance of the real battles yet to come.
What remains is for Hillary Clinton to choose her time and place for showing the strength of character and resolve to lead her proud and determined troupes into the tent. This Obama cannot do, but this the Obama campaign can surely undermine. Clinton and even more her followers need time and calm and an opening to move toward unity. The test of character for Obama is remain still and allow this to happen.
The Clinton campaign has mapped out the steps for this to occur. Like the Obama campaign, they have broadcast their plans for the endgame. Oregon and Kentucky will vote. The Party will meet in due course on May 31st to address the Florida and Michigan situation. Puerto Rico will vote on June 3rd, two weeks from now.
And then it will be over. As Clinton has suggested, all voters will have had their say. All outstanding issues will have been formally addressed. The math will be the math, and the outcome will be clear. The dance will be complete. Then, after whatever negotiations are to be had—whether around campaign debts, the vice-presidency or a nomination to the Supreme Court—Clinton will stand with Obama on a stage.
Standing with him at her side, she will offer her fiery oratory against John McCain, call her supporters to arms, declare her full-throated support of her erstwhile adversary, and stand united with him, hands joined and arms aloft.
Which brings us back to May 20th.
The proposed victory declaration does nothing to advance this agenda. Clinton’s West Virginia victory offered conclusive proof that the end has come. This is the endgame not of the battles but of the party nomination process. This is a time for quiet attention to mending, rather than the pounding of chests and gloating that will only cast new fuel on the dying embers, and rip open wounds that are just looking for reasons to heal.
Clearly, the campaign leadership is tired, and hoping to bring this long saga to an end. But what they suggest as an event to provide closure will do exactly the opposite.
This has been a long and dramatic campaign. Indeed, through all of the drama and the sweep of the narrative—from the early predictions of an all-New York contest pitting Clinton against Guiliani, to Michael Bloomberg’s flirtations, Mark Warner’s non-flirtations and Fred Thompson’s failed flirtations, to these final months of the resurgent Clinton drive—two things have proven out. First, public opinion polling is a ragged science. Second, hubris will not go unpunished.
Which brings us back to May 20th.
Barack Obama has won the Democratic nomination. Barring the tsunami that remains the whispered hope of Terry McAuliffe, Howard Wolfson and Harold Ickes, the race is over. They held a primary in West Virginia, and no one cared.
What is left in the Democrat race is the denouement of Hillary Clinton’s campaign and the beginning of the reconstruction of the spirit and determination of a divided party. The Hudna, if you will, when emotions calm in advance of the real battles yet to come.
What remains is for Hillary Clinton to choose her time and place for showing the strength of character and resolve to lead her proud and determined troupes into the tent. This Obama cannot do, but this the Obama campaign can surely undermine. Clinton and even more her followers need time and calm and an opening to move toward unity. The test of character for Obama is remain still and allow this to happen.
The Clinton campaign has mapped out the steps for this to occur. Like the Obama campaign, they have broadcast their plans for the endgame. Oregon and Kentucky will vote. The Party will meet in due course on May 31st to address the Florida and Michigan situation. Puerto Rico will vote on June 3rd, two weeks from now.
And then it will be over. As Clinton has suggested, all voters will have had their say. All outstanding issues will have been formally addressed. The math will be the math, and the outcome will be clear. The dance will be complete. Then, after whatever negotiations are to be had—whether around campaign debts, the vice-presidency or a nomination to the Supreme Court—Clinton will stand with Obama on a stage.
Standing with him at her side, she will offer her fiery oratory against John McCain, call her supporters to arms, declare her full-throated support of her erstwhile adversary, and stand united with him, hands joined and arms aloft.
Which brings us back to May 20th.
The proposed victory declaration does nothing to advance this agenda. Clinton’s West Virginia victory offered conclusive proof that the end has come. This is the endgame not of the battles but of the party nomination process. This is a time for quiet attention to mending, rather than the pounding of chests and gloating that will only cast new fuel on the dying embers, and rip open wounds that are just looking for reasons to heal.
Sunday, April 27, 2008
Gas tax holiday nonsense
There really was not good news last week. Facing the combined impact of skyrocketing oil prices, rising food prices, falling home prices and tighter credit, the American consumer is in a bad mood, and the University of Michigan consumer sentiment index in April fell below forecast level to the lowest level since 1982. In addition, the U.S. economy lost 80,000 jobs in March, the most in five years—bringing the total jobs lost over the first quarter of the year to a hair under a quarter million—and the jobless rate rose to 5.1 percent, the highest level in more than two years.
For the first time in a generation—since the Ronald Reagan pronounced it Morning in America—the U.S. economy is losing jobs and Americans may be facing a real and prolonged recession, not just one of those two or three-quarter slow-downs that have pretended to be economic hard times since Paul Volker ruled the fed and tamed the post-Vietnam stagflation with the harsh economic medicine. How many remember that back in the day, inflation and unemployment each could be measured in double-digits, and the key measure—the Misery Index—was calculated by adding the two together.
Oil, the underpinning of the American economy and American culture for a half-century, has doubled in price over the past three years and increased by 20% in the past few months alone, and sits above $119 per barrel. Normally, hurricanes in the Gulf, political unrest in Nigeria or failing production facilities in Venezuela lead to spikes in energy costs, and lower prices in the futures market illustrate the transitory nature of market unrest. But not so today. Sure, there were some military skirmishes in the Persian Gulf this week—real ones, not just Hillary Clinton’s threats to obliterate Iran—and political unrest in Nigeria was back in the news—but high oil prices look to be with us for a while, as the futures market projects oil above $110 through the middle of the next decade—as far out as futures are traded. At the pump, this means that the $4.00 gas price is not an aberration. Energy markets are spilling over into the supermarket as well, as well, as flour and eggs and other basic foodstuffs are showing the affect of the diversion of 25% of America’s corn crop into ethanol production.
It will be an interesting question to see if the political establishment can rise to the challenge of steering a democracy through the dramatic shifts that are affecting our economy and world. So far, even as President Bush pronounced that help is on the way—in the form of the stimulus rebate checks—one has to wonder if there is not some form of leadership that might be called for other than throwing money—Chinese money at that—at the problem. After all, if $4.00 gas is our lot, perhaps a gas tax holiday, as proposed by Republican presidential candidate McCain is neither sound policy nor responsible leadership.
All pandering aside, shouldn’t a proposal that will: (i) increase gas use, (ii) increase oil company revenues, (iii) increase demand pressures on the price of oil, (iv) increase oil company earnings, (v) reduce government trust fund resources for rebuilding transportation infrastructure, (vi) increase oil company earnings, (vii) increase petrodollar outflow to Gulf states, (viii) increase downward pressure on the dollar, and (ix) not necessarily reduce prices at the pump, be greeted with some skepticism? Somewhere?
It is fair and appropriate for our elected officials to want to do something to help. But faced with the looming recognition that the ethanol subsidies built into the President’s energy program have proven to be a debacle for the consumer—even if a boon to the farmer—perhaps some more thought should be given to the gas tax holiday. After all, the government’s goal should be help the situation over the longer term, and even if you happen to be a Senator looking to a fall presidential vote, policies should stand up to some modicum of scrutiny.
For the first time in a generation—since the Ronald Reagan pronounced it Morning in America—the U.S. economy is losing jobs and Americans may be facing a real and prolonged recession, not just one of those two or three-quarter slow-downs that have pretended to be economic hard times since Paul Volker ruled the fed and tamed the post-Vietnam stagflation with the harsh economic medicine. How many remember that back in the day, inflation and unemployment each could be measured in double-digits, and the key measure—the Misery Index—was calculated by adding the two together.
Oil, the underpinning of the American economy and American culture for a half-century, has doubled in price over the past three years and increased by 20% in the past few months alone, and sits above $119 per barrel. Normally, hurricanes in the Gulf, political unrest in Nigeria or failing production facilities in Venezuela lead to spikes in energy costs, and lower prices in the futures market illustrate the transitory nature of market unrest. But not so today. Sure, there were some military skirmishes in the Persian Gulf this week—real ones, not just Hillary Clinton’s threats to obliterate Iran—and political unrest in Nigeria was back in the news—but high oil prices look to be with us for a while, as the futures market projects oil above $110 through the middle of the next decade—as far out as futures are traded. At the pump, this means that the $4.00 gas price is not an aberration. Energy markets are spilling over into the supermarket as well, as well, as flour and eggs and other basic foodstuffs are showing the affect of the diversion of 25% of America’s corn crop into ethanol production.
It will be an interesting question to see if the political establishment can rise to the challenge of steering a democracy through the dramatic shifts that are affecting our economy and world. So far, even as President Bush pronounced that help is on the way—in the form of the stimulus rebate checks—one has to wonder if there is not some form of leadership that might be called for other than throwing money—Chinese money at that—at the problem. After all, if $4.00 gas is our lot, perhaps a gas tax holiday, as proposed by Republican presidential candidate McCain is neither sound policy nor responsible leadership.
All pandering aside, shouldn’t a proposal that will: (i) increase gas use, (ii) increase oil company revenues, (iii) increase demand pressures on the price of oil, (iv) increase oil company earnings, (v) reduce government trust fund resources for rebuilding transportation infrastructure, (vi) increase oil company earnings, (vii) increase petrodollar outflow to Gulf states, (viii) increase downward pressure on the dollar, and (ix) not necessarily reduce prices at the pump, be greeted with some skepticism? Somewhere?
It is fair and appropriate for our elected officials to want to do something to help. But faced with the looming recognition that the ethanol subsidies built into the President’s energy program have proven to be a debacle for the consumer—even if a boon to the farmer—perhaps some more thought should be given to the gas tax holiday. After all, the government’s goal should be help the situation over the longer term, and even if you happen to be a Senator looking to a fall presidential vote, policies should stand up to some modicum of scrutiny.
The role of the government is not to prevent markets from working, but to give people the tools and information they need to make prudent and long-term choices. Perhaps our perspective on energy should adjust if the world of energy is itself changing. If energy is going to be a dear and costly commodity in the future, perhaps we are better off as consumers understanding that message. Here is an idea: how about building the subsidies now larded into the budget for each energy source into the price. That is to say stop subsidizing and focus instead on letting markets work, letting the consumer know the full price of what they are using so that they can adjust their choices according.
Internalization of external costs is not a new idea, it just happens to be one that many industries prefer to avoid. The nuclear power industry is loath to pay the cost of insuring against nuclear accidents or the cost of disposal. The oil industry no doubt would hate to see the cost of defending oil resources in unstable countries built into the cost at the pump. But the alternative is that we pay for these things anyway, but by not bearing the full cost when we drive or when we operate our appliances, we simply delay that much further the day when new forms of energy become competitive in the marketplace.
Would it be a tough sell? Perhaps. But there is only one wallet here. Ours. Assuming of course that we plan to pay back all the money we are borrowing from the Chinese.
It is all about honesty. Markets are tough, as anyone who has been buying eggs or flour recently can tell you. But markets are where freedom of choice and honesty of consequences are allowed to play out, without regard to political ideology or pandering. So instead of cutting taxes on gasoline, consider a plan to increase them. Slowly, predictable, over time.
Increase taxes or fees on oil or carbon to internalize as much of the true cost as possible. At the same time reduce income taxes in tandem. Return to basic principles: make subsidies transparent, internalize costs, let markets work. And remember that the money all comes out of the pockets of the electorate. The best politicians can do is provide good information, make things as efficient as possible, and get out of the way.
Someone, tell that to John McCain.
Increase taxes or fees on oil or carbon to internalize as much of the true cost as possible. At the same time reduce income taxes in tandem. Return to basic principles: make subsidies transparent, internalize costs, let markets work. And remember that the money all comes out of the pockets of the electorate. The best politicians can do is provide good information, make things as efficient as possible, and get out of the way.
Someone, tell that to John McCain.
Monday, April 21, 2008
Before the Pennsylvania primary
Forget what happens in Pennsylvania tomorrow. It doesn’t matter.
Hillary Clinton will not leave the race for one simple reason. The Democratic Party is heading for a train wreck of catastrophic proportions, and she—for one—is not going to step aside and watch it happen.
The United States of America is not going to elect Barack Obama to be its next president. Not gonna happen. That is what she told Bill Richardson when her long-time friend and her husband’s cigar buddy called to say he was going to endorse her opponent.
Bill. He CANNOT win.
Not you are betraying me and my husband. Not I am a better candidate.
He CANNOT win.
Not an opinion. A statement of fact.
This is not about race. This is not about experience. This is not about who has a better health care plan.
This is not about whether Reverend Jeremiah Wright loves America. Or whether Bill Ayers loves America. Or whether Barack Obama wears a flag pin. Or Whatever. And it sure as hell is not about whether there was a sniper in the woods one brisk morning on the tarmac in Tuzla.
For all of the arguments back and forth—He said, she said. He said she said—this race is about a simple question:
Are American politics going to change fundamentally?
That is the question. Hillary is running as the embodiment of the premise that politics is hardball, it is tough and it is a zero-sum game. There are votes, there are winners and there are losers. This is the way of American politics, from the early years forward. Any suggestion that today’s harsh partisanship is a new phenomenon is a misreading of our nation’s political history.
Barack Obama is running to create a new politics, a politics where people come together and deal with tough problems in a non-partisan way. He is suggesting that the famous injunction of Senator Arthur Vandenburg—that partisanship should end at the water’s edge—should be extended from foreign policy to domestic policy. He is suggesting that instead of extending the politics of division and wedge issues to foreign policy—as we have now successfully done—we should be doing the reverse. Rolling back the tide of partisanship.
As Hillary Clinton sees the world, the tide of partisanship is not going to be rolled back. It is part of who we are. Politics is about winning and losing. That is why we vote. This race is about who will be cared for in the years ahead. Hedge fund managers or single mothers with no health coverage. And it is about the Supreme Court.
Either we win or they win. So you see, the race is not about whether Reverend Jeremiah Wright loves America. Or whether Bill Ayers loves America. Or whether Barack Obama loves America. Or whatever.
But that is what the fall election is going to be about. Because the Republicans know that most Americans want life to be simple, not complicated. Sitting around their kitchen tables, Americans want to be safe. They want to believe that their country is a good country, and that they are a good people. They don’t want erudite speeches. They don’t really want to deal with tough problems, if they aren’t their problem. The American people want lower taxes. They want good jobs. And—Yes, Virginia—they believe in the private sector and capitalism—and by and large they believe that the old saw—I am from the Government and I am here to help you—is in an oxymoron.
Democrats can’t win when they make things complicated. And Barack Obama is making things complicated. Hope is complicated. Change is complicated.
What is shocking is the number of Senators and Governors, and others who should know better, who have endorsed Senator Obama as a response to their children’s conviction. Senators and Governors and others who should know better have been drawn into an idealistic fantasy world.
The Clintons, on the other hand, are adults who see the world for what it is, and will do whatever it takes to keep the Democratic Party from succumbing to all of the self-righteous, self-absorbed idealistic claptrap. Someone has to keep the children of America from leading their parents down a Yellow Brick Road after a Pied Piper on a path that leads nowhere.
He CANNOT win.
Not an opinion. A statement of fact.
So Hillary Clinton is not getting out of the race. No matter what happens tomorrow.
Because as she sees the world, the future of the Democratic Party is at stake.
Hillary Clinton will not leave the race for one simple reason. The Democratic Party is heading for a train wreck of catastrophic proportions, and she—for one—is not going to step aside and watch it happen.
The United States of America is not going to elect Barack Obama to be its next president. Not gonna happen. That is what she told Bill Richardson when her long-time friend and her husband’s cigar buddy called to say he was going to endorse her opponent.
Bill. He CANNOT win.
Not you are betraying me and my husband. Not I am a better candidate.
He CANNOT win.
Not an opinion. A statement of fact.
This is not about race. This is not about experience. This is not about who has a better health care plan.
This is not about whether Reverend Jeremiah Wright loves America. Or whether Bill Ayers loves America. Or whether Barack Obama wears a flag pin. Or Whatever. And it sure as hell is not about whether there was a sniper in the woods one brisk morning on the tarmac in Tuzla.
For all of the arguments back and forth—He said, she said. He said she said—this race is about a simple question:
Are American politics going to change fundamentally?
That is the question. Hillary is running as the embodiment of the premise that politics is hardball, it is tough and it is a zero-sum game. There are votes, there are winners and there are losers. This is the way of American politics, from the early years forward. Any suggestion that today’s harsh partisanship is a new phenomenon is a misreading of our nation’s political history.
Barack Obama is running to create a new politics, a politics where people come together and deal with tough problems in a non-partisan way. He is suggesting that the famous injunction of Senator Arthur Vandenburg—that partisanship should end at the water’s edge—should be extended from foreign policy to domestic policy. He is suggesting that instead of extending the politics of division and wedge issues to foreign policy—as we have now successfully done—we should be doing the reverse. Rolling back the tide of partisanship.
As Hillary Clinton sees the world, the tide of partisanship is not going to be rolled back. It is part of who we are. Politics is about winning and losing. That is why we vote. This race is about who will be cared for in the years ahead. Hedge fund managers or single mothers with no health coverage. And it is about the Supreme Court.
Either we win or they win. So you see, the race is not about whether Reverend Jeremiah Wright loves America. Or whether Bill Ayers loves America. Or whether Barack Obama loves America. Or whatever.
But that is what the fall election is going to be about. Because the Republicans know that most Americans want life to be simple, not complicated. Sitting around their kitchen tables, Americans want to be safe. They want to believe that their country is a good country, and that they are a good people. They don’t want erudite speeches. They don’t really want to deal with tough problems, if they aren’t their problem. The American people want lower taxes. They want good jobs. And—Yes, Virginia—they believe in the private sector and capitalism—and by and large they believe that the old saw—I am from the Government and I am here to help you—is in an oxymoron.
Democrats can’t win when they make things complicated. And Barack Obama is making things complicated. Hope is complicated. Change is complicated.
What is shocking is the number of Senators and Governors, and others who should know better, who have endorsed Senator Obama as a response to their children’s conviction. Senators and Governors and others who should know better have been drawn into an idealistic fantasy world.
The Clintons, on the other hand, are adults who see the world for what it is, and will do whatever it takes to keep the Democratic Party from succumbing to all of the self-righteous, self-absorbed idealistic claptrap. Someone has to keep the children of America from leading their parents down a Yellow Brick Road after a Pied Piper on a path that leads nowhere.
He CANNOT win.
Not an opinion. A statement of fact.
So Hillary Clinton is not getting out of the race. No matter what happens tomorrow.
Because as she sees the world, the future of the Democratic Party is at stake.
Monday, April 14, 2008
Confessions of a bitter elitist
Elton John was blunt and to the point: If Hillary Clinton loses, the misogyny of the voters will be to blame. He was not the first to make the case. After all, Robin Morgan’s email—to name one—was a legal brief of the wrongs that have been done to women. Her only failing was in not making the connection as to why that compelled the reader to redress the past by pulling the lever for her woman.
Gloria Steinem took the argument a step further, making the startling suggestion that the reason to vote for Hillary is that Black men have had the vote for a half-century longer than women. Again, both the credulity of the argument and the political conclusion seemed questionable—or as one friend suggested, “And therefore what, exactly?”
I can find many reasons to support Hillary Clinton for president. She is very smart. She knows the issues—domestic and international—inside and out. She is determined. And she will fight to the death for what matters to her. And I have great respect for anyone who has embraced her for her strengths, forgiven her weaknesses and will go to the mat for her. No problem.
But there are many reasons that one might quarrel with the argument that Hillary is most qualified to be the standard bearer for the Democratic Party, and they are valid and compelling arguments for declining to support Hillary’s candidacy now.
Failed Leadership in the Past. Hillary’s record of executive leadership is thin, but the single instance when she was handed the mantle was with health care reform under her husband’s administration. While it is rarely discussed—which is particularly surprising given that her experience with healthcare is central to candidacy—that episode was a debacle. The secrecy and arrogance of her approach led directly to its failure, to the Gingrich Revolution and to her husbands embrace of the Republican welfare reform bill, in order to reestablish is own credibility in Washington.
Ability to Learn From Mistakes. One of the hallmarks of executive leadership is the ability to learn and adapt from mistakes. Indeed, some would argue that failure is as important one’s growth as a chief executive as success. Hillary’s current approach to healthcare—suggesting once again that her plan and her ability alone can deliver results—evidences little learning from her past performance.
The Urge to Power Overwhelms the Urge to Change. It has become a staple of late night comedy that Hillary is finding her voice. At age 60, most politicians know who they are [Mitt Romney is not 60 yet, give him time]. The long time complaint of Republicans against Bill Clinton was that he had no core principles beyond the will to power, and that he would throw anyone under the bus who got in his way. Hillary was always viewed on the left as the principled voice of the Clintons, but that stance ended with her embrace of welfare reform and alienation of Peter and Marion Wright Edelman.
By the end of the Clinton administration, Hillary had embraced welfare reform and the deregulation of the financial system [see Sub-Prime Crisis at Wikipedia] as well as free trade and other initiatives that enabled the Clintons’ to triangulate between the left and the right. This week, Hillary is a churchgoing, gun-toting, working class gal. Just imagine what tomorrow might bring.
If you ask yourself one simple question, it illustrates the quandary with Hillary: What type of Commander in Chief would she be? Would she emulate Maggie Thatcher to prove herself to the military and to the male establishment or would she bring a fundamentally different perspective and set of values to the job? What would trump, her core beliefs or some kind of triangulation algorithm? How does Hillary measure her own success? The differences among the candidates in this regard is significant. One can easily imagine John McCain or Barack Obama losing this race and moving on with their lives. Hillary, and Bill, evince a need to win that is deep and urgent .
Issue of Corruption. Hillary has had a virtual pass on the most troubling issue in the Clinton use of power. The fundraising scandals with Johnny Chung and Norman Hsu have only been the most traditional areas where money was raised and laundered, and favors were granted. The pardons were far more egregious, and none more egregious than the pardon given to Marc Rich. While many would argue that this is old news, it is not. The pardons came on the last day of the Clinton presidency, and most voters likely never gave any of it a second thought. It is, after all, politics.
But the case of fugitive financier Marc Rich was not just politics, but has all the appearances of old-time corruption. The Justice Department was adamant that Rich not be pardoned. Bill Clinton said he was just following the process. When Congress investigated, the participants took the Fifth Amendment. But in the wake of the pardon the Clintons received hundreds of thousands of dollars for the library and the foundation.
Before descending farther into the rhetoric of a right-wing nut, it is important to note that the contributions to the foundation and the library remain sealed at the Clintons’ request. The Colombia trade agreement issue that was just in the center of the news is important not because of who does or does not believe in free trade at the Clinton’s kitchen table. Rather, it is the important issue of how a husband and wife address issues of policy and corruption. Which brings up the final issue.
Mixing Business with Business. Bill Clinton received $800,000 for speeches in support of the Colombia free trade agreement. He then contributed the funds to Hillary’s campaign. He received a $30 million contribution to his foundation—with $100 million yet to come—for helping a Canadian win a uranium contract in Kazakhstan. The use of a tax-exempt foundation to garner benefits from public action —and therefore as a tool of public corruption—first found fertile soil in Philadelphia. The question that has barely been raised in the media is what the rules are for a husband-wife presidency, and how Bill’s activities will be monitored and constrained. He has already said that contributors to both the library and the foundation will be made public after she is in the White House—but only contributors going forward. He has said that he owes a promise of confidentiality to the contributors—a debt that apparently is greater than he owes the voting public.
Manipulation in Pursuit of Power. OK. This one is unfair. After all, campaigns are all about manipulating the public in pursuit of power. But the premise of Microtrends, Mark Penn’s book and central to his political outlook, is that success is achieved by targeting myriad archetypal groups and selling each what they want to hear. And so as the time is winding down on the campaign, Hillary is morphing to each audience. In Scranton, she is the church-going, gun-shooting child of rural America. In Pittsburgh she is the protectionist old-time union activist. In Erie, she is the working class girl who worked the night shift. The problem of with the microtrends strategy is that people have a history—which in Hillary’s case is of being a Hollywood-loving, anti-gun, free-trader, from a middle class family, albeit with enough caveats along the way to give her cover. Microtrends is a demographic theory, and one with great salience for Proctor & Gamble and Saatchi & Saatchi. But for a politician still seeking her voice, it reeks of exigency and a lack of core principles or purpose.
But with her back against the wall, Elton John delivered the message that has become the bludgeon used against Obama supporters: Hillary is only losing because of misogyny among the electorate. This is not delivered as a social critique—a claim that in the privacy of the voting booth people’s prejudices emerge—rather it is an attack on the individuals working for or supporting Obama. This is the ultimate extension of the politics of political correctness: If you don’t vote for her—not a woman, but this woman—it is an indictment of your character.
So we have come full circle. The essence of the political race is no longer about the character of the candidate. It is now about the character of the electorate. If Hillary loses, it will be because of misogyny and unfairness. Forget issues of her own past conduct or performance, forget the manipulations of a campaign of inevitability, forget issues of corruption and conflicts of interest. If she wins Robin Morgan and Gloria Steinem and others who are standing at the barricades with their fists thrust in the air shouting No Passaran should not be surprised if after they have invested their hopes and dreams, Hill and Bill do not turn on them as they have on others whenever it suits their purposes.
The other day, Hillary suggested that only she could end the war in Iraq. On the face of it, it was a preposterous statement. What if she gets hit by a bus? Will the war go on forever? For 100 years? I think not. The world will survive if she is not the next president. And a judgment of whether to support her candidacy can be made fairly and honestly, based on the history that she—and her husband—have made.
If Hillary loses, she and Bill should fully embrace that they were the lead actors in her demise. The media gave her all the advantages of incumbency as they embraced the narrative of inevitability for more than a year—until losing Iowa undermined the premise. It was no Establishment White Man that was her undoing, but a judgment that it is time to turn the page and look forward to a future of new personalities and new possibilities.
Gloria Steinem took the argument a step further, making the startling suggestion that the reason to vote for Hillary is that Black men have had the vote for a half-century longer than women. Again, both the credulity of the argument and the political conclusion seemed questionable—or as one friend suggested, “And therefore what, exactly?”
I can find many reasons to support Hillary Clinton for president. She is very smart. She knows the issues—domestic and international—inside and out. She is determined. And she will fight to the death for what matters to her. And I have great respect for anyone who has embraced her for her strengths, forgiven her weaknesses and will go to the mat for her. No problem.
But there are many reasons that one might quarrel with the argument that Hillary is most qualified to be the standard bearer for the Democratic Party, and they are valid and compelling arguments for declining to support Hillary’s candidacy now.
Failed Leadership in the Past. Hillary’s record of executive leadership is thin, but the single instance when she was handed the mantle was with health care reform under her husband’s administration. While it is rarely discussed—which is particularly surprising given that her experience with healthcare is central to candidacy—that episode was a debacle. The secrecy and arrogance of her approach led directly to its failure, to the Gingrich Revolution and to her husbands embrace of the Republican welfare reform bill, in order to reestablish is own credibility in Washington.
Ability to Learn From Mistakes. One of the hallmarks of executive leadership is the ability to learn and adapt from mistakes. Indeed, some would argue that failure is as important one’s growth as a chief executive as success. Hillary’s current approach to healthcare—suggesting once again that her plan and her ability alone can deliver results—evidences little learning from her past performance.
The Urge to Power Overwhelms the Urge to Change. It has become a staple of late night comedy that Hillary is finding her voice. At age 60, most politicians know who they are [Mitt Romney is not 60 yet, give him time]. The long time complaint of Republicans against Bill Clinton was that he had no core principles beyond the will to power, and that he would throw anyone under the bus who got in his way. Hillary was always viewed on the left as the principled voice of the Clintons, but that stance ended with her embrace of welfare reform and alienation of Peter and Marion Wright Edelman.
By the end of the Clinton administration, Hillary had embraced welfare reform and the deregulation of the financial system [see Sub-Prime Crisis at Wikipedia] as well as free trade and other initiatives that enabled the Clintons’ to triangulate between the left and the right. This week, Hillary is a churchgoing, gun-toting, working class gal. Just imagine what tomorrow might bring.
If you ask yourself one simple question, it illustrates the quandary with Hillary: What type of Commander in Chief would she be? Would she emulate Maggie Thatcher to prove herself to the military and to the male establishment or would she bring a fundamentally different perspective and set of values to the job? What would trump, her core beliefs or some kind of triangulation algorithm? How does Hillary measure her own success? The differences among the candidates in this regard is significant. One can easily imagine John McCain or Barack Obama losing this race and moving on with their lives. Hillary, and Bill, evince a need to win that is deep and urgent .
Issue of Corruption. Hillary has had a virtual pass on the most troubling issue in the Clinton use of power. The fundraising scandals with Johnny Chung and Norman Hsu have only been the most traditional areas where money was raised and laundered, and favors were granted. The pardons were far more egregious, and none more egregious than the pardon given to Marc Rich. While many would argue that this is old news, it is not. The pardons came on the last day of the Clinton presidency, and most voters likely never gave any of it a second thought. It is, after all, politics.
But the case of fugitive financier Marc Rich was not just politics, but has all the appearances of old-time corruption. The Justice Department was adamant that Rich not be pardoned. Bill Clinton said he was just following the process. When Congress investigated, the participants took the Fifth Amendment. But in the wake of the pardon the Clintons received hundreds of thousands of dollars for the library and the foundation.
Before descending farther into the rhetoric of a right-wing nut, it is important to note that the contributions to the foundation and the library remain sealed at the Clintons’ request. The Colombia trade agreement issue that was just in the center of the news is important not because of who does or does not believe in free trade at the Clinton’s kitchen table. Rather, it is the important issue of how a husband and wife address issues of policy and corruption. Which brings up the final issue.
Mixing Business with Business. Bill Clinton received $800,000 for speeches in support of the Colombia free trade agreement. He then contributed the funds to Hillary’s campaign. He received a $30 million contribution to his foundation—with $100 million yet to come—for helping a Canadian win a uranium contract in Kazakhstan. The use of a tax-exempt foundation to garner benefits from public action —and therefore as a tool of public corruption—first found fertile soil in Philadelphia. The question that has barely been raised in the media is what the rules are for a husband-wife presidency, and how Bill’s activities will be monitored and constrained. He has already said that contributors to both the library and the foundation will be made public after she is in the White House—but only contributors going forward. He has said that he owes a promise of confidentiality to the contributors—a debt that apparently is greater than he owes the voting public.
Manipulation in Pursuit of Power. OK. This one is unfair. After all, campaigns are all about manipulating the public in pursuit of power. But the premise of Microtrends, Mark Penn’s book and central to his political outlook, is that success is achieved by targeting myriad archetypal groups and selling each what they want to hear. And so as the time is winding down on the campaign, Hillary is morphing to each audience. In Scranton, she is the church-going, gun-shooting child of rural America. In Pittsburgh she is the protectionist old-time union activist. In Erie, she is the working class girl who worked the night shift. The problem of with the microtrends strategy is that people have a history—which in Hillary’s case is of being a Hollywood-loving, anti-gun, free-trader, from a middle class family, albeit with enough caveats along the way to give her cover. Microtrends is a demographic theory, and one with great salience for Proctor & Gamble and Saatchi & Saatchi. But for a politician still seeking her voice, it reeks of exigency and a lack of core principles or purpose.
But with her back against the wall, Elton John delivered the message that has become the bludgeon used against Obama supporters: Hillary is only losing because of misogyny among the electorate. This is not delivered as a social critique—a claim that in the privacy of the voting booth people’s prejudices emerge—rather it is an attack on the individuals working for or supporting Obama. This is the ultimate extension of the politics of political correctness: If you don’t vote for her—not a woman, but this woman—it is an indictment of your character.
So we have come full circle. The essence of the political race is no longer about the character of the candidate. It is now about the character of the electorate. If Hillary loses, it will be because of misogyny and unfairness. Forget issues of her own past conduct or performance, forget the manipulations of a campaign of inevitability, forget issues of corruption and conflicts of interest. If she wins Robin Morgan and Gloria Steinem and others who are standing at the barricades with their fists thrust in the air shouting No Passaran should not be surprised if after they have invested their hopes and dreams, Hill and Bill do not turn on them as they have on others whenever it suits their purposes.
The other day, Hillary suggested that only she could end the war in Iraq. On the face of it, it was a preposterous statement. What if she gets hit by a bus? Will the war go on forever? For 100 years? I think not. The world will survive if she is not the next president. And a judgment of whether to support her candidacy can be made fairly and honestly, based on the history that she—and her husband—have made.
If Hillary loses, she and Bill should fully embrace that they were the lead actors in her demise. The media gave her all the advantages of incumbency as they embraced the narrative of inevitability for more than a year—until losing Iowa undermined the premise. It was no Establishment White Man that was her undoing, but a judgment that it is time to turn the page and look forward to a future of new personalities and new possibilities.
Saturday, April 12, 2008
China syndrome
After a bad first quarter, the stock market rebounded sharply on April Fools Day. But this week the major market indices fell sharply in the wake of news that can only be described as the same-old, same-old. This time, the news that gave a bad taste to the end of the week was that General Electric missed its earnings targets, and missed them soundly. It was the unanticipated extent of GE’s under-performance that most unnerved the market. Over the past weeks, the market has been struck by new sectors of the economy being infected by the sub-prime mess. First the banks. Then the brokerages. Then the insurance companies. And so on.
GE’s suggestion that it fell short due to the impact of “disruptions in the capital markets” on its financial services businesses should not have been a surprise. But what was shocking was that this company that rarely misses guidance by more than a penny or so should miss the target by such a wide mark. After all, what has made GE an icon for so many years has been its ability to manage both its earnings and investor expectations. The fact that GE directed full-year guidance on earnings growth down from “at least” 10% to near zero was a further wake-up call for anyone who has managed to sleep through the ruckus in the financial markets of late.
Last week’s April Fools Day rally––which came in the wake of optimism that the financial sector had hit bottom and a correction in surging commodity prices––suddenly seems a long time ago. After rallying 6.6% in the prior week, the S&P financial sector dropped 4.6% this week.
This was a significant week in the currency markets, as China’s currency, the yuan—the renminbi to some—rose to new heights against the dollar. The yuan, pegged at 8.2 to the dollar until the Chinese allowed their currency to float in July 2005, has appreciated 16% against the dollar since then.
This is important on the home front for several reasons. First, and most directly, it will make Chinese-made goods more expensive over time—indeed the 16% appreciation acts no differently than a 16% tariff or tax on imported Chinese goods. But more important, an expensive yuan—and the prospect of a more expensive yuan to come—offers the most effective deterrent to the outsourcing of jobs to China.
Trade has been an embarrassing item on the political circuit these days. After all, during the NAFTA debate in Ohio, it should have struck most observers that America is not losing many jobs to Canada. And, I dare say, Colombia is not the risk that it would seem to be from all the press attention to a trade riff between Hill and Bill. It is understandable that candidates have foresworn speeches on the impact of floating currencies on long-term investment and competitive advantage, or for that matter on international stability, but hopefully the surviving candidate’s policies will be better informed than their political strategies.
Like Japan before it, China may be on a trajectory away from being the source of cheap consumer goods. And this has both good and bad consequences that the political class should be focused on. The risk to America in the future will not be a China that is a source of low cost labor, but rather, a China that is becoming a source—and a very large source indeed—of well-educated and disciplined workers in engineering and the sciences. Someday we may wish for the days when we lost our low-end jobs to China.
The American worker listening to pandering politicians and pundits, they should be looking for only three things: portable pensions, portable and affordable healthcare, and affordable and lifelong access to education. Political-speak continues to be dominated by language that views American workers as passive agents. “Government needs to retrain workers… We need to retrain you…” The reality of the world today is that a politician or government worker is increasingly unable to understand the skills, attitudes and aptitudes that any given worker will need to learn to get ahead.
Twenty years or so ago, Peter Drucker described a future in which every worker would be a free agent in a competitive marketplace, with the need to seek out new skills and new knowledge on an ongoing basis to succeed through several careers in the course of their work life. Well, as George Allen—the coach, not the Senator—liked to say, the future is now. It is time for our candidates to talk less about the solutions from the 1950s and 1960s, and try to imagine what solutions will work in the 2020s and 2030s, when today’s children of Pennsylvania will be in the middle of their third or fourth careers.
GE’s suggestion that it fell short due to the impact of “disruptions in the capital markets” on its financial services businesses should not have been a surprise. But what was shocking was that this company that rarely misses guidance by more than a penny or so should miss the target by such a wide mark. After all, what has made GE an icon for so many years has been its ability to manage both its earnings and investor expectations. The fact that GE directed full-year guidance on earnings growth down from “at least” 10% to near zero was a further wake-up call for anyone who has managed to sleep through the ruckus in the financial markets of late.
Last week’s April Fools Day rally––which came in the wake of optimism that the financial sector had hit bottom and a correction in surging commodity prices––suddenly seems a long time ago. After rallying 6.6% in the prior week, the S&P financial sector dropped 4.6% this week.
This was a significant week in the currency markets, as China’s currency, the yuan—the renminbi to some—rose to new heights against the dollar. The yuan, pegged at 8.2 to the dollar until the Chinese allowed their currency to float in July 2005, has appreciated 16% against the dollar since then.
This is important on the home front for several reasons. First, and most directly, it will make Chinese-made goods more expensive over time—indeed the 16% appreciation acts no differently than a 16% tariff or tax on imported Chinese goods. But more important, an expensive yuan—and the prospect of a more expensive yuan to come—offers the most effective deterrent to the outsourcing of jobs to China.
Trade has been an embarrassing item on the political circuit these days. After all, during the NAFTA debate in Ohio, it should have struck most observers that America is not losing many jobs to Canada. And, I dare say, Colombia is not the risk that it would seem to be from all the press attention to a trade riff between Hill and Bill. It is understandable that candidates have foresworn speeches on the impact of floating currencies on long-term investment and competitive advantage, or for that matter on international stability, but hopefully the surviving candidate’s policies will be better informed than their political strategies.
Like Japan before it, China may be on a trajectory away from being the source of cheap consumer goods. And this has both good and bad consequences that the political class should be focused on. The risk to America in the future will not be a China that is a source of low cost labor, but rather, a China that is becoming a source—and a very large source indeed—of well-educated and disciplined workers in engineering and the sciences. Someday we may wish for the days when we lost our low-end jobs to China.
The American worker listening to pandering politicians and pundits, they should be looking for only three things: portable pensions, portable and affordable healthcare, and affordable and lifelong access to education. Political-speak continues to be dominated by language that views American workers as passive agents. “Government needs to retrain workers… We need to retrain you…” The reality of the world today is that a politician or government worker is increasingly unable to understand the skills, attitudes and aptitudes that any given worker will need to learn to get ahead.
Twenty years or so ago, Peter Drucker described a future in which every worker would be a free agent in a competitive marketplace, with the need to seek out new skills and new knowledge on an ongoing basis to succeed through several careers in the course of their work life. Well, as George Allen—the coach, not the Senator—liked to say, the future is now. It is time for our candidates to talk less about the solutions from the 1950s and 1960s, and try to imagine what solutions will work in the 2020s and 2030s, when today’s children of Pennsylvania will be in the middle of their third or fourth careers.
Sunday, March 30, 2008
Memories of war
I am sorry, but this I just don’t get.
”I remember landing under sniper fire. There was supposed to be some kind of greeting ceremony at the airport, but instead we just ran with our heads down to get into the vehicles to get to our base.”
Turns out there was a greeting ceremony. With a little Bosnian girl bearing flowers. So the story was altered a bit.
”I was told that the greeting ceremony had been moved away from the tarmac, but that there was this eight-year-old girl and I said, ‘Well, I, I can’t. I can’t rush by her. I’ve got to at least greet her. So I greeted her. I took her stuff and I left. Now that’s my memory of it.”
But then the videotape emerged, showing Hillary Clinton and Chelsea greeting the U.S. officials, stopping for photos, then moving on.
In politics, as Michael Kinsley once noted, a gaff is when a politician tells the truth. When they tell a—well, a non-truth—they misspoke. And so it was here according to campaign aids. For the candidate herself, it was a mistake.
"I made a mistake. I have a different memory."
But the purpose of the story was to impress upon listeners the candidate’s experience and bona fides to be commander-in-chief, to convey a sense that she has faced the fires of war. If the story was not true, a better explanation would have been to tell us of the experience that she was thinking about. After all, running from a plane across a tarmac under sniper fire—with one’s daughter no less—does not appear to be something that one would forget. So either she had that experience—but confused the circumstances—or she never had the experience and recalled the event from whole cloth.
This matters. After all we are in the midst of an historical period when chief executives are granted wide latitude to go to war or not. George Bush wore his flight suit for the media when he landed on the carrier Abraham Lincoln—with the banner Mission Accomplished draped as the backdrop—because he intended to convey a sense of competence to lead and seriousness of purpose. Hillary Clinton’s story of a Leader Under Fire is designed to accomplish a similar, visceral purpose.
Fair enough. Unless it is not true.
I for one do not particularly care if Hillary Clinton was under fire in Bosnia. Unless she was never under fire. Anywhere. If she was under fire, then she misspoke. If she was never under fire, she lied. And that is what matters. After all, we have three candidates from which we will chose our next president, and at the end of the day issues of judgment, honesty and integrity matter.
”I remember landing under sniper fire. There was supposed to be some kind of greeting ceremony at the airport, but instead we just ran with our heads down to get into the vehicles to get to our base.”
Turns out there was a greeting ceremony. With a little Bosnian girl bearing flowers. So the story was altered a bit.
”I was told that the greeting ceremony had been moved away from the tarmac, but that there was this eight-year-old girl and I said, ‘Well, I, I can’t. I can’t rush by her. I’ve got to at least greet her. So I greeted her. I took her stuff and I left. Now that’s my memory of it.”
But then the videotape emerged, showing Hillary Clinton and Chelsea greeting the U.S. officials, stopping for photos, then moving on.
In politics, as Michael Kinsley once noted, a gaff is when a politician tells the truth. When they tell a—well, a non-truth—they misspoke. And so it was here according to campaign aids. For the candidate herself, it was a mistake.
"I made a mistake. I have a different memory."
But the purpose of the story was to impress upon listeners the candidate’s experience and bona fides to be commander-in-chief, to convey a sense that she has faced the fires of war. If the story was not true, a better explanation would have been to tell us of the experience that she was thinking about. After all, running from a plane across a tarmac under sniper fire—with one’s daughter no less—does not appear to be something that one would forget. So either she had that experience—but confused the circumstances—or she never had the experience and recalled the event from whole cloth.
This matters. After all we are in the midst of an historical period when chief executives are granted wide latitude to go to war or not. George Bush wore his flight suit for the media when he landed on the carrier Abraham Lincoln—with the banner Mission Accomplished draped as the backdrop—because he intended to convey a sense of competence to lead and seriousness of purpose. Hillary Clinton’s story of a Leader Under Fire is designed to accomplish a similar, visceral purpose.
Fair enough. Unless it is not true.
I for one do not particularly care if Hillary Clinton was under fire in Bosnia. Unless she was never under fire. Anywhere. If she was under fire, then she misspoke. If she was never under fire, she lied. And that is what matters. After all, we have three candidates from which we will chose our next president, and at the end of the day issues of judgment, honesty and integrity matter.
Monday, March 17, 2008
Palpable fear
The question is this: When we look back on this moment, will it mark the beginning of the end of this economic cycle, the market bottom of a regular, if turbulent, economic downturn. After all, the S&P500 is 20% off its highs of last fall. The yield curve, once inverted and predicting a downturn, has a strong positive slope. And fear is palpable in the markets, and in the public square. All of these can be signs of a market bottom.
Or perhaps not. Perhaps this is just the end of the beginning. With the collapse of Bear Stearns and the plummeting dollar, is what we are seeing in the flight from the dollar into hard assets just the first stage in the final reckoning, for the United States and for the world. Could this be the moment when the dollar’s slide marks more than the balancing of accounts as envisioned at Bretton Woods a half-century ago? Could this instead accelerate the movement away from the dollar as the world’s reserve currency and the basis of economic transactions far beyond our shores. Is this the moment that Eurocentrism is to be put to the test, and the question raised at Versailles and put to rest at Nuremburg will once again be on the table. Is Europe really able to lead the world?
Despite the rhetoric, this is not yet the Asian century. The threat of a collapse in the American economy has given the lie to the pretense of a multi-polar world. For all of their assets, their reserves and their sovereign wealth funds, the Asian economies still live on the margin of the American economy. Nothing has made this evident than the plight of the dollar, with the emerging fears that a 3% downturn in America could become a 20% downturn in Taiwan, and the realization that China, with 500 million people living in poverty, remains a mercantilist nation decades away from being ready to turn her attention to the plight of her neighbors.
This week, all of the questions remain unanswered. Ben Bernanke has bet the house on stanching the tide of the sub-prime crisis. Tuesday, the Fed will drop the Fed Funds target rate by 75 or 100 basis points, a move that will further exacerbate the dollar's decline. The Fed has placed its bet, and would rather see the dollar go down than the banking system. This is coming in the wake of the busiest week on record for the Fed. This past Tuesday, the Fed announced a $200 billion program to take illiquid mortgage-backed securities back from the banks, and then on Friday arranged for JPMorgan—the Whitest of the old White Shoe investment houses—to acquire Bear Stearns, a firm whose roots are from a distinctly different tradition. But the Fed did more than arrange this marriage, it provided the dowry as well, agreeing to share with JP the downside risk.
Some will balk at the notion of a bailout, but the stockholders and employees of Bear Stearns would challenge that description of the deal. After all, at a price of $2 per share, the employees at Bear—half of whom stand to lose their jobs—saw the value of their 35% stake in the company fall by 99% from $8 billion to around $80 million, with much of that decline coming since the closing bell on Friday. Instead, this should lead to calls for reregulation of the financial sector, which was largely deregulated in 1999.
Ben Bernanke has given the lie to the notion that deregulation in the banking sector is a balanced policy, and it is hard to imagine who in his shoes would act differently. Faced with the looming collapse of the financial sector, the problem of moral hazard—the risk that failing to let those who made bad bets suffer will contribute to future bad behavior—will not prevent intervention. In the moment, when the world is collapsing around you, there is just too much at stake to dwell on ethical and market theory. But don’t blame Bernanke, after all, we went through Continental Illinois, Long-Term Capital and the Savings & Loan mess ad seriatum. Same story. Same result. More or less.
Thus, the question of whether we sit at the beginning of the end or the end of the beginning is not an academic one. Our country—which has been living beyond its means for decades—may actually have finally bitten off more that we can chew. With a $3 trillion war and a $2 trillion financial crisis both in full swing, and both requiring massive infusions of foreign capital, the fix this time might involve some pain. Maybe it is time to set some new rules, for the private sector and for the public sector as well.
But at the end of the day, the rest of the world has a stake in our survival—at least for the moment—because we are kind of like a big Wall Street investment bank that has done some stupid things. Many people may want us to pay the price for our conduct, but they don't want to get hurt in the process. They don't want to play a game of chicken when their own future is at stake.
So you tell me, is this the time to buy, or what?
Or perhaps not. Perhaps this is just the end of the beginning. With the collapse of Bear Stearns and the plummeting dollar, is what we are seeing in the flight from the dollar into hard assets just the first stage in the final reckoning, for the United States and for the world. Could this be the moment when the dollar’s slide marks more than the balancing of accounts as envisioned at Bretton Woods a half-century ago? Could this instead accelerate the movement away from the dollar as the world’s reserve currency and the basis of economic transactions far beyond our shores. Is this the moment that Eurocentrism is to be put to the test, and the question raised at Versailles and put to rest at Nuremburg will once again be on the table. Is Europe really able to lead the world?
Despite the rhetoric, this is not yet the Asian century. The threat of a collapse in the American economy has given the lie to the pretense of a multi-polar world. For all of their assets, their reserves and their sovereign wealth funds, the Asian economies still live on the margin of the American economy. Nothing has made this evident than the plight of the dollar, with the emerging fears that a 3% downturn in America could become a 20% downturn in Taiwan, and the realization that China, with 500 million people living in poverty, remains a mercantilist nation decades away from being ready to turn her attention to the plight of her neighbors.
This week, all of the questions remain unanswered. Ben Bernanke has bet the house on stanching the tide of the sub-prime crisis. Tuesday, the Fed will drop the Fed Funds target rate by 75 or 100 basis points, a move that will further exacerbate the dollar's decline. The Fed has placed its bet, and would rather see the dollar go down than the banking system. This is coming in the wake of the busiest week on record for the Fed. This past Tuesday, the Fed announced a $200 billion program to take illiquid mortgage-backed securities back from the banks, and then on Friday arranged for JPMorgan—the Whitest of the old White Shoe investment houses—to acquire Bear Stearns, a firm whose roots are from a distinctly different tradition. But the Fed did more than arrange this marriage, it provided the dowry as well, agreeing to share with JP the downside risk.
Some will balk at the notion of a bailout, but the stockholders and employees of Bear Stearns would challenge that description of the deal. After all, at a price of $2 per share, the employees at Bear—half of whom stand to lose their jobs—saw the value of their 35% stake in the company fall by 99% from $8 billion to around $80 million, with much of that decline coming since the closing bell on Friday. Instead, this should lead to calls for reregulation of the financial sector, which was largely deregulated in 1999.
Ben Bernanke has given the lie to the notion that deregulation in the banking sector is a balanced policy, and it is hard to imagine who in his shoes would act differently. Faced with the looming collapse of the financial sector, the problem of moral hazard—the risk that failing to let those who made bad bets suffer will contribute to future bad behavior—will not prevent intervention. In the moment, when the world is collapsing around you, there is just too much at stake to dwell on ethical and market theory. But don’t blame Bernanke, after all, we went through Continental Illinois, Long-Term Capital and the Savings & Loan mess ad seriatum. Same story. Same result. More or less.
Thus, the question of whether we sit at the beginning of the end or the end of the beginning is not an academic one. Our country—which has been living beyond its means for decades—may actually have finally bitten off more that we can chew. With a $3 trillion war and a $2 trillion financial crisis both in full swing, and both requiring massive infusions of foreign capital, the fix this time might involve some pain. Maybe it is time to set some new rules, for the private sector and for the public sector as well.
But at the end of the day, the rest of the world has a stake in our survival—at least for the moment—because we are kind of like a big Wall Street investment bank that has done some stupid things. Many people may want us to pay the price for our conduct, but they don't want to get hurt in the process. They don't want to play a game of chicken when their own future is at stake.
So you tell me, is this the time to buy, or what?
Sunday, March 16, 2008
Geraldine's moment of lucidity
What was your moment of epiphany, Geraldine, when you realized that society had bent over backward for the Black Man? What was the moment when the resentment of one caught looking upward at the glass ceiling boils over into a rage of the privileges offered to those who were offered instead the legacy of the lynching tree?
It is no fault of Hillary’s that the candidate that has emerged as her antagonist is a Black Man. Surely, Geraldine Ferraro believed that she was signing up for the Great Campaign that would pit Hillary against the best Man the system might put forward. And certainly she is not alone in having failed to truly grasp the significance of the historical moment. But in her lashing out, her words betrayed her. To suggest that being Black in American politics is an advantage is curious. Point if you will to the ranks of African American Senators or Governors, or those elected to majority White districts whose residents looked beyond color to elect the man or woman.
Our system remains rife with the symbols of centuries of the abject oppression of Black Men. Our criminal justice system educates more Black Men, by some counts, than our great universities. Affirmative action, once viewed as a critical tool to redress past and current disadvantages, lies but a shell of its former self, its demise at once a symbol of America’s commitment to egalitarian values and denial of the cruelty and ugliness of its past. But meanwhile, Title Nine lives on. Ironically, it is OK to offer White Woman a free ride for their prowess at lacrosse but not to the descendents of the African slave trade.
I would have thought that the intellectual prowess of the icons of the Women’s Movement would have shown greater insight. To condemn Obama’s rise as one more manifestation of the Old Boy’s Network rising up to defend the status quo against the rise of a woman warrior fails the tests of intellectual honesty. Why not instead move the conversation forward rather than backward. Why not question why America’s fixation with racial identification fails to accept Obama as bi-racial. Why not—if we are to be true to our commitment to our children who view the world with far greater nuance and acceptance of difference—let this moment deepen and animate our understanding of identity.
If Hillary loses the nomination battle, the scars will be bitter and deep for her supporters, whose belief in her is firm and deep. But Ferraro has fallen prey to her own demons. Barack Obama is not Jesse Jackson. Barack Obama’s base was not Black until Bill Clinton made it so. Before Iowa, a majority of Black voters were for Clinton. But the world of identity politics is part of Democracy, not a creature of this race. And Hillary’s strategy has been built on that reality. Clinton chief strategist Mark Penn early on articulated their calculus being to win the 48% of the electorate that is Democratic, and pull up to 20% of Republican women—and when push comes to shove, that will be the case that they will make to the super-delegates.
That is the case they will make, and the case that they are making now. Plus, they will argue, America will never elect a Black Man to be president. Despite whatever Geraldine might think.
It is no fault of Hillary’s that the candidate that has emerged as her antagonist is a Black Man. Surely, Geraldine Ferraro believed that she was signing up for the Great Campaign that would pit Hillary against the best Man the system might put forward. And certainly she is not alone in having failed to truly grasp the significance of the historical moment. But in her lashing out, her words betrayed her. To suggest that being Black in American politics is an advantage is curious. Point if you will to the ranks of African American Senators or Governors, or those elected to majority White districts whose residents looked beyond color to elect the man or woman.
Our system remains rife with the symbols of centuries of the abject oppression of Black Men. Our criminal justice system educates more Black Men, by some counts, than our great universities. Affirmative action, once viewed as a critical tool to redress past and current disadvantages, lies but a shell of its former self, its demise at once a symbol of America’s commitment to egalitarian values and denial of the cruelty and ugliness of its past. But meanwhile, Title Nine lives on. Ironically, it is OK to offer White Woman a free ride for their prowess at lacrosse but not to the descendents of the African slave trade.
I would have thought that the intellectual prowess of the icons of the Women’s Movement would have shown greater insight. To condemn Obama’s rise as one more manifestation of the Old Boy’s Network rising up to defend the status quo against the rise of a woman warrior fails the tests of intellectual honesty. Why not instead move the conversation forward rather than backward. Why not question why America’s fixation with racial identification fails to accept Obama as bi-racial. Why not—if we are to be true to our commitment to our children who view the world with far greater nuance and acceptance of difference—let this moment deepen and animate our understanding of identity.
If Hillary loses the nomination battle, the scars will be bitter and deep for her supporters, whose belief in her is firm and deep. But Ferraro has fallen prey to her own demons. Barack Obama is not Jesse Jackson. Barack Obama’s base was not Black until Bill Clinton made it so. Before Iowa, a majority of Black voters were for Clinton. But the world of identity politics is part of Democracy, not a creature of this race. And Hillary’s strategy has been built on that reality. Clinton chief strategist Mark Penn early on articulated their calculus being to win the 48% of the electorate that is Democratic, and pull up to 20% of Republican women—and when push comes to shove, that will be the case that they will make to the super-delegates.
That is the case they will make, and the case that they are making now. Plus, they will argue, America will never elect a Black Man to be president. Despite whatever Geraldine might think.
Tuesday, February 12, 2008
Where's the beef?
For a fourth time, the Obama campaign seems to be gathering momentum.
On each previous occasion––after the votes in Iowa and in South Carolina, and on Super Tuesday––Hillary Clinton successfully stemmed its rising tide. Now, the contest seems to be nearing its final moments, when Clinton will either succeed in turning Obama back for good, or find her campaign overwhelmed by the historical moment.
Hillary Clinton’s campaign was built on three core strategies––Monopolize the money. Build momentum. Dominate the message––and early on her success was unarguable. During the year leading up to Iowa, the Clinton campaign locked down a large proportion of the major Democratic donors, and with that money in place the campaign built momentum on the theme of inevitability. The campaign was a juggernaut, and they fully expected Super Tuesday to mark the end of the nomination process.
Instead, the day after Super Tuesday, two legs of the strategy lay in tatters. The momentum had dissipated, and the Obama campaign stunned the political world when it announced that in January it had raised $32 million, including contributions from 170,000 new contributors.
Only Hillary Clinton’s message remains in tact, and she is looking for a Walter Mondale moment to regain the upper hand. Like Clinton this year, 24 years ago Walter Mondale was the presumptive nominee facing an insurgent challenger whose rhetoric seemed high on fluff and low on substance, until Mondale dispatched Gary Hart in a single, dramatic moment. Now, Clinton is hoping for such a moment, when she might turn to Obama in a televised debate and utter Mondale’s famous words, “Where’s the beef?”
And her campaign imagines the devastation it would wreck on Obama’s campaign as the shallowness of his response would be apparent for all to see, reverberating in the millions of YouTube replays that would follow.
But that moment is unlikely to come. Today, American's have lost faith in our political institutions––in Congress and the Presidency––and have become acutely aware that as a nation we cannot fix our problems until we fix our politics.
Over the past twenty years––since Lee Atwater and others perfected a style of politics that used wedge issues to divide Americans against themselves––political strategies and tactics have exacerbated our differences at every turn, as each party sought to find an edge in pursuit of power.
The American people now know that we have paid a steep price for the politics, tactics and divisiveness of the past twenty years, and it is now clear that these politics have failed the American people. The truth is that in a world where Americans find themselves competing with workers in China and India and Brazil, we know that we can no longer afford the luxury of the political games that have sapped our country of our ability to solve the real problems we face.
Hillary Clinton’s hope to take Barack Obama down on the basis of her greater mastery of the intricacies of policy and the superiority of her healthcare plan is unlikely to succeed. It will not succeed because the overwhelming reality is that for the American electorate today, this election is not about who has the best plan.
After all, fifteen years ago, America watched as Hillary Clinton led the Clinton administration's effort to fix our healthcare system. She had a plan then––as she has a plan now––and her plan may have been better than everyone else’s plan. But that effort ended in failure. And it was nasty and partisan and hostile.
Today, everyone has experts and everyone has a plan. But that is no longer enough. Voters are looking past the plans into the stance of the candidates toward the most fundamental problem we face: our politics.
So if she finds her moment and turns toward Barack Obama and asks him, Where’s the beef?, she should not be surprised if it does not work out as she hoped.
The fundamental difference between the Clinton and Obama campaigns is not about Where’s the beef? but rather about What is the beef? What is it that really matters if we are to move forward as a society and a nation?
Hillary Clinton believes that plans matter most. Barack Obama, on the other hand, understands that Americans are tired of perfect plans and perfect solutions that lead nowhere. Instead, they want solutions. Not perfect solutions, perhaps, but solutions that can work, that are built on comity rather than conflict, and that emerge from mutual respect rather than recrimination.
Clinton’s dilemma as she tries to slow Obama’s campaign one final time is that her message––the final leg of her strategy––is not resonating with the voters. Because the beef is no longer about detailed plans and brainpower, it is about a simple question: Can this candidate move the country in a better direction?
The American people know that we have paid a terrible price for the politics, the tactics, and the divisiveness of the past twenty years, and we know that if we make the same choices we did in the past, we can only blame ourselves if we get the same results.
On each previous occasion––after the votes in Iowa and in South Carolina, and on Super Tuesday––Hillary Clinton successfully stemmed its rising tide. Now, the contest seems to be nearing its final moments, when Clinton will either succeed in turning Obama back for good, or find her campaign overwhelmed by the historical moment.
Hillary Clinton’s campaign was built on three core strategies––Monopolize the money. Build momentum. Dominate the message––and early on her success was unarguable. During the year leading up to Iowa, the Clinton campaign locked down a large proportion of the major Democratic donors, and with that money in place the campaign built momentum on the theme of inevitability. The campaign was a juggernaut, and they fully expected Super Tuesday to mark the end of the nomination process.
Instead, the day after Super Tuesday, two legs of the strategy lay in tatters. The momentum had dissipated, and the Obama campaign stunned the political world when it announced that in January it had raised $32 million, including contributions from 170,000 new contributors.
Only Hillary Clinton’s message remains in tact, and she is looking for a Walter Mondale moment to regain the upper hand. Like Clinton this year, 24 years ago Walter Mondale was the presumptive nominee facing an insurgent challenger whose rhetoric seemed high on fluff and low on substance, until Mondale dispatched Gary Hart in a single, dramatic moment. Now, Clinton is hoping for such a moment, when she might turn to Obama in a televised debate and utter Mondale’s famous words, “Where’s the beef?”
And her campaign imagines the devastation it would wreck on Obama’s campaign as the shallowness of his response would be apparent for all to see, reverberating in the millions of YouTube replays that would follow.
But that moment is unlikely to come. Today, American's have lost faith in our political institutions––in Congress and the Presidency––and have become acutely aware that as a nation we cannot fix our problems until we fix our politics.
Over the past twenty years––since Lee Atwater and others perfected a style of politics that used wedge issues to divide Americans against themselves––political strategies and tactics have exacerbated our differences at every turn, as each party sought to find an edge in pursuit of power.
The American people now know that we have paid a steep price for the politics, tactics and divisiveness of the past twenty years, and it is now clear that these politics have failed the American people. The truth is that in a world where Americans find themselves competing with workers in China and India and Brazil, we know that we can no longer afford the luxury of the political games that have sapped our country of our ability to solve the real problems we face.
Hillary Clinton’s hope to take Barack Obama down on the basis of her greater mastery of the intricacies of policy and the superiority of her healthcare plan is unlikely to succeed. It will not succeed because the overwhelming reality is that for the American electorate today, this election is not about who has the best plan.
After all, fifteen years ago, America watched as Hillary Clinton led the Clinton administration's effort to fix our healthcare system. She had a plan then––as she has a plan now––and her plan may have been better than everyone else’s plan. But that effort ended in failure. And it was nasty and partisan and hostile.
Today, everyone has experts and everyone has a plan. But that is no longer enough. Voters are looking past the plans into the stance of the candidates toward the most fundamental problem we face: our politics.
So if she finds her moment and turns toward Barack Obama and asks him, Where’s the beef?, she should not be surprised if it does not work out as she hoped.
The fundamental difference between the Clinton and Obama campaigns is not about Where’s the beef? but rather about What is the beef? What is it that really matters if we are to move forward as a society and a nation?
Hillary Clinton believes that plans matter most. Barack Obama, on the other hand, understands that Americans are tired of perfect plans and perfect solutions that lead nowhere. Instead, they want solutions. Not perfect solutions, perhaps, but solutions that can work, that are built on comity rather than conflict, and that emerge from mutual respect rather than recrimination.
Clinton’s dilemma as she tries to slow Obama’s campaign one final time is that her message––the final leg of her strategy––is not resonating with the voters. Because the beef is no longer about detailed plans and brainpower, it is about a simple question: Can this candidate move the country in a better direction?
The American people know that we have paid a terrible price for the politics, the tactics, and the divisiveness of the past twenty years, and we know that if we make the same choices we did in the past, we can only blame ourselves if we get the same results.
Thursday, February 07, 2008
No going back
And then there were three.
As Mitt Romney stepped aside, there were—with apologies to Mike Huckabee—three candidates left vying for the Presidency, each now given a one-in-three chance of taking office in January 2009, according to the futures market trading at Intrade.com. With nine months still to go until Election Day, the country—and the world—have a long time to consider what will come next.
According to a British friend, the American election has captivated Europe—much to the astonishment of the European press—and to the chagrin of the Gnomes in Brussels. This was, after all, to be the time of the Great Decoupling. This was to be the time when Europe, with a strong currency and an America besotted by war and internal division, would free itself from the economic bondage of Wall Street and the Dollar and American suzerainty.
Instead, the turmoil in the markets over the past six months has had the opposite effect. Since last August, the world financial markets have been in the grip of a liquidity and financial crisis as bank balance sheets have suffered the after effects of a massive lending bubble and credit has disappeared. While the sub-prime market meltdown has reached the front pages of the newspapers, the extent of the liquidity crisis last August that left the world markets shaken never really made it beyond the financial press, despite the firing of a bank CEO here and there and a growing public awareness that things could get a lot worse before they get better.
But with the collapse of the European equity markets two weeks ago, reality came crashing home. Early that Tuesday morning, the Federal Reserve Bank dropped its key interest rates by 75 basis points—three quarters of one percent—to buttress the markets against a spillover effect from Europe and a global unraveling. Then, a few days later, the Fed dropped rates a further 50 basis points.
The Fed actions were heretical. After all, faced with a collapsing dollar and oil at nearly $100 per barrel, the last thing that the United States can afford is a run on its currency. And that would seem to be the natural consequence of the Fed’s actions. After all, who would keep money in Dollars if the value loomed to decline further, and the interest rates were declining, rather than shifting in to Eurobonds, offering stability AND a higher yield? What oil producing country would not want to denominate oil in Euros, or some other basket of currencies, instead of in Dollars? What country holding our bonds as their reserve currency would not want to diversify?
And why not dump the Dollar? After all, each nation needs to look after itself. America had it coming, no? With our trade deficits, our budget deficits and our gas-guzzling SUVs—to say nothing of our militant unilateralism—the world was ready for new leadership. America’s time was past.
But the tell-tale signs did not emerge, and there was little evidence of a new run on the Dollar. By all accounts, the countries that have financed our deficits have not sold. Our long-term bond interest rates have gone down, not up. Asian countries and Arab countries, flush with cash from selling us cars and computers and oil have been the first in line to buttress our financial system and invest capital in our banks.
Only the Europeans have waited to the last minute to recognize the depth of their dependence on the United States. Only after their markets collapsed did the sophisticates of the Eurozone grasp what was evident to the new financial elites of China and Singapore, Dubai and Abu Dhabi: The new globalized world, the world of markets and trade and commerce and finance, remained America’s world. It was America’s creation, and for the moment, it is dependent on American leadership.
This is the world that we wanted. That we created. American foreign policy since World War II has been to lead to a world of free markets, where political divisions would give way to economic interdependency. Our objective was to see the nations behind the Iron Curtain—China, Russia and their satellite nations—and the socialist block countries of India and Egypt and their non-aligned fellow travelers, forsake military competition for economic competition.
This is the world that we desired, and it is the world that we have achieved. The closed factories of the Rustbelt. The migration of our economy from manufacturing to service. The two-income family. The end of defined benefit pension plans. The new imperative of lifelong learning. The pressure for new, non-workplace health insurance. These are all manifestations of our victory in the Cold War, and our success in creating the world of our imagination. The world of economic competition and competitive markets, in the hope of forestalling a world of resource wars and nuclear confrontation.
While much of this is old news, the past several weeks have added a new reality, a new granularity, to our picture of the world. When the Fed threw caution to the wind and reduced interest rates by 25% in one week, when they dispensed with the traditional incrementalism, they were struggling with a new reality. In a world where the Dollar has become the reserve currency, the Feds core monetary policy tools for managing our economy have lost power. Similarly, as Congress passed a stimulus package, it was clinging to an antiquated notion that the tools of Keynesian fiscal policy—spending as a tool for spurring economic growth—had more than marginal influence in a world of massive and unchecked deficit spending.
The new reality is that in a world where much if not most of our currency circulates beyond our borders, our tools of monetary and fiscal policy no longer have the power they once had. This is not just our new reality, but the reality of others as well. As central bankers in Brussels struggle with growing demands that they spur growth, while those in Shanghai struggle to contain it, each now realizes that their future—if not their currency—is pegged to ours.
President McCain. President Clinton. President Obama. One of them will inherit a world where the rules have changed, and where domestic monetary and fiscal policy tools will no longer be adequate to dictate our economic future. The new president will have to build new strategies for the coordination of economic policies that address this new and deep interdependency. China and Singapore, Dubai and Abu Dhabi know full well that a collapse of the American Dollar will bring all of them down with it. But only over the past few weeks have their counterparts in Europe come to realize that like the American people, their future will depend on the quality of leadership that emerges from our elections, and whomever that person turns out to be, they have a very real interest in their success.
As Mitt Romney stepped aside, there were—with apologies to Mike Huckabee—three candidates left vying for the Presidency, each now given a one-in-three chance of taking office in January 2009, according to the futures market trading at Intrade.com. With nine months still to go until Election Day, the country—and the world—have a long time to consider what will come next.
According to a British friend, the American election has captivated Europe—much to the astonishment of the European press—and to the chagrin of the Gnomes in Brussels. This was, after all, to be the time of the Great Decoupling. This was to be the time when Europe, with a strong currency and an America besotted by war and internal division, would free itself from the economic bondage of Wall Street and the Dollar and American suzerainty.
Instead, the turmoil in the markets over the past six months has had the opposite effect. Since last August, the world financial markets have been in the grip of a liquidity and financial crisis as bank balance sheets have suffered the after effects of a massive lending bubble and credit has disappeared. While the sub-prime market meltdown has reached the front pages of the newspapers, the extent of the liquidity crisis last August that left the world markets shaken never really made it beyond the financial press, despite the firing of a bank CEO here and there and a growing public awareness that things could get a lot worse before they get better.
But with the collapse of the European equity markets two weeks ago, reality came crashing home. Early that Tuesday morning, the Federal Reserve Bank dropped its key interest rates by 75 basis points—three quarters of one percent—to buttress the markets against a spillover effect from Europe and a global unraveling. Then, a few days later, the Fed dropped rates a further 50 basis points.
The Fed actions were heretical. After all, faced with a collapsing dollar and oil at nearly $100 per barrel, the last thing that the United States can afford is a run on its currency. And that would seem to be the natural consequence of the Fed’s actions. After all, who would keep money in Dollars if the value loomed to decline further, and the interest rates were declining, rather than shifting in to Eurobonds, offering stability AND a higher yield? What oil producing country would not want to denominate oil in Euros, or some other basket of currencies, instead of in Dollars? What country holding our bonds as their reserve currency would not want to diversify?
And why not dump the Dollar? After all, each nation needs to look after itself. America had it coming, no? With our trade deficits, our budget deficits and our gas-guzzling SUVs—to say nothing of our militant unilateralism—the world was ready for new leadership. America’s time was past.
But the tell-tale signs did not emerge, and there was little evidence of a new run on the Dollar. By all accounts, the countries that have financed our deficits have not sold. Our long-term bond interest rates have gone down, not up. Asian countries and Arab countries, flush with cash from selling us cars and computers and oil have been the first in line to buttress our financial system and invest capital in our banks.
Only the Europeans have waited to the last minute to recognize the depth of their dependence on the United States. Only after their markets collapsed did the sophisticates of the Eurozone grasp what was evident to the new financial elites of China and Singapore, Dubai and Abu Dhabi: The new globalized world, the world of markets and trade and commerce and finance, remained America’s world. It was America’s creation, and for the moment, it is dependent on American leadership.
This is the world that we wanted. That we created. American foreign policy since World War II has been to lead to a world of free markets, where political divisions would give way to economic interdependency. Our objective was to see the nations behind the Iron Curtain—China, Russia and their satellite nations—and the socialist block countries of India and Egypt and their non-aligned fellow travelers, forsake military competition for economic competition.
This is the world that we desired, and it is the world that we have achieved. The closed factories of the Rustbelt. The migration of our economy from manufacturing to service. The two-income family. The end of defined benefit pension plans. The new imperative of lifelong learning. The pressure for new, non-workplace health insurance. These are all manifestations of our victory in the Cold War, and our success in creating the world of our imagination. The world of economic competition and competitive markets, in the hope of forestalling a world of resource wars and nuclear confrontation.
While much of this is old news, the past several weeks have added a new reality, a new granularity, to our picture of the world. When the Fed threw caution to the wind and reduced interest rates by 25% in one week, when they dispensed with the traditional incrementalism, they were struggling with a new reality. In a world where the Dollar has become the reserve currency, the Feds core monetary policy tools for managing our economy have lost power. Similarly, as Congress passed a stimulus package, it was clinging to an antiquated notion that the tools of Keynesian fiscal policy—spending as a tool for spurring economic growth—had more than marginal influence in a world of massive and unchecked deficit spending.
The new reality is that in a world where much if not most of our currency circulates beyond our borders, our tools of monetary and fiscal policy no longer have the power they once had. This is not just our new reality, but the reality of others as well. As central bankers in Brussels struggle with growing demands that they spur growth, while those in Shanghai struggle to contain it, each now realizes that their future—if not their currency—is pegged to ours.
President McCain. President Clinton. President Obama. One of them will inherit a world where the rules have changed, and where domestic monetary and fiscal policy tools will no longer be adequate to dictate our economic future. The new president will have to build new strategies for the coordination of economic policies that address this new and deep interdependency. China and Singapore, Dubai and Abu Dhabi know full well that a collapse of the American Dollar will bring all of them down with it. But only over the past few weeks have their counterparts in Europe come to realize that like the American people, their future will depend on the quality of leadership that emerges from our elections, and whomever that person turns out to be, they have a very real interest in their success.
Tuesday, January 22, 2008
The art of strategy
As February 5th approaches, the nation appears to be heading to the Clinton-McCain contest that was deemed to be inevitable before McCain’s long decline and Obama’s rise. But first, McCain must prove that he can win a primary without independent support, and Clinton has to finally bury the Obama insurgency.
McCain’s challenge is formidable, as he is seeking to break from the formula that has been the key to Republican Party electoral success in presidential contests since rising out of the ashes of Barry Goldwater’s defeat in 1964. For all of the fealty shown by this year’s crop of Republican presidential aspirants to the memory of Ronald Reagan, the underpinning of Republican success has not been character or charisma, but rather strict adherence to the formula set forth long ago by Grover Norquist, long-time conservative activist and President of American’s for Tax Reform.
Don’t raise taxes. Preserve property rights. Protect the Second Amendment. Support home schooling. Oppose abortion. Support communities of faith. Protect marriage.
Norquist rules have been the cornerstone of a Republican coalition that endured for decades. It brought together seven groups, each of whom were moved to vote on a single issue.
Pro-faith. Anti-tax. Pro-gun. Anti-gay. Pro-life. Anti-sex education. Pro-property.
Norquist understood that if those single-issue voters stayed together, they could control the government.
“The reason the center-right coalition holds together, the Reagan voters, the George W. Bush voters… vote and are moved by a desire not to be messed with themselves. And as long as everybody’s primary vote-moving issue is dealt with well––and that’s what Bush did, that’s what Reagan did, that’s what the next Republican nominee that gets this right will do––then the coalition is a low-maintenance coalition, because nobody in the room wants anything at the expense of anyone else on a vote-moving issue.”
“As long as the Christians don’t try and steal anyone’s guns, and the gun-owners don’t try to steal anyone’s property, and the property-owners don’t throw prophylactics at the Christians’ kids, we can all work together because nobody is in anyone else’s face, nobody is in anyone else’s pocket, and we can all go fight the Left the rest of the week.”
And it worked. And it endured.
If a Clinton-McCain contest emerges, the Republican Party will be in uncharted waters.
Despite being a traditional conservative on social issues, John McCain never bought into Norquist’s vision, and has been anathema to elements of the Republican Party for years. His campaign collapsed and was largely left for dead after his efforts to mend fences with evangelical leaders. His strength––his brand––lay in his hero status, his straight-talk persona, and his integrity. He is a big picture candidate. Pandering––the essence of Norquist’s business model––simply did not suit him.
This stands in stark contrast to Hillary Clinton’s campaign strategy, as formulated by strategy guru Mark Penn. Penn, the author of Microtrends, views America and the electorate as a quilt of distinct socio-cultural groups with their own interests and concerns, and fashioned the campaign accordingly. However, Penn’s is not a Democrat version of the Norquist strategy, as his are not single-issue voting groups, but rather archetypes built on the familiar model of “Soccer Moms” and “NASCAR Dads.”
However, Barack Obama’s campaign challenged the fundamental premise of Penn’s targeting strategy. Obama’s candidacy was not build on positions, but rather an appeal to an inchoate notion that the nation needs a different kind of leadership, that after years of the Blue-Red Civil War, it is time to rebuild the notion of Nation.
Obama’s appeal loomed to be devastating to Clinton, just as any campaign that is built on interest group politics can appear craven next to a larger appeal to the better angels of our nature. Obama’s message brought out the worst in Bill Clinton, in particular, who was reduced to inveighing against the risks of idealism and false hope. However, the emergence of race during the week after New Hampshire turned the tide for the Clinton campaign, and has been devastating for Obama.
In the Iowa caucuses––now receding deep into memory––Obama won among all voter groups except for older women, and after his victory speech the Pundit Class was building him up as a combination of J.F.K. and M.L.K. Less than a week later, despite losing New Hampshire to Clinton largely on the basis of her strong rebound among women voters, Obama continued to enjoy strength across all voter categories.
In the wake of her New Hampshire victory, however, Clinton uttered words that will become legend in the world of political strategy. Clinton embraced the King metaphor but suggested that while visionary leadership was fine, it took L.B.J. to enact the legislation that King’s rhetoric engendered.
For the week that followed, Clinton pressed the theme that she was the political leader with the muscle and finesse to tame the bureaucracy and drive a progressive agenda, while Obama was just talk. But the strategy was not intended to resuscitate the memory of L.B.J. Rather, the objective was to turn the discussion to race.
And it worked. Outrage ensued that Clinton had subordinated King’s achievements to those of Lyndon Johnson, and––even worse––that almost half a century later a visionary Black leader would still have to rely on White leadership to see their dreams come into reality.
Hillary stoically withstood days of racially charged vituperation, drawing on her and her husbands deep reservoirs of support in the Black community. But by the time a truce was called before the Nevada vote, the trick had been turned, and Obama had been transformed.
No longer was he the visionary, whose base was drawn from those eager for fundamental change––the latest in a long Democratic Party tradition that included Eugene McCarthy, Bobby Kennedy, George McGovern, Gary Hart, Paul Tsongas and Howard Dean. Now he was first and foremost a Black Candidate, inheriting the mantle instead of Jesse Jackson.
And what was wrong with that? After all, Jackson won more primaries than almost anyone on that list.
But as the Nevada vote rolled in, what was wrong became clear. In less than a week, the entire dynamic of the race had changed. Identity Politics largely displaced the debate over Change vs. Experience, and the Obama campaign was badly wounded.
For the Clinton campaign, this transformation was essential. After all, she had won New Hampshire in the wake of the Teargate episode that drew women to her banner in large numbers. While that was fine as a means of reviving a campaign that was failing, she could not allow herself to become identified as a Women Candidate.
Therefore, labeling Obama as the Black Candidate served two purposes. First, even if it ceded a major voting block to him, it marginalized his campaign and undermined its national prospects. Second, it neutralized the negative aspects of her own reliance on women, by making each candidate an identity candidate.
And what a good trade it was. In Nevada, Clinton might have lost much of her support within the Black community––which backed Obama three to one––but in exchange she gained a dominant edge among Women, Whites and Latinos.
How quickly the new politics devolved to the old. The Clinton campaign and its surrogates immediately began to spin expectations based on the logic of the newly reframed campaign. They have pronounced Obama the likely winner the upcoming South Carolina vote on the basis of its large Black vote––a tactic that in turn solidifies the image of Obama as the Black Candidate, diminishes the importance of the outcome if he wins, and magnifies the importance if she wins––while remaining silent on the corollary that they fully expected to win California and New York in the trade.
If a Clinton–McCain contest emerges, it will be a throwback. John McCain will once again be John McCain, and will run on the basis of his iconic status as a maverick and as a leader, eschewing his lapse into Grover Norquist’s world of coalition politics. Clinton, for her part, will have to choose which voice to embrace. Mark Penn long ago scripted the general election as one in which she would quilt together the Democrats' 48% Blue vote, and build a broad electoral victory by drawing in up to 20% of Republican Women.
But that was then. The successes of both the McCain and Obama campaigns reflect a public weary with the old political rules and strategies, and a desire for a future that is different from the past. Offering a future that is different from the past––a past defined by divisive national politics and twenty years with a Bush or Clinton in the White House––will be a tough sell for Hillary. Despite all of the advantages that Clinton will enjoy in this Democratic year, McCain’s stature and independence may enable him to draw support across party lines, much as Obama was able to do.
There is no small irony that this all comes to a head in the South Carolina, the state where George W. Bush buried John McCain in 2000 through a racially-charged strategy. The Clinton campaign has regained its position of dominance, and challenged Obama to respond in turn if he is to regain his momentum.
Meanwhile, Hillary has opened a new front in the campaign. In the last debate, raised the issue of Obama’s relationship with Chicago developer Antoin Rezko. It is truly a sign of the confidence that the Clintons––whose own campaign finance history includes their own unsavory moments Johnny Chung and Norman Hsu and the pardoning of fugitive billionaire Marc Rich––would take this tack, and invite a reopening of the entire saga of Clintons past.
A saga that is one of the central elements in the desire of many voters to move on.
McCain’s challenge is formidable, as he is seeking to break from the formula that has been the key to Republican Party electoral success in presidential contests since rising out of the ashes of Barry Goldwater’s defeat in 1964. For all of the fealty shown by this year’s crop of Republican presidential aspirants to the memory of Ronald Reagan, the underpinning of Republican success has not been character or charisma, but rather strict adherence to the formula set forth long ago by Grover Norquist, long-time conservative activist and President of American’s for Tax Reform.
Don’t raise taxes. Preserve property rights. Protect the Second Amendment. Support home schooling. Oppose abortion. Support communities of faith. Protect marriage.
Norquist rules have been the cornerstone of a Republican coalition that endured for decades. It brought together seven groups, each of whom were moved to vote on a single issue.
Pro-faith. Anti-tax. Pro-gun. Anti-gay. Pro-life. Anti-sex education. Pro-property.
Norquist understood that if those single-issue voters stayed together, they could control the government.
“The reason the center-right coalition holds together, the Reagan voters, the George W. Bush voters… vote and are moved by a desire not to be messed with themselves. And as long as everybody’s primary vote-moving issue is dealt with well––and that’s what Bush did, that’s what Reagan did, that’s what the next Republican nominee that gets this right will do––then the coalition is a low-maintenance coalition, because nobody in the room wants anything at the expense of anyone else on a vote-moving issue.”
“As long as the Christians don’t try and steal anyone’s guns, and the gun-owners don’t try to steal anyone’s property, and the property-owners don’t throw prophylactics at the Christians’ kids, we can all work together because nobody is in anyone else’s face, nobody is in anyone else’s pocket, and we can all go fight the Left the rest of the week.”
And it worked. And it endured.
If a Clinton-McCain contest emerges, the Republican Party will be in uncharted waters.
Despite being a traditional conservative on social issues, John McCain never bought into Norquist’s vision, and has been anathema to elements of the Republican Party for years. His campaign collapsed and was largely left for dead after his efforts to mend fences with evangelical leaders. His strength––his brand––lay in his hero status, his straight-talk persona, and his integrity. He is a big picture candidate. Pandering––the essence of Norquist’s business model––simply did not suit him.
This stands in stark contrast to Hillary Clinton’s campaign strategy, as formulated by strategy guru Mark Penn. Penn, the author of Microtrends, views America and the electorate as a quilt of distinct socio-cultural groups with their own interests and concerns, and fashioned the campaign accordingly. However, Penn’s is not a Democrat version of the Norquist strategy, as his are not single-issue voting groups, but rather archetypes built on the familiar model of “Soccer Moms” and “NASCAR Dads.”
However, Barack Obama’s campaign challenged the fundamental premise of Penn’s targeting strategy. Obama’s candidacy was not build on positions, but rather an appeal to an inchoate notion that the nation needs a different kind of leadership, that after years of the Blue-Red Civil War, it is time to rebuild the notion of Nation.
Obama’s appeal loomed to be devastating to Clinton, just as any campaign that is built on interest group politics can appear craven next to a larger appeal to the better angels of our nature. Obama’s message brought out the worst in Bill Clinton, in particular, who was reduced to inveighing against the risks of idealism and false hope. However, the emergence of race during the week after New Hampshire turned the tide for the Clinton campaign, and has been devastating for Obama.
In the Iowa caucuses––now receding deep into memory––Obama won among all voter groups except for older women, and after his victory speech the Pundit Class was building him up as a combination of J.F.K. and M.L.K. Less than a week later, despite losing New Hampshire to Clinton largely on the basis of her strong rebound among women voters, Obama continued to enjoy strength across all voter categories.
In the wake of her New Hampshire victory, however, Clinton uttered words that will become legend in the world of political strategy. Clinton embraced the King metaphor but suggested that while visionary leadership was fine, it took L.B.J. to enact the legislation that King’s rhetoric engendered.
For the week that followed, Clinton pressed the theme that she was the political leader with the muscle and finesse to tame the bureaucracy and drive a progressive agenda, while Obama was just talk. But the strategy was not intended to resuscitate the memory of L.B.J. Rather, the objective was to turn the discussion to race.
And it worked. Outrage ensued that Clinton had subordinated King’s achievements to those of Lyndon Johnson, and––even worse––that almost half a century later a visionary Black leader would still have to rely on White leadership to see their dreams come into reality.
Hillary stoically withstood days of racially charged vituperation, drawing on her and her husbands deep reservoirs of support in the Black community. But by the time a truce was called before the Nevada vote, the trick had been turned, and Obama had been transformed.
No longer was he the visionary, whose base was drawn from those eager for fundamental change––the latest in a long Democratic Party tradition that included Eugene McCarthy, Bobby Kennedy, George McGovern, Gary Hart, Paul Tsongas and Howard Dean. Now he was first and foremost a Black Candidate, inheriting the mantle instead of Jesse Jackson.
And what was wrong with that? After all, Jackson won more primaries than almost anyone on that list.
But as the Nevada vote rolled in, what was wrong became clear. In less than a week, the entire dynamic of the race had changed. Identity Politics largely displaced the debate over Change vs. Experience, and the Obama campaign was badly wounded.
For the Clinton campaign, this transformation was essential. After all, she had won New Hampshire in the wake of the Teargate episode that drew women to her banner in large numbers. While that was fine as a means of reviving a campaign that was failing, she could not allow herself to become identified as a Women Candidate.
Therefore, labeling Obama as the Black Candidate served two purposes. First, even if it ceded a major voting block to him, it marginalized his campaign and undermined its national prospects. Second, it neutralized the negative aspects of her own reliance on women, by making each candidate an identity candidate.
And what a good trade it was. In Nevada, Clinton might have lost much of her support within the Black community––which backed Obama three to one––but in exchange she gained a dominant edge among Women, Whites and Latinos.
How quickly the new politics devolved to the old. The Clinton campaign and its surrogates immediately began to spin expectations based on the logic of the newly reframed campaign. They have pronounced Obama the likely winner the upcoming South Carolina vote on the basis of its large Black vote––a tactic that in turn solidifies the image of Obama as the Black Candidate, diminishes the importance of the outcome if he wins, and magnifies the importance if she wins––while remaining silent on the corollary that they fully expected to win California and New York in the trade.
If a Clinton–McCain contest emerges, it will be a throwback. John McCain will once again be John McCain, and will run on the basis of his iconic status as a maverick and as a leader, eschewing his lapse into Grover Norquist’s world of coalition politics. Clinton, for her part, will have to choose which voice to embrace. Mark Penn long ago scripted the general election as one in which she would quilt together the Democrats' 48% Blue vote, and build a broad electoral victory by drawing in up to 20% of Republican Women.
But that was then. The successes of both the McCain and Obama campaigns reflect a public weary with the old political rules and strategies, and a desire for a future that is different from the past. Offering a future that is different from the past––a past defined by divisive national politics and twenty years with a Bush or Clinton in the White House––will be a tough sell for Hillary. Despite all of the advantages that Clinton will enjoy in this Democratic year, McCain’s stature and independence may enable him to draw support across party lines, much as Obama was able to do.
There is no small irony that this all comes to a head in the South Carolina, the state where George W. Bush buried John McCain in 2000 through a racially-charged strategy. The Clinton campaign has regained its position of dominance, and challenged Obama to respond in turn if he is to regain his momentum.
Meanwhile, Hillary has opened a new front in the campaign. In the last debate, raised the issue of Obama’s relationship with Chicago developer Antoin Rezko. It is truly a sign of the confidence that the Clintons––whose own campaign finance history includes their own unsavory moments Johnny Chung and Norman Hsu and the pardoning of fugitive billionaire Marc Rich––would take this tack, and invite a reopening of the entire saga of Clintons past.
A saga that is one of the central elements in the desire of many voters to move on.
Saturday, January 12, 2008
Whither change.
“Some of us are right, and some of us are wrong. Some of us are ready, and some of us are not.”
With her voice soft and her eyes showing a hint of tears, Hillary Clinton laid herself bare to the voters. Perhaps this will become the signature look that will convey the sincerity to the public that Bill mastered when he bit his lower lip as he felt our pain.
Some of us are right, and some of us are wrong.
In this YouTube moment, Hillary brought her campaign back, laid her claim to the presidency, and set forth her creed. Blunt words hidden behind the soft voice. Steel behind the moist eyes.
While the media focused on the emotional content and visual images, the words themselves expressed sharp differences between Hillary Clinton and Barack Obama.
For months, the contest between Clinton and Obama was largely reduced to the themes of Experience and Change. However, that characterization has been seriously flawed from the outset. After all, Clinton’s claim to “thirty-five years of experience as a citizen activist” masks a resume that boasts just over one term in the Senate as a follow-on to her years as First Lady and her legal practice in Little Rock. Her years as First Lady certainly provided great exposure to the presidency, but its relevance remains an open question.
If nominated as the standard bearer for her party, her claim to the mantle of experience will not hold up long in the general election contest, whether she faces John McCain, Rudy Giuliani or Mike Huckabee, so better to set that argument aside now. The fact is that Clinton’s resume is as thin as any presidential candidate in memory. She has completed one term in the Senate, has never served in the military or held a foreign policy position, and has never been accountable for the basics of executive leadership: setting strategy, making decisions on limited information, building on successes, addressing failures, and learning from both. And however one spins her years as First Lady, even Bill Clinton would be forced to credit Huckabee’s tenure as Governor of Arkansas as a more proven credential.
Yes, Hillary led her husband’s efforts at healthcare reform. But the upshot of that effort does little credit to her claims, as it stands as the signature policy failure of her husband’s tenure. In the wake of that failure, Hillary did not regroup and soldier on, but rather she left the stage while husband Bill beat a tactical retreat as he tacked to the center and embraced Republican welfare reform legislation. Opponents of welfare reform might reasonably argue that the poor paid a heavy price for Hillary’s leadership failure.
Hillary’s words in New Hampshire bring back to center stage a central characteristic of her leadership style that will become pivotal before the election is over. Like the man that she seeks to replace in the White House, Hillary Clinton believes that she is right, and that those who disagree are wrong. And while the facts of her resume may belie her claim to the mantle of Experience, this central aspect of her personality makes the mantle of Change an odd fit as well, particularly in terms of what Change has come to mean in this election year.
The theme pf change that emerged in the Iowa victories of both Barack Obama and Mike Huckabee was not the appeal of the outsider, but rather it was a reflection of the exhaustion of the electorate with the politics of division that have characterized the current administration, and that characterized the Clinton years as well. Whatever their differences on policy, both Obama and Huckabee are comfortable with and reach out to people whose views and experiences differ from their own. Just as Obama visited and embraced the congregation of evangelical pastor Rick Warren––and they embraced him––Huckabee connected with African American audiences that were bypassed by the rest of the Republican field. They share an optimism and humanity that resonate with voters weary of years of Red and Blue, the use of patriotism as a rapier of political tactics, and the politics of personal destruction.
The real distinction between Clinton and Obama is not about experience. It is philosophical and sharp, and Hillary laid it out in her moment of sincerity in New Hampshire.
Some of us are right, and some of us are wrong. The words and the righteousness once reserved for the minions of the vast right wing conspiracy were now leveled at her antagonist for her party’s nomination.
The question that was raised from the moment he considered running for the presidency is about to be answered. We are about to find out if Barack Obama is ready. The campaign over the weeks to come will define both Hillary Clinton and Barack Obama. Clinton in terms of how much this fight means to her and the tactics that she will embrace. Obama by whether he can stand up against the fury of the assault that lies ahead, and whether it deepens his commitment to his core message or whether he shrinks from it.
The race is Hillary’s to lose. After all, all of the advantages are hers. Her team is experienced, and her message is simple. She is expected to do whatever it takes, so few will think less of her if when she goes on the offensive. And much of the core message has already been fleshed out, as it was delivered by Bill Clinton prior to the vote in New Hampshire:
Voting for Obama is a risk. He has no experience. His ideas are flawed. It is all an illusion. Get real.
And there will also be the subliminal messages delivered by surrogates to undermine the Obama campaign, such as the "testimonial" offered by Clinton supporter and former Senator Bob Kerry while campaigning in Iowa prior to the caucuses––and for which he apologized profusely later:
I like the fact that his name is Barack Hussein Obama, and that his father was a Muslim and that his paternal grandmother is a Muslim. There’s a billion people on the planet that are Muslims.
Amazing, really, that after months of being the insurgent running against the inevitable nominee, Barack Obama was the frontrunner for all of two days. Barely twenty-four hours from when three polls were released showing him ahead in New Hampshire by ten points to the day the votes were counted in New Hampshire.
Then, a day after her dewy eyed performance, Hillary won by four points. And it was over.
Now we are back to where it all started. She is once again the presumptive nominee. The advantage is hers. But it will not be about Change, because we have seen this show before. Right or wrong, ready or not, this is about the real world of power politics. The question for the voters, and central to her challenger’s message will be whether we want to go back or whether it is time to move on.
With her voice soft and her eyes showing a hint of tears, Hillary Clinton laid herself bare to the voters. Perhaps this will become the signature look that will convey the sincerity to the public that Bill mastered when he bit his lower lip as he felt our pain.
Some of us are right, and some of us are wrong.
In this YouTube moment, Hillary brought her campaign back, laid her claim to the presidency, and set forth her creed. Blunt words hidden behind the soft voice. Steel behind the moist eyes.
While the media focused on the emotional content and visual images, the words themselves expressed sharp differences between Hillary Clinton and Barack Obama.
For months, the contest between Clinton and Obama was largely reduced to the themes of Experience and Change. However, that characterization has been seriously flawed from the outset. After all, Clinton’s claim to “thirty-five years of experience as a citizen activist” masks a resume that boasts just over one term in the Senate as a follow-on to her years as First Lady and her legal practice in Little Rock. Her years as First Lady certainly provided great exposure to the presidency, but its relevance remains an open question.
If nominated as the standard bearer for her party, her claim to the mantle of experience will not hold up long in the general election contest, whether she faces John McCain, Rudy Giuliani or Mike Huckabee, so better to set that argument aside now. The fact is that Clinton’s resume is as thin as any presidential candidate in memory. She has completed one term in the Senate, has never served in the military or held a foreign policy position, and has never been accountable for the basics of executive leadership: setting strategy, making decisions on limited information, building on successes, addressing failures, and learning from both. And however one spins her years as First Lady, even Bill Clinton would be forced to credit Huckabee’s tenure as Governor of Arkansas as a more proven credential.
Yes, Hillary led her husband’s efforts at healthcare reform. But the upshot of that effort does little credit to her claims, as it stands as the signature policy failure of her husband’s tenure. In the wake of that failure, Hillary did not regroup and soldier on, but rather she left the stage while husband Bill beat a tactical retreat as he tacked to the center and embraced Republican welfare reform legislation. Opponents of welfare reform might reasonably argue that the poor paid a heavy price for Hillary’s leadership failure.
Hillary’s words in New Hampshire bring back to center stage a central characteristic of her leadership style that will become pivotal before the election is over. Like the man that she seeks to replace in the White House, Hillary Clinton believes that she is right, and that those who disagree are wrong. And while the facts of her resume may belie her claim to the mantle of Experience, this central aspect of her personality makes the mantle of Change an odd fit as well, particularly in terms of what Change has come to mean in this election year.
The theme pf change that emerged in the Iowa victories of both Barack Obama and Mike Huckabee was not the appeal of the outsider, but rather it was a reflection of the exhaustion of the electorate with the politics of division that have characterized the current administration, and that characterized the Clinton years as well. Whatever their differences on policy, both Obama and Huckabee are comfortable with and reach out to people whose views and experiences differ from their own. Just as Obama visited and embraced the congregation of evangelical pastor Rick Warren––and they embraced him––Huckabee connected with African American audiences that were bypassed by the rest of the Republican field. They share an optimism and humanity that resonate with voters weary of years of Red and Blue, the use of patriotism as a rapier of political tactics, and the politics of personal destruction.
The real distinction between Clinton and Obama is not about experience. It is philosophical and sharp, and Hillary laid it out in her moment of sincerity in New Hampshire.
Some of us are right, and some of us are wrong. The words and the righteousness once reserved for the minions of the vast right wing conspiracy were now leveled at her antagonist for her party’s nomination.
The question that was raised from the moment he considered running for the presidency is about to be answered. We are about to find out if Barack Obama is ready. The campaign over the weeks to come will define both Hillary Clinton and Barack Obama. Clinton in terms of how much this fight means to her and the tactics that she will embrace. Obama by whether he can stand up against the fury of the assault that lies ahead, and whether it deepens his commitment to his core message or whether he shrinks from it.
The race is Hillary’s to lose. After all, all of the advantages are hers. Her team is experienced, and her message is simple. She is expected to do whatever it takes, so few will think less of her if when she goes on the offensive. And much of the core message has already been fleshed out, as it was delivered by Bill Clinton prior to the vote in New Hampshire:
Voting for Obama is a risk. He has no experience. His ideas are flawed. It is all an illusion. Get real.
And there will also be the subliminal messages delivered by surrogates to undermine the Obama campaign, such as the "testimonial" offered by Clinton supporter and former Senator Bob Kerry while campaigning in Iowa prior to the caucuses––and for which he apologized profusely later:
I like the fact that his name is Barack Hussein Obama, and that his father was a Muslim and that his paternal grandmother is a Muslim. There’s a billion people on the planet that are Muslims.
Amazing, really, that after months of being the insurgent running against the inevitable nominee, Barack Obama was the frontrunner for all of two days. Barely twenty-four hours from when three polls were released showing him ahead in New Hampshire by ten points to the day the votes were counted in New Hampshire.
Then, a day after her dewy eyed performance, Hillary won by four points. And it was over.
Now we are back to where it all started. She is once again the presumptive nominee. The advantage is hers. But it will not be about Change, because we have seen this show before. Right or wrong, ready or not, this is about the real world of power politics. The question for the voters, and central to her challenger’s message will be whether we want to go back or whether it is time to move on.
Monday, October 29, 2007
It ain't over yet.
Markets are the dominant fact of our lives. They are pervasive and volatile, and yet we continue to be surprised as each peak and valley is upon us.
Last week, we moved to the next phase of the sub-prime mortgage “crisis” as major financial institutions began to succumb to reality, to unwind financial positions and to write-down the value of financial assets. Citibank, Merrill Lynch––the most visible brands in the financial markets––lost billions, and billions more that expected.
How? Just a lot of the same-old, same-old. We have been there so many times over the past quarter century––the Savings and Loan Crisis of the late 1980s, the Japanese market collapse of the early 1990s, the Asian fiscal crisis of the late 1990s, the Dot-com collapse at the beginning of the decade––and each time there are three distinct phases. First, there is the “Gee, it doesn’t get any better than this,” phase.
This is the home-value-as-ATM phase, the NASDAQ hitting 6,000, or the Nikkei nearing 39,000, which was epitomized to me in the late 1990s when a Merrill Lynch broker called our home to propose a product where we would take out a home-equity loan to invest in the stock market. How long had he been a broker? Just a year. This time, the exuberance was manifest in the mortgage markets, where buyers could finance 100% or more of a home purchase, and then pay less than the interest-only cost of the loan for several years.
The problem that these mortgage products claimed to solve is that housing was too expensive, and therefore new products were needed to make things affordable. But the logic was backwards. The housing was too expensive because the financing was too cheap. Take away the financing, sit tight for a while, and the markets will correct. Prices will not stay up if demand dries up. Might take time for people to let go, but reality will set in.
That is the first law of markets. They move. The interesting part of the current crisis is how eager people have been to pronounce how long the correction in the real estate markets will take. This is the “Is it over yet?” phase, and here is a simple rule: If people are still asking if it is over yet, it ain’t over yet. This is the question that keeps people holding on and resisting selling, hoping that the bottom has been reached.
It is only when people give up that the third phase arrives, the vaunted “capitulation" phase. This is when fear sets in, when hope is lost, and when, ironically, it has already become a better time to buy than sell.
In our present financial crisis, the meltdown has not come yet. Some real estate markets will not be hit so hard because they never rose so high, while others, like Manhattan, will not be hit so hard because of exogenous factors. In the case of Manhattan, the plummeting value of the dollar has already driven home prices down over 25%––in Euros––bringing foreign buyers into that market.
The shining star in this financial moment has been the Federal Reserve Bank. Over the past three years, the Federal Reserve has steadily increased the Federal Funds Rate––the rate at which it lends money to member banks and the primary tool that it uses for regulating the pace of economic activity. The Fed was raising rates not as it normally does to subdue economic growth and tame inflation, but for the simple reason that after the collapse of the Dot-com bubble and 9/11 the Fed reduced the Fed Funds Rate to 1.00% from 6.50%, and within the Fed there was great concern that if rates were not raised, they could not be lowered again in the event of a new crisis.
Yes, the logic seems odd––to raise rates for the purpose of being able to lower them––but the fear was real. If there were to be a new crisis––such as the one that is now upon us––and the Fed Funds Rate were still at 1%, the Federal Reserve would have few effective tools for addressing that new crisis and supporting the financial system.
And through it all, Japan loomed as a lesson of how bad things could get if the central bank was left with no tools in the toolbox. Japan, as some might recall, was looming as the new world economic colossus in the late 1980s with their stock market and real estate prices in the stratosphere when the bubble burst and values plummeted by as much as 75%. Faced with price deflation, Japan’s central bankers proved unable to thwart the decade-long recession that ensued––even as they pushed interest rates down to 1/10th of 1%––with devastating social and economic consequences.
Fortunately, in the months ahead, this will not be our challenge. The Federal Reserve retains control over the monetary levers that it needs and unlike the Japanese, American consumers continue to spend money through thick and thin. The difficult choices will be on the regulatory and policy side. Specifically, with a presidential election looming, Washington will be faced with the decisions of how much pain can be tolerated before the bailouts begin.
There will be hard choices ahead, but even the resources of the federal government cannot forestall the pain that comes during a major market decline and new regulation always seems to be designed to address the last crisis rather than the next one. The question that will endure––from one market bubble to the next––is whether, when faced with things that appear to be too good to be true––a no-cost mortgage for example––people might pause for a moment before they sign up and consider that maybe they are.
Last week, we moved to the next phase of the sub-prime mortgage “crisis” as major financial institutions began to succumb to reality, to unwind financial positions and to write-down the value of financial assets. Citibank, Merrill Lynch––the most visible brands in the financial markets––lost billions, and billions more that expected.
How? Just a lot of the same-old, same-old. We have been there so many times over the past quarter century––the Savings and Loan Crisis of the late 1980s, the Japanese market collapse of the early 1990s, the Asian fiscal crisis of the late 1990s, the Dot-com collapse at the beginning of the decade––and each time there are three distinct phases. First, there is the “Gee, it doesn’t get any better than this,” phase.
This is the home-value-as-ATM phase, the NASDAQ hitting 6,000, or the Nikkei nearing 39,000, which was epitomized to me in the late 1990s when a Merrill Lynch broker called our home to propose a product where we would take out a home-equity loan to invest in the stock market. How long had he been a broker? Just a year. This time, the exuberance was manifest in the mortgage markets, where buyers could finance 100% or more of a home purchase, and then pay less than the interest-only cost of the loan for several years.
The problem that these mortgage products claimed to solve is that housing was too expensive, and therefore new products were needed to make things affordable. But the logic was backwards. The housing was too expensive because the financing was too cheap. Take away the financing, sit tight for a while, and the markets will correct. Prices will not stay up if demand dries up. Might take time for people to let go, but reality will set in.
That is the first law of markets. They move. The interesting part of the current crisis is how eager people have been to pronounce how long the correction in the real estate markets will take. This is the “Is it over yet?” phase, and here is a simple rule: If people are still asking if it is over yet, it ain’t over yet. This is the question that keeps people holding on and resisting selling, hoping that the bottom has been reached.
It is only when people give up that the third phase arrives, the vaunted “capitulation" phase. This is when fear sets in, when hope is lost, and when, ironically, it has already become a better time to buy than sell.
In our present financial crisis, the meltdown has not come yet. Some real estate markets will not be hit so hard because they never rose so high, while others, like Manhattan, will not be hit so hard because of exogenous factors. In the case of Manhattan, the plummeting value of the dollar has already driven home prices down over 25%––in Euros––bringing foreign buyers into that market.
The shining star in this financial moment has been the Federal Reserve Bank. Over the past three years, the Federal Reserve has steadily increased the Federal Funds Rate––the rate at which it lends money to member banks and the primary tool that it uses for regulating the pace of economic activity. The Fed was raising rates not as it normally does to subdue economic growth and tame inflation, but for the simple reason that after the collapse of the Dot-com bubble and 9/11 the Fed reduced the Fed Funds Rate to 1.00% from 6.50%, and within the Fed there was great concern that if rates were not raised, they could not be lowered again in the event of a new crisis.
Yes, the logic seems odd––to raise rates for the purpose of being able to lower them––but the fear was real. If there were to be a new crisis––such as the one that is now upon us––and the Fed Funds Rate were still at 1%, the Federal Reserve would have few effective tools for addressing that new crisis and supporting the financial system.
And through it all, Japan loomed as a lesson of how bad things could get if the central bank was left with no tools in the toolbox. Japan, as some might recall, was looming as the new world economic colossus in the late 1980s with their stock market and real estate prices in the stratosphere when the bubble burst and values plummeted by as much as 75%. Faced with price deflation, Japan’s central bankers proved unable to thwart the decade-long recession that ensued––even as they pushed interest rates down to 1/10th of 1%––with devastating social and economic consequences.
Fortunately, in the months ahead, this will not be our challenge. The Federal Reserve retains control over the monetary levers that it needs and unlike the Japanese, American consumers continue to spend money through thick and thin. The difficult choices will be on the regulatory and policy side. Specifically, with a presidential election looming, Washington will be faced with the decisions of how much pain can be tolerated before the bailouts begin.
There will be hard choices ahead, but even the resources of the federal government cannot forestall the pain that comes during a major market decline and new regulation always seems to be designed to address the last crisis rather than the next one. The question that will endure––from one market bubble to the next––is whether, when faced with things that appear to be too good to be true––a no-cost mortgage for example––people might pause for a moment before they sign up and consider that maybe they are.
Saturday, October 27, 2007
Winds of war
For those who might have missed the vanguard of the French New Left back in the day, the Situationists were anarchists who sought to create situations that would engender a response that would provide a critique of the system that they sought to destroy. So one day, they put up posters in the metro with pictures of a man sitting behind his desk, in the crosshairs of a gun, with a caption reading, “Wouldn’t you like to kill your boss today?”
Except, of course, that no one got it. No rash of boss-killings ensued, no national debate on the absurdity of work in the capitalist system. Just more ennui.
Osama Bin Laden, on the other hand, was more effective. Sitting in a cave in North Waziristan, his goal was to drive a wedge between the 1.4 billion Muslims and the West, as a first step toward rebuilding the pan-Islamic caliphate. His method was pure Situationist. He would attack America and sit back and wait for the response. It was not his attack that would create the outcome he sought, but the reaction of his adversary, the reaction of the all-powerful, morally corrupt Americans. They would come after him, and in so doing would go to war on Islamic soil. They would slaughter Muslim women and children in their wake, and those images would be broadcast across the world.
He tried for years before we took the bait. He attacked our embassies in Africa. He attacked the Kobar towers. He attacked the USS Cole, but we did not respond. Finally, with the ranks of Al Qaeda reduced to a few dozen stalwarts, they chose to attack the U.S. homeland in a final effort to prod the Americans to come after him.
Bull’s eye.
Six years later, even as the American military trumpets the defeat of Al Qaeda in Iraq and Dick Cheney declares that Bin Laden has been reduced to irrelevance, Al Qaeda has grown from a few dozen men in a cave to a world-wide movement, and the challenge of bridging Islam and the West has become one of the defining societal challenges of this era.
And now a second front has been joined, and we are being baited once again. Iran is working hard to goad the Bush administration to double down on its strategy of preemption and would be quite pleased with an attack, particularly the discrete assault on nuclear facilities that is contemplated in the western media. A limited strike would be the best of all possible worlds. All the benefit, so little destruction.
The Bush administration has become a wonderful foil for the Iranians. After all, little more than a decade after the revolution that brought the clerics to power, the Guardian Council was faced with a popular movement demanding openness, democracy and secularization. Efforts to repress dissent only increased that momentum of the reformists, as the modern Iran that the Ayatollahs sought to forestall grew in the public imagination.
It was the Axis of Evil rhetoric that gave the Guardian Council the latitude to crack down on reform and elevate Mahmoud Ahmadinejad to the Presidency. Since then, the Iranian’s have played a dangerous game, but pursued their strategy diligently, and Ahmadinejad has played the nuclear and Israel cards skillfully.
The Iranians have two goals in this game. First, and foremost, the regime wants to stay in power. This requires an external threat to the regime that can justify the repression of domestic opposition and undermining of democratic institutions, and engender nationalist support for the regime. For this goal, the Americans could not have served interests of the clerical regime any better. Oil revenues are high, Americans are arrayed along their borders beating the drums of war, and even secular Iranians and Iranian ex-patriots support the regime’s assertion of Iran’s national right to pursue its nuclear program.
Second, the regime desires to assert Shi’a leadership in the Islamic world in its struggles with the West and to counter the ascendancy of Al Qaeda. This is an issue that blends ethnic and sectarian rivalry, with substantial historical resonance. After all, the Shi’a lived under the Sunni boot for more than a millennium until the fall of the Caliphate in the 1920s, only to find a new boot appear in its stead, this one made of British and American leather. This goal requires building the Iranian brand in the minds of the far-flung Islamic nation, the Umma, and has been the purpose behind Iranian support of Hamas and Hezbollah, its assault on the Danish cartoons, its Holocaust rhetoric, and Ahmadinejad’s visit to Columbia University, where he took the West’s verbal assaults and gave the lie to the West’s claims of openness and tolerance.
What could be better now for the Iranian regime than to be attacked by the Americans? What better way to in one moment harden domestic resentments against a common external enemy and build sympathy and support across the Islamic world? What better way to establish Iranian bona fides as the Islamic David standing against the American Goliath?
Where in all of this is the American art of strategy in the world? Why are subtlety and nuance the purview of others? Why do we not consider what happens on day two and day three and day four after we utter our words or launch our spears?
Last month, the Iranians showed the other side of their strategy, when, at the request of Lee Hamilton, Iranian supreme leader Ali Khamenei ordered the release of Halah Esfandiari. Esfandiari, an Iranian-born scholar, had been imprisoned for nine months as a “threat to the Iranian state.” Her comments after her release were notable. When she protested to her chief interrogator that she was not a spy, but just “wrote articles and organized symposia,” the Iranian official replied, “Yes, and that is how it started in Ukraine and Georgia.”
The Iranians care first and foremost about the survival of their regime, and the greatest threat the regime is not guns and bullets, but words and ideas.
Now we are at another moment of decision––when we should be thinking clearly about what strategies will best achieve the goals that we seek––before we launch a new war and once again find ourselves doing the bidding of our adversaries. But even as our adversaries in the world have proven adroit at nuanced strategy and asymmetric warfare, our stance in the world has become more linear and less subtle, more bellicose and less thoughtful.
Unfortunately, bellicosity apparently plays in Peoria, so the winds of war may loom as irresistible. Among the leading Republican candidates, war with Iran has become the new national security shibboleth, and with an eye to the general election Hillary Clinton is marching in lock-step. But behind all of the heated words, is there much thought going on? About day two, about day three or about day four?
How is it that five years into the Iraq war, we might once again succumb to the drumbeat of national security populism? Is it possible that our political class has lost the capacity to think about the implications of their words, to be a little more wise and a little less warrior, and to discern whether they are being manipulated by others more thoughtful and strategic than they?
As we dig our hole deeper and deeper, we should remind ourselves that we are neophytes in this neighborhood. When he was in New York, Ahmadinejad made reference to the invasion of Greece by Darius II, over 2,000 years ago. The Sunni and the Shi’a are playing a complex game of tribe and faith that dates back a millennium. The Turks ruled the region for centuries and are loathe to be dictated to. And the Russians, the French and Brits have been contesting the region since before the battle of Yorktown.
We just might not be as smart as we think we are. And everyone else might know a thing or two. And that would be OK.
Except, of course, that no one got it. No rash of boss-killings ensued, no national debate on the absurdity of work in the capitalist system. Just more ennui.
Osama Bin Laden, on the other hand, was more effective. Sitting in a cave in North Waziristan, his goal was to drive a wedge between the 1.4 billion Muslims and the West, as a first step toward rebuilding the pan-Islamic caliphate. His method was pure Situationist. He would attack America and sit back and wait for the response. It was not his attack that would create the outcome he sought, but the reaction of his adversary, the reaction of the all-powerful, morally corrupt Americans. They would come after him, and in so doing would go to war on Islamic soil. They would slaughter Muslim women and children in their wake, and those images would be broadcast across the world.
He tried for years before we took the bait. He attacked our embassies in Africa. He attacked the Kobar towers. He attacked the USS Cole, but we did not respond. Finally, with the ranks of Al Qaeda reduced to a few dozen stalwarts, they chose to attack the U.S. homeland in a final effort to prod the Americans to come after him.
Bull’s eye.
Six years later, even as the American military trumpets the defeat of Al Qaeda in Iraq and Dick Cheney declares that Bin Laden has been reduced to irrelevance, Al Qaeda has grown from a few dozen men in a cave to a world-wide movement, and the challenge of bridging Islam and the West has become one of the defining societal challenges of this era.
And now a second front has been joined, and we are being baited once again. Iran is working hard to goad the Bush administration to double down on its strategy of preemption and would be quite pleased with an attack, particularly the discrete assault on nuclear facilities that is contemplated in the western media. A limited strike would be the best of all possible worlds. All the benefit, so little destruction.
The Bush administration has become a wonderful foil for the Iranians. After all, little more than a decade after the revolution that brought the clerics to power, the Guardian Council was faced with a popular movement demanding openness, democracy and secularization. Efforts to repress dissent only increased that momentum of the reformists, as the modern Iran that the Ayatollahs sought to forestall grew in the public imagination.
It was the Axis of Evil rhetoric that gave the Guardian Council the latitude to crack down on reform and elevate Mahmoud Ahmadinejad to the Presidency. Since then, the Iranian’s have played a dangerous game, but pursued their strategy diligently, and Ahmadinejad has played the nuclear and Israel cards skillfully.
The Iranians have two goals in this game. First, and foremost, the regime wants to stay in power. This requires an external threat to the regime that can justify the repression of domestic opposition and undermining of democratic institutions, and engender nationalist support for the regime. For this goal, the Americans could not have served interests of the clerical regime any better. Oil revenues are high, Americans are arrayed along their borders beating the drums of war, and even secular Iranians and Iranian ex-patriots support the regime’s assertion of Iran’s national right to pursue its nuclear program.
Second, the regime desires to assert Shi’a leadership in the Islamic world in its struggles with the West and to counter the ascendancy of Al Qaeda. This is an issue that blends ethnic and sectarian rivalry, with substantial historical resonance. After all, the Shi’a lived under the Sunni boot for more than a millennium until the fall of the Caliphate in the 1920s, only to find a new boot appear in its stead, this one made of British and American leather. This goal requires building the Iranian brand in the minds of the far-flung Islamic nation, the Umma, and has been the purpose behind Iranian support of Hamas and Hezbollah, its assault on the Danish cartoons, its Holocaust rhetoric, and Ahmadinejad’s visit to Columbia University, where he took the West’s verbal assaults and gave the lie to the West’s claims of openness and tolerance.
What could be better now for the Iranian regime than to be attacked by the Americans? What better way to in one moment harden domestic resentments against a common external enemy and build sympathy and support across the Islamic world? What better way to establish Iranian bona fides as the Islamic David standing against the American Goliath?
Where in all of this is the American art of strategy in the world? Why are subtlety and nuance the purview of others? Why do we not consider what happens on day two and day three and day four after we utter our words or launch our spears?
Last month, the Iranians showed the other side of their strategy, when, at the request of Lee Hamilton, Iranian supreme leader Ali Khamenei ordered the release of Halah Esfandiari. Esfandiari, an Iranian-born scholar, had been imprisoned for nine months as a “threat to the Iranian state.” Her comments after her release were notable. When she protested to her chief interrogator that she was not a spy, but just “wrote articles and organized symposia,” the Iranian official replied, “Yes, and that is how it started in Ukraine and Georgia.”
The Iranians care first and foremost about the survival of their regime, and the greatest threat the regime is not guns and bullets, but words and ideas.
Now we are at another moment of decision––when we should be thinking clearly about what strategies will best achieve the goals that we seek––before we launch a new war and once again find ourselves doing the bidding of our adversaries. But even as our adversaries in the world have proven adroit at nuanced strategy and asymmetric warfare, our stance in the world has become more linear and less subtle, more bellicose and less thoughtful.
Unfortunately, bellicosity apparently plays in Peoria, so the winds of war may loom as irresistible. Among the leading Republican candidates, war with Iran has become the new national security shibboleth, and with an eye to the general election Hillary Clinton is marching in lock-step. But behind all of the heated words, is there much thought going on? About day two, about day three or about day four?
How is it that five years into the Iraq war, we might once again succumb to the drumbeat of national security populism? Is it possible that our political class has lost the capacity to think about the implications of their words, to be a little more wise and a little less warrior, and to discern whether they are being manipulated by others more thoughtful and strategic than they?
As we dig our hole deeper and deeper, we should remind ourselves that we are neophytes in this neighborhood. When he was in New York, Ahmadinejad made reference to the invasion of Greece by Darius II, over 2,000 years ago. The Sunni and the Shi’a are playing a complex game of tribe and faith that dates back a millennium. The Turks ruled the region for centuries and are loathe to be dictated to. And the Russians, the French and Brits have been contesting the region since before the battle of Yorktown.
We just might not be as smart as we think we are. And everyone else might know a thing or two. And that would be OK.
Monday, October 22, 2007
Memories of Billy Rohr
It did not take long for the grumbling to start: “Are the Red Sox ready to become the Yankees?”
A knife to the heart of those whose lives have been defined by the seasonal yearnings and disappointments inherent to the chosen path; a sharp rebuke to those whose own human frailty led them over time to root as much for the defeat of their Nemesis, as for that chimerical moment when their own heroes might emerge triumphant.
A close friend––still warm from the heat of Dustin Pedroia’s night––remarked of what the future might hold for a team whose young roster of Beckett and DiceK, Ellsbury and Papelbon, DelCarmen, Lester and Buccholtz––along with the evening’s diminutive star––have their best years before them, but was quick to add that should they sign A-Rod, she would “have a hard time continuing as a Red Sox fan.”
For such is the life. Once the yearning defines the soul, the conditionality is inevitable. We are fans, after all, not whores. We cannot be bought. After a lifetime of waiting, what is another decade? Better that than debasing the very meaning of the journey.
The Red Sox have won nothing yet this year––thought last night was a glorious night––and just one World Series to redeem the hopes of those who forty years ago saw a season begin with Billy Rohr blanking the Yankees, and who believed that with he and Yaz and Rico and Boomer, Santiago and Lonborg, the future was bright. A young roster can come to naught, as the Conigliaro brothers can attest, as the heroics of Bernie Carbo and Hendu and Pudge can so easily be taken away by Calvin Shiraldi and Johnny Mac.
It is way too soon to rest on one night’s laurels, for this may be Colorado’s year, but we learn to love the moment and to feel the warmth from the moment that Coco Crisp––a name for the ages––crashed into the wall with the ball cradled in his grasp––for Siddhartha Gautama and every Red Sox fan knows that such moments are fleeting. Each must be inhaled and savored for what it is, for the journey itself.
The moment is barely past when we are awoken from our reverie.
Unable to tolerate the moment of joy for Red Sox fans, whose torment they have so enjoyed over the decades, New York writers dig deep for a journalistic Haiku, and strike with full force.
“Are the Red Sox ready to become the Yankees? Are they ready?”
A knife to the heart of those whose lives have been defined by the seasonal yearnings and disappointments inherent to the chosen path; a sharp rebuke to those whose own human frailty led them over time to root as much for the defeat of their Nemesis, as for that chimerical moment when their own heroes might emerge triumphant.
A close friend––still warm from the heat of Dustin Pedroia’s night––remarked of what the future might hold for a team whose young roster of Beckett and DiceK, Ellsbury and Papelbon, DelCarmen, Lester and Buccholtz––along with the evening’s diminutive star––have their best years before them, but was quick to add that should they sign A-Rod, she would “have a hard time continuing as a Red Sox fan.”
For such is the life. Once the yearning defines the soul, the conditionality is inevitable. We are fans, after all, not whores. We cannot be bought. After a lifetime of waiting, what is another decade? Better that than debasing the very meaning of the journey.
The Red Sox have won nothing yet this year––thought last night was a glorious night––and just one World Series to redeem the hopes of those who forty years ago saw a season begin with Billy Rohr blanking the Yankees, and who believed that with he and Yaz and Rico and Boomer, Santiago and Lonborg, the future was bright. A young roster can come to naught, as the Conigliaro brothers can attest, as the heroics of Bernie Carbo and Hendu and Pudge can so easily be taken away by Calvin Shiraldi and Johnny Mac.
It is way too soon to rest on one night’s laurels, for this may be Colorado’s year, but we learn to love the moment and to feel the warmth from the moment that Coco Crisp––a name for the ages––crashed into the wall with the ball cradled in his grasp––for Siddhartha Gautama and every Red Sox fan knows that such moments are fleeting. Each must be inhaled and savored for what it is, for the journey itself.
The moment is barely past when we are awoken from our reverie.
Unable to tolerate the moment of joy for Red Sox fans, whose torment they have so enjoyed over the decades, New York writers dig deep for a journalistic Haiku, and strike with full force.
“Are the Red Sox ready to become the Yankees? Are they ready?”
Saturday, October 06, 2007
The problem of Europe
Two weeks ago, Nicholas Sarkozy launched his most direct assault on the European Central Bank. In the view of the new French President, the ECB’s tight money policies threaten to undermine his efforts to open up the French economic system and stimulate economic growth and liberalization. The ECB policies, Sarkozy suggested, were biased toward Germany’s enduring fear of inflation and against his policies of stimulating growth and international competitiveness.
The rift between Sarkozy and the ECB has been exacerbated by the trading relationship between the Euro, the Dollar and the Chinese Yuan. As the value of the Dollar has collapsed under the weight of massive U.S. current account deficits, the Euro has risen to new heights, while the Chinese currency, which does not trade freely, has only risen modestly. The result has been that European goods have become less competitive in the U.S. market. The ECB can ameliorate this problem, as Sarkozy has suggested, by reducing interest rates––at least in concert with U.S. central bankers––which would stem the pace of the Euro’s rise. But this, the Gnomes of the ECB insist, is not their job. Their job is to fight inflation. They are independent. Go away.
Sensing their inability to move the ECB to act, some European finance ministers have responded to the Euro’s rise by beseeching Ben Bernanke to raise U.S. interest rates to support the Dollar. This, however, is not going to happen. The Federal Reserve just lowered interest rates in response to the sub-prime lending crisis, and any upward move would undermine U.S. markets. The Fed’s mandate is to fight inflation and to support economic growth, and whatever is going on with the Euro is simply not their job.
More to the point, the price of Mephisto shoes might be the symptom, but it is not the problem. The problem is more fundamental. It is the problem of Europe.
The European Union is a nice idea. Like the Iraq War, it is an idea that gained momentum among many constituencies that came to support the same policy, though for different reasons. For some, who saw the emergence of Asia and the United States as two great economic forces, the European Union would create a third trading block to protect the European economies. For others, the EU represented an opportunity to assert Europe as a political counterweight to the United States imperial power in the post-Cold War era. For yet others, the EU was necessary to bind France and Germany together so tightly that a third world war between the historic rivals would become an impossibility.
The reality of creating a European Union has been a tough go. The “domestic” economic strategy of the European Union has mirrored the industrial policy of the United States over the decades. While the United States implemented policies to stimulate economic growth in its poorer states––in the south and in the west––so has Europe invested in the economies of its southern and poorer members. Neo-classical trade theories have been realized, as countries with comparative advantages in labor costs or other attributes have benefited, while growth in the Franco-German heartland has stagnated. Imagine Ireland, Portugal and Spain as the sunbelt of Europe.
However, while the rustbelt gave way in economic and political clout to the sunbelt in the U.S., the rise of new economic powers in Europe threatened the cultural identity of the members, as well as the economies of the older powers. European Unionists have implemented the attributes of nationhood before the participants agreed to become a single nation. They have centralized regulation, asserted legal hegemony and created a single currency, even as the EU constitution has failed to win ratification. The Euro-centrists have said yes, even as the people continue to say no.
In the United States, political union came first, then came the struggle to determine the extent to which the center could impose its will on the member states and undermine local law and custom. As one observer noted, the issue finally came to a head in 1863, when the two sides convened at a small town in Pennsylvania to settle matters. After three days of debate, the supporters of a strong center won the day and the matter was settled.
Sarkozy is raising the central question of how a nation that cannot control their monetary policy can seek to control their future. His policies, his presidency and the ability of France to chart a new economic path––one in which fiscal policy will play a reduced role relative to market forces––depend on a parallel monetary policy that makes capital available to a growing entrepreneurial sector.
Alan Greenspan unwittingly underscored Sarkozy’s point of the important linkage between fiscal and monetary policy during his recent book tour, when he indicated the extent to which he directed monetary policy to support the fiscal policies of the federal administrations. Far from adopting the strict constructionist stance of the current ECB, Greenspan recognized the anti-inflationary impacts of technology and deregulation, and allowed an expansive monetary policy that led to sustained economic growth, even as the Dollar and federal current account deficits might have warranted the tighter monetary stance.
Europe, for anyone who has visited recently, is not what it used to be. The quaint villages are not quite as quaint. The local bakeries are disappearing. Local cultures are ceding to the forces of economic integration. Ironically, it is France’s Hungarian-born President that is raising the central question, not just about whether France can control its economic destiny, but whether, just two years after the French voters rejected the proposed European Constitution, France has already lost its ability, and right, to be La France.
The rift between Sarkozy and the ECB has been exacerbated by the trading relationship between the Euro, the Dollar and the Chinese Yuan. As the value of the Dollar has collapsed under the weight of massive U.S. current account deficits, the Euro has risen to new heights, while the Chinese currency, which does not trade freely, has only risen modestly. The result has been that European goods have become less competitive in the U.S. market. The ECB can ameliorate this problem, as Sarkozy has suggested, by reducing interest rates––at least in concert with U.S. central bankers––which would stem the pace of the Euro’s rise. But this, the Gnomes of the ECB insist, is not their job. Their job is to fight inflation. They are independent. Go away.
Sensing their inability to move the ECB to act, some European finance ministers have responded to the Euro’s rise by beseeching Ben Bernanke to raise U.S. interest rates to support the Dollar. This, however, is not going to happen. The Federal Reserve just lowered interest rates in response to the sub-prime lending crisis, and any upward move would undermine U.S. markets. The Fed’s mandate is to fight inflation and to support economic growth, and whatever is going on with the Euro is simply not their job.
More to the point, the price of Mephisto shoes might be the symptom, but it is not the problem. The problem is more fundamental. It is the problem of Europe.
The European Union is a nice idea. Like the Iraq War, it is an idea that gained momentum among many constituencies that came to support the same policy, though for different reasons. For some, who saw the emergence of Asia and the United States as two great economic forces, the European Union would create a third trading block to protect the European economies. For others, the EU represented an opportunity to assert Europe as a political counterweight to the United States imperial power in the post-Cold War era. For yet others, the EU was necessary to bind France and Germany together so tightly that a third world war between the historic rivals would become an impossibility.
The reality of creating a European Union has been a tough go. The “domestic” economic strategy of the European Union has mirrored the industrial policy of the United States over the decades. While the United States implemented policies to stimulate economic growth in its poorer states––in the south and in the west––so has Europe invested in the economies of its southern and poorer members. Neo-classical trade theories have been realized, as countries with comparative advantages in labor costs or other attributes have benefited, while growth in the Franco-German heartland has stagnated. Imagine Ireland, Portugal and Spain as the sunbelt of Europe.
However, while the rustbelt gave way in economic and political clout to the sunbelt in the U.S., the rise of new economic powers in Europe threatened the cultural identity of the members, as well as the economies of the older powers. European Unionists have implemented the attributes of nationhood before the participants agreed to become a single nation. They have centralized regulation, asserted legal hegemony and created a single currency, even as the EU constitution has failed to win ratification. The Euro-centrists have said yes, even as the people continue to say no.
In the United States, political union came first, then came the struggle to determine the extent to which the center could impose its will on the member states and undermine local law and custom. As one observer noted, the issue finally came to a head in 1863, when the two sides convened at a small town in Pennsylvania to settle matters. After three days of debate, the supporters of a strong center won the day and the matter was settled.
Sarkozy is raising the central question of how a nation that cannot control their monetary policy can seek to control their future. His policies, his presidency and the ability of France to chart a new economic path––one in which fiscal policy will play a reduced role relative to market forces––depend on a parallel monetary policy that makes capital available to a growing entrepreneurial sector.
Alan Greenspan unwittingly underscored Sarkozy’s point of the important linkage between fiscal and monetary policy during his recent book tour, when he indicated the extent to which he directed monetary policy to support the fiscal policies of the federal administrations. Far from adopting the strict constructionist stance of the current ECB, Greenspan recognized the anti-inflationary impacts of technology and deregulation, and allowed an expansive monetary policy that led to sustained economic growth, even as the Dollar and federal current account deficits might have warranted the tighter monetary stance.
Europe, for anyone who has visited recently, is not what it used to be. The quaint villages are not quite as quaint. The local bakeries are disappearing. Local cultures are ceding to the forces of economic integration. Ironically, it is France’s Hungarian-born President that is raising the central question, not just about whether France can control its economic destiny, but whether, just two years after the French voters rejected the proposed European Constitution, France has already lost its ability, and right, to be La France.
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