Archive for January, 2007

Choosing Failure

Sunday, January 28th, 2007

The Senate Foreign Relations Committee recently approved a resolution, 12-9, in a largely party-line vote, to oppose President George Bush’s plan to surge the troops in Iraq. The goal of the troop surge is to bring greater security to Iraq. Much of the resolution’s text is non-controversial. It calls for the eventual transfer of security responsibility to Iraqi forces. This is certainly the ultimate goal of the Administration. Further, no one can reasonably oppose the assertion that leads off the resolution that “maximizing chances of success in Iraq should be our goal.”

The Senate and Congress also have a positive responsibility to hold hearings and evaluate the President’s foreign policy. They can even responsibly conclude that the President’s policy is unwise. They could even decide that it is so unwise that they cut off funds. While they could not use legislative power to micromanage troop deployments, they certainly could cut funds for the Iraq War by a date certain.

In Congressional hearings and in public statements members of the Senate and Congress can advocate whatever policy they consider the most prudent. For example, contrary to her current position, House Speaker Nancy Pelosi while minority leader in 2004 urged more troops for Iraq.

However, a non-binding resolution officially rebuking the President’s decision is irresponsible. This resolution, if passed by the full Senate, merely undermines the troops in the field. Certainly, Al Qaeda and insurgents in Iraq view the resolution as a victory. By its nature, the resolution makes the successful execution of the troop surge less likely and endangers lives and violates the stated goal of the resolution of “maximizing chances of success.”

To appreciate the fact that this Senate action is pure political posturing of the most cynical kind, one only has to notice that the Senate followed dismissal of the President’s policy in committee with the confirmation of General David Patraeous by a whopping 81-0 vote in the full Senate. General Patraeous is not only tasked to carry out the President’s surge policy, he is an important architect of it. Voting against the surge and for Patraeous is measure of how unserious most of the Senate is.

As rash as the anti-surge resolution is, the most terribly disheartening recent news is the Fox News Poll that asked Americans whether they wanted the President’s surge policy to succeed. The question was not whether they expected the policy to succeed, but whether “you want the plan President Bush announced last week to succeed.”  Among Democrats 51% wanted the plan to succeed (the loyal opposition), 34% did not, and 15% were not sure they wanted the plan to succeed.

Let’s be generous and assume that the 15% listed as “don’t know” were confused by the question. Let us further assume that nearly half of the Democrats who said they did not want the plan to succeed accidentally selected the wrong response. Thus, by conservative estimate the percentage of Democrats who do not want the President’s plan to succeed is 20%.

If the President’s plan does not succeed it means the American military would suffer more casualties than it otherwise would. It would mean that many more innocent Iraqi citizens would die. Any even 36% of Democrats in the same poll conceded that if the plan fails, terrorists would be “encouraged to attack the United States again.”

A cynic could confidently conclude that one-in-five Democrats hate the President (or perhaps the country) so deeply and profoundly they would prefer all these negative consequences to Bush succeeding. It would be convenient if Democrats would refrain from providing evidence that nurtures such cynicism.

Posted in Politics | No Comments »

Income and Wealth

Sunday, January 21st, 2007

Paul Krugman, op-ed writer for the New York Times and economics professor at Princeton University, once boasted about his algebraic understanding. Whereas most political and social commentators speak or write of unquantifiable philosophical notions, coming from an economic background, Krugman is adept at algebraic symbol manipulation. Economists try to model their social science on the physical sciences like physics or chemistry, whose universal language is mathematics. Indeed, Krugman was correct in writing, “There are important ideas in [economics] that can be expressed in plain English, … [b]ut there are also important ideas that are crystal clear if you can stand algebra, and very difficult to grasp if you can’t.” Krugman concedes his impatience with those less precise in thought and presentation than he fancies himself to be. The danger, of course, is that after having postured so, someone will challenge Krugman on his own terms.

Alan Reynolds, of the Libertarian Cato Institute, did not write Income and Wealth as a specific rebuttal to Krugman. However, Krugman has been so argumentative and prolific in writing about the economic demise of the middle class and poor at the expense of the affluent and has done so via the exploitation of sloppy statistics that he provides convenient and oft-mentioned examples of the misuse of statistics. Krugman’s professional background makes it impossible to plausibly plead ignorance to their misuse. None one who seriously wants to understand income and wealth and how it has changed over time in the United States, can be ignorant of the concepts explained by Reynolds in Income and Wealth.

The fundamental problem for Liberal economists is history. In the 1970’s under a regime of high tax rates, the economy suffered high inflation, high interest rates, high unemployment, and low growth. Then President Ronald Reagan arrived and slashed marginal tax rates by half. After a relatively short transition period, the economy radically improved with high growth rates, low inflation, low interest rates, and low unemployment. Clinton marginally increased tax rates but only modestly and, with the help of a Republican Congress, passed the North American Free Trade Agreement (NAFTA). Clinton’s free trade policies were in direct conflict with trade unions, a traditional member of the Democratic electoral coalition. The economy was buoyant in the 1990s. After the short recession caused by the attacks of September 11, Bush’s tax cuts have revived the economy. Moreover, those industrialized countries in Europe that have adhered to a high-tax strategy, the policy advocated by Liberal economists, are burdened with low growth and high unemployment. The Conservative prescriptions for the economy are conspicuously successful.

The response from the Left is to concede the high growth, low unemployment, low inflation, and low interest rates; but to argue a series of “Yes, buts.” Yes, but the real median wages have remained static for the last twenty-five years. Yes, but only the rich have experienced increasing incomes as the expense of the poor. Yes, but the rich have increased their wealth more than others. Yes, but income and wealth inequality have grown.

Unfortunately for the rhetorical convenience of the Left, in order to make such claims, it is necessary to make any number of rather simple errors. Reynolds systematically explains the real nature of the data. For example:

Real wages have only remained static if you use an obsolete measure of inflation. With more modern measures, median wages have risen by over a third.

Median wages only include the wages of those who are employed. In the late 1970’s, the base period often used for comparisons, unemployment was high. The least skilled and the lowest paid were laid off first, ironically increasing median wages for those still employed during that period. However, no one would reasonably want to increase unemployment to increase median wages.

Wages measure only a part of compensation. Medical and retirement benefits have become an increasingly large part of total compensation. Counting only wages neglects this important component. Also ignored are transfer payments to the lower income quintile such as Social Security or in-kind assistance like food stamps.

The Gini index is a broad measure of inequality. People often point to the increase in inequality as measured by the Gini index during the 1990s. Of course, it is often neglected that for technical reasons the Census Department altered the way it computed the index in the early 1990s. This resulted in a one time jump in the Gini index that did not reflect any change in the economy. Without this jump, the Gini index has remained relatively stable.

In measuring the distribution of wealth, many studies only include immediately accessible wealth, i.e., liquid financial instruments. Counting in this ignores the enormous increase in the wealth of the middle class from increasing housing values and increasing asset value of 401(k) or 403(b) retirement plans.

In addition, the demographic composition of the United States has aged dramatically over the last two-and-half decades. Typically, young people are rich in human capital, with the prospect of earning income over many years. Older people have less human capital, but have accumulated a lifetime of assets and savings. By conventional measures, the older people are wealthier than younger ones. Changes in wealth distribution in large measure represent a change in the age distribution rather than a direct economic change.

Reynolds explains that the single biggest discriminator on which households occupy different income quintiles is the number of people who work in the household. Two income households fill the top quintile, while the bottom quintile usually has no worker or only a part-time worker, perhaps a single mother. Family structure is highly correlated with economic success.

The media is too full of glib and incorrect assertions about who has and has not benefited from explosive economic growth of the last two-and-half decades. Reynolds sorts through the errors and the rhetoric in a readable style. And in the end who could disagree with his conclusion:

“No matter what one thinks ought to be done about taxes, spending, unions, immigration, trade, minimum wage laws, and so on, the first thing that needs to be done is to get the facts right. If that happens there will still be plenty of room for lively debates about all sorts of public policies. And they will be honest debates.”

Posted in Economics, Politics | 1 Comment »

A Loss for Maryland

Saturday, January 20th, 2007

Sometimes it is entirely rational to vote for an inferior candidate for public office if his or her election might affect the balance of power in a legislative chamber. Assume, for example that you largely agree with policies of candidate A. However, if the election of candidate A would aid the party with which one largely disagrees with, it makes sense to consider voting against candidate A. More could be accomplished by the party of one’s preference than by a single representative one prefers.

In the last election, the unpopularity of the Iraq War had this effect on Congressional Republicans. People could not vote for against the author the policy, President George Bush, so they used Congressional Republicans as a proxy. This combined with the facts that the Liberal leaders in the Congress like Representative Nancy Policy and Senator Harry Reid were deliberately inconspicuous and that many Democrats ran as conservatives made is easier from normally reliable Republican voters to switch tickets. Nonetheless, some Republicans were undeserving victims of the purge.

One obvious political casualty was Governor Robert Ehrlich Jr. of Maryland. The moderate Republican managed to earn a 55% approval rating in a state where registered Democrats outnumber Republicans two-to-one. After inheriting a surging budge deficit from the previous Democratic governor, Paris Glendening, Ehrlich managed to bring the state’s budget into surplus without raising taxes and while increasing aid to education. He also managed to finally start up an important transportation project, the Intercontinental County Connector, which had been lingering in legislative limbo for decades. Ehrlich is the sort of attractive and successful governor that soon finds himself on the short list of possible presidential and vice-presidential candidates.

Ehrlich is young enough and charismatic enough that he might be called upon for public service in the future, but for now he is one more casualty of Republican losses in 2006. Not only was this a loss for Republicans, it was a loss for the residents of Maryland as well.

Last week, Ehrlich threw a party to thank his supporters. Here are some photos from the event.

Bob Ehrlich Jr.
Bob Ehrlich Jr. speaks to crowd.
Kendal Ehrlich
Kendal Ehrlich waves to crowd.
Crowd and Ehrlich thank you party.
Supporters listen to Ehrlich.

Posted in Politics | No Comments »

Pushing All the Chips In

Sunday, January 14th, 2007

When the history of the Iraq War is written, it may well be concluded that former Secretary of Defense Donald Rumsfeld will have proven to be an excellent manager, but a mediocre war-time leader. It may well be the consensus that Generals William Casey, Commander of Multi-National Force-in Iraq, and John Abizaid, Commander of Central Command, were  more talented as diplomats and administrators than as warriors.

At the outset of the Iraq War, there were two prevailing strategic theories to topple the Saddam Hussein regime, go in “heavy” or “fast.” Going-in-heavy meant the large systematic destruction of the Iraqi resistance using heavy armor and intense firepower. The upside of such an approach was a higher probability of military success with fewer US casualties. The disadvantage would be higher civilian casualties and greater destruction of Iraqi infrastructure. The strategy of going-in-fast relied more on speed, precision, and flexibility to reduce collateral damage, but at the cost of potentially increasing US casualties.

General Tommy Franks elected to go-in-fast and that gamble paid off handsomely. The war started on March 20, 2003. By April 9, Baghdad had fallen, and by April 15, the Saddam strong-hold of Tikrit also fell. The conventional part the war was effectively over with very few American casualties and minimum of collateral damage.

Although, Franks had proved that going-in-light was a wise strategy to win the war, there was no follow-up with large numbers of Coalition troops to secure Iraq post hostilities. Perhaps, because Secretary of Defense Rumsfeld wanted to minimize the costs of the war, perhaps because some advised that a large US footprint would irritate Iraqis, perhaps because some urged a political solution as opposed to a heavy-handed military presence, the US maintained a modest presence of under 200,000 troops, usually less than 150,000.

The strategy championed by Casey and Abizaid was to maintain modest troop levels. The goal was to seek first to implement a democratic government under the belief that after a political solution, the violence would decline. Perhaps, we should have noticed that the increased troop levels used to secure Iraq during the election periods were actually very effective in reducing violence.

The theory of keeping US troop presence at a minimum was an honest and plausible post-war strategy, but it has not succeeded in the way anticipated. In conflict, cutting corners is dangerous and does not convince either friends or adversaries of one’s commitment and strength.

Potential insurgents must never be allowed any success. Sources of power other than Coalition troops and the elected Iraqi government should never be allowed to exist. After initially quelling outbreaks by followers of Muqtada al-Sadr, militias loyal to al-Sadr have been allowed sanctuaries. Out of an effort to reduce stresses within the new Iraqi government, al-Sadr was given latitude. As a consequence sectarian violence has festered. In war, there is no substitute for victory and it must be complete.

Now it is possible that the proposed surge in troops in conjunction with different rules of engagement, and with the participation of Iraqi troops could change the momentum of the conflict. Most areas of Iraq, save Baghdad and Anbar province, are mostly secure. Focusing 20,000 troops in the correct places may work.  Karl von Clausewitz warned “that no military leader has ever become great without audacity.” The surge should not be timid attempt to regain security, but grand attempt to gain victory

From a distance it is not possible to determine if the proposed troop surge and the plan to use these troops are sufficient to overwhelm opposition. We may know in a few months. At the poker table of the Iraq War virtually all Democrats, who are only sitting at the table for fear of being left out, and some squishy Republicans have already folded their hands. President George Bush has pushed all his chips into the center. However, this is only wise if one has a sufficiently good hand to claim the pot.

Posted in Social Commentary | No Comments »

America Alone

Sunday, January 7th, 2007

The world is not at a loss for doomsday scenarios. During the 1970s, we were all concerned that the world would end in a nuclear exchange with the Soviet Union. We were told that would exhaust the world’s oil and food resources before the current century. New worries have ascended to the top of the list of worries recently. There is always the possibility of a large asteroid smashing into the Earth and wiping out most of the life on the surface, much as a similar asteroid probably accounted for the rapid extinction of dinosaurs. Evidence is accumulating that the Earth is warming auguring significant climate change effects.

Of course, the danger of nuclear war with the USSR was real and we fortunately avoided it. This does mean that the dangers of nuclear weapons have entirely been eliminated. Predictions of natural resource shortages have proven unduly pessimistic, or at least premature. While it is certain that a large asteroid will, at some time in the future, be on a collision course with the Earth, the probability of an impact in the foreseeable future is tiny. The net effect of climate change is still speculative.

To these concerns, Mark Steyn adds one more in his American Alone. Steyn’s thesis begins with unassailable fact that much of the Western World, particularly in Europe is in demographic collapse. In order for any society to maintain it population it must have a fertility rate of about 2.1, i.e., women on average have 2.1 children. The European Union, as a whole, suffers under a weak fertility rate of 1.47 with some countries like Italy and Spain suffering with anemic fertility rates of 1.33 and 1.28, respectively. Literally, there are places in Europe which will become depopulated of ethnic European in one or two generations.

There are at least a couple of consequences of a declining and aging population. First, the generous social welfare states of Europe are dependent upon an influx of young people to support the pensions and increased medical expenses of retirees. Without such an influx these countries face economic stagnation and declining living standards. Second, culture is a reflection of the integrated perceptions and attitudes of its citizens. A demographically young culture is innovative and energetic culture, whereas a demographically older culture is likely to be risk adverse and focused on maintenance of pension checks.

Now, it is always possible that the fertility rates in Europe will undergo dramatic reversal. However, these rates have declined over decades and it difficult to foresee a circumstance that would change current trends. Moreover, Steyn argues that the European social welfare states are themselves nurture suicidal attitudes to reproduction. He writes:

“…a variety of government interventions — state pensions, subsidized higher education, higher taxes to pay for everything — has so ruptured the traditional patterns of inter-generational solidarity that Continentals now exist almost entirely in the present tense culture of complete self-absorption.”

The Muslim population is increasing the Europe due to both immigration and the high-fertility rates of immigrant populations. Steyn questions whether Europe can undergo dramatic demographic change and not undergo dramatic political change. Thanks to lavish funding of radical mosques by Saudi Arabia and others, the Muslim populations in Europe and elsewhere are becoming radicalized. Certainly, there are moderate Muslims and they probably constitute a majority, but radical Islam represents the Zeitgeist of the Islamic world.

Moreover, the self-absorption of modern secular welfare states saps culture confidence. What Steyn calls “culture exhaustion” will make it impossible for Europeans to resist the Islamic demands for deference. In Steyn’s assessment, Europe’s demographic and cultural death spiral is too far along to reverse. Before the end this century, there will parts of Europe where Sharia law is enforced. Great societies are not killed, but rather commit suicide.

Steyn writes American Alone with cleverness and humor that belies his deeply pessimistic message. America may soon represent the only remnant of Western ideals, of liberty and personal independence. The only hope Steyn offers is that the example of Europe’s demise will make obvious even to the American Left, the necessity to resist the clash of cultures. After all, a world dominated by Sharia law as practiced by radical Islamists is not that will be hospitable to gay or abortion rights, the key concerns of the modern American Left. It is not one where women will be treated with equal rights and dignity. It will represent a return to the Dark Ages, before the Renaissance and before the Enlightenment. As Steyn asserts, “…much of what we call the Western World will no survive the twenty-first century, and much of it will effectively disappear with our lifetimes.”

Abraham Lincoln described the American Civil War as a great test of democracy and liberty that would determine “if any nation so conceived and so dedicated, can long endure.” The United States represents are far freer country with a far less protective welfare state. Nonetheless, the United States, over the decades, has moved steadily closer to the European model, though among modern industrial states it is still “exceptional.” If Steyn is correct in his assessment that European suicidal fertility rates are an inevitable outcome of the “Eutopian” welfare state, then the clash with radical Islam represents a test to determine whether a society so structured can long endure.

Posted in Economics, Politics, Social Commentary | 3 Comments »