What You Should Think About Progress

July 21, 2008

“The greatest thing in the world is not so much where we are, but in what direction we are moving.”

–Oliver Wendell Holmes

In dialogue about the war in Iraq, so many terms have been robbed of consensus meaning.  Never mind “mission accomplished.” “Victory,” “success,” “defeat,” and even “war” are officially applied in completely inappropriate contexts.  The pathological abuse of language even extends to the point where demilitarization plans are shaped by “time horizons” and a major diplomatic meeting cannot be labelled as a “negotiation.”

This Orwellian approach to misleading the public can never serve any worthwhile purpose . . . at least, not as well as clear honest communications would.  However, it can prove effective to the degree that confusing the general public is its intent.  “Progress” provides a platform from which to observe this phenomenon.  After years and years, slaughter upon slaughter, there has been a meaningful reduction in the level of violence inside Iraq.  No doubt in some sense this is progress.  Yet it is fair to ask if this is the progression of strategy adapting to achieve improved results or the progression of a fire that is running low on fuel.

Had powerful outsiders equipped with invincible military power occupied the United States of America, a radical and violent insurgency seems like one inevitable consequence.  To some degree there is an rational case to be made for freedom fighters.  The idea that many of us would not simply capitulate and take orders from an invading force may even be a legitimate source of pride.  Yet for how many years would we struggle against the occupying power before the highest levels of violent resistance could no longer be sustained?

Unlike religious fanaticism, the principle of self-government provides an ethical basis for resisting outside invaders.  With that in mind, is it likely that an insurgency containing elements of Al Qaeda would run out of proverbial steam even sooner?  The reduction in violence, like the reduction of polar ice, is a fact established by credible evidence put through extensive scrutiny.  Yet the case for a kinder gentler Iraq caused by the “troop surge” rests on hot air of the figurative variety, whereas a trend of atmospheric warming is subject to measurement and verification.

There is some underlying reality to consider.  For one, the actual escalation in troop numbers went a little beyond a token gesture.  From even before the invasion began, informed experts openly criticized Secretary Rumsfeld’s “lighter, faster, cheaper*” paradigm that saw U.S. forces putting roughly one third as many boots on the ground as would be required for effective control.  The surge of this year was an order of magnitude below what would be required to pursue pacification over such a large and diverse area.  However, something is better than nothing, and it was only one order of magnitude shy of a full-fledged military solution.

Then again, just what about this continued to be a military problem after Saddam Hussein was apprehended?  Even accepting the proposition that regime change in Iraq was a sensible goal to pursue at the time of the invasion, there is no excuse for a total failure to push for demilitarization of U.S.-Iraqi relations after the old Baghdad regime was effectively neutralized and a fledgling state established in its place.  Instead of preparing Iraq to stand on its own, the Coalition Provisional Authority fired everyone in the army and most security services.  If there were ever a case of criminal stupidity, surely adding legions of desperately poor young men with guns to an already unstable and violent mix would be that case.

To what degree this dip in Iraqi violence was inevitable and to what degree it was a result of American policy is not at all clear.  Thus it becomes clear when someone proclaims “the surge is working” that the vocal individual is eager to pass off opinions as facts.  It is hard to imagine the level of gullibility required to take those individuals seriously.  They laud the cleverness of the current Presidency based on this argument after countless evasions of responsibility for nearly everything that went wrong in foreign affairs, counterterrorism policy, and military operations since the first moments “shock and awe” was unleashed on Baghdad.

Even a broken clock is right twice per day.  Pundits who constantly predict economic boom times get it right when there is a boom.  Something parallel is true of more bearish prognosticators.  Official statements regarding the war have taken the concept of rose colored glasses to a much more extreme and much more disturbing place than ever before.  At any point in the years and years this bloodbath has been perpetuated, President Bush and his administration remained poised to take credit for any dip in violence.  As determined as insurgents and terrorists were to drive off the invaders, it appears that even their desire to kill was no match for that of our political right-wing.

Now as the debate about Iraq looks to the future, one candidate will argue that the other “wanted America to lose” and “was wrong about Iraq” regarding the effectiveness of the escalation and new tactics.  Yet this all goes back to the Orwellian trick.  Insofar as winning and losing are applicable concepts, a “win” was extremely unlikely based on the initial plan and not at all possible after Paul Bremmer demonstrated beyond any shadow of doubt that the 21st century is no place for viceroys.  Is it really a “win” to partially rebuild a nation devastated by an invasion and occupation that were predicated on abominable intelligence analysis and perpetuated by even worse executive leadership?

Manipulating language to confuse asymmetrical warfare with conventional warfare may rally support for violence, but only to the extent that violence is misguided.  A straightforward explanation of terrorism and the means of neutralizing terrorist threats can promote support for wise policies and create a kind of genuine strength propaganda never can.  Likewise, those who would trivialize and spin this incredibly complex situation in Iraq by phrasing things in terms of “winning” or “losing” promote a false strength that is really a weakness.  This national weakness has left our nation politically and intellectually hobbled for at least as long as this war has been underway.

Demilitarization of Iraq policy is a measure that is long overdue.  The blood and treasure squandered during years of unjustifiable delay is staggering.  Yet those losses only continue to grow until the time comes that real power is used to rally the kind of real strength that can only come from real progress toward concluding this obscenely long military occupation.

If we are to be constructive in all of this, perhaps the term “progress” can be reclaimed from those who insist American policy in Iraq is the cause of said phenomenon.  Whatever the true cause(s), less violence in Iraq is some form of progress.  More and more people conceiving of a day when that land is not subject to U.S. military occupation is progress as well.  If we as a nation can find common ground about realizing a vision like that, then we can continue to make progress.  Call them “time tables” or “time horizons,” but by all means keep such talk alive.

*Of all the ironies, the notion that a joint Pentagon-Haliburton venture would be part of a “cheaper” approach to war may be the most extreme.  Of all the tragedies, the earnest belief that privatization of the commisary did in fact generate savings for taxpayers is nowhere near the most extreme . . . but it is nonetheless a tragic failure of basic competence.

What You Should Think About Economic Churn

December 11, 2007

“So now, as an infallible way of making little ease great ease, I began to contract a quantity of debt.”

–from Great Expectations by Charles Dickens

Wall Street’s elite and television news anchors seem largely of one mind when it comes to the recent decision to cut interest rates again. None of them seem to have a problem with the ongoing trend. To the contrary, their complaint is that the latest cut was relatively modest when continuing turmoil in the world of high finance is thought to constitute a demand for bold cuts to continue. Chronically drunk on loose credit, they find mere moderation of the trend cause to for vocal complaint.

The underlying thinking is simple enough. Lower interest rates mean that consumers and businesses may borrow more easily. All else being equal, this also means that consumers will make more large purchases and businesses will undertake more aggressive expansion. It also lowers the hurdles aspirant entrepreneurs must overcome to launch a new venture. So far, so good, right?

The problem with this nice neat simple thinking of this sort is that we do not actually live in a nice neat simple world. After all, if great economic success was automatically the result of lowering interest rates, why not slash them to the practical minimum with all possible haste? The answer lies in the fact that not all economic activity is actually a good thing. Sometimes new ventures actually are a bad idea, destined to waste resources then fold for lack of revenue. Sometimes existing businesses are not actually better off at a larger size. Sometimes consumers are not best served by another big ticket purchase.

One major influence on present economic conditions is proof enough that this is true. The ongoing problems with mortgage-related financial instruments in the United States have much to do with a mismatch between real estate acquisitions and suitable lifestyle choices. This goes beyond low interest rates and a shamelessly underegulated mortgage industry enticing homeowners to bite off more than they could possibly chew. The rise of media promoting lavish home improvement aspirations, even idealizing fairy tale rarities in which amateurs “flip” properties they have no intention of inhabiting, fueled a wave of cultural pressure to go big with real estate.

No doubt there are many Americans with the resources to live in large houses or even own multiple homes. However, there are also many Americans who attempt to do this in spite of lacking the resources to make it a sound decision. There was a definite sense of schadenfreude in the early 1990s when Japanese investors, coming from a crowded island nation, took tremendous losses on commercial real estate in the U.S. The idea that an office tower in a major city might actually be less valuable from one year to the next simply did not compute among analysts willing to be literally crammed inside trains for their morning commute.

When excessive capacity ran up against sagging U.S. demand for that urban office space, even world famous landmarks had difficulty holding their value. Somehow that experience, well-covered in financial media of the time, seems to have been forgotten by figures framing American real estate policies and practices this century. Year after year of steady growth in the sector was thought to be part of a perpetual boom. It seems to me anyone claiming to be an expert in economics and/or personal finance ought know better than to ever endorse the notion of a perpetual boom.

Yet what has happened to American housing lately is not all that divergent from what has been happening to American business lately. For years and years “more more more” has been the battle cry of pundits and policymakers alike. Yet more activity does not necessarily generate more real value. One healthy aspect of the business cycle is that downturns weed out marginal operations that are not thriving on their own merits.

An ideal economy has very little churn — makework activity or meaningless transactions that serve no useful purpose. The more churn involved in an economy, the more demands will be placed on working citizens without any compensatory increases in quality of life. To a simpleton spellbound by Gross Domestic Product and unemployment figures, there is no difference between churn and meaningful productive endeavors. Yet to the people actually doing the work, there are huge consequences for morale. Perhaps more importantly, to everyone participating in the economy, there are huge consequences for the quality of goods and services obtained by a given unit of purchasing power.

Replacing a lifelong pharmaceutical therapy or an expensive surgery with a simple remedy for a common medical condition is seen as bad for the economy by prevailing metrics. Yet who among us would prefer to live in a world where a $500/month treatment is widely promoted in spite of being no better than a $150 treatment that provides at least as much health benefit? A pro-churn paradigm has our nation favoring the perpetual prescription or the sophisticated surgery over simpler approaches. While the market ultimately promotes smart choices when they become available, it also discourages the development and popularization of smart choices when there are huge profits to be made from continued dependence on costlier alternatives.

The most recent announced decline in interest rates, as with all others, is thought by its proponents to spur new ideas and new investments that will advance the cause of American prosperity. Yet this method of growing the economy is more like blowing up a balloon than building up a structure. Absolute emphasis on quantity, with no regard at all for quality, drives greater levels of economic activity without driving any greater satisfaction of human needs or desires (save the desire to prop up specific economic indicators.) In the long term, it actually undermines prosperity by amplifying the extent of future losses when an inevitable reckoning comes to pass.

This is not to say that there is no place for manipulation of interest rates as a means to stimulate or fortify a national economy. In fact, the prospect of surging foreclosure rates in response to rising interest rates is precisely the sort of scenario in which a bold cut could accomplish some useful purpose. Unfortunately, this purpose — encouraging stability in the face of troubling fundamental conditions — is best accomplished when the bold cut stands out as a sharp contrast to historical changes. When national policy has long been “cut, cut, and then cut some more,” no practical cut will be bold enough to send the right signals, and anything less than continued sharp cuts only compounds the influence of troubling fundamentals.

If managing a national economy were like running a horse race, we would find America’s productive elements so heavily whipped that no further action is likely to bring about a more energetic effort. Had the implement been used more sparingly, then it would have much more potential to motivate a surge at this point in time, when there is a clear imperative for stimulating intervention. In this way it becomes possible to provide effective support as it is needed. Realism, sensitivity, and selectivity all have crucial roles to play in these decisions.

Alas, along with just about every other issue that has some political dimension, most discussions of interest rate policy have been dumbed down beneath the point of usefulness. “When rates go down it is good, when rates go up it is bad,” is just a slightly more nuanced perspective than Frankenstein’s monster’s thoughts on fire. Yet widely respected financial analysts seem unable to do better in their assessments of Federal Reserve actions. This mindset is a wonderful thing for promoting even more economic churn, but when it comes to promoting real productivity and building real value in the American economy, it is anything but wonderful.

What You Should Think About the War in Iraq

December 2, 2007

“He who wants a rose must respect the thorn.”

–Persian proverb

I recall being mystified at the enormous disconnect between reality and “journalism” as I watched a little Fox News Channel almost every day from the emergence of the Clinton-Lewinsky story up through the end of the impeachment effort. Yet bemused puzzlement gave way to alarm as I also made a point of keeping tabs on that network during the rush into the Iraq war. While they spoke in sure tones of Saddam Hussein’s advanced nuclear weapons program, I saw qualified unfettered weapons inspectors concluding no such program existed. While they predicted a quick clean military operation that might cost $1-2 billion, I foresaw a protracted bloodbath.

More disturbing still, ABC, NBC, CBS, CNN, and MSNBC all made the same sort of mistakes FNC did. The “mainstream media” may not have been quite so willing to celebrate bloodlust. Yet every network on that list gave airtime to transparent partisan shills spouting extreme misinformation. Every network on that list presented anchors giving the voice of authority to false narratives generated by White House propagandists. If ever there was a time to rigorously check the facts in a story, that was it. Be it fear of public backlash or lack of access to government officials or parent corporations losing government business, something drove each of those media organizations to take an active role in a campaign of national misdirection.

In fairness, actual public officials were not quite so brazen as political operatives working the media. Defense Secretary Donald Rumsfeld seemed downright circumspect by comparison when he predicted a little complexity in the operation along with a total price tag that might run as high as $50 billion. Yet he joined the chorus of deception when it came to that “the Iraqi people will greet our soldiers with flowers and candy in the street” forecast. Even with thoughtful planning and minimal collateral damage, such an expectation was naïve. Blind faith in the certainty of such an outcome may explain why planning was so thoughtless and the invasion itself generated so many civilian deaths.

Like voting for George W. Bush in 2000, using overwhelming military force to accomplish regime change in Iraq may be regarded as a well-intentioned mistake. Real geopolitical or historical savvy would be required to see the folly of a brute force approach rather than (as was actually done in Afghanistan) working with indigenous people to help them achieve liberty with dignity and autonomy. On the other hand, by 2004 it seemed that outright idiocy was required to overlook the dangers of continuity of Iraq policy as well as the Presidency defined by it.

Though I am not aware of any loyal Bushies admitting to it, perhaps the underlying thinking was that a full scale invasion was required to secure control of Iraqi oil. Yet even if the policy was shaped by thoughts of a resource grab, it was not framed or implemented competently. Forces on the ground were given orders to leave military supply depots unsecured in order to provide immediate protection for the oil fields. What sort of thinking could possibly lead planners to believe forces hostile to America could do less harm with explosives stockpiles than with oil wells?

People with genuine respect for the lives of coalition soldiers and/or the lives of Iraqi civilians would surely have surely recognized problems and pushed for new ideas, perhaps even new leadership, at this point. Rather than accept Secretary Rumsfeld’s initial offer of resignation, the sitting President prioritized saving face over saving lives. The fall of Baghdad was celebrated and already marginalized critics were “put in their place” by jubilant (though also ignorant or dishonest) public figures. Up went the Coalition Provisional Authority; out went every cop, bureaucrat, utility worker, and teacher affiliated with the Ba’th Party; and some truly idiotic thinking about the importance of limited government was put to the test.

Rather than give Iraqi people genuine freedom along with encouragement and support to forge their own institutions of popular rule, a long list of mandates was imposed. At times it seemed as if Rush Limbaugh himself was dictating the shape of things to come in Iraq. For example, American authorities insisted that the new Iraqi government should accept an absolute limit of 15% on income tax. After all, we wouldn’t want the new Iraqi government doing crazy things like providing quality health care to countless collateral casualties or rebuilding devastated infrastructure at a brisk pace.

Most problematic of all was the American insistence that Iraqi oil resources be placed under private ownership. This went far beyond anarcho-capitalist ideology and into the realm of outright kleptocracy. Exxon did not generate this natural bounty. Chevron executives have no ancestral claim to Iraqi sands. Even from an American perspective, there was no justice in taking such a valuable resource out of the hands of the Iraqi people in order to let foreign corporations gorge themselves on oil profits. Imagine how that American directive registered in the minds of the Iraqi people, not merely in desperate need of that revenue, but also entitled to it by any reasonable standard.

Still, what is the plight of an entire nation when there is a Presidential face to be saved? Even as some understanding of Iraq’s internal politics slowly penetrated the thick skulls of relevant American officials, there was no acknowledgement of any legitimate grievances the Iraqi people might feel toward an occupying power. Of course simply maintaining an occupation is itself cause for concern. What American would be comfortable living under martial law imposed by a distant military power? How many of our citizens would stop at nothing to strike back against the invaders? Is it any surprise that in 2004 the most popular video rental in Iraq was Red Dawn?

In light of all this, what else could the White House do but stay the course? Apparently, they did eventually come to consider an alternative — the troop surge. In a land where military occupation is the primary fuel for the fires of anarchy and terrorism, more intense military occupation is the way to go?!? Perhaps today’s war planners are hopeful that insurgents and Al Qaeda affiliates will eventually lose interest in the causes for which they are willing to die. All that can be ascertained clearly from this policy is that there is no amount of blood and treasure that would cause George W. Bush to acknowledge the unthinkable — he might actually have committed a major blunder that changed the course of history.

In the end this disastrous reality may be a natural outgrowth of late 20th century conservative political thought. Again and again, errors are met with denials or evasions rather than recognition and change. It seems as if some people believe that strong enough faith in that which is untrue can reshape reality to make trickle down economics work or environmental damage inconsequential or even brutal warmongering constructive. Talk alone, growing less and less reasonable even as it grows more and more vehement, is employed as an alternative to adaptation in the face of serious problems.

Even if one grants that Saddam Hussein was a very bad man who had to go, it remains the case that the hardships of Iraq today are not caused by any threat that might be overcome with superior military might. Political problems require a political solution. It is inexcusable that the day after Saddam Hussein was pulled from his spider hole was not a day in which sweeping demilitarization of U.S.-Iraq policy was announced.

There is much work for diplomats, and perhaps spies as well, to perform inside Iraq. Perpetuating the bloodbath over there has added enormous difficulties to the challenges already inherent in the Iraqi situation. A new approach, in which officials make a good faith effort to face facts, then a similar effort to be honest with the public in both Iraq and the United States, would be a wonderful step in the right direction. Substantial reduction in the profile as well as the scope of the occupation would also be a form of progress. Instead policy seems oriented entirely around delaying the point at which error must be conceded. To me, it seems like this is procrastination of downright murderous proportions.

What You Should Think About Pacifism

November 29, 2007

“From pacifist to terrorist, each person condemns violence — and then adds one cherished case in which it may be justified.”

–Gloria Steinem

Even in more tranquil times, there is no shortage of commentary meant to remind non-violent citizens that legions of trained killers stand at the ready to provide security for the nation. No doubt much of human history reveals that force of arms provides a means to keep a hostile enemy out of a nation’s heartland. Yet more circumspect analysis also demonstrates that force of arms provides a means to produce hostile enemies. Could it be that there is more to achieving a security goal than having the most guns or the best fortress?

The bizarre state of the world in the aftermath of America’s “headless behemoth” foreign policy provides a new perspective on some old ideas. From the earliest clashes in military history, there have been questions about the justification for war. No one remotely acquainted with the realities of warfare could carry on without any doubts about the endeavor, even if military culture vigorously promotes thoughtlessness in this arena.

To be fair, soldiers in the thick of it are more effective if no weighty political cogitations distract from the urgent business at hand. Yet this same culture so useful in the field also has drawbacks. Once the fog of war has cleared and some opportunity for reflection presents itself, this mindset creates difficulty reconciling doubts raised by the experience of waging war with political justifications for the violence.

Since ancient times, it has been common for a head of state to have extensive personal experience with military service. Thus the entire history of governance is heavily influenced by, if not a “might makes right” attitude, at least a “having might is more important than being right” attitude. In Europe (sans Switzerland and a few other pockets of exceptional thoughtfulness,) from the Middle Ages to the middle of the 20th century, it was accepted that a genuinely defensive stance was inadequate. Responsible governance was presumed to include cultivating enough military might to fight alongside allies, lend credibility to aggressive posturing, and project force to distant lands.

Even today, blatantly stupid ideas like “war is good for the economy” or “war is essential to driving technological progress” are widely believed. Centuries upon centuries of social paradigms make it such that questioning or contradicting these unsound assumptions is regarded as a sign of weakness. It may be that the negative response is as much primal as it is cultural. Yet it surely is not intellectual.

There may be a subset of human beings who are best able to achieve their potential in some context provided by war. Yet to promote war as a means of promoting human achievement is downright senseless. Many of those who have achieved great things in a wartime context were just as capable of achieving great things in some peaceful pursuit. More to the point, surely that portion of humanity inclined to thrive in warfare is not a strong majority. Then, even if I were mistaken about that point, how much innocent blood may be spilled in the name of creating a militant environment for human achievement? Could the inspirations of war ever exceed the lost loves and labors of lives cut short by the consequences of combat?

War for war’s sake is only a good thing to the degree that someone has developed a profoundly misguided notion of “good.” Yet there remains the matter of defense. Wherever there is prosperity or power available for the taking, there is the risk that aggression will occur. George Orwell is known to have asserted, “we sleep safe in our beds because rough men stand ready in the night to do violence upon those who would do us harm.” To someone just beginning to attain the first glimmers of enlightenment, such a statement seems to suggest that peace and prosperity rest on an essential foundation created by awesome military forces ready to lay waste to prospective national enemies.

That assessment comes from an ignorance of the interconnectedness of all things. Did a sniper stuff the pillows on which this peaceful sleep occurs? Did a gunboat pilot assemble the frame of the bed? Was the mattress put together by an artillery crew? Is the heating and plumbing that makes our homes comfortable first invented by a team designing killing machines? Were our city streets planned and paved with the oversight of combat-hardened generals? To turn the simple-minded interpretation of Orwell on its head — dedicated warriors eventually find safe places to sleep away from the battlefield because most everyone else stands ready to perform constructive and creative activities on their behalf.

For too long, the darkness of tribalism and barbarism has lingered in our modern institutions. In the halls of power, even from the lips of those who avoided service themselves, characterizations of military forces as “the backbone of our society” are sincere. Yet they are also archaic and misguided. If we accept that military organizations are the essential core of strength our society possesses, then we define our greatness chiefly by our power to kill and destroy. I would think even an overwhelming majority of military personnel would hope for a more noble perspective from national leaders. Alas, this affliction remains severe in the United States, and it is hardly absent from other nations in the modern world.

Even amongst warriors, the trait of being peace-loving is correctly regarded as a virtue. Yet when it comes to absolute pacifism, hawks, chicken hawks, and plenty of doves all seem willing to agree that it is foolish. Personally I agree that there are plausible scenarios in which defense of others or defense of self justifies actions intended to neutralize a real and imminent threat. Yet no small part of the pacifists’ wisdom is understanding how incredibly rare these situations are if you do not make it your business to instigate or escalate hostilities.

An absolute pacifist runs the risk of doing wrong by failing to take the most effective course of action in protecting the innocent. Everyone else runs the risk of doing wrong by performing willfully destructive actions that do not serve any protective purpose. Which is the greater risk?

In the personal context, fluid situations and instantaneous needs can lead to situations where thoughtful reflection is not an option. Within limits both reasonable and practical, there should be some tolerance for honest mistakes. In an international context, however fluid the situation, opportunities for contemplation are usually abundant. To go to war when the underlying facts are not subject to thorough investigation or the stated cause(s) are unreasonable or the overall plan is unrealistic is to perpetrate the very worst sort of mistake. Only a team of lazy minds paired with dark hearts could let the desire to order an army to do violence take priority over the moral imperative to avoid unnecessary warfare.

Perhaps absolute pacifists are fools. Yet if we see clearly, then we see that life makes fools of us all. There is much more to be learned from the fool who thinks differently than from the fool who echoes our own thoughts. When we cut through useless divisiveness, we are left recognizing that abhorring violence is innately rational, perhaps even innately good. While we who are not absolute pacifists set about establishing the grounds on which we would support acts of violence, there is much benefit to be found in considering the very best arguments against those acts. If we cannot even face the questions of those who condemn all violence, how can we possibly believe our own justifications for it are legitimate?

What You Should Think About Recession

November 28, 2007

“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.”

–William Arthur Ward

My first experience analyzing the cultural resonance of the word “recession” comes from the media treatment of conditions leading up to the 1992 Presidential election. It is clear that the first President Bush presided over a weakening American economy as the end of his term approached. Yet it is also clear (all the more with hindsight) that a some of this was the inevitable adjustment of indicators and indices tugged away from realities by the fervor of Reaganomics jingoism.

Today, jingoism is almost too soft a term for an institutional predisposition to spin economic news. Anchors with almost every major network tiptoe around the fundamentals and treat “the R word” as if it were a vulgarity that should never be uttered in polite company. In fact, recession is a technical term that should be fluently employed in any applicable discussion of economics. Alas, it is also something of an ambiguous term, made all the more fuzzy by the abuses of journalists, pundits, and politicians themselves.

Perhaps the most sensible definition of “recession” holds that it is a period of time when economic growth across two consecutive quarters does not keep pace with population growth. Yet economic growth is itself a much fuzzier concept than tends to be widely believed. If an expensive and fragile device is replaced by a cheap durable device that fulfills the same need, adopting the innovation registers as a negative on the scorecard of economic growth. Acting promptly to minimize the damage caused by a natural disaster may also compare unfavorably with the activity involved in rebuilding efforts.

Then there is the matter of war. While much of education, child care, resource conservation, domestic toil, etc. is not included in the calculations that shape growth assessments, even the most destructive of military activities registers as economic accomplishment. For years the present Bush Administration has turned out mediocre economic performance — a feat that might be considered more than mediocre in light of the damage the attacks of 9/11 inflicted on key institutions as well as public morale.

Yet it is legitimate, even important, to have some sense of context in these matters. Attributing the economic components of declining public morale to terrorist attacks seems a serious error in judgement. If anything, the United States was energized and mobilized, more than at any other time in recent decades, as a response to the 9/11 attacks. A strong national leader with real vision about how to solve real problems could have accomplished amazing things while marginalizing apathy for the foreseeable future. As our sitting leader chose a different approach to directing the resources of the nation, we have experienced a different outcome.

Insofar as there are problems with public morale today, they have little to do with fears Al Qaeda is about to take the roof off the local Pamida store and more to do with weariness. People have grown weary of the persistent disconnect between the stated purposes and the predictable outcomes of White House initiatives. People have grown weary of the persistent deference to market forces in almost all matters, as if trickle-down thinking was still considered to be a perfect panacea to all social ills. Perhaps most of all, people have grown weary of a horrendously bloody and costly counterterrorism strategy that does at least as much to produce new terrorist recruits as it does to neutralize existing terrorist operatives.

The war in Iraq continues to bleed this nation, both literally and economically, to a significant degree. Yet that significance also registers as a net positive in the Gross Domestic Product. An end to the wartime spending binge would mean less spending to stimulate economic activity (unless policy also called for expensive peaceful initiatives like universal health care, universal access to higher education, and whatever else could be funded with the mountains of money funding the occupation of Iraq.) A short term thinker cannot help but see perpetuating the war as vital from the perspective that it also perpetuates wartime spending.

Yet focusing exclusively on short term thinking is almost never a sound approach to economics. So much spending creates more government debt. More government debt means more difficulty in securing creditors for the Treasury. Other than raising interest rates, there is little legitimate action a government can take to expand support from investors. Yet this all happens against a backdrop of interest rate cuts. Even now, Wall Street svengalis continue to promote loose credit as a way of encouraging business growth.

Somewhat like a balloon, applying hard restraints to the economy in one area at best merely transfers pressure to a different area. If our nation spends more and more while issuing bonds that are less and less rewarding, ultimately the medium of exchange itself takes a hit in value. While this eases debt pressure by reducing the real value of that debt, another inevitable consequence is increased pressure on working class citizens (or really all citizens with ordinary levels of personal income.) Less value in the dollar means more dollars are required to obtain goods or services of value — but the process does not provide more dollars to income recipients until terms of employment change.

On top of this great tangle of fundamental problems, oil speculators have driven energy prices up, and thus by extension made inflation that much more severe. If there is any bright spot in the big picture here, it is that the speculation cannot persist indefinitely. Unless the Bush-Cheney team starts a shooting war with Iran, the climb of oil should be arrested in spite of the continued decline of the American dollar. In fact, a general sense that U.S. belligerence is a declining phenomenon could drive a long-needed correction in the price of that particular commodity.

Still, when President Bush’s chief economic advisor Allan Hubbard declared that the prospect of a recession was more likely now than it seemed one year ago, he was doing so with some awareness of these hard facts. As this moment of frankness was almost immediately followed by a resignation, it is hard to say if many others inside the administration have even tried to wrap their minds around the particularly complex and particularly messy state of the national economy today.

Will the unraveling of Dubyanomics have such a severe impact as to bring about a national recession? This is a difficult question to answer, even if one accepts a concrete technical definition for the term “recession.” It may well be the case that American industriousness will sustain some measure of real growth even as the ongoing series of small shocks continue to reduce the median purchasing power of the American consumer. It may even be the case that a sense of hope brought on by a pending change in national direction could inspire major changes for the better.

Yet there should be no doubt — military aggression and widespread corruption fostered by this President have done no favors to the American economy. If we fail to get out economic house in order relatively quickly, the price we have already paid for his follies will be multiplied as it rests on the shoulders of future Presidents and even future generations of American taxpayers.

What You Should Think About Gross Domestic Product

November 8, 2007

“If we command our wealth, we shall be rich and free. If our wealth commands us, then we are poor indeed.”

–Edmund Burke

One of the most frequent concerns in discussions of public policy is economic growth. The state of Texas continues to permit the sale of notary public stamps without verifying that the recipient is in fact a notary public. When one journalist confronted the Attorney General of Texas about this policy and its significant role in facilitating the work of grifters, the official explained that state government did not want to increase the regulatory burdens experienced by businesses. While this is a particularly shortsighted and ridiculous approach to laissez-faire economics, it also seems to be a microcosm for one form of widespread national myopia.

In some circles economic growth has become a sacrosanct virtue. Any policies that promote it are presumed good, and any policies that impede it are presumed bad, if not also dangerous, unpatriotic, etc. Part of this seems to stem from a poor understanding of what economic growth actually is and how the phenomenon is measured. The present standard for assessing U.S. national growth is the gross domestic product (GDP.)

Put simply, GDP is the sum of all investment gains, government spending, and commercial transactions that take place within a nation’s territory. Balance of trade is a factor, such that exports add to the final value and imports diminish it. It is vital to note that only the positive component of investment outcomes is included in the calculation — investment losses have no direct impact on GDP.

That is far from the only problem with this metric. GDP focuses keenly on activities that involve buying and selling. Thus a cancer patient who is diagnosed early and subjected to a simple yet effective treatment will register much smaller in GDP figures than a cancer patient diagnosed late and subjected to an array of extremely costly treatments.

Obviously it is better to live in a society where preventative medicine minimizes the severity of human ailments. Yet in the context of GDP, a society that makes optimal use of preventative medicine to promote public health is rated as less productive than a society that relies on emergency care and extreme measures to deal with health problems.

In the end, GDP is more a measure of the consumption of resources than the production of beneficial outcomes. In fact, it does nothing to directly consider the value lost through resource depletion. It is true that a nation that engages in overfishing to the point of exhausting natural fisheries will take a long term hit to GDP. Over time, the domestic fishing industry becomes less lucrative.

However, while that overfishing is actually taking place, GDP will be boosted by the brief spurt of elevated revenue that comes from taking more food from the sea than nature can replace by the next season. Given the way Wall Street drives American economic thinking to take place more in 90 day intervals than five year plans, intense focus on GDP promotes practices and policies with devastating long term consequences.

Yet the absurdity does not end there. Just as treating severe illness tends to be measured as “more productive” than preventing severe illness, violence and disaster are also blessings to the growth-oriented politician. Taking responsible measures to prevent a major metropolitan center from being ravaged by disaster almost never costs as much as reconstruction after the damage has been done. Precisely because of this, Hurricane Katrina acted as a significant GDP stimulus.

Of course residents New Orleans and many other communities in the area are not better off for lack of adequate precautions. The nation as a whole also does not benefit from letting buildings be ruined only to be rebuilt. Yet disaster relief and reconstruction efforts feed into the GDP picture just as much as if the hurricane had never happened and those same resources had been used to actually improve quality of life enjoyed by American citizens.

GDP becomes even more bizarre when applied in some international contexts. A nation could be bombed into the Stone Age, then partially rebuilt, and GDP would register those rebuilding efforts as economic growth. Of course Iraq is not a better place to live than it was before the commencement of Operation Iraqi Freedom. Yet peering through a GDP lens at the situation on the ground there would suggest that occupied Iraq is a tremendous economic success story!

In spite of the underlying realities, the war in Iraq also shows up as a positive on the American economic scorecard. This has nothing to do with whether or not the White House is correct in its assertion that maintaining a bloody military occupation somehow reduces the extent of terrorist threats from abroad. GDP assumes ipso facto that warfare should be viewed as having positive value. Obviously that position is absurd when subjected to reflection. Still, one might well ask if part of the reason the sitting President (not to mention more than a few Presidential candidates) favors a “stay the course” approach has to do with the GDP dip that would come from demilitarizing our Iraq policy.

This reveals another crucial flaw in the GDP perspective. Public morale is an enormous, if innately cryptic, factor in the economic well-being of a nation. Many analysts focus on “consumer confidence” indicators in order to try and get a handle on that factor. I believe one of the many significant failings of assessing growth by means of GDP is that it can paint a picture of continuous gains even when citizens know in their guts (and some in their heads as well) that their nation has taken a serious turn for the worse. Equating rebuilding with new building or killing foreigners with aiding foreigners may change the statisticians’ tune. Yet that sort of distortion only undermines the public’s ability to have faith in positive assessments that persist in the face of negative realities.

Yet the list of problems does not end there. As buying and selling activity is the essence of GDP, it is also propped up by economic churn. Aside from loose credit, part of the problem rattling the American real estate market this year involved frequent (and loosely regulated) repackaging and reselling of mortgage debt. The actual value created by this activity is minimal, yet every time one financial institution sells a bundle of debt to another financial institution, that activity feeds into the GDP indicator. When irresponsible loans are written off or the entire real estate market suffers a hit, there is no direct response from GDP. This strengthens an unhealthy separation between the world of high finance and what former Secretary of Labor Robert Reich would characterize as “the real economy.”

There have been some efforts to do better. Financial analysts with any real predictive success under their belt are aware of GDP’s many flaws and in touch with a host of other indicators informing their outlook for the future. Still, so many national debates tend to remain obsessed with GDP-measured “growth” as a paramount concern. In 1972, the King of Bhutan launched an effort to shift this debate by trying to quantify “Gross National Happiness.” This effort has suffered from some arbitrary distortions and the inherent difficulty of measuring a phenomenon like happiness. Yet it does represent a step in the right direction.

As economic growth is measured today, manufacturing and selling five appliances that will tend to fail after two years of operation is five times more productivity than using the same resources to manufacture and sell one appliance that will tend to remain useful for a span of ten years. As economic growth is measured today, producing and administering a lifetime of medication will tend to be orders of magnitude more productive than using a tiny fraction of those resources to produce and administer an outright cure for the same affliction. To remedy our national GDP-mania, political discourse must become much more informed about the differences between growth by that metric and real growth — activities actually leave the American people better off in some meaningful way.

What You Should Think About Social Minima

October 17, 2007

“If the misery of the poor be caused not by the laws of nature, but by our institutions, great is our sin.”

–Charles Darwin

Earlier today America was witness to an extremely unusual event in 21st century politics. Our President subjected himself to public press interaction in which the questions and answers were generally not orchestrated by prior arrangement. A healthy national dialog would be supported by routine exchanges of this nature. Still, this is better than nothing. Any acknowledgment of public accountability by senior executive officials is a positive thing.

In today’s press conference, repeated references were made to the fact that families with an income as large as $83,000/year would be eligible for participation in a proposed program to subsidize health care for children. Depending on the specifics of the surrounding national economy, there could be a case for arguments about excessive taxation or better use for those funds. No such arguments were offered. Instead the President justified his veto on purely ideological grounds. It was as if breaking with a particular political orthodoxy were a wrong in itself, children be damned . . . and I mean literally damned.

It is fair to argue that a typical family with $83,000 in annual income would not be part of America’s neediest population. Yet not all families are typical. Children are not immune to horrible accidents. Children are not immune to developmental disorders. Children are not immune to chronic degenerative diseases. As it is Medicaid will provide for those families with enormous medical expenses only after they spend themselves into poverty before appealing for government assistance.

So, under the status quo, giving birth to a child with cystic fibrosis or watching your child cope with severe spinal cord injury after a bus accident is reason enough to experience poverty — regardless of however hard-working family breadwinner(s) might be. How does this mesh with the notion that economic status ought to incentivize productivity? How does this mesh with an ideology that makes no distinctions between what quality of life an individual merits and what financial resources he or she controls?

Hostility toward any form of economic welfare tends to emerge from one narrow view of the intersection between economics and justice. The question is typically framed as a matter of how much unproductive freeloaders “deserve” from the pockets of those with substantial personal income. Yet this misrepresents the natures of both society and income. It rests on faulty assumptions holding that personal wealth in any meaningful concentration could exist in the absence of social support. It also fails to recognize that not all wealth is merited (e.g. senior Enron executives) nor is all poverty is a reflection of personal worthlessness (i.e. starving artists, community activists, humble clergy, etc.)

The law of the jungle may have some bearing . . . in a jungle! I do not deny that a society so bereft of resources that entire communities may be one bad harvest away from ultimate doom cannot afford to provide generous economic support to its least productive members. However, I vehemently deny that the modern United States is in any way that sort of society. Again and again public figures boast that we are the richest nation in the world. By some measures that remains true. Yet that is all the more reason not to let our social policies be shaped by thinking as if modern America is precariously balanced on the brink of national destitution.

To some degree it is all a perversion of Darwinism. Prior to the fall of the Soviet Union, there were two comparably popular interpretations of the term “social Darwinism.” West of the Iron Curtain (or, perhaps more accurately, to the political right of basic human decency) it was argued that economic systems emphasizing a competition for survival between individuals would improve national gene pools. Of course this is nonsense, since the time frame of biological evolution is wildly out of proportion with the persistence of any regime, never mind an ideologically orthodox body of economic policy. Yet it was also nonsense because it equated fitness to live with ability to gain income — without any regard whatsoever for the ethics or consequences of that activity. Is it at all sensible to go through life believing Bill Gates or Paris Hilton is thousands of times more fit to live than a typical American citizen?

Yet social Darwinism has a different resonance when taken from a Marxist perspective. After all, in nature, competition between species is as, if not more, significant than competition between individuals. A collective approach holds that the best way to promote human fitness involves working toward common goals to improve the overall quality of life enjoyed by a society. There can be no doubt that Stalin corrupted a communist superpower with outright evil that was orders of magnitude worse than the worst abuses of power by any American President. That history does very little to shed light on the merits of any economic philosophy.

Personally, I believe that we can do better in framing our economic and social policies than to be guided by half-baked pontifications on the struggles of primal beasts. However, if one perspective must be favored over another, just why should anyone favor an approach that divides America between winners and losers over an approach that unites America behind common goals? A (typically misplaced) sense of personal superiority, contempt for poor people, satisfaction from the suffering of others . . . these are not the stuff of any noble vision, especially one fit to make its way into the laws of our land.

“Social Darwinism” means different things to different thinkers. On the other hand, “social minimum” is a concept used consistently by economists and philosophers from a wide range of traditions. That term defines an economic boundary beneath which members of a society are not permitted to fall regardless of circumstances (save voluntarily eschewing material possessions, of course.) In many societies with respectable rates of economic growth, a robust social minimum guarantees all citizens material subsistence, medical care, educational opportunity, and much more.

For the most part the United States has not endeavored to uphold a lower social minimum than the rest of the civilized world. That tendency is a fairly recent phenomenon coinciding with decades of deliberately expanded class divisions. Whatever ideological wallpaper is pasted over policy, the underlying reality is that it has been framed so as to hasten the concentration of American wealth and reduce the incidence of class mobility in our society. The England our Founding Fathers rebelled against was never so obsessed with making the rich richer. One might even question if the pre-revolutionary France under Louis XVI was more moderate in its plutocracy.

There is no choice that is not a choice. Nothing in the U.S. Constitution forbids subsidized higher education or socialized medicine or even outright income redistribution. To the contrary, if we are to honor the intent of the founders’ and such utterances as Lincoln’s immortal, “by the people, for the people,” sentiment, then it is anti-American to espouse flimflam about bogus technical obstacles to obstruct any public desire to legislate change.

President Bush is correct to argue that the children’s health care bill he vetoed would expand the role of government in meeting the needs of the people. Where he and his most loyal supporters go wrong in is standing on that argument alone, ignoring all practical consequences of their actions. This only perpetuates a system that demands poverty of American families guilty of no greater misdeed than having an extremely sick child. It is shameful that such shoddy thinking is all that stands between the status quo and successful elevation of our own social minimum. After all, that same thinking also stands between genuinely desperate families and a significantly brighter future for their ill or injured children.