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The Coming Race War Won’t Be About Race

by Iron Fist ( 237 Comments › )
Filed under Bailouts, Crime, Economy at August 20th, 2014 - 7:00 am

Let’s talk about it:

Ferguson is not just about systemic racism—it’s about class warfare, and how America’s poor are held back

Will the recent rioting in Ferguson, Missouri, be a tipping point in the struggle against racial injustice, or will it be a minor footnote in some future grad student’s thesis on Civil Unrest in the Early Twenty-First Century?

The answer can be found in May of 1970.

You probably have heard of the Kent State shootings: on May 4, 1970, the Ohio National Guard opened fire on student protesters at Kent State University. During those 13 seconds of gunfire, four students were killed and nine were wounded, one of whom was permanently paralyzed. The shock and outcry resulted in a nationwide strike of 4 million students that closed more than 450 campuses. Five days after the shooting, 100,000 protestors gathered in Washington, D.C. And the nation’s youth was energetically mobilized to end the Vietnam War, racism, sexism, and mindless faith in the political establishment.

You probably haven’t heard of the Jackson State shootings.

On May 14th, 10 days after Kent State ignited the nation, at the predominantly black Jackson State University in Mississippi, police killed two black students (one a high school senior, the other the father of an 18-month-old baby) with shotguns and wounded twelve others.

There was no national outcry. The nation was not mobilized to do anything. That heartless leviathan we call History swallowed that event whole, erasing it from the national memory.

And, unless we want the Ferguson atrocity to also be swallowed and become nothing more than an intestinal irritant to history, we have to address the situation not just as another act of systemic racism, but as what else it is: class warfare.

That gets us a little historical perspective. We can come back to it in a minute. Let’s continue or exploration, here:

By focusing on just the racial aspect, the discussion becomes about whether Michael Brown’s death—or that of the other three unarmed black men who were killed by police in the U.S. within that month—is about discrimination or about police justification. Then we’ll argue about whether there isn’t just as much black-against-white racism in the U.S. as there is white-against-black. (Yes, there is. But, in general, white-against-black economically impacts the future of the black community. Black-against-white has almost no measurable social impact.)

First and foremost, let’s hear it for someone willing to be honest about this problem. We don’t see this discussed at all. I think that you may find more raicsm against whites than against blacks, but I will also agree that the black against white racism doesn’t generally impact things the way white on black racism (even if less forcefully in-your-face) does. I think I can agree with this completely, and I can say this as someone who has been a victim of black-on-white racial violence. Let’s pursue this a little further:

Then we’ll start debating whether or not the police in America are themselves an endangered minority who are also discriminated against based on their color—blue. (Yes, they are. There are many factors to consider before condemning police, including political pressures, inadequate training, and arcane policies.) Then we’ll question whether blacks are more often shot because they more often commit crimes. (In fact, studies show that blacks are targeted more often in some cities, like New York City. It’s difficult to get a bigger national picture because studies are woefully inadequate. The Department of Justice study shows that in the U.S. between 2003 and 2009, among arrest-related deaths there’s very little difference among blacks, whites, or Latinos. However, the study doesn’t tell us how many were unarmed.)

I don’t see anything here to disagree with. Police have their own problems, and they do not come to the table with clean hands, but when we are bringing our wrath to bear about the treatment of gangbanger-wannabes in thug life as victims to the table, we have to also represent the police themselves. Let’s explore this a little further:

This fist-shaking of everyone’s racial agenda distracts America from the larger issue that the targets of police overreaction are based less on skin color and more on an even worse Ebola-level affliction: being poor. Of course, to many in America, being a person of color is synonymous with being poor, and being poor is synonymous with being a criminal. Ironically, this misperception is true even among the poor.

And that’s how the status quo wants it.

Notce how he doesn’t say “Left” or “Right” or “Black” or “White”. It is the forces of the status quo, who have a good deal of money that they are making out of the situation, that are pleased by this course of events. I really like the way that he has set this up. It is well written. I don’t have any particular complaints about the content, the agenda, or anything else that he has presented so far. Continue:

The U.S. Census Report finds that 50 million Americans are poor. Fifty million voters is a powerful block if they ever organized in an effort to pursue their common economic goals. So, it’s crucial that those in the wealthiest One Percent keep the poor fractured by distracting them with emotional issues like immigration, abortion and gun control so they never stop to wonder how they got so screwed over for so long.

One way to keep these 50 million fractured is through disinformation. PunditFact’s recent scorecard on network news concluded that at Fox and Fox News Channel, 60 percent of claims are false. At NBC and MSNBC, 46 percent of claims were deemed false. That’s the “news,” folks! During the Ferguson riots, Fox News ran a black and white photo of Dr. Martin Luther King, Jr., with the bold caption: “Forgetting MLK’s Message/Protestors in Missouri Turn to Violence.” Did they run such a caption when either Presidents Bush invaded Iraq: “Forgetting Jesus Christ’s Message/U.S. Forgets to Turn Cheek and Kills Thousands”?

How can viewers make reasonable choices in a democracy if their sources of information are corrupted? They can’t, which is exactly how the One Percent controls the fate of the Ninety-Nine Percent.

I don’t particularly disagree here though I might dispute the specific numbers for Fox News versus MSNBC, we can’t ignore the fact that across the spectrum we are not being given the truth, the whole truth, and nothing but the truth by the news media nor our political leaders. We are being lied to and manipulated, and I think that at some level we all knowthat. He goes on:

Worse, certain politicians and entrepreneurs conspire to keep the poor just as they are. On his HBO comedic news show Last Week Tonight, John Oliver ran an expose of the payday loan business and those who so callously exploit the desperation of the poor. How does an industry that extorts up to 1,900 percent interest on loans get away with it? In Texas, State Rep. Gary Elkins blocked a regulatory bill, despite the fact that he owns a chain of payday loan stores. And the politician who kept badgering Elkins about his conflict of interest, Rep. Vicki Truitt, became a lobbyist for ACE Cash Express just 17 days after leaving office. In essence, Oliver showed how the poor are lured into such a loan, only to be unable to pay it back and having to secure yet another loan. The cycle shall be unbroken.

Payday loans aren’t my thing one way or another, and I don’t know the political parties of the people he mentions by name here. I think that we can all agree that this looks pretty shady, no matter who these people are or what party they represent. And we see this same thing at the national level. How many big press operatives have spouses/significant others working in the Obama Administration. Do we really believe that these people are giving honest accounting of the actions of people that they really are literally sleeping with? You’ve got folks in every branch of the government, all over the place, where these relationships help each other make it though the day without people like us dragging the SOBs out of their offices and to the nearest lamp post.

Rather than uniting to face the real foe—do-nothing politicians, legislators, and others in power—we fall into the trap of turning against each other, expending our energy battling our allies instead of our enemies. This isn’t just inclusive of race and political parties, it’s also about gender. In her book Unspeakable Things: Sex, Lies and Revolution, Laurie Penny suggests that the decreased career opportunities for young men in society makes them feel less valuable to females; as a result they deflect their rage from those who caused the problem to those who also suffer the consequences: females.

Yes, I’m aware that it is unfair to paint the wealthiest with such broad strokes. There are a number of super-rich people who are also super-supportive of their community. Humbled by their own success, they reach out to help others. But that’s not the case with the multitude of millionaires and billionaires who lobby to reduce Food Stamps, give no relief to the burden of student debt on our young, and kill extensions of unemployment benefits.

Nothing I particularly disagree with here., I might also point out that making the Straight, Christian, White Male the societal scapegoat (a position held by Jews in Nazi Germany and by blacks in the post-Reconstruction South) isn’t helpful. Continue:

With each of these shootings/chokehold deaths/stand-your-ground atrocities, police and the judicial system are seen as enforcers of an unjust status quo. Our anger rises, and riots demanding justice ensue. The news channels interview everyone and pundits assign blame.

Then what?

And that, my friends, is the real question. I don’t find anything here that I particularly disagree with. He comes at it from a more Leftward perspective than I would, but I can’t disagree with what he is saying. I could add, where are we in an America that has seen the net worth of the middle class evaporate (to the tune of about 33% of the net worth of the average American Middle Class Family) over the last six years while Wall Street is going gangbusters, and the National Debt is exploding into uncharted levels in all of history. I don’t know what the answer is, but I know it isn’t more gun control, more Wall Street bail-outs, more militarized police, or more draconian laws to hold us all down while the elites party like it is the end of the world while the rest of us are fighting to make a life for ourselves under more taxes and regulation, and the heavy-hand of a police force that looks more like it comes from Death Race 2000 than it does Mayberry.

A Sunday Essay on Foreign Policy

by coldwarrior ( 123 Comments › )
Filed under Cold War, Economy, History, Open thread, Politics, World at June 29th, 2014 - 8:00 am

Anytime I see Thucydides and Marcus Aurelius quoted, I have to read it all.

Changing rules of the game of thrones

For the first time since it emerged as the world’s pre-eminent power, the United States is walking away from the global battlefields. This makes it vital for regional powers like India to hammer out new rules for the geostrategic order — and the tools to enforce them

Minerva and Apollo, the ancient gods of wisdom and knowledge, stand watch on the marble arch off al-Hara al-Kabir street in Tripoli, their two-wheeled chariot of war drawn by fabulous griffons and sphinxes. Built in 166CE, the arch celebrates the triumph of Emperor Marcus Aurelius Antoninus Augustus over the Parthians. The statue of Marcus Aurelius that once stood at the top of the arch, toppled over sometime during the last millennia. It lay buried under the sand until it was recovered by 19th century archaeologists.

Marcus Aurelius — celebrated as a warrior, philosopher and the last of the Five Good Emperors — might have considered this indignity with dispassion. “Look back over the past, with its changing empires that rose and fell,” he wrote in his masterwork, The Meditations, “and you can foresee the future too.”

For much of his reign, the emperor was at constant war, stamping out rebellions by barbarian tribes and rival powers in a perpetual struggle to secure trade and imperial order. His aim was modest: “Do not hope for Plato’s utopia, but be content to make a very small step forward and reflect that the result even of this is no trifle.”

The retreating empire

United States President Barack Obama’s recent decision not to commit combat troops or air power in Iraq will likely be remembered as a critical moment in an epoch-shaping imperial retreat. For five decades, hegemony in oil-rich West Asia was a keystone of U.S. foreign policy. Now, it has shown it is willing to live with defeat. Elsewhere, too, the U.S. is showing diminishing interest in enforcing the global order it built after the Second World War.

The reasons have something to do with the bruising long wars it fought in Iraq and Afghanistan, but more with the rapidly-transforming nature of its global interests. Put simply, the world’s greatest power no longer needs the world in quite the same way it used to.

For the rest of the world, the lessons Marcus Aurelius drew from his experience are relevant today as perhaps never before. The imperial retreat to its fortress, guarded by the great eastern and western oceans, will leave behind a seething mass of wars — and questions. Powers like China, Russia and India will have to hammer out new rules for the global game of thrones — and the means to enforce them.

Last year, Mr. Obama spelled out his vision for America’s strategic future. “For over the last decade, our nation has spent well over a trillion dollars on war, helping to explode our deficits and constraining our ability to nation-build here at home,” he told an audience at the National Defense University. “For what we spent in a month in Iraq at the height of the war,” he argued, “we could be training security forces in Libya, maintaining peace agreements between Israel and its neighbors, feeding the hungry in Yemen, building schools in Pakistan ….”

Descent into chaos

Events have ruthlessly interrogated Mr. Obama’s arguments in the months since he gave his speech, giving plenty of reason to doubt that the global order can in fact be defended by funding development or even military proxies.

Full brigades of Iraq’s Army, which received $8.2 billion in U.S. aid last year, in addition to national spending of $17.1bn., were swept aside by small bands of Islamist insurgents last month. Pledges of $4bn. in aid didn’t persuade Mali’s soldiers to hold out against rebels in the country’s north-eastern Kidal region. Libya has degenerated into an anarchic battlefield, with warlords competing for power. Pakistan’s descent into the abyss continues.

The truth, though, is the U.S. has little interest in stemming this descent into chaos. The country’s shale oil and gas revolution will soon make it a net exporter of hydrocarbons — leaving it with no reason to expend lives and money on containing chaos in West Asia. The country’s military still has the power to reach across the globe, punishing those who would seek to deny it vital lines of communication or trade routes. Perhaps more important, its competitors have entrenched interests in the beams and pillars that hold up the global economy: they cannot hurt the U.S. without hurting themselves.

It costs the U.S. little, therefore, to countenance Russian assertion of power in Europe, despite the concerns of its North Atlantic Treaty Organisation allies. There is no real price to be paid, either, for the panic caused among the U.S.’ East Asian partners by its contracting navy.

For decades, idealists have argued that a multipolar world would be desirable, limiting imperial excess while at once creating a web of regional powers that would limit each other’s ambitions.

Now, this world is a real prospect; it is also becoming clear that this isn’t the only possible outcome. Faced with threatening regional hegemons, and with no great-power allies at hand, smaller states are likely to expand their arsenals. The first signs of this are already evident. Through the Pacific Rim, fears that the U.S. will no longer be willing to contain China have led states to grow their militaries at an alarming rate.

Experts even fear that the arms race in Asia could lead on to nuclear-weapons competition — with countries like Vietnam seeking to develop arsenals that will deter great powers they cannot compete with in conventional military might.

The prospect isn’t as remote as it seems. In 1969, Japan’s Ministry of Foreign Affairs prepared a secret paper saying “for the time being we will maintain the policy of not possessing nuclear weapons” but also “… keep the economic and technical potential for the production of nuclear weapons, while seeing to it that Japan will not be interfered with in this regard.” Even though it is an ardent advocate of nuclear weapons control, Japan retains large plutonium stockpiles — of little use other than in the construction of nuclear weapons.

Perpetual wars

In Hollywood movies, wars end with images like these: the bloodstained bayonet being sheathed; the flag flying victorious over the battlefield; the injured hero returning home to kiss his loving wife. The notion that the U.S. was a pacific power, slow to reach for the sword, is an entrenched part of its self-belief. George Kennan, the Cold War ideologue, likened the U.S. to a prehistoric beast “with a body as long as this room and a brain the size of pin: he lies there in his comfortable primeval mud and pays little attention to his environment; he is slow to wrath — in fact, you practically have to whack his tail off to make him aware that his interests are being disturbed; but, once he grasps this, he lays about him with such blind determination that he not only destroys his adversary but largely wrecks his native habitat.”

The truth is a little different: as for all past great powers, and perhaps all future great powers, war was just as much the norm as peace. “There has not been a single American generation that did not take part in a war,” the historian Robert Divine has noted.

In the 18th century, America’s colonial experience ended with the war to evict France from North America and the Revolutionary War against Britain. The 19th century saw murderous conflicts break out every few decades, from the war of 1812 against Britain, to the 1898 decimation of Spain. The great World Wars of the 20th century were followed in quick time by Korea, Vietnam, Grenada and Panama and a dozen other wars-by-proxy. The end of the Cold War brought new wars in Bosnia, Kosovo, Iraq and Afghanistan.

Mr. Obama has learned the perils of overreach. “The best way to make ourselves feared by the Greeks in Sicily,” the chronicler Thucydides has Nicias saying in his History of the Peloponnesian Wars, “is not to go there at all; and the next best thing is to make a demonstration of power and then, after a short time, go away again. We all know that what is most admired is what is farthest off, and least liable to have its reputation put to the test.”

For the regional powers now left to secure their neighbourhoods and their vital interests retreat is not an option. No one knows what the new world order might look like, and what tools might be needed to uphold it. From Marcus Aurelius, though, leaders ought to learn that perpetual war is the inexorable consequence of the pursuit of peace. The reputation of the inheritors of America’s world order will, without doubt, be put to test — and to fail could lead on to catastrophe.

praveen.swami@thehindu.co.in

 

 

 

Not Afraid Of The Lax Rules Involved With Federal Agencies? Get A Load Of This.

by Flyovercountry ( 116 Comments › )
Filed under Barack Obama, Democratic Party, DHS, Economy, Progressives, Regulation at June 23rd, 2014 - 7:00 am

I’ve written about this before, the evils perpetrated upon our constitutional republic by establishing federal agencies as a substitute for the framework of governance originally established by our founding national law. Federal agencies have effectively swept away all vestiges of the checks and balances system, and have done more to concentrate power within the federal behemoth than the election of 10 Barack Obamas consecutively could ever achieve.

Our very first federal agency was the Interstate Commerce Commission, established in February of 1887. The act granting authority to establish this agency established something called agency law. The Act itself was worded purposefully vague, and granted the agency authority to write its own rules, manage the enforcement of those rules, and depended upon the Judiciary for what little check on its power the weakest branch of our government would care to muster. The Judiciary of course elected to defer such oversight authority, deferring in almost all instances to the, “wisdom of the experts within the agencies themselves,” for such matters. With that almost exclusively followed path set forth then, continued to this day without interruption, all federal agencies effectively have the power of all three branches of our federal behemoth, concentrated within the hegemony of the current bureaucracy. What’s worse, since it is nearly impossible to fire federal workers, that bureaucracy remains in place and devoted to its own belief system, irrespective of which leadership team to manage the whole mess is actually decided upon by the American People. If for example Conservatives win national elections, the federal agencies will undoubtedly continue to run with a decidedly liberal bent, they’ll just be a little more discreet about it for 4 or 8 years.

it’s taken a while, 127 years to be more specific about it, but this very week, one of those newly formed agencies showed perfectly, why we should all be very terrified.

From the Town Hall article linked to above:

Last week the Consumer Financial Protection Bureau, through the power of Dodd-Frank, passed a rule giving the agency unprecedented power to shut down businesses, no matter what the reason, at any time it wishes through a cease-and-desist order. Further, the rule puts businesses at the mercy of the CFPB and they cannot go back into operation until government approval or a court ruling is made over an issue. Subsequently because bureaucratic decisions and court rulings take a substantial amount of time to happen, businesses cannot survive during those waiting periods. Here are the details (emphasis mine):

In a notice published in today’s Federal Register, the CFPB has announced that it has adopted its interim final rule on temporary cease-and-desist orders (C&Ds) without change. The final rule takes effect on July 18, 2014.

The CFPB is authorized to issue temporary C&Ds under Section 1053(c) of Dodd-Frank. That provision authorizes a temporary C&D as an adjunct to a cease-and-desist proceeding brought under Section 1053 against a covered person or service provider. A temporary C&D is effective immediately upon service and remains in effect unless modified or terminated administratively by the CFPB or set aside on judicial review.

Reasons!? Reasons!? They don’t need no stinking reason to shut you down! This latest rule of course is being inflicted now to threaten banks who do business with gun dealers and manufacturers. So, rather than inflict gun control, which is prohibited by our Second Amendment, and further, is opposed by the vast majority of American citizens, they’ll just make certain that gun shops can not participate in the market place of capital commerce. They won’t be able to process credit card payments, deposit checks, or cash, or use checking accounts to pay their bills and such. All of course because the CCFB has granted itself this authority, and it’ll doubtless take the Judiciary a decade or so to sort it out, assuming that our weakest branch of government even cares to do so.

On Father’s day I had a conversation with a liberal. I reminded him that the entire purpose of the Second Amendment was to protect the citizens of the newly formed nation from any future government tyranny, so that the federal government would always be as afraid of its citizens as the citizens were of the government. He immediately quipped, as if I would be silly to consider that necessary today, “do you even think that’s an issue now?” When I answered you bet, he labeled me a fringe radical fanatic. (I love that softball opportunity to slap someone down by the way.) So I of course asked if his definition of a fringe radical was someone who did not wish to live under the societal rules that he agreed with and sought to inflict. That was a conversation ending question, and it felt good. This latest bit, something I wish I had in my arsenal a week ago, is that perfect example of government tyranny run completely amok.

Make no mistake about it however, this is something far bigger than the threat to use a back door method to inflict gun control. It is far bigger even than the CCFB. It is the agency system of governance itself that must be dealt with. The only President ever, who attempted to do something to reign in the out of control behemoth that our federal agencies have become, was Richard Nixon. This, as much as anything, was a reason for why he was so hated by the political left. We need the political will and fortitude not seen since Reagan to do that, and I actually have someone in mind. We’ll be discussing that on Monday. I’m going out on a limb and making an endorsement, even before anyone declares for the upcoming 2016 bloodbath.

Cross Posted from Musings of a Mad Conservative.

More on Cantor’s Loss

by coldwarrior ( 100 Comments › )
Filed under Debt, Economy, Open thread, Politics, Regulation, Republican Party, taxation, The Political Right at June 18th, 2014 - 12:00 pm

This article sums up the division in the GOP quite nicely.

Sure, I agreed with some of the things he voted for, but in the long run (as we in the dismal science love to say) he failed in the basic task that a conservative has in DC: Limit the size of Fedgov and return power to the States, return power to YOU.

The video at the end is well worth the watch as well.

 

Will Anybody Really Miss Eric Cantor?

His stunning loss was built on a terrible record of big-government conservatism at its worst.

| June 17, 2014

Will anybody really miss Eric Cantor? Probably not. Despite (or maybe because of) his position in the House Republican leadership and the historic nature of his primary loss, there was virtually nothing remarkable about him as a politician or a policymaker. The Republicans have dozens or hundreds or thousands more just like him. He’s like a Dorito corn chip in those old Jay Leno ads: They’ll make more.

Cantor exemplifies what Sen. Rand Paul (R-Ky.) just denounced as a “Chamber of Commerce”-style GOP legislator, “the same-old, same-old,” standard-issue Republican who has brought the party to a historically low level of self-identification among voters.

Cantor was what passes for a small-government conservative. Which is to say that Cantor was in favor of shrinking the size and scope of government…except for the endless list of exceptions that allowed him to help grow federal spending by more than 50 percent in real terms, and regulatory spending by even more, during the Bush years.

You know the drill: As a “conservative,” Cantor wanted the government out of people’s lives because FREEDOM-FOUNDING FATHERS-CONSTITUTION. Yet Cantor was anti-gay marriage and anti-abortion (he even wanted to prohibit adults from transporting minors across state lines if they were getting abortions). Because the federal government really should dictate all that, right? He endorsed a constitutional amendment against flag burning because free expression doesn’t mean you can actually express what you mean. He was pro-gun or, more specifically, pro-National Rifle Association. He was pro-drug war. Nothing unique or interesting there.

He wavered ever-so-slightly on immigration reform, meaning that he believed some children of immigrants shouldn’t be punished for their parents’ transgressions (big of him, really, at least in a GOP context). But he voted to build a militarized fence along our border with Mexico, pulled a 100 percent rating from the xenophobes at the Federation for American Immigration Reform (FAIR) and he wanted English to be the official language of America (what’s Mexican for WTF?). He loved the national security state (including virtually unchecked surveillance of Americans as well as foreigners), defense spending, and wars (especially when a Republican was in the White House). He voted for No Child Left Behind, the single-biggest increase in federal control over education because education is an issue best dealt with at the local level, unless conservative Republicans run the country.

On spending and economic issues, he was atrocious and hypocritical in all the ways that a Republican can be. Of course he voted for the 2003 expansion of Medicare to include prescription drugs, even as he voted against allowing Medicare to negotiate cheaper prices for that unwarranted giveaway to the nation’s seniors. He signed off on the Bush budgets and he championed the Troubled Asset Relief Program and the illegal auto bailouts (at least as long as a Republican was president).

Like the U.S. Chamber of Commerce, Cantor was a spirited defender of the Export-Import Bank, an FDR-created boondoggle that guarantees loans to foreign businesses who buy American products. As the Mercatus Center’s Veronique de Rugy has shown, the Ex-Im Bank is among the purest excrescences of crony capitalism, with favored U.S. companies such as Boeing getting massive subsidies via the program. Cantor was the leader in the effort to reauthorize it two years ago and was the point man on this year’s reauthorization too. He loved the House Republican budget resolution, the so-called Path to Prosperity, which is full of accounting tricks (such as zeroing out spending on Obamacare while keeping all the program’s revenues) and would increase annual federal spending from $3.7 trillion in 2015 to $5 trillion in 2024.

If Cantor does indeed exemplify the Chamber of Commerce-style Republican that enflames the Tea Party even more than it does liberal and progressive Democrats, does the majority leader’s defeat spell doom for the GOP establishment?

I hope so, but it’s far from clear. Cantor’s district had been redrawn, and while it remained solidly red, he was unfamiliar in much of it. His internal polling was way off, so he didn’t start a counter-campaign until it was too late. For reasons that aren’t clear, he pulled 8,500 fewer total votes in this primary than he did in 2012, a drop The Washington Post notes is wider than his opponent’s 7,200-vote margin of victory.

Primary voters tend to be much more ideological and extreme than general-election voters, so they aren’t representative of larger party dynamics. Economics professor David Brat vanquished Cantor in part by touting a tough line on immigration, but it’s not clear that rank-and-file Republicans are anti-immigrant or even care much about the topic. A recent Politico poll, for instance, finds 64 percent of Republican voters in favor of comprehensive immigration reform, and the topic is way down on lists of voter concerns.

For all those reasons, I think it’s folly to talk about Cantor’s loss as meaning more than the obvious: He perfectly represented the modal Republican in that he talked about limiting government while actively growing its reach in virtually every way. That is a supremely unattractive character to be in contemporary American politics, and it helps explain why Gallup finds just 25 percent of Americans identify as Republicans (the news isn’t rosy for Democrats, either, according to Gallup: Just 31 percent of Americans identify with that centuries-old brand). Last Saturday, Rand Paul told the Texas Republican Liberty Caucus that people everywhere “say it’s time…for this libertarian moment, this liberty moment. It’s no longer something that scares people, it’s what [makes] people say, we can’t run the same-old, same-old, we’re not going to win with the same-old, same-old.” Eric Cantor was definitely the same-old, same-old. The GOP is choking on guys (yes, guys) just like him who talk about limited government and then legislate in a totally different way.

I hope that Paul is right and folks want to embrace a vision of limited government that extends to social issues and spending issues. I don’t think the rejection of Cantor by primary voters tells us much about that. But it does signal that the status quo is up for grabs and that undistinguished pols like Cantor should be shaking in their boots.

 

Econ 400, Biflation

by coldwarrior ( 1 Comment › )
Filed under Economy, Special Report at June 5th, 2014 - 9:42 pm

Yes, prices can go up AND down. And, oddly enough, interest rates can be negative.

Normally, when there is too much money being spent in the economy chasing too few goods, there in inflation.

It’s called the “Dismal Science” for a reason

Read This:

Biflation (sometimes mixflation) is a state of the economy in which inflation and deflation occur simultaneously.[1] The term was first introduced by Dr. F. Osborne Brown, a Senior Financial Analyst for the Phoenix Investment Group.[2] During biflation, there is a rise in the prices of commodity/earnings-based assets (inflation) and a simultaneous fall in the price of debt-based assets (deflation).[3] The prices of all assets depend on the demand for them and the volume of money in circulation to buy them.

  • On the one hand, an over-abundance of money is injected into the economy by central banks. Since most essential commodity-based assets (food, energy, clothing) remain in high demand, their prices rise due to the increased volume of money chasing them. The increasing costs of purchasing these essential assets are the price-inflationary arm of biflation.
  • On the other hand, there is increasing unemployment and decreasing purchasing power. As a result, more money is used to buy essential items and less is available to buy non-essential items. Assets such as large houses and expensive cars are less in demand. As a result, their prices fall: this is the price-deflationary arm of biflation.[4]

Ok. Now you need to understand that high interest rates usually cause people to save, low interest rates cause people to spend. Interest rates are a kind of throttle on the velocity of money. So what happens when interest rates are near 0 and no one is spending/lending? The Central Bank hits the Krugman Liquidity Trap. In short, when interest rates are very low and the velocity of money is low, the Central Banks have pretty much run out of tools. People will simply not spend, they will put the extra printed money in the bank or just sit on it or invest it. This is not spending. This takes money out of the economy and more or less sidelines it.

M2 : A measure of money supply that includes cash and checking deposits (M1) as well as near money. “Near money” in M2 includes savings deposits, money market mutual funds and other time deposits, which are less liquid and not as suitable as exchange mediums but can be quickly converted into cash or checking deposits.

A lot of money is not moving, So we get this. Please read this very very carefully:

Mario Draghi takes historic gamble with negative rates but still stops short of QE

ECB’s revolutionary move aims to force banks to pay a charge if they continue to park money for safe-keeping in Frankfurt

“Are we finished? The answer is no,” said Mario Draghi, the ECB’s president

The European Central Bank has become the first of the world’s monetary superpowers to cut its deposit rate below zero, taking a leap into the unknown as it tries to drive down the euro and head off deflation.

The bank opened the door to direct purchases of private assets or quantitative easing, and announced a €400bn blast of long-term lending at cheap rates for banks.

The benchmark interest rate was cut to a record low of 0.15pc, tantamount to zero. The revolutionary move was to lower the deposit rate to -0.1pc, forcing banks to pay a charge if they continue to park money for safe-keeping in Frankfurt.

“Are we finished? The answer is no,” said Mario Draghi, the ECB’s president. “If required, we will act swiftly with further monetary policy easing. The Governing Council is unanimous in its commitment to using unconventional instruments within its mandate should it become necessary to further address risks of prolonged low inflation.”

The rate cuts prompted fury in Germany, where the head of the German Association of Savings Banks, Georg Fahrenschon, accused the ECB of expropriating savers. “We are tearing a hole in the pensions of savers. Over time these low rates will destroy the value of assets,” he said.

Der Spiegel deemed it was the “end of capitalism”, while Die Welt described Mr Draghi as Europe’s Bismarck, a near autocrat beyond control. It is a foretaste of what may happen if the ECB does graduate to QE later this year, once the machinery is ready.

David Marsh, head of the financial forum OMFIF, said the latest stimulus is mostly window dressing and may backfire. “The fear is that it cannot and will not provide the massive impulse needed to return the euro area to full health. But it will nonetheless be more than sufficient to antagonise public opinion in Germany,” he said.

The anti-euro party Alternative fur Deutschland won seven seats in the European Parliament in last month’s elections, giving it a platform for the first time.

In an extraordinary development, Germany’s finance minister, Wolfgang Schäuble, has called into question the backstop plan for Italian and Spanish bonds unveiled with spectacular effect by Mr Draghi two years ago, saying the scheme cannot go ahead without German consent and “we will not approve of such a programme”. The comments yet again call into question how far Germany is willing to go keep the system together.

David Owen, from Jefferies Fixed Income, said the lending measures offer more than meets the eye and amount to a mini-bazooka. “Draghi has drawn a line in the sand and is telling us that he is not going to raise interest rates for four years. This is highly significant,” he said.

Banks will be able to borrow €400bn for four years at near zero rates at LTRO (long-term refinancing operation) auctions in September and December. The magic is in the details. While the sums are far lower than earlier LTRO auctions, the banks will be able to tap the ECB for funds equal to 7pc of their private loan book without using up collateral. “They can get free money for four years so long as they lend it to the real economy,” he said.

ECB officials hope that this will unlock a surge of lending. The aim is to stop “passive tapering” as banks rush to repay loans and beef up capital ratios, a phenomena that has caused the ECB’s balance sheets to shrink by €800bn.

Mr Draghi has also copied a tool deployed by the Bank of Japan in February, letting banks obtain liquidity equal to three times their lending. The first trickle of QE is coming through as €165bn bonds held from an earlier scheme are no longer “sterilised”, but the pace will be glacial.

The ECB package of emergency measures is in striking contrast with developments in the US and Britain, where central banks are moving toward the exit door, deeming the job done.

It underscores the gravity of the crisis in Europe, where lending to the private sector is declining at a rate of 1.8pc and several countries are in deflation. Italy, Holland and Portugal relapsed into economic contraction in the first quarter, while France fell back to zero growth. The recovery is in danger of withering on the vine.

The blitz comes late, with EMU inflation already down to 0.5pc. The ECB slashed its inflation forecast for this year to 0.7pc, making a mockery of the coming stress test for banks, which deems 1pc to be the most extreme “adverse scenario”.

The ECB also lowered its inflation estimate to 1.1pc in 2015 and 1.4pc in 2016, showing how far it has strayed from its 2pc target. Mr Draghi has warned in the past of a “pernicious negative spiral” in prices, but insisted that their is currently no “self-fulfilling” dynamic at work pulling Europe into a trap.

Even so, the prolonged effects of “lowflation” are serious, since any drop in the rate at this stage can have powerful effects on the intensity of debt-deflation in the crisis countries. It is a key reason why debt ratios keep spiralling higher despite austerity cuts.

Danae Kyriakopoulou, from the Centre for Economics and Business Research, said the negative deposit rate may do more harm than good. Banks hold just €30bn in cash reserves at the ECB – down from €700bn in mid-2012 – so the move will not free up much money for lending.

“What we may see instead is deposit flight as savers look for banks more willing to take on their cash elsewhere, as happened in Denmark. This in turn could even lead to a fall in lending, making the rate cut effectively contractionary, and do little to raise eurozone inflation,” she said.

The negative deposit rate risks causing havoc in the money market industry, one reason why the US Federal Reserve never tried it. The industry is worth €843bn in Europe, of which €375bn is from foreign funds.

The ECB is clearly hoping that some of this money will drift away, pulling down the euro exchange rate, which has strengthened 5pc in the past year and pushed the bloc closer to deflation. Early on Thursday the euro plunged one cent against the US dollar to $1.35 but bounced back and ended slightly higher.

Hans Redeker, currency chief at Morgan Stanley, said it will be a struggle to weaken the euro for long given the eurozone’s ballooning current account surplus of €280bn and the repatriation of funds by banks shoring up defences at home. “The ECB has bought time but Europe’s banks are incapable of recycling the surplus,” he said.

The stock markets rallied by 1pc in France, 1.1pc in Spain and 1.5pc in Italy on the historic measures, though reaction in Germany was muted. Many of the details were flagged in advance. Jens Nordvig, from Nomura, said credit markets have already priced in near perfection. It may take “broad-based” asset purchases to keep the rallies going.

Full-blown QE is not yet on the cards, though the ECB has a €1 trillion plan for use in extremis. Mr Draghi said the bank wants to “signal” that it is willing to buy asset-back securities if need be. They would be packages of loans but not the incendiary concoctions that led to the US subprime crisis. “They should be simple, not CDS (collateralised debt securities) cubed, or squared. They should be real loans, not based on derivatives,” he said.

It is an immature market in Europe, with just €700bn of assets to buy, and it is unclear whether purchases of asset-backed securities can direct much lending to small businesses, where it is most needed. It is costly to put together packages of sellable loans for family firms. “Their importance to politicians far outstrips their attractiveness to creditors,” said Matt King, from Citigroup.

In the end, the ECB may have to bite the bullet and resort to full-blown purchases of sovereign debt, just like the central banks of the US, Britain and Japan. That thorny issue has been put off for a few more months while the ECB prays for a miracle.

Now it costs the Banks money to park assets in Frankfurt. They have to do something with this money. The ECB is demanding that they lend it. Last resort? QE in the EU.

This will be very interesting to watch. I’ll leave this up for a few days so we can get our heads around this.

I Have An Idea, Let’s Move From Bad To Worse!

by Flyovercountry ( 273 Comments › )
Filed under Barack Obama, Democratic Party, Economy, Hipsters, Progressives at June 3rd, 2014 - 2:00 pm

Here’s this week’s weekly address from our President, as delivered on Saturday. Hold on to your hind parts, and for the love of God, don’t bend over for the soap, and every other we’re about to get screwed cliche I can think of, Here comes the completion of that transformation of our once proud strongest economy in the world to becoming that also ran third world Socialist Worker’s Paradise that caused the collapse of the Soviet Union in only 80 years time.

What strikes me immediately about the Bamster’s latest pivot to stem the rise of the Oceans is that he began his appeal with that wailing, “it’s for the children,” refrain. That’s usually brought up last, as it is recognized as a shameless appeal to emotionalism rather than reason. That U.N. report claiming that Earth’s destruction is closer than even the worst fear monger touted last month happened in spite of the Scientific community finally showing some signs of intellectual honesty, at least on a somewhat even scale.

For those of you who doubt where my own head is at, let me lay it out for you. In order to believe that man kind’s activity, especially in regards to industrial development and prosperity, is in any way warming the planet, cooling the planet, or causing any change in our weather even in the slightest fashion, one must be irretrievably stupid. The U.N.’s report is based entirely on political considerations, all of which involve the successful economies of the world eschewing the economic engine that garnered that success for the Socialist model that brought you Chernobyl. It of course must all begin with a massive transfer of wealth from America to the tin pot thugs who serve humanity as malevolent despots in every backwards third world toilet the world has produced to date.

Just to hit the irony nail squarely on the head, this story broke at the exact moment that President Zero announced his domestic pivot towards focusing in on the massive puppy dog karate kick we in the prosperous industrial world have seen fit to administer to Mother Nature. As it happens, The PBSG, (Polar Bear Specialist Group,) a subset of the IUCN, (International Union for Conservation of Nature,) has admitted publicly that they’d estimated those dwindling Polar Bear population numbers, not based on any actual scientific estimation, but as a direct result of political pressure being placed upon them.

From the Daily Caller article linked to above:

This may come as a shocker to some, but scientists are not always right — especially when under intense public pressure for answers.

Researchers with the IUCN Polar Bear Specialist Group (PBSG) recently admitted to experienced zoologist and polar bear specialist Susan Crockford that the estimate given for the total number of polar bars in the Arctic was “simply a qualified guess given to satisfy public demand.”

Crockford has been critical of official polar bear population estimates because they fail to include five large subpopulations of polar bears. Due to the uncertainty of the populations in these areas, PBSG did not include them in their official estimate — but the polar bear group did include other subpopulation estimates.

PBSG has for years said that global polar bear populations were between 20,000 and 25,000, but these estimates are likely much lower than how many polar bears are actually living in the world.

Two things are noteworthy here. First the easy one, which is that the diminishing Polar Bear population, one of the central themes used by the Climate scare crowd to convince us that the sky has been falling lo these many years, is exploding. Two, it is a public confirmation by a group of those same supposedly beyond reproach members of the scientific consensus that the data showing the sky to be falling was falsified in order to acquiesce to political consideration. Meaning that the U.N. and our very own political left needed for it to be true, so they stated it as such. We can now add this latest fib to Climategate, and prepare ourselves for the day of ultimate gloating. That wonderful day when we can point to with derision and laughter, all who once spouted off that our planet had a fever, or that man kind’s activity had affected some how the weather. I told you so won’t do it for this one either. It’ll have to be something grander, like, “I remember when you were so freaking moronic that you stated the Earth was warming on a global scale due to farting cows and too many Sports Utility Vehicles burning too much gasoline.”

Today, right on the heels of the Bamster’s weekly address, The EPA announced that they plan to send the price we pay for electricity to the moon. In what has to be the single greatest departure from the separation of powers that our nation was founded upon, and one by the way that has been noted as most definitely against the law of the land, it should be noted that this was done is such a way that not one single Democrat will be forced to vote yes on the issue. The slick political sasquatch, known as the Conservative Democrat will once again be able to claim that they oppose the President on this matter, and that they’ll hold the radical left accountable, by making Harry Reid Majority Leader once again, and returning Nancy Pelosi to the Speaker’s Chair no doubt.

Just for fun, and for reference purposes, please enjoy the following graphs from the Independent Journal Reiview, which should be most usefull in countering the whole warming premise. Of particular note should be graph number 7, which shows clearly a negative net feedback between Carbon and warming. The computer models all utilize a net positive feedback several times greater than those found in nuclear reactions in order to produce the scary results worthy of inflicting worldwide Communism in order to combat the mythical problem. Unfortunately however, that’s an argument of science, and not one of faith, which is what the whole thing is about anyhow.

heating_effect_of_co2

Adding more carbon dioxide to the atmosphere does not lead to a linear effect on “thermal forcing,” but a logarithmic one. That means the more CO2 is added, the less of a “warming” effect it has.

Cross Posted from Musings of a Mad Conservative.

We’re All Racists Now!

by coldwarrior ( 43 Comments › )
Filed under Bigotry, Economy, government, Islam, Open thread, Politics, Progressives, Racism, UK at May 29th, 2014 - 5:00 pm

It was, after all, just a matter of time!

RAAAAACIST!

 

Are we all racist now?

As a survey of British social attitudes reveals a shocking upturn in prejudice, Allison Pearson argues that the political elite’s desire to advance multiculturalism with mass immigration has backfired

With impeccable timing, the children chose Mother’s Day lunch to tell their grandmother she was racist. And what vile abuse had my poor mother bandied about? She had asked her grandson if his choir sang Negro spirituals.

“Raaaa-cisst,” chorused my junior Thought Police with more than a hint of witchfinder glee.

“I’m not racist,” said my mother, clearly shocked. “What did I say that was racist?”

“You’re not allowed to call them Negro spirituals any more,” my Daughter informed her.

“What do you call them, then?” asked Grandma.

“African-American spirituals,” announced Daughter, a creature of such impeccable liberal certitude that she makes Nick Clegg look like Oswald Mosley.

“People of Colour spirituals,” hazarded the Boy. He obviously didn’t have a clue, but was enjoying his generation’s favourite baiting game: More Politically Correct Than Thou.

“Grandma is not racist,” said Himself. “Heinrich Himmler is a racist. Grandma, not so much.”

“Who’s Henry Himmer?” asked the Boy.

“Heinrich HIMMLER,” said Himself, “was a foul, Jew-exterminating, Nazi fiend whom your grandmother’s parents and their whole generation fought a world war to defeat in order that she could sit here 70 years later and be called racist by her sanctimonious and ungrateful grandchildren. Anyone for crumble?”

When my mum had gone for a nap, I explained to the kids that racism was not as black and white as they seemed to think. During their grandmother’s lifetime, the UK had seen vast social changes. Certain words once in common usage were now regarded as toxic, and rightly so. I blenched to think that, as a child myself, I went down the “Paki” shop to get some Blackjacks (inky toffees in a wrapper decorated with the faces of, then unremarkable, golliwogs). Miss Leyshon, my lovely primary school teacher, taught us to count with the help of three toys, Teddy, Dolly and Golly. In 2014, she would be considered guilty of inciting racial hatred.

I told the kids that, over the past 15 years, my mother’s town in South Wales had seen a huge influx of Eastern Europeans. It was possible for Grandma and her friends to note that the character of their birthplace had changed, and express some unease about it, but also for them to enthuse about their excellent Romanian dentist. Tolerance was not a one-way street. Tolerance meant treating elderly people who used outdated language with understanding, not finger-pointing and yelling “Raaa-cisst!” Real racism – the ugly, frightening, visceral kind – would flourish if people’s tolerance was taken for granted, and their communities changed too fast without any regard for the consequences.

That was two months ago, and I wish I were more surprised to learn that a new British Social Attitudes survey has found that more than a third of Britons admit they are racially prejudiced. Prejudice fell to an all-time low in 2001, but the latest figures show that the problem has returned to the level of 30 years ago. More than 90 per cent of those who say they are racist want to see immigration halted. More interestingly, 72 per cent of those who do not consider themselves racist also want to see immigration cut drastically.

As shell-shocked politicians from the main parties struggle to discern the causes of Ukip’s deafening electoral success, here’s a tip: look in the mirror, chaps! It is politicians, not the British people, who are to blame for a resurgence in racism; politicians who have ignored public opinion and created the conditions in which resentments fester and grow. Specifically, though not exclusively, it is New Labour who welcomed workers from the new, accession countries of the EU at a time when countries such as France and Germany wisely exercised their right to keep them out for another seven years. According to Jack Straw, this was a “spectacular” error. And Jack should know, because he was Home Secretary at the time. The plan of Tony Blair’s government, as laid bare by Andrew Neather, then a Blair speechwriter, was to banish that old, hideously white, retrograde England and usher in a new, vibrant, multicultural country which, rather conveniently, would vote Labour. Mr Blair now works in international conflict resolution, having stored up enough conflict in his homeland to keep future generations busy for centuries.

You bigoted xenophobic nazis can read the rest here.

Now We’re Down To Heresy Once Again Being A Crime.

by Flyovercountry ( 47 Comments › )
Filed under Economy, Fascism, Progressives at May 27th, 2014 - 10:00 am

Michael Ramirez Cartoon

Heresy -
noun
belief or opinion contrary to orthodox religious (especially Christian) doctrine.
“Huss was burned for heresy”
synonyms: dissension, dissent, nonconformity, heterodoxy, unorthodoxy, apostasy, blasphemy

During the Dark Ages, when European Clergy wore their funniest hats, heresy was a crime punishable by lengthy stays in some of the nicer royal prison facilities. They were treated to some of the most effective reeducation devices of the time, namely The Rack, The Iron Maiden, Wall Shackles, and The Comfy Chair. In what has to be the single greatest denial of free speech, one of the fundamental natural rights guaranteed in the First Ten Amendments, expressing an opinion, or even believing differently than what the clergy at the time wanted the public to believe, some were even executed for thinking thoughts held to be out of fashion.

The reason for this is not all that difficult to understand. People holding the reigns of power in totalitarian regimes can not under any circumstance tolerate dissenting opinion. They most often realize that their true authority is not derived from the consent of the governed, but from their ability to coerce the governed. Hence, any and all dissent was dealt with violently, and swiftly. By the Dark Ages, the clergy were stewards of political power, and they enjoyed that role so thoroughly, that torture was used as a means to discourage any thought of dissension. That is when the crime of heresy was invented, and those found guilty of it were burned alive. Revolt against the, “king,” in those days was far more prevalent than is taught in history. Quelling revolution is far easier if you prevent dissent from catching on to begin with, and that was best accomplished by simply removing those who had such thoughts.

You might be wondering what any of that has to do with Global Climate Cooling Warming Change Chaos Disruption, and it’s a fair question to ask. As you’ll see by reading this story, found at the Daily Caller, A geneticist named David Suzuki has proposed that all who disagree with Global Climate What-Have-You be locked up as criminals. In short, he has proposed that heresy once again be made illegal. Welcome my comrades to the golden age of enlightenment.

Canadian geneticist David Suzuki urged Western governments to lock up politicians who question man-made climate change, telling PBS’ Bill Moyers “our politicians should be thrown in the slammer for willful blindness!”

Before any of you declare that this is the only guy doing this or who is pimping this new law, I’ve also seen some iteration of it from several facebook friends, and from several of the genius hosts and paid pontificators at MSNBC and CNN. The political left’s clearly superior intellect is on full display here, and I am willing to play along. I am willing to make a deal, and I for one would love to see it happen. Let them clearly define the proscribed punishment for the crime of heresy first. After they do, here’s the bet. I’ll voluntarily go to jail or suffer what ever consequence deemed appropriate if their theory is ever proven to be true, beyond silly computer modeling that is, if they’ll agree to suffer the same punishment should the theory ever be disproven. That sounds fair to me. I mean after all, they may wish to make heresy illegal once again, but the last time I checked, perpetrating a fraud already is. So, by my way of thinking, it’s put up or shut up time for the Lefties.

Now the question is, how deep does the faith truly run in the Church of Global Climate What-Have-You? Since the proscribed cure for their belief system is Marxism, something that has been proven time and again to cause massive misery on what ever population that finds itself placed in that oppressive economic environment, some consequence should be inflicted upon those who insist we adopt it, should their reason for that adoption ever be proven false. Burning them alive might be fun, but fair is fair, and Suzuki only suggested jail time for heresy.

Exit question before the update added while writing this post: What do you think Chris Matthew’s nick name in prison will be? Tingles, or something more timely?

Update:

while I was writing the post, we’ve had another sighting of Republicans with testicles from Washington D.C. I know it’s hard to believe, but here is something that proves the Tea Party is having a real effect upon those who’ve been elected. It’s a good sign, and one that tells me that even slow children can learn when bashed repeatedly about the head with a clear message. Six years ago, this doesn’t happen. Hey, it may be a small victory, but take them where you can.

Another from the Daily Caller, as linked to above:

Republicans are looking to bar the Obama administration from using any of the funds appropriated for national defense to implement global warming policies.

West Virginia Republican Rep. David McKinley will offer up an amendment to the National Defense Authorization Act (NDAA) Wednesday afternoon that would prevent the White House from sending funds to “the U.S. Global Change Research Program National Climate Assessment, the Intergovernmental Panel on Climate Change’s Fifth Assessment Report, the United Nation’s Agenda 21 sustainable development plan, or the May 2013 Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866.”

“President Obama’s climate agenda reaches all corner of the government, including the military,” McKinley spokesman Jim Forbes told The Daily Caller News Foundation. “Rather than blindly accepting drastic climate change policies, we ought to be debating their effectiveness and their impact.”

McKinley has been a vocal opponent of President Obama’s climate agenda, in particular Environmental Protection Agency regulations that target coal-fired power plants and mines — an economic mainstay of West Virginia.

Cross Posted from Musings of a Mad Conservative.

America and India

by coldwarrior ( 3 Comments › )
Filed under Economy, India, Military, Politics, Special Report at May 26th, 2014 - 11:55 am

There is now a real chance for closer ties that would benefit both countries.  The victory of Hindu National Party and elevation of its leader Narendra Modi to Prime Minister signals a sea change in Indian politics, defense, and economics. The voters in India have forcefully rejected the socialist/collectivist old ways of the Congress Party and have demanded reforms and new ways. Capitalism and Nationalism are the order of the day.

Home Minister Rajnath Singh, Defence Minister Arun Jaitley, and External Affairs Minister Sushma Swaraj—the troika who will implement Mr. Modi’s strategic vision — will be seeing lots of the world, but it is unlikely to be fun.

East Asian states like Japan and Vietnam, alarmed by the rise of China and an apparent decline in United States’ power, want to lock India into closer military partnership. Islamist insurgencies and Saudi Arabia-Iran tensions have made West Asia, the source of the fuel India’s economy lives on, dangerously fragile. Nuclear-armed Pakistan is buffeted by civil-military tensions, and, in some areas, collapsing central authority.

Ms. Swaraj will have to negotiate this maze of regional crisis — knowing all of them could directly hurt India’s overarching strategic goal, high economic growth.

Teeth for war machine

The unprecedented decision to give Mr. Jaitley charge of Defence in addition to Finance suggests that Mr. Modi believes these challenges can’t be dealt with unless India has military teeth. Mr. Jaitley will face immediate calls from defence services for injections of cash. The 2014-2015 interim budget allocated the armed forces Rs. 2.24 billion, but just Rs. 895.88 of that is available for capital expenditure—leaving the forces’ acquisition programme floundering.

 

In the long run, I believe that India will fare better than China. India is where we need to be to counter the Chinese. A US-India alliance is the most obvious of goals.

A window of opportunity

Geo-strategically, some of the big issues that confront the United States today, China, Pakistan, and the shaping of the post-2014 transition in Afghanistan, all happen to be in India’s periphery. A more rapid expansion of India’s economy can accelerate the creation of a common economic space in South Asia

India’s weak economic performance, the 2008 financial crisis and the economic downturn in the United States have all diminished the India-U.S. relationship in recent years, after the two countries had come a long way together since the 1950s. When I arrived in Philadelphia in early April, Prof. Surjit Mansingh — once an Indian Foreign Service officer and now teaching at the American University — ruefully said, “Nothing can be expected from a U.S. government that has relegated South Asia, India included, to the strategic unimportance it had during the Cold War.” While the two governments remained somewhat somnambulant, business and industry leaders and the Indian-American community, the other drivers of the relationship, became dormant too. Extricating it from the depth it has sunk will be no easy task.

Consonance of interests

Post-election, there has been a visible change in the outlook of experts on India within think tanks, universities and the beltway in Washington DC. There is a sense that India’s destiny depends not just on economic progress; it also needs governance that has a social vocation, public institutions that are accountable, and a society that is tolerant and secular. From Prime Minister Narendra Modi’s statements, they hope he might turn out to be different from how he has been portrayed by the Opposition. They believe it is time to re-engage with an India that is energised, self-confident, and which will grow faster under a new government.

On his part, Mr. Modi has set aside the personal affront of his visa blacklisting. Declaring that national interest is higher than individuals, he has committed himself to work for improved India-U.S. ties. He fought the election on an agenda of development, for which India needs markets, investments and technology. For India, the U.S. remains the prime source of all three.

Geo-strategically, some of the big issues that confront the U.S. today, China, Pakistan, and the shaping of the post-2014 transition in Afghanistan, all happen to be in India’s periphery. A more rapid expansion of India’s economy can accelerate the creation of a common economic space in South Asia. Such an India can better contribute to the design of the currently absent security architecture in Asia and the Indo-Pacific. India’s contribution to stabilising the subcontinent, underwriting its integration and development through its own growth, and investment in building regional infrastructure and connectivity, as also India’s growing role in protecting maritime routes in the Indian Ocean, all benefit the U.S too.

Defence preparedness

Besides the economy, India’s focus externally will be on improving relations with the contiguous countries, including China. Given our experience since Independence, this also requires better defence preparedness, for which the relationship with the U.S. will be critical in the years ahead.

So far, India’s major military platforms, including some still being developed, have come from Russia. The two countries have enjoyed a special relationship for several decades and this must be preserved and nurtured. The inept U.S. handling of its ties with Russia has cemented Sino-Russian strategic relations in a way that India’s preferential customer status of Russian defence supplies is now imperilled. India might not be able to rely indefinitely on exclusive or favoured treatment from Russia vis-à-vis China.

During his just concluded visit to Beijing, Russian President Vladimir Putin said Russia-China relations were “at the highest level in history.” The Skovorodino-Mohe pipeline project worth over $60 billion in investment, and nearly half a trillion dollars in overall value over three decades, is about to roll. In his phone-in-interview on April 17, available on his website, President Putin said Russia and China are neighbours and “allies,” and that, with China, Russia has “never had such trust based relations in the military industry.” Earlier, this year, Kommersant, a Moscow trade paper reported that Mr. Putin had given his assent for a deal to sell China — over the objections of his general staff — the state-of-the-art S-400 missile system, capable of shooting down all “enemy aerial targets that are known today.” Talks are at an advanced stage for sale of Su-35 fighter aircraft to China. Meanwhile, Russia itself is buying higher quality military platforms, such as the Mistral helicopter carriers from France.

India might, therefore, need to diversify its defence procurement further. On offer from the U.S, among other equipment, is the ‘Javelin,’ said to be among the best available crew fired anti-tank weaponry, as also the co-development and manufacture of the next generation of such missiles, long-range surface-to-air missiles, and the next generation naval gun. An even more pressing need for India is to raise the level of technology domestication in the defence industry, for which a tweaking of the offset policy and increasing the cap on foreign direct investment (FDI) in defence to nurture joint ventures might lead to a breakthrough in an area that have confounded India’s efforts at indigenisation so far.

Another area where constructive India-U.S. ties will have a positive impact is on India’s other external relationships. Until 15 years ago, India-U.S. exchanges were confined largely to bilateral issues. When on the Americas Desk in the Ministry of External Affairs (MEA) between 2001 and 2004, I saw the start of multiple India-U.S. dialogues, on East Asia, the rise of China, the Association of Southeast Asian Nations (ASEAN) and Indonesia, the situation in the Gulf and the Middle East, and a range of multilateral and global issues. Other great powers quickly took notice and followed suit by pursuing similar conversations.

As the India-U.S. relationship gathered momentum, and an accord with the U.S. on peaceful uses of nuclear energy began taking shape, not perhaps as a consequence of but certainly as a sequel to it — there has been a spate of small successes in India’s interactions internationally. A case in point is the agreement with China in 2005 on the “Political Parameters and Guiding Principles for the Settlement of the India-China Boundary Question.” It was arguably the sole, significant success of the 17th round of talks of the Special Representatives negotiating the India-China boundary. This came when India’s global importance was at a high point, with flourishing relations with Russia, the U.S., the European Union, key European countries, and the start of warming relations with Japan. That traction in India’s external engagement was lost concurrently with India-U.S. relations losing steam, especially over the past five years.

The instruments of revival

For a revival in relations, the onus is on the U.S. side. The challenge would be how to do it. Mr. Modi has had the least contact with U.S. leaders, compared to those of Russia, China and Japan, and not of his own volition. U.S President Barack Obama has reached out to Mr. Modi by doing what other world leaders have done, but that is not enough.

The right mechanics must be harnessed in cranking up a cold motor — for starters, a new U.S. Ambassador in New Delhi. It appears that the eminent personalities who have been sounded out, such as the U.S. Exim Bank chairman/president, Fred Hochberg, do not want it with a lame duck presidency behind them. As of now, there is more than an even chance that in the coming Congressional elections, the Republicans will gain a narrow majority in the Senate, foreclosing presidential initiatives that do not have bipartisan support.

India’s well-wishers in Washington DC are urging the President to send out an envoy soon to confer with India’s new leadership. The obvious choice for this, U.S. Secretary of State, John Kerry, might not find enthusiastic resonance in New Delhi. Bill Burns, the Deputy Secretary of State, is leaving at the end of summer. A more inspired choice, some have suggested, might be Vice-President Biden, who knows India better than President Obama does. That might also indicate that the White House is taking back the India account from the State Department.

On India’s side, the most categorical step to revive its global standing, including with the U.S., would be to get the engine of the Indian economy roaring again. In today’s world, economic heft is the booster rocket of foreign policy.

In discussions in New Delhi, both in South Block and outside, there is often a debate on whether the India-U.S. story should be strategic or transactional. When times are difficult, there is nothing wrong with a give-and-take approach, a prudent and practical engagement that looks at the relative costs and benefits and eschews normative arguments. The congruence of interests of India and the U.S. is self-evident. So also is the current hiatus in the relationship. There is a window of opportunity to resuscitate it now.

(Jayant Prasad is a former diplomat and currently a visiting scholar at the Center for the Advanced Study of India, University of Pennsylvania.)

 

Saturday Lecture, MultiPlayer Games and Economics

by coldwarrior ( 65 Comments › )
Filed under Academia, Economy, Open thread, saturday lecture series at May 24th, 2014 - 8:00 am

Game Theory turned on it’s head!

 

“A Multiplayer Game Environment Is Actually a Dream Come True for an Economist”

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In October 2011, the Greek economist Yanis Varoufakis received an unusual email. “I’m the president of a videogame company,” it began. The message was from the head of Valve Software, the influential video game design firm behind such industry-defining titles as the sci-fi shooter Half-Life and the first-person puzzle adventure Portal.

Varoufakis, who teaches economic theory at the University of Athens and also has a post at the University of Texas at Austin, had spent years working on game theory—the strategic and decision making processes that economists study, not the theory behind computer games. He also examined the complexities of linking multiple distinct economies. During the height of the Euro crisis in Greece, Varoufakis was often seen in the media explaining the meltdown and describing what might happen next in the currency-integrated Eurozone. Now Valve Software chief Gabe Newell was asking him to apply the same insights to the interlinked virtual economies of Valve Software’s games.

After meeting Newell and other Valve staffers in Seattle, Varoufakis agreed to become the company’s first official in-house economist. From early 2012 through the middle of 2013, he studied Valve’s games, occasionally sharing his insights on the company blog in lengthy posts with wonky titles. (Sample: “Arbitrage and Equilibrium in the Team Fortress 2 Economy.”) His work for Valve led to more media attention, including articles and interviews in The Washington Post, The Financial Times, and National Public Radio.

In February, Varoufakis spoke with Senior Editor Peter Suderman about what he learned as a video game economist, the failings of his chosen academic profession, and how computer games and virtual online worlds might be the future of macroeconomics.

reason: What does a video game company want with an economist?

Yanis Varoufakis: The moment that video game companies shifted from single-player to multiplayer games, without realizing it, they created a social economy. People interacting through the game have the opportunity not only to kill one another, but also to exchange stuff. Stuff that was valuable-or scarce, as an economist would say-within the virtual world.

In almost no time that sort of economy started creating, within the game, a lot of value, and also distributing it. If you have a kind of community involving millions of people who trade with one another, who engage with one another, and who can even create value through production processes-for instance, designing some shield or some garden and sending it through the store of the community to other players-all of a sudden, these video game companies realized that they have an economy in their hands.

reason: So the interest for economists is that you have a confined space to learn about how people behave within economies. And the interest from gaming companies is that they inadvertently created economies that they needed some expertise on.

Varoufakis: A multiplayer game environment is a dream come true for an economist. Because here you have an economy where you don’t need statistics. And elaborate statistics is what you use when you don’t know everything, you’re not omniscient, and you need to use something in order to gain feeling as to what is happening to prices, what is happening to quantities, what’s happening to investments, and so on and so forth. But in a video game world, all the data are there. It’s like being God, who has access to everything and to what every member of the social economy is doing.

reason: You have the perfect knowledge that every central banker wishes he or she had.

Varoufakis: Indeed. Every congressman, every senator, every regulator, every banker, every Treasury official. It’s equivalent to being omniscient, being able to see and know everything that goes on in the economy. And that’s amazing.

reason: You’ve said that you were not really a gamer before working with Valve. What did you learn about video game worlds? What surprised you?

Varoufakis: The most poignant observation was the speed with which these economies evolve. Within a year, you have an evolutionary process that can replicate what happened out there in the outlying economies, in terms of creating a complex web of exchanges and sound economic systems. And the outlying economy took centuries. I didn’t expect to see institutions spontaneously generating within these social economies so fast and so furiously, and therefore creating a growth rate that the real world would love to replicate.

I also learned something else which I’m very grateful for. We economists are very much disposed toward our models, and our models assume that economic choices converge very quickly toward some kind of equilibrium where demand equals supply and where prices tend to their natural level and so on and so forth. Well, that’s not how the real world works. We should have known that.

In the video game world it’s quite astonishing to watch. Quickly, collective aggregate behavior converges at equilibrium and then disequilibrates itself. Then some other equilibrium comes and then goes away. It’s the speed and the irregularity of behavior around some equilibrium and the speed with which new equilibria are being formed.

reason: So is there a real world lesson that you can draw out from having seen this irregularity pop up in virtual economies?

Varoufakis: Absolutely. Let me put it very brutally and very bluntly: Our best economic models-from the Federal Reserve or the U.S. Treasury or the International Monetary Fund or the Organization for Economic Development-are really not worth the trouble of putting together. Because they are presuming a kind of equilibrium stability and convergence toward equilibrium, because it makes our models look better. It is not something that is replicated in the real world.

reason: You once wrote that because of its heavy reliance on statistics and on this sort of simple modeling, economics can resemble “computerized astrology.” That’s pretty harsh. Could you talk a little bit more about that judgment and whether you think that studying economics in a virtual world-where you’re not just looking at a model, you’re looking at real behaviors and real interactions amongst thousands or millions of people-offers a way out of an economics stuck in a model-bound world?

Varoufakis: If we think of ourselves as empiricists who judge the value of the theory on the basis of how well it predicts, then we should have ditched economic models years ago. Never have our models managed with data to predict the major turning points, ever, in the history of capitalism. So if we were honest, we should simply accept that and rethink our approach.

But actually, I think they’re even worse. We can’t even predict the past very well using our models. Economic models are failing to model the past in a way that can explain the past. So what we end up doing with our economic models is retrofitting the data and our own prejudices about how the economy works.

This is why I’m saying that this profession of mine is not really anywhere near astronomy. It’s much closer to mathematized superstition, organized superstition, which has a priesthood to replicate on the basis of how well we learn the rituals.

Video game communities, social economies, give us something that we never had as economists before. That’s something of an opportunity, a chance to experiment with a macroeconomy. We can experiment in economics with individuals. We can put someone behind a screen and experiment on the subject, and ask him or her to make choices and see how they behave.

That has nothing to do with macroeconomics. Macroeconomics requires a different scenario. You conduct controlled experiments with a large economy. We are not allowed to do this in the real world. But in the video game world, we economists have a smidgen of an opportunity to conduct controlled experiments on a real, functioning macroeconomy. And that may be a scientific window into economic reality that we’ve never had access to before.

reason: What a lot of these discussions come down to is that you can never in macroeconomics have a real counterfactual. Do you think that video games offer a meaningful solution to that problem, where we might actually be able to solve, or if not solve, get useful knowledge, about macroeconomic policy, whether it’s stimulus, whether it’s other spending and taxation policy, whether it’s Fed policy?

Varoufakis: In one word: potentially. I don’t think we can yet.

In order to be able to run these controlled experiments within the video game world in a manner that will result in meaningful conclusions regarding depression economics, recession economics, and so on and so forth, we need to wait for people to engineer the creation of labor markets and financial markets within these video game communities. But I have no doubt that it’s going to happen.

These video game communities are evolving so fast that there will be markets for credit, and very soon, production. I think in EVE Online and other games, there are already such labor markets. Once video game communities have developed full-fledged financial and labor markets, then quite simply the answer will be yes.

reason: In the last few decades we’ve started to see a shift in economic research toward experiments, with economists designing little cooperation games that can be played in labs in short rounds and that sort of thing. A lot of that still seems to be pretty small-scale. I’m wondering how these big, persistent commercial game worlds can inform or interact with that sort of research.

Varoufakis: Well, they give us an opportunity to liberate ourselves from the smallness as you posit. There was one experiment that took me 10 years to complete from inception to execution to collecting the data to writing up the paper. A decade for one little paper!

reason: That’s a long time.

Varoufakis: My sample size was 650 subjects. When I looked at some of the games, I had millions and millions of deviations per hour, and it was all in real time. I didn’t even need to collate it. Watch it in front of your eyes; you’ll be liberated from smallness.

But in the experimental economics that we’ve been carrying out as academics outside the video game world, we have a lot more control. Even though we have a small sample size, and it took ages to get the whole thing going, at least we control precisely the conditions. No commercial video game companies are going to give the economists complete free rein of allowing him or her to control the environment.

This is a trade-off. The challenge for academic economists who are working with video game economies is how to maximize the degree of control they have over the experiment that they conduct without damaging the enjoyment that players get from playing the game.