Davos and the spirit of mutual misunderstanding
Davos and the spirit of mutual misunderstanding
By John Gapper
This was not the week to be seen in Davos and, if you were there, it was not the time to remain calm.
Despite the blue skies in the Swiss skiing resort, the World Economic Forum’s annual meeting, usually a feelgood festival of political leaders and chief executives vowing to work together to solve the world’s problems, was distinctly fractious.
The audience cheered in one debate when Nassim Nicholas Taleb, author of The Black Swan, said it was time to punish bankers by forcing them to hand back bonuses. Vladimir Putin, the Russian prime minister, angrily swatted down Michael Dell, the head of Dell Computers, over the latter’s impertinent suggestion that Russia needed technological help.
Finally, Recep Tayyip Erdogan, Turkey’s prime minister, walked out of a debate with Shimon Peres, president of Israel, saying he had been given insufficient time to reply to Mr Peres’s remarks about Gaza. Mr Erdogan, who was met on his return to Turkey by cheering crowds, said Mr Peres talked to him “in a manner not in line with ... the spirit of Davos”.
The Davos spirit, along with others, is usually imbibed freely by those who journey to Switzerland for a few days of debates and parties. Klaus Schwab, a German-born professor, has fine-tuned a genial event at which executives can mingle with, and lobby, presidents and prime ministers. Occasionally, Davos is a venue for concrete action. Turkey was party to one of Mr Schwab’s proudest moments – the 1988 Davos Declaration between Turkey and Greece that helped to avert war. Mostly, however, it is a place where good intentions are expressed and antagonists turn into panellists.
So it was a pale-faced and shaken Professor Schwab who called a snap press conference on Thursday evening with Mr Erdogan to calm things down. “We always hope for the Davos spirit, a spirit of mutual understanding. It is a positive spirit, a constructive spirit,” he said, in the manner of one whose hopes have been dashed.
He should not have been surprised. The WEF had an impossible task this year – to forge harmony out of tension, particularly over the financial crisis and how the world can recover from it. Instead, Davos became the place where the pent-up dismay and anger over what Wall Street wrought boiled to the surface.
A lot of bankers were not there to hear themselves being blamed for the economic crisis. Lloyd Blankfein, chief executive of Goldman Sachs, stayed away and cancelled the investment bank’s usual party. Bob Diamond, president of Barclays, had been due to co-host a mountain-top dinner for clients but decided at the last minute to remain at home.
The star turns this year were the seers who warned of economic downfall. As well as Mr Taleb, Nouriel Roubini, a New York University economics professor, sat on many panels to warn that the worst is yet to come for the global financial system. The absence, or low profile, of bankers left little to counteract this pessimism. Some were in town – Jamie Dimon, chief executive of JPMorgan Chase, gamely held a party – but they were no longer dominant voices. Josef Ackermann, chairman of Deutsche Bank, humbly moderated a panel of central bankers, the new masters of the financial universe.
Apart from the bankers, the other absentees were members of Barack Obama’s new administration. The only official representative was Valerie Jarrett, Mr Obama’s friend and amanuensis, who made a boilerplate speech promising a new era of US leadership and co-operation without providing many details. The words were fine but the accompanying action – a near-boycott of Davos – was less reassuring.
The gap was quickly occupied by Russia and China, with combative appearances both from Mr Putin and Wen Jiabao, the Chinese premier. Mr Putin took a deliberate jab not only at Mr Dell but Americans in Davos last year who had “emphasised the US economy’s fundamental stability and cloudless prospects”.
Beneath the verbal sparring, the week exposed some big obstacles to the stated aim of many speakers – to ensure that the world tackles the economic crisis together, rather than being drawn into a repeat of trade protectionism in the 1930s. That brought the Smoot-Hawley Tariff Act of 1930 but the problem now is more one of capital than trade.
Last year in Davos, it seemed that co-operation – in the form of sovereign wealth funds from Asia and the Middle East voluntarily investing in troubled western banks – could save the system. This year, less wealthy countries fretted that the US will instead use force majeure to soak up capital. It will print Treasury bonds to finance its banking bail-out and its fiscal stimulus.
Meanwhile, financial globalisation is under threat. The US government may push bailed-out banks such as Citigroup to sell overseas operations to raise capital and Gordon Brown, the UK prime minister, has attacked banks such as Royal Bank of Scotland for taking UK deposits and using them to lend overseas.
Thus, the spirit of financial co-operation is running low, which accounts for the short supply of Davos spirit. This year’s forum showed what happens when the world economy ceases to finance global co-operation and goodwill.
In theory, the forum is the place where jaw-jaw replaces war-war and the global elite finds a way to get along. In practice, there was little that a pleasant get-together in the Swiss mountains could do to help.
No wonder Prof Schwab looked so stricken.
Republicans Pick Steele as Next Party Chairman
Republicans Pick Steele as Next Party Chairman
Michael Steele, the former Maryland lieutenant governor, wins the chairmanship after six rounds of voting in which five candidates were competing.
Former Maryland Lt. Gov. Michael Steele holds a gavel after winning election to head the Republican National Committee Friday in Washington. (AP Photo)
The Republican National Committee has picked Michael Steele, a black man from a traditionally Democratic state, to be the new face of the party as the GOP forges a revival following a second consecutive electoral drubbing.
Steele, the former Maryland lieutenant governor, won the chairmanship Friday after six rounds of voting in which five candidates were competing. He becomes the first black chairman of the Republican Party just days after President Obama became the nation's first black president.
Steele delivered a rousing speech after winning the race, pledging to re-establish the Republican presence in the northeast and win elections in regions across the country.
"It's time for something completely different, and we're gonna bring it to them," he said. "Get ready baby. It's time to turn it on."
Steele said he would work to build the party to an unprecedented level and warned: "For those of you who wish to obstruct, get ready to get knocked down."
Outgoing Chairman Mike Duncan dropped his bid for a second term after the third round of voting. South Carolina GOP Chairman Katon Dawson had emerged as Steele's top challenger, but Steele won with 91 votes to Dawson's 77.
Voting lasted for hours because no candidate was able to rack up the majority of votes necessary. A candidate needs 85 of 168 votes to win, which Steele eventually attained.
Ken Blackwell, Ohio's former secretary of state, and Saul Anuzis, Michigan GOP chairman, dropped their bids before the final round of voting.
Steele ran unsuccessfully for Senate in Maryland in 2006, and later headed up GOPAC, the Republican recruiting arm. He is a frequent media commentator, on FOX News and other outlets, and has touted that experience as one of his credentials. In a recent interview with FOXNews.com, he also said his political upbringing in a liberal stronghold of Maryland had toughened him.
The results in the early rounds Friday signaled that many Republicans were eager for new leadership, after suffering double-digit losses in congressional elections for the second time in a row in November and losing the White House. Steele lagged Duncan by just six votes in the first round Friday, but the second round had them tied and Steele led Duncan 51-to-44 votes in the third round, after which Duncan dropped out.
"Obviously the winds of change are blowing," Duncan said as he withdrew from the race and got a standing ovation. The Kentucky Republican thanked former President George W. Bush and said of his two-year tenure: "It truly has been the highlight of my life."
Another candidate, former Tennessee GOP Chairman Chip Saltsman, dropped out of the race on Thursday with little explanation, saying only in a letter to RNC members: "I have decided to withdraw my candidacy."
Saltsman, who ran former Arkansas Gov. Mike Huckabee's failed presidential campaign last year, was considered a long-shot candidate who several Republican officials said likely wouldn't have had enough support even to be formally nominated had he continued his bid.
It faltered in December after he drew controversy for mailing a 41-track CD to committee members that included a song titled "Barack the Magic Negro" by conservative comedian Paul Shanklin and sung to the music of "Puff, the Magic Dragon."
Steele had criticized Saltsman for the mailing.
Obama: Agent of Change?
Hezbollah leader Hassan Nasrallah says — and he should know — there is no difference between the policy of “absolute support” for Israel between Barack Obama and George W. Bush.
Obama’s own spokesman Robert Gibbs affirmed that, as under Bush, “all options remain on the table” with regard to Iran.
A recent executive order from the new president allows the CIA to continue to operate its “safe houses” — possibly a torture loophole.
Even President Obama’s massive stimulus plan continues the print-and-spend insanity preferred by the former administration.
And depending on whom you ask, Obama might want to ramp up military activity in Afghanistan — one area where Bush’s policy wasn’t quite forceful enough for the new president.
Don’t forget Obama’s new Homeland Security appointment of a “cybercrimes expert” as general counsel. You know, instead of abolishing Bush’s gargantuan Homeland Security bureaucracy altogether.
So aside from closing Guantánamo Bay in an extremely literal sense — after all, many of the detainees will remain such — what “change” have we witnessed thus far?
How to Sell a Mess
How to Sell a Mess
What "stimulus" advocates learned from the push for war with Iraq
Jesse Walker
When Washington makes a big decision—to pass the PATRIOT Act, to invade Iraq, to bail out Wall Street, to spend hundreds of billions "stimulating" the economy—the most important stage of the debate isn't the final agreement on what to do. That's just a bunch of details about portions and timing. The key stage comes in the initial rounds, when the acceptable radius of disagreement is established. Your sharpest critics are often your most radical critics, so it's important that their arguments be confined to the foreign press, the blogosphere, and other backwaters.
Once those boundaries are ratified, you must police them without pity. This is harder than it sounds. If you argue with those outsiders, you've made them a part of the debate. But you can't shut them up either. The goal then is to persuade everyone else that the dissidents simply don't deserve attention: that they're extremists, partisan flacks, or just not "serious." In 2003, "serious" people were willing to debate the evidence that Saddam Hussein had weapons of mass destruction, but they considered it settled that such weapons were reason enough to invade his country. In 2009, "serious" people will debate the best ways to stimulate a slumping economy, but the arguments against a so-called stimulus itself are beyond the pale.
Not everyone will respect the borders you've established. As it became more and more obvious that the Iraq war was a bad idea, for example, critics outside the serious zone started mocking the insiders' pretentions; the term Very Serious Person became an in-joke on antiwar blogs. The left-wing pundit Matthew Yglesias was especially fond of the phrase, particularly when criticizing liberal hawks. But such mockery doesn't make the tactic any less attractive. When House Minority Leader John Boehner (R-Ohio) opposed the use of stimulus money to keep state budgets in the black, it was Yglesias who declared that Boehner wasn't part of "the serious-people universe." I don't think he was being ironic.
In an even more telling moment this month, the prominent Berkeley economist Brad DeLong blogged a list of economists making, for the most part, normal free-market objections to stimulus spending: that "Congress typically spends according to its political priorities, not economic priorities," that the government "can only shift jobs from one part of the economy to the other," that "the stimulus plan will most probably turn quickly into pork spending," that Obama should "allow the marketplace to correct the errors made by the last 8 years of misguided intervention." Then DeLong informally anathematized everyone on his list, writing them off as "ethics-free Republican hacks." Setting aside questions of ethics and hackery, several of the economists he accused aren't even Republicans. But it's easier to dismiss someone when you've reduced his arguments to a matter of partisan loyalty. That's another trick you may remember from Iraq. "They're not anti-Keynesian—they're just on the other side."
On one level, the stimulus crowd hasn't been as successful as the GOP was during Bush's first term: The Democratic leadership cravenly fell in behind the PATRIOT Act and the Iraq war, but every Republican in the House voted against the Democrats' bill yesterday. On another level, the Democrats don't need to be as successful as the GOP. The bill passed the House without the Republicans' help, and it will probably pass the Senate. And in the meantime, the Dems defined the debate, excluding alternative perspectives almost as effectively as the Bushians did.
Do you doubt that? Consider the following argument:
The recession is a necessary correction. It is forcing ill-conceived and poorly run companies to collapse or restructure, and it is compelling consumers to save again. Protecting those overgrown institutions and encouraging more unsustainable consumption will only delay doomsday and make it worse. It's better to endure some pain now than to endure even more pain tomorrow.
There's two things you should notice about that counternarrative. The first is that it sounds pretty radical. The second is that it isn't as radical as it sounds. It doesn't require you be a thoroughgoing libertarian opposed to all intervention in the economy. An ordinary liberal Democrat could accept it, arguing for federal efforts to ease individual pain—unemployment insurance, retraining subsidies, even direct income grants—while refusing to shore up failing institutions. You might think that would be a common position on the left: help for the dispossessed, not one dime for corporations.
But as far as Washington is concerned, it's invisible. The only Democratic legislators who broke with the bill were conservatives. Meanwhile, many Republicans have accepted the premises behind a Keynesian stimulus effort; they're just debating scale, means, and methods. Alternative ideas are out there, but Washington doesn't take them seriously.
In other words, the Dems have learned a lot from the administration they deposed. As the St. Lawrence University economist Steve Horwitz wrote this week, "Accusing your opponents of being 'ethics-free Republican hacks'...means you don't have to argue for the merits of the individual pieces, just scare the public and demonize the opposition. Of course, that's exactly what these same folks complained about after 9/11. Meet the new boss, same as the old boss indeed."
Managing Editor Jesse Walker is the author of Rebels on the Air: An Alternative History of Radio in America.
Meet the New Boss; Same as the Old Boss
Meet the New Boss; |
| David R. Henderson |
| "And so, to all other peoples and governments who are watching today, from the grandest capitals to the small village where my father was born: know that America is a friend of each nation and every man, woman, and child who seeks a future of peace and dignity, and we are ready to lead once more." Well, it didn't long to break that promise. On Tuesday, Jan. 20, President Barack Obama said that America, by which we can assume he meant the U.S. government, is a friend of every man, woman, and child who seeks a future of peace and dignity. But just three days later, the U.S. government used drones to attack and kill at least 20 people in Pakistan, a country with which the U.S. government isn't even at war. Of course, President Obama could argue that the attacks were on "foreign militants." But some locals in Pakistan claim that four of the dead were children. If that's true, there goes the "child" part of Obama's pledge. Obama could argue that we shouldn't be surprised. After all, during the presidential campaign, he did say that he would be willing to attack Pakistan. But then he shouldn't have made such a pledge in his inaugural address. The simple fact is that, although Obama wants to wind down the war in Iraq, he wants to escalate the war in Afghanistan and, as he has already shown, is even willing to continue the undeclared war on Pakistan. In his inaugural address, Obama also stated, "And to those nations like ours that enjoy relative plenty, we say we can no longer afford indifference to the suffering outside our borders." Yet, according to the AP wire, "Obama has not commented on the missile strike policy." This seems to me like indifference to suffering. Most Americans, I suspect, are indifferent to this suffering. But Obama is worse than indifferent: He could have prevented the attacks and chose not to. Is it just possible that President Obama is a smarter, smoother, more eloquent version of pro-war George Bush? As The Who said in one of their famous songs, "Meet the new boss; same as the old boss." And remember the name of the song from which that line comes: "Won't Get Fooled Again." During the 2000 presidential campaign, I was fooled by George W. Bush's line that he wanted America to have a humble foreign policy. I wasn't fooled enough to vote for him, but I was fooled, nevertheless. In my view, to paraphrase Yogi Bear, George W. Bush had a lot to be humble about. We're stuck with President Obama until Jan. 20, 2013. Let's at least not be fooled by him. Let's give him credit for his steps to shut down the prison at Guantanamo Bay and to end torture. Also, his choice of Dawn Johnsen for the Justice Department's Office of Legal Counsel was first-rate. But let's not kid ourselves into believing that he wants to have peaceful relations with peaceful people in other parts of the world. Copyright © 2009 by David R. Henderson. Requests for permission to reprint should be directed to the author or Antiwar.com. |
The Big Stimulus
The Big StimulusGet rid of the empire |
| by Justin Raimondo |
| The talk is all of stimuli and other matters economic – how do we re-inflate the balloon of American prosperity? Reality has taken a hat-pin to it, and trillions have gone up in the smoke of foreclosed mortgages and credit-default swaps. Panaceas are not lacking. Paul Krugman says it doesn't matter what we spend our money on, as long as we throw it away rapidly and without forethought. I have no doubt that soon we'll be hearing the ghost of Huey Long promising "Every man a king!" I fully expect the Townsend Plan to come back at some point, along, perhaps, with a revival of interest in pre-Leninist forms of Marxism. Along these lines, President Obama and his party have come up with a "stimulus package," and I must pause to remark how important language is to these people. It's a "package," you see, just like a Christmas gift, only better, because they, the politicians, get to play Santa Claus and shower their constituents with presents. This legislative larceny is predicated on the oddly counterintuitive notion that we can and should spend our way out of poverty – that the sins of our profligacy can be forgiven if only we indulge in yet more ravenous forms of gluttony. To ordinary Americans, this kind of Washington-think is wholly alien: it is Bizarro economics. After all, when normal human beings are in financial trouble they cut back on their spending, as they are doing now. The American polity, in its younger days, would naturally apply the same logic to government, but, in our dotage, we impart magical powers to the organs of the state, which can produce wealth out of thin air, with only the aid of a printing press. Oh, yes, we understand – albeit vaguely – that this is debt for future generations to pay. Yet we recall – even more vaguely – old bromides like "We owe it to ourselves," which are embedded in our collective memory like flies in amber, and we are reassured. Putting aside Bizarro economics, for now, and my wholesale rejection of same, there is one way we can stimulate the economy with a mighty injection of cash into the hands of one and all. No, not another government subsidy, but the cutting of the single largest federal expenditure down to a manageable size: the U.S. military budget. Larger than all the other "defense" budgets in the world combined, this unimaginable sum is not even known, for sure, but of one thing we can be certain: the hidden costs are much more than anyone suspects. Covert "black operations" are run on an off-the-books budget that we peons are not entitled to see. Consuming nearly half of all government spending, the military budget maintains an overseas empire unrivaled in the history of the world. The U.S. operates a network of bases in dozens of countries, on every continent. The Pentagon is the biggest landowner on earth. This is not only tremendously expensive, but also completely unnecessary and even harmful to our national interests. Why, for example, do we need bases in Germany, of all places? They are there on account of a war fought a generation ago, and they stayed because of a perceived threat from the Soviets that vanished into history along with Stalin's ghost. The hidden costs of empire are not limited to the CIA's secret slush funds – a much greater proportion of this sum amounts to invisible yet all too real opportunity costs, lost avenues of investment that were, instead, diverted to the military-industrial complex. Militarism distorts not only the economy, but also the progress of science, which is channeled in directions that are wholly destructive, rather than productive. Yes, it's true that military applications have often spun off useful byproducts, but if the original aim and intent of scientific research were directly applied to productive and pacific civilian projects, it 's reasonable to expect the results would have been far more fruitful. The reason for the huge outlay in military expenditures has nothing to do with America's national security: after all, we don't even inspect all the cargo coming into our ports. How concerned with real security are we, anyway? Not very. What matters, in this game, is the financial security of certain economic interests, as well as the ideological agendas of pressure groups within U.S. society. The Pentagon establishment wants to start building a new generation of nuclear weapons, over some opposition in the Obama administration. That these weapons only add to the danger of global annihilation, and therefore reduce our security, is irrelevant: what matters is that a powerful political constituency exists for the pattern of our military spending, with a very organized and well-funded lobby to continually push for bigger, better, and progressively more expensive weaponry. In making a point about how a complete fraud like Mikheil Saakashvili, the despotic president of Georgia, managed to make such headway in Washington circles, Professor Stephen Walt trenchantly observes: "The United States has a uniquely permeable political system. If a foreign diplomat can't persuade the State Department, Treasury, or Defense, there are 435 congressmen and 100 different senators for them to go to work on. As Ken Silverstein shows in his fascinating and funny book Turkmeniscam, there are also a host of lobbying and PR firms who are happy to help foreign governments sell their story here too." This permeability is even more conducive to domestic lobbies, such as those deployed by the arms manufacturers and the ancillary industries that piggyback on America's overseas presence. A good example is Halliburton and its offshoots, which provide all the comforts of home to our centurions at the far frontiers of the empire. Add to this corporate factor the foreign lobbyists and their domestic fellow travelers, and you have the broad outlines of the War Party's political coalition, the means by which they retain their iron grip on policymaking. Up against this colossus stands – what? Or, rather, whom? Well, it's just you and me, folks, and a few other scattered, badly disorganized and under-funded peace groups. And that's it. There's no pro-peace lobbying organization with any heft, and certainly not with any funding. The anti-interventionist blogger Professor Juan Cole recently noted this vital lack, and he's absolutely right when he says: "The reason AIPAC and its constituencies among the Evangelicals and American Likudniks has been so successful is that there is virtually no countervailing political force. Madison and other Founding Fathers set up the U.S., as Ian Lustick has argued, on the assumption that on most important issues there would be opposing factions who would check each other in the legislature. The drawback of their system is that when there is only one effective faction on an issue, it completely dominates politically. Madison's system worked to prolong the heyday of Big Tobacco far beyond what was reasonable. Anti-smoking campaigners who knew that smoking kills you dead could not make headway with Congress because the tobacco-growing and cigarette industries would counter-lobby. Putting aside the choice of "Big Tobacco" – as a libertarian, and a smoker, I say leave them the heck alone – Professor Cole is quite correct: there is virtually no opposition to the War Party in the halls of government. The enemies of peace are organized, they coordinate their efforts, and they have plenty of money to throw around. The peacemakers, on the other hand, are disorganized, divided, and poor. This imbalance is what – more than any other single factor – has given the War Party so many victories in recent years. We will not defeat them until we out-organize them on the ground. The potential is there, but it is – so far – tragically unrecognized. Such a Peace Lobby, if you will, would seize this moment in our history, when there really is a good chance that a mass movement to cut the "defense" budget could get off the ground. By arguing for a "peace stimulus," one that would allow bigger tax cuts for all and put more money in the hands of oppressed taxpayers, the organizers of such a campaign could make a larger point: that an empire is bad economics, as well as bad foreign policy. You want a "stimulus"? Forget all those condoms and start cutting back the Pentagon. We could cut our military budget by 30 percent without even feeling it, although I would suggest a 50 percent reduction – to start. Sound radical? Well, as Ron Paul remarked more than once, you'd be surprised how much of our military expenditures amount to maintaining our overseas empire and really have nothing to do with the defense of the continental United States. Get rid of the empire, and we can finance the rebuilding of the American economy – or, at the very least, our decayed infrastructure – several times over. |
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