Tuesday, December 27, 2011

Prague Autumn

The Czechs escaped Soviet domination only to face a new tyranny
by Peter Hitchens
For most of us, Prague is an idea before it is a city. Mention of the name calls up a series of monochrome images, most of them violent and distressing, boding little good for those involved. Imperial delegates are hurled from a high window into a dungheap and the Thirty Years War begins. Women weep as the German army tramps by in the March gloom. Reinhard Heydrich, Hitler’s personal favorite, is assassinated on a street corner (the first killer’s gun jams, but the second hurls a hand grenade), and hundreds have to die or suffer horribly in the furious retaliation. Jan Masaryk, a liberal who tried to work with Stalin, is pushed to his death from yet another window, his fingernails scrabbling on the sill as he discovers for certain that democracy is incompatible with Communism, or was it the other way round? Rudolf Slansky and Vlada Clementis, guilty of being Jewish at a time when Stalin was displeased with Jews, are hanged by their revolutionary comrades, swiftly cremated, and their ashes spitefully used to grit the snowy roads. Russian tanks crawl through sullen crowds, their crews puzzled because they had expected to be welcomed. The affronted people hold up signs, in good, grammatical Russian, saying politely, “Go Home.” When this fails, they try Molotov cocktails, and Jan Palach burns himself to death.
After too much of this, enormous peaceful multitudes demand and achieve the return of their lost liberty. It is a happy ending, though too late for several million people unlucky enough to live and die in all the unhappy eras. We have heard and read Prague’s name in ancient newsreels and history books. We know it as the scene of Franz Kafka’s hopeless Trial and perhaps as the home of the Good Soldier Schweik, who responds to authority by having another drink. Like Rome or Jerusalem, its name sounds in the mind like a bell or a snatch of music, plangent and melancholy.
So it is, in any case, for me. Prague the city is as mysterious and somber as you might expect, if not more so. Something about this dark bend on the Vltava River seems to attract melodrama and woe and inspire people to futile but admirable acts of resistance to historical inevitability.
I was advised to travel there more than three decades ago by someone who had been a courier for Stalin’s Comintern in the years before 1939. This wife of a prominent British labor union leader had carried messages to Moscow and gold to London, often passing through the Czech capital on her secret travels, lodged in the best hotels, clad in couture clothes and provided with the smartest luggage, for in those less egalitarian days rich voyagers attracted less attention from customs men than the shabby poor. Thanks to her continuing sympathies with the Soviet empire, she had been back since.
In those days, Eastern and Central Europe were barely visited by British people. They did not, she said, know what they were missing. “Go now,” she urged. “There is nowhere in Europe where you can still feel and see what the Continent was like before the Second World War.”
So it proved. There were no guidebooks or reliable street plans to be found. The official railroad map of Europe ended at the Iron Curtain. The booking clerks had to unearth special procedures to obtain our tickets. Our passports were sent off to Prague to be unstitched, reassembled, and photocopied by the Secret Police. But we persisted. The train, once it had crawled past the dragon’s teeth and barbed wire coils of the frontier, slowed to the pace of half a century ago. Through the somnolent afternoon, elderly waiters in the dining car served a weighty lunch of pork, dumplings, and beer as we wound past decayed spas and sad, dispossessed castles. We fell at last into the dark gravitational pull of Moscow, passing dispirited industrial cities hung with red banners and then, in the Prague suburbs, vast sidings full of Soviet rolling stock marked with the hammer and sickle. Then we were there.  
The stone crown of Central Europe was improbably lovely but also black and cold, unspoiled only because nobody could afford to spoil it, unbombed only because it had been handed over captive. Even so, it was all still there, though much of it was prevented from falling down only by large baulks of dirty timber jammed against sagging walls. It was full of genuine fear, something the Western visitor could selfishly enjoy, much as one enjoys a good ghost story because he knows that the evil is contained within secure borders. There were no tourists, only perplexed North Korean exchange students, their hair massacred in the style later indissolubly associated with Kim Jong Il, gaping at the sooty spires and mad, triumphalist Baroque churches of the Old Town. I even acquired a personal Secret Police escort, who took me out to meals and drove me around in the mistaken belief that I was more than I seemed to be and would somehow reveal myself if given enough Pilsner beer. I was approached on trams by sad men who thanked me (as if I were responsible) for the BBC Czech service, their only source of truth. I was approached in hotels by Anglophile black Cuban students who wanted to drink rum with an Englishman.
But Englishmen have a special difficulty with Prague, the place we merrily betrayed in 1938, hoping to save our own bacon by cooking the Czechs’ goose. In a way, we betrayed it again in 1948 and 1968, when we peaceably abided by the unspoken agreement that we could live as we pleased in Western Europe if we let the Russians do what they liked in the East.
I went back again and again while Prague languished under the stupid rule of the Communist Party, until the astonishing week when all that stopped. 
Then I didn’t return for almost 20 years. I could not quite bear to. After the impossible sweetness of November 1989, when the forces of good just for once appeared to triumph completely over the forces of wickedness, I thought it could never be any better. I was swept along the great streets in the snow, under icy blue skies, in a great triumphal festival of the newly liberated, and it seemed as if Christmas had arrived early.
I heard in the years afterward that it had not been quite so sweet, that the KGB themselves might have had a hand in the all-too-easy overthrow of Communism. It was even revealed that the student whose death we had all been protesting so righteously hadn’t actually died or even been seriously hurt. Vaclav Havel, like so many revolutionaries, gradually transformed himself from a tribune of liberty into a slightly tiresome figure of woolly, modish liberalism.
Parties of British youths, attracted by cheap beer, infested the ancient city, yelling and spewing among the monuments. The previously untouched facades began to wear the universal livery of global branding. Czechoslovakia itself fell apart. Both segments were gobbled up by the European Union.   
I went back, a little reluctantly, by the route Adolf Hitler liked to take from Berlin down to Dresden, now living proof that you can put the clock back, as its lovely domes and towers rise again from the wreckage of bombing and the grimy neglect of socialism. The journey is a poignant one, past the glum fortress towers of Pirna where the Third Reich pioneered the slaughter of the mentally handicapped (“we do it in the womb and so get away with it”) and then along the melodramatic gorge of the Elbe, not unlike the Potomac as seen from Harpers Ferry. Like Hitler, I had no need to pause at the Czech frontier. Along with all the borders of continental Europe, it has ceased to exist, smashed not by tanks but by the mighty decrees of the European Commission.
The Vienna Express roars on regardless, and the traveler must look closely at inn signs and such things to make out that he has passed from Germany into the Czech lands. Or has he? For this is the very Sudetenland that provided the pretext for the Munich crisis, in those days a German minority enclave in the invented state of Czechoslovakia. It is now ostensibly restored to Czech rule, but the Czech Republic is only a feeble vassal of the mighty European Union, which differs from all previous empires in not having an emperor—at least not yet.

Tu ne cede malis, sed contra audentior ito


by R. Wenzel
As part of the recent attacks on Ron Paul, some have raised the point that attempts were made to reach out to various right wing groups. Murray Rothbard was probably influential with these attempted alliances, although I'm not sure how seriously he took them, himself. In addition to being a genius, making major contributions in economics, history, political philosophy and legal theory, he had a bug for third party politics.

At times, approaches to right wing groups were made, but Rothbard also once endorsed
Norman Mailer for Mayor of New York City and at another time called for William Kunstler to be freed from jail.

Bottom line: Rothbard was all over the map, in Diogenes fashion. But instead of looking for an honest man, Rothbard was looking for a political party of some sort, where he could introduce a libertarian point and quench his thirst for third party activity.

Here's Rothbard's 
hilarious take on his infiltration of the Maoist wing of a Leninist-Trotskyite party: 
The peak of my political activity on the New Left came during the 1968 campaign. In the spring of 1968, my old enthusiasm for third party politics was rekindled, albeit in a different direction. The Peace and Freedom Party (PFP) which had become (and still is) established in California, decided to go national, and opened up shop in New York. I found that the preliminary platform and the only requirement for membership contained only two planks: the first was immediate U.S. withdrawal from Vietnam, and the second was some plank so vague about being nice to everyone that almost anyone, left, right, center could have endorsed it. Great: here was a coalition party dedicated only to immediate withdrawal from Vietnam and requiring no commitment whatever to statism! As a result, our entire libertarian group in New York poured happily into the new party.
The PFP was structured around clubs, most of them regional – such as the powerful West Side (of Manhattan) club, the hippie Greenwich Village Club, etc. One was occupational – a Faculty Club. Since there were very few actual faculty members in this very youthful party, the PFP generously widened the definition of "faculty" to include graduate students. Lo and behold! On that basis, of approximately 24 members in the Faculty Club, almost exactly one-half were our people: libertarians, including myself, Leonard Liggio, Joe Peden, Walter Block and his wife, Sherryl, and Larry Moss. The legislative arm of the PFP was to be the Delegate Assembly, consisting of delegates from the various clubs. The Faculty Club was entitled to two delegates, and so we naturally divvied it up: one going to the socialists, and one to us, who turned out to be me.
At the first meeting of the Delegate Assembly, then, here I was, only in the Party for about a week, but suddenly vaulted to top rank in the power elite. Then, early in the meeting, some people got up and advocated abolishing the Delegate Assembly as somehow "undemocratic." Jeez! I was just about to get a taste of juicy political power, when some SOBs were trying to take it away from me! As I listened further, I realized that something even more sinister and of broader concern was taking place. Apparently, the New York party was being run by a self-perpetuating oligarchical executive committee, who, in the name of "democracy," were trying to eliminate all intermediate social institutions, and to operate upon the party mass unimpeded, all in the name of "democracy." To me it smacked of rotten Jacobinism, and I got up and delivered an impassioned speech to that effect. After the session ended, a few people came up to me and said that some like-minded thinkers, who constituted the West Side Club, were having a gathering to discuss these matters. So began our nefarious alliance with the Progressive Labor faction within Peace and Freedom.
It later turned out that the PFP and its executive committee were being run, both in California and in New York, by the Leninist-Trotskyite Draperites, International Socialists run by Berkeley librarian Hal Draper. The Draperites were the original Schachtmanites, Trotskyites who had rebelled against Trotsky as Third Camp opponents of both the U.S. and the Soviet Union. The New York party was being run by the Draperites, including as their allies a motley collection of assorted socialists, pacifists, counter-cultural druggies, and Left Libertarians.
The opposition within PFP was indeed being run by the Maoist Progressive Labor Party (PL), who the Draperites feared were plotting a takeover. Actually, it soon became clear that PL had no such intention, but were only keeping their hand in, and were using the West Side Club to recruit candidate-members into PL. Both PL and the Draperites were keeping the structure loose while waiting for an expected flood of Gene McCarthy followers after Humphrey’s expected Democratic nomination victory – a flood that, of course, never materialized. Hence the loose ideological requirement, and the fact that the platform was up for grabs. The alliance between PL and us libertarians was highly useful to both sides, in addition to cooperating in fending off Draperite dictatorship in the name of democracy. What PL got out of it was a cover for their recruiting, since no one could of course call us vehement antisocialists tools of Progressive Labor. Whatwe got out of it was PL’s firm support for an ideological platform – adopted by our joint caucus – that was probably the most libertarian of any party since the days of Cleveland Democracy. The PL people were pleasantly "straight" and nondruggie, although quite robotic, resembling left-wing Randians.
The great exception was the delightful Jake Rosen, the absolute head of PL’s fraction in the PFP. Rosen, bright, joyous, witty, and decidedly nonrobotic, knew the score. One of my fondest memories of life in the PFP was of Jake Rosen trying to justify our laissez-faire platform to his Maoist dunderheads. "Hey, Jake, what does this mean: absolute freedom of trade and opposition to all government restrictions?" "Er, that’s the ‘antimonopoly coalition’." "Oh, yeah." Jake, with more sincerity, joined us in opposing guaranteed annual income plans; he considered them bourgeois and "reactionary." About the only thing Jake balked at was our proposal that our caucus come out for immediate abolition of rent control. "Hey, fellas, look, I’d love to do it, but we have commitments to tenant groups." Graciously, we let him off the hook.
But after all those flirtations, Rothbard very early on (pre-1992) spotted a man who could deliver the libertarian message across the board:
Rothbard would have been very proud of the success that Ron Paul is having right now and its terrible that those who should know better are trying to paint Rothbard as someone that he was not. Rothbard always fought for freedom, and probably did more in that way for people around the globe than almost anyone else. But it did not stop there. On a personal level, and Rothbard told me this directly, he supported third world children through the monthly donation programs such as Save the Children.

Rothbard never wrote of this publicly (though the records might still be around), it was the private Rothbard and much different from the way Ron Paul-haters are trying to spin things.

The case against censorship, inquisition, religious intolerance, and the persecution of dissenters.


Direct Government Interference with Consumption
by Ludwig von Mises
WE WANT BEER!In investigating the economic problems of interventionism we do not have to deal with those actions of the government whose aim it is to influence immediately the consumer's choice of consumers' goods. Every act of government interference with business must indirectly affect consumption. As the government's interference alters the market data, it must also alter the valuations and the conduct of the consumers. But if the aim of the government is merely to force the consumers directly to consume goods other than what they would have consumed in the absence of the government's decree, no special problems emerge to be scrutinized by economics. It is beyond doubt that a strong and ruthless police apparatus has the power to enforce such decrees.
In dealing with the choices of the consumers we do not ask what motives induced a man to buy a and not to buy b. We merely investigate what effects on the determination of market prices and thereby on production were brought about by the concrete conduct of the consumers. These effects do not depend on the considerations which led individuals to buy a and not to buy b; they depend only on the real acts of buying and abstention from buying. It is immaterial for the determination of the prices of gas masks whether people buy them of their own accord or because the government forces everybody to have a gas mask. What alone counts is the size of the demand.
Governments, which are eager to keep up the outward appearance of freedom even when curtailing freedom, disguise their direct interference with consumption under the cloak of interference with business. The aim of American prohibition was to prevent the individual residents of the country from drinking alcoholic beverages. But the law hypocritically did not make drinking as such illegal and did not penalize it. It merely prohibited the manufacture, the sale and the transportation of intoxicating liquors, the business transactions which precede the act of drinking. The idea was that people indulge in the vice of drinking only because unscrupulous businessmen prevail upon them. It was, however, manifest that the objective of prohibition was to encroach upon the individuals' freedom to spend their dollars and to enjoy their lives according to their own fashion. The restrictions imposed upon business were only subservient to this ultimate end.
The problems involved in direct government interference with consumption are not catallactic problems. They go far beyond the scope of catallactics and concern the fundamental issues of human life and social organization. If it is true that government derives its authority from God and is entrusted by Providence to act as the guardian of the ignorant and stupid populace, then it is certainly its task to regiment every aspect of the subject's conduct. The God-sent ruler knows better what is good for his wards than they do themselves. It is his duty to guard them against the harm they would inflict upon themselves if left alone.
Self-styled "realistic" people fail to recognize the immense importance of the principles implied. They contend that they do not want to deal with the matter from what, they say, is a philosophic and academic point of view. Their approach is, they argue, exclusively guided by practical considerations. It is a fact, they say, that some people harm themselves and their innocent families by consuming narcotic drugs. Only doctrinaires could be so dogmatic as to object to the government's regulation of the drug traffic. Its beneficent effects cannot be contested.
However, the case is not so simple as that. Opium and morphine are certainly dangerous, habit-forming drugs. But once the principle is admitted that it is the duty of government to protect the individual against his own foolishness, no serious objections can be advanced against further encroachments. A good case could be made out in favor of the prohibition of alcohol and nicotine. And why limit the government's benevolent providence to the protection of the individual's body only? Is not the harm a man can inflict on his mind and soul even more disastrous than any bodily evils? Why not prevent him from reading bad books and seeing bad plays, from looking at bad paintings and statues and from hearing bad music? The mischief done by bad ideologies, surely, is much more pernicious, both for the individual and for the whole society, than that done by narcotic drugs.
These fears are not merely imaginary specters terrifying secluded doctrinaires. It is a fact that no paternal government, whether ancient or modern, ever shrank from regimenting its subjects' minds, beliefs, and opinions. If one abolishes man's freedom to determine his own consumption, one takes all freedoms away. The naïve advocates of government interference with consumption delude themselves when they neglect what they disdainfully call the philosophical aspect of the problem. They unwittingly support the case of censorship, inquisition, religious intolerance, and the persecution of dissenters.
This article is excerpted from chapter 27 of Human Action (1949)

The pleasure of giving is not just for the rich


Charity around the world
Charities Aid Foundation (a UK international charity): "This is the second edition of the 'World Giving Index', the largest study into charitable behavior across the globe involving 153 countries in total. Using data from Gallup's Worldview World Poll, the report is based on three measures of giving behavior - giving money, volunteering time and helping a stranger.

Overall the World Giving Index, demonstrates that the world has become a more charitable place over the last 12 months - with a 2% increase in the global population 'helping a stranger' and a 1% increase in people volunteering."

In the meantime, the debasement of paper money continues


Christmas motive
Image by 10incheslab
 The pathetic state of the global financial system was again on display this week. Stocks around the world go up when a major central bank pumps money into the financial system. They go down when the flow of money slows and when the intoxicating influence of the latest money injection wears off. Can anybody really take this seriously?
On Tuesday, the prospect of another gigantic cash infusion from the ECB’s printing press into Europe’s banking sector, which is in large part terminally ill but institutionally protected from dying, was enough to trigger the established Pavlovian reflexes among portfolio managers and traders.
None of this has anything to do with capitalism properly understood. None of this has anything to do with efficient capital allocation, with channelling savings into productive capital, or with evaluating entrepreneurship and rewarding innovation. This is the make-believe, get-rich-quick (or, increasingly, pretend-you-are-still-rich) world of state-managed fiat-money-socialism. The free market is dead. We just pretend it is still alive.
There are, of course those who are still under the illusion that this can go on forever. Or even that what we need is some shock-and-awe Über-money injection that will finally put an end to all that unhelpful worrying about excessive debt levels and overstretched balance sheets. Let’s print ourselves a merry little recovery.
money raining down on umbrella
Image by Salvatore Vuono
How did Mr. Bernanke, the United States’ money-printer-in-chief put it in 2002? “Under a paper-money system, adetermined government can always generate higher spending…” (Italics mine.)
Well, I think governments and central banks will get even more determined in 2012. And it is going to end in a proper disaster.
Lender of all resorts
Last week in one of their articles on the euro-mess, the Wall Street Journal Europe repeated a widely shared myth about the ECB: “With Germany’s backing, the ECB has so far refused to become a lender of last resort, …” This is, of course, nonsense. Even the laziest of 2011 year-end reviews will show that the ECB is precisely that: A committed funder of states and banks. Like all other central banks, the ECB has one overriding objective: to create a constant flow of new fiat money and thus cheap credit to an overstretched banking sector and an out-of-control welfare state that can no longer be funded by the private sector. That is what the ECB’s role is. The ECB is lender of last resort, first resort, and soon every resort.
Let’s look at the facts. The ECB started 2011 with record low policy rates. In the spring it thought it appropriate to consider an exit strategy. The ECB conducted a number of moderate rate hikes that have by now all been reversed. By the beginning of 2012 the ECB’s policy rates are again where they were at the beginning of 2011, at record low levels.
So why was the springtime attempt at “rate normalization” aborted? Because of deflationary risks? Hardly. Inflation is at 3 percent and thus not only higher than at the start of the year but also above the ECB’s official target.
The reason was simply this: states and banks needed a lender of last resort. The private market had lost confidence in the ability (willingness?) of certain euro-zone governments to ever repay their massive and constantly growing debt load. Certain states were thus cut off from cheap funding. The resulting re-pricing of sovereign bonds hit the banks and made it more challenging for them to finance their excessive balance sheets with money from their usual sources, not least U.S. money market funds.
So, in true lender-of-last resort fashion, the ECB had to conduct a U-turn and put those printing presses into high gear to fund states and banks at more convenient rates. While in a free market, lending rates are the result of the bargaining between lenders and borrowers, in the state-managed fiat money system, politicians and bureaucrats define what constitutes “sustainable” and “appropriate” interest rates for states and banks. The central bank has to deliver.
Eurotower in Frankfurt
Unlimited Euros!, photo by Florian K.
The ECB has not only helped with lower rates. Its balance sheet has expanded over the year by at least €490 billion, and is thus 24% larger than at the start of the year. This does not even include this week’s cash binge. The ECB is funding ever more European banks and is accepting weaker collateral against its loans. Many of these banks would be bust by now were it not for the constant subsidy of cheap and unlimited ECB credit. If that does not define a lender of last resort, what does?
And as I pointed out recently, the ECB’s self-imposed limit of €20 billion in weekly government bond purchases (an exercise in market manipulation and subsidization of spendthrift governments but shamelessly masked as an operation to allow for smooth transmission of monetary policy) is hardly a severe restriction. It would allow the ECB to expand its balance sheet by another €1 trillion a year. (The ECB is presently keeping its bond purchases well below €20 billion per week.)
Deflation? What deflation?
It is noteworthy that there still seems to be a widespread belief that all this money-printing will not lead to higher inflation because of the offsetting deflationary forces emanating from private bank deleveraging and fiscal austerity.
This is an argument I came across a lot when I had the chance in recent weeks to present the ideas behind my book to investors and hedge fund managers in London, Edinburgh and Milan. Indeed, even some of the people who share my outlook about the endgame of the fiat money system do believe that we could go through a period of falling prices first, at least for certain financial assets and real estate, before central bankers open the flood-gates completely and implement the type of no holds barred policy I mentioned above. Then, and only then will we see a dramatic rise in inflation expectations, a rise in money velocity and a sharp rise in official inflation readings.
Maybe. But I don’t think so. I consider it more likely that we go straight to higher inflation.
The deleveraging in the banking sector is the equivalent of austerity in the public sector: it is an idea. A promise. The reflationary policy of the central bank is a fact. And that policy actively works against private bank deleveraging and public sector debt reduction.
Consider this: The present credit crisis started in 2007. Yet, none of the major economies registered deflation. All are experiencing inflation, often above target levels and often rising. In the euro-area, over the past twelve months, the official inflation rate increased from 2 percent to 3 percent.
From the start of 2011 to the beginning of this month, the U.S. Federal Reserve boosted the monetary base by USD 560 billion, or 27 percent. So far this year, M1 increased by 17.5 percent and M2 by 9.5 percent.
Below is the so-called “true money supply” for the U.S. calculated by the Mises Institute.
True money supply chart
From the Mises Institute Website
As the Mises-Institute’s Doug French pointed out, total assets held by the six biggest banks in the U.S. increased by 39% over the past 5 years. Maybe this is not surprising given that in our brave new world of limitless fiat money, credit contraction is strictly verboten.

It's more fun to give


A Country in Denial About Its Fiscal Future
There are moments when our political system, whose essential job is to mediate conflicts in broadly acceptable and desirable ways, is simply not up to the task. It fails. This may be one of those moments. What we learned in 2011 is that the frustrating and confusing budget debate may never reach a workable conclusion. It may continue indefinitely until it's abruptly ended by a severe economic or financial crisis that wrenches control from elected leaders.
We are shifting from "give away politics" to "take away politics." Since World War II, presidents and Congresses have been in the enviable position of distributing more benefits to more people without requiring ever-steeper taxes. Now, this governing formula no longer works, and politicians face the opposite: taking away -- reducing benefits or raising taxes significantly -- to prevent government deficits from destabilizing the economy. It is not clear that either Democrats or Republicans can navigate the change.
Our political system has failed before. Conflicts that could not be resolved through debate, compromise and legislation were settled in more primitive and violent ways. The Civil War was the greatest and most tragic failure; leaders couldn't end slavery peacefully. In our time, the social protests and disorders of the 1960s -- the civil rights and anti-war movements and urban riots -- almost overwhelmed the political process. So did double-digit inflation, peaking at 13 percent in 1979 and 1980, which for years defied efforts to control it.
The budget impasse raises comparable questions. Can we resolve it before some ill-defined crisis imposes its own terms? For years, there has been a "something for nothing" aspect to our politics. More people became dependent on government. From 1960 to 2010, the share of federal spending going for "payments to individuals" (Social Security, food stamps, Medicare and the like) climbed from 26 percent to 66 percent. Meanwhile, the tax burden barely budged. In 1960, federal taxes were 17.8 percent of national income (gross domestic product). In 2007, they were 18.5 percent of GDP.
This good fortune reflected falling military spending -- from 52 percent of federal outlays in 1960 to 20 percent today -- and solid economic growth that produced ample tax revenues. Generally modest budget deficits bridged any gap. But now this favorable arithmetic has collapsed under the weight of slower economic growth (even after a recovery from the recession), an aging population (increasing the number of recipients) and high health costs (already 26 percent of federal spending). Present and prospective deficits are gargantuan.
The trouble is that, while the economics of give away policies have changed, the politics haven't. Liberals still want more spending, conservatives more tax cuts. (Although the tax burden has stayed steady, various "cuts" have offset projected increases and shifted the burden.) With a few exceptions, Democrats and Republicans haven't embraced detailed take away policies to reconcile Americans' appetite for government benefits with their distaste for taxes. President Obama has provided no leadership. Aside from Rep. Paul Ryan, chairman of the House Budget Committee, few Republicans have.
No one wants to take away; it's more fun to give. All 2011's budget feuds -- over the debt ceiling, the supercommittee, the payroll tax cut -- skirted the central issues. There's a legitimate debate about how fast deficits should be reduced to avoid jeopardizing the economic recovery, notes Charles Blahous, a White House official in the George W. Bush Administration. But the long-term budget problem, as he says, stems from Social Security, Medicare and other health programs.
Any resolution of the budget impasse must repudiate, at least partially, the past half-century's politics. Conservatives look at the required tax increases and say: "no way." Liberals look at the required benefit cuts and say: "no way."
Each reverts to scripted evasions. Liberals imply (wrongly) that taxing the rich will solve the long-term budget problem. It won't. For example, the Forbes 400 richest Americans have a collective wealth of $1.5 trillion. If the government simply confiscated everything they own, and turned them into paupers, it would barely cover the one-time 2011 deficit of $1.3 trillion. Conservatives deplore "spending" in the abstract, ignoring the popularity of much spending, especially Social Security and Medicare.
So the political system is failing. It's stuck in the past. It can't make desirable choices about the future. It can't resolve deep conflicts.
An alternative theory is that we're muddling our way to a messy consensus. All the studies and failed negotiations lay the groundwork for ultimate accommodation. Perhaps. But it's just as likely that this year's partisan scapegoating implies more partisan scapegoating. Political leaders assume that financial markets won't ever choke on U.S. debt and force higher interest rates, stiff spending cuts and tax increases. 

The State is Violence


Egypt’s Military Masters
Egypt Women
By Andrew Rosenthal,
Five days of violent clashes between Egyptian soldiers and protesters have produced appalling images of cruelty and abuse — including a video showing soldiers stripping the abaya off a woman on the ground to reveal her blue bra as one raises a boot to stomp on her.
In February, the army enhanced its standing by refusing to fire on demonstrators when President Hosni Mubarak was ousted. Now it is inspiring rage and threatening Egypt’s transition to democracy. On Tuesday, in an extraordinary display, thousands of women gathered in Tahrir Square in Cairo to express outrage over the army’s treatment of women and to protest against continued military rule.
The generals who form the ruling military council are proving that they will do whatever it takes — including killing protesters and detaining thousands — to protect their authority and control of lucrative chunks of the economy. They have repeatedly shown that they are determined to hold on to power even after a new Parliament — still in the process of being elected — is seated next year.
On Monday, Gen. Adel Emara of the ruling council denied that soldiers were responsible for any violence and claimed the protesters were engaged in a plot “to destroy the state.” Blaming protesters is unconvincing in the face of shocking images of the military’s conduct. If the military rulers were interested in justice, they would have started an independent investigation into all acts of violence, whether military or civilian.
Secretary of State Hillary Rodham Clinton spoke forcefully this week against the street attacks on women, noting, that “this systematic degradation of Egyptian women dishonors the revolution, disgraces the state and its uniform and is not worthy of a great people.”
The Obama administration needs to keep pressing the generals to move expeditiously to civilian rule. If the army continues to attack the Egyptian people, the administration will have no choice but to reduce its $2 billion in annual aid — two-thirds of it going to Egypt’s military — to show that it will not enable such behavior.
The army mishandled Egypt’s transition from the start, including refusing financial help from the International Monetary Fund for its deteriorating economy. But the Islamist parties that won big in the early rounds of parliamentary voting and the liberals that have done poorly in the voting also made mistakes. There are huge challenges ahead, including writing a constitution and coping with a looming and serious economic crisis exacerbated by the political turmoil. But the most pressing issue is ensuring that power moves from the army to elected civilian leaders.