What Is to Be Done?

The Opacity Of Hope

By Richard Fernandez 

Angelo de Codevilla’s ^[1] review of six accounts of Barack Obama’s life at the Claremont Review of Books ends in the conclusion that Obama was always something other than what he portrayed himself to be. What that is, in Codevilla’s summary, is this:

In sum, Barack Obama grew intertwined with the narrow, self-referential left side of the American Left. They helped one another believe they had come up the hard way, as underprivileged but brilliant, square-jawed tribunes of the common man. Their common problem, however, is that their agendas are antagonistic to people unlike themselves, and that they cannot keep from showing their contempt for the common folk in whose name they would ride to power.Since the days of Karl Marx’s First International a century and a half ago, this very human opposition between socialist theory (egalitarianism) and socialist reality (oligarchic oppression) has bedeviled the Left. Marx laid the problem bare in his “Critique of the Gotha Program” (1875). Lenin dealt with it honestly and brutally in What Is to Be Done? (1902)—the foundational document of Communism. By acknowledging that the Communist Party is not the common people’s representative, but rather its “vanguard,” Leninists were comfortable with a party responsible only to itself and to history, a party that openly demanded deference from the humans whose habits it forcibly reshaped. Communism’s undeniable horrors forced the New Left to disassociate itself from What Is to Be Done? and once again to pretend that its socialism was neither oligarchic nor coercive, that somehow it was on the side of ordinary folks. This is a much tougher sell in the 21st century than it was in the 19th. Contemporary socialists try to explain away the common man’s suspicion of them as harbingers of oligarchy, corruption, and coercion by resorting to jargon (e.g., “false consciousness” and “socio-economic anxiety”). But that is ever less convincing. This is why the movement argues so strenuously with itself about whether and how much it should dissimulate its agenda.Which is one reason why it plays the “race card” and seizes on recruits like Barack Obama: because many black Americans’ ancestors were slaves, must not any black American be, ipso facto, unquestionably, a member and true representative of the downtrodden? And if a skeptic should argue that this or that black man is really a representative of old, white, nasty socialism, of the Corporate State, of upscale parasites who prey on working people, it is easy enough to re-focus the argument on the skeptic’s “racism.” If blacks inclined to play this role did not exist, the Socialist movement would have every incentive to invent them. And in a sense it tries to invent them, through the “black studies” programs that now divert so many young Americans from useful lives into partisan service.Obama is as close as one could imagine to a made-to-order front man for contemporary, upscale, shy-about-itself, nouveau socialism. From his earliest age, he shaped his dreams about himself to act out a character wholly fictitious, namely a black American from a humble background who rose up out of brilliance and merit, and who yearns to draw all of America’s low-born (plus the rest of mankind) up through the same paths. But he is none of that. Equally imaginary is his vaunted understanding of and sympathy for foreign cultures. A typical multiculturalist, Obama speaks no language other than a peculiar version of English. His native language, loves, and hates are common to some of the most leftist elements of the current American ruling class.That class knows about America only that it must be changed, and looks at the vast majority of Americans the way carpenters look at warped pieces of lumber. Barack Obama is neither more nor less than its product and agent.

There is much else in the reviewed books that Codevilla weighs, puts aside skeptically, or takes with a grain of salt. For example, there are the accounts that neither his father, mother, nor his maternal family nor even his Indonesian stepfather were just plain folks. It seems likely they were distinctly political animals with powerful beliefs and vaulting ambitions. There is the suggestion that they moved on the fringes of a CIA faction that “considered themselves family members of the domestic and international Left. They believed that America’s competition with Soviet Communism was to be waged by, for, and among the Left.”

Codevilla makes his arguments and one may believe them or not. But what is not in dispute is that Barack Obama is the least known quantity in the modern American presidency. He said of himself in his own book, or what is said to be his own book, “I serve as a blank screen on which people of vastly different political stripes project their own views.” Certainly his biographies show him as something very different from the image he portrayed on the hustings. Codevilla argues that far from being a hardscrabble black man made good, Obama is the product of an elite system of formation.

What the nature of that formation was is open to debate. Its elusiveness is indirect proof of the shortcomings of the gatekeeping system. Whether one cares for President Obama’s character or politics is a matter of political choice. But the choices should be as clear as the lettering in packages that we buy. That the nature of his politics and character should, in his third year of office, still be shrouded in ambiguity and remain in an unreadable script suggests a failure in the political and journalistic system to tell the public what was inside the box.

For surely the public had a right to know. Yet the same line of reasoning can also be marshalled to argue that the absence of narrative means there is no malignant narrative. “No Label” can simply mean too good to characterize. The opacity of Barack Obama might mean there is no conspiratorial pattern present; and what people take to be guile is but complexity. In that view Obama is merely the blank screen on which his opponents project their own bigotry.

But that is too facile an answer. It is also an example of what is sometimes called an “argument from ignorance”; the assertion that something must be good because it cannot readily be proven to be bad. It is logically sounder to assert that the more we know about the president the better off we are, because an argument from knowledge is always better than an argument from ignorance.  Yet there are some who would disagree that knowledge is our due. There is the view that a lot of knowledge, not just a little, is supremely dangerous. Only by turning our eyes aside from knowledge can we act. It is the frightful sight of the abyss that we must hide from sight  to nerve ourselves to scale the mountains.

W.H. Murray, a Scottish mountaineer ^[2], is famous for a remark he made about inner decisions; a remark that many Leftists would intuitively recognize. Describing his Himalayan expedition of 1951, Murray wrote that the expedition’s key act was to step into the unknown:

... but when I said that nothing had been done I erred in one important matter. We had definitely committed ourselves and were halfway out of our ruts. We had put down our passage money— booked a sailing to Bombay. This may sound too simple, but is great in consequence. Until one is committed, there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative (and creation), there is one elementary truth the ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, then providence moves too. A whole stream of events issues from the decision, raising in one’s favor all manner of unforeseen incidents, meetings and material assistance, which no man could have dreamt would have come his way. I learned a deep respect for one of Goethe’s couplets:
Boldness has genius, power and magic in it!

Whatever you can do or dream you can, begin it.

And in that light some may think it best not to know who or what Barack Obama is; at least not in comparison to what they imagine him to be, lest to know too much extinguish hope, not simply in the man, but in the Dream.

Black Swan Economics

Nassim Taleb Calls Dodd-Frank Created Office "Soviet-Style"

By R. Wenzel

Nassim Taleb, one of the witnesses at a recent congressional hearing, described the Dood-Frank Act created, the Office of Financial Research, an attempt to create “an omniscient Soviet-style central risk manager.”

In his testimony,  according to WSJ, Taleb said that “[f]inancial risks, particularly those known as Black Swan events cannot be measured in any possible quantitative and predictive manner; they can only be dealt with [in] non predictive ways.” He argued that trying to do what the OFR is designed to do could actually increase risks, in part by increasing “overconfidence” in the information’s ability to predict the next crisis.

Go Nassim! Let's hope you bring the same candor to the IMF..

The Reagan Myth

An Autopsy

by Murray N. Rothbard

Eight years, eight dreary, miserable, mind-numbing years, the years of the Age of Reagan, are at long last coming to an end. These years have surely left an ominous legacy for the future: we shall undoubtedly suffer from the after-shocks of Reaganism for years to come. But at least Himself will not be there, and without the man Reagan, without what has been called his "charisma," Reaganism cannot nearly be the same. Reagan’s heirs and assigns are a pale shadow of the Master, as we can see from the performance of George Bush. He might try to imitate the notes of Reagan, but the music just ain’t there. Only this provides a glimmer of hope for America: that Reaganism might not survive much beyond Reagan.

Reagan the Man

Many recent memoirs have filled out the details of what some of us have long suspected: that Reagan is basically a cretin who, as a long-time actor, is skilled in reading his assigned lines and performing his assigned tasks. Donald Regan and others have commented on Ronald Reagan’s strange passivity, his never asking questions or offering any ideas of his own, his willingness to wait until others place matters before him. Regan has also remarked that Reagan is happiest when following the set schedule that others have placed before him. The actor, having achieved at last the stardom that had eluded him in Hollywood, reads the lines and performs the action that others – his script-writers, his directors – have told him to follow.

Sometimes, Reagan’s retentive memory – important for an actor – gave his handlers trouble. Evidently lacking the capacity for reasoned thought, Reagan’s mind is filled with anecdotes, most of them dead wrong, that he has soaked up over the years in the course of reading Reader’s Digest or at idle conversation. Once an anecdote enters Reagan’s noodle, it is set in concrete and impossible to correct or dislodge. (Consider, for example, the famous story about the "Chicago welfare queen": all wrong, but Reagan carried on regardless.)

Division of Labor

The mother-of-14 without a husband who wants another baby to compete with her pregnant 15-year-old

By Kathryn Knight

When Joanne Watson learned that her 15-year-old daughter was pregnant earlier this year, she confesses to feeling shock and disappointment — but not for the reasons you might expect. 

Never mind the struggles that her daughter would face as a teenage single mum; Joanne was jealous that it was her daughter expecting a baby and not herself. 

‘I’d just done a pregnancy test of my own and it was negative. I came downstairs and that’s when Mariah said she had something to tell me,’ Joanne says. 

‘I somehow knew immediately that she was going to tell me she was expecting a baby, and it was the last thing I wanted to hear after doing my own test. I said: “I don’t want to know.” But there was no avoiding it. We went to the doctor’s and she was eight weeks gone.’

Mum of Britain's biggest family Joanne Watson, 40, left, stands at the head of her 14 children at their family home in St Martin, Guernsey: From left to right, Indianna, two; Tallulah, three; Armani (known as Arnie), five; Nerilly-Jade, six; Lilly-Arna 7; Charlie, nine; Febrianne, 10; Brittany, 11; Caitlin, 12; Georgia, 15; Mariah, 15; Shanice, 19; Bradley, 20; and Natasha 22

An astonishing response? Well, yes. But then Joanne, 40, is no ordinary mum. For including Mariah, she has 14 children, ranging in age from 22-year-old Natasha to two-year-old Indianna. Oh, and since her divorce three years ago, she’s a single mum, raising them all (you guessed it) on state benefits. Shocked? It gets worse. For Mariah is not the only one of the brood to have become a teenage mother. Her two elder sisters beat her to it. 

Natasha got pregnant with her son Branford, now six, when she was 16, while Shanice, now 19, gave birth to a baby boy at 17 and recently had another son. 

Now Mariah has followed in their footsteps, making a hat-trick of gymslip mums.

So does Joanne feel culpable for allowing her three daughters to embark on motherhood while they are still children themselves? Not a bit of it. It turns out she’s far too busy continuing her quest to expand her own brood, and is actively trying for another baby with her part-time lover.

When I suggest that some people may think this highly irresponsible, she responds with an angry snort of derision. ‘It’s not my fault I’m in the situation I’m in,’ she says. ‘I have my children because I love being a mum — not for the money. 

‘It makes me really cross when people accuse me of sponging or having children for benefits. I get pregnant very easily and I could never have an abortion — it’s just not something I agree with.’

European Pricing

The Disappearing Recovery

What if the weak recovery is all the recovery we are going to get?

By D. Henninger

Barack Obama, John Boehner and Mitch McConnell have been performing an intricate scorpion dance over spending, taxes and the debt ceiling, premised on the belief that this is the deal that would ignite the recovery.

But what if it's too late? What if that first-quarter growth rate of 1.8% is a portent of the U.S.'s long-term future? What if below-normal U.S. GDP is, as the Obama folks like to say, the new normal?

What if the weak recovery is all the recovery we are going to get?

In May, Bob Lucas pulled his thoughts together and delivered them as the Milliman Lecture at the University of Washington, an exercise he described to me this week as "intelligent speculation."

Here is the lecture's provocative final thought: "Is it possible that by imitating European policies on labor markets, welfare and taxes, the U.S. has chosen a new, lower GDP trend? If so, it may be that the weak recovery we have had so far is all the recovery we will get."

The Obama-will-turn-us-into-Europe argument is a staple of the administration's critics. Prof. Lucas's intelligent speculation, however, carries the case beyond dinner-party carping.

The baseline reality for any discussion of where we're headed is that from 1870 to 2008, the U.S. economy has had average GDP productivity growth of about 3% and about 2% on a per-person basis. Despite displacements—wars, depressions—we've always returned to this solid upward trend. From 1870 till recently, real income per person has increased by a factor of 12—"an ongoing miracle," Prof. Lucas notes, "mainly due to free-market capitalism."

The Obama economists like to argue that this recession was the greatest meltdown since the Depression. Prof. Lucas agrees. Most recessions, he says, are not very important events. This one, though, has taken U.S. GDP almost 10% off its long-term growth trend. The only downturn comparable to this in the past century is the more than 30% decline during the Depression.

What discomfits him is the similarities in the policy choices that accompanied both delayed recoveries. By 1934, the Depression's banking crisis had been resolved, "yet full recovery was still seven years away," he said in the Milliman lecture. GDP stayed more than 10% below trend. "Why?" The answer, he says, was growth-suppressing policies, such as the Smoot-Hawley tariff, cartelization, unionization and, "most important but hardest to measure, FDR's demonization of business."

By the end of 2008, he notes, the primary storm of the financial panic was essentially over. We did get spending declines in GDP in that year's last quarter and in the first quarter of 2009. "But there is a world of difference," he says, "between two quarters of production declines and four years!" The persistence of growth 10 percentage points below its long-term trend line is troubling.

He credits the current Federal Reserve with avoiding the mistakes of the Depression, properly acting this time as the lender of last resort. With the financial side essentially in order and the recovery stalled, Prof. Lucas sees public-policy analogies to the 1930s: "The likelihood of much higher taxes, focused on 'the rich'; medical legislation that promises a large increase in the role of government; financial legislation that assigns vast, poorly defined responsibilities to the Fed and others."

The consensus assumption, however, is that the U.S. economy will return to its century-long growth trend. Prof. Lucas asks: "Is this really the case?"

Forgotten in most discussions of the U.S.-Europe comparison is that for the first 70 years of the 20th century, continental Europe's growth rose alongside that of the world-leading U.S. and U.K., especially after World War II. Through the 1960s, he says, there was every reason to expect a common, high living standard for all of us. Then, "in the 1970s, their catch-up stalled."

A 20% to 40% gap in income levels emerged between the U.S. and Europe, reflecting a lowered European work effort. In Prof. Lucas's view, that gap represents the cost (largely taxes) of financing a larger welfare state from 1970 onward. Other economists, he says, have cited a 30% loss in GDP per person in Western Europe since the 1970s.

The U.S.'s projected long-term welfare costs, including the new health-care law, are the justification the Obama economists give for pushing spending to 25% or more of GDP. The tax increase the president is fairly shrieking for this week isn't for the August debt limit. It's for the next 25 years.

"If we're going to move to a European welfare state," says Prof. Lucas, "we're going to have to pay a European price." And that price could be a permanently lower level of GDP per person. The U.S.'s amazing 100-year ride would slow.

Among the many things any such drop in GDP will siphon away is America's relentless productive vitality. "So much new happens in the United States," Prof. Lucas says. But will it still?

Econ 101

Why Do Medicare Patients See the Doctor Too Much? They Usually Pay Nothing Out-of-Pocket; So Demand Curves Really Do Slope Downward

From an editorial earlier this week in the WSJ:

"Almost all discussions about Medicare reform ignore one key factor: Medicare utilization is roughly 50% higher than private health-insurance utilization, even after adjusting for age and medical conditions. In other words, given two patients with similar health-care needs—one a Medicare beneficiary over age 65, the other an individual under 65 who has private health insurance—the senior will use nearly 50% more care.Several factors help cause this substantial disparity. First and foremost is the lack of effective cost sharing. When people are insulated from the cost of a desirable product or service, they use more. Thus people who have comprehensive health coverage tend to use more care, and more expensive care—with no noticeable improvement in health outcomes—than those who have basic coverage or high deductibles.In addition, Medicare's convoluted benefit structure encourages the purchase—either individually or through an employer—of various forms of supplemental insurance. Medicare covers roughly three-fourths of total costs, but about 85% of the Medicare population has expanded coverage with small to limited cost sharing. This additional cost insulation pushes seniors' out-of-pocket costs toward zero, thereby increasing overall utilization."

MP: This crystallizes one of our main health care problems: spending other people's money (see chart above, data here).  When out-of-pocket costs for medical care approach zero, it shouldn't be any surprise that utilization goes up, that's just the Law of Demand.

End Game

Economists Nearly Unanimous on Need for Greek Restructuring

By Phil IzzoAll but one of 49 economists surveyed by the Wall Street Journal last week said Greece will be forced to restructure its debt.

Fifty-three economists, who are mostly U.S.-based, take part in the survey, but not everyone answers every question. Forty-eight of the 49 respondents to the question on Greece think a restructuring is inevitable. “Restructuring, default, or forgiveness by lenders,” said Allen Sinai of Decision Economics. “There’s too much debt for Greece to pay down.”

Last week, concerns grew that the debt crisis could spread, as Italy faced bond market jitters. Just two of 44 participants said that the crisis in the euro zone will be contained in Greece. Thirteen see it moving to Ireland and Portugal, while 19 say it won’t be contained until it has reached Italy and/or Spain. The remainder — 10 economists — expect it to move even deeper into the euro zone.

“My fear is that if we can’t stop the recent Italian scare, all bets are off,” said Diane Swonk of Mesirow Financial. “My hope is that Europe comes together on this.”

In congressional testimony last week, Federal Reserve Chairman Ben Bernanke played down fears that the euro zone crisis could spread to U.S. shores. “Were there to be a significant deterioration in conditions in Europe, we would see a general increase in risk aversion, declining asset prices, a lot of volatility,” he said. But he added: “The direct exposures … are quite small and manageable, so we wouldn’t expect those direct impacts to be the critical channel if there were problems — a default, for example.”

Meanwhile, the majority of respondents — 24 of 46 — say that the European Central Bank‘s credibility has been diminished by its response to the sovereign debt crisis. “The ECB has ignored the economic context of policy,” said Ram Bhagavatula of Combinatorics Capital.

Looking toward risks in Asia, the economists, on average, said the odds are 64% that China is experiencing a bubble in property prices. “Bubbles result from excessive credit creation, as in China,” said Paul Kasriel of The Northern Trust.

Among other potential bubble markets, gold was the only one that got better than 50/50 odds, with the economists on average putting chances at 61% that the yellow metal is overvalued.

An insider recounts the early days of Google

The Beginning

the bizarre job interview, April Fools' pranks that enraged users, roller hockey, platters of sushi—and the uneasy leap to the mainstream.

By DOUGLAS EDWARDS

In November 1999, Douglas Edwards became fledgling Google's first "brand manager," making him employee No. 59. In this excerpt from his new book, "I'm Feeling Lucky," Mr. Edwards gives an inside view of the company's early days, starting with his job interview with co-founder Sergey Brin, then 26 years old.

Cindy McCaffrey, director of public relations, brought me back to the conference room to wait for Sergey. I wasn't nervous. Sergey was about the age of my favorite T-shirt (I was 41) and a Russian by birth. I had lived in Russia. I spoke some Russian. I had Russian friends.

I felt unusually confident that the interview would go well. Perhaps I would become his mentor and we would toast each other's health with fine Siberian vodka. Sergey showed up wearing roller-hockey gear: gym shorts, a T-shirt and in-line skates. He had obviously been playing hard. I had known better than to wear a tie, but he took office casual to a new level.

Sergey pored over my résumé and began peppering me with questions. "What promotion did you do that was most effective?" "What metrics did you use to measure it?" "What types of viral marketing did you do?"

"How much do you think a company our size should spend on marketing?" Sergey asked me. Based on his earlier questions, it was easy to guess what he wanted to hear from me. "I don't think at this stage you should spend much at all," I said. "You can do a lot with viral marketing and small budgets."

He nodded his agreement, then asked about my six months in Siberia, casually switching to Russian to see how much I had picked up. Finally, he leaned forward and fired his best shot, what he came to call "the hard question."

"I'm going to give you five minutes," he told me. "When I come back, I want you to explain to me something complicated that I don't already know." He then rolled out of the room toward the snack area. I looked at Cindy. "He's very curious about everything," she told me. "You can talk about a hobby, something technical, whatever you want. Just make sure it's something you really understand well."

I reached for a piece of scrap paper as my mind raced. What complicated thing did I know well enough to describe to Sergey? I decided to go with the general theory of marketing, which was fresh in my mind, because I'd only learned it recently.

One of my dirty little secrets was a complete lack of academic preparation for the business world. Fortunately, my boss at the San Jose Mercury News, where I was working as a brand manager, had a Harvard MBA and a desire to drive some business theory into my thick skull. She had given me a bunch of her old textbooks, along with strong hints that I should spend time reading them. I began regurgitating everything that I could remember onto the paper in front of me: The five P's (or was it six?), the four M's, barriers to entry, differentiation on quality or price.

By the time Sergey came back, I had enough to talk for 10 minutes and was confident I could fill any holes with the three Bs (Buckets of Baffling Bulls—). I went to the whiteboard and began drawing circles and squares and lots of arrows. I was nervous, but not very. Sergey bounced on a ball and asked questions that required me to make up things on the spot.

He seemed to be paying attention, and I began enjoying myself. We were developing a special rapport! Clearly, he wanted to hear what I had to say and valued my opinions. Later I found out that Sergey did this with everyone he interviewed. An hour wasted with an unqualified candidate wasn't a total loss if Sergey gained insight into something he didn't already know.

The light was fading by the time I finished, and Sergey invited me to join the staff for dinner, which was being brought into a small kitchen across from the conference room. A crowd of hungry engineers bounced from plate to plate with chopsticks picking at a large selection of sushi.

"We just hired a chef, so this is a temporary set-up," Sergey told me. "And we've got a couple of massage therapists coming in as well."

A warning light flashed in my head at that. This was the guy who didn't think there should be a marketing budget, and he had hired a chef and two massage therapists? But then I saw the platters of fatty tuna and shrimp and salmon and yellowtail. I grabbed some chopsticks and began loading my plate. Concerns about a business plan and revenue streams and organizational structure faded away.

Google met most of my requirements. It offered at least the appearance of superior Internet-related technology, some eccentric genius types, funding that should last at least a year and a fun consumer brand that I could help to develop. Two weeks later, on Nov. 29, 1999, I started work as Google's online brand manager.

You would have needed uncanny foresight or powerful pharmaceuticals to envision Google's success in 1999. Or maybe just money to burn. Kleiner Perkins and Sequoia Capital had something, because the two venture capital firms invested $12.5 million each, leading cynics in the Valley to define "Googling" as "getting funding without a business plan."

It's just as well that I hadn't realized how fragile Google truly was as I set up the meeting to discuss next steps for my marketing plan.

"The most important thing to consider," I began, "is that our own internal research shows our competitors are beginning to approach Google's level of quality. In a world where all search engines are equal, we'll need to rely on branding to differentiate us from everyone else." The room grew quiet.

I looked around nervously. Had I said something wrong? Yes. Not just wrong but heretical to engineers who believed anything could be improved through the iterative application of intelligence. Co-founder Larry Page made my apostasy clear. "If we can't win on quality," he said quietly, "we shouldn't win at all."

"I have a good idea," Sergey informed marketing manager Susan Wojcicki a couple of weeks after I started. "Why don't we take the marketing budget and use it to inoculate Chechen refugees against cholera. It will help our brand awareness, and we'll get more new people to use Google."

Our company was barely a year old at the time. We had no real revenue. Spending a million dollars of our investors' money on a land war in Asia would indeed be a revolutionary approach to growing market share.

A wound that won't heal

Why My Father Hated India

Aatish Taseer, the son of an assassinated Pakistani leader, explains the history and hysteria behind a deadly relationship

By AATISH TASEER

Mohandas Gandhi visits Muslim refugees in New Delhi as they prepare to depart to Pakistan on Sept. 22, 1947

Ten days before he was assassinated in January, my father, Salman Taseer, sent out a tweet about an Indian rocket that had come down over the Bay of Bengal: "Why does India make fools of themselves messing in space technology? Stick 2 bollywood my advice."

My father was the governor of Punjab, Pakistan's largest province, and his tweet, with its taunt at India's misfortune, would have delighted his many thousands of followers. It fed straight into Pakistan's unhealthy obsession with India, the country from which it was carved in 1947.

Though my father's attitude went down well in Pakistan, it had caused considerable tension between us. I am half-Indian, raised in Delhi by my Indian mother: India is a country that I consider my own. When my father was killed by one of his own bodyguards for defending a Christian woman accused of blasphemy, we had not spoken for three years.

To understand the Pakistani obsession with India, to get a sense of its special edge—its hysteria—it is necessary to understand the rejection of India, its culture and past, that lies at the heart of the idea of Pakistan. This is not merely an academic question. Pakistan's animus toward India is the cause of both its unwillingness to fight Islamic extremism and its active complicity in undermining the aims of its ostensible ally, the United States.

The idea of Pakistan was first seriously formulated by neither a cleric nor a politician but by a poet. In 1930, Muhammad Iqbal, addressing the All-India Muslim league, made the case for a state in which India's Muslims would realize their "political and ethical essence." Though he was always vague about what the new state would be, he was quite clear about what it would not be: the old pluralistic society of India, with its composite culture.

Iqbal's vision took concrete shape in August 1947. Despite the partition of British India, it had seemed at first that there would be no transfer of populations. But violence erupted, and it quickly became clear that in the new homeland for India's Muslims, there would be no place for its non-Muslim communities. Pakistan and India came into being at the cost of a million lives and the largest migration in history.

This shared experience of carnage and loss is the foundation of the modern relationship between the two countries. In human terms, it meant that each of my parents, my father in Pakistan and my mother in India, grew up around symmetrically violent stories of uprooting and homelessness.

But in Pakistan, the partition had another, deeper meaning. It raised big questions, in cultural and civilizational terms, about what its separation from India would mean.

In the absence of a true national identity, Pakistan defined itself by its opposition to India. It turned its back on all that had been common between Muslims and non-Muslims in the era before partition. Everything came under suspicion, from dress to customs to festivals, marriage rituals and literature. The new country set itself the task of erasing its association with the subcontinent, an association that many came to view as a contamination.

Had this assertion of national identity meant the casting out of something alien or foreign in favor of an organic or homegrown identity, it might have had an empowering effect. What made it self-wounding, even nihilistic, was that Pakistan, by asserting a new Arabized Islamic identity, rejected its own local and regional culture. In trying to turn its back on its shared past with India, Pakistan turned its back on itself.

But there was one problem: India was just across the border, and it was still its composite, pluralistic self, a place where nearly as many Muslims lived as in Pakistan. It was a daily reminder of the past that Pakistan had tried to erase.

Pakistan's existential confusion made itself apparent in the political turmoil of the decades after partition. The state failed to perform a single legal transfer of power; coups were commonplace. And yet, in 1980, my father would still have felt that the partition had not been a mistake, for one critical reason: India, for all its democracy and pluralism, was an economic disaster.

Pakistan had better roads, better cars; Pakistani businesses were thriving; its citizens could take foreign currency abroad. Compared with starving, socialist India, they were on much surer ground. So what if India had democracy? It had brought nothing but drought and famine.

But in the early 1990s, a reversal began to occur in the fortunes of the two countries. The advantage that Pakistan had seemed to enjoy in the years after independence evaporated, as it became clear that the quest to rid itself of its Indian identity had come at a price: the emergence of a new and dangerous brand of Islam.

As India rose, thanks to economic liberalization, Pakistan withered. The country that had begun as a poet's utopia was reduced to ruin and insolvency.

The primary agent of this decline has been the Pakistani army. The beneficiary of vast amounts of American assistance and money—$11 billion since 9/11—the military has diverted a significant amount of these resources to arming itself against India. In Afghanistan, it has sought neither security nor stability but rather a backyard, which—once the Americans leave—might provide Pakistan with "strategic depth" against India.

In order to realize these objectives, the Pakistani army has led the U.S. in a dance, in which it had to be seen to be fighting the war on terror, but never so much as to actually win it, for its extension meant the continuing flow of American money. All this time the army kept alive a double game, in which some terror was fought and some—such as Laskhar-e-Tayyba's 2008 attack on Mumbai—actively supported.

The army's duplicity was exposed decisively this May, with the killing of Osama bin Laden in the garrison town of Abbottabad. It was only the last and most incriminating charge against an institution whose activities over the years have included the creation of the Taliban, the financing of international terrorism and the running of a lucrative trade in nuclear secrets.

This army, whose might has always been justified by the imaginary threat from India, has been more harmful to Pakistan than to anybody else. It has consumed annually a quarter of the country's wealth, undermined one civilian government after another and enriched itself through a range of economic interests, from bakeries and shopping malls to huge property holdings.

The reversal in the fortunes of the two countries—India's sudden prosperity and cultural power, seen next to the calamity of Muhammad Iqbal's unrealized utopia—is what explains the bitterness of my father's tweet just days before he died. It captures the rage of being forced to reject a culture of which you feel effortlessly a part—a culture that Pakistanis, via Bollywood, experience daily in their homes.

This rage is what makes it impossible to reduce Pakistan's obsession with India to matters of security or a land dispute in Kashmir. It can heal only when the wounds of 1947 are healed. And it should provoke no triumphalism in India, for behind the bluster and the bravado, there is arid pain and sadness.

From utopia to reality

From Italy to the US, utopia vs reality

By Martin Wolf

In the eurozone, the fiscal crisis is lapping on Italy’s shores. In the US, the administration declares it will run out of funding early next month if the debt ceiling is not raised. Far fewer Europeans than Americans believe public sector defaults are beneficial. But important Europeans share with Republicans the view that there are still worse outcomes. For reluctant Europeans, the eurozone must not be a “transfer union”. For recalcitrant Republicans, taxes must not be raised. Fiat justitia, et pereat mundus – let right be done even if the world perishes – is the motto.

The fiscal crises we see are a legacy of the west’s private and public sector debt binges of recent decades. As the McKinsey Global Institute tells us in an update of last year’s study of the aftermath of the credit bubble, this is an early stage of a painful process of deleveraging in several economies (see chart). “If history is a guide,” noted the 2010 report, “we would expect many years of debt reduction in specific sectors of some of the world’s largest economies, and this process will exert a significant drag on GDP growth.” So it is proving, with disappointment almost everywhere.

The link between private and public sector debt is intimate. In some countries, notably Greece, easy credit led to an upsurge in public sector borrowing. In others, notably Italy, it encouraged governments to relax attention to debt reduction: its primary fiscal budget (before interest) moved from a surplus of 6 per cent of gross domestic product in 1997, before joining the currency union, to 0.6 per cent in 2005. Elsewhere, the sudden end of private sector credit booms led directly to collapses in government revenue and surges in public spending: the US, UK, Spain and Ireland are examples.

Exploding fiscal deficits are mainly the result of collapses in activity and revenue rather than of bank bail-outs. But fiscal weakness then undermines the banks, partly because the latter hold large quantities of domestic public debt and partly because they rely on fiscal support. The private and public sectors are intertwined. The view of Republican hawks in the US and of German or Dutch hawks in Europe that the crisis has fiscal roots alone is wrong. Easy credit ends up in fiscal crises.

US evidence is striking. Compare the forecasts for fiscal years 2010, 2011 and 2012 in the 2008 and 2012 presidential budgets, the first under George W. Bush shortly before the crisis and the second under Barack Obama well after it (see chart). The 2011 deficit was forecast in 2008 to be a mere $54bn (0.3 per cent of GDP). But in the 2012 budget, it is forecast to be $1,645bn (10.9 per cent of GDP). 58 per cent of this rise is due to unexpectedly low revenue and only 42 per cent due to a surge in spending, both of these changes mostly due to the financial crisis, not the modest stimulus package (about 6 per cent of GDP).

The astonishing feature of the federal fiscal position is that revenues are forecast to be a mere 14.4 per cent of GDP in 2011, far below their postwar average of close to 18 per cent. Individual income tax is forecast to be a mere 6.3 per cent of GDP in 2011. This non-American cannot understand what the fuss is about: in 1988, at the end of Ronald Reagan’s term, receipts were 18.2 per cent of GDP. Tax revenue has to rise substantially if the deficit is to close.

Read the rest at http://www.ft.com/intl/cms/s/0/979c10d8-acb8-11e0-a2f3-00144feabdc0.html#axzz1S4JTPxAZ

Yesterdays

A Small Taste Of The 1930s

by stevengoddard

The climate of the 1930s was atrocious.

It's just a loan

Obama Raises More $$$s Than All Republican Candidates Combined

There is no better example of the power of the presidency and the willingness of many to pay for access

President Barack Obama, despite weak showings in the polls, and the Democratic National Committee raised a combined $86 million in the second quarter of the year, Obama's campaign has announced.

Obama's campaign said in a video message Wednesday morning that it raised more than $47 million and the Democratic National Committee took in more than $38 million through the end of June.