Offensive parallelism

How a few burqa-clad militants terrified the West

The so-called ‘Kabul offensive’ by the Taliban was nothing like the Tet Offensive in Vietnam – but it’s telling that the two are being compared.

By Brendan O’Neill

Following the Taliban assault on Western embassies in Kabul this week, commentators have been rummaging through their history books to find comparable events. Some, having wrestled against their critical faculties and won, likened the Kabul assault to the Tet Offensive of 1968, when Viet Cong forces launched a surprise assault on American forces in Vietnam. Others, admitting that the Taliban attack wasn’t quite of Tet proportions, have claimed that it did nonetheless signal ‘Taliban resolve’. The militants were apparently showing their determination to ‘battle Western forces to the hour of their exit’.

In truth, history is not a good guide to what is unfolding in Afghanistan. Because what we’re witnessing is not an old-style stand-off between Western forces and implacable militants, or even a new-fangled ‘clash of civilisations’ between Yanks and Islamists, but something new, weird and dangerous. The current instability is best understood as the violent spin-off of what we might call the meandering militarism of Western forces, the fact that American and British troops are physically present in Afghanistan but spiritually and morally absent. The West has boots on the ground, yes, but Western leaders continually express their desire to leave. And it is that advertisement of the West’s lack of resolve, the public displays of lassitude, which invites various factions to try to push the West over the edge.

No sooner had the first rocket-propelled grenade hit the outer wall of the American embassy in Kabul than observers were, in the words of Reuters, ‘drawing comparisons with the 1968 Tet Offensive’. The American ambassador to Afghanistan had to bat aside questions about an ‘Afghan Tet Offensive’, arguing that ‘a half a dozen RPG rounds from 800 metres away – that isn’t Tet, that’s harassment’. And yet reporters continued to talk about ‘the Tet Offensive’s parallels to Afghanistan’. An expert on Middle Eastern security at King’s College London tweeted: ‘Looks like a Taliban version of the Tet Offensive going on in Kabul.’

Comparing the Taliban’s tiny, opportunistic chucking of hand grenades with the Tet Offensive of 1968 takes historical illiteracy to a new and alarming low. Both physically and politically, both in terms of what happened and what it meant, there’s no comparison between what the Taliban did this week and what the Vietnamese did 43 years ago. This week’s Kabul Offensive (as history probably won’t record it) lasted from Tuesday lunchtime till Wednesday morning, a total of 20 hours, during which time a handful of burqa-clad insurgents took over a half-constructed building and took pot shots at the US and other embassies. Five Afghan policemen and 11 civilians were killed. In January 1968, 80,000 Viet Cong forces launched a countrywide assault on America and her allies, lasting for two months, during which time 100 cities and towns were attacked and 2,500 US forces were killed. There were ‘mini Tets’ throughout 1968.

It isn’t only the scale but also the nature of the offensives that is glaringly different. The Tet Offensive was a clash between an ideologically driven, mass liberation movement and an American military on an international moral mission against what it judged to be the ‘evils’ of Communism. More broadly, Tet spoke to a bigger international divide, between the West and its allies on one side and Soviet-supported, China-backed Vietnamese forces on the other. Today, in Afghanistan, there’s merely an increasingly isolated, directionless Western military force in one camp and a cut-off, eccentric Islamist movement in the other. Also, the Tet Offensive occurred at a time of huge political upheaval in America, fuelling domestic opposition to the Vietnam War and deepening the profound malaise of the old US elite. The ‘Kabul Offensive’ is likely only to have made the increasingly Afghan-cynical American public say: ‘We’re still there? Why?’

The strikingly different political backdrops to the Tet and Kabul offensives mean that even those who admit that Kabul was not quite the same as Tet still go too far when they claim that it did nonetheless demonstrate ‘Taliban resolve’. This is effectively to argue that Kabul was a smaller version of Tet – fewer insurgents and less fighting, yes, but the same goal: ‘to battle Western forces to the hour of their exit’. In truth, the pathetic Kabul offensive speaks, not to any strength or vision on the part of the Taliban, but rather to the weakness and discombobulation of the Western occupation.

The key dynamic in Afghanistan now is not American resolve to rule or insurgents’ determination to liberate – the two forces that clashed epically in Vietnam 40 years ago – but the moral disarray of the occupying forces. It is that which nurtures sporadic outbursts of small-scale violence, as the Taliban effectively seeks to make real America’s expressions of spiritual disinterest in Afghanistan by trying to edge it out of the picture. The Taliban is now entirely parasitical on the defeatism of the Western forces in Afghanistan and of the West more broadly.

America and Britain’s presence in Afghanistan is a kind of phantom occupation. It has a semblance of physical reality, in the sense that troops occasionally still carry out patrols, but no political backbone. The presence of tens of thousands of Western troops is not matched by anything like political will on the part of Western leaders. Indeed, virtually every statement Washington and London now make about Afghanistan concerns their eventual, much longed-for withdrawal from that country. In December 2009, President Obama sent 30,000 additional troops to Afghanistan while also announcing that in July 2011 ‘our troops will begin to come home’. In 2010, NATO held a summit at which it announced that all its forces would withdraw by 2014. That was followed up by UK prime minister David Cameron promising that all Brits will be out by 2015. These non-stop declarations of a desire to withdraw, the bizarre setting of super-specific timetables, act as an invitation to the Taliban to launch attacks. Sensing there’s no substance, no moral arc, to the Western military presence in Afghanistan, the Taliban instinctively recognises that even small-scale assaults can have a pretty big impact on occupying forces that don’t really have the stomach to occupy.

And it is right – as demonstrated by the fact that even its Kabul offensive, which killed fewer people than spree killer Thomas Hamilton did in Dunblane in 1996, is breathlessly discussed as a new Tet. The impact of the Taliban’s actions is determined, magnified and exploded, by the reaction of the institutions being targeted. It is fundamentally their fear and disarray, their frequently stated desire to get out of all this, which gives small Taliban missions their impact, allowing even a Columbine-style attack on a few embassies to be compared to the historic events of 1968. Yet the Tet Offensive changed the course of the Vietnam War, opening Washington’s eyes to the fact that it could not win, and by extension it changed the course of modern history; in contrast, the Kabul offensive was a mere reaction to, an exploitation of, America’s already-stated desire to withdraw. It was the cynical chucking of hand grenades from the sidelines in an attempt to hurry history along.

Amid all the talk about a new Tet, one commentator argues that, actually, this week’s offensive was more an attempt to ‘strengthen the Taliban’s position [for when Western forces leave]’. Indeed. The more that the occupying forces advertise their lack of moral stomach for the Afghan project, the more they invite various forces to make a stab for influence in whatever will happen in 2011, 2014, 2015. Recent events confirm that a defeatist Western occupation, one fuelled by fleeting face-saving considerations more than colonial desires, can be just as destabilising and inflammatory as a coherent one.

Bailing out the Planet

Dollars to the European Rescue

WSJ Editorial

The world's central banks rode in on their Brinks trucks yesterday to stem the global run on European banks, creating new vehicles for access to U.S.-dollar liquidity. European bank stocks promptly soared, and now it would be nice if Europe's political and financial leaders finally used this reprieve to address their solvency issues.

The central-bank move is a de facto admission that dollar funding has been drying up for many European banks. We warned on June 27 ("Money-Market Mayhem") about the dangers to U.S. money funds from their lending to banks heavily invested in Greek and other sovereign debt. The money-fund lobby said we were exaggerating, but the funds have since cut their lending dramatically. This is prudent, since the world doesn't need a repeat of 2008 when a U.S. money fund broke its $1 net asset value.

The problem is that this withdrawal by money funds reduces the options for European banks to finance their dollar-lending operations. Moody's downgraded two of the three biggest French banks on Wednesday, citing liquidity and short-term funding needs. The CEO of Societe Generale—one of the downgraded banks, with Credit Agricole—said his bank was "adjusting to the reduction in the money-market fund exposure."

We received our own immersion in the issue this week after we published an op-ed Tuesday by contributor Nicolas Lecaussin quoting an unnamed executive from BNP Paribas as saying the bank had lost its access to dollar funding. BNP immediately said it was "fully able to obtain USD funding in the normal course of business, either directly or through swaps." It also acknowledged a "reduction and shortening of resources" from U.S. money funds.

In its official statement, BNP Paribas said only that its borrowing from U.S. money funds had recently declined to €36 billion outstanding from €46 billion, so we asked the bank to support its claim that it was "fully able" to meet its dollar needs. BNP's treasurer, Michel Eydoux, elaborated in an interview that "some of the money market funds have not renewed" their loans and others are of shorter maturities—generally one month instead of three to 12 months previously.

He said BNP is thus relying more on foreign-exchange swap contracts for its dollar needs. The counterparties to these swaps are, according to Mr. Eydoux, "banks and corporations who want the same maturities" that BNP is seeking and can no longer obtain from the money markets. The bank is also trying to expand its dollar deposit base among corporations and governments in Asia and Middle East that need someplace to keep their dollars.

Much to our surprise, BNP Paribas also requested that the French equivalent of the SEC, the Autorité des Marchés Financiers, "open an investigation into the publication of erroneous information about its funding in dollars in an article in the Opinions section of the Wall Street Journal."

The AMF is "tasked with safeguarding investments and maintaining orderly financial markets in France" and it can also conduct investigations, although by its own account its jurisdiction does not normally extend to the press. An official at the AMF declined to say how often newspaper articles lead to investigations.

Meanwhile, a senior French government official called us "as a reader," he said, to express his shock that we had published Mr. Lecaussin's op-ed. The article, he said, "was quite damaging to this bank and to French banks generally." At least he conceded that perhaps he was "abusing his position" as a top government official to express his displeasure.

We certainly hope the French government and BNP intention isn't to shut down reporting on French bank problems. We can't imagine, say, White House chief of staff Bill Daley calling us about a story on Bank of America, or BofA siccing the SEC on us. Relations between banks and the government are closer in France than they are in the U.S., but we'd have thought French politicians had enough problems without picking a fight over press freedom.

All the more so because we're far from the only messengers. In a report last week, JP Morgan analysts argued that French banks as a group had one of the lowest ratios of highly liquid assets to short-term funding needs in Europe. JP Morgan pegged BNP's so-called liquidity-coverage ratio at 70%. When asked about that figure, one BNP official sputtered that JP Morgan's own coverage ratio was only 52%. Under the Basel III international banking standards, banks are required to achieve a 100% liquidity-coverage ratio by 2015.

The funding status of French banks is news because fears of 2008 are still fresh and Europe's woes could spill into U.S. banks and the larger world financial system. Europe's banks have done far less than American banks since 2008 to strengthen their capital base, own up to their bad assets, and generally clean up their act. Until they do, the world's lenders will treat them with well-deserved wariness.

Playing ball

The bureaucracy versus you

by D. Schlichter

The global finance bureaucracy is clueless. Its policies are failing. Yet, the bureaucracy is not giving up. The same tired and idiotic explanations for what is wrong with the economy and what the economy needs are regurgitated with numbness-inducing persistency: The economy is in need of more, wait for it, “demand”. Not necessarily your demand or my demand. In fact, any demand will do. And since you and me are obviously failing to produce the demand that the economy demands the required demand has to come from the state. It can come from government spending, preferably debt-financed, or from the central bank printing more money and handing it to the banks. And the wider public – those easily manipulated monkeys that the bureaucracy obviously thinks we are – will willingly spend, borrow, and consume, and invest, and consume more.

Is anybody still taking this tiresome nonsense seriously? Does anybody really believe that the economy is just some tired old mule that is simply in need of a kick in the backside to get going again? Or, when you wake up on a Monday morning and feel a bit sleepy and you are longing for a strong cup of coffee – is that how the economy feels? Does it just need a bit of –stimulus?

I tell you what is wrong with the global economy: the global bureaucracy. That is what is wrong. Decades of rising taxation, increasing regulation, and persistent redistribution have fundamentally and structurally weakened the major economies of the world. Underneath the glittering razzmatazz of modern technology lies a society that has been sapped of its capitalist juices. For decades we have been eating into our capital stock.

To make matters worse, this persistent structural decline has been masked and indeed furthered by another evil the bureaucracy has bestowed on us: a constantly expanding supply of fiat money, astutely channelled through the banks and wider financial industry. For decades this has helped project an illusion of savings availability while it has simultaneously weakened the all-important propensity to save and to create lasting capital. A constantly expanding money supply, artificially low rates and cheap credit have encouraged borrowing, leverage and debt-accumulation on a gigantic scale, and have fed various asset bubbles, which in turn have further enhanced the illusion of wealth while diverting resources away from where they could have generated real prosperity. At the same time, a new generation has been raised on the belief that wealth comes from consumption, not saving and production, and that you can vote for it.

The bureaucracy is the problem

Ludwig von Mises and Friedrich August von Hayek demonstrated two generations ago that EVERY money-induced credit boom must end in a bust. Their theory was developed at times when even state paper money was still anchored to gold. Their theory was considered a business cycles theory, which to modern ears sounds quite innocuous. In the olden days it explained the ups and downs of the economy. What that term doesn’t fully encapsulate but what the theory nevertheless explains very well are the much larger dynamics that have been unleashed since 1971, when the last connection between state paper money and gold was severed and the entire world was put on a system of fully elastic, constantly expanding fiat money under central bank control. Say hello to the credit mega cycle!

Remember, the last time high real interest rates were allowed to cleanse the U.S. economy of the distortions of administratively cheapened credit was in 1979/1980 when Fed chairman Volcker – for a short time only – stopped the printing press. Since then, and until about 2007, we had been in a three-decade long relentless credit-expansion. The credit boom was beyond anything Mises, Hayek or anybody else of that generation could have envisioned – sadly, so is the coming bust.

Defend our shores, deliver the mail, and get the hell out of the way

Houston, We Have a Solution

By Mario Loyola

On a warm Saturday evening in June 1943, crowds were relaxing on Belle Isle, a retreat slightly larger than New York’s Central Park nestled in the Detroit River, which separates Canada and the United States. Belle Isle’s landscapes and structures were a showcase of great American architecture: Frederick Law Olmsted, Albert Kahn, and Cass Gilbert all were represented. Its botanical garden, yacht club, memorial fountain, golf course, and opulent marble lighthouse offered a serene testament to the grandeur of Detroit.

Exactly what started the riots that night, we’ll never know for sure. There seems to have been a confrontation between a white sailor’s girlfriend and a black man, which led to a brawl. As contradictory rumors raced through the city, the conflagration spread. By the time federal forces intervened to impose law and order three days later, dozens of people had been killed, mostly blacks, and millions of dollars of property destroyed, mostly in the poor, black, inner-city neighborhood of Paradise Valley.

Detroit’s fall can be traced to the race riots of 1943, though many decades of prosperity and achievement still lay ahead. The rise and fall of Detroit is history on an epic scale: Favored by fortune at first, then plowed under its wheel, the city has had a lot of bad luck. But as Oscar Wilde lamented as he languished in Reading Gaol near the end of his life: “I must say to myself that I ruined myself, and that nobody great or small can be ruined except by his own hand . . . Terrible as was what the world did to me, what I did to myself was far more terrible still.”

Houston had suffered race riots, too, during World War I, but fortune would smile on it for most of the 20th century. And when oil prices collapsed in the mid-1980s, sending the city into a depression, it bounced back as if suspended from a bungee cord — even though the oil bust lasted nearly two decades. What Houston did for itself is not merely a model for any city facing the danger of sudden economic decline: The policies that Houston and Texas have followed are proof of concept for the conservative vision of government, which is, essentially, to keep the government off the people’s backs and let a free society find its own way to prosperity.

Detroit, conversely, is proof of concept for the liberal vision of government, which seeks to solve every problem through government, to shape economic development through government, to redress grievances through government, to attain social justice through government, and, finally, to insinuate government into every aspect of our lives. The problems Detroit faced in the latter half of the 20th century would have been enormously challenging no matter what policies it embraced. But it embraced the worst ones and so plunged recklessly down the slope of decline.

Each city has offered a nearly pure exposition of a particular philosophy of government and a vivid demonstration of the results. In the degree of collusion between business and government, in the power of labor unions, in the method of economic development, in the burden of taxation and regulation, in the tolerance for diversity — in all these ways and more, the two cities stand as diametric opposites in the choices a society can make.

By 1943, it was clear that both Detroit and Houston were having a great war. Detroit’s massive car factories had all been converted to war production, and it was churning out tanks, jeeps, and bombers at a dizzying pace. The demand for wartime labor drew more than 300,000 migrants to Detroit, mostly from Appalachia and the South. In 1943, the population was approaching 2 million, and it seemed to be growing with no end in sight. But the race riots had revealed a sore festering beneath the surface, and there were others.

Giving it to ‘em with the bark on

Setting Grandma’s Hair on Fire

by Patrick J. Buchanan

Social Security is a “Ponzi scheme for these young people,” said Gov. Rick Perry in his first debate as a presidential candidate. “The idea ... that the current program is going to be there for them is a lie.”

Pressed by the moderator, Perry did not back down. He doubled down, calling Social Security a “monstrous lie to our kids.”

Is not such language provocative, Perry was asked. Retort: “Maybe it’s time to have some provocative language in this country.”

Since Barry Goldwater suggested the program be privatized and LBJ ran an ad of a Social Security card being scissored in half, the issue has been “the third rail of American politics.” Touch it—and it kills you.

Apparently, the Mitt Romney campaign thinks it is still the third rail.

Falling on Perry’s perceived fumble, Mitt declared that Social Security “is working for millions of Americans, and I will keep it working for millions of Americans. ... Our nominee must not be someone who is committed to abolishing Social Security but ... to saving Social Security.

Yet Perry never said he was going to abolish Social Security. He said, “We need to be focused on how we are going to change this program.”

Karl Rove, however, piled on, as did ex-Romney aide Alex Castellanos:

“Rick Perry may have reassured the base with some very fiery rhetoric, but what he didn’t do last night was prove in any way that he could win independents or seniors or soccer moms. And ... he shot an arrow into the heart of seniors. He set grandma’s hair on fire.”

Well, perhaps.

Yet, on the merits, Perry has more than a small point. For the Social Security program has been relentlessly looted by a Beltway political class that has used it for decades as the piggy bank of last resort.

Social Security was originally designed in the 1930s to be a program where all workers would contribute during their years of employment into a trust fund, from which they would receive a small annual stipend to help with retirement, should they live to 65.

In the 1930s, not everyone lived to 65. Indeed, from 1950 to 1955, life expectancy for the average American male was 66 years.

In 1972, when Richard Nixon proposed a 10-percent increase in Social Security benefits, plus indexation—automatic annual increases to cover inflation—the Democratic Congress raised it to 20 percent.

Fearing a congressional override if he vetoed, Nixon signed, then claimed credit for the most generous Social Security benefit increase in history, and went on to win 49 states.

But the 1970s became a decade of soaring inflation, and Social Security payments, now indexed, soared along with it.

By 1982, Social Security was nearly bankrupt. A commission led by Alan Greenspan was appointed to save the system. This was done by raising the Social Security tax rate and tax base, and modestly increasing the age of full retirement. Americans were living longer.

However, something else had been happening to the Social Security trust fund. The hundreds of billions that poured into government coffers in Social Security taxes each year had been borrowed by the U.S. Treasury and used for operating expenses—fighting wars, funding food stamps, etc.

Thus today the Social Security trust fund consists not of gold, silver or tradable commodities and securities, but of special-issue government bonds, IOUs, a promise by the Federal Government to pay back what it has taken out and spent.

If Ford Motor did what the U.S. Government has done—borrowed and spent all the cash the company, its employees and workers had contributed to their pension fund, and used it for wages, salaries and expenses, leaving IOUs in the vault—the executives would go to prison.

What is Social Security today?

Basically, it has become an inter-generational income-transfer program where working people contribute 6.2 percent of all wages, and their employers match it, and the money is then sent to the Treasury, which sends it out in monthly checks to the 50 million on Social Security.

If incoming funds don’t match what Social Security recipients are entitled to, the Feds borrow the money from China or somewhere else. If incoming funds exceed what has to go out in Social Security checks, the Feds use the surplus to cover the deficits, and leave an IOU.

And there are other and serious questions raised by the Ponzi scheme controversy. Is grandma’s generation, which fought World War II, Korea and the Cold War, more alarmed by Rick Perry’s red-meat rhetoric than by President Obama’s refusal to address the entitlement crisis threatening the fiscal and financial future of the republic?

Is political correctness more important to Americans than hearing the unvarnished truth about the condition of their country?

If so, the country is in trouble, not just Rick Perry.

Another Texan from another time, “Cactus Jack” Garner, once said, “Sometimes you have to give it to ‘em with the bark on.”

For an America going steadily downhill, such a time is now.

Children as sub-atomic particles

Canada Legalizes Infanticide

Government-sanctioned child sacrifice returns to the Western hemisphere

By Rob Taylor

The title isn’t fair — in Canada infanticide is a serious crime that can land you a tough five year sentence. That’s five years maximum, by the way. After all, it’s only killing a baby, nothing people need to really be punished for doing.

People in Canada who think killing an infant is the act of a morally bankrupt monster who deserves more time than the average murderer are getting another kick in the teeth, courtesy of Judge Joanne Veit. She let a woman convicted of murdering her newborn baby then throwing the body over her neighbor’s backyard fence walk out of court with a suspended sentence and probation ^[2].

According to Veit the murderess is the victim:

Queen’s Bench Justice Joanne Veit rejected the Crown’s call for a four-year prison term — which she described as “essentially” seeking the maximum five-year punishment when taking into account the time Effert has already spent behind bars and under strict bail conditions.

Based on the fact infanticide has not been struck from the Criminal Code and it has no minimum penalty, Veit said she feels Canadians “understand, accept and sympathize with the onerous demands pregnancy and childbirth exact from mothers, especially mothers without support.

“Naturally, Canadians are grieved by an infant’s death, especially at the hands of the infant’s mother, but Canadians also grieve for the mother,” said Veit.

I’m sure. The mother in question is Katrina Effert. In 2005, she gave birth to the child alone in her parent’s basement and when the baby started to cry, she strangled the boy with a pair of thong underwear and threw his body into her neighbor’s yard ^[3]. When police investigated after finding the boy’s body, she initially claimed she was a virgin, but when caught in that lie she told cops she had given the baby to her boyfriend.

She strangled her newborn baby, threw the body into her neighbor’s yard, and then tried to frame her boyfriend for the murder. She did all this because, at 19, she was hiding her pregnancy from her mother.

During her first trial ^[4] her behavior — specifically her attempts to cover up the crime and frame an innocent man — was used by prosecutors to show this wasn’t “infanticide” but murder. In Canada, infanticide is assumed to be the product of a temporary mental illness ^[5] – brought on by having a baby or by that mind-searing horror we call lactation. In Canada a woman commits infanticide if she murders a newborn before she has “recovered” from the effects of child birth, a process billions of women were able to handle for millions of years without losing their sanity.

In that first trial, Effert was sentenced to life in prison. But her defense lawyers appealed and we have this ruling, in which a judge very cavalierly suggests that Canadians should be grieving for the mother as well as for the helpless child who was murdered with a pair of thong panties and dumped like a bag of garbage into some unsuspecting neighbor’s backyard. Obviously many people in the pro-life movement see this as the natural progression of a culture that wholeheartedly accepts the most liberal positions on abortion ^[6]. And they may have a point:

Pro-life advocates have warned for years that widespread acceptance of abortion will open the door to greatersocietal acceptance of infanticide, beginning with the euthanizing of disabled newborns.  Infanticide proponent Peter Singer, a top ethicist at Princeton University, has said, for example, “there is no sharp distinction between the foetus and the newborn baby.”

Though he once was considered to be on the radical fringe, Singer’s views are becoming more mainstream.  For example, the world’s most prestigious bioethics journal, The Hastings Center Report, published in 2008 an enthusiastic defense of the Netherlands’ practice of euthanizing newborns.

However, it is a classic case of putting the cart before the horse to assume that acceptance of abortion is the driving factor in the culture of death Canada and the United States have both developed over the years. Canada’s acceptance of late-term abortions is a symptom of a much deeper problem, one that also leads to a criminal justice system that gives women who murder newborns slaps on the wrist.

Leftism sanctions and encourages criminality by changing societal views of criminals and victims. We see this clearly when Veit speaks of the onerousness of childbirth, as if the child is a parasite erupting from the womb of some innocent victim in a scene slightly less gory than the chest bursting dinner scene in Alien. Meanwhile, Veit presumes to speak for all Canadians when she claims they grieve for Effert, the woman who strangled a baby and then tried to frame an innocent man for the murder.

Collectivist ideology sees people as essentially interchangeable; they do not accept the idea that a child’s life is more precious than an adult’s. The Western leftist tradition also sees all people as victims and criminality as an expression not of moral weakness or lack of character, but of frustration and lack of opportunity. Canada, with its much beloved welfare state and universal health care, still wasn’t doing enough for poor Katrina Effert and that’s why she killed her son. It has nothing to do with selfishness, immorality, or evil.

For the left, “income inequality” causes crime and the criminal is actually a victim of an unfair and unjust system created by the only true evil in the world: Western civilization. More than 5,000 years of philosophy and moral tradition has led to the West being (until recently) the light in a benighted world. In a little less than 200 years, Karl Marx and his spiritual heirs have overturned those traditions and now we are a people who slap the wrists of child murderers while supposedly grieving for them. Now we blame the newborn for his murder by insinuating that his birth was such an ordeal it literally drove the mother mad.

 About eight years ago I took a class in Meso-American art with an archeologist who had two decades in the field under his belt. One of the things I learned was that in some of those famous pyramid temples each corner had a sacrificed infant placed under the foundation. The first Europeans to come into contact with the Aztecs were rightly disgusted by people who killed their own children in religious ceremonies. Now their descendants suspend the sentences of child killers who didn’t want to get in trouble with their parents.

Convulsions of a dying society

Endgame for Egypt

By David P. Goldman

Robert Musil’s Der Mann Ohne Eigenschaften (“The Man Without Qualities”), one of the great novels of the past century, is a portrait of the Austrian early in 1914. The readers know that their silly world will come to a terrible end a few months later with the outbreak of war, but the protagonists do not. Musil published a first volume and spent the rest of his life trying to write a second, without success, for it is the sort of story that has no end except for the abyss.

Arab politics today has a Musil-like quality of unreality, for the conclusion will be the collapse of the Egyptian state. The misnamed “Arab Spring,” really a convulsion of a dying society, began with food shortages. Egypt imports half its caloric consumption, 45% of its people are illiterate, its university graduates are unemployable, its $10 billion a year tourism industry is shuttered for the duration, and its foreign exchange reserves are gradually disappearing. In August, the central bank’s reported reserves fell below what the bank calls the “danger level” of six months’ import coverage, or $25 billion, from $36 billion in February, although I suspect that even this number is bloated by $5 to $10 billion of Algerian and Saudi loans and trade credits. Despite reports in the press that food price inflation in Egypt has slowed, Arab-language Egyptian media report that the price of some staples, like rice and sugar, have risen by 50% or more since March. The military government is distributing bread and propane (the main cooking fuel).

Egypt turned down a proposed loan from the International Monetary Fund earlier this year because the military government could not accept the conditionality attached to IMF money. The Gulf States and the West may keep Egypt on life support, which would leave a large proportion of Egyptians in a limbo of extreme destitution. The fiscal collapse of Southern Europe (and sever problems elsewhere) makes this an inopportune time to come to the West with a begging bowl. As for the Gulf States: they are not even meeting their commitments to the Palestine Authority, and can’t be expected to carry a $15 to $20 billion annual financing requirement for Egypt.

It does not compute. Western economists can concoct all the economic recovery plans in the world, but a country that can’t teach half its people to read, and can’t produce employable university graduates, and can’t feed itself, is going to go down the drain. Nasser, Sadat and Mubarak kept Egypt under control by keeping most of its people poor, ignorant, and on the farm, and by warehousing its youth in state-run diploma mills. After sixty years of such abuse, Egypt simply can’t get there from here.

The result, I predict, will be a humanitarian catastrophe that makes Somalia look like a picnic. It’s not surprising that the Egyptian mob might attack the Israeli embassy. The Egyptian street has nothing to do but rise up against perceived oppressors, because nothing good awaits them; and the desperation that will follow the collapse of the Arab “Spring” threatens every Middle Eastern regime, such that the rulers have to try to get out in front of the rage. But what will they actually do? The Egyptian military is hanging onto power by its fingernails. If it attacks Israel, it will lose, and generals will be hanged from lamp posts. The Syrian military is too busy killing protesters to attack Israel, or to assist Hezbollah in a confrontation with Israel.

What we are likely to witness during the next two years will be repellent, even horrifying – but not necessarily dangerous.

Freedom and property

Reflections on the Shanghai skyline

Two pictures comparing the Shanghai skyline between 1990 and 2010 have been making the rounds online – we posted them on the blog the other day. In this piece, Dr Richard Ebeling discusses the economic history of Shanghai's skyline, which thrived during the pre-Second World War years and, thanks to the laissez-faire economic policies it enjoyed as a virtual city-state, grew to become Asia's answer to New York City.

by Richard Ebeling        

The "before" picture of Shanghai (from 1990) is actually the same skyline from before the Second World War. Under communism, from 1949 until 1980s-1990s, this picture of Shanghai had not changed.

And, by the way, how did Shanghai come to have such a "Western"-style skyline before the Second World War? Because following the British-Chinese War of 1842 (the "Opium War"), Shanghai was one of the treaty ports in which there emerged foreign "concessions" administered by Western governments to minimize frictions between the Chinese and Europeans and Americans, due to conflicting conceptions of criminal and civil law, and property rights.

By the end of the 19th century, Shanghai had two foreign districts. The French Concession, administered by a Governor-General appointed by the French government in Paris, and the International Settlement (the picture, above, shows what was the "heart" of the International Settlement among the Bund (the waterfront) facing the Whangpoo River).

The International Settlement was administered by a city council of 14 members elected by the foreign rate payers (mostly property taxes) residing in the boundaries of the Settlement. Thus, it was, for all intents and purposes, a self-governing "city-state" under the protection of the Western Powers (which ended up meaning mostly a British and American military presence).

You ain't seen nothing yet

The Decapitalization of the 
West
by Sam Bowman  

A harsh dose of reality from the indispensible Kevin Dowd. The lecture above was given on Monday night. Dowd weaves together the strands of economic breakdown created by central banks, bailouts and high taxes into a tapestry of ruin. It's gripping and horrible, and essential viewing to anybody who thinks the worst is behind us. Dowd's message: you ain't seen nothing yet.

Kevin Dowd's most recent book is The Alchemists of Loss: How Modern Finance and Government Intervention Crashed the Financial System. 

Non welfare economics

The Mayo Clinic and the Free Market

by Michel Accad

Neoclassical economists such as Kenneth Arrow and Joseph Stiglitz tell us that the healthcare market is imperfect (or "Pareto inefficient"), meaning that the allocation of services is not optimal from the standpoint of social welfare. They point toinformation asymmetry as an important cause of this imperfection: patients cannot distinguish on their own the physician from the charlatan, the surgeon from the butcher, the remedy from the snake oil, the hospital from the coop. This may lead to moral hazardwhere the party with the most knowledge can provide inferior service with impunity.

To provide the necessary counterbalance for this "knowledge gap," experts must be in charge of social institutions that tell patients where to go, whom to see, how to be treated, and how much it should cost. This has been a principal and virtually unchallenged argument underpinning healthcare legislation for the last 100 years. In a famous paper he wrote on the subject in 1963, Arrow declared, "It is the general social consensus, clearly, that the laissez-fairesolution for medicine is intolerable."

But for those who wonder how firmly established the "general social consensus" or how intolerable the "laissez-faire solution" really is, a short booklet published in 1926 may prove instructive. The Sketch of the History of Mayo Clinic and Mayo Foundation is an account produced by Mayo "merely to record in chronological order the principal facts concerning the two institutions."

One fact that stands out is the professional career of William W. Mayo, the clinic's founder. Mayo started practicing in Minnesota in 1855 and, for a time, was surgeon with a band of settlers frequently occupied by guerrilla warfare with the Sioux Indians. Mrs. Mayo herself, it appears, did not hesitate to swing around the pitchfork to deter Native American warriors from attacking their village. When the fighting subsided, the Mayos moved to Rochester where William Mayo established his private practice. Mayo had previously studied chemistry in Manchester under the famous John Dalton, but after moving to the United States, his medical training had consisted of a two-year apprenticeship in Indiana and a four-year formal medical education at the University of Missouri.

Mayo was keen on applying the latest discoveries in medical science. He was the first physician in the West to adopt the microscope for clinical work. In 1871 he took a graduate course at Bellevue Medical College in New York and became a pioneer in abdominal surgery. He was an avid reader and contributed frequently to the medical literature on a variety of topics. Remarkably, however, the patron of the famous clinic did not have a medical license.

A singular aspect of American medicine in the second half of the 19th century is its nearly complete lack of regulation. While modest licensing standards had been adopted by most states of the Union after the revolution, these weak requirements eventually disappeared during the westward expansion of the country. In his book Medical Licensing in America, historian Richard Shryock attributed this "deterioration" in part to Jacksonian "anti-intellectualism" and lamented that

By the 1850s, when German authorities were establishing uniform standards and when the British government was taking the first steps toward national control, the situation in the United States seemed to be approaching its nadir.

EVERYTHING FOR EVERYONE…

The Inventor of the Digital Age

By Jeffrey A. Tucker

Michael S. Hart (March 8, 1947 — September 6, 2011) got it. He understood. He saw what others missed. And he was nearly alone at the time.

After he was permitted access to an Internet account at the University of Illinois as long ago as 1971, he had a mind-blowing revelation. He realized that this tool had the potential to universalize all knowledge. It could liberate ideas from their static existence on physical media and put them into a form that could be copied, copied, copied, and copied unto infinity, not just for today but forever. This was the Star Trek replicator. Amazing.

How is it possible, he wondered, that this tool exists and yet it is being kept under wraps, used only for the most superficial purposes and only by a few?

He grabbed a copy of the Declaration of Independence, typed it in, and posted it — despite being warned that this was not allowed, that he might crash the system, that there was just something wrong with letting ideas escape the small group that controlled them and allocated them to physical things only.

Bosh, he said. He would dedicate himself and his entire life to the universal distribution of anything and everything he could. Over the rest of his life, he ended up personally typing hundreds of books and distributing them.

His medium was and is called Project Gutenberg — a perfect name for his plan and agenda. Virtually alone, he saw that the Internet was the next stage. The whole history of publishing technology was about reaching ever more people with knowledge at ever-lower costs. This was the driving force at work in publishing for thousands of years, and the whole key to progress

The Internet was the next stage, even the final stage, the culmination of the efforts of every scribe, every inventor, every printer, every distributor, every teacher, every novelist, poet, intellectual, lecturer, orator, scholar.

In 1995, the year that the web browser became part of the mainstream of life and the year that the Internet began to take its current shape, he sent out a clarion call to everyone who would read:

For the first time in the entire history of the Earth, we have the ability for EVERYONE to get copies of EVERYTHING as long as it can be digitized and communicated to all of the people on the Earth, via computers [and the devices a person might need to make a PHYSICAL, rather than VIRTUAL copy of whatever it might be] …

Think about what you have just read for a moment, please, EVERYTHING FOR EVERYONE…

Hart had a mighty vision here. He grasped the magic and meaning of the power of infinite reproducibility, the earth-shaking significance of what it means to reduce the costs of duplication to near zero and to do so without any depreciation of the content itself. The invention of the printing press was a hinge of history; the Internet contained within itself the power to do the work of millions of scribes and millions of printing presses every single instant, forever and for everyone. The knowledge of 1 person could reach 7 billion and those 7 billion could all reach each other.

And so his own Project Gutenberg became his driving passion, the way he decided to gift his entire life to the whole of humanity. It began with plain text, nothing fancy. He urged that people copy these texts and publish them in whatever way possible. Today, the venture offers 36,000 books online for free, in many different formats.

It pioneered new ways to crowd source proofreaders. It inspired hundreds of thousands of volunteers. It anticipated the medium of ebooks 40 years in advance, a medium that is only this year being taken seriously by publishers and institutions.

Hart's writings reveal a man who stayed in a constant state of stunned amazement at everything that stood in the way of the dream. He gagged on institutions like copyright. He scoffed at the trillions being spent on higher education to teach the few at a time when we possess the means to school the entire globe. But he did more than just dismiss anything that stood in the way; he was himself a tireless example of how to proceed.

Hart's institutional children are everywhere today: Google Books, Kindle, Nook, Audible, Creative Commons, MIT's OpenCourseWare project, Khan Academy, Mises.org, and thousands of other sites, and not just for ebooks but also for painting, architecture, music, medical research, and every other field in art, commerce, and science. The word "knowledge" sums up the human experience; the Internet could embody that and flood the entire world.

When Gutenberg invented his press, consumers loved it. A frenzy of buying swept the German-speaking world. Psalters and bibles for everyone! But producers' guilds put up resistance. They complained of Gutenberg's rising wealth. Scribes feared the loss of their jobs. Critics complained of how people were becoming obsessed with reading instead of working.

It is no different today except that the producers' guilds and cultural worrywarts are allied with the state to stop the universal distribution of knowledge. Many rue the day that the first text was made available through the Internet, and dedicate themselves to ending the global frenzy to discover and learn. Our descendants will laugh, just as we find it funny that people tried to hobble the printing industry

Hart's life demonstrates the difference that one person's thinking can bring about in the shape of the real world. Without such thinking, the world would grind to a halt. Nothing new would ever happen. We would all do and think yesterday the same way we would think tomorrow and the next day, and history would have no direction, no guiding purpose, and life itself would be reduced to tedium and a pointless and endless rotation of hours, days, years, and generations.

But with people like Hart, people who not only imagine change but work super hard to bring it about themselves, humanity is lifted up, and the world rises ever more out of the state of nature.

He liked to quote George Bernard Shaw: "Reasonable people adapt themselves to the world. Unreasonable people attempt to adapt the world to themselves. All progress, therefore, depends on unreasonable people."

To say that Hart was unreasonable he would have regarded as the highest compliment you could ever give him.

Requiescat in pace. If you don't know what that phrase means, where it comes from, what it is used for, you can look it up in about two seconds. Hart's vision makes that possible. He certainly deserves to rest in peace knowing of his gift to the human race.