Get the troops back NOW

Calling things by their proper names

By Caroline Glick

Next month, America's long campaign in Iraq will come to an end with the departure of the last US forces from the country.

Amazingly, the approaching withdrawal date has fomented little discussion in the US. Few have weighed in on the likely consequences of President Barack Obama's decision to withdraw on the US's hard won gains in that country.

After some six thousand Americans gave their lives in the struggle for Iraq and hundreds of billions of dollars were spent on the war, it is quite amazing that its conclusion is being met with disinterested yawns.

The general stupor was broken last week with The Weekly Standard's publication of an article titled, "Defeat in Iraq: President Obama's decision to withdraw US troops is the mother of all disasters."

The article was written by Frederick and Kimberly Kagan and Marisa Cochrane Sullivan. The Kagans contributed to conceptualizing the US's successful counterinsurgency strategy in Iraq, popularly known as "the surge," that president George W. Bush implemented in 2007.

In their article, the Kagans and Sullivan explain the strategic implications of next month's withdrawal. First they note that with the US withdrawal, the sectarian violence that the surge effectively ended will in all likelihood return in force.

Iranian-allied Prime Minister Nuri al-Maliki is purging the Iraqi military and security services and the Iraqi civil service of pro-Western, anti- Iranian commanders and senior officials. With American acquiescence, Maliki and his Shi'ite allies already managed to effectively overturn the March 2010 election results. Those elections gave the Sunni-dominated Iraqiya party led by former prime minister Ayad Allawi the right to form the next government.

Due to Maliki's actions, Iraq's Sunnis are becoming convinced they have little to gain from peacefully accepting the government.

The strategic implications of Maliki's purges are clear. As the US departs the country next month it will be handing its hard-won victory in Iraq to its greatest regional foe - Iran.

Repeating their behavior in the aftermath of Israel's precipitous withdrawal from southern Lebanon in May 2000, the Iranians and their Hezbollah proxies are presenting the US withdrawal from Iraq as a massive strategic victory.

They are also inventing the rationale for continued war against the retreating Americans. Iran's Hezbollah-trained proxy, Muqtada al-Sadr, has declared that US Embassy personnel are an "occupation force" that the Iraqis should rightly attack with the aim of defeating.

The US public's ignorance of the implications of a post-withdrawal, Iranian-dominated Iraq is not surprising. The Obama administration has ignored them and the media have largely followed the administration's lead in underplaying them.

For its part, the Bush administration spent little time explaining to the US public who the forces fighting in Iraq were and why the US was fighting them.

US military officials frequently admitted that the insurgents were trained, armed and funded by Iran and Syria. But policy-makers never took any action against either country for waging war against the US. Above the tactical level, the US was unwilling to take any effective action to diminish either regime's support for the insurgency or to make them pay a diplomatic or military price for their actions.

As for Obama, as the Kagans and Sullivan show, the administration abjectly refused to intervene when Maliki stole the elections or to defend US allies in the Iraqi military from Maliki's pro-Iranian purge of the general officer corps. And by refusing to side with US allies, the Obama administration has effectively sided with America's foes, enabling Iranian-allied forces to take over the US-built, trained and armed security apparatuses in Iraq.

ALL OF these actions are in line with the US's current policy towards Egypt. There, without considering the consequences of its actions, in January and February the Obama administration played a key role in ousting the US's most dependable ally in the Arab world, president Hosni Mubarak.

Since Mubarak was thrown from office, Egypt has been ruled by a military junta dubbed the Supreme Council of the Armed Forces. Because SCAF is comprised of the men who served as Mubarak's underlings throughout his 30-year rule, it shares many of the institutional interests that guided Mubarak and rendered him a dependable US ally. Specifically, SCAF is ill-disposed toward chaos and Islamic radicalism.

Here be dragons

SAINT GEORGE AND THE FLAGGIN'

By Mark Steyn

When it's not explicitly hostile, Western liberals' attitude to Ayaan Hirsi Ali is deeply condescending. One thinks of Nicholas Kristof in the New York Times, pondering the author's estrangement from her Somali relatives:

I couldn't help thinking that perhaps Hirsi Ali's family is dysfunctional simply because its members never learned to bite their tongues and just say to one another: "I love you."

In Somalia, they don't bite their tongues but they do puncture your clitoris. Miss Hirsi Ali was the victim of what Western hospitals already abbreviate to "FGM" ("female genital mutilation") or, ever more fashionably, "FGC" (the less judgmental "female genital cutting"). Group hugs may work at the Times op-ed desk when the Pulitzer nominations fail to materialize, but Mr. Kristof is perhaps being a wee bit Upperwestsideocentric to assume their universality. Miss Hirsi Ali has been on the receiving end of both Islam and the squishy multiculti accommodation thereof. For seven years, she has been accompanied by bodyguards, because the men who killed the film director Theo van Gogh would also like to kill her.

She was speaking in Calgary the other day and, in the course of an interview with Canada's National Post, made a sharp observation on where much of the world is headed. It's not just fellows like Mohammed Bouyeri, the man who knifed, shot, and, for good measure, near decapitated van Gogh. She noted the mass murderer Anders Breivik, who killed dozens of his fellow Norwegians supposedly as a protest against the Islamization of Europe — if one is to believe a rambling manifesto that cited her, me, Jefferson, Churchill, Gandhi, Hans Christian Andersen, and many others. Much media commentary described Breivik as a "Christian." But he had been raised by conventional Eurosecularists, and did not attend a church of any kind. On the other hand, he was very smitten by the Knights Templar.

"He's not a worshiping Christian but he's become a political Christian," said Ayaan, "and so he's reviving political Christianity as a counter to political Islam. That's regression, because one of the greatest achievements of the West was to separate politics from religion." Blame multiculturalism, she added, which is also regressive: In her neck of the Horn of Africa, "identity politics" is known as tribalism.

That's a shrewd insight. We already accept "political Islam." Indeed, we sentimentalize it — dignifying the victory of the Islamist Ennahda party in post–Ben Ali Tunisia, the restoration of full-bore polygamy in post-Qaddafi Libya, and the slaughter of Coptic Christians in post-Mubarak Egypt as an "Arab Spring." On the very day Miss Hirsi Ali's interview appeared, the mob caught up with the world's longest-serving non-hereditary head of state. Colonel Qaddafi had enlivened the U.N. party circuit for many years with his lavish ball gowns, but, while he was the Arab League's only literal transvestite, that shouldn't obscure the fact that most of his fellow dictators are also playing dress-up. They may claim to be "pan-Arabists" or "Baathists," but in the end they represent nothing and no one but themselves and their Swiss bank accounts. When their disgruntled subjects went looking for something real to counter the hollow kleptocracies, Islam was the first thing to hand. There is not much contemplation of the divine in your average mosque, but, as a political blueprint, Islam was waiting, and ready.

Multicultural Europe is not Mubarak's Egypt, but, north of the Mediterranean as much as south, the official state ideology is insufficient. The Utopia of Diversity is already frantically trading land for peace, and unlikely to retain much of either. In the "Islamic Republic of Tower Hamlets" — the heart of London's East End, where one sees more covered women than in Amman — police turn a blind eye to misogyny, Jew-hatred, and gay-bashing for fear of being damned as "racist." Male infidel teachers of Muslim girls are routinely assaulted. Patrons of a local gay pub are abused, and beaten, and, in one case, left permanently paralyzed.

The hostelry that has so attracted the ire of the Muslim youth hangs a poignant shingle: The George and Dragon. It's one of the oldest and most popular English pub names. The one just across the Thames on Borough High Street has been serving beer for at least half a millennium. But no one would so designate a public house today. The George and Dragon honors the patron saint of England, and it is the cross of Saint George — the flag of England — under which the Crusaders fought. They brought back the tale from their soldiering in the Holy Land: In what is now Libya, Saint George supposedly made the Sign of the Cross, slew the dragon, and rescued the damsel. Within living memory, every English schoolchild knew the tale, if not all the details — e.g., the dragon-slaying so impressed the locals that they converted to Christianity. But the multicultural establishment slew the dragon of England's racist colonialist imperialist history, and today few schoolchildren have a clue about Saint George. So the pub turned gay and Britain celebrated diversity, and tolerance, and it never occurred to them that, when you tolerate the avowedly intolerant, it's only an interim phase. There will not be infidel teachers in Tower Hamlets for much longer, nor gay bars.

The "multicultural society" was an unnecessary experiment. And, in a post-prosperity Europe, demographic transformation is an unlikely recipe for social tranquility. If Ayaan Hirsi Ali is right, more than a few Europeans cut off from their inheritance and adrift in lands largely alien to them will seek comfort in older identities. In the Crusaders' day, the edge of the maps bore the legend "Here be dragons." They're a lot closer now.

I'm rooting for the free market

Europe's Two Endgames

by Gary North

On November 22, the New York Times published an interactive chart on which governments owe how much money to which foreign nation's banks. The chart reveals the fault lines in Europe's economy. The debts are owed above all to French banks. The biggest debtor is Italy. If Italy defaults, France's largest banks go down. Overnight.

On Monday, November 28, there was a Financial Times article speculating that the Eurozone has less than two weeks to survive. The headline: "The Eurozone really has only days to avoid a collapse." It was written by an associate editor of the publication.

There have been lots of these articles over the last few weeks. They all offer the same formula: "The end is near, unless. . . ." Unless what? Unless Western Europe's largest governments unilaterally abolish the treaties that created the European Union in the 1990s. This will involve the following: (1) the consolidation of the Eurozone into an unconstitutional super-state, and (2) the European Central Bank buys bonds issued by this new entity, which is also unconstitutional, according to the existing treaties.

The first solution is consistent with over 90 years of behind-the-scenes planning to centralize Europe politically, thereby destroying individual national sovereignty. I have written about this many times. The mastermind of this was Jean Monnet. Monnet started working for political unification when he and Raymond Fosdick, John D. Rockefeller, Jr.'s agent, sat together at the Versailles Peace Conference in 1919.

In July 1919, Fosdick sent a letter to his wife. He told her that he and Monnet were working daily to lay the foundations of "the framework of international government." [July 31, 1919; in Fosdick, ed., Letters on the League of Nations (Princeton, New Jersey: Princeton University Press, 1966), p. 18.] Fosdick returned to New York City in 1920, where he took over running the Rockefeller Foundation for the next 30 years.

Monnet was the #1 front man for the New World Order for the next five decades. He promoted political unification by wrapping it in the swaddling clothes of economic unification. The first institutional manifestation of this plan was in 1951: the creation of the European Economic Coal and Steel Community. It was extended in 1957 with the creation of the Common Market.

The second aspect of this unification process was the creation of a unified currency and a single central bank. The NWO did not get all of this, but they got most of it in 2000: the Eurozone and the euro.

We are now facing the clash of these two endgames: (1) Monnet's political endgame, which could easily become a reality in the next few weeks vs. (2) the monetary endgame, in which Monnet's original vision is not consummated, because the Eurozone collapses in a wave of big bank failures. The world then goes into a recession . . . or worse.

STOCK MARKETS RALLY

Also on November 28, European stock markets had an enormous rally, between 3% to 5.5%, depending on the market. I see three possible explanations:

1. The article was dead wrong: no Eurozone crisis.
2. Monnet's political endgame in about to happen.
3. Investors grab at straws.

There was a rumor over the weekend that the IMF was going to lend Italy's government €600 billion. Here is how one news outlet reported it.

Rome – The IMF could bail out Italy with up to €600bn ($794bn), an Italian newspaper reported on Sunday, as Prime Minister Mario Monti came under pressure to speed up anti-crisis measures.

The money would give Monti a window of 12 to 18 months to implement urgent budget cuts and growth-boosting reforms "by removing the necessity of having to refinance the debt", La Stampa reported, citing IMF officials in Washington.

The IMF would guarantee rates of 4.0% or 5.0% on the loan - far better than the borrowing costs on commercial debt markets, where the rate on two-year and five-year Italian government bonds has risen above 7.0%.

Either the article was wrong, or else the author's alternatives – fiscal union and European Central Bank inflation on a massive scale – are a slam dunk, to use an American phrase.

Early Monday morning, the IMF had denied that any such plan existed. The markets paid no attention to the denial. The rumor had to be true. It was only right that it be true. It was too good not to be true. All day, they soared upward.

Investors want to believe that Santa Claus will come early this year.

For weeks, the volatility of Europe's stocks has been enormous. Wild waves of pessimism are followed by equally wild waves of optimism. The pessimism is driven by free market forces: the relentless upward move of interest rates for PIIGS government bonds. Greece is paying well over 100% on its two-year bonds. Italy and Spain are facing 7%, which is regarded as some sort of tipping-point figure – why, we are not told. It just is. Greece pays almost 20 times this, but we are reassured that Greece will not default. However, Spain and Italy may default as a result of 7%.

I do not buy either story. Greece will surely default, contrary to all assurances to the contrary, but Italy and Spain may not, if they cut government spending fast enough and deep enough. But they won't.

So, are the investors wiser than the columnists? Is the IMF going to come through, even though (1) Europe is not yet consolidated politically, and (2) the ECB will continue to refuse to inflate? Is the IMF Santa Claus? Or will it turn out that the ECB is going to play Santa this year?

The investors don't care. One of these scenarios has to be true, because the alternative is a crash. France will have its credit rating downgraded. Sarkozy's government will fall.

The Eurozone needs a lot more than €600 billion. It needs something in the range of €2 trillion in a TARP-like bailout. And this doesn't include however much the ECB must inflate to keep the banks solvent. This is the opinion of the other Sarkozy: Nicholas' half brother, who is a senior manager of the Carlyle Group, the third largest private hedge fund on earth. Among its investors are George H. W. Bush and the rich bin Ladens.

How soon is this enormous infusion of capital needed? A lot sooner than most people think, he says.

Stock market investors on November 28 were saying, "No problem!" The money will be forthcoming. From whom? No one knows. From bonds issued by a unified government that does not exist and which most voters oppose? Bonds purchased by whom? By the ECB, which has held out against major increases? By nearly insolvent large banks? By private investors?

Who is the Santa who will come in the night with toys for good politicians? Who are these good politicians? Politicians who say that the two European Union treaties need not be honored, since they do not authorize fiscal union or central bank purchases of bonds issued by such a political entity.

Τhe rule of a cosmopolitan elite

How the EU oligarchy has downsized democracy

So-called liberals and leftists have become obsessed with constructing a political firewall between the elite and the multitude.

By Frank Furedi

Over the past month, it has become clear that the European Union doesn’t simply suffer from a democratic deficit; rather, it has decided that in the current climate of crisis and uncertainty, the institutions of government must be insulated and protected from public pressure. In Brussels, and among an influential coterie of European opinion-makers, the idea that ordinary people have the capacity to self-govern is dismissed as at best a naive prejudice, and at worst a marker for right-wing populism.

As we shall see, this desire to renounce the politics of representation is by no means confined to EU technocrats. To no one’s surprise, many businesspeople and bankers also prefer the new unelected governments of Greece and Italy to regimes that are accountable to their electorates. And such elitist disdain for nations’ democratic representative institutions is also shared by sections of the left and the intelligentsia, too. So in his contribution on the crisis of democracy, Jürgen Habermas, the leading leftist German philosopher, writes off national electorates as ‘the preserve of right-wing populism’ and condemns them as ‘the caricature of national macrosubjects shutting themselves off from each other’.

Indeed, it isn’t the old-fashioned conservative detractors of the multitude who are at the forefront of the current cultural turn against democratic will-formation – no, it is liberal advocates of expert-driven technocratic rule who are now the most explicit denouncers of democracy. The current political attack on the principles of representative democracy is founded on three propositions. First it is claimed that the people cannot be trusted to support policies that are necessary for the preservation and improvement of society. Secondly, it is suggested that there is an important trade-off to be made between democracy and efficiency, and that in a time of crisis the latter must prevail over the former. And finally, anti-democratic ideologues believe that governments, especially democratic governments, have lost the capacity to deal with the key problems facing societies in today’s globalised world.

The inconvenience of democratic accountability

Governments across Europe fear talking openly to their electorates about the scale of the problems in their societies. They believe that if they introduce the punitive austerity measures required to stave off the disintegration of the economy, their people will turn against them. Consequently, their principal objective is to insulate themselves from public pressure.

Numerous commentators have mistakenly argued that this project of constructing a political firewall between the people and the institutions of government is simply a response to the pressures of market forces. So, the soft technocratic coups in Greece and Italy have been attributed to ‘neo-liberalism’ and the global markets. ‘The world’s statesmen no longer shape events but merely respond to them, in thrall of market forces’, says a columnist for the Observer. In the same vein, the Independent’s Paul Vallely wrote of a ‘market coup’, which has ‘suspended, if not overthrown, democracy in Greece’. No doubt the financial markets placed tremendous pressure on the governing institutions of Greece and Italy. But the EU’s political elites did not need to be ‘dictated’ to by the markets; they were more than happy to evade their responsibilities by hiding behind technocrats and experts.

As usual, it was the European Commission president José Manuel Barroso who explained the necessity for technocratic, insulated decision-making. He explained that the non-democratically appointed governments of Italy and Greece have been installed ‘not just because they’re technocrats, but because it [is] easier to ask independent personalities to construct political consensus’. Barroso did not need to spell out what these ‘personalities’ were independent of, because it is pretty evident that their main virtue is that they are independent of the electorate. For Barroso, effective policymaking means getting rid of the distractions thrown up by the process of public accountability.

The tendency to depict democratic accountability as a deeply flawed, unpredictable thing is based on the belief that ordinary people lack the intellectual resources to deal with the complicated challenges facing policymakers. According to the traditional aristocratic version of this argument, since people will inevitably react against taking difficult decisions, it makes far more sense simply for someone else to take those decisions on their behalf.

In recent decades, this claim has been supplemented by a new thesis: that ordinary people are so misguided by the media or the church or some other institution that they simply do not know what is in their best interests anymore. ‘People getting their fundamental interests wrong is what American political life is all about’, asserted Thomas Frank in his influential US bestseller What’s the Matter with Kansas? How Conservatives Won the Heart of America. If this wasn’t the case, Frank says, then why on earth would they vote for the Republicans?

Contempt for the intellectual and moral capacities of the multitude invariably leads many self-proclaimed ‘enlightened’ commentators to distrust the public. Such anti-public sentiments are often expressed by environmentalists, who regard ordinary folk as far too selfish or too in thrall to consumerism to vote for policies that will require them to make the kind of sacrifices that might ‘save the planet’. So Australian academic Clive Hamilton has argued that the ‘practices of democracy at times do not sit comfortably with the best advice of those most qualified and knowledgeable’. As someone who considers himself to be among the ‘most qualified and knowledgeable’, Hamilton feels concerned ‘about the corpses of science, reason and expertise that democracy is leaving in its wake’.

Upholding the authority of the ‘most qualified and knowledgeable’ invariably leads to the downsizing of democratic authority. One advocate of soft coercion of the people, the green journalist Johann Hari, has argued that since ‘we’ll save the planet only if we’re forced to’, coercion is necessary in order to make us behave. He justifies the use of compulsion on the grounds that the issue of the environment is far too important to be decided through the unpredictable institutions of democracy. ‘[E]ven the most hardcore libertarians agree that your personal liberty ends where you actively harm the liberty of another person’, argued Hari in defence of compelling people to adopt a green lifestyle.

Disappointment with the intellectual and moral resources of ordinary people doesn’t mean that Thomas Frank or Clive Hamilton is an anti-democratic ideologue. But what their loss of faith in democracy expresses is a pragmatic and unprincipled attitude towards the ideal of political representation. Like bankers and EU policymakers, they have greater faith in technocrats and experts than in the electorate. The instinct to restrain the influence of popular will is even expressed by Anthony Barnett, editor of openDemocracy, who is uncomfortable with the idea of the UK parliament taking a decision on the death penalty. He feels reassured that Britain’s elected parliament ‘may debate but it cannot in fact introduce the death penalty’, because the European Court of Human Rights has ‘ruled that the death penalty does in fact contravene the European Convention [on Human Rights]’. The only difference between Barroso, Barnett and Hamilton is which expert institution they uphold as being preferable to the institutions of democratic accountability.

When it comes to making a decision about economic austerity, the environment or the death penalty, apparently the views of the electorate must now give way to the views of the ‘most qualified and knowledgeable’.

The democracy/efficiency trade off

Thinkers who argue against democratic political accountability often assert that representatives of the people are far less able to deal with complex issues, certainly in comparison with technocrats and experts. Of course, every modern political institution requires and depends upon the advice and input of scientists, engineers and experts. But what the advocates of the current technocratic turn demand is not simply that politicians consider such advice, but that they defer to it, that they bow before the wisdom of the expert. In its more caricatured form, this technocratic turn assumes the character of an expert-dominated polity. So Joschka Fischer, the former German foreign minister and grand old man of the Green Party, has talked about the need for an ‘avant garde of the United States of Europe’.

The socialist state is necessarily a police state

Individualism and the Industrial Revolution

by Ludwig von Mises

Liberals stressed the importance of the individual. The 19th-century liberals already considered the development of the individual the most important thing. "Individual and individualism" was the progressive and liberal slogan. Reactionaries had already attacked this position at the beginning of the 19th century.

The rationalists and liberals of the 18th century pointed out that what was needed was good laws. Ancient customs that could not be justified by rationality should be abandoned. The only justification for a law was whether or not it was liable to promote the public social welfare. In many countries the liberals and rationalists asked for written constitutions, the codification of laws, and for new laws which would permit the development of the faculties of every individual.

A reaction to this idea developed, especially in Germany where the jurist and legal historian Friedrich Karl von Savigny (1779–1861) was active. Savigny declared that laws cannot be written by men; laws are developed in some mystical way by the soul of the whole unit. It isn't the individual that thinks — it is the nation or a social entity which uses the individual only for the expression of its own thoughts. This idea was very much emphasized by Marx and the Marxists. In this regard the Marxists were not followers of Hegel, whose main idea of historical evolution was an evolution toward freedom of the individual.

From the viewpoint of Marx and Engels, the individual was a negligible thing in the eyes of the nation. Marx and Engels denied that the individual played a role in historical evolution. According to them, history goes its own way. The material productive forces go their own way, developing independently of the wills of individuals. And historical events come with the inevitability of a law of nature. The material productive forces work like a director in an opera; they must have a substitute available in case of a problem, as the opera director must have a substitute if the singer gets sick. According to this idea, Napoleon and Dante, for instance, were unimportant — if they had not appeared to take their own special place in history, someone else would have appeared on stage to fill their shoes.

To understand certain words, you must understand the German language. From the 17th century on, considerable effort was spent in fighting the use of Latin words and in eliminating them from the German language. In many cases a foreign word remained although there was also a German expression with the same meaning. The two words began as synonyms, but in the course of history, they acquired different meanings. For instance, take the word Umwälzung, the literal German translation of the Latin word revolution. In the Latin word there was no sense of fighting. Thus, there evolved two meanings for the word "revolution" — one by violence, and the other meaning a gradual revolution like the "Industrial Revolution." However, Marx uses the German word Revolution not only for violent revolutions such as the French or Russian revolutions, but also for the gradual Industrial Revolution.

Incidentally, the term Industrial Revolution was introduced by Arnold Toynbee (1852–1883). Marxists say that "What furthers the overthrow of capitalism is not revolution — look at the Industrial Revolution."

Marx assigned a special meaning to slavery, serfdom, and other systems of bondage. It was necessary, he said, for the workers to be free in order for the exploiter to exploit them. This idea came from the interpretation he gave to the situation of the feudal lord who had to care for his workers even when they weren't working. Marx interpreted the liberal changes that developed as freeing the exploiter of the responsibility for the lives of the workers. Marx didn't see that the liberal movement was directed at the abolition of inequality under law, as between serf and lord.

Karl Marx believed that capital accumulation was an obstacle. In his eyes, the only explanation for wealth accumulation was that somebody had robbed somebody else. For Karl Marx the whole Industrial Revolution simply consisted of the exploitation of the workers by the capitalists. According to him, the situation of the workers became worse with the coming of capitalism. The difference between their situation and that of slaves and serfs was only that the capitalist had no obligation to care for workers who were no longer exploitable, while the lord was bound to care for slaves and serfs. This is another of the insoluble contradictions in the Marxian system. Yet it is accepted by many economists today without realizing of what this contradiction consists.

According to Marx, capitalism is a necessary and inevitable stage in the history of mankind leading men from primitive conditions to the millennium of socialism. If capitalism is a necessary and inevitable step on the road to socialism, then one cannot consistently claim, from the point of view of Marx, that what the capitalist does is ethically and morally bad. Therefore, why does Marx attack the capitalists?

Marx says part of production is appropriated by the capitalists and withheld from the workers. According to Marx, this is very bad. The consequence is that the workers are no longer in a position to consume the whole production produced. A part of what they have produced, therefore, remains unconsumed; there is "underconsumption." For this reason, because there is underconsumption, economic depressions occur regularly. This is the Marxian underconsumption theory of depressions. Yet Marx contradicts this theory elsewhere.

Marxian writers do not explain why production proceeds from simpler to more and more complicated methods.

Nor did Marx mention the following fact: About 1700, the population of Great Britain was about 5.5 million; by the middle of 1700, the population was 6.5 million, about 500,000 of whom were simply destitute. The whole economic system had produced a "surplus" population. The surplus population problem appeared earlier in Great Britain than on continental Europe. This happened, first of all, because Great Britain was an island and so was not subject to invasion by foreign armies, which helped to reduce the populations in Europe. The wars in Great Britain were civil wars, which were bad, but they stopped. And then this outlet for the surplus population disappeared, so the numbers of surplus people grew. In Europe the situation was different; for one thing, the opportunity to work in agriculture was more favorable than in England.

The old economic system in England couldn't cope with the surplus population. The surplus people were mostly very bad people — beggars and robbers and thieves and prostitutes. They were supported by various institutions, the poor laws,[1] and the charity of the communities. Some were impressed into the army and navy for service abroad. There were also superfluous people in agriculture. The existing system of guilds and other monopolies in the processing industries made the expansion of industry impossible.

In those precapitalist ages, there was a sharp division between the classes of society who could afford new shoes and new clothes, and those who could not. The processing industries produced by and large for the upper classes. Those who could not afford new clothes wore hand-me-downs. There was then a very considerable trade in secondhand clothes — a trade which disappeared almost completely when modern industry began to produce also for the lower classes. If capitalism had not provided the means of sustenance for these "surplus" people, they would have died from starvation. Smallpox accounted for many deaths in precapitalist times; it has now been practically wiped out. Improvements in medicine are also a product of capitalism.

Arguably

Arguing Hitchens

Arguably: Essays [1], Christopher Hitchens, Twelve Books, 788 pages

By George Scialabba 
^[2]It has always been with me a test of the sense and candor of anyone belonging to the opposite party whether he allowed Christopher Hitchens to be an ornament of Anglo-American literary journalism. Hundreds of novelists, historians, memoirists, and politicians have undergone Hitchens’s critical attentions, to the frequent edification and unfailing entertainment of his readers. Few present-day journalists have a detectable, much less unmistakable, prose style; the suavity and piquancy of Hitchens’s prose are unmatched among his critical peers.
Equally admirable is his breadth of reading; he has made an art of casual allusion. “Erudition” is not quite right; it suggests labor, and what is most impressive about the way Hitchens liberally sprinkles apposite quotes from Auden and Larkin, Waugh and Wodehouse, Jefferson and Churchill throughout his essays is his apparent effortlessness. He always seems to have been reading just the right book at just the right moment—though at a certain point it dawns on you that it can’t be an accident; he really must be intimate with an extraordinary expanse of modern European history and literature.


The essays collected in Prepared for the Worst (1988), For the Sake of Argument (1991), Unacknowledged Legislation (2000), Love, Poverty, and War (2004), and now Arguably range almost inconceivably widely. A short gallery of personal favorites would begin with his portrait of Thomas Paine, whom he praises in terms that strikingly parallel Lionel Trilling on Orwell:

Everything he wrote was plain, obvious, and within the mental compass of the average. In that lay his genius. And, harnessed to his courage (which was exceptional) and his pen (which was at any rate out of the common), this faculty of the ordinary made him outstanding.

It would include his portrait of Conor Cruise O’Brien, to whose variegated political and intellectual career Hitchens renders difficult and delicate justice. His first embattled defense of Orwell (several others would follow) remarks penetratingly that “the essence of Orwell’s work is a sustained criticism of servility. It is not what you think but how you think that matters.” There are blistering takedowns of English politicians Reginald Maudling and Michael Foot and American neoconservatives Norman Podhoretz and Charles Krauthammer, which, brief though they are, deserve to outlive their subjects. There is a harrowing report from El Salvador under the death squads, with a muted and diffident, but all the more affecting, tribute to the Catholic resistance.
A tossed-off column from 25 years ago is virtually Hitchens’s sole effort to formulate a political philosophy. It is so good that one is furious with him for never returning to the subject:

I bought an armful of socialist magazines in London recently, and was impressed by their dogged iteration of the new rage for free-market, individualist formulae. … Once the intoxication of this ‘new thinking’ has worn off, it will again become boringly clear that all macro questions are questions that confront society rather than the individual. … This is true of the imperiled web of nature and climate, which when messed around with can lead to dustbowls in one province and floods in the neighboring one. It is true of the water that can bring lead into the blood and bone of children. There is no ‘minimal government’ solution to any of these pressing matters.
One doesn’t want or need to argue this with any relish. The idea of the individual should not be glibly counterposed to the idea of society. After all, what is society made up of, if not individuals? But there are two ways of facing collective responsibilities. One is to ignore them until it is too late, at which point things like rationing, conscription, and regimentation become the options, irrespective of whether the system is capitalist or socialist. The other is to recognize them in time and take the necessary measures freely and by consent. But there is no evading these responsibilities altogether, or of dismissing them as ‘One World sentimentality.’

Alas, these examples have only gotten us through Hitchens’s first collection, Prepared for the Worst. There is no space left to mention his authoritative pieces on the New York intellectuals and Noel Annan’s portrait of the British Establishment, or “Booze and Fags,” a jolly paean to alcohol and tobacco, or an illuminating essay on Daniel Deronda (all in For the Sake of Argument); the pair of exquisite tributes to Oscar Wilde, the discerning essays on Conan Doyle, Kipling, and Anthony Powell, or the full-on considerations of Isaiah Berlin and Whittaker Chambers, Gore Vidal and Andy Warhol (in Unacknowledged Legislation); the magisterial assessments of Trotsky and Churchill, the wonderfully perceptive, V.S. Pritchett-like essays on Byron, Huxley, Waugh, Joyce, Proust, Borges, and Bellow, or the simultaneously rollicking and haunting record of a trip the length of Route 66 in a rented red Corvette (in Love, Poverty, and War).


And even this leaves out his books: No One Left to Lie To, a definitive account (or as near as possible) of Bill Clinton’s mendacity; The Trial of Henry Kissinger, which has convinced hundreds of thousands of readers (some of them sitting magistrates in foreign countries) that President Obama’s fellow Nobel laureate should be behind bars; and God Is Not Great, the first New York Times number one bestseller to advance that claim. It’s clear, I’m afraid, that within the confines of a mere book review, any short gallery of personal favorites will be frustratingly incomplete. There’s simply too much very good Hitchens.

Unbelievable

Canada: "We Believe in Free Trade" and Will End Dozens of Tariffs on Imports to Help Manufacturing

By Mark Perry

TORONTO (Reuters) - "Canadian Finance Minister Jim Flaherty said on Sunday the government would eliminate tariffs on dozens more products used by Canadian manufacturers, aiming to lower their costs and encourage more hiring. The initiative would scrap custom duties on 70 items used by businesses in sectors such as food processing, furniture and transportation equipment.

Flaherty, who estimated the tariff cuts would save Canadian businesses C$32 million ($30.5 million) a year, said the cuts were part of the Conservative government's overall free trade policy. "We believe in free trade in Canada," Flaherty said on CTV's "Question Period" program. "Some of these old-fashioned tariffs get in the way. So we're getting rid of them."

As part of its Economic Action Plan to pull Canada through the global slowdown of 2008-09, the government has eliminated more than 1,800 tariff items, providing about C$435 million a year in tariff relief. Its stated goal is to make Canada a tariff-free zone for manufacturers by 2015."

A few thoughts:

1. We sometimes forget that "tariffs" and "duties" are really "taxes" on imports; and therefore eliminating or reducing tariffs or duties is the same thing as eliminating or reducing taxes on consumers and businesses buying foreign products.  In the same way that "tax cuts" can stimulate economic activity, "tariff cuts" do the same, and that's the approach being taken in Canada. 

2. When it comes to helping domestic manufacturers through trade policy, the usual approach is to impose tariffs or restrictions on imports as a way to protect domestic producers from more efficient foreign producers.  But the Canadian case illustrates the reality that domestic producers are often using foreign-produced inputs, parts and supplies, to manufacture products domestically, and in that case reducing tariffs on imports ("cutting taxes") helps domestic manufacturers by lowering the cost of their foreign inputs.  

The chart above displays U.S. imports by category for 2011 (through September) and shows that roughly 58% of imported goods are: a) industrial supplies and b) capital equipment that are being purchased by U.S. producers.  If we were to completely eliminate tariffs on imports, U.S. manufacturers relying on foreign inputs would receive significant benefits, while other U.S. manufacturers competing against imports would be less protected from foreign competition.  

Bottom Line: Even though we usually think of increasing exports as the route to increased domestic manufacturing output and employment, Canada's trade policy of reducing tariffs for its manufacturing sector highlights the important contribution of imports to domestic manufacturing.

Update: By keeping its currency undervalued, China is in effect subsidizing American businesses and consumers buying products "Made in China."   We should be thankful for that form of "foreign aid," or transfer of wealth from relatively poor Chinese to rich Americans, as unfair as that might be.  If the U.S. pressures China to appreciate its currency, it would be exactly the same as imposing (or increasing) tariffs on Chinese products.  And just like increased tariffs would make Americans worse off overall, I would argue that a stronger yuan would have the same result.

Deregulation is our last, best hope.

Curing the Unemployment Blues

by Richard A. Epstein 

One of the enduring faiths of modern progressive thought is that omniscient policy makers can cancel out the errors of one form of economic intervention by implementing a second. That lesson was brought home to me when I was a third year student at Yale Law School, whenever discussion turned to the perennial debate over the minimum wage. The charge against the minimum wage was that it had to introduce some measure of unemployment into labor markets by raising wages above the market-clearing price. “Not to worry,” came the confident reply. The way to handle that imperfection is to raise the level of welfare benefits in order to remove the dislocations created by the minimum wage. If one government program had its rough edges, a second government program could ride to the rescue. Implicit in this argument was the tantalizing, but fatal, assumption of economic abundance: The government has the power to tax, and with that power, has access to a cornucopia of public funds that never runs empty—at least until it does.

This abundance-based argument is not confined solely to the minimum wage, but has been extended to countless programs of state intervention in labor, or indeed, any market. Thus in 1935, American labor law created a system of collective bargaining whereby employees bargain with a single voice. That system allows unions to seek, and often obtain, monopoly profits for their members. That system in turn reduces the number of workers hired by the unionized firms. So what is to be done with the excess workers? They should be shepherded into job-training programs, funded by the public, which would allow them to reenter the labor force with other jobs.

For example, job training is the solution for those workers in the Northwest whose skilled jobs in the timber industry have been decimated by a variety of environmental diktats, of which the Endangered Species Act of 1973 is only the most notable. That same two-pronged strategy is evident in the American Jobs Act. Key provisions require recipients of government expenditures (of at least $50 billion) to adopt Buy American programs or to pay prevailing wages, both of which hobble the recipient firms. One predictable offset is tax credits to employers who hire long-term unemployed workers, coupled with yet another “Bridge to Work” job-training program.

The two-sided programs so popular in the United States also play a large role in the European Union, which has stronglycollectivist labor policies. There, employers find it next to impossible to fire workers, to whom they owe a rich set of statutory benefits covering everything from maximum hours to minimum vacations, funded, of course, by government tax revenues. Meanwhile, displaced or unemployed workers receive generous welfare benefits, which reduce their incentive to find new work. The upshot is chronic levels of unemployment in countries like Greece, Italy, Spain, and Portugal, whose fragile financial conditions have put into doubt the survival of the Euro and indeed the European Union.

The massive level of economic dislocation both at home and abroad offers conclusive evidence that this venerable two-part strategy does not, and cannot work. Pinpointing its systematic errors is critical to avoid expanding on past mistakes. The proper approach is simple to state but hard to execute: Always seek “first-best” solutions. The correct response to any restriction on capital or labor is its prompt removal. A “second-best” effort to introduce some offsetting program only makes matters worse. The two errors do not cancel out. They cumulate.

The point is made by looking at the interaction between tough minimum wage laws and high unemployment benefits. The minimum wage law introduces two immediate distortions into labor markets, which grow as the gap between the market-clearing wage and the minimum wage increases. First, it imposes huge administrative burdens on the Department of Labor and other state and federal agencies that have to enforce the law, and the private firms who have to be sure that they act in compliance with its commands. It is no easy thing to define an “hour” for the full range of jobs. There are no uniform answers for dealing with statutory exemptions, commuting time, work breaks, sick leave, or jobs away from home. Overtime pay is a world unto itself. The complex regulations needed to implement this one provision of the labor code require large investments from firms who need to avoid the heavy exposure to government sanctions and private lawsuits from noncompliance. None of these costs are eliminated by the adoption of any program of unemployment benefits or job creation, each of which imposes its own distinct, and costly, administrative overlay.

These costs have to be borne by someone else, and most of them are in fact covered by a combination of general revenues and specific unemployment taxes on current workers. Both of these programs produce additional distortions. Any tax on general revenues reduces the income available for both investment and consumption in all sectors of the economy. Unlike taxes that are imposed to create sensible infrastructure and other public goods, these unemployment taxes do not generate benefits for the parties taxed that equal even a small fraction of the costs that they impose. Firms do not benefit by paying income taxes to government agencies whose job it is to oversee their operations. The same can be said of specific taxes geared to fund unemployment programs, which hit most heavily those firms that have expanded their workforce in ways that reduce the ranks of the unemployed. Make no mistake about it: Any effort to cushion the blow of unemployment also functions, in both the short and long run, as an impediment to job creation. The effort to cushion the blow of unemployment necessarily adds to the ranks of the unemployed.

The two-part strategy also fails as a long-term measure. The consequence of higher rates of unemployment is the detachment of workers from the workforce. One of the serious mistakes of much labor market regulation, including the minimum wage law, is to assume that the only compensation given to employees is found in wages and benefits. But a sounder understanding of labor markets indicates that workers at all levels of the workforce also gain additional marketable skills from working on a steady job. For workers at the bottom of the ladder, those key skills could be as simple as knowing how to keep to a schedule, how to dress for work, how to take instruction, how to work in teams, and how to balance a ledger. For workers up and down the income distribution, idleness means a deterioration of work skills that reduces the potential for job advancement down the road.

Government job-training programs are a feeble substitute for real work experience. Labor markets are always dynamic while job-assistance programs are designed by agency bureaucrats who have all the flexibility of a Soviet bureaucracy. These agencies lack a profit motive, they are heavily budget-constrained, and they specialize in the use of outdated equipment for jobs that will have disappeared before the training program is completed. It has long been known that most graduates of these programs don’t get jobs. That trend continues today, especially in fields like energy.

The only lesson of History is that it does not teach us anything

Lessons of History?

By Thomas Sowell

It used to be common for people to urge us to learn "the lessons of history." But history gets much less attention these days and, if there are any lessons that we are offered, they are more likely to be the lessons from current polls or the lessons of political correctness.

Even among those who still invoke the lessons of history, some read those lessons very differently from others.

Talk show host Michael Medved, for example, apparently thinks the Republicans need a centrist presidential candidate in 2012. He said, "Most political battles are won by seizing the center." Moreover, he added: "Anyone who believes otherwise ignores the electoral experience of the last 50 years."

But just when did Ronald Reagan, with his two landslide election victories, "seize the center"? For that matter, when did Franklin D. Roosevelt, with a record four consecutive presidential election victories, "seize the center"?

There have been a long string of Republican presidential candidates who seized the center -- and lost elections. Thomas E. Dewey, for example, seized the center against Harry Truman in 1948. Even though Truman was so unpopular at the outset that the "New Republic" magazine urged him not to run, and polls consistently had Dewey ahead, Truman clearly stood for something -- and for months he battled for what he stood for.

That turned out to be enough to beat Dewey, who simply stood in the center.

It is very doubtful that most of the people who voted for Harry Truman agreed with him on all the things he stood for. But they knew he stood for something, and they agreed with enough of it to put him back in the White House.

It is equally doubtful that most of the people who voted for Ronald Reagan in his two landslide victories agreed with all his positions. But they agreed with enough of them to put him in the White House to replace Jimmy Carter, who stood in the center, even if it was only a center of confusion.

President Gerald Ford, after narrowly beating off a rare challenge by Ronald Reagan to a sitting president of his own party, seized the center in the general election -- and lost to an initially almost totally unknown governor from Georgia.

President George H.W. Bush, after initially winning election by coming across as another Ronald Reagan, with his "Read my lips, no new taxes" speech, turned "kinder and gentler" -- to everyone except the taxpayers -- once he was in office. In other ways as well, he seized the center. And lost to another unknown governor.

More recently, we have seen two more Republican candidates who seized the center -- Senators Bob Dole in 1996 and John McCain in 2008 -- go down to defeat, McCain at the hands of a man that most people had never even heard of, just three years earlier.

Michael Medved, however, reads history differently.

To him, Barry Goldwater got clobbered in the 1964 elections because of his strong conservatism. But did his opponent, Lyndon Johnson, seize the center? Johnson was at least as far to the left as Goldwater was to the right. And Goldwater scared the daylights out of people with the way he expressed himself, especially on foreign policy, where he came across as reckless.

On a personal note, I wrote a two-line verse that year, titled "The Goldwater Administration:"

Fifteen minutes of laissez-faire,

While the Russian missiles are in the air.

Senator Goldwater was not crazy enough to start a nuclear war. But the way he talked sometimes made it seem as if he were. Ronald Reagan would later be elected and re-elected taking positions essentially the same as those on which Barry Goldwater lost big time. Reagan was simply a lot better at articulating his beliefs.

Michael Medved uses the 2008 defeat of tea party candidates for the Senate, in three states where Democrats were vulnerable, as another argument against those who do not court the center. But these were candidates whose political ineptness was the problem, not conservatism.

Candidates should certainly reach out to a broad electorate. But the question is whether they reach out by promoting their own principles to others or by trying to be all things to all people.

Virtual reality gone out of control

2012=1968?

 

In 2008, Barack Obama lit a fire among young activists. Next year, Occupy Wall Street could consume him.

By John Heilemann

The post-Zuccotti era of Occupy Wall Street began for Max Berger just after 1 a.m. on November 15, when he learned via text message that a forcible eviction of the park was close at hand. At 26, Berger is a redheaded Reed College alum and professional activist; his employers have included the Progressive Change Campaign Committee and Van Jones’s outfit, Rebuild the Dream. By hard-core standards, he had come late to the OWS action, not visiting the park until a week after the protest got going on September 17. But Berger found himself sucked in and became one of its central players. Now, with Zuccotti under siege, he raced to the park and fired off a series of frantic tweets—before being put in handcuffs. “People singing Marley!” “Press not being let in. This is gonna be some Tiananmen shit.” “They can take this park, but they can’t stop this movement. This will backfire. We will win.”

Berger’s optimism was shared by his OWS cohorts. Upset as the organizers were about losing the symbolic value of the encampment at Zuccotti, the way it happened—in a late-night raid by police in riot gear, with reporters denied access and even arrested—had its own symbolic oomph. The organizers thought, too, that the eviction would confer another benefit: catalyzing turnout for the next major OWS demonstration, which was scheduled to take place two days later. And although the “day of action” on November 17 failed to shutter the stock exchange, the demo’s marquee goal, the show of force in Gotham was impressive—and replicated on a smaller scale in cities around the country.

When histories of Occupy Wall Street are written, those days in November will no doubt be seen as a watershed. In just two months of existence, OWS had scored plenty of victories: spreading from New York to more than 900 cities worldwide; introducing to the vernacular a potent catchphrase, “We are the 99 percent”; injecting into the national conversation the topic of income inequality. But OWS had also suffered setbacks. The less savory aspects of the occupations had provided the right with fuel for feral slander (Drudge: “Death, Disease Plague ‘Occupy’ Protests”) and casual caricature. Even among some protesters, there was a sense that stagnation had set in. Then came the Zuccotti clampdown—and the popular perception that it meant the end of OWS.

It’s perfectly possible that this perception will be borne out, that the raucous events of November 17 were the last gasps of a rigor-mortizing rebellion. But no one seriously involved in OWS buys a word of it. What they believe instead is that, after a brief period of retrenchment, the protests will be back even bigger and with a vengeance in the spring—when, with the unfurling of the presidential election, the whole world will be watching. Among Occupy’s organizers, there is fervid talk about occupying both the Democratic and Republican conventions. About occupying the National Mall in Washington, D.C. About, in effect, transforming 2012 into 1968 redux.

The people plotting these maneuvers are the leaders of OWS. Now, you may have heard that Occupy is a leaderless ­uprising. Its participants, and even the leaders themselves, are at pains to make this claim. But having spent the past month immersed in their world, I can report that a cadre of prime movers—strategists, tacticians, and logisticians; media gurus, technologists, and grand theorists—has emerged as essential to guiding OWS. For some, Occupy is an extension of years of activism; for others, their first insurrectionist rodeo. But they are now united by a single purpose: turning OWS from a brief shining moment into a bona fide movement.

That none of these people has yet become the face of OWS—its Tom Hayden or Mark Rudd, its Stokely Carmichael or H. Rap Brown—owes something to its newness. But it is also due to the way that Occupy operates. Since the sixties, starting with the backlash within the New Left against those same celebrities, the political counterculture has been ruled by loosey-goosey, bottom-up organizational precepts: horizontal and decentralized structures, an antipathy to hierarchy, a fetish for consensus. And this is true in spades of OWS. In such an environment, formal claims to leadership are invariably and forcefully rejected, leaving the processes for accomplishing anything in a state of near chaos, while at the same time opening the door to (indeed compelling) ad hoc reins-taking by those with the force of personality to gain ratification for their ideas about how to proceed. “In reality,” says Yotam Marom, one of the key OWS organizers, “movements like this are most conducive to being led by people already most conditioned to lead.”

And so in coffee shops and borrowed conference rooms around the city, far from the sound and fury in the park and on the streets, the prime movers have been doing just that—meeting, planning, talking (and talking) about the future of OWS. The debates between them have been fierce. Tensions have been laid bare, factions fomented, and ideological cleavages exposed—all of it a familiar recapitulation of the growing pains experienced by protesters of the past, from those in favor of civil rights and against the Vietnam War in the sixties to those fighting for workers’ rights in the thirties.