Egypt’s Coup Conundrum

The grand hopes of the Arab Spring are withering away

By Doug Bandow

There are many grand failures of U.S. foreign policy. Egypt has joined the pantheon, with Washington seemingly under attack by every faction in Cairo.

Egypt long has been a national wreck. Its recent history featured rule by an indolent king and a leftish Arab nationalist. A couple of authoritarian generals followed. The economy was ruined by dirigisme economic plans, endless bureaucratic incompetence, and pervasive political corruption.

Washington was only too happy to go along in the name of “stability” since Cairo backed U.S. policy and preserved peace with Israel. This ugly Realpolitik persisted even after the Cold War ended and the Bush administration launched a war to end tyranny and promote democracy.

The people of Egypt finally had enough, forcing the Obama administration’s opinion to shift from “Mubarak is our friend” to “Mubarak should leave in an orderly fashion” to “Mubarak should go—now!” However, the end of autocracy loosed Islamist forces.

This was not what Washington desired, but Egyptians weren’t concerned with what Washington desired. Mubarak’s fall led to the election of the Muslim Brotherhood’s Mohamed Morsi and approval of an Islamist-oriented constitution. Both were flawed, but both were approved democratically. Washington had no choice but to accept Morsi’s rule, after spending decades supporting autocrats who had suppressed the Brotherhood.

Alas, President Morsi failed politically. He failed to accept government limits, especially checks on executive authority. He failed to ensure accountability for government. He failed to accommodate religious minorities and political opponents who feared centralization of power. He failed to reassure those who feared the Brotherhood was determined to Islamicize Egyptian society.

He also failed economically. He failed to open and deregulate the economy. He failed to encourage foreign investors. He failed to offer opportunity to impoverished Egyptians.

Why Fight for King and Country?

There is something monstrously out of whack about going to war for a large nation state

By Robert Higgs

I can understand why a man might take up arms in defense of himself, his family, his friends, perhaps even his neighborhood or his town. But once we get past the lived-in milieu, a man’s risking his life, limbs, health, and mental composure to fight for a large politically defined unit makes less and less sense, the larger the unit. Why, for example, should a man from Arizona go to war on behalf of people from New Jersey, people with whom he is not acquainted, people about whom he knows little or nothing. The man from Arizona might well have more in common with and greater concern for a typical “enemy” soldier than he has for the people of New Jersey. He might even dislike people from New Jersey and like the enemy people.

I do not care much for many Americans. I find their apparent values and modes of life offensive or worse, although I am personally acquainted with only a handful of them and so I may be doing a disservice to many of those with whom I am not personally acquainted. But in view of the constraints everyone faces, no one can really know, much less like, more than, say, a few hundred other people. What am I to make of a demand that I bear great personal risks in defense of hundreds of millions of complete strangers—for all I know, these people don’t even exist, and the Census Bureau has perpetrated a gigantic fraud in its declarations that they do.

On the opposite side of the ledger, I do know and like—indeed greatly admire and esteem—scores of people in other countries. I cannot imagine going to war against them; I’d sooner go to prison than harm them. So, if the U.S. government went to war against Guatemala, for example, it would have to count me out; I’ve far too many dear friends there even to consider joining in such violence. I wonder sometimes how many of the U.S. soldiers who went to Iraq to kill people there had ever seen, much less been acquainted with, an Iraqi previously. What impels a man to kill perfect strangers, especially perfect strangers who pose no threat to him or to those he cares about at home? To me, it defies basic elements of humanity. One might say that such killers are responding more to their allegiance to their own government’s leaders, but why should they have such a loyalty in the first place? Not one soldier in a thousand has ever personally encountered a top American political leader. Unless the soldier is extraordinarily dense, he understands vaguely that such people are all liars and crooks. Why should he kill other people and risk being killed himself merely because these political kingpins want him to do so? Does he fail completely to see the government’s propaganda for what it is?

I realize, of course, that the questions I have raised are merely queries about the basic nuts and bolts of the great machine of nationalism, and I am aware that astute philosophers, social scientists, and others have labored long and hard to delineate the configuration and operation of this machine. Nevertheless, I find it worthwhile to step back from the abstractions and highfalutin scholarly talk and to ask questions about national loyalty as if we were encountering it for the first time. When we do so, it strikes me that we are accustomed to taking for granted some things that are, at best, quite counter-intuitive and highly perplexing.  

Mirror, Mirror, on the Wall, Which Nation Is in the Deepest Fiscal Doo-Doo of All?

United States in a worse long-run position than Greece, Italy, Spain, Portugal, France, and other failing welfare states

By DANIEL J. MITCHELL

According to the Bank for International Settlements, the United States has a terrible long-run fiscal outlook. Assuming we don’t implement genuine entitlement reform, the only countries in worse shape are the United Kingdom and Japan.

The Organization for Economic Cooperation and Development, meanwhile, also has a grim fiscal outlook for America . According to their numbers, the only nations in worse shape are New Zealand and Japan.

But I’ve never been happy with these BIS and OECD numbers because they focus on deficits, debt, and fiscal balance. Those are important indicators, of course, but they’re best viewed as symptoms.

The underlying problem is that the burden of government spending is too high. And what the BIS and OECD numbers are really showing is that the public sector is going to get even bigger in coming decades, largely because of aging populations. Unfortunately, you have to read between the lines to understand what’s really happening.

But now I’ve stumbled across some IMF data that presents the long-run fiscal outlook in a more logical fashion. As you can see from this graph (taken from this publication), they show the expected rise in age-related spending on the vertical axis and the amount of needed fiscal adjustment on the horizontal axis.

In other words, you don’t want your nation to be in the upper-right quadrant, but that’s exactly where you can find the United States. 

Yes, Japan needs more fiscal adjustment. Yes, the burden of government spending will expand by a larger amount in Belgium. But America combines the worst of both worlds in a depressingly impressive fashion.

So thanks to FDR, LBJ, Nixon, Bush, Obama and others for helping to create and expand the welfare state. They’ve managed to put the United States in a worse long-run position than Greece, Italy, Spain, Portugal, France, and other failing welfare states. 

Prison Eugenics in the Golden State

No woman should give consent on the operating table

By Carl Close

In 2003, California Governor Gray Davis issued a formal apology for the forced sterilization of inmates in the state’s prisons, a practice officially banned in 1979.

“To the victims and their families of this past injustice, the people of California are deeply sorry for the suffering you endured over the years,” he said in a press release. “It was a sad and regrettable chapter in the state’s history, and it is one that must never be repeated again.”

Given the mountains of bad publicity surrounding the Golden State’s history of forced sterilization—an estimated 20,000 male and female California inmates were sterilized from 1909 to 1964—it’s easy to see why most people might have assumed that such practices were halted long ago. But new evidence suggests that coercion continued well into the twenty-first century.

This week the non-profit Center for Investigative Reporting released a study claiming that from 2006 to 2010 California prison doctors performed tubal ligation surgery on at least 148 female inmates without having obtained the necessary state authorizations. Moreover, an additional one hundred violations may have occurred going back to the late 1990s.

According to Dr. Ricki Barnett, who heads the state committee tasked with authorizing the restricted surgery on a case-by-case basis, prison health administrators, doctors, and nurses seemed unaware that they needed special permission to perform tubal ligation on inmates.

The study supports its claims of unauthorized sterilizations with state documents and interviews with former prison staff and prisoners.

In 2010, Kimberly Jeffrey, 43, was an inmate at Valley State Prison for Women and was sedated for a C-section when a prison doctor pressured her to undergo a sterilization procedure, she told the Center for Investigative Reporting.

“He said, ‘So we’re going to be doing this tubal ligation, right?’ ” Jeffrey said. “I’m like, ‘Tubal ligation? What are you talking about? I don’t want any procedure. I just want to have my baby.’ I went straight into a panic.”

The China-US 'Brotherhood'

"Fragile"? You wish.

By Pepe Escobar 

The fifth round of the US-China Strategic and Economic Dialogue began this Thursday in Washington. This China-US "Brotherhood" does involve a lot of talk - with no perceptible action. US Think Tankland is trying to convey the impression that Beijing is now in a more fragile position relative to Washington compared with the post-financial crisis environment in 2009. Nonsense. 

It's as if the ongoing NSA (global) scandal never happened; Edward Snowden exposed how the US government has turned against its own citizens even while it keeps spying on virtually the whole planet. Then there's the meme of the Chinese economy being "in trouble", when in fact Beijing is launching a long-reaching, complex strategy to calibrate the effects of a relative economic slowdown. 

Finally, the supposed "aggressive Chinese behavior" in terms of Asian security is just spin. Beijing is building up its navy, of course - yet at the same time both China and selected members of the Association of Southeast Asian Nations are fine-tuning their tactics ahead of multilateral talks about a code of conduct for any serious problems in the South China Sea. Beijing would be foolish to go for diplomacy of the gunboat variety - which would certainly attract a US countercoup. 

Bogged down, all over
Beijing has clearly interpreted the North Atlantic Treaty Organization's "liberation" of Libya - now reverted into failed state status; US support for the destruction of Syria; and the "pivoting" to Asia as all interlinked, targeting China's ascension and devised to rattle the complex Chinese strategy of an Eurasian energy corridor. 

Yet it does not seem to be working. As Asia Times Online reported, the Iran-Pakistan (IP) pipeline may well end up as IPC, "C" being an extension to Xinjiang in western China. Beijing also knows very well how the proposed Iran-Iraq-Syria gas pipeline has been a key reason for the emphatic attack on Syria orchestrated by actors such as Qatar, Saudi Arabia and Turkey. Beijing calculates that if Bashar al-Assad stays and the US$10 billion pipeline ever gets completed (certainly with Chinese and Russian financial help) the top client may end up being Beijing itself, and not Western Europe. 

Germany’s Energiewende Is Not Just Unworkable, It Might be Illegal

The implications for the already struggling continent are enormous

By Walter Russell Mead

Germany’s Energiewende, or “energy revolution,” has been heralded by greens as a shining example of the kind of true commitment to renewable energy that our planet requires, but in practice it’s been a flop. As the country phased out its nuclear reactors in the wake of the Fukushima disaster, it heavily subsidized wind and solar farms, passing the costs of these subsidies to consumers in the form of higher electricity prices. In a bid to keep them competitive—and, well, to keep them in Germany—Berlin decided to exempt many of its energy-intensive industries from these high energy prices.

But now the EU is stepping in. The European Commission, concerned that these exemptions violate competitions laws within the trading bloc, will open up an investigation on the matter this Wednesday, Spiegel reports:

[EU Energy Commissioner Günther Oettinger] said many provisions in the law appeared to be in breach of EU single market rules and competition law. For example, he said, it wasn’t acceptable that Germay subsidizes its own wind power but makes no subsidies available to operators from Denmark and Norway that deliver windpower to Germany. [...]

The Commission plans to launch proceedings aimed not only at banning such exemptions in the future, but also requiring companies to repay the charges they were exempted from in the past.

GOP Hypocrisy and the Farm Bill

Any Republican who voted for this bill and then claims to care about the debt or deficits should be laughed off the stage

By Michael D. Tanner

Whenever Republicans attempt to cut spending for some social welfare program or another, Democrats are quick to claim that it is not unaffordable spending that the Republicans dislike, but poor people. By passing the farm bill this week — after stripping out spending for the food stamp program — House Republicans showed that that stereotype is largely true.

Make no mistake, the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, is out of control, and should be cut. Since 2000, spending on SNAP increased from just $17 billion per year to more than $78 billion in 2012, while the number of recipients rose from 17 million in 2000 to more than 48 million today. Nearly one out of every six Americans receives SNAP.

In the previous iteration of the farm bill, Republicans had attempted to cut SNAP spending by $20.5 billion over 10 years, paring the program back to 2010 levels of spending. Democrats opposed those cuts, while some Republicans didn’t believe the cuts were deep enough. As a result, the farm bill went down to well-deserved defeat.

In response the Republican leadership split the bill into two pieces, allowing Republicans to vote for agricultural subsidies without having to vote for any funding for food stamps at all. With the Republican leadership whipping the vote, including threatening wayward committee chairmen, the welfare-for-farmers-only version passed 216-208, entirely on the strength of Republican votes. In fact, only 12 Republicans voted against it.

But in passing the farm bill, Republicans demonstrated that they are just fine with bloated welfare programs as long as those welfare payments go to well-healed special interests.

In 2011, the last year for which full data is available, the average farm household had an income of $87,289, 25 % higher than the average for all U.S. households. And about a third of the farm subsidies go to the largest four percent of farm operators. If you want to see real “welfare queens,” look no further than Pilgrim’s Pride, Tyler Farms, and Riceland Foods.

How John Locke Should Have Saved The Lone Ranger

Yet another action movie rooted in the myth of the Wild West

By Sam Staley

I had a glimmer of hope for the 2013 film The Lone Ranger when I read that young U.S. attorney John Reid, aka The Lone Ranger, arrives in untamed west Texas with a copy of John Locke’s Two Treatises of Government. After watching the otherwise entertaining summer action film, I left the theater wondering if the screenwriters, or even the director, had even read the book, let alone the CliffsNotes version.

Riding into town at the near end of a rail line 1869, John Reid proclaims his desire to bring the “rule of law” to the wild, uncivilized western territories. So far so good, and this is an intriguing although hardly original beginning to the film (although economic research challenges the conventional wisdom that the West was in fact “lawless”). John Locke’s Second Treatise is widely recognized for launching the Enlightenment theory of the “social contract” between free citizens and their government into the mainstream of political discussion. The role of government, the 17th century political philosopher argued, is to protect personal liberty and freedom through the protection of life and property. Moreover, this freedom is inherent in life itself. To the extent governments (or more relevantly for the period, monarchs) violate this social contract, citizens even have the right to revolt.

Alas, despite the reference to the Locke, the “Rule of Law as Justice” theme is unhinged, and the story, plot and characters suffer as a result. The first clue is evident in one of the first scenes. John Reid is on the train with a group of Presbyterian missionaries. One of the missionaries offers up his Bible and asks Reid if he would pray with him. Instead, the supposedly well-schooled attorney declines saying that, in effect, his “bible” is Locke’s Two Treatises. What’s missing in this exchange is that Locke’s concept of social contract, and the arguments for liberty and even the right to revolution, are embedded in Natural Rights, the idea that men are born free and their natural state is liberty. These rights are granted by God, not men. Hence, the Rule of Law is an objective standard that cannot be abrogated by men. Thus, the proper biblical understanding of free will and personal freedom as a Natural Right is foundational, not just complimentary to the notion of Locke’s social contract.

It is never, ever different this time

We Must Not Forget The Lesson Of The Cyprus 'Bang! Moment' Shock

By JOHN MAULDIN,

"Future shock is the shattering stress and disorientation that we induce in individuals by subjecting them to too much change in too short a time."

                                       – Alvin Toffler

What is it about humans that we fail to see a crisis in advance, yet when we look back, its likelihood or inevitability so often seems blindingly obvious? Rather than a flaw, our under- reliance on foresight as opposed to hindsight is perhaps a necessary evolutionary design feature that has allowed us to make rapid progress as a species (especially over the last few thousand years), but in a complex modern society it can really create quite the crisis for individuals. This week we resume our musings about Cyprus, to see what that tiny island can teach us about our own personal need to engage in ongoing critical analysis of our lives and investment portfolios. Cyprus is not Greece or France or Spain or Japan or the US or ... (pick a country). I get that. No two situations are the same, but there may be a rhyme or two here that is instructive.

This Country Is Different

In 1974, Turkey invaded Cyprus. Eventually the island was divided into two zones, and Greeks in the Turkish zone, like Turks in the Greek zone, were forced to leave with only the clothes on their backs and little else. That was a defining moment for Cyprus, and the aftershock is still evident when you get past the normal polite conversation. Plus, the wall dividing the two countries is always there when you are in the capital city of Nicosia, although lately there are a few places where you can cross into the other zone. The first night I was in Nicosia, we ate dinner outside at a Greek taverna (what else?) that stands almost in the shadow of the wall.

One hundred years after the Civil War, the South of my childhood was still mixed up with the aftereffects of that war. The war in Cyprus was less than 40 years ago. Another evening we went to a local club where the members were Greeks who had been expelled from a particular neighborhood in the Turkish-occupied area. Many looked young enough that they could not have been alive during the war, but the memory of the "old neighborhood" was still strong among them.

These people lost homes and businesses, jobs – everything. They had to start over. (I am sure it was that way for the Turks who had to relocate as well.) But for the next 40 years there was very steady economic growth, 4% or so a year over time. The people took advantage of what they had.

There was no university, so children went abroad to study and work and then came back, generally with skills. The legal and accounting professions grew particularly strong. Like two other former British island colonies, Singapore and Hong Kong, Cyprus became a financial center. Fifty double tax treaties later, the island had become a place to domicile companies, handle taxes and accounting, etc.

And then they branched out into banking. After the creation of the euro, the deposit base of Cypriot banks went through the roof, until it was up to six times the size of local GDP (depending on whom you believe – official sources make it closer to five times). By some measures, Cyprus had the second wealthiest population in Europe and certainly one of the best educated. Twenty-five percent of the world's ships were operated under the flag of Cyprus. Because the country had been a member of the nonaligned movement in the '80s (remember that?), it had good ties (and double tax treaties) with Eastern Europe and the USSR. Some of the kids went to university in Russia and developed contacts there. After the collapse of the Soviet Union, it was natural for Russians to use Cyprus as a conduit to the West.

Cyprus has, by some accounts, the best beaches in the Mediterranean, and so more and more people came and built vacation homes. They brought their money with them and deposited it in the local banks and took out loans to build their homes. Real estate prices climbed and climbed. Below are Cypriot bank deposits and loans from 2009 through April of this year (data from the central bank).

Unemployment was quite low, less than 4% in 2008, although the global credit crisis led to a gradual rise (though nothing like that seen in the rest of Europe). Much of the new unemployment was in the construction industry, which fell into a slump along with the rest of Europe during the crisis.

 Banking soon became the biggest industry. There were more banking branches per capita in Cyprus than anywhere else in the world, more than double the European average. And there were over 40% more employees per branch than in the average eurozone country. Money was easy to get, so debt exploded by over 50% in both businesses and households in just six years, from 2005– 2011.

The country had always run a current account deficit, but by 2008 that deficit had topped 15%, keeping pace with Greece's and Portugal's. However, earnings and productivity had more than kept up. Cypriots worked hard and offered good value for their services. They saw themselves as different from the other Southern European countries. But, as in much of the rest of Europe, public-sector employment doubled from 1990, with the second-highest government wage bill (behind Denmark's) and a monstrous 50% growth in social benefits in the last 10 year

Still, starting in 2003, public debt-to-GDP actually fell. Why ring the alarm bell when things are getting better?

There were in fact no alarms bells ringing as 2012 opened. But there should have been. Cyrpiot banks were flush with cash. They bought foreign banks in Greece and Russia. They made ever more loans and then looked around and decided that Greek sovereign debt was something they needed more of. And then came the Greek sovereign debt crisis, and the capital base of the Cypriot banks was essentially wiped out. But the ECB and the EU had bailed out Irish and Spanish banks; and so depositors in Cyprus, many of them Russian, decided, along with the local citizens, to leave their money in the banks.

The country had been under the parliamentary control of the Communist Party since 2008. Seriously. Supported by the Orthodox Church. (Note that public debt began its serious rise after the communists came to power). No one reined in the banks, and they grew ever fatter and more exposed until the crisis hit. Then Cyprus could no longer fund its debt and needed EU help. Further, the Central Bank of Cyprus (not to be confused with the commercial Bank of Cyprus) had to make emergency liquidity loans to Cypriot banks that had to meet demands for withdrawals and could no longer raise capital. There was not a bank run, but there was a fast-paced walk.

The ECB balked, as the quality of the collateral offered did not come close to the standards of the Emergency Lending Assistance (ELA) program. The government of Cyprus needed money to fund its basic needs as well as to "roll over" its debt as it came due. The EU basically declined to negotiate, as there was a Cypriot election scheduled for late February, and the EU preferred to wait to see the results before acting. There was talk of a "bail-in" (where depositors would shoulder some of the loss), but as usual that proposal came from the Germans, and the rest of Europe would surely not agree.

The new president assumed office and saw immediately that the country was in trouble. He tapped Michael Sarris, a "technocrat," to be his finance minister. Sarris was the man who had helped bring Cyprus into the euro and who oversaw the reduction in Cypriot debt. While he was not a member of the winning political party, he had been at the World Bank and had relationships with many of the finance heads of Europe.

Sarris went to Brussels, only to find no friends of Cyprus there. The Germans privately told him they would approve no bailout of Russian depositors (rumored to account for over half of the base of some of the banks) prior to the German elections this fall. Cyprus was seen as a money haven and a place for rather loose tax accounting. I have to admit that many of the Cypriots I talked to knew that money laundering was going on. It was a very open secret. Cyprus had very strict rules, but it seems there were ways to engineer exceptions.

In the end, Cyprus makes no difference – that was the perception in Europe, and while they were just talking a few billion euros here and there, a fraction of what Ireland or Spain needed, there was just no sympathy for Cyprus. Many of the European finance ministers wanted to establish the questionable principle that bank deposits were no longer sacrosanct, and Cyprus was just not seen as a systemic risk. The best deal Sarris could get was a 6.75% "tax" on deposits of less than €100,000 and 9.9% above that, with the aim of raising €5.8 billion. That was on a weekend, and by Monday, when Sarris returned, the indignation in Cyprus had grown to the point that not one politician voted to accept the deal.

A bank holiday was declared and Laiki Bank was put into receivership and closed as a "bad bank," but within a week the EU decided to insure all deposits up to €100,000, the number that "everyone" had understood to be the safe deposit amount. The banks eventually reopened, but Cyprus placed capital controls on deposits and limited withdrawals. A euro in a Cypriot bank was no longer the same as a euro in an Irish bank. 

The Economist wrote shortly thereafter:

The Criminals Have Seized Power

Coup d’etat

How do you change the direction of the country when power has been seized by the ultra-wealthy criminal class? When the financial, economic, political, military, judicial, and media organizations have been taken over by criminals who are looking out only for their financial interests, the few citizens who have the courage to speak the truth become enemies of the state. There is no non-violent solution to this state of affairs. This is what Fourth Turnings are all about.  

Coup d’etat  —  Paul Craig Roberts

The American people have suffered a coup d’etat, but they are hesitant to acknowledge  it. The regime ruling in Washington today lacks constitutional and legal legitimacy.  Americans are ruled by usurpers who claim that the executive branch is above the law and that the US Constitution is a mere “scrap of paper.”

An unconstitutional government is an illegitimate government. The oath of allegiance requires defense of the Constitution “against all enemies, foreign and domestic.” As the Founding Fathers made clear, the main enemy of the Constitution is the government itself.  Power does not like to be bound and tied down and constantly works to free itself from constraints.

The basis of the regime in Washington is nothing but usurped power. The Obama Regime, like the Bush/Cheney Regime, has no legitimacy.  Americans are oppressed by an illegitimate government ruling, not by law and the Constitution, but by lies and naked force. Those in government see the US Constitution as a “chain that binds our hands.”

The South African apartheid regime was more legitimate than the regime in Washington. The apartheid Israeli regime in Palestine is more legitimate.  The Taliban are more legitimate. Muammar Gaddafi and Saddam Hussein were more legitimate.

The only constitutional protection that the Bush/Obama regime has left standing is the Second Amendment, a meaningless amendment considering the disparity in arms between Washington and what is permitted to the citizenry. No citizen standing with a rifle can protect himself and his family from one of the Department of Homeland Security’s 2,700 tanks, or from a drone, or from a heavily armed SWAT force in body armor.

Like serfs in the dark ages, American citizens can be picked up on the authority of some unknown person in the executive branch and thrown in a dungeon, subject to torture, without any evidence ever being presented to a court or any information to the person’s relatives of his/her whereabouts.  Or they can be placed on a list without explanation that curtails their right to travel by air.  Every communication of every American, except  face-to-face conversation in non-bugged environments, is intercepted and recorded by the National Stasi Agency from which phrases can be strung together to produce a “domestic extremist.”

If throwing an American citizen in a dungeon is too much trouble, the citizen can simply be blown up with a hellfire missile launched from a drone.  No explanation is necessary. For the Obama tyrant, the exterminated human being was just a name on a list.

Abbott and Costello on Unemployment

A Short Guide to Unemployment Political Treats and Tricks 

By Glenn Blomquist

COSTELLO: I want to talk about the unemployment rate in America.

ABBOTT: Good Subject. Terrible Times. It's 7.8%.

COSTELLO: That many people are out of work?

ABBOTT: No, that's 14.7%

COSTELLO: You just said 7.8%.

ABBOTT: 7.8% Unemployed.

COSTELLO: Right 7.8% out of work.

ABBOTT: No, that's 14.7%.

COSTELLO: Okay, so it's 14.7% unemployed.

ABBOTT: No, that's 7.8%.

COSTELLO: WAIT A MINUTE. Is it 7.8% or 14.7%?

ABBOTT: 7.8% are unemployed. 14.7% are out of work.

COSTELLO: If you are out of work you are unemployed.

ABBOTT: No, Congress said you can't count the "Out of Work" as the unemployed. You have to look for work to be unemployed.

COSTELLO: BUT THEY ARE OUT OF WORK!!!

ABBOTT: No, you miss his point.

COSTELLO: What point?

ABBOTT: Someone who doesn't look for work can't be counted with those who look for work. It wouldn't be fair.

COSTELLO: To whom?

ABBOTT: The unemployed.

COSTELLO: But ALL of them are out of work.

ABBOTT: No, the unemployed are actively looking for work. Those who are out of work gave up looking and if you give up, you are no longer in the ranks of the unemployed.

COSTELLO: So if you're off the unemployment rolls that would count as less unemployment?

ABBOTT: Unemployment would go down. Absolutely!

COSTELLO: The unemployment just goes down because you don't look for work?

ABBOTT: Absolutely it goes down. That's how they get it to 7.8%. Otherwise it would be 14.7%. Our govt. doesn't want you to read about 14.7% unemployment.

COSTELLO: That would be tough on those running for reelection.

ABBOTT: Absolutely!

COSTELLO: Wait, I got a question for you. That means there are two ways to bring down the unemployment number?

ABBOTT: Two ways is correct.

COSTELLO: Unemployment can go down if someone gets a job?

ABBOTT: Correct.

COSTELLO: And unemployment can also go down if you stop looking for a job?

ABBOTT: Bingo.

COSTELLO: So there are two ways to bring unemployment down, and the easier of the two is to have people stop looking for work.

ABBOTT: Now you're thinking like an Economist.

COSTELLO: I don't even know what the hell I just said!

ABBOTT: Now you're thinking like Congress.  

George Orwell and the Cold War: A Reconsideration

On the road to totalitarianism based on perpetual war on terror

by Murray N. Rothbard

In a recent and well-known article, Norman Podhoretz has attempted to conscript George Orwell into the ranks of neoconservative enthusiasts for the newly revitalized cold war with the Soviet Union.[1] If Orwell were alive today, this truly “Orwellian” distortion would afford him considerable wry amusement. It is my contention that the cold war, as pursued by the three superpowers of Nineteen Eighty-Four, was the key to their successful imposition of a totalitarian regime upon their subjects. We all know that Nineteen Eighty-Four was a brilliant and mordant attack on totalitarian trends in modern society, and it is also clear that Orwell was strongly opposed to communism and to the regime of the Soviet Union. But the crucial role of a perpetual cold war in the entrenchment of totalitarianism in Orwell’s “nightmare vision” of the world has been relatively neglected by writers and scholars.

In Nineteen Eighty-Four there are three giant superstates or blocs of nations: Oceania (run by the United States, and including the British Empire and Latin America), Eurasia (the Eurasian continent), and Eastasia (China, southeast Asia, much of the Pacific). The superpowers are always at war, in shifting coalitions and alignments against each other. The war is kept, by agreement between the superpowers, safely on the periphery of the blocs, since war in their heartlands might actually blow up the world and their own rule along with it. The perpetual but basically phony war is kept alive by unremitting campaigns of hatred and fear against the shadowy foreign Enemy. The perpetual war system is then used by the ruling elite in each country to fasten totalitarian collectivist rule upon their subjects. As Harry Elmer Barnes wrote, this system “could only work if the masses are always kept at a fever heat of fear and excitement and are effectively prevented from learning that the wars are actually phony. To bring about this indispensable deception of the people requires a tremendous development of propaganda, thought-policing, regimentation, and mental terrorism.” And finally, “when it becomes impossible to keep the people any longer at a white heat in their hatred of one enemy group of nations, the war is shifted against another bloc and new, violent hate campaigns are planned and set in motion.”[2]

Dry Humor

The Futile Search for the Perfect Dry Martini

Although she did not drink martinis, she graciously prepared a double for me every evening before dinner. I introduced her to Tanqueray gin and Noilly Pratt vermouth, the ingredients for a perfect martini. Sensitive husband that I was, I courteously congratulated her every day on a fine martini, cautiously suggesting that it might be a touch drier. Day after day, I congratulated her, suggesting that it might be a touch drier still. One day I sipped the martini and bathed her in kisses: “Betsey, you’re wonderful, it’s perfect.” She did not take well to my gushing. Betsey almost never raised her voice, but raise it she did: “I knew it! I knew it! Of course I’m wonderful! Of course it’s perfect! You’re drinking straight gin.”

(Eugene D. Genovese, about his wife Elizabeth Fox-Genovese, in Miss Betsey: A Memoir of Marriage)

(No, I haven’t read the whole book. If I want to read a radical socialist turned right-wing opportunist, I can always read Marx.)

Bad jobs at bad wages are better than no jobs at all

In Praise of Cheap Labor

By Paul Krugman|

For many years a huge Manila garbage dump known as Smokey Mountain was a favorite media symbol of Third World poverty. Several thousand men, women, and children lived on that dump--enduring the stench, the flies, and the toxic waste in order to make a living combing the garbage for scrap metal and other recyclables. And they lived there voluntarily, because the $10 or so a squatter family could clear in a day was better than the alternatives.

The squatters are gone now, forcibly removed by Philippine police last year as a cosmetic move in advance of a Pacific Rim summit. But I found myself thinking about Smokey Mountain recently, after reading my latest batch of hate mail.

The occasion was an op-ed piece I had written for the New York Times, in which I had pointed out that while wages and working conditions in the new export industries of the Third World are appalling, they are a big improvement over the "previous, less visible rural poverty." I guess I should have expected that this comment would generate letters along the lines of, "Well, if you lose your comfortable position as an American professor you can always find another job--as long as you are 12 years old and willing to work for 40 cents an hour."

Such moral outrage is common among the opponents of globalization--of the transfer of technology and capital from high-wage to low-wage countries and the resulting growth of labor-intensive Third World exports. These critics take it as a given that anyone with a good word for this process is naive or corrupt and, in either case, a de facto agent of global capital in its oppression of workers here and abroad.

But matters are not that simple, and the moral lines are not that clear. In fact, let me make a counter-accusation: The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through. While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers.