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Monday message board

April 24th, 2006

It’s time, once again for the Monday Message Board. As usual, civilised discussion and absolutely no coarse language, please.

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  1. Terje
    April 24th, 2006 at 10:56 | #1

    It is not the first time I have heard this said but when I stumbled on it again in Wikipedia I felt inclined to share it.



    There is also a body of scholarship, associated with Juan Linz, Fred Riggs, Bruce Ackerman, and Robert Dahl that claims that parliamentarianism is less prone to authoritarian collapse. These scholars point out that since World War II, two-thirds of Third World countries establishing parliamentary governments successfully transitioned to democracy. By contrast, no Third World presidential system successfully transitioned to democracy without experiencing coups and other constitutional breakdowns. As Bruce Ackerman says of the thirty countries to have experimented with American checks and balances, “All of them, without exception, have succumbed to the nightmare [of breakdown] one time or another, often repeatedly.�

    It is interesting to note that Iraq chose a parliamentarian system of government.

    Clearly the US system of government works for the USA. And there would be no point in the USA changing systems. However it may not be the best flavour of democracy to spread across the globe.

  2. April 24th, 2006 at 11:33 | #2

    Whilst on Iraq it is good news that they seem to have broken the political deadlock and annointed a new PM.

    Brief details on the new top guy in Iraq are here:-


  3. David Allen
    April 24th, 2006 at 11:45 | #3

    Howard says Iraq is not a disaster! Seems he’s still not reading his cables.

  4. still working it out
    April 24th, 2006 at 12:11 | #4

    I agree on the benefits of a parliamentary system.

    A presidential system has an inherent problem of conflicts between the executive and legislative branches. You have the awkward problem of two mutally dependent branches of government being controlled by opposing sides.

    This often creates gridlock and frustration. It is also an unbalanced power situation where the President can use his control over the police and military to break the deadlock, at the cost of producing authoritarianism.

  5. April 24th, 2006 at 12:22 | #5

    I have to agree Terje, a new Iraqi PM seems to be great news (hope so!), but not of the tipical kind prefered by the US/Brit/Oz occupaying forces:

    Fight ahead for anti-war prime minister

  6. April 24th, 2006 at 12:24 | #6

    In the USA they have the electoral college that decides who becomes president (and hence who holds executive power). In some ways a parliamentary system is like an ongoing electoral college with the capacity to change its mind as events unfold. In spite of concerns about the AWB scandal and the governments senate majority I think that the Australian position does still constrain the ability of the executive wing (ie cabinet) to get excessively self absorbed.

  7. April 24th, 2006 at 12:57 | #7

    As for benefit analysis of different systems of gov: let’s not over-simplify the scrutiny just because here in Oz we have a parliamentary system, so it just must be the best one, hey?

    Currently it’s leaving a lot to be desired!

    Or to put it not so mildly: “caca y mierda”, which translated is something like: the poor choice between poo and sh*t, or like the Australianism: “same sh*t, different smell”.

    All this reminds me of a discussion (more a monologue really) while having a haircut a while back at my local barbers, most of them being Iraqi and Irani. Shortly after the invasion and the call for elections, this punter was telling them how the magic answer to all their sectarian problems was a parliamentary system and a federal structure, just like Oz. In fact it was perfect for most of the Middle-East: it will give them representation, independence and enough room to make everyone happy, etc, etc.

    Whenever they’d very humbly abstain from comment or even raise a difficult point or another kind of objection, he’d just wave it all away and tell them how much they should learn from stable mature democracies like UK/Oz and just get on with it, since we knew what was better for them…

  8. observa
    April 24th, 2006 at 13:08 | #8

    “Howard says Iraq is not a disaster! Seems he’s still not reading his cables.”
    Well David it may well be a case of 2 steps forward (the 2 Iraqi elections) and 1 step backwards(the stalemate over al Jafaari) The question now is whether breaking the parliamentary gridlock will see another couple of steps forward. Perhaps necessity is the mother of invention in the sense that a taste of sectarian civil war provided the impetus for all elected representatives to consider the stakes and compromise. Let’s face it, we have the luxury of leaving them all to their sectarian civil war if that’s the path they really choose.

  9. David Allen
    April 24th, 2006 at 13:24 | #9

    Mr Anonymous Observa,

    Um, didn’t Bush,Blair and Howard choose the path?

    Even if you think Howard is wonderful and want to vote for him forever, etc., how can his description of Iraq not being a disaster be accepted by any rational and enquiring mind? The definition of ‘disaster’ can’t possibly be stretched far enough not to include the situation in Iraq.

    I think we could debate the cons of this disaster forever. I’d prefer for Howard to explain it all to a judge at his trial for war crimes. Can’t get fairer than that. You are either for the rule of law or against it, after all.

  10. observa
    April 24th, 2006 at 13:46 | #10

    You’re right David that a debate about the pluses and minuses of progress in Iraq would be a lengthy one. Let me just make a few points. Yes the COW has been on a steep learn curve too, but that was inevitable. AQ has largely been frustrated in its attempts to get a decent foothold in Iraq, namely wide support from Iraqis. Yes they intermingled with the Sunni insurgency, but the Sunnis largely told them to push off when they overstepped the mark. Also Coalition troops have succeeded in defeating the Sunni insurgency, to the extent that Sunnis now know they cannot take back power militarily. They now need the Coalition troops to prevent incursions by Shia militias and police. The Coalition have fired a warning shot or two back at those militias to give Sunnis a feeling of equality of treatment. Now the Coalition are leaning hard on the major groups to compromise politically. In that sense the compromise of Maliki is an important glimmer of light. The Shia could have stalled indefinitely over this if they felt their military strength could grasp the reins of power permanently. Don’t underestimate here how important compromise is in any fledgling democracy, given some deep misgivings between the various groups. This was always going to be the hardest part of the Iraqi BOL venture and it’s proving to be. I’m not prepared to surrender to Western ADD just yet.

  11. David Allen
    April 24th, 2006 at 14:23 | #11

    Mr Anonymous Observa, (is it Mr?)

    COW, AQ,BOL,ADD. Can you provide a glossary?

    When you explain it Iraq doesn’t sound like a disaster at all. It must be just me.

    I gather you are for the rule of law and agree that Howard should explain it all to judge? He’s always saying he’s got nothing to hide. I’m sure he’d welcome the opportunity to explain how his actions aren’t covered by the international laws Australia is signatory to.

  12. gordon
    April 24th, 2006 at 14:32 | #12

    I recently found that I had forgotten an embarrassing amount of detail surrounding the catastrophic rise in insurance premiums around 2001 and the associated attacks on legal liability (referred to as “tort law reform”). Does anybody know of a good, factual account in book or article form?

  13. April 24th, 2006 at 15:51 | #13

    As mentioned previously on this site I am concerned by the continued decline of the Australian dollar as measured by gold (now A$1

  14. April 24th, 2006 at 15:58 | #14

    As mentioned previously on this site I am concerned by the continued decline of the Australian dollar as measured by gold (now A$1 = 37mgg). The inflation pressure is building as we speak.

    With tax cuts coming up soon this is a bit of a policy worry. Because if the inflation monster pops its pressure valves and flows through to higher CPI then it may partially resurrect the old myth that tax cuts cause inflation.

    With oil and gold and most commodity prices heading upwards the worlds monetary authorities have clearly got things wrong again. Even spot market prices like company stocks are headed upward.

  15. Chris C
    April 24th, 2006 at 16:11 | #15


    If skyrocketing commodity prices do not flow through to higher prices for the things that end-consumers actually buy (ie consumer goods and houses), whats the problem?

    Or is it your view that skyrocketing commodity prices WILL lead to increasing general inflation, and thats why its a worry?

  16. April 24th, 2006 at 16:32 | #16

    The second one.

    It is not too late to turn it around but if they don’t do it soon then consumer prices will follow commodity prices upward. We don’t need to follow the USA down this hole but historically it seems that we do choose to.

    One could argue that it is just an oil shortage. But coupled with gold and all the other commodities I am strongly inclined to think we are suffering a currency surplus not a commodity shortage.

  17. Chris C
    April 24th, 2006 at 17:06 | #17


    Why do you think it is a currency surplus, and not a temporary speculative frenzy that will pop and leave no lasting inflationary effect?

  18. James Farrell
    April 24th, 2006 at 17:28 | #18

    Terje, there’s an influential British stock broker who’s been making much the same argument as you.

  19. Katz
    April 24th, 2006 at 19:10 | #19

    Shorter observa: “whatever happens in Iraq is what we secretly wanted to happen. The BOL is AOK (or will be PDQ).”

  20. Ernestine Gross
    April 24th, 2006 at 23:17 | #20

    James says: “Terje, there’s an influential British stock broker who’s been making much the same argument as you.”

    Brilliant reference: “influential British stock broker” – a David Ricardo, who wrote in 1810.

  21. brian
    April 25th, 2006 at 03:12 | #21

    It amusing to see that those who so desperately want the American Empire’s operation in Iraq to succeed,clutch at any straw..however insubstantial!!
    The new P.M comes from a shiite faction ,and spent much of his time in exile from Saddam,in Syria where he has many friends…the other man in the contest had many friends in Iran…how funny that the USA is now dependent on support from man who has link with what Bush once called the axis of evil . Still when your in the deepest of holes like Bush ,you must be thankful for small mercies..”.the kindness of strangers”,to quote a famous line .
    I remember the joy when they caught Saddam…that would solve the problem!! but it didn’t …then the elections(several) would do the trick…but no way…now a handful of politicians hiding inside the Green Zone will do the trick!!! very unlikely I think. but hopes spring eternal.!!..still better keep plenty of helicopters on hand for that interesting day when the US and its puppets have to make their exit by helicopters(see;Saigon file;1975)…now that was a real exit strategy!!!

  22. Ernestine Gross
    April 25th, 2006 at 07:07 | #22

    More on ‘labour market flexibility’ or lack thereof:

    Robert Rowthorn and Andrew J. Glyn (2006) “Convergence and Stability in U.S. Employment Rates”, Contributions to Macroeconomics: Vol. 6: No. 1, Article 4

    “Since the seminal work of Blanchard and Katz, it has been widely believed that interstate migration causes state-level employment rates in the United States to revert rapidly to normal following a regional employment shock. This paper identifies two sources of bias in conventional estimates of the dynamics of regional labor markets: small sample bias stemming from the use of short time series, and measurement error in survey based series for employment status at the state level. Estimates that use more reliable series and correct for these biases suggest little or no mean reversion in state-level employment rates. Thus the perception that U.S. regional labor markets are highly flexible appears to be incorrect. “

  23. April 25th, 2006 at 07:48 | #23


    If labour is not so mobile then isn’t it somewhat essential (for the unemployed) that price is made as flexible as possible.

    Assuming price flexibility then a decline in production within an economic region will lead to a decline in currency within that region (as consumption continues for a while via imports) and in turn there will be downward pressure on prices (localised deflation). It is this reduced price of labour that then attracts new factors of production to the region.

    On a global scale we are currently seeing this effect in play as factors of production move to regions where labour prices are cheapest.

    So if the mountain won’t come to the Mohammad we should not make it unappealing for Mohammad to go to the mountain.


  24. Katz
    April 25th, 2006 at 07:48 | #24

    “Would someone do the world a favour & shoot Brian.”

    Thanks for that contribution SATP. It surpasses your usual standard:

    1. Many losers go into denial. You’ve invented a new category: denial with extreme prejudice.

    2. You may have a case to answer under the NSW Crimes Act. Check out Section 545B concerning intimidation.


  25. andy george
    April 25th, 2006 at 09:09 | #25

    Katz, calm down mate. Prissy pursed-mouth responses to humour don’t belong in debate among rational people who have a whole persona. Your behaviour is rather like Generalissimo Quiggin and his post earlier this week about smokers being barred from all scientific discussion – perhaps they are to be burned on a pyre next.

    Anyway I principally logged in to unscramble some of the alphabet soup of Observa, and very interesting it is.
    COW = Council of War, that’s obvious
    AQ = Osama’s team Al Qaeda
    BOL = spaghetti Bol. Actually it seems that observa is the main proponent of this arcana acronymiis. Tony Blair is a fan of the Beacon of Light (BoL, BOL) approach that Iraq, cleaned up of Saddam, would be a beacon of light for the middle East. Observa, this acronym is hard to understand and you’re its main proponent and I note your extensive use of the phrase in many posts in many websites almost never gets understood.
    ADD = attention deficit disorder, and refers of observa’s point that (I’m with him on this too) it’s so typical of the West and the US that they don’t stay the distance, due to a confluence of two strands – the ‘get them out now’ Latham-followers and the Cindy Sheehans and the bleeding heart liberals want to get out and leave the moderates in the local couintry higfh and dry, and the ‘realpolitik limited objectives’ people like George Bush 1 after GW1 (Gulf War 1) and Roosevelt at Yalta with Stalin who also pull out too early and leave havoc behind. This is why the US is rarely trusted around the world for its staying power and why many in-country people hold back and don’t commit because of fear that the US will pull out and the locals, exposed, will get killed like the Kurds etc after GW1.
    So coming bacxk to observa’s theme, and I agree, this is why we must not have any ill-considered get out now approach. This is not some weekend fling. The Iraq democratisation has gone through many different phases which oibserva has summarised very well, comoplete with acronyms. Unfortunately you get little of this in the media because they all conflate all the many factions into one pottage of rag-heads, with no discernment of what’s actually happening.

  26. observa
    April 25th, 2006 at 09:54 | #26

    While it may amuse Brian to see Iraq descend into sectarian civil war in order to somehow punish evil Murrikans (and presumably all the other COW evil empires involved) for daring to presume Iraqis might need better civil govt than Saddam’s regime, it certainly won’t amuse me. Nor quite a few Iraqis I dare say, if they fumble the baton and fail to run with it. I like many others, will not exactly be so chuffed to think that ME Muslims really need the totalitarian hand of a Saddam to weld their countries together. However if that is the case I will take on board that information stoically and move on. Personally, the followers of Islam have not been a great source of amusement for me these last few years.

  27. Katz
    April 25th, 2006 at 10:29 | #27


    How very post-modern of you to adopt the persona of the unreliable narrator. For that is the only explanation possible of your melange of half-truths and ham-fisted “wisecracks”.

    Given your betrayal of your lack of comprehension, your views on Iraq, while symptomatically fascinating, come as no surprise. That fact in no way detracts from their ability to amuse.

    Please do make more contributions on as many issues as you feel fit to comment upon. (I believe that you may well feel confident in commenting on an almost infinite range of interesting and important topics.)

    The world needs more humour, even though it happens to be unintentional.

  28. observa
    April 25th, 2006 at 10:55 | #28

    COW was ‘Coalition of the Willing’ in reference to the countries that participated in the invasion of Iraq and regime change. It was widely used at the time but may have fallen from favour somewhat nowadays.

  29. Katz
    April 25th, 2006 at 11:26 | #29

    Not surprisingly the term “Coalition of the Willing” (COW) has fallen into disuse as erstwhile COW nations have folded their tents and stolen away into the night. Italy will soon do the same. Britain tried something similar some time back when the British Government attempted to convince Australia to take over Britain’s role in Basra for the purported reason that Britain had more pressing business in Afghanistan.

    Just for the record, I do agree with Observa’s comments about the “ADD” of the West.

    Observa has dedicated himself to becoming a cheerleader supporting greater firmness of purpose.

    I, on the other hand, am less romantic in my expectations. The infirmity of purpose of US voters is a long-standing fact. Any assessment of US foreign military policy that ignores this fact is useless.

    A perusal of the poll figures measuring US attitudes to the war in Iraq indicate that it is highly likely that the US will run out of steadfastness of purpose long before “the job is done”.

    No amount of pom pom waving by Observa is likely to change that fact.

    So why deceive people with promises that can’t be fulfilled?

  30. observa
    April 25th, 2006 at 13:35 | #30

    “So why deceive people with promises that can’t be fulfilled?”

    Probably to do with the shortcoming of our ‘infidel assemblies’
    Nothing to do with 25% of reconstruction costs being absorbed by security, albeit that business overdraft rates around 23% on borrowed capital in our economies, the last time I looked, had some rather unpleasant repercussions.

    No, you’d have to put it down to infidel assemblies if Iraq goes pear shaped. If that is the case then we can forget any thought of intervention/regime change in places like Sudan, Zimbabwe, Iran, etc. Just bomb the shit out of them like Milosevic and Ghaddaffi. Sweating in the dark, particularly underground, may be the most effective cure for these totalitarian motor mouths and their cheer squads. Clearly infidel assemblies are for true infidels only.

  31. Katz
    April 25th, 2006 at 13:47 | #31

    You’re flirting with the fringes of opacity here Observa.

    Please state your case in short sentences.

    Please restrict yourself to one (apt) metaphor per paragraph. Your metaphors tend to fight each other like cats in a bag. (If you’ll pardon the simile.)

  32. observa
    April 25th, 2006 at 13:51 | #32

    And let’s face it on this remembrance day. Trench warfare and Marshall Plan reconstruction aint exactly what they used to be. Video game weapons delivery on our news is more hip and has the added benefit of not having to put up with the Cindy Sheahans.

  33. observa
    April 25th, 2006 at 14:41 | #33

    Basically Osama reckons our ‘infidel assemblys’ and Islam are incompatible. The left have largely tended to agree with him, but perhaps due to the shortcomings of our infidel assemblies ‘we’ have been slow to see their truer light here. Beacon of Light Blairites in Iraq, might eventually have to concede that. ‘We’ (collectively via our infidel assemblies)are not generally given to continually ignore the bleeding obvious. That would then call for a change of methodology and it will be axiomatic to look at what has worked in the past with dictators and their cheer squads. IMO we won’t have to look much further than Milosevic and Ghaddaffi. AmenJihad and Co have probably already worked that out. Leaves them in a delicate dilemma over affecting short term outcomes in Iraq too wouldn’t you say? Well, at least until they can pick up some nuclear insurance it does.

  34. Katz
    April 25th, 2006 at 15:19 | #34

    Osama seems to be quite an astute chap, especially in the light of the bizarre nature of his world view.

    He appears to understand that there is a fundamental contradiction between establishing a civil society and the methods used by the vestages of the COW in Iraq and elsewhere.

    Napoleon faced the same problems in Spain. He entered the country promising liberty and liberation from superstition, ignorance and tyranny. Unlke the US troops, French troops actually did receive flowers and chocolates from grateful natives in the early days.

    But it couldn’t last. And it didn’t. Goya documented it brilliantly. They’re well worth a look. Many remind me of Abu Ghraib.

    As someone observed, “No one likes a missionary carrying a gun.”

    Eventually Spain evolved into a civil society indistinguishable from the rst of Europe, but it didn’t happen until more than a century and a half after Napoleon was booted out of the Iberian Peninsula.

    The Americans don’t seem to understand that if you try to rush these things you just make them worse. This is a fatal weakness for a culture that has the attention span and the pain tolerance of a gnat.

  35. brian
    April 25th, 2006 at 16:06 | #35

    I’ll treat the silly remark of Katz about shooting me ,with the contempt it deserve,though how John Quiggin views such tasteless remarks, I don’t know. If I was a Palestinian activist of course ,the “democratic” Israelis would call that”targeted killing.,Katz wouldn’t they?..and Andy George calling Arabs “ragheads”is just a pure example of racism,which I was suprised to see on this website,and the sort of stuff one would expect to hear on “Fox” news or some US shock-jock’s program.
    As for Cindy Sheehan she actually has the distinction of having lost a son in Bush’s futile war.Still all will be revealed in time,as facts are stubbon things,and the US and it’s diminished band of allies(Italy will now be out within a month!)will one day,surely, learn the futility of its’ policies…based on these two unswerving principles ,getting the opl,and supporting Israel.I just read today thast Brent Scowcroft, a senior republican aide to Bush.Snr. in 1990,said that”Sharon had George .W. twisted round his little finger”…now if you want to know about the disasters of US policy in the M.E .that might be a matter to consider.

  36. observa
    April 25th, 2006 at 17:04 | #36

    Actually Brian I would have thought your obvious point about US support for Israel, would have flown completely in the face of ‘it’s all about oil’ logic concerning US foreign policy here. Funnily enough if the US pragmatically backed the Arabs and the Russians Israel, I could easily imagine the left prattling on about the evil, US and its lackey Arabs picking on the poor little bloke in the ME. Since the US backs liberal democratic Israel against any obvious oil self-interest in the region, then it’s all the way with Islamic theocracy for the left, although some like John Quiggin, can’t hold their noses any longer over Allah’s Axers, Hammers, Hissholler, or whatever name the latest Muslim death cult worshipper prefers to go by. This new theocratic left of course have no grubby interests in earthly things like oil, because they walk everywhere or if they do own a bicycle, they walked(or more likely swam) to the factory to purchase it. Still we mustn’t begrudge them their moment of truth that Muslims are not ready for our ‘infidel assemblies’ and it could be centuries before they ‘evolve’ in their own good time. If they are right, I’ll look forward to their logical conclusion that multicuturalism is a pipe dream and naturally what it means for deciding who comes here.

  37. jquiggin
    April 25th, 2006 at 17:09 | #37


    That remark was made by “Steve at the Pub”. I deleted it as soon as I saw it, but didn’t catch the response from Katz, who was quoting the now-vanished post by SATP.

    SATP, this was a serious breach of civility, which I specifically require from all commenters and mention explicitly in the post announcing this thread.

    I request that you apologise to Brian and refrain from anything similar in future. Please don’t offer quibbles about “only a joke” or similar. It’s hard enough running a blog without having to deal with this kind of thing.

  38. Katz
    April 25th, 2006 at 17:26 | #38

    JQ has accurately explained my role in the imbrogliio of which Brian complains.

  39. observa
    April 25th, 2006 at 18:35 | #39

    Of course any discussion here of Bush’s futile war in Iraq
    would not be complete without recalling that warm, fuzzy, Clintonesque alternative.
    What we might call the ‘Madeleine’s Alright’ stance

  40. andy george
    April 25th, 2006 at 19:21 | #40

    Just passing by and wish to explain one point. My use of the term ragheads was not to imply that this is my view as, as I hoped my post showed, there is a range of views, many different races, tribes and religious groups involved. I meant only to comment on the fact that most of the popular media makes no distinction between Shia, Sunni, Kurd and other people of Iraq and conflates them into ‘Itaqi insurgents, Iraqi unrest, etc.’ I’ve been reading Fisk today and am interested to see that even he, who also favours exist of the COW from Iraw, is at a loss to understand who’s behind the bombings and who’s behind the destablisation campaign.
    I take your point Katz about Napoleon and other ‘peacemaker’ hegemonists, and parallels include Stalin post-Yalta and the Germans in France. The problem is that, having made the mess, the COW now, if they retire, will create a massive loss of life. I for one don’t want to be culpable for that.

  41. Katz
    April 25th, 2006 at 20:02 | #41

    “The problem is that, having made the mess, the COW now, if they retire, will create a massive loss of life. I for one don’t want to be culpable for that.”

    That is a valid moral viewpoint.

    However, does anyone seriously suggest that the COW still has, or intends to, invest military and financial resources necessary to decrease materially the current suffering of the Iraqi people?

    It’s not good enough to argue that things were worse under Saddam. He’s been gone for more than three years.

    The US has already pulled stopped supplying development aid.

    No nation is committing significantly increased numbers of troops. Italy is about to leave. Britain is removing troops.

    So isn’t it naive to believe that the COW is doing anything useful right now for the suffering Iraqis?

    And isn’t it true that Bush’s tough talk is primarily for domestic purposes?

    Thus we arrive at the overriding practical point which trumps even the most valid moral point: why continue to subsist on false hopes and why prolong the agony?

  42. observa
    April 25th, 2006 at 20:14 | #42

    “why continue to subsist on false hopes and why prolong the agony?”

    That’s really a question you need to address to the elected representatives of the Iraqi people. As far as I’m aware they want COW troops there and presumably when they don’t any longer, they’ll ask us politely to leave. True, we could make an executive decision without consulting them on this.

  43. SJ
    April 25th, 2006 at 22:03 | #43

    observa Says:

    That’s really a question you need to address to the elected representatives of the Iraqi people. As far as I’m aware they want COW troops there and presumably when they don’t any longer, they’ll ask us politely to leave.

    Nice bit of fantasy there, observa.

    The US apparently plans to stay for a long time, regardless of any polite requests.

    NEWSWEEK: Balad Air Base in Iraq Evidence That U.S. Planning to Stay For a Long Time; 15-Square-Mile Mini-City One of Four ‘Superbases’ Where The Pentagon Will Consolidate U.S. Forces
    Sunday April 23, 3:38 pm ET
    New $592 Million ‘Massive’ U.S. Embassy Being Built in Baghdad

    NEW YORK, April 23 /PRNewswire/ — Despite all the political debate in Washington about a quick U.S. pullout from Iraq, the vast Balad Air Base, a 15-square-mile mini-city of thousands of trailers and vehicle depots located 43 miles north of Baghdad, is hard evidence that the Pentagon is planning to stay in Iraq for a long time-at least a decade or so, according to military strategists.

  44. observa
    April 25th, 2006 at 22:29 | #44

    Can we assume then the Iraqi govt has indicated they’d like a US security presence around for at least a decade or so? Presumably they both agree on the need for such an air base to launch air strikes against any neighbouring threat to Iraq’s security, particularly from those seeking WMD. It certainly makes a lot of sense, given some of the rhetoric of late.

  45. SJ
    April 25th, 2006 at 22:44 | #45

    Can we assume then the Iraqi govt has indicated they’d like a US security presence around for at least a decade or so?

    What’s with the attachment to fantasy, observa? Why would anyone assume that the government formed a couple of days ago pre-emptively asked months ago that this base be built?

  46. econwit
    April 25th, 2006 at 23:12 | #46

    Off subject, but it is now midweek?

    We have not heard much of the Family Tax Benefit from the economic gurus that loiter on this blog.

    “Here’s a wild idea. Lower taxes might mean cutting government spending on middle-class welfare such as family tax benefits and childcare subsidies. The Government collects less tax, pays less out in welfare and, instead, allows people to decide for themselves how they spend their money”.

    Read more here:


  47. observa
    April 25th, 2006 at 23:43 | #47

    Good God econwit, how are you possibly going to wean the Women’s Movement off subsidised childcare. Besides many of us have shares in ABC Childcare Centres. You just need to be able adjust to new economic realities in times of rapid social change.

  48. April 26th, 2006 at 04:07 | #48

    Gosh, I have been very naughty and expressed a sentiment which is quoted verbatim by Katz. “Somebody

    Brian: Sorry for saying you should be shot. I was out of order. Blog commenting should never attract wishes of physical harm. How much better off (if at all) the world would be without you is something I am in no position to know. I believe you are quite safe, as nobody ever seems to take instruction/advice from me.

    JQ: I most definitely was NOT joking. Would never my mind to claim that I was. Neither will I claim I just meant he should be “winged”, as I was thinking “fair between the eyes”, even if I didn’t say it.

    Slanging matches online are rather pointless and jejune. I certainly don’t want to start one. There is enough ranting of “you’re a commo”, retort “you’re a nazi” etc etc online without me giving people cause to start more rot.

    You do a sterling job putting up with all of us & keeping this blog running. I can’t keep track of where on the net I even left a blog comment, never mind watch over and moderate the comments of others. I don’t know how you do it.

  49. April 26th, 2006 at 04:31 | #49

    Katz: It is not the slightest interest to me what the NSW crimes act says. NSW is suitable as a GST collection point, the proceeds of which are then injected by the government into my northern town. Otherwise it isn’t even on the radar screen here, (except at State of Origin time).

    Read again that link you provide. Crown law would not touch with a 40-foot pole a case against me.

    Even if I did step into the Tardis & go to NSW, what would I have to worry about? I have spent time in NSW, I have seen Lebanese thugs deliberatly and coldly STAB people in front of a cinema full of witnesses, get arrested, and still not go to jail (not even on remand) or recieve any punishment. What could I possibly have to fear by typing an abstract comment such as: “Someone should do the world a favour & shoot Brian”?

    Queensland law, however, has jurisdiction over me, and despite my most fervent prayers, it is still not a breach of the law here to express the sentiment that “someone should shoot someone”.

    You are suggesting I am a loser? This thought crosses my mind every day. Wins in life seem to be so much outnumbered by the losses that sometimes I wonder why I bother. Or perhaps that is just my personal perception, as others feel that my lot in life is a very fortunate one, and they would love to be me.

  50. April 26th, 2006 at 15:02 | #50

    Terje, there’s an influential British stock broker who’s been making much the same argument as you.


    Thankyou for the article.


    Unfortunately David Ricardo includes some classical arguments such as:-

    Gold and silver, like other commodities, have an intrinsic value, which is not arbitrary, but is dependent on their scarcity, the quantity of labour bestowed in procuring them, and the value of the capital employed in the mines which produce them.

    I find this type of appeal to “intrinsic value” to be a very disappointing but popular argument amoungst gold bugs (and classical writers). I have yet to see any useful definition for “intrinsic value” that makes any economic sence.


    Value is subjective and is not resident within an object in the manner that electric charge or mass might be. The comment also seeks to import a naive version of the “labour theory of value”. Of course it is not just gold bugs that make this mistake. It is frequently argued that the value of fiat currencies is created merely “by decree” when in fact the value is once again a market phenomena underpinned by supply and demand.

    No disrespect to David Ricardo. I am sure he could make some very astute counter points.

    In terms of what gets into the media these days I found this more recent article:-


    MARC FABER, who told investors to bail out of US stocks a week before the 1987 Black Monday crash and began recommending commodities at the end of 2001, said gold might rise tenfold in the next 10 years.

    The author of the newsletter The Gloom, Boom & Doom Report said gold wasn’t expensive when “you compare its price to the quantity of money that has been printed in the last 10 to 15 years in the US and the world in general”.

    Whilst I fundamentally agree that printing extra currency is inflationary in nature the actual outcome in terms of a currencies value (and an actual inflation outcome) depends not only on changes in supply of a currency but also changes in demand. With floating fiat currencies we have a complex situation since every new round of currency printing increases the supply of the domestic currency but also creates a new source of demand for foreign currencies. Hence a lot of new currency printing may simply end up as reciprocal reserves in foreign central banks as each bank increases supply to contend with demand created by other central banks. Only a more detailed analysis would be able to uncover any significant “quantity” pointers that might be indicative of future currency valuations.

    There are many arguments in favour of using gold as a benchmark for value. Whilst I am an advocate of the proposition I also observe that a lot of the arguments simply don’t stack up. I would caution against any assumption that gold is headed for US$6000 per ounce. Although I will be bold and predict that we will see more such forcasts in the media in the coming months.

    Should the central bankers at the US Federal Reserve become cognisant of the problem and should they have the will to act then gold could be back at US$450 within hours. All they need do is announce that they are targeting gold instead of interest rates, indicate their target trading range and back it up with open market operations. Easy peasy!!


  51. Katz
    April 26th, 2006 at 22:54 | #51

    “Can we assume then the Iraqi govt has indicated they’d like a US security presence around for at least a decade or so?”

    Probably not, for the very good reason that there is no Iraqi government. Jawad al-Maliki has less than 28 days to form one. Then Iraq will have the distinction of being led by a phoney government under the aegis of a non-operational constitution. But let’s pass on to more substantial matters.

    It is quite true, as Observa notes, that none of the important blocs represented in the Iraqi parliament have openly called for the withdrawal of the COW.

    There are several reasons for this:

    1. The Kurds know that their hopes for autonomy or even independence rely upon US support. If the US withdraw that support isn’t worth the paper it’s written on.

    2. The non-rejectionist Sunni fear that the Shiite militia will be turned on them as soon as the US leaves.

    3. Different Shiite parties and factions have a very complex relationship with the US. Some are grateful to the US for removing Saddam. Some dislike the US but see them as useful for combatting Sunni rejectionists. Some follow the Iranian line which pictures Iraq as an attritional lesson to the US to persuade them against invasion of ME nations.

    4. The small number of secularists fear a sectarian deluge after US withdrawal.

    The problem for the Bush clique is that Shiite sectarians will dominate Iraqi national politics for the foreseeable future. Democracy is the hallmark of success that justifies Bush’s Mesopotamian adventure. Yet the results of this democracy are inimical to any substantive measure of success in the region. Shiite sectarians know that time is on their side. Either the US will stay and fight the Sunni rejectionists, which is good for Shiite sectarians, oor the the will leave disillusioned by their failures, leaving the Shiites and Iran masters ofthe situation in the region.

    Why should any of these groups want the US to leave just yet? The Lilliputians have lashed Gulliver to the ground and are making sport of him.

    One factor at until now not considered is the possibility that US troops may take matters into their own hands and resume an updated version of the practice of fragging. Were this to happen, the US would be compelled to reconsider the terms of its occupation of Iraq.

    It’s early days, but here’s a story of an enlisted man who fragged two officers recently in Iraq:


  52. observa
    April 27th, 2006 at 00:43 | #52

    You can instantly see for yourself the problem with a gold standard when you compare the record price of $850/oz in 1980 cf around the current high of $650. Clearly the real drop in value is much worse than the nominal drop here. You were probably better off with an iron ore standard, given that sort of return. You’d imagine an oil standard would be a better bet than gold in future. Fiat currency is fine so long as we rigidly agree not to resort to printing the stuff at the rates we do. That’s the hard part I guess.

  53. observa
    April 27th, 2006 at 00:47 | #53

    When you’ve got them by the goolies, there hearts and minds will follow eh?

  54. James Farrell
    April 27th, 2006 at 04:18 | #54


    Thanks for looking at the link and responding. Six points in response:

    1. I referred you to Ricardo mainly to make the point that the idea is a very old one, that gold (even under a non-convertible regime) is the most appropriate measure of the value of money. A secondary point is that there’s a wide consensus that, brilliant as he was, Ricardo got the wrong end of the stick when it came to monetary policy. Among other things, you have to realise that price indices had not been invented in his time. But this is a long story. I can you give some references if you are interested in archaeology.

    2. There is no concept of intrinsic value in modern economics. Value just means price. Early economists used the term intrinsic value various ways. Locke used it to mean what the classicals later called ‘use value’ (i.e. the ‘subjective value’ you referred to, but did not think of it in quantitative terms. Cantillon meant basically the cost of production, but Smith elected to use the term natural price to refer to the same thing. The closest equivalent in modern economics is the idea of long run average cost, originating with Marshall; of course that’s a schedule rather than a single value (the classical economists didn’t think of costs as dependent on quantity, at least over the relevant range.)

    3. Whether the ‘cost of production’ can be expressed in terms of labour is neither here nor there: it doesn’t alter the nature of the concept. (Ricardo didn’t subscribe to a naïve concept of the LTV, by the way. In fact it was precisely he who worked out what was wrong with it.)

    4. The closest equivalent in modern economics is the idea of long run average cost, originating with Marshall; of course that’s a schedule rather than a single value. The classical economists didn’t think of costs as dependent on quantity, at least over the relevant range. This is why Marshall, Walras and others realised that demand had to come into the story – you need it there to determine the quantity.

    5. The idea that prices depend on both utility and technical conditions of production is still the basis of modern value theory. So I’m not sure what you mean you by insisting that value is subjective: on the one hand, nobody (except for a few Marxists or extreme ‘post-Ricardians’) thinks that subjective valuations don’t matter; on the other hand if you think costs don’t matter, that’s just wrong. Even in your own arguments you’re forever evoking demand and supply. A good’s supply price, in the relevant time frame, is its marginal cost. (As long as gold is still being mined, by the way, it too is covered by this generalisation.)

    6. Now that we’re on the topic of your and demand and supply models, I can only repeat that you yourself have gotten the wrong end of the stick on monetary policy itself. In case you missed my earlier comment on this, it’s here. The main point is that it’s very hazardous to try and explain inflation in terms of demand and supply of money.

    Could I just ask you, as a matter of interest, the extent of your formal training in economics? You are obviously passionately interested, but I get the feeling that the strength of your opinions is a little out of proportion to your conceptual knowledge. As I’ve hinted before, a bit of reading – a textbook or two, rather than fringe websites – might benefit you enormously. That probably sounds patronising, but I can’t think of another way to express it.

  55. James Farrell
    April 27th, 2006 at 04:25 | #55

    Sorry, I repeated some sentences there – copied and pasted rather than cut and pasted. And, for what it’s worth, there should be a close bracket after “(i.e. the ‘subjective value’ you referred to”.

  56. Katz
    April 27th, 2006 at 08:49 | #56

    “When you’ve got them by the goolies, there hearts and minds will follow eh?”

    And whose knackers are nailed to the floor in Iraq?

  57. April 28th, 2006 at 14:28 | #57


    I did miss your earlier post in the other thread. I will attend to it within that thread.

    Within this thread mostly you have said things I agree with. Your comments about “intrinsic value” mostly accord with what I said. If you have a particular point of disagreement that you wish to explore then please feel free to outline the specifics.

    When it comes to the subjective nature of value then of course the cost of production has a big impact on the outlook of any producer. Consistently selling goods below cost is a sure path to pain. And pain usually has an influence on a persons outlook.

    My formal qualifications in economics are nil. I did a HSC subject called economics but that was a long time ago. None of which mean I have not read any books. How about you?


  58. April 28th, 2006 at 15:38 | #58

    You can instantly see for yourself the problem with a gold standard when you compare the record price of $850/oz in 1980 cf around the current high of $650. Clearly the real drop in value is much worse than the nominal drop here. You were probably better off with an iron ore standard, given that sort of return. You’d imagine an oil standard would be a better bet than gold in future. Fiat currency is fine so long as we rigidly agree not to resort to printing the stuff at the rates we do. That’s the hard part I guess.

    Try looking at the bigger picture. The price in 1980 was a peak at the high point of US inflation. The fact that the spike fell represents nothing more than a correction in the direction of economic policy and a change of trend.

    The following graph might be enjoyable:-


    Gold is a leading indictator of errors in monetary policy. It is not some type of simplistic forcast for inflation. Like a compass it can tell you where you are currently headed but it can not predict how you might choose to change course tomorrow.

    Any attempt to use gold as a simplistic forcast for inflation will be wrong if the policy direction changes. However for a monetary navigator (eg a monetary authority setting a monetary course) the gold price should be used like a compass to ensure that it sails a safe path.

  59. Ernestine Gross
    April 28th, 2006 at 18:17 | #59

    And the following site may convey some of the difficulties with semi-private money even if gold is involved:


  60. April 28th, 2006 at 23:06 | #60


    The webpage conveys some of the complexity of the monetary history. However the article does cover a long expanse of time and if we look over the last few decades in our modern era the track record is hardly superior. At least in antiquity when systems were loosely based on gold and silver cross border trade was relatively straight forward even if the face on the gold and silver coins changed to reflect the political powers that be. Gold was gold regardless of the units into which it was carved or the figures that adorned it or the paper notes that promised it. In fact it still is.

    Is there any good reason to continue the effective prohibition on privately issued bearer based gold promisory notes? If they are an inferior form of currency then surely they should be of little threat to the status quo. Lets lift the prohibition and see what happens.


  61. Ernestine Gross
    April 29th, 2006 at 11:45 | #61

    Terje says:

    “The webpage conveys some of the complexity of the monetary history. However the article does cover a long expanse of time and if we look over the last few decades in our modern era the track record is hardly superior”

    Strange. The article pertains to the monetary history of a geographical region known as Germany. Keeping the geographical region constant, the track record of the monetary history during the last few decades is unambiguously ‘superior’ by any measure I can think of.

  62. April 29th, 2006 at 12:39 | #62

    Really!! Lets take inflation as a measure. If we look at German over the last 35 years it has not been so great. If we look at the 20th century as a whole it was pretty dreadful. I would think that few of the earlier eras had it so bad.

    I do think the Euro is promising. It has eliminated the floating currencies in the trade regions surrounding Germany. In many ways the Euro has brought similar trade advantages that gold and silver did in earlier eras. Although the Euro took a lot more political capital to estabish and required the sacrifice of a lot more sovereignty to maintain.

  63. Ernestine Gross
    April 29th, 2006 at 19:04 | #63


    Yes, really. I should think the life of the FRG covers the “past few decades” (your condition). During the life of the FRG one can say that there was no inflation problem.

    Don’t you know that the “Bundesbank” followed a monetary rule? Yes, very much in the spirit of Milton Friedman.

    As for measurements of ‘inflation’, the following article might be helpful to you:

    http://www.bundesbank.de/download/volkswirtschaft/dkp/2000/200004dkp_en.pdf. (It is in English.)

  64. April 30th, 2006 at 01:56 | #64

    FRG = Federal Republic of Germany? (I presume)

    Actually when I dig up the specific figures for West Germany over the last 35 years I am forced to admit that it did do well at keeping inflation in check. For West Germany in a couple of years around 1974 inflation hit something like 7% however other than that its been pretty low. It does seem to have done a lot better than a lot of other countries. So I will retract my remark about the last 35 years in Germany.

    The article you reference is 60 pages. Does it make a particular point pertinent to this discussion or is it just something interesting I should read in the course of time.

  65. Ernestine Gross
    April 30th, 2006 at 13:15 | #65

    The article describes methods and methodology quite well. Several measures of ‘inflation’ are compared. The article is thorough. It won’t date quickly.

    I listed it because the environmental costs of e-communication are negligible. I would not have sent it in hard-copy because my estimate of the chance of the general public reading is at most .2.

  66. James Farrell
    May 1st, 2006 at 05:38 | #66


    Sorry if I implicitly attributed views that you don’t hold. I confess I was influenced by a conversation on another blog with a self-styled Austrian and autodidact who had a bee in his bonnet about value being subjective, as if mainstream theory didn’t take pereferences into account. Your last statement about costs and pain still reflects a bit of confusion, but it’s all pretty tangential to your gold topic, so I’ll leave it.

    In answer to your question, I teach economics at UWS. Mostly macroeconomics and the history of economics. But I’ve never run a business, and am in awe of anyone who does.

  67. August 6th, 2006 at 21:58 | #67

    While you are reading this, the Iranian reactor produces enriched bomb-grade uranium. Terrorists can deliver that bomb to your city, and it can kill you and your children. Yet the government does nothing.

    Do we demand violence? Not in any common sense. Similarly, police use force to arrest criminals in order to stop violence.

    But Iran is not a criminal? Wrong. Iran has proven malicious intent. Iran, under the current regime, conducted many terrorist bombings in the West, and sponsors deadly terrorists. Iranian leaders repeatedly called for fight against the United States and annihilation of Israel.

    Perhaps Iran needs nuclear weapons for self-defense? No. Iran already bullies the Middle East with its huge conventional army. No country threatens Iran.

    Since the eighth-century jihad and the Ottoman army at the gates of Vienna, the West has never been exposed to such threat. Iran’s several nuclear bombs can inflict more damage on America than the World War II. Never before the Islamic fundamentalists who hate the West and dream of attacking it had military might of apocalyptic dimensions. Are you crazy to doubt they will use the bomb?

    We call on the United States: Do not hesitate. Protect your people. Protect your allies. Destroy the Iranian reactor!

    To sign the petition, visit http://terrorismisrael.com/nuclear_iran.htm

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