I wrote this is a guest post for the News.com blog: not sure if they’ve run it yet.
Category: World Events
Free markets: a proposed trade
Since the collapse of the US financial system became undeniable, I’ve been struck by the number of people insisting that this has no implications for free-market policies because the US (and particularly its financial sector) is not truly a free-market economy. [1]
In the spirit of market economics, I want to offer a trade to all such people. I will agree that
(a) the US is not a free-market economy, and its failures do not constitute evidence against the claim that a pure free-market economy is the best possible form of social organization
(b) no other actually existing society is, or has ever been, a free-market economy, and no actual or conceivable events anywhere constitute evidence against the claim that a pure free-market economy is the best possible form of social organization
(c) In discussion with parties to the agreement, I will not contest the claim that a pure free-market economy is the best possible form of social organization
All I ask in return is that the counterparties to the deal agree not to advocate, oppose, criticise, or comment on any policy or political position that might actually be implemented, to ensure that the purity of the free-market ideal is not compromised by actual experience.[2]
fn1. Since I haven’t checked, I’ll assume that this set of people has zero overlap with those I once debated who insisted that the supposedly superior performance of the US economy over social-democratic competitors demonstrated the superiority of free market economics.
fn2. I’m willing to make the same offer to Marxist-Leninists and (two for the price of one) to combine both offers for free-market Marxist-Leninists
Unspeaking the clean bailout
Steven Poole is taking a break from blogging, so we can’t get his thoughts on the “clean bailout” as an example of Unspeak. To me the natural association is something like “clean handover” as in “I want a clean handover. Leave the money in unmarked used bills, no tricks and no police, nobody gets hurt”
Crowdsourcing works!
In the comments to my last post, reader Peter Schaeffer provides exactly what I asked for: a breakdown of the discrepancy between 30 per cent growth in US household income over the last 40 years and 117 per cent growth in income per person. In addition to the factors I’d mentioned (falling household size and growing inequality) Schaeffer notes two more: the fact that GDP has grown faster than national income and the fact that prices faced by households (the CPI-U-RS) have risen faster than the GDP deflator. He provides the details to show that this fully explains the discrepancy.
What should we make of this. As far as the situation of the average American is concerned, the only correction we need to make to the household income figures is to correct for changes in household size. That makes the increase over the last 40 years about 63 per cent, or an annual growth rate of 1.2 per cent. By contrast, the 117 per cent growth in GDP per person implies a rate of just under 2.0 per cent. So, changes in GDP per person (let alone changes in total GDP) are essentially irrelevant as a guide to how the average household is doing.
And of course, the poor have done much worse. Household incomes for the bottom quintile have barely moved for decades. Growth in consumption has been driven largely by increasing access to debt, a process that now looks to have run out of road. That would seem to indicate a looming social crisis. But the coming election will still turn on whether Obama called Palin a pig.
Oil and war
.!.
It’s pretty widely assumed that several recent wars (most obviously those in Iraq and Georgia) have been motivated, in part at least, by the desire to control oil and other valuable resources including natural gas and (one that is close to my heart) water. The other side of the same coin is the idea (again evident in both these cases) that countries with control over valuable resources can use that control to further their own geopolitical ends.
But examples where either of these strategic ideas has been applied with success are thin on the ground to say the least. While I don’t subscribe to simple ideas of “war for oil” in relation to Iraq, it’s pretty clear that one of the many motives for going to war was the desire to put Iraq’s oil under the control of a government friendly to the US (and preferably not so friendly to rivals like France and Russia). The war has been as spectactular a failure in this respect as in many others. With the best part of a trillion dollars already spent and trillions more to come, the US is worse off in the oil market than it has ever been.
On the other side, the oil embargo of 1973 signalled the change from a market dominated by a buyer cartel to one dominated by a seller cartel. But in geopolitical terms it was a disaster. The Israeli occupation arising from the 1967 war, then only six years old, is still almost intact 35 years later (the Egyptians got the Sinai back, but not because they had any oil).
More generally, I suspect that countries wanting oil can’t do better than to buy it at the going price, and that those wanting to maximise the benefits from owning oil would be best off selling it for the same price and using the money to promote their strategic goals (or, more sensibly, investing it in projects like education).
Of course, showing that it’s stupid to go to war over oil doesn’t prove that people won’t do it. Empirical observation gives us plenty of evidence of the fact that people are more than usually stupid when war is concerned. In the early 20th century, Norman Angell’s Great Illusion demolished the idea that modern nations could secure economic benefits by fighting over war and resources. He was proved right in the most appalling way possible: the Great War that began in 1914 led to the ruin of all the parties.
Real and fake
Until now, the blogospheric fuss over former TNR diarist Scott Beauchamp has been notable only for the amount of attention paid to disputing utterly trivial anecdotes. But the Beauchamp saga has suddenly and surprisingly collided with the reality of war in Iraq, as Moon of Alabama explains.
Fortunes of war
Things have gone better than expected (certainly better than I expected) in Iraq over the past year[1]. On the other hand, things are going very badly in Afghanistan. For those, like me, who have supported the war in Afghanistan and opposed the war in Iraq, this raises some points to consider.
Most obviously, war is inherently unpredictable and dangerous, and there is no necessary correlation between the justness of a cause and its military success. That means, among other things, that launching a war (or revolution) on the basis of a cause that seems justified to those starting it, but which has little or no hope of success (indeed without strong grounds for expecting a good outcome after the inevitable loss of life on all sides is taken into account), is not glorious but criminally reckless.
War again
The short, but miserable, war in South Ossetia seems to be over for the moment at least. Some not very original observations over the fold
The Great and Unremembered War
This piece by Edward Lengel n in the Washington Post has a lot to say about something I’ve long regarded as critically important in explaining the strength of the war party in the US: the absence of any real recollection of the Great War of 1914-18, the opening round of the bloody conflict that dominated the history of the 20th century, spawning Communism and Nazism, Hitler’s War and the Cold War, and even, in large measure the continuing war in the Middle East. Of course, the US came late to the war, and its losses (50 000 combat deaths) were comparable to those of Australia, with 10 per cent of the population. But there is more to it than that.
Lengel (a military historian writing on Memorial Day) makes the striking observation
Americans haven’t forgotten about the doughboys. We just didn’t want to hear about them in the first place.
and continues
“The boys would talk if the questioners would listen,” said one embittered ex-doughboy. “But the questioners do not. They at once interrupt with, ‘It’s all too dreadful,’ or, ‘Doesn’t it seem like a terrible dream?’ or, ‘How can you think of it?’ or, ‘I can’t imagine such things.’ It shuts the boys up.” … The Civil War and World War II seem to lend themselves to good storytelling, as long as one avoids the ugly, depressing bits. They appear to have clear beginnings and endings, with dramatic heroes and villains. They move. World War I, by contrast, with its images of trench warfare and mustard gas, is not so easy to manipulate in a marketable manner. Popular historians consequently avoid it.
It would be charitable to interpret the reluctance of Americans to talk about the horrors of the Great War as evidence of inherent pacifism and perhaps this element was present. As Andy McLennan points out in comments, the main reaction to WWI was an increase in isolationist sentiment: the problem was Europe, not war itself. After isolationism was discredited (which did much to strengthen the War Party) from a distance it looks like WWI was simply forgotten,and the end state is functionally equivalent.
In any case, in the long run, the absence of this most bloodily futile of wars from historical memory has been a huge boon to the war party. With a historical memory of war dominated by the “Good War” against Hitler and the Axis, it’s unsurprising that Americans have been much more willing than the citizens of other democratic societies to accept war as part of the natural order of things.
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Republicans on the nose
While most attention has been focused on the never-ending story of the Democratic presidential primaries, the Republicans have just lost a seemingly safe seat in a Mississippi special election, following two earlier losses including that of former House Speaker Dennis Hastert. As this CNN story says, this raises the prospect of a wipeout in November. The result is consistent with steadily declining Republican affiliation and massive rejection of Bush (who’s reached all-time lows in several polls recently). McCain is still managing to avoid much of the stench associated with his party, but it seems to me this will be a lot harder for him in the context of a general election, where I imagine he will be expected to campaign on behalf of vulnerable Republicans.
I don’t know, though, whether there’s a common pattern of upsets in special elections. Incumbent governments often do badly in by-elections in Australia, since it provides the opportunity for a largely consequence-free protest vote, but this logic doesn’t seem to apply in the US context. I’d be interested in any thoughts from readers
John Quiggin 