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Jolly Spot

Northern Austerity vs. Southern Profligacy

I recently wrote a post discussing the differences between North and South. Taking as my starting point Anne Applebaum’s article about well-budgeted Northern European countries vs. profligate Southern European countries, I extended her theme to discuss Northern hemisphere vs. Southern, and Northern states vs. Southern states here in the US. Now I want to continue my riff and see if I can expand even further on this latitudinal dichotomy.

Can we call this dichotomy a civil war of behavior? And if we do, does the allusion to America’s Civil War help or hurt? Certainly one could make a case that the American South, by building an economy on the backs (literally) of slaves, enabled a profligacy that wasn’t really warranted. An economy built on the untenable foundation of slave labor is sort of like building the economy of Greenwich, Connecticut on the false profits of Wall Streeters trading sham mortgage securities, or building the economy of Greece on money borrowed from other countries and then stolen from the national treasury. People still get to buy their Maseratis, but they haven’t really earned the money.

What explains this broad gap between North and South? Or is North v. South even the right distinction? After all, Australia and New Zealand are pretty far south, and they are generally well run. South Africa is also way south, and even has south in its name, but it’s the best run country in Africa. Maybe the proper axis to examine is equatorial v. non-equatorial.

In my (admittedly limited) traveling experience, it does seem like tropical lands generally have a relaxed attitude about life. This relaxed attitude could easily become profligacy or corruption, or apathy regarding profligacy or corruption among leaders. Perhaps it is the ease of living in these climates that engenders this relaxed attitude. I mean, if you can wear shorts and flip flops all year round, and crops grow easily, why wouldn’t you just hang loose and relax? Compare that to Germany, for example, or Massachusetts, where there are seasons and snow and you have to bundle up and carefully plan your crops. It stands to reason that cultures in these more challenging environments would consequently be more organized and open to austerity.

Winter in Germany

I should note that I have no data to back this up; I am purely using deductive reasoning. I should also emphasize that I am NOT saying that tropical cultures are bad, worse, corrupt, inferior, or any other pejorative. I am purely noting that if your climate makes it that you don’t need to worry or plan, you probably won’t worry or plan that much.

When Presidents Break the Law (e.g. Bush)

There is a new book out called Because It Is Wrong: Torture, Privacy, and Presidential Power in the Age of Terror. Written by Charles Fried, a Harvard law professor who served in several legal roles in the Reagan administration, including Solicitor General, and his son Gregory Fried, a philosophy professor at Suffolk University, the book explores “the ethics of torture and privacy violations in the Bush era.”

Harvard Magazine recently ran some excerpts from the final chapter, where the Frieds move off of torture per se and more into the general obligations of a president to the people.

They discuss that at times a president might break the law because he thinks the law will not allow him to do what is necessary to save the country, as did Jefferson in 1807 and Lincoln in 1861.The Frieds liken this law breaking to civil disobedience, with “a fundamental allegiance to the political community and its system of laws and government.” Executive law breaking while maintaining ultimate fidelity to the state and its system is civil disobedience; law breaking outside this fidelity is a coup.

But the Frieds also emphasize that civil disobedience, with fidelity to the state, requires admitting your law breaking. Like civil rights protestors who willingly went to jail, executive law-breakers under the Fried model…

“…break the law in a way that emphasizes their allegiance to the rule of law and the existing system of laws and institutions in general, with the exception of the law or set of laws in question. They break the law openly. They break the law reluctantly only for reasons of deep principle and in situations of great urgency, after making a good faith effort to change the law by legal means. They do not resist or avoid the representatives of the state when they arrest them. The practitioners resist by pleading their case in court, and they accept their punishment if the court goes against them, trusting that their fellow citizens will see the light eventually.”

The Frieds note that unlike MLK, a president takes an oath to uphold the law. Yet quoting Aristotle, they claim that the law cannot always foresee what is in the public interest. But if the executive gets to decide what is in the state’s best interest, what is to prevent the executive from becoming a tyrant? Here is where their call for open law-breaking is essential. The risk of being found guilty by the jury of citizenry will keep executives from going too far. “A chilling effect is exactly what we need when it comes to the rule of law.”

In other words, the Frieds believe that an executive law-breaker should stand up and say “yes, I did commit that act” and let the citizens decide. They compare this, unfavorably, to the law-breaking in the Bush administration, wherein the law-breakers to this day refuse to acknowledge what they did. The Frieds make clear that they are not necessarily calling for prosecutions of Bush officials; they only point out that “there is a great danger to secret executive lawbreaking. What is done in secret could metastasize into the arbitrary, lawless power of the tyrant—as it did in the Weimar Republic, with Hitler’s rise to power.”

Has Silicon Valley Stopped Solving Problems?

That is the claim of Dan Lyons in the recent Newsweek, wherein he claims that the trend of consumer internet companies (Facebook, Twitter, Zynga, etc.) making gobs of money by doing essentially shallow things will draw engineers and entrepreneurs away from solving the hard problems that have traditionally driven Silicon Valley.

Erick Schonfeld at TechCrunch disagrees, saying that Facebook and its ilk aren’t shallow and are also technically hard, since they have to scale to support so many users.  Most of Schonfeld’s article is, quite frankly, dumb (I mean seriously, using anti-virus software, which solves a real and burdensome problem, to show that internet companies are useful too, is nuts. And saying that Twitter’s many-to-many communication is a bigger tech achievement than the telephone network…dude, do you even know anything about technology?), but I appreciate his viewpoint and that of the many comments his article generated (as usual with comments, they are split between wisdom and inanity).

It won’t surprise regular readers of Thoughtbasket to learn that I come down somewhere between these two poles. I wrote a post on this very topic recently, riffing off a former Gartner analyst who said pretty much exactly what Gross said. Yes, Facebook makes people happy, and some of the technology required to build it to scale might help build other products. But it’s basically a toy, and the technology isn’t that innovative. More importantly, it sure isn’t curing cancer or solving the energy problem.

It’s OK for fun products to do well; Facebook and Zynga make tons of money because people love using them. But Lyons makes a good point: the wealth and attention being lavished on these fun products could lead smart people to build ever-shallower products (hello Foursquare) instead of solving big and important problems. Silicon Valley is a big place, and there seem to be a lot of entrepreneurs attacking all sorts of problems, but the tendency of the press (particularly TechCrunch) to focus on consumer internet companies as if they were the only things of note in Silicon Valley adds to the problem Lyons describes.

Alaska Loves Federal Money

Yesterday I posted about how Alaska politicians talk a big game about wanting the federal government to leave them alone, but in reality they suck down more federal money than any other state. Having just spent a week in Alaska, I brought some photographic evidence of our biggest state’s big appetite for taxpayer money.

Here is the beginning of a beautifully built and maintained trail at the Mendenhall Glacier outside Juneau. You can see that construction of the trail, which must have employed several people to cut brush and grade the path, was paid for by the federal stimulus package. As for the big Bob Marley joint depicted on the sign….it’s unclear if federal dollars paid for that.

Trail paid for by US taxpayers

In Gustavus, a small town which is the gateway to Glacier Bay, a brand new $20 million dock is being built with federal stimulus dollars. I spoke with the owner of my hotel and with the pilot of my whale watching boat, and both said that the dock was completely unnecessary. But it was employing a whole bunch of skilled laborers, so many that they had to come in from Juneau, since Gustavus didn’t have that many construction workers.

The new dock at Gustavus

Here is a photo of all the pickups and SUVs owned by the people working on the dock. Again, these are local workers being paid with US taxpayer dollars.

Construction worker trucks

I have no problem with stimulus dollars paying people to build paths and docks; that is how a government stimulus package works. The government injects money into the system to boost employment and spending.  My problem is with a state that talks about how it doesn’t believe in the stimulus or in federal help at all while it continues to take as much federal money as it can.

The Myth of the Sophisticated Investor

This article in The Big Money discusses how Goldman Sachs’ defense in the Abacus CDO case – that the buyers were sophisticated investors – isn’t entirely accurate, since those sophisticated investors (banks and pension funds) get a significant amount of money from regular folks like you and me. This is true, but it only gets at half the story. In the context of Wall Street, banks and pension funds are not considered the most sophisticated players.

The reality is that Wall Street has a hierarchy, and it’s measured by compensation. Generally speaking, the smartest people go to where they can make the most money. So if you are really sharp, you’re not likely to end up managing a pension fund’s investments and being a civil servant making $200k per year. You might settle for being a bond portfolio manger at a bank, making $500k. But if you are really smart and aggressive – in other words, a sophisticated player – you are going to end up at an investment bank putting together deals that can pay you several million dollars per year.

So Goldman’s “these were big boys” defense has two flaws. One, as The Big Money points out, the big boys got their money from the little guys. But two, the buyers may have been big boys, but the Goldman bankers pushing the CDOs were men. Speaking metaphorically, of course.

Wall Street Is A Casino

Two articles came out in the past week comparing Wall Street to a casino, pointing out that much of the activities of the big investment banks – like the synthetic CDO at the heart of the Goldman fraud case – provide no real value to society and are simply ways to bet on the direction of an event. In this case, the event was housing prices, but the articles ask how that bet is really any different than betting on the outcome of a baseball game or a roulette wheel.

What is particularly interesting is the source of these articles. One was an op-ed in the hyper-conservative Wall Street Journal, co-written by Niall Ferguson, a Harvard professor who is generally quite conservative, and Ted Forstmann, an equally conservative private equity financier. The other article was written by Andrew Ross Sorkin in his NY Times Dealbook. The Times is, of course, quite liberal, but Sorkin makes his living (quite lucrative, according to reports) by having great sources on Wall Street, and generally speaking you don’t keep those sources by insulting them in print.

For conservatives to publish against their leanings, and for ambitious journalists to publish against their career prospects, is a pretty big deal. They must have felt very strongly about the casino aspect of Wall Street to write those articles.

Just in! Here is Eliot Spitzer’s take on Wall Street as casino. You may discount him due to his hooker addiction, but he hits the nail on the head (so to speak) here.

The Role of the Supreme Court

Following up on last week’s post regarding the new opening on the Supreme Court, Dahlia Lithwick at Slate wrote a piece more up to her normal standards, discussing how a court that “shows restraint” essentially just perpetuates the political power dynamic currently in force, enabling tyranny of the majority, which is exactly what the founding fathers wanted the judicial branch to be a bulwark against.

Lithwick’s article draws heavily on this awesome NY Times op-ed by Geoffrey Stone, a law professor at University of Chicago. His money quote is here:

Although the framers thought democracy to be the best system of government, they recognized that it was imperfect. One flaw that troubled them was the risk that prejudice or intolerance on the part of the majority might threaten the liberties of a minority. As James Madison observed, in a democratic society “the real power lies in the majority of the community, and the invasion of private rights is chiefly to be apprehended … from acts in which the government is the mere instrument of the major number of the constituents.” It was therefore essential, Madison concluded, for judges, whose life tenure insulates them from the demands of the majority, to serve as the guardians of our liberties and as “an impenetrable bulwark” against every encroachment upon our most cherished freedoms.

Lithwick also refers to this Huffington Post piece discussing how the Democrats have greatly improved their messaging on this matter, linking economic populism with the role of the Court, as in this quote by Vermont senator and Judiciary Committee chairman Pat Leahy:

“Congress has passed laws to protect Americans in these areas, but in many cases, the Supreme Court has ignored the intent of Congress in passing these measures, oftentimes turning these laws on their heads, and making them protections for big business rather than for ordinary citizens.”

War Against Terror is a War of Messages

With all the talk of whether Khalid Sheikh Mohammed and the other 9/11 terrorists should be tried in civilian or military court, and concurrent discussion of whether Christmas Day underwear bomber Umar Abdulmutallab should have been arrested and Mirandized or shipped off to Gitmo, it feels like there is a lot of macho posturing going on instead of focusing on what is best for national security.

“The president doesn’t understand we’re at war,” people say. “Terrorists aren’t criminals…they’re the enemy,” say others. It seems everyone is jockeying to prove how poorly they can treat the enemy and thus how tough they are. But being tough isn’t the goal of a war…winning is the goal. Being tough is only relevant if it helps us win; toughness qua toughness is pointless.

Of course Obama understands we’re at war; everyone understands we’re at war. Duh. But conservatives don’t seem to understand that this is a war of messages just as much as a war of guns. We need to imprison terrorists and kill terrorists, yes, but we also need to prevent people from becoming terrorists. And the way we do that is with a hearts and minds strategy, exactly as David Petraeus, every conservative’s hero, laid out in the Army’s counterinsurgency manual.

Every time I see or read an interview with someone in the Middle East, or look at the results of surveys from that region, the consistent message is that when the US acts like a bully or a hypocrite (eg. supporting totalitarian regimes while talking up democracy (hello Egypt)), the people get angry and listen to Al Qaeda and its ilk. When the US treats people fairly and follows its own laws, folks in the Middle East think better of us. Look at this graph showing improved Middle Eastern views of the US since Obama’s election. As Stephen Walt writes in Foreign Policy, Bush’s tough detainee policies were a “propaganda boon” for Al Qaeda.

Trying KSM in civilian courts would show that the US follows its own laws; it would demonstrate commitment to a fair system of justice. This would send a positive message to the unemployed Arab youth from whom Al Qaeda recruits. Our civilian courts can handle this sort of case; we have convicted many terrorists already, and they are serving life sentences in prison. Using civilian courts doesn’t mean we are soft. It means we are fair. Coupled with Obama’s aggressive use of drone strikes to kill Taliban leaders, it’s hard to see how anyone will think we’re soft. In fact, the use of civilian courts here with tough military tactics there is exactly the “balanced application of both military and non-military means” (section 1-113) that General Petraeus calls for in the counterinsurgency manual.

In addition, why should we let Al Qaeda claim the mantle of soldier or warrior by trying them in military commissions? It’s far more insulting to treat them the same way we do common thugs and thieves. As the judge in the Richard Reid trial put it, “you are a terrorist. A species of criminal guilty of multiple attempted murders.” Terrorists want to be seen as mighty warriors. Let’s not give them that propaganda win.

FYI, read here about how the guy arrested in Chicago for helping with the Mumbai attacks, and dropped immediately into the traditional criminal justice system, is singing like a canary.

Part of this “look how tough I am dynamic” is a tendency toward vicious attacks on those who disagree. In a protest of Eric Holder’s decision to try KSM in a civilian court, people called him a “traitor” and yelled to “lynch him” (a particularly terrible to say to a black man, by the way). That really doesn’t help. Reasonable people can disagree on the best way to fight this war against terrorism. I don’t think people who argue for military commissions are traitors or unpatriotic. I may think they are wrong about the best path forward, but I don’t think they are awful people or totalitarian fascists. Maybe focusing on policy would be a good idea.

The protest mentioned above, by the way, was organized by Debra Burlingame, the sister of one of the pilots who was killed on 9/11, and a prime mover in the attacks on the DOJ attorneys who have represented Al Qaeda prisoners. Greg Manning, whose sister was badly burned on 9/11, took the mike to say that Holder would be responsible for “hundreds of thousands dead.” I’m going to come out say something that might be controversial: I am tired of the families of 9/11 victims having special status in this argument. I feel terrible about their tragic loss, of course, but that loss doesn’t make them national security experts. Nor should their quest for vengeance affect us; we left eye-for-an-eye justice behind a long time ago.

The Christmas Bomber and Miranda

Bad timing for David Rivkin, who used Tuesday’s Wall Street Journal for one of his monthly attacks on some Obama policy. This time it was about the Christmas Day bomber, with Rivkin saying that not immediately sending the bomber into military detention was “an intelligence failure of massive proportions.” Too bad that the very next day, today, the exact same newspaper reported that the Christmas bomber is again talking to the FBI, providing “valuable intelligence.” This also damages the arguments of this guy and this woman. Look, there are valid reasons to say that terrorists should be viewed as wartime combatants rather than criminals. But claiming that we won’t get good information from terrorists held in the civilian legal system is clearly not a valid reason. And there is at least one good reason not to throw them in military brigs: it creates an appearance of the US being at war with Islam, which appearance seems to generate more terrorists. Finally, I would like to note, again, that George W. Bush also tried terrorists in civilian courts. For Republicans to now claim that this approach is terribly weak is to be hypocrites of the worst sort. Which is, I supposed, to be expected from politicians.