Friday, October 15, 2004

Seen on a newsrack: Trump World Magazine, with the cover story being The Apprentice. This wasn't so much a surprise. The surprise was that this was volume 3, issue 3. Where the hell have I been?

Evidently not at Trump casinos, where the thing has apparently been tested before...

Matthew Yglesias notes that the Bush crew acts as if the only way to deal with terrorism is to deal with its state sponsors. One problem with that is that the major sponsors of the terrorist organizations that hit us are not limited to states. Much as we might carp about Saudi tolerance for support of terrorism, many checks apparently get written by private individuals out of their own funds, not out of Saudi government coffers.

So, a really effective plan for dealing with the actual terrorist threat has to confront non-state actors dealing through non-government channels. As an example of what I'm talking about, consider BCCI. This was an institution that presented itself as a perfectly respectable bank, based in the Middle East. But its founder's explicit goal was to "fight the evil influence of the West", and whose idea of doing that involved financing the nastiest thugs on the planet; the roster included everyone from the Medellin drug cartel to Abu Nidal.

As it happens, the bank was brought down by the crusade of a lone Senator, who wound up fighting the leadership of both parties. (BCCI was well-connected in Washington, to respected figures in both political parties, including such Democratic power brokers as Clark Clifford). So, this guy was doing unglamorous but important work to deal with the terrorist threat -- in the late 1980s. And in doing that, he probably did a lot more to stop terrorism against us than the attack on Iraq, which, we keep having to say, was never really active as a sponsor of terrorism against Western targets.

If you'd want to vote for a President with the clear-eyed vision to see terrorism as a deadly threat to all of us back in 1991, and to work hard to fight it back then, when all he could expect to get for it was grief, you're in luck. You can.

Thursday, October 14, 2004

Al Franken was on the radio yesterday saying that it's wrong for Sinclair broadcasting to order their TV stations to broadcast the anti-Kerry "documentary" because it's an in-kind contribution from the broadcasters to the Bush campaign.

He's dead wrong.

It's wrong for them to broadcast the thing because it's blatant slander. The "Swift Boat Veterans" began with claims about Kerry's service in Vietnam which have since been exposed as blatant lies -- my personal favorite is Larry Thurlow claiming that there was "no hostile fire" on a mission where both Kerry and Thurlow were awarded medals, and damage reports show Thurlow's boat came back with bullet holes. And the central charge of this movie -- that Kerry's testimony before the Senate somehow lent "aid and comfort" to the North Vietnamese, or worsened their treatment of American POWs -- doesn't even pass the laugh test. Kerry was testifying after the My Lai trial -- heck, after "free fire zones" had been official, acknowledged Army policy -- so the fact that atrocities had occured against civilians was absolutely no secret to anybody. These guys are liars, who have sacrificed their honor for sleazy political cheap shots, and the slime rubs off on everyone who willingly goes near them.

The broadcast shouldn't happen because it's slanderous, not because it's political. As Franken ought to know. On his show's recent tour, he wound up every live broadcast with a stemwinder speech urging his live audience to get out and work for the Democrats. If politically partisan broadcasts get treated as "in-kind contributions", he's off the air.

I sometimes wonder about people who favor preemptive action in the "war on terror". Not least because al Qaeda's campaign against us began years ago, so it's a bit late to preempt the bastards. But considering Dubya's flip flops on the importance of Osama bin Laden, it's possible that the terrorists that attacked us just aren't central to their notion of the "war on terror."

Besides, Bush keeps saying we didn't invade Iraq to preempt terror per se, but instead, to preempt terrorists getting weapons of mass destruction from Iraq. Of course, we now know from the Duelfer report that that threat didn't exist, and sanctions which we could have maintained indefinitely for a great deal less than the cost of the war were more than enough to keep it from coming into being. Bush's crew's has two responses. They say that there was no way to know that until we invaded. That's just wrong; we could have let the inspectors who were in the country do their job. They also claim that everyone agreed that the evidence they proferred was sound. That's also wrong -- key pieces of proferred evidence were widely criticized. The Niger "yellowcake" memos were exposed as crude forgeries. The aluminum tubes that the administration kept talking about were repeatedly described by the IAEA as unsuitable for uranium enrichment -- echoing, we now know, reports from the U.S. government's own technical experts, which Bush & co. suppressed. And so forth. To the extent that anyone believed the case, it was because they assumed that no resident of the Oval Office would endanger the credibility of the U.S. government by charging to war based entirely on this pack of transparent lies -- they had to have something, even if they weren't talking about it. (For what it's worth, that's what I was thinking). And as long as Bush remains in the White House, no one's going to be making that mistake again.

But forget all that. Let's look at the upshot. Iran now is everything that Bush claimed that Iraq was -- a state with an established record of promoting terrorism (much more than Iraq's), which is now threatening to get nuclear weapons. And our options for dealing with it are absolutely hamstrung by having so many of our combat forces tied down in Iraq, and having our credibility damaged by the failure to find the weapons which Cheney, Rumsfeld, and others were certain of before the war. A policy of preemption demands particular care in assessing threats, precisely to avoid this kind of incredibly costly mistake. The Bush administration did the exact opposite, "stovepiping" every rumor and innuendo they could find about Saddam straight to policy makers, bypassing all the usual checks on raw intelligence, with consequences that are now plain for all to see. People who actually believe in preemption as a viable approach to these sorts of problems ought to be furious at the way it has been botched. Where is the outrage?

Wednesday, October 13, 2004

A few thoughts on "The World's Banker", by Sebastian Mallaby:

It's generally considered bad form in reviewing books to complain that the author hasn't written the book you wanted him to write. But in this case, I think it might be fair to put readers on notice.

The ostensible subject of the book is World Bank head James Wolfensohn, who certainly is a character, but Daniel Drezner recommends it as a reference on the bank itself -- clear eyed, searching, and engagingly written:

How well-researched is this book? Mallaby's description of Wolfensohn's first trip to Africa as World Bank president has a lot of eye-grabbing detail, including one graf that describes how Wolfemsohn looks at an airplane tarmac. The description was a bit thick, and I was ready to chide Mallaby for inserting colorful details that neither he nor anyone else could have remembered -- until I checked the footnotes. Mallaby had recreated the scene using a World Bank video recording. It sounds like a small thing, but is indicative of the excellent sourcing in The World's Banker.

The thing is, my interest was less in cute James Wolfensohn stories than in a defense of the Bank, and its sister institution, the IMF, from its recent critics, like the Nobel Laureate, and erstwhile chief economist for the World Bank, Joe Stiglitz. The book certainly looks like it ought to answer the critics. It's a Council on Foreign Relations book -- the establishment speaking for itself -- with back-cover blurbs from Robert Kagan and Fareed Zakaria. Unfortunately, you can't judge this book by its cover.

As a sample of the depth of the book's arguments: early on, Mallaby discusses the "structural readjustment" policies that the Bank and IMF forced on the governments it financed in the '70s and '80s:

The Bank rightly urged developing countries to devalue their currencies ... oil was affordable only if countries boosted their exports, and that meant ... having a low exchange rate. The Bank simultaneously urged developing countries to cut government spending, a harsh policy but ... governments had lived far beyond their means during the 1970s. Little by little, these two core prescriptions were broadened: the Bank started to urge Latin Americans and Africans to cut trade barriers, to free prices, and generally to undo the state-directed development model that many had followed for the past two decades. Poor countries had not much choice but to comply ...

Some of this justification seems straightforward enough: Mallaby points out that there was triple-digit inflation in Brazil and Argentina. But then the argument starts to take a genuinely weird turn:

... while limited state direction of a developing economy does not have to be a bad thing, as East Asia's experience shows, Latin Americans and Africans went on to make a crucial error. The East Asian formula was to back industries that exported successfully; by using foreign markets as a test of firms' mettle, they avoided backing losers. But Latin Americans and Africans backed industries to supply their own markets; since these markets were often protected by trade barriers, their flagship firms escaped a competitive test of their efficiency. Pretty soon, Latin Americans and Africans found themselves pouring subsidies into white-elephant factories.

What's odd about this is that the Bank and IMF were not directing the Latin Americans to emulate the successful policies of, say, the South Koreans -- which included state support for industry and (though you won't learn it from Mallaby) substantial management of trade -- but rather to get out of supporting industries altogether. And when describing the upshot, well... let me just quote:

The trouble was that the Bank wrapped its sound advice in evangelistic market rhetoric. Echoing the free-market faith of its leading shareholder in Washington ... the Bank declared that structural adjustment would take no longer than five years ... This, like many development promises, proved wildly optimistic. Having grown 39 percent richer in the 1970s, the average Latin American grew 10 percent poorer in the subsequent decade[.] ... Budget austerity ... triggered riots in Zambia, Morocco, Bolivia, and the Dominican Republic; in Sudan they precipitated the fall of a government.

So Mallaby begins by saying that the "advice" was "sound", and the only problem was that it was, perhaps, a little tone deaf, even though it advocated policies rather different from what had actually worked in East Asia. And he goes on to say that in the areas subjected to the "sound advice", it just didn't work. Which leaves the reader wondering why exactly he considers the advice to have been sound. It's a conundrum that echoes throughout the book; a bit later, for instance, Mallaby states ex cathedra that "Africa's continuing misery was explained to a large extent by the failure to implement [structural adjustment] faithfully", while not saying a word on what signalled the Africans' disturbing lack of faith. Or he will talk about advice being based on "sound theory". Personally, I would have thought that when theoretically sound advice consistently fails in the real world, we should stop trying adjust the world, and adjust the theory.

Echoing his ostensible subject, bank head James Wolfensohn, Mallaby does cite third world corruption as a drag on development. But his poster case of an economy riddled and wracked by corruption is Indonesia -- where, he notes, it was awkward for the Bank to try to clamp down precisely because both economic development and antipoverty efforts were, by African standards at least, a smashing success. And later on, in a discussion of a controversial Chinese project near Tibet, he casually drops this bombshell:

China ... borrowed more from the bank during the 1990s than any other country. There was an extremely good reason for this: not only was China the world's most populous nation, it was also the most spectacularly efficient at eliminating poverty. Indeed, China's performance was so strong that it transformed the global picture, rescuing the Bank from some embarrassment. In the rest of the developing world, according to the Bank's own statistics, the number of people living below the dollar-per-day line actually increased between 1987 and 1998, and not by a small number: 100 million extra people were living in abject poverty despite all the efforts of the world's development agencies. But fortunately for the aid folk, China lifted the same number of people out of poverty over this period. So if you added China in to the picture, the embarrassment vanished.

But does it? The Chinese Communist Party may be friendly to market mechanisms now than in the days of Mao, but it is still quite active in managing the country's economy, with (as elsewhere in Asia) an emphasis on developing exports -- a State Department report from the period describes a still large State Sector in the economy, indirect subsidies for exports, and import barriers. And those favoring corruption as an explanation for the laggard third world won't be pleased to know that the Chinese model is spectacularly corrupt, and its comparative success has come despite that. At any rate, the upshot is that where the free-marketeering advice of the Bank and IMF was followed, the trend was consistently, over decades, that it failed.

Mallaby does cite countries that are doing it right -- Uganda, for instance, which has a good bunch of tough local technocrats. But while the Ugandan governments problems are not all its fault -- they're hardly to blame for the depredations of the Lord's Resistance Army, less a resistance movement than a violent death cult that sounds like something that wandered out of a Clive Barker novel -- the fact is that they are not doing as well as spectacularly corrupt governments elsewhere. (Besides, there's an odd note in the discussion of Uganda. One of the programs Mallaby praises is the governments drive towards universal, free elementary school education. Which strikes me personally as a good idea -- but it hasn't always struck the IMF that way; in other countries, they have insisted that the government collect school fees, under the rubric of "cost recovery". If Mallaby discussed those measures directly, I missed it).

At this point, we come around to Mallaby's discussion of critics of the Bank's approach. The central figure here is, of course, Joe Stiglitz, who Mallaby introduces as:

the brilliant and mischievous future Nobel laureate who had joined the bank as chief economist at the start of 1997. Stiglitz had helped to create a branch of economics that explained the failure of standard market assumptions; he was like a boy who discovers a hole in the floor of an exquisite house and keeps shouting and pointing at it. never mind that the rest of the house is beautiful ... Stiglitz had found a hole, a real hole, and he had built his career on it.

And that's pretty much it for Mallaby's discussion of Stiglitz's theoretical contributions. As to his critiques:

[Stiglitz] made much of the fact that IMF-prescribed austerity in Thailand had bankrupted local companies ... and he frequently implied that the IMF economists were to blinkered to realize that this might happen. This last insinuation was utterly preposterous. The IMF had indeed pressed too much austerity on Thailand and then later reversed course, but it was slanderous to suggest that the IMFs policy makers didn't know that raising interest rates could lead to bankruptcies.

But Mallaby's weasel words ("implied", "insinuation") implicitly concede that Stiglitz never made that accusation; what he did say, in very plain English, was that the IMF underestimated the risk and was indifferent to the danger, and in this, Mallaby effectively concedes that he was right. But that doesn't keep him from further describing Stiglitz as an immature bomb thrower -- not for being wrong; Stiglitz's arguments qua arguments are never seriously and thoughtfully addressed, but for having the temerity to air critiques of the IMF and U.S. Treasury in public, and worse, to suggest that anti-globalization street protesters weren't buffoons like the ones Mallaby describes (and like respectable people know them all to be), but that some of them might have valid points.

(Ironically, Stiglitz is presented as a less serious figure than Wolfensohn, who was sympathetic to a lot of the critiques, but whose temper and poor management style disrupted attempts to implement changes in policy, and alienated subordinates to the point of outright sabotage).

I started by saying that it's bad form in reviewing books to complain that the author hasn't written the book you wanted him to write. But it's still reasonable to ask what kind of book Mallaby has written. It's a kind of book which doesn't present even a half-hearted explanation of the theories underlying the policies it describes, but has room for entire pages full of anecdotes about Wolfensohn's service as a trustee at Carnegie hall, and the goings on at his retreat in Wyoming:

For Wolfensohn, those days in his "log cabin" -- actually a log cathedral build around astonishing spruce columns that soar thirty feet up to the roof -- were not merely downtime. They were a chance to connect with the World Bank's main shareholder, President Bill Clinton, who had morphed from stranger to firm friend in the few months since Wolfensohn's appointment. The shareholder in chief was also vacationing in Jackson Hole, testing his wits against Wolfensohn's neighborhood golf course and dining with Wolfensohn's friend Harrison Ford. The World Bank president had introduced the American president to a president from Hollywood, since Ford was soon to appear in the movie Air Force One as President James marshall. On August 19, Wolfensohn threw a party at his home to celebrate Clinton's forth-ninth birthday. The photos show the two men kitted out in denim shirts and bolo ties, surrounded by senators and film stars and other natural soul mates.

This is a book which presents the glamorous life of our national leadership, and treats their policies as informed by wisdom beyond our ken, which is too recondite to be properly considered in public. Readers of an earlier age -- accustomed to second hand reports of the glories of royal courts -- would have looked at a passage like this and known instantly what it is. But we live in a democracy where policies are ultimately judged by the will of the people, so it must be something else.

By the way, there's a lesson for Democratic politicians in that last bit I quoted. It's precisely the sort of thing that Republicans use to paint Democrats to their poor and middle class constituents as "not like us." Bill Clinton hangs out like movie stars; Tom DeLay, for his part, may have turned into a spectacularly corrupt Washington power broker, but he still looks the part of an exterminator from Texas. This stuff matters.

Above note and Uganda paragraph added late...

Tuesday, October 12, 2004

A thought on the arguments for war:

The Duelfer report says, at the very least, that the sanctions regime we had in place had prevented Saddam Hussein from obtaining weapons of mass destruction, or even mounting a serious development program. But the objection will be raised -- was raised, in fact, before the war -- that we couldn't afford to keep those sanctions on forever. Is that the case?

Let's consider what those costs would have actually been. Let's assume that costs of the sanctions regime -- beyond what could be charged to oil-for-food program revenues as administrative overhead or diverted as Gulf War I reparations -- somehow amounted to a billion dollars a year. (Sanity check: as of November, 2002, the oil-for-food program had generated $57 billion in sales, and received $23 billion worth of goods). The thirty-year treasury bill is currently selling for a bit under five percent. The present value of a perpetual annuity is the annual payment divided by the discount rate; applying those to the figures I've given, continuing the sanctions regime in perpetuity would have cost maybe $20 billion. Or choose your own figures -- it's hard to get a cost above the tens of billions of dollars. Which isn't chump change, even in Washington, but it has already been dwarfed by the cost of the war.

The sanctions regime, of course, created another argument for war -- that it was imposing an immoral level of privation on the Iraqi people, which, as the indispensable Jeanne D'arc reminds us, led to the resignations of two U.N. heads of the program. Talk all you like about corruption in the program, the fact remains that the U.S. government was quite deliberately sitting on contracts for

Among the goods that the United States blocked [in winter 2001]: dialysis, dental, and fire-fighting equipment, water tankers, milk and yogurt production equipment, printing equipment for schools. The United States even blocked a contract for agricultural-bagging equipment, insisting that the U.N. first obtain documentation to "confirm that the 'manual' placement of bags around filling spouts is indeed a person placing the bag on the spout."

But right now, when there's raw sewage running on the streets of Sadr City, reconstruction is more or less shut down because the streets are not safe, and Iraqis noting sardonically that Saddam wondering why Saddam was able to get the power on after the last war -- sanctions, corruption, and all -- better than we have, it's an awkward time for proponents of the war to make that argument.