Saturday, March 27, 2004
More feedback on Kerry's international tax plan
I also received an e-mail that's worth re-printing:
Just one person's account? Not according to Kerry's economic advisors. From the New York Times:
This story has additional lukewarm sentiment from the business community.
So, I'm underwhelmed -- but oddly encouraged.
Why? This is much less populist than I had feared based on Kerry's rhetoric during the primary season. This is a key point of the Times article cited above. The key bits:
OK, The praise of Rubin might be a bit over the top, but I find a lot of this reassuring. The fact that, as the article reports, "[this] sort of thinking does not appear to sit so well with Senator Edward M. Kennedy" is just gravy.
The ten-year anniversary of the Rwandan genocide
The Economist has an article marking the 10-year anniversary of the Rwandan genocide and the lessons learned from it. There's an interesting contrast between the lessons learned by the "international community" and the lessons learned by the survivors of the genocide:
UPDATE: Nicholas Kristof points out why this is a far from academic conversation:
David Gelernter writes in the Weekly Standard about the relevancy of genocide prevention to Iraq as well. Both articles are worth checking out (and thanks to commenters for raising both topics).
Friday, March 26, 2004
The media whore of Hyde Park
I'm going to go out on a limb and suggest that my outsourcing essay is starting to attract some attention. Here's my day today:
Here's the funny/scary thing -- I have no idea how the interview will be framed. I was critical of Kerry on outsourcing but I also said that the corporate taxation proposal he announced today indicated a change in rhetoric from "Benedict Arnold CEO's." We talked for ten minutes, and there was a lot of tape -- they could go either way with it. [You should have followed Brad DeLong's advice on interviews--ed. Now you remember to tell me.]
UPDATE: Nope, they cut me. C'est la vie.
John Kerry on corporate taxation
The Washington Post reports that John Kerry is giving a major economic speech in Detroit today, proposing a mixture of temporary and permanent cuts in corporate tax rates in return for "the most sweeping reform of international tax law in over 40 years." The gist:
Here's the Associated Press analysis: "[Kerry] settled on a blend of loophole-cutting populism and business-friendly moderation, casting his package as jobs-producing tax reform."
1) This is a lot more about symbolism than substance. According to the Post story, the total sums involved in these tax changes are around $12 billion. That sounds like a lot, but it's around 1% of the federal budget. Not a lot of money either way.
2) That said, the symbolism is important, in that "corprate tax reductions" sound a lot better to the business community than "Benedict Arnold CEOs."
3) The economic advisors quoted in the Post story are Roger Altman and Gene Sperling. They fall decidedly into the "sane" camp of Democratic economic advisors.
Palestinians for nonviolence
In the wake of the second intifada and the increase in suicide bombings over the past four years, it's tempting -- particularly post 9/11 -- to pidgeonhole all Palestinians as a feckless, violent people. Sheik Yassin's assassination and the resulting protests in the occupied territories only reinforce that perception.
That kind of easy stereotyping is dangerous, because it obscures the complexities within Palestinian society that I've discussed in the past. I'm not saying that Palestinian civil society is in a healthy state -- merely that it would be a mistake to assume that Hamas/Islamic Jihad/Al-Aqsa = Palestine.
On that note, the Chicago Tribune reports the following:
A fitting coda for Jayson Blair
Thursday, March 25, 2004
For those who are reluctant to shell out the money, Julia Turner creates a "good parts" version of Against All Enemies in Slate.
Brad DeLong, meanwhile, composes what Condoleezza Rice's public testimony would have looked like -- it looks pretty credible. [UPDATE: the New York Times reports that Rice will testify before the 9/11 Commission again in private -- she had testified behind closed doors for four hours last month.]
Fox News reports on the emnity between Rice and Clarke:
*Post title changed upon request from Tom Maguire.
UPDATE: David Adesnik has more.
Reading Against All Enemies, part II
Over at Time, Romesh Ratnesar accuses Clarke of "sexing up" his interactions with Bush. One example:
This is on pages 32-33 of Against All Enemies -- and actually, Clarke's written account of the Bush encounter is more charitable to the President than Ratnesay indicates. The key passage occur right after the encounter:
[Yeah, and don't forget what Clarke said on background in mid-2002!--ed. Actually, I'm not terribly persuaded that this should weaken Clarke's credibility. As anyone who's worked in government should know, what's said in an official capacity will read differently than what's said when one is allowed to be candid. Clarke was acting as a dutiful bureaucrat in 2002, and not as an independent agent.]
An interesting correlation
Mickey Kaus says what I was thinking:
[But that contradicts Noam Chomsky's thesis that the media has been bought and paid for by Bush!--ed. You did that just to link to Chomsky's new blog, didn't you? Er, yes - but his permalinks don't seem to work--ed.]
CLARIFICATION: Commenters on this post seem to think that I think this is more than a coincidence. I don't -- and I'm assuming Mickey's tongue is mostly in his cheek as well.
Reading Against All Enemies
As I said before, Richard Clarke's criticisms of the Bush administration need to be taken seriously, so I went out and bought Against All Enemies yesterday. Last night I read the preface and the first two chapters. What stood out for me so far came on page x in the preface, in which he writes:
So, in Clarke's account, three Republicans dropped the ball on terrorism, while the lone Democrat fought the good fight but failed to achieve anything because of Republican attacks.
Let's assume for the moment that Clarke is telling the truth in his characterization of the four presidents (I still need to read those portions). Is he telling the whole truth? Tell you what, let's rework those bullet points a little bit:
Did I stack the deck in the second set of bullet points? Absolutely. My point, however, is that Clarke stacked the deck in the first set of bullet points.
Why would he do this? Some will say it's because Clarke is a partisan hack, which isn't really credible -- he
I'm still going to read the rest of the book. It's worth remembering that Clarke was correct in his assessment of Al Qaeda, and as the Chicago Tribune points out, even George W. Bush acknowledged to Bob Woodward that bin Laden was not on the top of this administration's priority list when it took office. And I am curious to see what he has to say about whether/how the decision to invade Iraq undermined the military effort to defeat Al Qaeda.
Still, it's hard not to believe that Clarke's evaluation of presidential performance is directly correlated with how well those presidents treated Clarke.
UPDATE: Greg Djerejian posted something about Clarke from three weeks ago that's also worth reading.
Wednesday, March 24, 2004
Globalization and creative destruction
In previous posts, I've treated trade and technology as competing explanations for why employment has declined in certain sectors. However, to be fair, the effects are not mutually exclusive. Open borders increase the incentives for technological innovation, and innovation increases the rewards from trade.
On this point, the New York Times ran an article two days ago about how the trade and technology are intertwined. Their case study -- how globalization is affecting the orange-growing industry. The highlights:
Read the whole thing. The creative desctruction of technological innovation does impose short-run dislocations on certain segments of the American economy -- particularly unskilled workers. However, the long-run effects are unambiguously positive, as Ted Balaker argues over at Reason (link via Virginia Postrel).
This is not a new debate -- Frédéric Bastiat made these arguments in mid-19th century France. The Dallas Federal Reserve has a nice primer of Bastiat's arguments (thanks to Scott Harris for the link).
The rhetoric of Bastiat's opponents sound awfully familiar today.
Tuesday, March 23, 2004
Regarding Richard Clarke
Being out of town and putting the Foreign Affairs essay to bed, I'm late to the Richard Clarke story. Clarke has a new book, Against All Enemies: Inside the White House's War on Terror--What Really Happened. He also appeared on 60 Minutes. The Bush administration using the big guns -- Condoleezza Rice and Richard Cheney -- to fire back. Howard Kurtz provides a nice rundown of the state of play.
The blogosphere is getting into it as well -- check out Josh Marshall, Matthew Yglesias, Kevin Drum, David Adesnik, Chris Lawrence, James Joyner, and David Frum. The basic liberal line is that Clarke's account is a damning indictment of the Bush team's woeful unpreparedness for the war on terror, in part due to an obsessive focus on Iraq. The basic conservative line is that Clarke is just a disgruntled ex-bureaucrat who's hawking a book.
So what's my take?
1) Richard Clarke is no Paul O'Neill. Back in January I pointed out the flaws of Paul O'Neill as a messenger on Iraq. Clarke is a different story. This guy managed to work at a high level at the National Security Council for three different administrations. This is highly unusual -- most NSC staffers are either political appointments who leave with a departing administration or career bureaucrats who cycle out of State, DoD, or the intelligence community for a two-year stint.
What does it mean that Clarke was able to hang around so long? It means two things. First, he was very capable at his job, in a way that O'Neill wasn't. Deputy National Security Advisor Stephen Hadley said on 60 Minutes that:
Ryan Lizza adds, "this White House has never been confronted with such a credible and nonpartisan critic on the issue of terrorism."
Second, he was extremely skilled in the art of bureaucratic politics. One official who saw Clarke in action -- and has no love for this administration -- described him to me as "smart, conservative, dedicated, insecure, and vindictive." I've heard stories from both friends and foes of Clarke, and they have one common thread -- you did not want this man for an enemy. He knows how to retaliate. [UPDATE: check out Fred Kaplan's sidebar and main story in Slate about Clarke for examples.]
So, when the Bush team decided to jettison Clarke sometime after 9/11, they made an enemy out of Clarke. And they're paying for that now.
So, does Clarke have a personal incentive to stick it to this administration? Absolutely. Does he know what he's talking about? Absolutely. Can what he says can be ignored? Absolutely not.
2) The administration ain't helping its own cause. Ryan Lizza has a fine rundown of the different lines of attack levied against Clarke in the 48 hours since this story went live. They range from the plausible (Clarke was obsessed with process and not outcome) to the implausible (Cheney's implication that Clarke was out of the loop prior to 9/11). They also contradict each other at times. The fact that both Rice and Cheney have addressed this head-on demonstrates, in Kevin Drum's language, that "the White House is sure acting like they have the potential to do some serious damage."
3) The administration could help its own cause. Stephen Hayes points out in the Weekly Standard that Clarke does come off as biased in throttling the Bush administration for apparent lassitude while the Clinton administration seems to gets a free pass:
It's worth remembering that every new administration needs about six months to work out the foreign policy kinks -- flash back to the Clinton team's firxt six months if you think this is a recent problem. To claim that they were slow to move on Al Qaeda misses the point -- unless it was a campaign issue, every new administration is slow to move on every policy dimension.
Furthermore, as the Washington Post reports, in the end the administration did get this one right, in the form of a September 10, 2001 deputies meeting that agreed upon a three-part, three-year strategy to eject Al Qaeda from Afghanistan. For all of Clarke's accusations about the Bush team's neglect, it's hard to see how things would have changed if this decision had been made a few months earlier. Post-9/11, for all of Clarke's claims about intimidation to show Iraq caused 9/11, the policy outcome was that we ejected the Taliban from Afghanistan. Iraq was put on the back burner. I'm someone who's been less than thrilled with Bush's management of foreign policy. Some of what Clarke says disturbs me, particularly about homeland security. But for this case, it does look like the system worked.
The best thing for this administration is to say in response to Clarke would be: "Yes, if we could turn back time, we'd have given AQ more consideration. But it probably would not have prevented 9/11. And don't claim that we could solve a problem in eight months that the last team -- in which Clarke was the lead on this policy front -- couldn't solve over eight years."
4) There is a deeper policy split at work. Rational Bush opponents are happy to see Saddam gone but do not see any connection between the war in Iraq and the larger war on terror. Rational Bush supporters will acknowledge that at best there was a loose connection between Iraq and Al Qaeda, but that remaking Iraq is a vital part of the war on terror because it will help to remake the Middle East, terrorism's primary source.
David Frum writes:
I'm not completely convinced that Frum is being fair to Clarke, but the comment raises an interesting parallel between current debates over how to wage the war on terror and previous debates over how to contain the Soviet Union.
55 years ago, George Kennan and Paul Nitze had different positions on how to wage a containment policy, with Nitze taking a much more aggressive posture in NSC-68 than Kennan did in "The Sources of Soviet Conduct." I'm not sure that it's ever been decided which position was right. The same will likely be true of current debates.
A query to those worried about outsourcing
The lion's share of the critical feedback I've received from "The Outsourcing Bogeyman" essay has been targeted at my claims about the IT sector. I'm supposedly wrong on the IT side of the equation, and therefore better-paying jobs will follow lower-paying jobs overseas.
What's interesting is that I haven't heard much discussion about either the manufacturing part of the story or the business processes part of the story. Does this mean people are willing to acknowledge that these are sectors where standard trade theory apply?
[Now you're just goading your critics--ed. No, just curious -- plus, it might make a good article about public perceptions of economics.]
Monday, March 22, 2004
Critiquing one critique
Scott Kirwin posts his critique on why I’m wrong on outsourcing. It boils down to:
However, it’s worth pointing out that the current direction of capital flows bears no resemblance to what either Roberts or Kirwin fear. The U.S. currently runs a massive capital account surplus, which finances both our budget and trade deficits. When restricted to foreign direct investment, the overwhelming majority of U.S. outrward FDI goes to other OECD countries. This objection is the reddest of red herrings.
On relying too much on MGI data because they’re big into outsourcing – hey, I’ll relinquish MGI data if Kirwin and others renounce the use of data from Gartner, Forrester, Deloitte, etc. [You're being flippant!--ed. Here's a more substantive response.] All of these firms are equally into outsourcing but still put up overhyped guesstimates about projected job losses. As I pointed in the Foreign Affairs article, these firms also have a strong incentive make outsourcing a business fad. Think their job loss numbers might be exaggerated a tad?
On the future of better-paying jobs, Jacob Kirkegaard of the Institute for International Economics points out that the Forrester study that got everyone hyperventilating in the first place points out that most jobs projected to be lost are below the US average wage.
Certainly the data to date don’t support Kirwin at all. According to Kirkegaard:
Statebuilding proceeds in Iraq
The Washington Post reports on an imminent deal to disarm the two big militias remaining in Iraq. The key parts:
Open Yassin thread
Comment on the missile strike that killed Hamas founder Sheik Ahmed Yassin here.