Saturday, June 19, 2004
Who's buying T-bills? Why are they buying T-bills?
One of the concerns that Niall Ferguson raised in Colossus: The Price of America's Empire about the long-term financial strength of the United States was the huge amount of U.S. government debt that Asian central banks were purchasing. Daniel Gross has more details about this phenomenon in Slate:
Gross goes on to observe that central banks are purchasing a rotten investment -- T-bills currently have low rate of returns and are denominated in a currency that has been slowly losing its value compared to the euro or other major currencies.
Tyler Cowen offers seven possible explanations. My vote is for a mixture of reasons three, four, and six -- mostly three ("China and Japan want to keep the value of the yuan and yen low, as part of a mercantilist export-promotion strategy.")
There is another possible explanation, but I don't seriously believe it. As Gary Shilling points out in Forbes in an essay downplaying foreign ownership of U.S. government securities, the moment Chinese capital markets are liberalized, the Chinese central bank won't be the only Chinese actor interested in greenbacks:
So, one possibility is that the Chinese central bank is buying Treasuries in advance of capital market liberalization. But that would be such a complex undertaking -- given the fragility of the state-owned Chinese banking system -- that I can't think that's what's going on.
With that possibility unlikely, what I find so interesting is the parallel between what Asian central banks are doing now and what Japanese private investors did back in the late 1980's -- make lousy investments in overpriced assets. I don't think there's any correlation between the two phenomenon -- private investors and central banks are like apples and oranges.
Friday, June 18, 2004
What sustains the barriers to globalization in the Middle East?
Marcus Noland and Howard Pack have written a must-read policy brief for the Institute for International Economics on why the Middle East appears to be suffering from relative economic stagnation. They lay out the challenge in stark terms:
The authors dismiss the simple argument that Islam retards receptivity to capitalism. Rather, Noland and Pack's key finding is that "public attitudes toward foreigners and globalization" more generally is the greatest barrier to foreign investment. Their operationalization of this kind of attitude is most intriguing:
From this finding, the authors return somewhat gloomily to the role of Islam and conclude:
Read the whole brief.
I'm not feeling the love from Russia
CNN International reports that the Russia Federation warned the United States about Iraqi plans for terrorism against the United States:
I wouldn't want to speculate on the quality of Russian intelligence, but that last sentence provokes a question to President Putin -- why didn't the information change your mind about the war? You have intel saying that one sovereign state is planning to commit acts of aggression against another sovereign state in violation of the laws of war.
If that's not a justification for preventive action, what is?
Does John Kerry have moles in his campaign?
Mickey Kaus, June 17, 2004:
Jim VandeHei and Lois Romano, "Kerry's Search: In Depth, In Secret." The Washington Post, June 18, 2004:
My very own cabinet reshuffle
Brad DeLong has been urging "grown-up Republicans" for the past year to force Bush and Cheney's resignations. In latest post on this theme, DeLong expresses his half-serious wish that "the presidential succession passes to Colin Powell."
Now, besides the fact that Brad's theories of political science rest on shaky ground, and besides the fact that the only time I can think of either party forcing a sitting president not to run again was Johnson in 1968 (and even then it wasn't "grown-up Democrats" doing the pushing), I'm a bit puzzled by DeLong's embrace of Colin Powell. Maybe Powell is a moderate Republican, but that doesn't seem to have made him a particularly good Secretary of State. As the New York Times and Washington Post pointed out last year in their autopsies of the diplomatic run-up to Operation Iraqi Freedom, and as I highlighted in this post, the Secretary of State did not exert a lot of diplomatic effort. This is from the Times account:
A secretary of State who dislikes travel -- my kind of diplomat.
However, Brad's post did get me to thinking about Bush's foreign policy team and my own qualms with their performance. Tenet and Negroponte have recently left their positions. Rumsfeld should resign. Powell is lackluster. Fairly or unfairly, Ashcroft as Attorney General has been an automatic campaign contribution machine for Democrats. Foreign policy professionals are thoroughly disenchanted with the current team.
Since Bush and Cheney themselves aren't going anywhere, I've got an idea -- how about a cabinet overhaul now instead of November!!
Of course, this presents an exciting but challenging task -- picking a new foreign affairs cabinet that meets the following criteria:
With those criteria in mind -- and do bear in mind that this is a blog post, so it's not like I've thought every detail of this out -- what's my new cabinet look like?
Secretary of Defense -- John McCain. It's worth remembering that back in 2000, John McCain was the preferred candidate for a lot of prominent neocons. Here's a way to snuff out all that Kerry-McCain mumbo-jumbo and make McCain's star quality work for the Republicans. Plus, he knows a thing or two about defense matters.
Attorney General -- John Danforth. This position is a lightning rod for social conservatives -- but no one could doubt Danforth's adherence to conservative values or his sense of duty. Danforth commands respect on both sides of the aisle for his Senatorial record as well as his recent efforts to end the civil war in Sudan. This pick would please conservatives and not piss off moderates at the same time -- not an easy task.
Director of Central Intelligence -- Brent Scowcroft. Let's face it, the intelligence community is a mess right now -- what's needed is a technocrat's technoract, someone who can clean house while commanding the respect of intelligence professionals. Scowcroft has experience in just about every policy position in Washington, and currently chairs the President's Foreign Intelligence Advisory Board. [Why would he leave a lucrative consulting group to go to take a position lower than NSC advisor?--ed. Er, a sense of duty.]
Secretary of State -- Kenneth Dam. Dam was Deputy Secretary of State under George Shultz and Deputy Secretary of the Treasury under Paul O'Neill. To my knowledge, no one in DC has ever said a bad word about him. I'm going to go out on a limb and say he's got sufficient experience for the job.
National Security Advisor -- Bob Blackwill. By all accounts, Blackwill is the Republican version of Richard Holbrooke -- an arrogant SOB who gets the job done. The NSC advisor needs to be someone who can be an honest broker in the policy process, unafraid of large egos, and able to be candid with the president. Blackwill's perfect for the job -- besides, as Lawrence Kaplan points out, Blackwill seems to be evolving into a shadow NSC advisor anyway.
Treasury Secretary -- Robert Zoellick. In the spirit of keeping one current Bush appointee, promote this guy and finally have a Treasury chief that understands there's an international component of the job.
Secretary of Homeland Security -- Rudoplh Guliani. If you think the intelligence community has problems, consider this monstrosity of a department for a second. This job is much tougher than DCI -- at least the CIA has some sense of esprit de cotps. DHS is a conglomeration of smaller agencies that have been discarded by other departments. What's needed here is a centralizer, someone who can meld an awkward organizational chart into something resembling a functional bureaucracy. I think Guliani fits that mold.
United Nations Ambassador -- Robert Kagan. This is always an awkward slot, because it usually goes to someone who lost out in the Secretary of State/NSC Advisor Sweepstakes. Plus, the UN ambassador needs to be someone who can play nicely with other countries, but still accepts the original neoconservative principle that the U.N. is a bastion of anti-Americanism and general silliness. Alas, Daniel Patrick Moynihan is neither Republican nor alive. But Kagan comes the closest to embodying those principles.
Seems like a nice mix of responsible realists and responsible neoconservatives to me. Someone get me David Broder's private line to float this trial balloon!
Readers are hereby encouraged to submit alternative candidates -- provided they meet the criteria listed above.
Thursday, June 17, 2004
Eugene Volokh triggers a gay civil war
Well, not really. Eugene's original quotation of Marilyn Zielinski's theory about what it takes for a man to be sexy was quite interesting:
This has inspired two very different responses from two different gay men.
First, Andrew Sullivan weighs in:
For a somewhat different take, Eugene follows up his original post with the following reprint of Geoffrey Murry's Queer Eye view:
The one thing I'm sure of is that Sullivan and Murry should probably not date each other.
We here at danieldrezner.com welcome any and all contributions to this pressing debate, regardless of sexual preference.
Should Rummy resign, part III
Last month I posted here and here on why Donald Rumsfeld should resign. I'll just cut and paste this Eric Schmitt/Thom Shanker story in the New York Times for why I stand by that belief:
UPDATE: This Reuters story doesn't comfort me much either:
Sorry, that last answer doesn't cut it for me.
Suggest a guest-blogger for danieldrezner.com!!
Josh Marshall is taking a vacation, but not before dropping a coy reference to a journalistic venture "that I and several colleagues have been working on a story that, if and when it comes to fruition --- and I’m confident it shall --- should shuffle the tectonic plates under that capital city where I normally hang my hat."
More intriguingly, Marshall will be having a guest blogger at Talking Points Memo [UPDATE: Marshall made a fine choice in TNR's Spencer Ackerman.] Which got me to thinking that even though I often fill in as a guest-blogger for the Higher Beings of the Blogosphere, I haven't had a guest blogger here at danieldrezner.com -- with the singular and laudatory exception of my wife.
Due to some impending events that will become public in due course, I may need the services of a guest-blogger or two in the coming months. I've thought on occasion about who could be able to fulfill my mandate of "politics, economics, globalization, academia, pop culture... all from an untenured perspective"? All too often I draw a blank.
Sooooo..... readers are hereby invited to submit suggestions -- from the blogosphere or the scholarly community -- as possible short-term substitutes (for those shy academics in the audience who are interested but would rather not post that fact on the blog, contact me directly).
It's not easy keeping up with the Oxbloggers
David Adesnik's praise to the contrary, we here at danieldrezner.com often feel powerless in the wake of the Oxbloggers' relentless stream of publications. It's not just their ability to publish in so many tony outlets -- it's the fact that they're more than a decade younger than me and publishing in so many tony outlets. Just who do these young whippersnappers think they are, writing such high-quality copy on such a regular basis?
[Is it because they haven't completed a Ph.D. yet and therefore haven't had their writing skills crushed into a sticky paste?--ed. From an epistemological standpoint, that's a nonfalsifiable hypothesis and lacks any counterfactual analysis. Thank you for proving my point--ed.]
But today the advantage is mine. My review of Niall Ferguson's Colossus: The Price of America's Empire is on page D7 of today's Wall Street Journal. You can see the online version by clicking here. Here's the part of the book that I found most interesting:
The ball's in your court, Oxblog... oh yes, the ball is most definitely in your court.
[Ummm... didn't Adesnik and Chafetz already publish something in the Wall Street Journal?--ed. Arrggh!! I'd have a greater sense of self-esteem if it wasn't for those meddling kids!!]
Wednesday, June 16, 2004
Are successful blogs correlated with successful campaigns?
Back in the winter when Dean crashed and burned in Iowa, I asked:
Now, the reason I asked this was obvious -- most people associated campaign blogs with Dean, and if Dean flamed out, surely that meant that having the most successful blog around didn't mean all that much even in primary campaigns.
The unstated assumption behind my question was that Blog for America was actually the most successful campaign blog out there. Even though campaign blogs are different from other kinds of blogs, and even though I had criticized its content in another venue, I certainly believed it to be the most professional.
However, I may have been in error. [Again--ed.] Gene Koprowski, UPI's telecomminications reporter, reports on an interesting study about campaigns and blogs:
Now, a few caveats -- first, I can't find a press release or an executive summary of this study on the Empirix web site (see below for an update). Second, the difference between Dean's 98% effectiveness and Kerry's 100% effectiveness is not huge. Third, Edwards outperformed Dean in the primary campaign even though his blog was only half as effective.
Still, this is the first (report of a) study I've seen in which Kerry's blog comes out on top by any metric.
By the way, if you read the entire UPI report, you'll find a mention of danieldrezner.com -- clearly, Greg Wythe was not the only person impressed with my ability to fold in a Kristin Davis reference to a post about Sarbanes-Oxley.
UPDATE: Drezner gets results from UPI and Empirix! After an e-mail query, the good people at Empirix were nice enough to send me their study, which was done at the behest of Baseline magazine -- though it doesn't appear to have been cited in their December 2003 package on campaign blogs. But for those who care, their study was conducted from "October 31, 2003 at 1:00pm Eastern through November 7, 2003 at 1:00pm Eastern." It looks quite proper.
Someone's been in the ivory tower too long
I've haven't been following the scandals involving the University of Colorado at Boulder's football program too carefully. What I have read about it is at a welcome distance. As someone who used to teach there, I can't say I'm particularly shocked by the catalogued behavior.
The tendency of CU-Boulder university officials to say idiotic things hasn't helped matters. One of the triggers for the mess was when coach Gary Barnett, in responding to questions about the alleged rape of female placekicker Katie Hnida by a teammate, called Hnida an "awful" player who "couldn't kick the ball through the uprights." Barnett was suspended pending an investigation, and later reinstated.
Alas, CU-Boulder's president, Elizabeth Hoffman, seems determined to follow Barnett's ability to put one's foot in one's mouth. From the KUSA (NBC's affiliate station in Denver) web site:
You can see the relevant portion of the transcript by clicking here.
Now Hoffman is etymologically correct -- at least according to this site, "the word wasn't always considered derogatory, even though it is today." (Click here for more than you would ever want to know about this word.)
And in further defense of Hoffman, here's a statement released by a university spokeswoman:
Unfortunately for Hoffman, this is one of those questions for which common sense suggests the obvious answer -- no matter how adversarial the situation. Responding as she did makes her seem way too detached from the real world.
There's realism and then there's realism
I liked the way Lawrence Kaplan starts his cover story in The New Republic (subscription required) on the resurgence of realism in American foreign policy circles:
It gets better from there:
Kaplan makes some good points -- but I have two moderate carps with the piece:
1) Not everyone who opposes the administration is a realist. The Committee that Kaplan fronts the piece with is entitled "The Coalition for a Realistic Foreign Policy." Semantic as this may sound, "realistic" is not the same thing as "realist." A quick glance at the coalition's statement of principles reveals that what binds this coalition together is an opposition to American empire -- but that can come from several sources. For example -- as I argued a few months ago in TNR Online -- realists dislike the neocon enthusiasm for nation-building, whereas liberal institutionalists dislike the neocon disdain for multilateralism. While realists and liberal institutionalists might disagree with neoconservatives on empire-building, they don't agree on a lot of other dimensions of policy. The list of signatories paints a similar picture -- while there are a large number of true-blue realists on the list, there are also people, like Charles Kupchan, who would not fit that label (though, admittedly, most of the other people on that list are realists).
Kaplan doesn't help matters by labeling G. John Ikenberry in the essay as a "prominent realist." No offense against John -- who's a fine scholar and a star in the discipline -- but that ain't right. If you read Ikenberry's principal work, After Victory, it's clear that he's quite the fan of multilateral institutions as a binding mechanism on hegemonic powers. This is hardly a controversial position to adopt in the gamut of international relations theory -- but it flatly contradicts all varieties of realism. As someone in the same department as "today's premier realist," John J. Mearsheimer, let me put it this way: I've served with realists (on committees). I know realists. Realists are friends of mine -- and John Ikenberry is no realist.
Kaplan's confusion of "realistic/pragmatic" with "realist" reveals a small but telling weakness among some neoconservatives -- their tendency to lump all of their intellectual adversaries into the same undifferentiated box. It is only through appreciating the nuances of alternative points of view that one can hone one's own arguments and policy proposals -- and I don't think a lot of neocons do this all that much.
Which brings me to a related point:
2) Kaplan wants to absolve the neocons of all blame: Kaplan's essay rightly excoriates administration realists (read: Rumsfeld) for failing to follow through on nation-building. And it is certainly true that some neocons (Kagan, Kristol, Pollack) wanted the U.S. to be large and in charge in Iraq. However, Kaplan is way too quick to dismiss the errors of the neocons who were actually in power. It was not just Rumsfeld that believed we could do nation-building on the cheap -- it was Paul Wolfowitz, Douglas Feith, and Richard Perle as well. Perle in particular thought that it would be easy to topple the Baathist regime and hand the keys of government to Chalabi. Kaplan seems to adopt a similar position in his TNR essay when he scolds the Chalabi raid.
Kaplan is correct to point out the faulty assumptions made by administration realists in the post-war administration of Iraq. But he is incorrect not to say that many of those assumptions were generated by the neocons.
Who's the biggest budget-cutter of them all?
If I were Brad, I'd bring out these numbers as well -- and I think he has half a point. In examining a president's record of fiscal probity, it's not enough to look at whether department budgets were cut -- the magnitude of the cuts matter as well.
However, the point of the AEI report was to examine the efforts by presidents to cut government spending, not government spending as a percentage of GDP. A big reason Clinton does so well in Brad's figures is not because of Clinton's containment of government growth (the numerator) but because of the economic boom of the 90's (the denominator). Clearly, Clinton had some role to play in the latter as well -- but to go back to Pearlstein's WaPo article:
For example, if you go to Brad's post on the Cinton administration's fiscal legacy, his "rough numbers" for how America's fiscal situation improved during the nineties give about 64% of the credit to events beyond Clinton's control (the end of the Cold War, Bush I's 1990 budget deal, the information age boom). The Clinton team gets credit for most of the rest of the improvement -- which sounds about right to me.
[You just put that last WaPo quote in there to see if Brad goes medieval on Pearlstein, didn't you?--ed. I have no idea what you're talking about.]
UPDATE: Be sure to read Tyler Cowen's response to DeLong as well. Cowen makes a point that covers this blog as well: "is writing, and there is linking. A link does not itself constitute a specifically inferable opinion on what is being linked to."
Comparing Reagan with Bush & Kerry
Tyler Cowen and Virginia Postrel both have posts up on how Reagan affected the size of government. Tyler links to this AEI report that lists the number of department and agency budgets that each president tried to cut during their term:
Sigh. Be sure to check out Postrel's post as well.
[So this is the last straw, right? Now you're ready to jump on the Kerry bandwagon, right?--ed. It's not like Kerry is closer to inheriting Reagan's mantle. Henry Farrell's observations at a Kerry fundraiser don't fill me with a lot of confidence:
Steven Pearlstein is not exactly thrilled with Kerry's rhetoric in the pages of the Washington Post:
Not exactly a replica of Regan's opimism, eh?]
Tuesday, June 15, 2004
Tim Berners-Lee finally makes a buck
Victoria Shannon has a nice story in the International Herald Tribune about how the inventor of the World Wide Web is finally reaping some rewards from his marvelous invention:
Read the rest of the article to find out why.
We here at danieldrezner.com salute Mr. Berners-Lee for finally making a profit off of the Internet.
Who's going to the moon?
Victoria Griffith reports in the Financial Times that NASA proper won't be responding to President Bush's call for a manned mission to the moon or Mars anytime soon. That doesn't mean it won't happen:
It would have helped if I had actually read the Chatham House rules
Some of you may have noted that I deleted a Sunday post about my impressions after attending a Council on Foreign Relations meeting. The reason is that I completely blanked on one aspect of the Chatham House Rule:
While I was quite scrupulous about the first parts of the rule, I was in flagrant violation of the highlighted segment.
My profound apologies to all for the error.
The ironies of President Lula
The Economist examines the effects of Brazil's increasingly assertive foreign policy. The results may surprise you:
Read the whole thing -- there's a disturbing bit at the end about Brazil's nuclear program.
Monday, June 14, 2004
The effect of Sarbanes-Oxley
The Hackett Group has an interesting finding on the effect of Sarbanes-Oxley -- you know, the corporate governance bill passed in the wake of the 2002 corporate scandals. The results are pretty interesting. [How interesting can that be?--ed. Definitely less interesting than speculation about possible future roles for Kristin Davis, but more interesing than your average post about corporate governance.]
Where was I? Oh, yes, here's a summary of the findings:
While perusing the Hackett web site, I came across another Hackett study on the outsourcing (both onshore and offshore) of finance operations:
The door decorations of North American professors
James M. Lang has a droll dissection of why professors decorate their office doors the way they do in the Chronicle of Higher Education. My personal favorite:
Alas, the only mention of my discipline is not exactly a favorable one:
[What about your door?--ed. Compared with most of my colleagues, I have a relatively flamboyant office door. Three Onion headlines (my favorite: "Intensive Five-Year Study Finds Five Years a Long-Ass Time"), two drawings by Sam, two New Yorker cartoons, and one Weekly World News headline.
My favorite door hangings, however, are culled from Vivian Scott Hixson's He Looks Too Happy to Be an Assistant Professor, a must-have collection of cartoons for academics. Front and slightly off-center on my door is a cartoon showing one graduate student whacking another with his briefcase, while two students comment on this in the foreground. The caption reads, "None of that wishy-washy relativism in this seminar!"]
Sunday, June 13, 2004
I promise this is my last outsourcing post for a while
However, before I get off my outsourcing high horse, it's worth noting that the phenomenon is not limited to the for-profit sector -- now the Catholic Church is getting in on the act. Saritha Rai has the details in the New York Times:
Thanks to alert danieldrezner.com reader R.S. for the link.