Finals Hiatus

The Sound Bite is going on a break for finals, don't worry though, it'll be back by Christmas time.

The Economy on Life Support: Are we Saving it or Letting it Die?

So far Washington has only given the economy high powered pain killers, will it get about the business of curing the broader economic sicknesses?

Without a doubt the American economy is sick, sicker perhaps than it has been in over seventy years.  In the midst of the crisis I wonder if our government is doing anything to actually help the country recover or just administering fiscal and monetary narcotics that moderate the symptoms without actually curing the underlying disease.  The various stimulus and aid packages have been aimed at easing credit markets, propping up crucial financial institutions, and soothing spooked investors.  

These problems, though severe, are not the underlying cause of this recession or the broader malaise that has stricken the American economy for the last eight to nine years.  They are, rather, just the painful symptoms of the broader problem, namely a decrease in American worker productivity and a decrease in real economic output. 

The various stimulus and aid packages are an important way to ease the pain of a recession.  However, unless this is to be the first of many prolonged recessions the American people and government need to find a way to reestablish the American economy as the most productive in the world, not just the biggest consumer.

A re-establishment of a strong (union free) industrial complex along with much needed educational reform to train the skilled workers needed in the 21st century would go a long way to solving the larger problems.  We need to create both the skills and the resources to drive a dynamic productive economy, this is the medicine that will cure the American economy.   

These Days, Scandals in Washington Know no Party

Just as the dust settles over the Ted Stevens scandal another surfaces, this time implicating a House Dem.  So much for a clean slate in the Capitol Building

The N.Y Times has just released a story outlining how NY Dem. Chuck Rangel may have used his influence in Congress to preserve off-shore tax loops for donors to his memorial library at C.U.N.Y.  This comes as Rep. Rangel is already being investigated for violating New York State rent control laws and failing to pay various income and property taxes during his time in Washington.  The fact is that if Rangel did specifically exempt the companies donating to his library from new tax laws as a quip pro quo, the lost tax revenue comes to over a billion dollars, that makes Stevens's $250,00 pay off look like chump change.

Read about it here and here.

Recent scandals, or rather the ongoing wave of scandals in Washington raise an interesting question, do the scandals in Washington point to a declining morality in the United States or are they one of the perils of power that have always been a part of life in Washington?  I'm inclined to think the latter, but I'm not entirely sure.

China Sings the Blues, We Might End up Singing Along

This post is the first in a series examining the effects and possible repercussions of the global economic slowdown on developing nations.  A look at the effects of declining oil prices on Latin populist governments is up next.

Despite being an intensely totalitarian country China boasts one of the world’s most dynamic and fastest growing economies.  China’s hybrid communist/capitalist structure has given it some very enviable economic advantages; however in this time of global recession this unique position makes it the country with the most to lose.  A prolonged recession in China will bring to the forefront three major problems with the potential to cause severe internal strife: a huge population of single unemployed men, a crisis of moral leadership in the Communist party, and insufficient cash reserves to provide for a huge unemployed urban population.  These problems individually would pose serious problems for China’s leadership but as a trio the results are catastrophic for China and for the rest of us as well.

Strict enforcement of the one child policy in China has led to the creation of a huge surplus of men hundreds of million strong.  Since there are no women for these men to marry, nor any other meaningful social or economic ties these men have been and will continue to be a destabilizing force in China.  In the past leaders dealt with their population surpluses by conscripting armies and fighting wars.  The modern world no longer allows war as a means of disposing of excess population for both moral and technological reasons.  If China’s leadership cannot find a way to integrate these men into society it may find itself dealing with a revolution fought by young men with nothing to lose; the worst kind of revolutionary.  Rapidly rising unemployment will only exacerbate the problem by swelling the ranks and increasing dissatisfaction.

Frustration felt by the marginalized elements of Chinese society is worsened by the fact that every level of the Communist party leadership in China is corrupt.  In the wake of China’s unbridled pursuit of capitalism corruption in government has become endemic.  The result is a breakdown in government credibility and stability that will only add fuel to the fire of discontent as China’s economic situation crumbles.

The easiest solution for China to economic problems would be an increase in benefits across the board for the unemployed coupled with government ownership of key industries.  This action would soften the blow for consumers and limit popular unrest.  Unfortunately this remedy requires large cash reserves, something China does not currently have; all its cash is tied up in U.S. securities.  By investing in U.S. Treasury Bills China pursued a financial path designed to provide for future security and stability, not the pressing current crisis.  The lack of liquidity and domestic spending power will severely hamper China’s ability to buy its way out of a recession.

The current problems facing China are severe and could lead to increased popular unrest; if the government responds in the typical tank and machine gun fashion it may lose control of the situation.  The time is now for China to make deep changes in the way it functions, namely in the adoption of governmental transparency and accountability (a fundamental shift in governance practices), a change in population control policies, and an investment of resources domestically rather than abroad.  These changes should be both endorsed and aggressively promoted by the U.S. government because if China fails, it could and probably would take the rest of the world down with it.

If it looks like a Clinton administration and quacks like a Clinton administration...

I don't know that a return to the Clinton years is really a change I can believe in.  Early indications are that Obama will be drawing heavily from the former Clinton administration to fill key positions on his staff.  In his defense, Obama recognizes that his lack of experience is a weakness to be addressed, conceivably he is choosing subordinates that will strengthen him; still he won because he promised to be different, not just from Bush, but from everything we'd seen in a long time.  People always say that our friends determine how we turn out, if Barack Obama hasn't learned that lesson he would do well to figure it out now.

Current appointments and possible appointments:

Rahm Emanuel as Chief of Staff

Ron Klain as Joe Biden's Chief of Staff, read about it here. 

Eric Holder as Attorney General, read about it here.

and of course...

Hillary Clinton as Secretary of State, read about it here.

Said one Clinton era staffer of Obama's move away from his criticism of the Clinton years, "It's heartening to see that that was just primary rhetoric."  I wonder if everyone who voted for Obama feels the same way.

Fading into an Iraqi Sunset: What we did and why we did it

The Iraq war is finally (maybe) winding down; looking back over the last five years, wondering what we accomplished, and if it was worth the effort

It seems as though the Iraq War is finally drawing to a close; American troops will be off the streets by next summer and they’ll be gone all together by 2011.  The agreement signed yesterday by U.S. Ambassador Ryan Crocker and his Iraqi counterpart marks the end of an American era and signals that in many ways the presidency of George W. Bush has come full circle.  It’s been a long time since President Bush stepped on board the U.S.S. Lincoln and gave his “mission accomplished” speech.  The question now is that since the mission seems to really have been accomplished, so what?  Have the American troops in Iraq actually accomplished anything meaningful or has our entire mission been in vain?  The answer to these questions is unfortunately, yet to be seen.  If the United States has been able to create a friendly democracy in the desert then the sacrifice was worthwhile.

The Iraq war was supposedly started in an attempt to get Saddam Hussein to turn over his weapons of mass destruction and submit to the various U.N mandates he had flagrantly violate.  No one really expected to find WMD’s, not because they didn’t exist, but because since the end of the Gulf War Saddam had plenty of time to sell, hide, or actually (not likely) destroy the weapons.  Dick Cheney and Donald Rumsfeld were not fools, they knew the chances for finding WMD’s were slim, what they really wanted to do was create an Arab Muslim state that was both friendly to the United States and democratic.  They wanted a state that would serve as an effective counterweight to the anti-American pole led by Iran, and as an economic alternative to the oil fields of Saudi Arabia.  Iraq presented an ideal opportunity for state building: the world’s fourth largest known oil reserves, a relatively well educated population, and a corrupt dictator at the head of government just waiting to be toppled.  American troops went to Iraq not find WMD’s, or to bring Saddam Hussein to justice, but to build a new state; only the success of that state will justify the great sacrifice untaken over the last five years and a half years.

Despite all of the challenges facing Iraq it probably is a better place than it was five and a half years ago, it appears that democracy may actually succeed in Iraq.  The real unknown in the future is whether or not Iraq will indeed be a leader in the Middle East and a champion for American values.  As a matter of history the states occupied by the United States have generally stayed friendly once the troops went home, but the challenges facing an Iraqi/American partnership are unique and it remains to be seen if they can be overcome going forward.  Iran and other anti-American forces will attempt to pull Iraq away from American influence, Iraq will remain a target for terrorist groups, and the fabulous oil wealth in Iraq will in many ways be a hindrance to an emerging market economy.  The future belongs to the people of Iraq, ultimately they will decide whether or not to take the opportunities available to them going forward.

 

Republicans in Congress and The Bush Administration Resist Bailout for Automakers

It looks like an handout for the automakers will probably not be forthcoming: resistance in both the Senate and the White House will probably keep anything from being voted on, at least for now.  Read about it here.