Best Articles of 2007

How to Defuse Iran?

adminn — Tue, 11 Dec 2007 11:43:00 -0500

In the wake of the new National Intelligence Estimate on Iran's nuclear program, Democrats and others are criticizing President Bush for again having "hyped" a nuclear weapons threat. This criticism, while deserved, does not address the critical policy question: What do we do now?

Clearly, the United States cannot ignore Iran. Tehran may have suspended the purely weapons-related aspects of its nuclear program, but it continues to master uranium enrichment, with no agreed limits in place. And Iran is well positioned either to facilitate or thwart American objectives in Iraq and across the Middle East.

At the same time, the Bush administration's single-minded insistence on increasing international pressure on Iran seems increasingly detached from reality. Even before the intelligence estimate, there was no set of sanctions with any chance of being endorsed by the Security Council (or even the relatively cooperative European Union) that would have given Washington and its allies real strategic leverage over Iranian decision-making.

Indeed, as oil prices shoot up, American insistence that Iran's hydrocarbons -- including the world's second-largest proven reserves of conventional crude oil and natural gas -- stay in the ground until America gets an Iranian regime it likes is simply not practical over the long term.

The idea of "engaging" Iran diplomatically is becoming less politically radioactive than it was early in the Bush years, when any officials who broached it were putting their careers in jeopardy. Given official American-Iranian cooperation over Afghanistan and Al Qaeda after the 9/11 attacks (one of us, Hillary, was involved in those negotiations) and the current sets of talks between American and Iranian officials in Baghdad, Secretary of State Condoleezza Rice's claim that she is willing to change "28 years of policy" and negotiate with Iran is disingenuous.

Still, even Democrats who have talked about "engagement" have yet to spell out what it would take to engage Iran successfully. Most hide behind a vague incrementalism, epitomized in a recent statement by Hillary Clinton's top national security adviser extolling the candidate's willingness to consider "carefully calibrated incentives if Iran addresses our concerns."

Why should any Iranian leader take such rhetoric as a legitimate invitation to the table? Iran has tried tactical cooperation with the United States several times over the past two decades -- including helping to secure the release of hostages from Lebanon in the late 1980s and sending shipments of arms to Bosnian Muslims when the United States was forbidden to do so.

Yet each time, Tehran's expectations of reciprocal good will have been dashed by American condemnation of perceived provocations in other arenas, as when Iranian support for objectives in Afghanistan after the 9/11 attacks was rewarded by President Bush's inclusion of Iran in the "axis of evil." Today, incremental engagement cannot overcome deep distrust between Washington and Tehran -- certainly not rapidly enough to address America's security concerns.

From an Iranian perspective, serious engagement would start with American willingness to recognize Tehran's legitimate security and regional interests as part of an overall settlement of our differences. But neither Republicans nor Democrats have been willing to consider such an approach, because of the pursuit of a nuclear weapons option and support for terrorist organizations that Iran employs to defend what it sees as its fundamental security interests. Successful United States-Iran engagement requires cutting through this Gordian knot by undertaking comprehensive diplomacy encompassing the core concerns of both sides.

From the American side, any new approach must address Iran's security by clarifying that Washington is not seeking regime change in Tehran, but rather changes in the Iranian government's behavior. (While Secretary Rice has said recently that overthrowing the mullahs is not United States policy, President Bush has pointedly refused to affirm her statements.) To that end, the United States should be prepared to put a few assurances on the table.

First, as part of an understanding addressing all issues of concern to the two parties, Washington would promise that it would not use force to change Iran's borders or form of government. (This would be a big shift: before the Bush administration signed on to a European-drafted incentives "package" for multilateral negotiations over Iran's nuclear activities last spring, it insisted that all language addressing Iran's security interests be removed.)

Next, assuming that American concerns about Iran's nuclear activities, provision of military equipment and training to terrorist organizations, and opposition to a negotiated Arab-Israeli settlement were satisfactorily addressed, Washington would also pledge to end unilateral sanctions against Iran, re-establish diplomatic relations and terminate Tehran's designation as a state sponsor of terrorism.

What would Iran have to concede? It would first have to carry out measures -- negotiated with the United States, other major powers and the International Atomic Energy Agency -- definitively addressing the proliferation risks posed by its nuclear activities. This would include disclosing all information relating to its atomic program, past and present, now being sought by the atomic energy agency, and agreeing to an intrusive inspections regime of any fuel cycle activities on Iranian soil.

Tehran would also have to issue a statement supporting a just and lasting settlement to the Arab-Israeli conflict based on current United Nations Security Council resolutions. This statement would affirm the idea of a two-state solution to the Israeli-Palestinian conflict as expressed in the 2002 Security Council resolution, and also the Arab League's commitment to normalized relations with Israel after it has negotiated peace agreements with the Palestinians and Syria.

Iran would also have to pledge to stop providing military supplies and training to terrorist organizations and to support the transformation of Hamas and Hezbollah into exclusively political and social-welfare organizations. Iran, in fact, proposed these steps as part of its offer for comprehensive talks that was passed to the Bush administration through Swiss diplomats in 2003. (Today, it's clear that Hezbollah's transformation would need to be linked to reform of Lebanon's so-called democracy to end systematic Shiite under-representation in Parliament.)

Even if both sides agreed to such bilateral steps, a lasting rapprochement could be achieved only if Washington and Tehran worked out a more cooperative approach to regional security. The obvious first step would be collaborating on a plan to stabilize Iraq, acting in concert with that country's other neighbors. Without a regional consensus on a post-Baathist political settlement, Tehran will continue its 20-year practice of supporting Iraqi Shiite factions and militias.

The goal of such cooperation would be a multilateral body analogous to the Organization for Security and Cooperation in Europe. Each member nation would commit to abide by international norms regarding respect for other states' sovereignty, the inviolability of borders and the observance of international conventions and United Nations resolutions on conflict resolution, economic relations, human rights, nonproliferation and terrorism.

Since Ayatollah Ruhollah Khomenei's death in 1989, United States policy toward Iran has not served American interests. Neither continuing to disregard legitimate Iranian interests nor timid incrementalism will improve the situation. In the long run, the real lesson of the new National Intelligence Estimate is that we need a comprehensive overhaul of American policy toward Iran.

Life Chances

adminn — Sat, 01 Dec 2007 22:35:00 -0500

The blue-ribbon commission has an inauspicious history in American public policy. Most often, assembling a dozen or two bipartisan grandees to deliberate soberly about a problem for several years is merely a way of evading the problem.

But there are exceptions. Though it will probably pass unnoticed, Dec. 22 of this year will mark the 20th anniversary of the creation of one of the most successful policy commissions in modern U.S. history: The National Commission on Children. Chaired by Sen. John D. Rockefeller IV, the esteemed group four years later issued a report, Beyond Rhetoric, which was most notable for its unanimity. Without dissent, though not without struggle, 32 members -- who ranged from former Health and Human Services official and abstinence advocate Wade Horn, Allan Carlson of the paleo-conservative Rockford Institute, and Kay Coles James (later of the Bush administration and Regent University) on the right, to Bill Clinton and Marian Wright Edelman on the left -- accepted recommendations for a $1,000 refundable tax credit for children, improvements to child-support enforcement, a health-care program for children and pregnant women, and more investment in child care and Head Start.

While the unanimity was impressive, the report's reception suggested that the title Beyond Rhetoric was meant ironically, since the recommendations, and their $52 billion annual price tag, seemed hopelessly unrealistic at the time. Rep. Patricia Schroeder dismissed the report, predicting that "people are going to cite it for about a month" before it would be forgotten, and Douglas Besharov of the American Enterprise Institute charged that it was "so unrealistic it threatens to divert attention from the incremental increases that were ready to happen this year."

But then a funny thing happened on the way to irrelevance: Almost every one of the commission's recommendations became law. The State Children's Health Insurance Program passed six years later. A child tax credit became law the same year, and later was expanded, and made partially refundable as of 2001 -- so that working families who don't pay income tax would get a benefit. All the recommendations for child-support enforcement passed, and have since contributed to dramatic increases in collections on behalf of American children. Today, child support lifts more than a million kids out of poverty annually. The commission's, and Rockefeller's, most notable achievement might not have been legislative, but in co-opting prominent social conservatives and forcing them to acknowledge that if they cared about families and children, they had to put the federal government's money where their mouths were. Much of what became the first President Bush's "kinder, gentler nation" and the second's "compassionate conservatism" stemmed from that moment of apparent consensus.

The commission on children was the centerpiece of what might be called the first wave of kids-first politics. Beginning in 1985, when Arizona governor Bruce Babbitt devoted his entire State of the State speech to children, earning ridicule from the state's leading paper for talking about "quiche" rather than the "meat and potatoes" of Arizona politics, the idea began to take hold that children could lead us to the restoration of the promise of liberal politics. Just as Social Security and Medicare set the stage for activist government by protecting the elderly, supports for children would restore the sense of cooperation and mutual obligation that had been lost in the Reagan era.

A couple of years later, a memo from pollster Stanley Greenberg entitled "Kids as Politics" argued that despite the temptation to "view kids as soft, secondary and timeless... 'kids' in the present period are different. ... When candidates talk about kids," he contended, "they are talking about the fundamental economic and social terrain on which Democrats must run." Improvement in the living conditions and future prospects for children was not the only or even the primary goal. Rather, kids would help Americans "rediscover government": "Kids bring the Democrats back into the homes of average voters, speaking about economic issues of a fundamental sort. ... Kids and public policy are a natural and credible combination."

Twenty years later, while kids-first politics has been a policy success, it has not quite lived up to Greenberg's expectations. Rather, conservatives who understood the political power of children supported certain children's programs, such as S-CHIP, in isolation, cutting around them like paper dolls. Meanwhile, they continued to push successfully the agendas of tax-cutting and economic individualism that narrow the reach of such programs. Despite an increase in investment in kids' programs -- a study by the Congressional Budget Office in 1999 found that the tax credits, health-care expansion, and other benefits amounted to an increase of $45 billion in annual spending on kids in working families since 1984 -- and significant improvements in child poverty and other measures of well-being, child poverty rates began to crawl back up in this decade. The children who benefit from such programs live in the very families that are the victims of the economic insecurity conservative policies promote.

The failure to date of kids-first politics to transform the politics of social investment or help Americans "rediscover government" is not merely a problem for partisan Democrats or liberals. It is a problem for kids, since Head Start and quality child care cannot make up for the consequences for children of widening inequality and deepening insecurity for the families in which children are raised.

But the first wave of kids-first politics ended some time ago, with President Bush's veto of the expansion of S-CHIP marking its last rites. The choice between continued tax-cutting and positive government support for families with children can no longer be avoided. Yet faced with that choice, all of the Republican presidential candidates (including former Arkansas governor Mike Huckabee, who sometimes talks a good game but puts no policy substance behind his rhetoric) have chosen tax cuts. The social conservatives like Wade Horn have retreated to promoting abstinence and marriage. The "Sam's Club Republicans" that the young conservative writers Ross Douthat and Reihan Salam predicted in The Weekly Standard would marry social conservatism with activist government, in order to support the struggling families of the GOP base, have somehow not yet shown up.

So we now have the opportunity to relaunch a second wave of more robust kids-first politics. And as we do, we should ask what lessons the first wave -- the one bookended, roughly, by Babbitt's speech and the Bush S-CHIP veto -- offers for a renewed effort.

First, consensus isn't always helpful. Let's not be afraid of a fight. Rockefeller won unanimity only by paring back his commission's recommendations, particularly by watering down his health-care proposal. A high price was paid to enlist the hardcore social conservatives. But now that they have left the field, we have more flexibility to talk about a real, comprehensive vision for the future of children, one that might not win the support of everyone, but one that can command an enthusiastic majority.

Indeed, if the politics of children is going to have real purchase as politics, as Greenberg foresaw, it has to connect to the conflictual nature of politics. If everyone is for kids, then there is no real kids' politics -- it's not an issue in contested political space. Bush's veto of the S-CHIP bill, while obviously disappointing as policy, at least makes the lines clear: There are politicians who see children as a priority, and there are those who don't. (At the moment, these lines closely follow party lines, but that has not always been the case and will not be in the future.) Real kids-first politics should be unafraid of forcing that choice, with a confidence that in a high-stakes fight between tax cuts and children, children will prevail.

Second, kids-first politics has to be integrated with a broad vision of economic opportunity and the family. All research on education from early childhood through college shows that family income is the single most important variable in a child's success. No single programmatic intervention, whether it is first-rate child care or preschool or reform of elementary schools, compensates for the effects of poverty.

In his recent book, The Sandbox Investment, David Kirp highlights as an alternative to the preschool-focused campaign in the U.S. the British Labour Party's approach of setting a "galvanizing objective" -- the complete elimination of child poverty -- and orienting all policy around that goal. Once such a goal wins broad acceptance, the range of policies that would accompany it fall naturally into place. Under Tony Blair's government, spending on children tripled, and preschool quickly and quietly became nearly universal.

There would be limits to such an approach in the U.S., however. One is that the poverty line is too low: Lifting the income of a family of three to slightly over $17,000 is not going to dramatically change their children's life chances. (Poverty in the U.K. is measured relative to the median income, rather than as an absolute minimum, so the poverty line there for a family of three is more than $23,000 at current exchange rates.) More importantly, as Dalton Conley argued in a recent essay in The Boston Review, "The Geography of Poverty," it isn't income itself that has the biggest impact on kids, but the geography of concentrated poverty and the inability of parents who work long hours and make long commutes to spend enough time with their children. Money is time, and Conley suggests that the best ways to help kids would be by giving their parents higher wages or wage subsidies so they can work fewer hours, by providing paid leave, or by changing the geographic incentives that result in the poorest workers having the longest commutes to work. None of these are alternatives to high-quality child care and early education, but without them, those programs are pushing back against a social and economic trend that hinders their efficacy.

Issues of work and family, and time with one's children, have a political advantage in that they are relevant to the middle class as well as those near poverty, even if the problems of a two-professional couple and a single parent working two low-wage jobs are very different. Like child-support enforcement and preschool, this cluster of issues lends itself to universalist policies that benefit almost everyone. But not all the policies that help kids will be equally universal, and that is a third lesson of kids-first politics. The doctrine that the only programs that can win broad and lasting political support are those that, like Social Security and Medicare, benefit "a huge cross-class constituency," in the words of Harvard's Theda Skocpol, is a severe constraint on policies for kids. The result is often programs that offer a little something to everyone, and not enough to anyone to significantly improve economic security or open new opportunities. Tax credits of a few hundred dollars (which if they are not made refundable, actually disproportionately benefit the well-off) provide too little benefit to families who need them and too much to those who don't. But as Christopher Howard argues in The Welfare State Nobody Knows, the credo that "programs for the poor are poor programs," lacking public support or funding, is not borne out by recent events, such as the creation or expansion of S-CHIP or the steady and quiet expansion of Medicaid and the Earned Income Tax Credit to support low-income working families. While Bush's veto of the S-CHIP expansion remains hugely unpopular, polls suggest that the Republican argument that the public benefit should not extend to middle-income families resonated with many voters. Freed from the compulsion to offer only universal benefits, no matter how watery, policy-makers will be liberated to design programs that truly lift up the kids who most need help. Such policies need to be coupled with a language of both moral obligation and the economic promise -- not just for the immediate beneficiaries, but for the economy as a whole -- of investing in children. (The companion piece in this issue on Illinois demonstrates how that state is moving toward universal, high-quality pre-K while giving priority to the poor.)

The first wave of kids-first politics led with silver-bullet programs and policies. The assumption was that individual policies that won broad elite support would succeed, and thus lead to a broader and more supportive politics for kids and families. A lesson from the partial success of that experiment is that you can win some policy changes without having much effect on the overall political or economic climate, or national priorities.

The next wave should start not with individual policies that win broad bipartisan consent, but with a comprehensive vision. The vision should be aspirational, not safe. A "galvanizing objective," such as the U.K.'s child-poverty goal, would certainly help. In the American case, perhaps a goal that all children should reach first grade ready to read would help organize all the key initiatives, from Head Start and universal pre-K, to nutrition and health care.

A further advantage of starting from a comprehensive goal such as poverty reduction or school readiness is that it addresses children as members of families. This counters the public anxiety, nurtured by the right, that liberals view public programs as alternatives to the family, and has the additional advantage, of course, that it is exactly the right approach to policy. Kids are not independent economic actors interacting with S-CHIP or Head Start. Family income (higher wages, Earned Income Tax Credit, child support, and programs to help non-custodial parents train and find work), family time (paid leave, expansion of unemployment insurance to cover family leave), family savings and economic security (baby bonds or individual development accounts), and the supports available to families within communities (such as the Harlem Children's Zone initiative) should all be priorities, whether the overall objective is poverty or readiness, in part because they make the other programs go further. Children's advocates should resist worrying that some of the dollars in such programs might support adults or support children only indirectly. It is adults who, indispensably, nurture children.

For all the investment generated by the last wave of kids-first politics, the U.S. social contract still socializes old age and privatizes childhood. Children bear the deepest scars from the "you're on your own" economy and society promoted by the last 30 years of public policy. Putting childhood itself -- and not just a few small programs -- at the center of political debate can serve to turn around that debilitating political assumption, for all of us.

Overdose

adminn — Sat, 01 Dec 2007 00:00:00 -0500

When we look back on the health-care plans of the 2008 campaign, we may wonder that no one chose to face up to one of the most troubling recent developments in American medicine. Yes, various presidential hopefuls have put forth plans containing detailed provisions to cover the uninsured, bring down costs, and improve the astonishingly uneven quality of health care. But no candidate has discussed the most dramatic change now under way in our medical system, a change that may negate many of the benefits of the plans on offer: the flood of new doctors coming down the pipeline.

Over the next eight years, medical schools are aiming to boost enrollment by as much as 30 percent above 2002 levels. More than a dozen new medical schools are being built or considered, and many of the nation’s 125 existing schools are planning to expand -- increasing the number of doctors minted each year from 16,000 to nearly 21,000. This expansion represents a stunning policy reversal by the Association of American Medical Colleges and the Council on Graduate Medical Education, which advises the federal government on how many residency positions to fund. Over the past 15 years, both organizations have raised concerns about the number of medical-school graduates, in the belief that having trained too many doctors in the 1970s and ’80s, we would see a glut of physicians. Now the AAMC is warning that we’ll be at least 100,000 doctors short by 2025 unless we hurry up and train more.

Behind the change of heart lies a cadre of economists and physicians who argue that demographic changes will make doctors scarce. First and foremost, they say, the population is expanding and the Baby Boomers are aging, resulting in more people to care for -- especially more old and sick people. Doctors are aging too, and many are retiring. Add to that a decline in the number of hours physicians are willing to put in each day and a few incipient signs of a shortage (notably longer waiting times for appointments and rising salaries for young doctors), and the conclusion that we should expand the physician workforce seems like a no-brainer.

And it would be, if not for all the complications. Those incipient signs, many experts note, may suggest something other than a shortage, and the projections for the number of doctors we’ll need aren’t all that clear-cut. Some experts would even go so far as to suggest we need fewer doctors, not more. Elliott Fisher, a physician and researcher at the Center for Evaluative Clinical Sciences at Dartmouth Medical School, quipped at a recent gathering at the Institute of Medicine, “If we sent 30 percent of the doctors in this country to Africa, we might raise the level of health on both continents.”

The physician workforce estimates rest on two critical assumptions, both of which are probably wrong.

The first is that the number of doctors practicing today is about right and that the market would send signals if supply were exceeding demand. This seems sensible enough, at least on the face of it. For most goods and services, after all, supply in any given community is limited by demand, a measure both of how much consumers need or want the product and of how able they are to pay for it. The number of car dealers in your town, for instance, depends on the number of people who want cars and can afford them.

The ability of patients to pay does help determine the number of doctors in any given community; physicians tend to congregate in places where incomes are higher and patients are more likely to be insured. (And to be sure, physicians are in short supply in parts of the country where relatively few people have health insurance, especially rural areas.) But the other component of demand -- how much health care patients want or need -- has far less influence over the supply of physicians. That’s because for the most part it’s your doctor and not you, the consumer, who determines how much care you receive. When your doctor says you need a CT scan, you get one. When your doctor says you should go to the hospital, you go. Doctors, in effect, generate some of the demand for their services, so that even when there are large numbers of them per capita, they can keep their appointment books full. There is a growing consensus among health-care analysts that this perverse feature of medical economics is spurring a great deal of unnecessary care. And there’s a corollary: New physicians won’t necessarily go to (poor, rural) places that may need doctors. Many will go to affluent areas and places featuring a high “quality of life” -- in other words, places already awash in physicians -- where they’ll generate even more demand.

The second assumption underlying the push to train more doctors is that an increase can only lead to better health, so that as long as the market can support new physicians financially, we should create more of them. This idea also rests on shaky ground. A wealth of data suggests that health care is actually no better (and if anything, worse) in parts of the country, like Manhattan and Los Angeles, where we have very high numbers of doctors and, in particular, very high numbers of specialists. In a paper published last year in the journal Health Affairs, David Goodman and his colleagues at Dartmouth’s Center for the Evaluative Clinical Sciences examined care at academic medical centers -- the hospitals that are associated with medical schools, considered the crème de la crème of American medicine. They tallied the number of doctors caring for Medicare recipients who were suffering from one or more chronic diseases and were in their last six months of life. The variation was enormous.

Medical centers at the high end, like UCLA and New York University Hospital, employed on average two to three times as many doctors per patient as did hospitals at the low end. But these high-end hospitals did not produce better outcomes than hospitals using relatively few doctors, like the Mayo Clinic, Duke, and Stanford. Other studies show that these latter hospitals consistently deliver higher-quality care -- and not just to dying patients -- using fewer physicians. And the cost of care is much lower.

Why would more doctors lead to worse care, and fewer doctors to better care? More tests and procedures always entail more risk, and for care that’s unnecessary, the ratio of benefit to risk is zero. What’s more, where numerous doctors, particularly specialists, are routinely involved in a patient’s case, the potential for miscommunication and confusion multiplies. Modern medicine should be a team sport, but it is often practiced as if everybody is running a different play. Different doctors order duplicative tests, prescribe drugs that interact poorly with what the patient is already taking, and assume another physician will attend to a critical aspect of a patient’s care. A cardiologist can be a virtuoso at slipping a stent into the coronary artery of a patient in the throes of a heart attack, but if she leaves it to another physician to prescribe aspirin to her patient -- one of the most effective treatments for preventing a second heart attack -- that prescription might fall through the cracks.

This is what appears to be happening in many hospitals, where the ratio of specialists to primary-care physicians is especially high. In one recent study, two Harvard economists -- Katherine Baicker, of the School of Public Health, and Amitabh Chandra, of the Kennedy School of Government -- examined how the quality of care in different states varied as the proportion of specialists rose. They found that measures of quality, like the percentage of heart-attack patients who received a prescription for aspirin, tended to fall in direct proportion to a rising ratio of specialists. The point, says Chandra, “is not that the specialist is inferior, but that the system is not accounting for the ‘coordination cost’ specialists are imposing.”

Medical schools are now graduating more and more specialists and fewer and fewer primary-care physicians. Between 1997 and 2005, the number of U.S. medical graduates entering family-practice residencies fell by 50 percent, as young doctors headed for more-lucrative specialties like orthopedic surgery and radiology. “The problem is, primary care has never been loved by the deans of medical schools or by the teaching hospitals,” says Dartmouth’s David Goodman. As the total number of doctors rises and the proportion of primary-care doctors falls, we’re likely to see the quality of care deteriorate further and the cost of care increase rapidly.

The imbalance between specialists and primary-care physicians could be mitigated by changes in physician pay. Medicare, for instance, could raise its low reimbursement rates for primary-care visits (and lower its rates for specialist services), so that more young doctors would view primary care as an attractive career. Two primary-care professional organizations have proposed a plan to ensure that every patient has a primary-care physician, who is paid extra to coordinate the patient’s various doctors. In the meantime, patients might want to pay attention to the mix of doctors at their local hospital and compare how the quality of care measures up.

As for the rising number of physicians being trained, the remedy is simple: Turn the spigot back off, or at least close it partway. The groups now calling for more physicians should come up with better evidence that all those new doctors are not going to simply drive up costs.

Grasp the Promise of Annapolis

adminn — Thu, 29 Nov 2007 15:25:00 -0500

Even the most hardened of Middle East cynics could be excused for momentarily feeling a fluttering of hope after witnessing the scenes at this week’s peace conference in Annapolis, Md.

Israel’s much-maligned prime minister, Ehud Olmert, conducted himself with consumate dignity, displaying a rare capacity to combine unabashed national pride with sincere empathy for the other. Palestinian President Mahmoud Abbas, for his part, met Olmert’s outstretched hand with an unflinching commitment to a negotiated resolution of this bloody conflict and to a realization of his own nation’s aspirations that would not be at Israel’s expense. Both men have developed a degree of genuine mutual respect and appreciation, and they were on display at Annapolis.

Only President Bush came up short, sticking to a simplistic good-versus-evil narrative that was not only patronizing, divisive and lacking any resonance with the Arab world, but might very well prove counterproductive. Nonetheless, the Bush administration, and especially Secretary of State Condoleezza Rice, can allow itself a gentle pat on the back this weekend: A joint statement was achieved, the conference was well attended, the speeches were uplifting, and Bush personally committed himself to the process.

The self-congratulatory moment, though, should be a fleeting one.

This week’s peace conference assiduously avoided even a flirtation with the serious substance and content of a peace agreement. The warm words at Annapolis will be followed by pledges of hard cash at a donors’ conference scheduled for Paris in three weeks, but after that the testing ground returns to the far more hostile terrain of the Middle East.

If, several weeks from now, the negotiations are perceived to have stalled and the situation on the ground to have deteriorated or just stayed the same, then the smiling Annapolis summiteers will turn ashen-faced and their detractors back home will claim vindication. Such a scenario is all too imaginable; a return to mutual recrimination, blame games and American disengagement would be perhaps the bookmaker’s favorite.

As coincidence would have it, the Annapolis gathering fell on the same week as the 60th anniversary of the adoption by the United Nations General Assembly of Resolution 181. Separated by six decades, these events are in fact intimately and perhaps decisively linked.

Anyone who has supped at the table of Zionist history has that night and the U.N. vote indelibly etched into memory: 33 in favor, 13 against, 10 abstentions. This was the great moment of international recognition for the Zionist cause.

The rest is history: The Arabs rejected partition, brave young Israel survived a war of independence and a threatening alliance in 1967, and the country has since grown middle-aged awaiting an Arab peace partner. All national narratives tend to play fast and loose with the historical record, and ours is no exception.

So where do we find ourselves in November 2007? Sixteen Arab states, including all of Israel’s neighbors, attended the Annapolis conference. This comes five years after the Arab League adopted an initiative that holds out the prospect of recognition and normal relations for Israel with the Arab world once comprehensive peace is achieved.

Even before that, at the Madrid conference in 1991 and at the Sharm el Sheikh summit in 1996, the Arab states stood alongside Israel when the United States convened previous peacemaking efforts. Some dismiss the significance of these developments and point to the curmudgeonly refusal of the Saudis to shake hands, but as Olmert himself quipped this week, “What did you expect, tea in Riyadh tomorrow?” The Arab states have actually softened their own position by taking steps toward normalization in advance of Israel ending the occupation.

The historic success of 1947 was a territorial division whereby 55% of mandatory Palestine would become a national home for the Jewish people, while 45% would be an Arab-Palestinian state. The prospect held out by the Arab initiative and the Annapolis summit is of Arab, Palestinian and world recognition and support for an Israel on 78% of that original territory.

You do the math. The Arab world is saying yes to less than half of what it was offered -- and rejected -- 60 years ago.

Some may ask why we ought to be defeatist now; history, such critics have been known to argue, proves that the longer we hold out, the more we get. This approach ignores the devastating damage done to Israel’s standing in the world and to its security, as well as disregards how the country’s priorities have been skewed by the ongoing occupation and absence of internationally recognized permanent borders.

Are we really prepared to continue paying over the coming decades the human, material and moral price in order to edge the percentage of land we can call ours from 78% to, what, 80% or 81%?

Grasping the promise of the Annapolis conference and the Arab initiative means saying yes to 78% and withdrawing to the 1967 lines on the West Bank, including East Jerusalem, and on the Golan Heights. There can be reciprocal and minor modifications to those lines, such as land swaps, that would allow for incorporating the vast majority of settlers into Israel’s new and internationally recognized borders, but the basic parameters of the deal are pretty clear. Israel would be wise to seize the post-Annapolis moment, while the Arab consensus on the Saudi initiative still holds and before there is a further waning of American influence in the region.

It would be cozy and comforting if all this could be achieved in accordance with Bush’s division of the world into moderates and extremists, but that is as intellectually lazy as it is practically unachievable. The challenge to the Annapolis framework is not only the need to summon the political courage to embrace the 78% option, it is also to build a more inclusive process that creates openings for actors who will be crucial to the credibility and sustainability of any secure peace -- in particular Hamas. Engaging Hamas, even indirectly, will not be easy, but Hamas, too, is inching toward an acceptance of the 1967 lines. In the context of an agreement that enjoys Arab consensus, an end of occupation and an acceptance of its own political role, Hamas’s acquiescence is far from inconceivable.

Annapolis represents Israel getting to yes with the Arab world. Now Israel and its supporters in America should declare a resounding yes to 78%. Last time I checked, we were a people who recognized a good deal when we saw one.

The Centre-Ground's Shift to the Left

adminn — Tue, 27 Nov 2007 22:42:00 -0500

Whether a Democrat or a Republican is inaugurated in January 2009, the centre of political gravity in the US is well to the left of where it was a decade ago. President George W. Bush's own contribution to the shift has been negligible. It is the result of long-term, tectonic shifts in political and economic ideology that are affecting all developed countries.

In hindsight, despite the re-election of a conservative president, 2004 was the hinge between eras. The definitions of right, left and centre changed dramatically between 1932 and 2004, which can be broken into two periods.

In the first, 1932-1968, the left/right spectrum in the US and similar democracies was defined by the appeal of various forms of statism on the left and the political weakness of classical liberalism or libertarianism on the right. Democratic socialism was never influential in the US, but its place was taken by economic populism, symbolised in the 1930s by demagogues such as Huey Long.

During the New Deal era of 1932-1968, the only politically relevant conservatives were moderates such as Dwight Eisenhower and Richard Nixon, who accepted the welfare state but fretted about its costs. Laissez-faire economics was considered to have died out in the Depression. New Deal welfare-state liberalism occupied the centre, flanked by economic populism to the left and moderate economic conservatism to the right. A similar spectrum was found in Britain and west European democracies, where democratic socialism replaced economic populism as the statist alternative to the "third way" of the welfare state.

Between 1968 and 2004, the political spectrum shifted to the right with respect to economic (but not social) issues. Long before the collapse of the Soviet bloc, socialism was discredited as a viable economic alternative. Parties of the left in the western world abandoned programmes of nationalising the economy for welfare-state liberalism. The disappearance of radical socialist or populist alternatives turned the former "third way" or "centre", welfare-state liberalism into "the left".

During the same period, Milton Friedman and other neoclassical economists led a powerful intellectual revival of laissez-faire economics. They blamed the "stagflation" of the 1970s on welfare-state policies and prescribed free markets as the panacea for society's problems. Outflanked on the right, the moderate position of Eisenhower, Nixon, and Tory "wets" in Britain suddenly became "the centre". Thus the post-1960s spectrum: welfare-state liberalism on the left and libertarianism on the right, with the centre occupied by what formerly had been moderate economic conservatism.

It was during this period, in the 1980s and 1990s, that many of the parties of the left, trying to move towards the centre, adopted moderate economic conservatism, now called neoliberalism. "Clintonomics" resembled Rockefeller Republicanism more than New Deal liberalism. President Bill Clinton and Tony Blair, then the UK prime minister, collaborated on a project they called "the third way" -- a term that had once been used for the welfare-state liberalism that was now redefined as the extreme left position.

That era has come to an end. The two great trends now are the collapse of libertarianism as a political force and the rise of economic populism.

Libertarians succeeded in promoting deregulation and the liberalisation of trade and finance. But, partly as a result of their success, the popular anxiety caused by globalisation doomed far more radical libertarian reforms.

Even as libertarianism was losing its political lustre, economic populism came to life in US politics for the first time since the 1930s. Unlike the reactionary populism of Patrick Buchanan in the 1980s and 1990s, the middle-class populism represented by CNN's Lou Dobbs cannot be dismissed as marginal. The decline of libertarianism and the revival of populism are already reshaping politics in the US and similar societies.

What formerly was the left -- welfare-state liberalism -- is once again the centre. To its left (in economic, not social, terms) is protectionist populism; to its right, neoliberalism.

This comes as a disorienting shock to Clinton-Blair third-way neoliberals. Having positioned themselves as the reasonable mean between the welfare-state left and the economic libertarian right, they have awakened to find that they are now the extreme right. The clever ones are inching their way, ever more carefully, towards today's new centre.

You can hear the change in what prominent would-be centrists are saying. In the 1990s, when neoliberalism was the centre, the line was: we must slash middle-class entitlements in order to be more competitive in the global free market. Now the line is: in order to save free-market globalism from populists preying on middle-class economic anxieties, we must expand the middle-class welfare state.

The winners -- at least for now -- are welfare state liberals such as old-fashioned New Dealers in the US and their equivalents in other countries. The position of the original "third way" of 1932-68 always made sense. Middle-class social insurance programmes, by guaranteeing economic security, reduce the appeal of populism, socialism and other kinds of radical statism, and make possible broad political support for open and competitive national and global markets. You will hear much more of this line as politicians rush to occupy the new centre in the years ahead.

It's More About Class and Less About Color

adminn — Sun, 25 Nov 2007 07:41:00 -0500

It couldn't have been more than a few months after the 1992 riots. I was seated in the office in the back of the Son Shine Missionary Baptist Church on Nadeau Street in South L.A. talking with the Rev. Leroy Shephard about how Mexicans and blacks in his neighborhood did and did not get along.

"We all know about the tensions," he said in his preacher's cadence. "But there are also plenty of budding friendships. You see, when blacks moved into South L.A., white folks didn't even stay around long enough for us to become friends. Most of them won't even drive through these neighborhoods."

But plenty of black and immigrant families do live together. The relationship is not always easy. Some Mexicans and Central Americans who moved into previously all-black neighborhoods in L.A. brought their own biases about blacks with them from their homeland; others acquired them here. And, like so many poor immigrants before them, there were Latinos who seized on their neighbors' low social status as a way to convince themselves that they did not occupy society's very lowest rung. They blamed blacks for the local crime.

But whatever their biases, they still moved into the neighborhood, and given a choice, most well-intentioned people chose to get along with their neighbors. Life is just easier that way. Homeowners -- those most vested in their neighborhoods -- were more eager to get along than renters. Young men who felt they had nothing to lose didn't waste too much time trying to get along with anyone.

Beneath the obvious layers of race and class was an aspiration gap that was the great source of tension. The 1980s saw a huge out-migration of upwardly mobile African Americans from South L.A. Those blacks who remained in the old neighborhood tended to be either elderly or the younger generations who didn't have the skills or the good fortune to move up. They were frustrated.

Into these neighborhoods came thousands of Latin American immigrants who harbored higher hopes and lower expectations and who were willing to work more for less pay.

Black trepidation about immigrant competition is nothing new. And it has always been intertwined with a resentment that, however rough newcomers had it, they were still treated better than native-born blacks. In the 1850s, Frederick Douglass wrote: "Every hour sees us elbowed out of some employment to make room perhaps for some newly arrived emigrants, whose hunger and color are thought to give them a title to especial favor." In 1882, Booker T. Washington warned that the stream of "European laborers that is continually flowing into the West leaves [blacks] no foothold there."

Politically correct news accounts of black-Latino tensions point to a supposed "competition over scarce resources." But every local employer knows that Mexicans benefit from the widely held preconception that they are hard workers. They're not losing out to blacks in the job market.

Indeed, the real tension -- and violence -- generally occurs between socioeconomically frustrated African Americans and U.S.-born Latinos, the children of immigrants who have slipped through the cracks and not completed the difficult transition from their parents' homeland into the American mainstream. I found this to be true when I visited Harbor Gateway after Cheryl Green, a 14-year-old African American girl, was killed in January, allegedly by a member of the predominantly Latino 204th Street gang. Among Latinos, the deepest racial resentment was not among immigrants but among U.S.-born Mexican American gang members who were fighting with black gangs over turf.

I don't know why we insist on seeing this issue as one that involves all blacks and all Latinos. It doesn't. The lion's share of the fighting still occurs among the most marginalized of each group, those who do not feel themselves integrated into society. In other words, the phenomenon of black-Latino conflict has as much to do with social and economic alienation as it does with race. In fact, Jonathan Fajardo, the 18-year-old gang member accused of killing Green, is himself half black, with four half siblings who are as dark as she was.

The truth is that people who fall through the cracks find all sorts of reasons to get angry, and people to get angry with.

Undebated Challenges

Cecille Isidro — Mon, 19 Nov 2007 16:35:00 -0500

The most damaging part of the Bush foreign policy legacy is not the precipitous decline in American power and influence brought about by the disastrous Iraq occupation. It is the way the Administration’s "war on terror" and its neoimperial project in the Middle East have distorted our vision of the world.

They magnify out of all proportion what should at worst be minor threats to our national security and ignore much larger developments, such as the extraordinary economic rise of China and India, which are having a much more profound effect on the American way of life.

Just how distorted our vision of the world has become has been on constant display during the primary campaign leading up to the 2008 elections. The major candidates from both parties have followed a foreign policy narrative dominated by Iraq, Iran and Islamic extremism. Promising to see the Iraq War through to a successful conclusion, the Republicans want to extend Bush’s policies into a generational war against Islamic extremism, which they see as a new totalitarian threat. Democratic candidates have committed themselves to getting out of Iraq -- or at least vastly reducing America’s presence there -- and to fighting a smarter war against terrorism while restoring America’s global leadership. But they, too, seem intent on proving their toughness, even to the point of pursuing many of the same goals that led to the loss of America’s standing in the first place.

Neither party seems ready to deal with a radically changed world that in many ways moved on as we got sucked ever more deeply into Bush’s Iraq catastrophe. In this sense, the 2008 elections pose a larger challenge: to advance American goals and interests in this new world, it will not be enough merely to repudiate the worst features of Bush’s militarism. It will be necessary to rethink American priorities and the very meaning of what American foreign policy is about.

The Republican Narrative

It is clear that this rethinking will not come from the leading Republican candidates. The GOP narrative of a long war against Islamic extremism is purposely backward-looking, modeled on the earlier struggle against Soviet Communism during the cold war. Yet as Juan Cole suggests, the idea that Islamic extremism poses a threat commensurate with Soviet Communism is patently absurd. Six years after 9/11, it is clear that Al Qaeda does not have the organizational capacity or resources to pose a systematic danger to American lives or interests, and that common-sense counterterrorist measures -- better intelligence, more effective border control and internationally coordinated police work -- can dramatically reduce the risk of terrorist attack. It is also clear that Al Qaeda does not have the popular appeal in Muslim societies to constitute a threat to any significant government, despite the boost that Bush Administration policies may have given to Al Qaeda recruitment.

When leading Republican candidates talk about the Islamic threat, they do not just mean Al Qaeda. They also mean religious-based popular movements like Hezbollah as well as the clerical leadership of Iran. But it is here that the Republican narrative turns from the absurd to the tragic, greatly expanding the number of America’s enemies and ignoring the fact that Iran and its Shiite allies are bitterly opposed to Al Qaeda and could be useful partners in the fight to eliminate extremism. Whether Republicans conflate the two out of ignorance or because they believe that Islamic radicalism of any stripe poses a threat to US interests, or merely because they want to play on the public’s fears, it makes for bad policy, as the Bush Administration’s failed Middle East strategy demonstrates.

Like know-nothing nineteenth-century imperialists, the leading Republican candidates warn that Islamic radicals want to push the United States out of the Middle East. They have forgotten that in the twenty-first century a military presence abroad is no longer a reliable way to secure a great power’s interests and may only create the very threat it seeks to avoid. It is not a coincidence that the greatest amount of Islamic terrorism stems from resistance to foreign military occupation or that the governments that feel most vulnerable to Islamic jihadism are those that have had a close association with the United States, or on whose soil the United States has left the heaviest footprint. Indeed, the tragedy of the Republican position is that it would suck us even more deeply into a "clash of civilizations" with a fringe Islamic movement while isolating us from other parts of the world that are just as or more important to American interests.

The Democratic Narrative

The leading Democratic candidates understand many of the shortcomings of the Bush Administration’s approach to the world. They understand, for example, that America’s moral standing has been gravely damaged by Abu Ghraib, Guantánamo and by the Administration’s disregard for international law, as Oona Hathaway points out. Yet in many key respects they are trapped in the same post-9/11 view of the world.

The Democratic candidates say they want to fight a smarter war against terrorism, but in the end they are adopting policies that seem more designed to prove their toughness than prevent terrorist attacks. This is evident, as

William Hartung notes, in their calls for increasing the size of US ground forces and for retaining a military presence in Iraq and neighboring Arab countries, as well as in Afghanistan. Such a visible US presence would serve no useful military mission, but it would give Al Qaeda an ongoing cause to keep its movement alive.

The Democratic commitment to restoring America’s global leadership also raises questions. For one thing, it will be difficult to reclaim moral leadership as long as America is bogged down in increasingly unpopular counterinsurgency wars in Iraq and Afghanistan. For even the most enlightened counterinsurgency warfare will inevitably entail civilian casualties, which engender nationalist resistance.

This is not to mention the financial cost of ongoing wars in Iraq and Afghanistan (estimated to be well more than $1 trillion over the next decade), which would foreclose other foreign policy initiatives as well as new social investments at home.

As important, the Democrats seem to assume that the world so wants and needs American leadership that it is there for the taking. But as Anatol Lieven suggests, the overarching question facing American foreign policy is not how to restore leadership but how to adjust to an increasingly multipolar world that may be less open to any one power’s primacy.

Russia, China, India, South Korea, a host of South American countries and even the pro-American powers belonging to the European Union have all grown accustomed to a world in which the United States has been preoccupied with Iraq and in which they have had more freedom to shape the politics and economies of their regions. Much of the world has done just fine without active American leadership during this time and thus may not be as receptive to a reassertion of US leadership, as most of the Democratic candidates seem to suggest.

Indeed, the leading Democratic candidates have failed to grasp one of the central lessons of the Bush era: the world does not need strong US leadership so much as it needs constructive US participation as a great power. On global climate change, on AIDS in Africa, on engaging North Korea, to mention just a few issues, other powers and new coalitions of transnational NGOs and intergovernmental agencies -- as well as long-established ones such as the United Nations -- got there just as quickly as and in some cases before the United States, and they now have an ownership stake in these issues and well-developed views about how they should be solved. They would welcome the United States to the fold, but they would not cede all leadership to Washington.

A Progressive Narrative

For the leading Democratic candidates and their advisers, toughness and global leadership have become ends in themselves. But in today’s world these ends do not automatically equal a better world for American interests or make possible a more decent liberal society at home. That requires a strategic vision of how to work with others to build a world order that accommodates the voices of an increasingly pluralistic group of nations yet serves America’s core interests and values.

Today’s presidential candidates could do worse than look to the Rooseveltian vision that emerged in the latter days of World War II for inspiration. That original vision entailed working to preserve peace by sharing power in international institutions; the promotion of the universality of human rights and self-determination; and the spread of middle-class prosperity through Keynesian economics and the managed expansion of global commerce. (To this narrative, of course, one now must add global climate change and the stewardship of the planet’s ecology.) This vision of world order was ever mindful of the intimate link between America’s international policies and its goal of socioeconomic progress at home. Maintaining peace among the great powers and avoiding unnecessary wars, it was correctly believed, would allow us to keep our national security costs low, freeing resources to expand our social contract through greater social spending and public investment. Promoting middle-class prosperity abroad would reinforce prosperity at home while helping secure a lasting peace internationally.

If this remains the most promising progressive foreign policy narrative, then the most significant development of the past decade is not the appearance of radical Islamic fringe groups in the Middle East but the extraordinary economic rise of China and India and the integration of more than 2 billion people into the world economy. This development, together with the ongoing integration of the world’s markets for goods, services and capital and the global political awakening made possible by satellite TV and the Internet, touches upon virtually every aspect of a progressive world vision and America’s domestic society, influencing everything from the price of oil and food, to human rights and governance in Latin America and Africa, to the wages and living standards of American workers.

Yet these developments have commanded little attention in the foreign policy debate of this electoral season, except for a few alarmist concerns about the threat they pose to American primacy. But to Rooseveltian progressives, they define the two overarching challenges of foreign policy in the early twenty-first century. One challenge relates to the classic strategic dilemma of how to amend the international system to accommodate the interests of new rising powers without sacrificing progressive values or undermining socioeconomic progress at home. The other challenge involves how to extend the system of national governance and regulation around the world, creating an effective system of international governance without compromising popular sovereignty at home. In the early twentieth century, the leading powers failed this test, and the result was two devastating world wars and a world depression.

The good news is that none of the emerging powers seek to challenge the United States directly or have hegemonic ambitions of their own -- at least not now. But they do want a greater voice in world affairs and more influence in shaping their regional environments. Rather than seeing this desire as an obstacle to American leadership, candidates in the progressive tradition should welcome it as a way to share the burden of keeping order and to reduce the need for projecting military power in the world. They should support the building of what Roosevelt called a community of power, even though in some cases this will require the United States to give up its maximalist demands and accept compromises that seem to fall short of progressive standards. Whether we like it or not China, India and Russia will influence what happens with Iran and North Korea, so better to involve them in a solution than to ignore their interests.

Refashioning today’s international institutions -- especially but not only the United Nations -- to give these emerging powers a larger voice will of course take time. But in the short term, the next administration could pursue the development of regional concerts of power and new arms control measures to prevent destructive geopolitical competition and costly arms races. The successful negotiation, under the six-power framework talks, of a deal to cap North Korea’s nuclear weapons program illustrates the promise of such regional concerts.

The United States was able to reduce any future threat to American national security without having to expend military power or make major concessions. The successful six-power talks provide a framework for an ongoing regional concert to manage the eventual reunification of Korea and to avoid destructive rivalries among China, South Korea, Japan and Russia and to cap future military spending.

The withdrawal of American forces from Iraq would provide another opportunity to internationalize American policy and draw other powers into the management of regional stability, thus reducing the American burden.

Establishing the framework of a more inclusive regional security architecture -- one that would both accommodate Iran’s legitimate interests and stem its destabilizing tendencies -- would, as Trita Parsi suggests, allow the United States to lower America’s military profile in the Persian Gulf without sacrificing vital American interests.

The most likely cause of future conflict among great powers lies in competition over oil and other strategic resources. China’s and India’s rapid economic growth has dramatically increased the demand for strategic commodities, and great powers whose economic growth depends on the import of such materials tend to develop geopolitical strategies to ensure their access to these resources. Accordingly, China has adopted a new diplomatic activism in Africa and Latin America, making long-term supply agreements that lock up access to world commodities and challenge the fragile international consensus of not rewarding countries for human rights abuses.

Some argue that the United States needs to respond with its own geopolitical strategy to maintain control of the world’s oil and strategic commodity markets by reinforcing its military position in the Gulf and expanding it to parts of Africa. A better approach would be for the United States to reduce the importance of these resources by helping to lead a worldwide effort, including cooperative ventures with China, aimed at harnessing the resource efficiency revolution and developing clean-energy alternatives.

Together with championing new arms control measures to prevent the further expansion of China’s naval and space deployments, this would make more sense.

The more immediate and more serious challenge relates to the unusual merger of American corporate capitalism with China’s authoritarian political system. To some governments in the developing world, this has created an attractive option -- authoritarian capitalism -- what some have dubbed the "Beijing consensus." Emerging in the wake of the failure of the neoliberal Washington consensus, the seeming success of the Chinese model poses a threat to the advancement of human rights, as authoritarian governments seek to justify repression by pointing to China’s success or seek to expand commercial ties with China in the hope of shielding themselves from Western pressure.

It also poses a threat to the middle-class social contracts of developed economies, which have been a cornerstone of the capitalist peace for the past sixty years, and to the development of similar middle-class contracts in other emerging economies, which will be important to future peace and prosperity. The entry of China and India (and the former USSR) into the global economy has had the effect of more than doubling the world’s potential labor force. This has put downward pressure on wages in both the developed and developing worlds -- eroding the middle classes in the advanced industrialized countries and slowing the growth of the middle class in developing economies.

Because of the size of China and India, their rapid integration into the world economy has also had the effect of crowding out economic opportunities for other developing countries, as reflected by the fact that China has attracted the lion’s share of the world’s direct investment.

China’s economic success has to some degree come at the expense of jobs and economic growth in Mexico and Central America, which in turn has resulted in more immigration of low-wage laborers to the United States.

This pattern of economic integration has resulted in growing disparities of wealth and income in both the United States and the emerging powers. Already one sees the effects -- in the growing disquiet in parts of the American heartland, in the rise of religious radicalism in the Middle East and in the populist backlash in Latin America. Should economic growth and job creation falter in China and India, we will see growing instability there as well, perhaps in the form of resurgent nationalism.

That is why the next administration must put jobs and middle-class prosperity at the center of American foreign policy, as Afshin Molavi suggests. And that is why it will have to find a way to encourage change in China away from authoritarian capitalism to a system that allows Chinese workers to enjoy much more rapid improvement in their living standard. That means replacing the widely discredited Washington consensus with what might be called a Rooseveltian consensus, which would aim to raise wages and living standards as well as create robust safety nets in these increasingly productive economies. Indeed, the most important foreign policy initiative the next administration could take would be to use its trading relationship with China to encourage it to develop a comprehensive social welfare system, allowing Chinese workers to save less and consume more. Such an initiative is not just necessary to reduce the US trade imbalance but to save the world economy, which is beginning to choke on excessive Chinese savings.

The success of a progressive foreign policy depends on establishing the right priorities. These include capping military expenditures in East Asia, turning America’s withdrawal from Iraq into a new regional security order in the Persian Gulf, promoting a worldwide resource-efficiency revolution, elevating human rights to their proper place in international diplomacy and emphasizing a new Rooseveltian growth consensus. All these goals reinforce one another. And they would enable the United States to prosper, even as its power relative to that of other nations recedes.

Jobs, Justice and Democracy

adminn — Mon, 19 Nov 2007 14:24:00 -0500

"My issue is cooking oil," Dya Alawa, a 37-year-old Turkish woman said on the day of Turkey's historic July election, which saw the Justice and Development Party (AKP) emerge with a resounding victory. "That's why I'm voting AKP," she told the Washington Post. For her, the election was simple: the economy has improved under AKP stewardship since 2002, her husband has less fear of layoffs at his textile factory and she can buy cooking oil at reasonable prices.

Indeed, Alawa is not alone. While the Turkish elections grabbed headlines and raised questions about the country's "secular soul" -- as the AKP, a party with its roots in political Islam, won the presidency and retained the premiership at the same time -- many ordinary Turks paid more attention to bread-and-butter issues of jobs, prices and the economy. Herein lies the irony of the AKP victory: it was not a victory of Islamists over Ataturk, nor was it a repudiation of Turkey's secular inheritance, as suggested by alarmed members of the secular establishment. The AKP victory was one of sound economic policy, amid an environment largely untainted by corruption, that made people like Dya Alawa feel secure about their future.

It's a lesson that the next US administration ought to learn well as it searches for a grand strategy for the Middle East and for the developing world. Far too often (and especially in the past six years), Washington has failed to listen closely enough to the voices of people like Alawa, instead preferring the urbane intellectuals who turn up in fellowships in Washington or visiting professorships at Harvard (and are granted meetings with the President and the Secretary of State). When we listen to the Alawas of the developing world, we hear a familiar refrain: we want jobs, decent wages, hope for the future and governments untainted by corruption.

These sentiments -- which turn up in global polls of developing countries, and especially the Middle East -- fuel the rise of populists from Latin America to Africa as well as "social justice" utopian Islamist movements from Morocco to Egypt to Indonesia that challenge the plutocratic elites often supported by Washington. The key words and themes used by the Islamist parties -- justice, development, jobs, corruption of the ruling elite, the dangers of globalization -- ring familiar to anyone who listens to the speeches of Hugo Chávez of Venezuela or Evo Morales of Bolivia.

In the Middle East/North Africa region -- which has one of the youngest populations in the world and is awash in frustration at the status quo -- this populist-versus-plutocrat dichotomy can be a winning card. The trouble is that most populists are good at sloganeering against the ruling elites but bad at governing. Turkey's Prime Minister Recep Tayyip Erdogan has governed as a probusiness moderate, not as a chest-thumping populist. Still, it was popular anger at the ruling elite amid the ruins of Turkey's 2001 financial crisis that spurred Erdogan to power.

Iran's President Mahmoud Ahmadinejad also played the populist card in the 2005 elections. At that time, the reformist wind had died down, as President Mohammad Khatami had been outmuscled by the conservative establishment. Iranians -- gripped by an economic unease fueled by inflation, stagnant wages and anemic job growth -- were either frustrated with the reformers and thus sat out the elections or were more concerned with the price of meat and onions than with abstract notions of civil society and dialogue among civilizations. Ahmadinejad exploited that latter sentiment well. He delivered a populist message and railed against corruption (and said nary a word about Israel or the Holocaust). It proved to be a winning card in Iran's admittedly limited elections. Unlike Erdogan, however, Ahmadinejad has not managed the economy well (in fact, he has proven disastrous) and will likely face in 2009 a skeptical voting public frustrated by soaring inflation and unemployment (only a US-led attack on Iran might save him now).

Then there is, of course, Hamas. The only surprising thing about the Hamas victory was the surprise that it caused in Washington and London. Should it have been any surprise that long-suffering Palestinians, impoverished and underemployed, battered by years of Israeli occupation and wounded by the corruption and nepotism of the Fatah elite, would vote for Hamas, which has become to many Palestinians the symbol of resistance and provider of social services? In the Gaza Strip, where even before the postelection international embargo on Hamas, unemployment stood at 44 percent, nearly 80 percent of all Gazans lived below the poverty line and nearly 50 percent were under the age of 18, there were a lot of justifiably angry Gazans searching for redemption and not finding the right answers in Fatah, Israel or the prospects of a peace deal.

In many Middle East/North Africa countries, 67 percent of the population is younger than 24. The World Bank estimates that the region needs to create 100 million jobs by 2020 simply to keep up with its growing labor force. Right now, the region's unemployment rate, hovering at 12 percent despite steady economic growth in the past four years, is the highest in the world, higher even than sub-Saharan Africa. Demographers do not agree on much, but they tend toward unity on this: large youth bulges coupled with high unemployment is a recipe for instability. And in today's Middle East, middle-class unemployment and, more important, underemployment (most jihadis are middle-class, not poor) swell the ranks of extremist recruits in small numbers and Islamist populists in larger numbers.

With few exceptions (most notably in the smaller, more nimble Persian Gulf states), the region is plagued by corrupt state-dominated economies, excessive regulation and bureaucracy, and poorly constructed legal and regulatory frameworks that hinder private-sector development, foreign direct investment, small and medium-sized business growth, and job creation. Places like Egypt -- the potential regional powerhouse -- have shown signs of improvement, winning plaudits from the World Bank, but they have still failed to achieve that critical mass that would spur significant job creation and affect ordinary Egyptians' lives.

As a result, the region is full of distressed populations -- who consistently rank jobs and finances among their top concerns -- and a younger generation susceptible to the simplistic exhortations of antidemocratic radical Islamists and the new populists. Free elections across the region tomorrow would produce more Islamist victories, but candidates wouldn't win because they are Islamist; they would win because they are populist. With high unemployment and stagnant wages amid an environment of crony capitalism that has, with a few exceptions, failed to deliver widespread prosperity, any would-be candidate in a future election would logically take a populist stance.

While Al Qaeda may seem like a more immediate threat to US interests, the rise of chest-thumping anti-American populist leaders -- in Latin America, the Middle East and soon in sub-Saharan Africa -- might be the longer-term danger. The next administration will need a strategy to meet the challenge of these new populists, who for the most part will likely worsen the economic conditions of their people while repressing their rights in the process.

Here is where Washington and its wealthier Persian Gulf Arab allies can step in. The more populous, poorer states like Egypt and Morocco could use upgrades in infrastructure that would bolster their business development while creating immediate jobs on the ground. The next administration should take a low-key leadership role in working with its Persian Gulf allies to direct some of their abundant cash flow toward building roads, schools and ports in the Arab regions. Like the United States in the mid-nineteenth century -- when large infrastructure projects put Americans to work and built the foundation for future growth -- the Arab states could benefit from state-funded development.

Pursuing a strategy of economic development that would create immediate jobs on the ground would defertilize the soil for chest-thumping populists. This, however, must be coupled with substantive steps toward growing regional middle classes, since most jihadis tend to come from the parts of the middle class that are underemployed, marginalized and disaffected. It can be profoundly disorienting to emerge with a college degree or a master's, only to find yourself driving a taxi or selling fruit at a street stand. It's even more disorienting to make it to Europe only to find yourself jobless or struggling in menial jobs in an Arab ghetto in Marseilles or Madrid, groping for answers as radical imams seek to scoop you into their world.

As the next administration pursues a Middle East strategy, no issue will be more important than economic development. Widespread unemployment is an enormous human tragedy and a destabilizing social force, but it is also the largest obstacle to democratization. The transition to democracy is more feasible and sustainable when a country has a vibrant middle class, a healthy employment market, a dynamic and independent entrepreneurial community and vigorous economic development.

We should help governments in the region develop mortgage markets and financial institutions that would support small and medium-sized enterprises; then, homeowners and small-business owners would form the core of a middle class that prizes stability and just might pursue a greater voice in government. The new President of the United States should let it be known loudly that America cares about the economic future of the region, and not just with free-trade agreements. Indeed, he or she would do well to borrow some populist language from the Islamists and then back it up with serious policies. This strategy of economic development would also bolster the long-term goal of democracy promotion -- a goal that the next administration should pursue with far more subtlety and long-term thinking than the current one.

Economic development ought to be pursued vigorously not only because of its democratic implications but simply because it's the right thing to do: the dignity of work and economic opportunity ought to be considered a fundamental human right. A true embrace of the project of spreading prosperity would simultaneously expand America's soft power in a world where fewer people and nations trust Washington's motives than ever before.

Dya Alawa, it must be remembered, will vote for the party that lowers the price of her cooking oil, whether it be Islamist, secular, democratic or mildly authoritarian. In authoritarian states (as in most of the Middle East and North Africa) where voting does not determine rulers, people like Alawa and her sons will be attracted to Islamist populist groups, many of which are banned from entering the political arena but which provide the only muscular alternative to the ruling elites. A strategy of economic development will portend a better future for her and the millions in the Middle East, Latin America and the broader developing world who are caught between corrupt ruling elites who underperform and utopian populists who overpromise.

Avoiding the Toughness Trap

Cecille Isidro — Mon, 19 Nov 2007 14:23:00 -0500

There is a surreal quality to many of the foreign policy arguments being put forward in the 2008 presidential campaign, particularly among Republican presidential hopefuls. The Bush Administration’s fiasco in Iraq is a transformative event that calls for a fundamental re-thinking of US security strategy. The policies of "preventive" war, forward basing of US troops aimed at intimidating designated adversaries and unbridled support for missile defense and new nuclear weapons should all be cast aside in search of a new approach.

While scrupulously avoiding reference to George W. Bush by name, the top Republican candidates have embraced the worst aspects of his national security policies. No matter how badly things go in Iraq, Senator John McCain has stubbornly adhered to his ill-advised position on the war. Former New York mayor Rudy Giuliani has cast himself as the post-9/11 tough guy, advocating not only a "stay the course" policy in Iraq but also the use of force against Iran. One of Mitt Romney’s most memorable pledges is his call to "double Guantánamo," while his main defense plank is a promise to increase the armed forces by 100,000 troops. Former Tennessee senator and "Law and Order" district attorney Fred Thompson is trying to run to the right of the other major Republican candidates, and his foreign policy positions reflect that decision. Perhaps most important for the long term, all the Republican front-runners support maintaining a large and growing US global military presence, including expansion into the heart of the Muslim world.

For their part, major candidates for the Democratic presidential nomination have not adequately distinguished their views from the Bush doctrine. Each has endorsed one or more of the following actions: threatening a unilateral military strike in the territory of an allied country; keeping all options "on the table" -- including, presumably, the use of nuclear weapons -- in addressing Iran’s nuclear program; increasing the Army and Marines by 80,000 or more troops and increasing the military budget.

In short, the door is open for a thoroughgoing debate on the future of US security policy that goes beyond the urgent question of how to get out of Iraq. So far, mainstream Democrats have failed to seize this historic moment.

The political underpinning of this failure of imagination comes from Democratic consultants, pollsters and think tanks, who argue that the party’s candidates need to project an image of toughness to overcome the "security gap" that has existed in public perceptions of Republicans versus Democrats since the end of the Vietnam War. But this logic rests on a fatal flaw -- the assumption that the immediate future will continue to resemble the pattern of the past three decades. In Iraq the disastrous consequences of the Bush Administration’s use of military force against a country that posed no imminent threat to the United States are there for all to see. Rather than projecting a posture of toughness, what is needed is an effective plan for defending the United States and its allies.

A progressive defense policy must begin with a fundamental redefinition of what constitutes security. Security should involve protection against all threats to human life, whether they emanate from terrorism, the spread of nuclear weapons, environmental degradation, outbreaks of disease or entrenched poverty and hunger. This means that many of the most dangerous threats we face are not amenable to military solutions. Furthermore, given their cross-border nature, these challenges must be addressed through inclusive global partnerships, not ad hoc coalitions.

The elements of a new defense policy fall into two areas: (1) reversing longstanding policies that are doing more to undermine US security than to promote it; and (2) fixing the mismatch in resources that devotes far too much funding to traditional military missions at the expense of the more diverse set of tools needed to address current and future threats to security.

Probably the most retrograde element of Hillary Clinton’s and Barack Obama’s foreign policy platforms is the proposal to increase the Army and Marines by at least 80,000 troops (John Edwards has refused to join the "bidding war" over who can propose the largest troop increases). This approach implies either a commitment to continuing the doctrine of "preventive" war and military occupation pioneered by the Bush Administration or, at the least, a continuation of the cold war practice of deploying US troops in bases ringing the globe. During the cold war, this aggressive posture was rationalized on the basis of containing the Soviet Union and its allies around the world. In some instances, the United States’ cold war military presence provided genuine reassurance to allies who depended on a US security pledge to feel safe. Now there is strong popular resistance to US military facilities in many of the areas where the Pentagon is most eager to base forces. And when the main US adversary is not a nation-state but a loose network of terrorist organizations, the stationing of large numbers of troops in or near Muslim nations offers little or no military value while generating opposition that can only help to improve the recruiting and fundraising activities of Al Qaeda and its allies.

Likewise, US nuclear policy still veers toward the cold war practice of using nuclear threats to shape the behavior of potential adversaries. This has certainly been the case with respect to Iran. But the primary goal of US policy in the current era should be preventing the acquisition and use of nuclear weapons by terrorist groups, not making loose threats that are more likely to spur other nations to seek nuclear weapons. Any future needs the United States may have to deter potential nuclear attacks can be handled with a small residual force of at most a few hundred warheads, which could be eliminated in conjunction with a longer-term international effort to abolish these weapons of mass terror altogether.

The most urgent short-term goal of US policy should be to secure or eliminate nuclear bombs and bomb-making materials in Russia -- where there are materials sufficient to build tens of thousands of nuclear weapons -- and worldwide, where smaller quantities of bombs and bomb-making material might be seized by a terrorist group. Barack Obama has built up an admirable track record on this issue.

Negotiations to curb or roll back North Korea’s nuclear program should continue, and saber-rattling toward Iran should be replaced by efforts to promote a grand political and security bargain. This would include ending military threats and economic sanctions against Iran in exchange for a pledge to limit its nuclear program to civilian purposes under a strict inspections regime. Some intelligence estimates put Iran’s capability of building and deploying nuclear weapons at ten years or more in the future, a time frame that allows plenty of scope for negotiations, notwithstanding the recent tough talk from Iranian President Mahmoud Ahmadinejad.

The linchpin of efforts to stem the spread of nuclear weapons should be an initiative to implement sharp cuts in US and Russian arsenals, which together account for about 95 percent of all nuclear weapons worldwide. In this area Democratic candidates Barack Obama and John Edwards have staked out strong, forward-looking positions in line with the views of former officials such as Nixon/Ford Secretary of State Henry Kissinger, Reagan Secretary of State George Shultz, Clinton Defense Secretary William Perry and former Senate Armed Services Committee chair Sam Nunn, who have endorsed the goal of "a world free of nuclear weapons," to be achieved by "working energetically on the actions required to achieve that goal." In keeping with this movement toward nuclear disarmament, the Energy Department’s National Nuclear Security Administration should abandon plans to research and build a new generation of nuclear warheads and eliminate plans to upgrade US bomb-making facilities under its Complex Transformation plan.

The second major thrust of a new security policy must address the stark misallocation of resources in this area, which is closely tied to the persistence of cold war strategies and weapons systems that have little relevance to today’s security environment. Implementing a more comprehensive security policy entails using all the tools available -- not just military force but diplomacy, intelligence, law enforcement, development assistance, environmental protection and forward-looking public health policies.

The top three Democratic candidates all endorse some version of this general framework. The difficulty arises when these candidates enunciate specific policies that are at odds with this perspective.

The most detailed proposal to date on how to engage in a shift in overall security spending is the Unified Security Budget (USB), the product of a task force organized by Foreign Policy in Focus and the Center for Defense Information (author’s note: I was a member of the task force that produced the USB report). The most recent task force report calls for cutting $56 billion from the Pentagon budget by eliminating or scaling back spending on unnecessary programs like the F-22 combat aircraft, the Virginia class submarine, the V-22 Osprey, missile defense and nuclear weapons. The proposal then argues that $50 billion of these funds should be invested in peacekeeping, diplomacy, development of alternative energy sources, public health infrastructure and protection of chemical and nuclear plants. John Edwards has endorsed the concept of a USB, but it is not clear whether he would therefore move significant amounts of funding from the Pentagon to other security programs.

Even with the kinds of cuts outlined above, the United States will outspend its closest rival -- China -- by about five to one. Expenditures by actual or potential adversaries like Al Qaeda, the Iraq insurgency, Iran or North Korea barely register on the charts compared with the US military budget. Iran, the demon du jour, spends just above 1 percent of what the United States spends for military purposes.

But advocates of higher military budgets argue that US military spending should be measured not only against the spending of other countries but against the potential missions that the US military may be asked to carry out. A progressive defense policy needs to provide answers to the question of how traditional military threats should be addressed.

A list of primary missions for the US military should arguably include the following: defending US territory and the territory of key allies; intervening to stop genocide or ethnic cleansing; preventing and combating terrorism against US targets; and preventing the use of nuclear weapons against the United States or its closest allies. Except in extreme circumstances, action in any of these areas should involve regional or international coalitions. And as noted, many of these objectives, once primarily addressed by military means, may now be achieved using nonmilitary means.

Defense of US territory is principally a homeland defense mission, not a military mission. It should go without saying that neither Mexico nor Canada is going to launch a land invasion of the United States, nor is there any nation equipped to mount a major military operation by sea. As for the Administration’s favorite fantasy program -- missile defense -- it has no capability for stopping a terrorist group intent on smuggling a dirty bomb or nuclear weapon into the United States.

This means that improvements in homeland defense should be the main instruments for defending US territory. These measures should include protecting chemical and nuclear plants; developing a rational system of immigration and border security that focuses on intercepting known terrorist suspects rather than imposing mass restrictions; improving training of and communications among police, fire departments and hospitals; and investing in public health institutions to improve their ability to detect potential outbreaks of infectious diseases.

As for dealing with aggression against US allies, there are relatively few cases in which US forces will be needed to carry out such a mission. Most key US allies, from other NATO countries to Israel to South Korea, are more than able to defend themselves from a conventional attack by their most likely adversaries. To the extent that US forces might be needed in a supporting role, their mission should be limited primarily to logistical support.

In the special case of Taiwan, the main line of defense should be political, not military. Making it clear to Taipei that its US security guarantee does not extend to a scenario in which it moves abruptly toward independence without consulting key allies would be one prong of a diplomatic strategy. The other would be to assure China that the United States continues to support a two-Chinas policy, while admonishing Beijing to forgo military action to seize Taiwan.

On the issue of humanitarian intervention, the United States has a mixed record, from late but significant engagement in Bosnia and Kosovo to a shameful lack of action to stop the genocide in Rwanda. In the ongoing humanitarian crisis of ethnic cleansing in Sudan, the most important role we can play is to provide financial and logistical support to regional and international peacekeeping forces while leading efforts to put economic and political pressure on Khartoum to stop supporting militias engaged in mass murder in the southern part of the country. The US role should also include concerted diplomacy to get China to cease its investment in Sudan’s oil resources until the regime meets international standards of conduct. For possible humanitarian interventions in the future, objective standards should be developed based on the severity of the situation -- an approach that would have dictated US involvement to stop the genocide in Rwanda.

For all the Bush Administration’s emphasis on military approaches to fighting terrorism, military force should be the last of the tools used in this effort. The tools of choice are better intelligence-gathering, efforts to limit the flow of funds and guns to terrorist groups, determined law-enforcement efforts aimed at improving on an already significant record of trying and convicting terrorist suspects in regular courts (as occurred in the United States before Guantánamo, as well as in Europe), and the possible use of air power or special forces to target specific terrorist training camps. One mission that should be ruled out is regime change as a way to sever connections -- real or imagined -- between terrorist groups and specific governments.

Not only would the security strategy outlined above forestall the need to increase the size of the Army and Marines, it would allow for cuts in the size of the armed forces, in conjunction with a reduction in US "global reach" as expressed by the hundreds of US military bases spread across the globe.

The level of detail set out here is unlikely to be discussed in the context of a presidential campaign, but it would be immensely helpful if the major candidates would at least re-think their commitments to outmoded security tools like an increase in the size of the armed forces and the use of veiled nuclear threats against nonnuclear states. Even if most of the measures proposed in this essay aren’t implemented by the President inaugurated in 2009, an informed debate on the future of US security policy can bring much-needed change over time.

Continuing the Investment

adminn — Mon, 19 Nov 2007 13:58:00 -0500

Deep Creek Elementary School is an education success story. In 2001, Deep Creek, where more than three-quarters of students come from low-income families and 80 percent are black or Hispanic, was one of the worst elementary schools in Baltimore County, Maryland. Its third-graders were reading at a first-grade level. But the new principal, Anissa Brown Dennis, expanded collaboration and professional development for teachers, implemented an aligned reading and math curriculum from pre-K through third grade, and offered summer learning and after-school programs for struggling students. Today, nearly three-quarters of Deep Creek students read on grade level, teacher and student morale is up, and the school has received local, state, and national recognition for its improvement. The key to Deep Creek's transformation: a clear vision of high-quality early education, starting in pre-K and continuing through third grade.

Advocates of universal pre-K are nothing if not visionary. They view universal pre-kindergarten as not just an end in itself but also a first step toward much more comprehensive public social welfare programs for preschool-age children and their families: prenatal care, parental leave, universal children's health care, and quality child care. For these advocates, the case for universal pre-K is also the case for new state-level systems, policies, and institutions that would serve children from birth through preschool.

Curiously, there's much less discussion of pre-K's potential to spur improvement in the schools children enter after they leave pre-K. The phrase "school readiness" is illustrative: If pre-K gets kids ready for school, then it's not school. As a result, school reformers focus on kindergarten through high school and stay away from pre-K advocacy, while early childhood advocates tend to focus on birth to age 5 and steer clear of school reform. That's a mistake. The universal pre-K movement isn't just about offering another social service: Pre-K advocates are actually building a whole new system of public education, and that has implications for the existing K-12 public education system. Without significant improvements in the public schools that children move on to after preschool, the pre-K movement will struggle to deliver promised results.

Research shows that high-quality pre-school has a positive impact on children's lives: Adult alumni of high-quality preschools have higher education attainment, employment, and earnings, and are less likely to be involved in crime than adults from similar backgrounds who didn't attend pre-K as children. Kindergarteners who attended good preschools also have stronger cognitive and academic skills than children who did not.

The trouble is, these academic differences disappear by third grade -- a phenomenon knows as "fade-out." That's fodder for conservative pre-K critics. During the 2006 debate over a referendum to establish universal pre-K in California, the Heritage Foundation, Reason Foundation, and other conservative groups published articles highlighting fade-out. The referendum failed. In an era of education accountability, politicians and the public expect preschool investments to improve elementary school test scores, so fade-out can undermine support for early education programs.

But evidence shows that fade-out is not a failure of pre-K; it is more deeply connected with children's ongoing education. Research by economics professors Janet Currie and Duncan Thomas has found that African American children who attend Head Start programs disproportionately go on to attend lower-performing public schools -- and this accounts for much of the fade-out in Head Start's academic results.

Rather than fearing fade-out, or trying to downplay it, pre-K supporters should highlight it as an argument for improving early elementary school programs. Education reformers and pre-K advocates should join forces to promote a comprehensive reform package that starts with high-quality, universal preschool for all 3-year-olds and 4-year-olds whose parents want it, followed by universal full-day kindergarten, to give kids more time to learn. In this vision, goals for children's learning and development -- including not just academics but also physical, social, and emotional development -- would be clearly articulated and extend from pre-K through third grade in a seamless progression. Lead teachers would all meet the same high-quality standard -- a bachelor's degree and demonstrated knowledge of how young children learn. This would allow teachers to work collaboratively across grade levels, so each year's learning builds on what children already know. (And ideally, talented preschool teachers without formal degrees would receive support and funding to pursue further schooling.)

The entire system would focus on ensuring children finish third grade with the skills they need to succeed in the next level of their education. Third grade is a turning point when children shift from learning to read to reading to learn. Children who can't read and do basic math well by then are unlikely ever to catch up. Indeed, proficiency by third grade is so critical that at least four states are known to use third-grade test scores to predict how many prison beds they'll need years later, reports the National Center on Education, Disability and Juvenile Justice.

Critics of the universal pre-k movement sometimes fret that pre-K advocates want to "extend public schooling down," to serve younger children for whom it's not appropriate. In fact, public education would actually benefit from extending some characteristics of high-quality early childhood programs up into public elementary and secondary schools.

This is precisely what happened at Deep Creek Elementary School and dozens of primary schools across the country that have implemented similar reforms. There, educators don't see preschool as just an add-on. Integrating pre-K and other early childhood programs with existing elementary schools can actually spur those schools to serve children better in the years following pre-K.

Let's look at the details: Most high-quality preschool programs focus on developing children's social and emotional competencies -- self-control, sticking with difficult tasks, resolving conflicts verbally rather than by force -- as well as academic skills. They build connections with parents and communities -- sometimes even using community-based providers to deliver early childhood education. They also often provide comprehensive services -- nutrition, health screenings, and parent education and involvement -- to address the myriad challenges that make it difficult for many children to succeed in school. These features are part of what make preschool programs successful, but too often they are woefully missing from elementary schools that are emotionally barren, devoid of resources to respond to the non- educational problems children bring to school with them, and disconnected from parents and communities. As advocates work to build publicly funded pre-K systems that emphasize social and emotional development, community connections, and comprehensive services, they're creating proof points that demonstrate how entire public education systems can deliver these things -- and why they must.

The universal pre-K movement also offers public education advocates and reformers models for academic reform. Changing existing systems is incredibly difficult; because states are building universal preschool systems from the ground up, there is more space for innovative thinking than in the established public education system. When it comes to evaluating the quality and effectiveness of schools and pre-K programs, for example, pre-K accountability systems use a much broader definition of quality than No Child Left Behind. Some use child assessments to measure pre-K learning, but they also look at resources and what actually goes on in pre-K classrooms: What kind of activities are children engaged in? How do teachers interact with children? A recent report from the National Early Childhood Accountability Task Force describes promising state and local models to evaluate the quality of pre-K programs. These models can help educators develop more nuanced ways to measure quality in public elementary and secondary schools.

States must also build new systems of teacher preparation and professional development to help experienced preschool teachers who lack a bachelor's degree meet new, higher education standards. Education reformers have long bemoaned the quality of K-12 teacher preparation and certification: Too often these programs fail to equip teachers with the skills to effectively teach diverse students, while their cost and time demands dissuade some potentially good teachers from entering the profession. New models to prepare preschool teachers could provide a potential leverage point for broader changes in K-12 teacher training.

Early childhood advocates and school reformers should be natural allies in building a better future for children, but too often they operate in separate spheres. The expansion of the pre-K movement, and the need to combat fade-out, create an opportunity to bridge that divide. By working together to build high-quality pre-K programs, education reformers and pre-K advocates can also open the door for improvements in the elementary and secondary education system. This kind of collaboration can make stories like Deep Creek's not the exception but the rule.

Losing Afghanistan, One Civilian at a Time

Cecille Isidro — Sun, 18 Nov 2007 11:16:00 -0500

The road between the eastern Afghan city of Jalalabad and the Pakistani border is one of the busiest in the country, congested with gaily painted trucks, battered taxis, buses packed to the rafters and Afghans riding bikes. One morning in early March, a suicide bomber plowed a Toyota packed with explosives into the middle of a U.S. convoy patrolling that road, killing himself and injuring a Marine. That was bad enough, but what may be the key to Afghanistan's future was what happened next.

As pedestrians scattered in the resulting confusion and chaos, other Marines opened fire as their convoy sped away, shooting at vehicles and pedestrians over the course of some 10 miles, according to the Afghanistan Independent Human Rights Commission. They left at least 12 civilians dead in their wake and injured dozens more. "They opened fire on everybody," one wounded bystander told a reporter, "the ones inside the vehicles and the ones on foot." A court of inquiry is scheduled to convene next month at Camp Lejeune, N.C., to determine whether the Marines acted improperly. Investigations by the U.S. military and the Afghan human rights commission have already concluded that the American convoy was not fired upon after the suicide attack.

The incident near Jalalabad is part of a disturbing larger pattern in Afghanistan. Last year was the worst year for civilian casualties since the fall of the country's cruel Taliban regime, and 2007 is shaping up to be even worse. The most alarming point: As of July, more civilians had died as a result of NATO, U.S. and Afghan government firepower than had died due to the Taliban. According to U.N. figures, 314 civilians were killed by international and Afghan government forces in the first six months of this year, while 279 civilians were killed by the insurgents.

So why on Earth are the NATO and U.S. forces and their Afghan allies killing more civilians than the Taliban? One explanation can be found in the relatively low number of Western boots on the ground. Afghanistan, which is 1 1/2 times the size of Iraq and has a somewhat larger population, has only about 50,000 U.S. and NATO soldiers stationed on its soil. By contrast, more than 170,000 U.S. troops are now in Iraq. So the West has to rely far more heavily on airstrikes in Afghanistan, which inevitably exact a higher toll in civilian casualties. Indeed, the Associated Press found that U.S. and NATO forces launched more than 1,000 airstrikes in Afghanistan in the first six months of 2007 alone -- four times as many airstrikes as U.S. forces carried out in Iraq during that period.

The collateral damage here goes beyond even the tragic loss of life. A September report by the United Nations concluded that Western airstrikes are among the principal motivations for suicide attackers in Afghanistan. Sure enough, suicide attacks in the country rose sevenfold from 2005 to 2006, to an alarming 123 attacks, and are already up by around 70 percent this year -- at the same time that pro-government forces are killing more Afghan civilians than are their Taliban foes.

NATO Secretary General Jaap de Hoop Scheffer has been blunt here, warning that the mounting loss of civilian life in Afghanistan is eroding the support of the very people whom Western forces are supposed to be protecting. According to a countrywide poll by the BBC, the number of Afghans who believe that their country is headed in the right direction dropped a precipitous 22 percentage points between 2005 and 2006, from 77 percent to 55 percent, while the number of Afghans who approve of the U.S. presence in their country eroded from 68 percent to 57 percent. Meanwhile, Afghan President Hamid Karzai has repeatedly urged NATO and the U.S. military to act with greater restraint. Lately, he has become more impassioned. "Our innocent people are becoming victims of careless operations of NATO and international forces," he said at a news conference in June. That could put the entire Afghan mission in peril.

Of course, the fact that international forces in Afghanistan are causing an unacceptable number of civilian casualties does not exonerate the Taliban insurgents. The fanatics' tactic of using civilians as human shields in combat is well documented and deplorable. But research by Brian Williams, a historian at the University of Massachusetts at Dartmouth, shows that Taliban suicide bombers -- unlike their Iraqi counterparts -- have been generally loath to target civilians, preferring instead to focus on Western and Afghan military personnel and bases.

This tragic trifecta -- a high number of allied airstrikes in Afghanistan, a growing gap between Taliban-caused civilian casualties and those caused by pro-government forces, and declining Afghan support for the international presence in Afghanistan -- means that the rules of engagement for NATO and the United States need to change. In July, de Hoop Scheffer proposed a good first step, announcing that NATO is planning to start using smaller bombs to reduce collateral damage and spare innocent Afghans. NATO is willing to wait for targeting opportunities that don't put civilians at risk, he said: "If that means going after the Taliban not on Wednesday but on Thursday, we will get him then." Moreover, last month, Defense Secretary Robert M. Gates urged NATO countries to put more of their soldiers on the ground in Afghanistan. Should that call be heeded -- by no means a certainty -- the influx of troops would also help lessen Western reliance on crude airstrikes.

All this makes good military sense. Indeed, Western commanders should literally take a page from the U.S. commander in Iraq, Gen. David H. Petraeus. The new Army counterinsurgency manual that he helped write contains sound advice for Afghanistan. An airstrike, the manual notes, "can cause collateral damage that turns people against the host-nation (HN) government and provides the insurgents with a major propaganda victory." Petraeus also points out that sometimes, the best response to an insurgent attack is "doing nothing." After all, "often insurgents carry out a terrorist act or guerrilla raid with the primary purpose of enticing counterinsurgents to overreact."

Let's hope that de Hoop Scheffer's patience and Petraeus's calm are woven into Western rules of engagement in Afghanistan. We should fight at the times of our choosing, not the Taliban's. And we should not fall into the old insurgent trap of provoking the occupiers into callous, disproportionate responses. Making these changes could mean far fewer dead innocents and a far more stable country.

The stakes are high. So far this year, more than 100 U.S. soldiers have died in Afghanistan, the highest number since the fall of the Taliban six years ago. One obvious way to lower the U.S. death toll there in 2008 would be to convince Afghans that they have more to fear from their Taliban would-be oppressors than from the militaries of the United States, NATO and the Afghan government. Tragically, today, that is simply not the case.

Technology is Helping Firms Reach Unbanked

Cecille Isidro — Fri, 16 Nov 2007 11:24:00 -0500

Over a dozen financial institutions have applied to be the issuer of the Treasury Department's Direct Express electronic bank accounts for depositing Social Security and other federal benefits.

The Treasury touts the product as a safer, easier, and more convenient way to receive and access monthly benefits. In part, this is a strategy by the federal government to lower expenses for taxpayers by saving on the issuance of benefit checks. Compared with the 89 cents for sending a check each month, electronic deposits cost a mere 9 cents a transaction — a savings of up to $125 million a year.

But beside the obvious administrative benefits, this strategy signals there is real government interest in delivering a low-cost, high-value financial product to the elderly and other Americans of modest means.

The federal government is not the only one interested in facilitating the delivery of reasonably priced financial products and services. Mayor Michael Bloomberg's campaign to fight poverty in New York has led to the design of new policy, programs, and even products for this population.

The inaugural step for participants in the mayor's program is establishing a formal connection with the mainstream financial services industry by opening a basic Opportunity New York account. This new product, the result of a unique public-private collaboration, is emblematic of a reinvigorated campaign to bank the unbanked.

It is telling that more than half of Opportunity New York families are unbanked or underbanked. For a myriad of reasons, families across the country are using alternative financial institutions to conduct routine transactions. And it's not cheap. Estimates suggest that as many as 40 million households nationwide are spending significant amounts of their income on things like cashing checks, making payments to others, and changing their paychecks and cash into money orders to pay rent and other bills.

Low-income households use alternative providers because their products and services meet their needs: access to cash; tools to pay bills and send money to friends and family; and small loans to cover emergency expenses. Moreover, depending on the product, the cost actually can be lower than conducting the same transaction at a bank.

A checking account may be advertised as "free," but with an average fee of $34 for bouncing a single check and New York check-cashing fees capped at 1.7%, using a check casher may well be a cheaper alternative than a bank.

However, with new technologies, product designs, and insights into underbanked consumers' demand, banks and credit unions can provide competitive products and services to this population at a lower cost and with more protections.

This demographic represents real profit potential for financial service providers who make an effort to design products these consumers need.

Across the country, city leaders have partnered with the industry to create initiatives such as Bank on San Francisco, an effort to bank the underbanked that couples targeted outreach with redesigned products.

Our research has provided the basis for bipartisan legislative proposals that would get people banked and spur new savings. The New Savers Act, which was introduced in August by Senators Hillary Rodham Clinton and Gordon Smith, would provide low-cost accounts to those without them. What's more, it would create an innovation fund for the industry to explore new products and strategies to meet the needs of lower-income families.

A growing number of bipartisan proposals call for the establishment of children's savings accounts to ensure the next generation is banked from birth. And getting individuals banked early can have a number of positive effects. Account ownership is one of the better ways to learn how to manage finances. Our newly released research shows that account ownership, when combined with financial education, leads to more frequent and wiser use of financial products.

We are developing a proposal that would connect underbanked consumers with accounts for transactions and savings at tax time. We propose leveraging tax refund dollars in combination with a pooled account structure to generate sufficient volume to entice financial institutions to deliver a transaction and savings account at tax time.

Filers with adjusted gross incomes of $30,000 or less are refunded $80 billion each year, according to 2005 IRS data. The accounts would be structured so that holders would receive their refunds on their account and reload them throughout the year with wages and salary. The account, accessible with a network-branded card, could be used for point of sale transactions, to access cash, to make online purchases and pay bills, and possibly to make remittances and secure money orders. It also would contain a savings component, which could help to meet short-term emergency expenses. We're calling it the ATA, short for Assets and Transaction Account.

Demonstration projects have proven the poor can and will save. Technology has cut transaction costs, and new products are beginning to emerge. It's time for the financial industry, with a boost from government, to develop products and services that meet underbanked consumers' needs at a reasonable price and yield fair returns for the industry.

Nowhere -- and No Way -- to Hide

Cecille Isidro — Tue, 13 Nov 2007 16:06:00 -0500

Privacy doesn't mean anonymity. Think about that for a bit -- and get used to it.

Or if you don't like it, get a plan. But it had better be a good one.

On Oct. 23, Donald Kerr, deputy director of the Office of National Intelligence, outlined the new order of things: "Too often, privacy has been equated with anonymity; and it's an idea that is deeply rooted in American culture." Well, yes, the Bill of Rights, for instance, includes protections against "search," as well as "seizure." But that was then. As Kerr put it, "In our interconnected and wireless world, anonymity -- or the appearance of anonymity -- is quickly becoming a thing of the past."

Kerr's speech got little notice until The Drudge Report highlighted an Associated Press write-up. No doubt, of course, the Office of National Intelligence will soon issue a soothing statement assuring us that the government indeed respects your privacy and your anonymity. And we've all heard that line before: "Nothing to see here folks, just move along." Then Uncle Sam will resume perfecting his warrantless surveillance.

In fact, the old equation -- privacy equals anonymity -- is being buzz-sawed six ways.

First and most obviously, terrorism concerns. If you're walking through Times Square carrying a backpack and acting strangely, inquiring minds will want to know why. And Godspeed to cops brave enough to tap that shoulder.

Second, and closely related, the proliferation of cameras and Webcams. Nobody likes to be spied on, but many people -- including parents keeping tabs on baby-sitters -- like to spy. In the coming face-off, the spies have it.

Third, health insurance. We have decided, collectively, to be generous with each other in terms of "human services." But though most Americans are happy to operate a welfare state for Americans, they draw the line at subsidizing the world. So as a matter of administrative necessity, the Nurse State will have to know exactly who you are -- and your legal status.

Fourth, the reality that medical treatment now depends on medical information. If doctors are to help you, they need to know your medical history -- not just blood type and allergies, but everything about you, including your genetic background. Such monitoring is fraught with controversy -- recent headline in The New York Times: "In DNA Era, New Worries About Prejudice" -- but this is the era of the instant Q-Tip identity test.

Fifth, Google and the basic nature of the Information Age. Once upon a time, people cared about bushels of wheat. Then it was tons of pig iron. Now it's bits and bytes. If you ever wondered why the Googlers can give you search engines -- and Gmail, and everything else -- for free, it's not because they are necessarily nice guys. In fact, they've built a $200-billion company by studying you closely.

And the database beat goes on: Just yesterday Network World reported that IBM is buying Cognos for $5 billion. Never heard of Cognos? Well, that's OK; the worldwide "business intelligence software vendor" based in Canada has most likely heard of you.

Sixth, the realization that the planet is getting smaller. If we can agree that pollution is a serious concern, it follows that ore-smelting in China or deforestation in Brazil, is a threat to everyone everywhere. Down the road of those concerns lies a massive global government, which will want to know if you're smoking too many cigarettes.

So what to do? Go off the grid? Become a hermit? That's one way, although, the eye in the sky, of course, will always be looking down from its orbit. But surely there are other ways to escape -- virtual reality, digging deep underground, traveling to space. People are going to try them all, and a huge privacy protection industry is destined to emerge.

But then, of course, everyone else will be curious as to what's being hidden, and why.

Western Myths and Pakistani Realities

Cecille Isidro — Fri, 09 Nov 2007 16:12:00 -0500

In the storm over President Pervez Musharraf's declaration of a state of emergency in Pakistan, a number of critically important things have been overlooked -- important not only in themselves, but in what they say about the ways in which Pakistan works and doesn't work.

The first is that as coups go, this has been a pretty genteel kind . The comparisons being made between this and events in Burma or Uzbekistan are false. At the time of this writing, no one has been killed. Most of those arrested have not been sent to prison but placed under house arrest; and since they are members of the Pakistani elite, we can be sure that their houses are comfortable ones.

Some lawyers have been tear-gassed and beaten, but at the time they were themselves throwing rocks at the police. Television channels have been disrupted, but to date the print media remains free to publish the strongest attacks on Musharraf and his actions.

By Pakistani standards, Pakistani elite politics are usually genteel -- especially when compared to the latent savagery of mass ethnic and religious politics in that country, and of the army and police when they are really turned loose to suppress unrest.

The elites, including those in the military, are closely interrelated and share a common set of basic assumptions and interests -- including not allowing their rivalry to reach the point where they would start killing each other.

Musharraf's intentions to date have been relatively limited. His declaration of a state of emergency was a move on the political chessboard, not an attempt to kick over the whole table. It took place in the context of a process of negotiation with Benazir Bhutto's Pakistan People's Party (PPP), aimed at the creation of a PPP-led government under Musharraf's continued presidency.

Musharraf's declaration was a pre-emptive counter to an apparently imminent move by the Supreme Court to tilt the terms of that compromise radically in favor of the PPP by declaring Musharraf's re-election as president illegal.

However, Musharraf's offer of a deal to the PPP still seems to be on the table. He presumably hopes that it can still be struck on his terms rather than hers.

Elements of the deal may include, for example, Musharraf being able to pick another PPP leader as prime minister, rather than being forced to change the Constitution and accept Bhutto herself in this role. Musharraf apparently still intends to hold elections once he has re-established his own prestige, and therefore his chances of being able to influence those elections.

There is no point in being too high-minded about these things. Pakistan is a hard country to govern, and the United States gives equal support to far more oppressive regimes elsewhere in the Muslim world.

As for the leading civilian politicians who hope to take over from Musharraf, every one of them when in office proved corrupt, autocratic and incompetent. If Musharraf's actions are illegal in terms of the Pakistani Constitution, according to that same Constitution many of his opponents ought to be in jail.

Building a true democracy in Pakistan will take a generation of socio-economic progress and cultural transformation. In the meantime, the country must be governed, and the growing threat from Islamist violence has to be countered.

Any government that hopes to do this successfully will need three things: a majority in Parliament, a degree of mass support, and the backing of the army, which has to do the actual fighting against the militants.

A parliamentary majority means building a coalition. The PPP is the largest single party, but no analyst or poll I know of suggests that it can win more than 30 percent of the vote.

Since the other parties have good reason to distrust the PPP, and each will demand a disproportionately large share of the government cake, Bhutto would also need military support to keep her coalition together.

Alternatively, a parliamentary coalition could be put together against the PPP. Such a move would be completely democratic and constitutional. It would also have to include the moderate and not-so-moderate Islamist parties. What, one wonders, would the U.S. administration make of this product of Pakistani democracy?

If Musharraf's latest move fails, and unrest spreads, then sooner or later he will be removed by the military high command itself. The generals will then manage a "transition to quasi-democracy." One of the civilian politicians will lead a coalition government, with the army exercising a more veiled but still dominant influence from behind the scenes.

Such an administration will then confront the same dilemmas and challenges as Musharraf's government: Islamist violence, political instability, and U.S. demands that Pakistani governments observe democracy while supporting U.S. strategies which most Pakistanis detest.

Pakistani-style "democracy," as presently constituted, may mitigate some of these dilemmas, though even that is doubtful. It cannot possibly solve them.

The Missing Innovators

Cecille Isidro — Wed, 07 Nov 2007 15:52:00 -0500

On the same week last month that the European Union unveiled its new, no-hassle "blue card" program to attract highly skilled migrant workers, the U.S. Senate voted to hike employer fees for H1-B visas to $5,000. H1-Bs allow U.S. employers to bring foreign talent into the American workforce. It was a telling coincidence, demonstrating that as the rest of the world is becoming more welcoming of skilled immigrants who fuel innovation, the United States, mired in its know-nothing Lou Dobbesian nativism, is turning its back on one of its great competitive advantages -- its historic knack for playing the role of host to the world’s most creative tinkerers.

For the nation, and for California, turning away gifted computer scientists and engineers to more welcoming jurisdictions could prove devastating. According to a recent study by the National Venture Capital Assn., over the last 15 years, foreign nationals have started a quarter of U.S. venture-backed public companies. These are companies that generate about $130 billion in annual revenue and that employ hundreds of thousands of Americans. Within California alone, foreign-born entrepreneurs played a key role in founding Intel, eBay, Yahoo, Sun Microsystems and Google.

The H1-B fee hike is a mere nuisance compared with the scarcity of such visas for needed workers. Congress has set the number of H1-Bs -- which are three-year visas -- at an arbitrarily low 65,000 a year. In April of this year, the first day companies could apply for the visas for fiscal 2008 (which started Oct. 1), the government was swamped with 133,000 applications. That means a lot of high-tech innovators will go to work elsewhere. Earlier this year, Microsoft expanded a research-and-development center in Vancouver, and it cited the dysfunctional U.S. immigration system as one reason to go to Canada, which is eager to attract, rather than harass, foreign talent.

In congressional testimony last June on the visa shortfall, Google’s vice president of "people operations," Laszlo Bock, said the company had failed to get visas for 70 engineers. Some of these individuals, who should be innovating in California, are now parked at Google campuses in Switzerland or Britain.

Does it really make sense to ban from the U.S. engineers whom Google has determined it needs to continue revolutionizing the Web? It isn’t as though U.S. workers are victimized by the addition of outstanding foreign workers. Google has hired thousands of people this year alone, and only 8% of its U.S. workforce is here on a visa. Moreover, the innovations resulting from bringing the world’s best and brightest together in Silicon Valley lead directly to the creation of more jobs for U.S. workers.

Orkut Buyukkokten, a Stanford University-trained computer scientist from Turkey who obtained his H1-B in 2002, was cited as a case in point by Bock. Buyukkokten’s first name is now a brand, the name of a popular social networking service. He is just one of many foreign computer scientists who have led to the company’s explosive growth.

Google will be fine, even if Lou Dobbs is elected president and all of the company’s innovation takes place overseas, but I worry about California’s future if overly restrictive immigration policies become the long-term norm. And it isn’t only the corporate icons that could be jeopardized but the state’s vaunted research universities as well.

The symbiotic relationship between places such as UC Berkeley and Stanford and high-tech start-ups is widely understood -- from the Hewlett-Packard era to our own Google age. But a key reason for that harmonic relationship has always been Silicon Valley’s accessibility to the world’s best and brightest. If high-tech start-ups start favoring more welcoming places such as Australia, Canada or even Europe, their universities will likely benefit at U.S. universities’ expense.

In 2005, two-thirds of U.S. doctoral electrical engineering students and half of computer science doctoral students were foreign born. Even if we could remain an educational magnet while closing the door to highly skilled foreign workers, would it really make sense to continue investing in the education of these great minds, only to see the fruits of their labor enrich more welcoming jurisdictions? The number of jobs in the U.S. for computer software engineers is expected to reach 450,000 by 2014, according to the government, and there is no way all these jobs will be filled solely by graduates -- foreign or native born -- of American universities.

The problems created by an unrealistically low number of H1-B visas are compounded by the notorious backlog for permanent-residency green cards, the alternative for foreigners who want to become U.S. workers. Green card applications (and lives) remain in limbo for more than five years. (Europe aims to process its blue-card applications within months.) The overall system screams "we don’t want you here" to talented workers the country in fact needs.

As in the case of the low-skilled agricultural workforce also crucial to this state, most members of Congress know that it is urgent to secure the supply of needed computer scientists and engineers. But in the aftermath of the collapse of comprehensive immigration reform this year, and the attending anti-immigrant hysteria, our representatives seem too paralyzed to do what the rest of the world knows to make sense, which is to try harder to woo those who will be creating the Intels, eBays and Googles of tomorrow.

In the Beginning

Cecille Isidro — Sun, 21 Oct 2007 06:51:00 -0400

You’ve heard the old saw: You can’t get to where you’re going unless you know where you’ve been.

It’s as true for peoples and countries as it is for individuals: We all need narratives to give meaning to our lives; we all look to archetypes and symbols to explain who we are. Ethnic and national "origin myths" may be pure fable (two divines, Izanai and Izanami, giving birth to the islands of Japan; twins, born of the gods and suckled by a wolf, founding Rome) or something closer to material reality. But fact or fiction barely matters: What’s important is what stories we choose and what we understand them to mean.

Here in the United States, Abraham Lincoln helped elevate the first Thanksgiving to the status of a modern national-origin myth when he set aside a federal Thanksgiving holiday in 1863. In the midst of a terrible civil war, he was trying to encourage Americans to count their blessings. But the holiday came to have broader significance. It is, as one historian, James Oliver Robertson, put it, a "ritual affirmation of what Americans believe was the Pilgrim experience, the particularly American experience of confronting, settling, adapting to, and civilizing the New World."

Of course, the "we gather together" Thanksgiving narrative glosses over other stories. Clearly, Anglo settlers didn’t always have cordial relationships with Indians; for the sake of history, we need to supplement origin myths with more sober facts. Still, as Joseph Campbell once said, "myths are public dreams"; they aren’t merely idealized versions of the past but contemporary calls to action and guides to the future.

But not all origin stories are constructive or inspiring. Mexicans, in particular, mythologized a tale of the violent and tragic conquest to explain their birth as a people: the story of the Spaniard Hernan Cortes and his indigenous translator and mistress, Dona Marina, a.k.a. La Malinche.

Marina was Cortes’ victor’s prize and, in 1522, she gave birth to Martin Cortes, one of many mestizo children born to the conquerors’ mistresses and paramours. Four and a half centuries later, in 1950, the great Mexican poet Octavio Paz famously wrote that the "strange permanence of Cortes and La Malinche in the Mexican’s imagination and sensibilities reveals that they are something more than historical figures: They are symbols of a secret conflict that we still have yet to solve."

Despite, or perhaps because of, the psychic power of the Cortes-Malinche story, you won’t find many monuments to them in Mexico City. After Mexico gained its independence from Spain in the early 19th century, Mexican nationalists, who sought to distance themselves from their European heritage, demonized the conquerors in general and Dona Marina in particular.

At the imposing two-story stone house at 57 Higuera St. in the Coyoacan district of Mexico City, for example, there is no plaque to indicate that Marina once lived there. Though for centuries she had been described as a beautiful, noble woman who commanded respect, 19th century depictions began to condemn her for her role in the Spanish conquest. Out of these portrayals arose the peculiarly Mexican concept of malinchismo, which means the betrayal of one’s own.

Paz contended that the Mexicans’ fixation on -- and ultimate rejection of -- both progenitors in their origin story left them in a state of "orphanhood, an obscure awareness that we have been torn from the All." The history of Mexico, he wrote, "is the history of a man seeking his parentage, his origins."

This alienation resonates profoundly throughout the culture. On the one hand, Mexico proudly acknowledges its Indian ancestry; on the other, it clearly prizes whiteness as a status symbol. It endlessly questions its identity: Is it modern or ancient, Spanish or Indian? And the Cortes/Malinche story, instead of defining Mexico’s origins in a constructive way, merely prolongs and exacerbates the country’s ambivalence about its history as a conquered nation.

Mexican mestizaje -- racial and cultural synthesis -- may have begun in a violent conquest, but it didn’t end there. Interracial love and attraction also played a role. Ultimately, racial mixture was rampant, and it combined with a rigid colonial caste system to create a society in which race was a malleable category. Mexicans developed -- in the words of Mexican American poet Gloria Anzaldua -- "a tolerance for contradictions, a tolerance for ambiguity," particularly in the realm of race and culture.

As Mexicans came north to the United States, that long history of mestizaje was also brought to bear on another cultural force, Anglo America. One scholar, Roberto Bacalski-Martinez, has described Mexican American culture in the Southwest as "incredibly ancient on the one hand, and surprisingly new on the other. Indian, Spanish, Mexican and Anglo elements have gone into its formation, and they continue to affect it. In each case, the introduction of new elements began as a clash between two peoples which eventually resulted in a newer, richer culture."

So, with this history of cultural collisions and convergences in mind, I propose that Mexicans and, particularly, Mexican Americans choose a different symbolic story to explain their identity. It’s not a new story, but too few know it. It’s right out of The Conquest of New Spain, Bernal Diaz del Castillo’s 16th century eyewitness account.

This story begins with Hernan Cortes arriving on the island of Cozumel in 1519. There, a friendly band of Mayans informed Cortes that some years before, two Christians had been taken captive in the neighboring land of Yucatan. The chief of Cozumel rejected the Spanish captain’s request that he send a search party to locate the captured Europeans. He feared they would be killed if he did. Undeterred, Cortes dispatched his own messengers to bargain for the captives’ release. The scouts took trinkets for ransom and a letter from Cortes that one man concealed in his hair.

The messengers found the two men -- Jeronimo de Aguilar and Gonzalo Guerrero, the only survivors of a 1511 shipwreck -- living in very different conditions. Aguilar was a slave desperately trying to hold on to Spanish ways. In exchange for some beads, his captors released him. He then joined in the search for his shipmate.

They found Guerrero 15 miles away, no longer a captive. He had married the daughter of a Mayan nobleman and was so thoroughly assimilated into Mayan life that he felt he no longer would be accepted by his Spanish countrymen. His face was tattooed and his ears were pierced. "What would the Spaniards say if they saw me like this?" he asked of his would-be liberators.

Guerrero’s Mayan wife angrily interrupted her husband’s conversation with Aguilar. She demanded to know why this "slave" had "come here to call my husband away?" Before Aguilar left, Guerrero explained to him the primary reason he could not leave. "Brother Aguilar," he said. "I am married and have three children, and they look at me as [a leader] here, and a captain in time of war." He then pointed to his children and said, "Now look at my three children, how beautiful they are." Guerrero was describing Mexico’s very first mestizos.

Peoples and nations need stories not only to remind us of where we came from but also to give us a sense of our potential. Cortes and Malinche’s tale of conquest and betrayal isn’t the only way to unfold the plot. Gonzalo Guerrero’s takes the same story line and finds "beautiful" possibilities. It speaks volumes about the ability to fuse cultures and creatively adapt to the constant reality of change.

Engaging Hamas: The When and the How

Cecille Isidro — Tue, 16 Oct 2007 13:28:00 -0400

The Hamas takeover of Gaza in June and the resulting West Bank-Gaza split has raised serious questions. What are the short-term prospects for reunification? Can serious political progress be made with Israel without Palestinian reconciliation? What are the elements of a successful and lasting future reconciliation?

There is no doubt that ultimately for political, economic and geopolitical reasons, the West Bank and Gaza must be one territorial unit. Hamas represents a sizable Palestinian constituency that must be engaged and become part of the political system. But the chances of that happening in the near future are slim. Engaging Hamas without a reversal of its Gaza takeover and its acceptance of the two-state solution paradigm and all related agreements will serve only to legitimize that takeover. It would also result in the re-freezing of direly needed international aid to the Palestinians and abort current peace prospects.

In addition, the Gaza takeover was conducted by elements of Hamas representing the hard-line ideological as opposed to pragmatic nationalist strains within the organization. Engaging these elements would validate their violent takeover and weaken the more moderate elements. However, official and unofficial messaging to Hamas must stress that their current isolation is not an effort to destroy them, but would end conditionally.

With reconciliation not a near-term option, concerns have been voiced that any agreement reached with Israel would lack legitimacy, since it excludes a sizable minority of the Palestinian people. In addition, Hamas may sabotage any agreement through violence against Israel, with the resultant and inevitable harsh Israeli response.

It is important here to distinguish between reaching an agreement and implementing it. It is entirely possible for Palestinian President Mahmoud Abbas to reach an agreement with the Israelis after the fall Mideast meeting without Hamas if a meaningful process toward Palestinian statehood is started following a document of principles setting the general contours of a peace agreement.

The process itself must include elements distinguishing it from previous ones, such as staggered Arab participation, rewards for both parties, reversal of Israeli actions in occupied East Jerusalem and a settlement freeze that goes beyond the declarative. In tandem must be a parallel process of internal security and governance reform in the Fatah-dominated Palestinian Authority.

Success will depend to a large degree on Israel. If no serious movement toward a political agreement is made and Israeli actions on the ground continue to undermine Palestinian statehood prospects, any PA security, governance and economic achievements will be spun by Hamas as the price the PA was paid for accepting and supporting the occupation.

Implementing a peace agreement will require Palestinian reconciliation, however. If such an agreement meets Palestinian national aspirations and is backed by key Arab countries, namely Saudi Arabia, it is hard to imagine Hamas opposing it and risking alienating the Palestinian people. In fact, a new telephone survey conducted in Gaza by Near East Consulting found that most Gazans do not regard the de facto Hamas government as legitimate and support a peace agreement with Israel.

Given the deep ideological differences between Hamas and Fatah and the fact that past attempts at national unity had papered these differences over, the reconciliation must include Hamas accepting the PLO charter, U.N. Security Council Resolution 242 and the two-state solution paradigm. Hamas must understand that even elections that legitimately brought it to power do not give it license to attempt to take over the PLO and dismantle the whole structure of "statehood through negotiations." Fatah for its part must relinquish its monopoly over governance and security institutions once Hamas accepts the above elements.

The PA’s basic message -- liberation through negotiation -- needs serious rehabilitation through significant, concrete and credible progress toward a permanent status deal and the establishment of a Palestinian state. If such progress is made, Hamas will find itself in the untenable and losing position of campaigning against a Palestinian state.

If, on the other hand, the national secular movement as represented by the PLO fails, the outlook will be bleak. We will witness either a full disintegration of the Palestinian polity or a Hamas takeover of the Palestinian society and political system. The Palestinian national cause will regress to where it was in the late 1960s: a movement fighting for recognition at the margins of the international system. The implications of this for Israel, the Arab world, and the West are best avoided.

The Wrong Way for Putin to Retain Influence

Cecille Isidro — Wed, 10 Oct 2007 09:50:00 -0400

The key political question in Russia over the past two decades has not been about the relationship between democracy and dictatorship, but between different kinds of oligarchy. The oligarchy that has taken shape under President Vladimir Putin is far more coherent, close-knit and disciplined than Boris Yeltsin’s collection of feuding magnates. It has a common culture and ethic drawn from the common origins of many of its members in the Soviet security services. Its comparative success is due to these factors, as well as good luck with energy prices and good economic management.

Then again, a fully fledged oligarchy does not depend for its survival on one leader; on the contrary, it tends to rotate power among different members of the ruling elite. For better or worse the Russian oligarchy is still far from achieving that degree of solidity.

Mr Putin may be more the chairman of a corporate board than a personal dictator, but he is extremely powerful. Without him, it is felt, not only would the ruling group lose its prestige with the population, but it would be liable to fall into uncontrollable rivalries. Not just Mr Putin himself but most members of the elite are therefore determined that he go on exercising dominant influence after stepping down as president next year.

Hence Mr Putin’s apparent intention to take over the leadership of the pro-government political party, United Russia, and turn it into a real ruling party rather than the present coalition of bosses and celebrities held together by allegiance to the president. This could be accompanied by Mr Putin’s assumption of the prime minister’s office, leading in turn either to the next president quickly stepping down to allow Mr Putin to run for another presidential term according to the constitution, or to the transfer of real power from the presidency to the prime minister’s office.

Given Mr Putin’s youth (he has just turned 55), his great though contested achievements and his immense popularity, it would have been surprising if he had not sought to retain dominant influence. Whether this is the best way to go about things is a different matter. Frankly, if he could not retire, then it might have been better if he had changed the constitution to allow presidents to run for extra terms and submitted the change to a popular referendum.

As it is, all Mr Putin’s possible courses look extremely problematic. Worst of all would be for Mr Putin to become an all-powerful prime minister under a supposedly emasculated presidency. This strategy could lead to a disastrous clash between president and prime minister and the destruction of the entire system.

Even if it succeeded, it would create a system in which power migrates restlessly from one government office to another depending on circumstances. This is no recipe for stability or predictability. By the same token, if a new president wins an election and takes office only to step down again in favour of Mr Putin, that would preserve continuity of power but would reduce the constitution to a pantomime farce.

In terms of the sheer effectiveness of government, the best option might be a strong premiership under Mr Putin together with a strong presidency under someone such as Sergei Ivanov, first deputy prime minister. In theory, this would be a truly formidable combination. In practice, it would require greater mutual trust than exists between most brothers.

Finally, there is the option of Mr Putin limiting himself to the role of leader of United Russia and exercising his power and influence from this platform -- something like Sonia Gandhi’s role in India. The great danger of this would be the risk that it would recreate a de facto one-party state.

On the other hand, Russia’s post-Communist democracy failed in large part precisely because Russian society proved incapable of generating real new political parties. If Mr Putin succeeds in turning United Russia into such a party, then it might eventually -- if unintentionally -- help encourage the emergence of real democratic party politics in Russia, on the basis of a new Russian society created by economic growth. Until that day comes, Russia is unlikely to do better than the present oligarchy and can only hope that it works as efficiently as possible, under a reasonably stable and consensual leadership.

A Quiz to Forge Americans

Cecille Isidro — Mon, 08 Oct 2007 09:39:00 -0400

Some immigrant rights activists are afraid that the new citizenship test unveiled by the government two weeks ago will create a new and higher barrier for people who want to become Americans.

They’re wrong. Far from being an exclusionary tool, the new test, which will be given to legal resident aliens who apply for citizenship after Oct. 1, 2008, is actually a rare mechanism for immigrant inclusion, the kind our country needs more of.

It’s true that, historically, whenever the government has introduced a new citizenship exam, it has been responding to shifting national attitudes toward immigration. And the winds today for immigrants -- be they legal or illegal -- are not so friendly. What’s more, this past July, the government raised the citizenship application fee from $400 to $675. That wasn’t exactly a welcome wagon.

Despite expectations to the contrary, the U.S. Citizenship and Immigration Services lived up to its promise to create a new test that would promote democratic values and civic integration -- and wouldn’t be any more difficult than the old one. The new exam does more than simply measure one’s ability to memorize facts. Instead of asking "What country did we fight during the Revolutionary War?" for example, the new exam is more likely to ask, "Why did the colonists fight the British?" It is more about concepts than facts, and it requires newcomers to learn about what it means to be American, not simply how many stripes are on the flag or who wrote "The Star-Spangled Banner."

A slew of man-on-the-street news stories over the last few weeks revealed that plenty of native-born Americans (who are citizens by accident of birth) wouldn’t be able to answer the new questions off the top of their head. Quick: What are two rights only for United States citizens? (Voting, running for office, carrying a U.S. passport, holding a federal job.) But that’s a meaningless gauge of the test’s difficulty because prospective citizens will be able to study all 100 potential questions and acceptable answers before their oral exam, during which they must answer six out of 10 correctly. So far, of the 6,000 applicants who volunteered to take the new test, 92.4% have passed -- higher than the overall 84% pass rate for the test we’ve been using since 1986.

Too easy, you say? Keep in mind that exclusionary tests were used in other eras to limit immigration and manipulate the ethnic composition of the population. In the early 20th century, for instance, a literacy test was implemented to impede arrivals from southern and eastern Europe. This new exam, however, is concerned with teaching the soon-to-be-naturalized immigrant how to be a good citizen. And that’s a welcome shift in federal policy.

For most of our history, the government has done very little to help immigrants integrate into the mainstream. For all intents and purposes, federal immigration policy largely began and ended at the nation’s borders. A small number of political refugees -- who come here fleeing persecution -- get government resettlement assistance. But most immigrants are left to their own devices. Indeed, foreign wars and international crises have fostered more loyalty to the U.S. among new arrivals than anything the federal government has done.

Some say that rampant globalization and the movement of millions of people across borders have rendered the concept of national citizenship obsolete. Nonsense. They have only made it more important. Citizenship is not just a legal status that confers rights and benefits. Particularly in a highly diverse nation like ours, it is an identity that should give us a sense of a shared fate and belonging. It is also a license to integrate oneself into American civic culture and to participate in a remarkable system of self-government.

For the last two generations, the government and schools have stressed the importance of respecting cultural pluralism. And that’s fine and good. But in this new era of high immigration -- 12% of today’s population is foreign-born, shy of the 15% highs in 1890 and 1910 -- it seems critical for the government to encourage new citizens to identify with our shared political culture.

Centrifugal forces always have seemed strongest in the United States; we push outward, toward new frontiers, far suburbs, away from one another. So it might seem quaint to institute a new civic rite that emphasizes belief in a common culture. But it’s not. The new citizenship test is an important step in the right direction, and a far cry from the coercive assimilationist programs of the early 20th century.

With any luck, it’ll be one of many new efforts that help Americans -- new and old -- balance our healthy regard for cultural pluralism with an equally strong respect for our shared political culture.

Forget Easy Money

Cecille Isidro — Sun, 07 Oct 2007 07:12:00 -0400

Countrywide Financial, the nation’s largest mortgage lender, has a curious new idea -- or, more precisely, an old one. No longer will it use wads of Chinese cash recycled through Wall Street to make subprime loans to unqualified borrowers. Instead, it will take in deposits from small savers and lend them out to people who might actually repay them -- just like that humble thrift institution president George Bailey did in It’s a Wonderful Life.

Imagine: a bank that promotes thrift! This could be the start of something big. Writing recently in the American Banker, Eugene Ludwig, a former comptroller of the currency, advised financial institutions to stop relying "on the easy money that comes from wholesale funding" and to concentrate instead "on harder-to-get core deposits." How quaint. Remember when banks actually tried to instill the savings habit by going into schools and helping kids set up small passbook accounts? Today, the first experience most younger Americans have with a bank comes during freshman orientation at college, when they come across a table laden with giveaways and credit-card applications.

This return to thrift comes none too soon. Not since the Great Depression have so many Americans lost their homes in one year -- and we’re not even in a recession, at least not yet. But we’re still on course to see 2 million foreclosures in 2007, afflicting one in 62 households. That’s a 67 percent increase from 2006, according to RealtyTrac. The Federal Reserve’s recent decision to cut its benchmark rate by half a point, while widely praised on Wall Street, will do little to stop the slide.

Also not since the Great Depression have Americans saved so little. Even with unemployment at historically low levels, Americans spent more than they earned in both 2005 and 2006 -- and charged the difference. Household debt, not including mortgages, now eats up nearly 15 percent of disposable income -- more than food and gasoline combined. One in seven families is dealing with a debt collector. Children today are more likely to live through their parents’ bankruptcy than their parents’ divorce. Americans’ stunning lack of savings not only brings personal tragedy but also is causing the dollar to plummet against all major currencies, jeopardizing our economic growth and threatening the financial system worldwide.

What’s going on? No doubt, some of us like to shop too much, but it’s also true that the "fixed costs" of middle-class life have soared. Elizabeth Warren, a professor at Harvard Law School, shows that while family incomes have gone up in the past generation, the costs of health care, education, housing, child care and transportation have risen even higher.

Meanwhile, not only does the government itself borrow as though there were no tomorrow, primarily through unfunded health and pension plans, but it promotes what David Blankenhorn of the Institute for American Values calls "anti-thrift" institutions. Today, 41 states plus the District of Columbia and Puerto Rico run lotteries, and 11 states encourage casinos. Government has also allowed for the mainstreaming of other anti-thrift institutions -- some charging annual interest of more than 500 percent -- that once existed, if at all, only in the shadows of society. Payday lenders, rent-to-own stores, auto-title lenders, some franchise tax preparers and chain pawn shops are all now as common across the landscape of middle-class America as Applebee’s.

After the terrorist attacks of 2001, President Bush told us that the patriotic thing to do was to shop. But Osama bin Laden is still out there, gas is more expensive than ever, the credit card is maxed out and our homes are depreciating. There’s a better way: the old-fashioned virtue called thrift.

Historically, thrift didn’t carry its current association of being cheap or stingy. Rather, it meant the wise use of resources. It meant an abhorrence of waste, whether of raw materials, time, energy or money. In short, it meant conservation.

To conserve money, working-class men and women banded together to create "thrift" institutions. Before these institutions were deregulated and taken over by the fast-buck crowd in the 1980s, they provided a staid but reliable vehicle for building a nation of "freeholding" middle-class homeowners and small-scale entrepreneurs. Most Americans understood, until the triumph of the anti-thrift institutions, that their own freedom from wage slavery -- and, indeed, the civic health and wealth of the republic -- depended on the savings habit and the widespread ownership of unencumbered small properties that it makes possible.

Today, by contrast, while many Americans understand the need to conserve energy and natural resources, they have trouble seeing what any of that has to do with credit cards and subprime mortgages. But conserving financial resources is not only still essential to individual liberty; it is also essential to moderating wasteful consumption and saving the environment.

Reviving the American thrift ethos won’t be easy, and it will probably take at least a generation. But we can take some small steps now that would make saving easy, automatic and frequent. Our goal should be to generate new savers as well as new savings -- in sharp contrast to current government policy, which allocates considerably more than $100 billion a year in tax breaks to high-income earners who would save anyway.

First, we should take advantage of one of the most powerful forces in human nature: inertia. Studies in behavioral economics show that when new hires have to opt out of a 401(k) retirement plan, as opposed to having to opt in, savings rates skyrocket. Also, building on the "Opportunity NYC" initiative (which is being privately funded by the Rockefeller Foundation, New York Mayor Michael R. Bloomberg and several other donors), governments, civic-minded corporations and philanthropies could make automatic savings deposits to individuals who engage in socially desirable behavior. Finish high school, volunteer in your community or buy an energy-efficient appliance, and your savings account receives a deposit.

Technology, if fully exploited, can also make the cost of maintaining a bank account far lower, thereby giving financial institutions a greater incentive to serve small savers and giving freedom to the "unbanked" poor from the gouging fees that payday lenders charge to cash checks. Imagine that your debit card is also an interest-paying savings card, to which your employer, the Internal Revenue Service and other entities can make automatic deposits. Some innovative firms are already offering such a product, which combines low cost with convenience and security.

Meanwhile, regulators should encourage more community-focused banks, credit unions and thrift institutions. These can resume their historical role of promoting thrift by helping customers become savers as well as (eventually) homeowners and small-business owners.

Congress should do its part as well. The bipartisan New Savers Act, for example, makes it easier to open bank accounts, buy savings bonds, put money away for college and receive financial education. Another bipartisan measure, the Automatic IRA Act, encourages automatic payroll deposits into IRAs. Other proposals authorize tax credits for low-income savers, as well as remove savings penalties for those on public assistance.

Finally, to usher in this "new thrift" across generations, Congress should establish a lifelong savings account for all children when they are born -- a reality in Britain and elsewhere and an idea that’s rapidly gaining bipartisan momentum in the United States.

If you’re an American born in the 20th century, thrift probably strikes you as a musty, downscale word -- reminiscent of used clothes, aged relatives who wrapped their sofas in plastic or perhaps the grandmother who saved Green Stamps. But it’s worth remembering, as did generations of Americans struggling up from poverty and privation, that thrift is still the essential virtue that makes the American dream possible.

Five Myths About Sick Old Europe

Cecille Isidro — Sun, 07 Oct 2007 04:22:00 -0400

In the global economy, today's winners can become tomorrow's losers in a twinkling, and vice versa. Not so long ago, American pundits and economic analysts were snidely touting U.S. economic superiority to the "sick old man" of Europe. What a difference a few months can make. Today, with the stock market jittery over Iraq, the mortgage crisis, huge budget and trade deficits, and declining growth in productivity, investors are wringing their hands about the U.S. economy. Meanwhile, analysts point to the roaring economies of China and India as the only bright spots on the global horizon.

But what about Europe? You may be surprised to learn how our estranged transatlantic partner has been faring during these roller-coaster times -- and how successfully it has been knocking down the Europessimist myths about it.

1. The sclerotic European economy is incapable of leading the world.

Who're you calling sclerotic? The European Union's $16 trillion economy has been quietly surging for some time and has emerged as the largest trading bloc in the world, producing nearly a third of the global economy. That's more than the U.S. economy (27 percent) or Japan's (9 percent). Despite all the hype, China is still an economic dwarf, accounting for less than 6 percent of the world's economy. India is smaller still.

The European economy was never as bad as the Europessimists made it out to be. From 2000 to 2005, when the much-heralded U.S. economic recovery was being fueled by easy credit and a speculative housing market, the 15 core nations of the European Union had per capita economic growth rates equal to that of the United States. In late 2006, they surpassed us. Europe added jobs at a faster rate, had a much lower budget deficit than the United States and is now posting higher productivity gains and a $3 billion trade surplus.

2. Nobody wants to invest in European companies and economies because lack of competitiveness makes them a poor bet.

Wrong again. Between 2000 and 2005, foreign direct investment in the E.U. 15 was almost half the global total, and investment returns in Europe outperformed those in the United States. "Old Europe is an investment magnet because it is the most lucrative market in the world in which to operate," says Dan O'Brien of the Economist. In fact, corporate America is a huge investor in Europe; U.S. companies' affiliates in the E.U. 15 showed profits of $85 billion in 2005, far more than in any other region of the world and 26 times more than the $3.3 billion they made in China.

And forget that old canard about economic competitiveness. According to the World Economic Forum's measure of national competitiveness, European countries took the top four spots, seven of the top 10 spots and 12 of the top 20 spots in 2006-07. The United States ranked sixth. India ranked 43rd and mainland China 54th.

3. Europe is the land of double-digit unemployment.

Not anymore. Half of the E.U. 15 nations have experienced effective full employment during this decade, and unemployment rates have been the same as or lower than the rate in the United States. Unemployment for the entire European Union, including the still-emerging nations of Central and Eastern Europe, stands at a historic low of 6.7 percent. Even France, at 8 percent, is at its lowest rate in 25 years.

That's still higher than U.S. unemployment, which is 4.6 percent, but let's not forget that many of the jobs created here pay low wages and include no benefits. In Europe, the jobless still have access to health care, generous replacement wages, job-retraining programs, housing subsidies and other benefits. In the United States, by contrast, the unemployed can end up destitute and marginalized.

4. The European "welfare state" hamstrings businesses and hurts the economy.

Beware of stereotypes based on ideological assumptions. As Europe's economy has surged, it has maintained fairness and equality. Unlike in the United States, with its rampant inequality and lack of universal access to affordable health care and higher education, Europeans have harnessed their economic engine to create wealth that is broadly distributed.

Europeans still enjoy universal cradle-to-grave social benefits in many areas. They get quality health care, paid parental leave, affordable childcare, paid sick leave, free or nearly free higher education, generous retirement pensions and quality mass transit. They have an average of five weeks of paid vacation (compared with two for Americans) and a shorter work week. In some European countries, workers put in one full day less per week than Americans do, yet enjoy the same standard of living.

Europe is more of a "workfare state" than a welfare state. As one British political analyst said to me recently: "Europe doesn't so much have a welfare society as a comprehensive system of institutions geared toward keeping everyone healthy and working." Properly understood, Europe's economy and social system are two halves of a well-designed "social capitalism" -- an ingenious framework in which the economy finances the social system to support families and employees in an age of globalized capitalism that threatens to turn us all into internationally disposable workers. Europeans' social system contributes to their prosperity, rather than detracting from it, and even the continent's conservative political leaders agree that it is the best way.

5. Europe is likely to be held hostage to its dependence on Russia and the Middle East for most of its energy needs.

Crystal-ball gazing on this front is risky. Europe may rely on energy from Russia and the Middle East for some time, but it is also leading the world in reducing its energy dependence and in taking action to counteract global climate change. In March, the heads of all 27 E.U. nations agreed to make renewable energy sources 20 percent of the union's energy mix by 2020 and to cut carbon emissions by 20 percent.

In pursuit of these goals, the continent's landscape is slowly being transformed by high-tech windmills, massive solar arrays, tidal power stations, hydrogen fuel cells and energy-saving "green" buildings. Europe has gone high- and low-tech: It's developing not only mass public transit and fuel-efficient vehicles but also thousands of kilometers of bicycle and pedestrian paths to be used by people of all ages. Europe's ecological "footprint," the amount of the Earth's capacity that a population consumes, is about half that of the United States.

So much for the sick old man.

An Incomplete Report Card

Cecille Isidro — Tue, 02 Oct 2007 10:07:00 -0400

Last Tuesday’s release of what is known as the "Nation’s Report Card" for math and reading is likely to reignite talk of the so-called racial achievement gap. Despite some good news, the report, published by the Department of Education’s Institute of Education Sciences, shows that Latinos, like blacks, haven’t made progress in catching up to the test scores of whites.

But the dour assessment of Latino educational achievement has nothing to do with a racial gap. We can’t use the same lens to interpret Latino data as we do to explain the differences between white and black achievement.

When it comes to Latinos and education, what we’re seeing is an assimilation gap. The disparity in academic achievement between whites and blacks is the complicated result of more than 400 years of discrimination by one racial group against another, so it makes sense to describe this gap as racial. The problem with describing Latino achievement in the same terms is that it attributes to race certain facts and trends that are more easily, and more accurately, explained in other ways.

Latinos, and Mexicans in particular, have been immigrating to the U.S. on a near constant basis for about 100 years. There are thus vast differences in how deeply their generational roots extend into American soil. Though they tend to be seen as a largely foreign group, nearly a third of all Mexican Americans trace their roots in the U.S. back three generations or more.

The "race gap" explanation assumes that Latino children growing up in poor, immigrant-headed households are no different than the great-grandchildren of immigrants living in middle-class homes because they share the same "race." But obviously, grouping the large number of poor immigrants in this country with fourth-generation Americans of Latino descent drives down averages for the entire group, providing an overly bleak assessment of educational progress.

The "report card" provides no information on generational differences, but it stands to reason that Latino scores are weighed down by the roughly one-third of Latino fourth-graders and one-fifth of Latino eighth-graders who the report classifies as "English-language learners." So purely racial explanations are guilty of what demographer Dowell Myers calls the Peter Pan fallacy: assuming that the Latino population doesn’t change in its educational achievement despite the passage of time.

Yet a 2003 paper by economist James P. Smith, published in the American Economic Review, shows that this is not the case. Each generation born in the United States does markedly better than the previous one. Smith demonstrates that the educational gap between Latino and white males, measured in the number of years of schooling completed by adulthood, closes from more than two years of schooling in the immigrant generation to 1.6 years in the second generation, and to less than a year by the third generation.

If you look specifically at Mexican Americans, the largest group of Latinos in the United States, the intergenerational gains are even more dramatic. Mexican-immigrant males lag behind whites by more than four years of schooling, but their children close the gap to 1.8 years, and their grandchildren make it to within less than a year of parity with whites.

The fact that Latinos do not entirely catch up even in the third generation is a function of their very humble immigrant origins. A 2005 report from the Public Policy Institute of California shows that differences in educational attainment between Mexican Americans and whites are explained in part by generation, and also by such family characteristics as income and parental education.

Understanding differences in educational outcomes as an assimilation gap doesn’t negate the need for serious policy intervention. Nearly half of all students in the average California classroom are Latino, and a significant number of them have immigrant parents. Far too many of these students end up in underfunded and overcrowded schools, and the dropout rate is still too high. Because our prosperity will soon depend on their full participation in the economy and society, any gap is unacceptable.

But if politicians and educators are going to figure out how to close the gap, they have to begin by understanding its makeup. It is not a canyon dividing people of different races. It is more like a staircase that Latinos climb over the course of several generations. Our education system needs to speed their climb.

Best Care Everywhere

Cecille Isidro — Mon, 01 Oct 2007 08:37:00 -0400

Back in July, while trying to justify his opposition to expanding government health care coverage for children, President Bush made a telling comment. The uninsured, he said, "have access to health care in America. After all, you just go to an emergency room."

That remark stuck many as blithe and callous, and in many ways it was. The uninsured don’t receive in ERs anything like the full array of health care they need. Indeed, one of the abiding arguments for universal health care is that patients often wind up in the emergency room with acute illnesses that could have been treated earlier, and more cheaply, had they been able to afford regular doctor’s visits.

Still, there was a kernel of truth to Bush’s comment -- one that we ought to take as a jumping-off point for rethinking how best to provide health insurance for all. The fact is, as a nation we already have an extensive, if ad hoc, system for providing health care to the uninsured. A fair amount of money flows through that system. And the quality of care it provides is far better than you might think.

According to the Kaiser Commission on Medicaid and the Uninsured, Americans who lacked health insurance in 2004 received an average of $1,629 per person in medical services. That’s only about 55 percent of what fully insured Americans consumed that year, but it’s still more than the total average per capita health care expenditure in Europe.

Some of that medical care is delivered at the suburban hospitals and doctor’s offices where those of us with health insurance generally get treated. But the lion’s share of health care for the uninsured is provided by assorted "St. Elsewhere" institutions: typically big, old, nonprofit community or teaching hospitals in poorer neighborhoods, with additional help from smaller public clinics.

This Spartan, patchwork system is in financial trouble, due largely to the cost of the uncompensated treatment that St. Elsewheres provide. But it nonetheless continues to offer surprisingly good care. A recent RAND study found that uninsured patients receive only 53.7 percent of the care experts believe they should get. Not so hot, right? But according to the same study, patients with private, fee-for-service insurance are even less likely to receive appropriate, evidence-based treatment. Indeed, among Americans receiving acute care, those who lack insurance stand a slightly better chance of receiving proper treatment than patients covered by Medicaid, Medicare, or any form of private insurance.

Counterintuitive as this may seem, in health care less is often more. The uninsured are virtually immune from receiving unnecessary surgery or other forms of overtreatment that the system constantly encourages. Once uninsured patients are through the door, they cost the hospital money until its doctors make them well enough to leave. There is no incentive to give them treatments they don’t need. Since about 20 percent to 30 percent of all health care spending in the United States goes for overtreatment -- much of it dangerous -- this is no small advantage.

It’s also true that the nation’s public hospitals, while they may have a Dickensian atmosphere and lack the very latest imaging machines, tend to deliver higher-quality health care than their more prestigious counterparts. For example, Dartmouth researchers John E. Wennberg and Elliot S. Fisher have found that among Medicare patients who are not terminally ill, and who share the same age, socioeconomic, and health status, the chance of dying in the next five years is greater if they go to a high-spending hospital than to a low-spending hospital. Whether suffering from heart attacks, colon cancer, or hip fractures, patients live longer if they stay away from "elite" hospitals, with their overabundance of specialists, and choose a lower-cost St. Elsewhere. Given this unexpected reality, it is perhaps not surprising that patient satisfaction also declines as a hospital’s spending per patient rises. It’s not fun to be overtreated, even if you get valet parking and the finest in pudding.

None of this is to minimize the plight of the uninsured, who die at higher rates than the rest of us in large part because they don’t have access to affordable primary care. But the fact that uninsured patients receive higher-quality acute care than do those with insurance ought to make us think twice about all the plans being put forth by presidential candidates to expand health insurance.

Virtually every one of those plans, Democratic and Republican alike, rests on the assumption that the uninsured should be brought into the health care system the rest of us use. But what if something like the opposite is true? What if the best way to help the uninsured is to make the health care delivery system they already use -- the St. Elsewhere model -- better and more affordable? What if that path to 100 percent coverage turns out to be not just better for the health of the uninsured, but cheaper for taxpayers than any other universal health care plan out there, and politically more viable? And what if, eventually, the rest of us could join that system?

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What I’m proposing is this: Take the existing, ad hoc system we use for treating the uninsured and turn it into a real integrated system. Specifically, mandate that everyone in America buy health insurance (with subsidies to those who can’t afford the premiums), and then contract with assorted St. Elsewheres to serve the resulting pool of newly insured patients. The organizing blueprint of this new system would come from the one truly successful national health care system we currently have: the VA.

There’s a funny thing about the VA. Among most Americans, it still has a reputation for mediocrity at best, and abysmal care at worst. Last spring, when The Washington Post reported on scandalous conditions at Walter Reed Army Medical Center, many observers mistakenly saw the news as another black eye for the VA -- not realizing that Walter Reed is in fact run by the Defense Department, an entirely separate cabinet agency. As for the VA, since its technology-driven transformation in the 1990s, those who use it love it. The VA has the highest rate of patient satisfaction of any health care delivery system in the United States, by far -- higher even than fee-for-service Medicare, with its limitless choice of doctors. As readers of this magazine are likely to know (see "Best Care Anywhere," Washington Monthly, January/February 2005), the VA also comes out on top of virtually every study ranking the quality, safety, efficiency, and cost-effectiveness of U.S. health care providers.

As Harvard’s John F. Kennedy School of Government gushed when awarding the VA a top prize in 2006 for innovation in government: "While the costs of health care continue to soar for most Americans, the VA is reducing costs, reducing errors, and becoming the model for what modern health care management and delivery should look like." In studies of health care quality, few private systems even come close to the VA.

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So how is a supposedly sclerotic government agency with 198,000 employees from five separate unions outperforming the best the private market has to offer? In a word: incentives. Uniquely among U.S. health care providers, the VA has a near-lifetime relationship with its patients. This, in turn, gives it an institutional interest in preventing its patients from getting sick and in managing their long-term chronic illnesses effectively. If the VA doesn’t get its pre-diabetic patients to eat right, exercise, and control their blood sugar, for example, it’s on the hook down the road for the cost of their dialysis, amputations, blindness, and even possible long-term nursing home costs. Unlike the vast majority of American health care providers, the VA also has no incentive to perform unnecessary surgery or redundant tests. Where other health care providers make money by treating patients, the VA makes money by keeping them well.

The VA model is that rarest of health care beasts: one with a perfect alignment of interest between patients and providers. This is why, for example, the VA has emerged as the world leader in electronic medical records -- and thus in the development of the evidence-based medicine these records make possible. For the rest of the American health care system, it makes little financial sense to invest in information technology and the systematic study of what treatments and drugs work best; precisely to the extent such investments improve the quality of care and make or keep people well, they dry up revenue. But for the VA, investments in quality make sense precisely because the system’s financial interests are in sync with the health interests of its patients.

Historically, to be sure, the VA has faced many challenges, and still does. Unlike Medicare and Social Security, it has no trust fund to ensure adequate and predictable funding. In building or closing hospitals it faces intense micromanagement from Congress. Its patients are older, poorer, and far more prone to addiction issues, traumatic injury, and chronic illness than the population as a whole. It is subject to intense and not always helpful scrutiny from the press, veterans-services organizations, and other special interest groups. It has to plan against imponderables that other health care providers can safely ignore, such as when and for how long America will go to war and what the physical and mental casualty rates will be. And while the VA is not a monopoly, many of its patients have little ability to switch to competing providers.

Yet all these factors have not been enough to prevent the VA from emerging as the bright star of the American health care system by almost every conceivable metric, which ought to tell you something big. Particularly these days, when long-term chronic illnesses like diabetes are the dominant threat to the health of the population and the national bank account, a system of care under which the provider has a stake in the patients’ long-term interest is the only sane way forward. If the 45 million uninsured Americans could be transitioned into a VA-style system, they would literally be getting the best care anywhere. And as news of that system’s low costs and impressive results spread, more and more Americans would wonder why they, too, didn’t have access to such a remarkable provider.

So how can we make that happen? The first step is to do what Mitt Romney has already done in Massachusetts, and what John Edwards says he will do nationally if he becomes president: make health insurance mandatory. Just as it is illegal in some states to drive and not have auto insurance, so too would it be illegal for any American not to have some kind of health insurance. Those who can’t afford the cost would receive subsidies. But here’s the twist: people not currently covered by private carriers or Medicare would have the option of receiving their care through a new network of providers that combines the best features of the VA.

For purposes of discussion, let’s imagine that this new network took the name Vista Health Care Network, because it has been inspired by the VA’s best-in-class VistA electronic medical record system and the high-quality model of care that the system makes possible. The slogan for the Vista Heath Care Network could be "Health for Life" -- because Vista’s prime long-term objective would be to offer Americans continuous and integrated lifetime care similar to that enjoyed by patients in the VA system.

Governance of the Vista network would be in the form of a board appointed by the president, whose members would not be subject to Senate confirmation and would serve staggered terms -- in effect, a Federal Reserve Board of Medicine. The board’s first task would be to approach various public and charitable hospitals around the country that face large loads of uninsured patients, and offer them a deal: Install the VA’s VistA health information management software, and agree to adhere to the performance measures and protocols of evidence-based medicine used by the VA itself. In exchange, you’ll get a contract to care for a guaranteed pool of people -- who will be paid for. No longer will you have to provide uncompensated care to everyone who enters your emergency room. This pool would consist of those who can’t afford private insurance and those on Medicaid. Reimbursement rates would be set much higher than in Medicaid, and when combined with the efficiency in the VA model of care, they’d be high enough to guarantee the solvency of participating hospitals.

It wouldn’t be hard for the Vista board to find hospitals willing to take this deal. Across the country, hospitals serving the growing ranks of the uninsured are in financial crisis. Today, for example, Maryland’s Prince George’s County, outside of Washington, D.C., is in danger of losing its three hospitals largely because of their high volume of uninsured patients. Half of New Jersey’s eighty-two hospitals run deficits, and the state is intent on closing most of them. For the past eight years, New York State’s hospitals as a group have lost money, and under the terms of a special "hospital closure" commission, as many as a quarter will soon be gone.

Let’s put ourselves in the shoes of people who manage, work for, or depend on one of these financially imperiled hospitals. Joining the Vista network would offer them a lifeline. Yes, the hospitals that take Vista’s offer would have to radically change the way they do business. They’d have to join the twenty-first century and learn to use electronic medical records, which the vast majority of providers currently do not rely on. They’d also have to shed acute care beds and specialists and invest in more outpatient clinics -- in which, for example, diabetics could learn how to manage their disease, or people with high blood pressure could join smoking-cessation programs. Doctors who work for these hospitals would no longer be constantly visited by pill salesmen, because decisions on what prescription drugs to use would be made on a scientific basis by the Vista board, and because the Vista network, like the VA, would negotiate as an institution to obtain the best prices from drug companies.

These and other changes would ruffle many feathers. But accepting the Vista deal means the hospital wouldn’t have to close. Instead, the local community could take pride in having preserved an institution that not only serves the needy, but offers them high-quality, high-value health care as well. As long as the hospital demonstrably adhered to the VA’s model of care, local politicians could continue to use it as a source of patronage, while local restaurants, stores, and real estate agents could continue to live off the income its employees spread through the community.

Now, let’s put ourselves in the shoes of those who would be the customers of the new Vista system. One segment would be lower-income people, who, for the most part, are already frequenting various St. Elsewheres for their health care needs. For them, the transition to the new system would be easy and, indeed, welcome. They’d be going mostly to the same hospitals and clinics they’re used to. But they would be able to get preventive care, like regular doctor checkups, as well as acute care, and not be hit with impossible-to-pay bills that could force them into bankruptcy.

A second segment of Vista customers would be people -- mostly young -- who currently lack insurance because they’re students or work for companies that don’t offer it, and because they’re healthy enough to feel that they don’t need it. These people might not like being forced to buy insurance. But given that they’d have to, they’d likely see the Vista network as an attractive option because of its low cost and its nationwide presence, which would mean they wouldn’t have to change health care plans when they move. Younger people, too, are more likely than their parents and grandparents to recognize the benefits of electronic medical records, and the evidence-based care they make possible.

In the short term, this new Vista system would offer acceptable care to every American who currently lacks health insurance -- a better deal than they’re getting now. Over time, as the reforms imposed on the participating hospitals and clinics began to take effect, the quality of that health care would improve, and, as word spreads, Vista’s popularity should increase even more. (Remember, the VA has the highest rate of patient satisfaction of any health care provider in the United States.)

For all this to work, Vista would need to have what the VA already enjoys: a lifetime relationship with the bulk of its patients, so that its financial incentives were in line with its patients’ health needs. This could happen with a relatively modest legal fix: any person in the Vista system who gets a job with health insurance should be allowed to direct his or her company to pay premiums to the Vista system if that person wants to remain in the system. And, presuming the system worked well, most people would want to stay in it, given its national reach and the strong desire most of us have not to have to constantly change doctors and health plans.

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Finally, let’s put ourselves in the shoes of Beltway politicians. Sometime around January 2009, they’re probably going to have to decide which -- if any -- of the proposals for universal health care floating around Washington they’re willing to support. The Vista plan offers several politically comforting advantages.

First, unlike the 1993 Clinton health care plan, the Vista proposal does not directly take on the medical/industrial complex. It would not require any changes to the private insurance market, for instance, or place any costly mandates on employers. At least in the short term, Vista would be focused on customers who aren’t now part of the private health insurance market.

Second, Vista should garner a wider array of political allies. Many private hospitals and doctors are likely to welcome the program, because it would relieve them of the burden of having to provide uncompensated care to the uninsured. Doctors working within the Vista system would also be free of the hassle of having to file claims to third-party payers and, as in the case of VA doctors, would not bear the burden of paying for medical malpractice insurance. Almost any universal health care proposal could hope to attract these kinds of allies -- but Vista would rally an additional set. Every lawmaker who has a costly or failing public hospital in his or her district (and most do) will have a built-in constituency of local politicians, newspapers, medical professionals, and community activists who will see Vista as the best way to save their local institution.

The third political advantage is price. If Vista worked like the VA, it would almost certainly be the lowest-cost route to decent health care for all the uninsured. High-quality health care is also low-cost health care, especially over the long term, as the effects of prevention and evidence-based medicine pay off. Precise costs are difficult to calculate because of differences in the populations served, but consider this figure: for every patient who transfers from Medicare to the VA, taxpayers save about one-third, while the patient, on average, gets higher-quality care.

In addition to employing the VA’s cost-control strategy, Vista would have other means of limiting its impact on taxpayers. Much of the money to pay for the Vista system would come from people who currently don’t have insurance but, because of the individual mandate, would have to pay at least something up front to defray the cost of their care. What subsidies the Vista system would require would also be largely offset by the forty-some billion dollars in federal, state, and local government spending that goes to treat the uninsured under the current highly inefficient, ad hoc system. Nor would creating a Vista Health Care Network require the government to incur huge capital costs or long-term debt. Though the network would have to build some of its own hospitals and clinics in certain underserved locations, most Vista-affiliated facilities would remain owned and operated by the private interests, charity organizations, and local governments that currently run them. Vista’s role in these hospitals and clinics would be analogous to that of a franchiser: setting and enforcing standards, and achieving economies of scale in technology, purchasing, information management, and marketing.

By building on a system that already exists, then, the Vista plan would be the least costly and, initially, the least disruptive way to provide health care for the uninsured (and high-quality care, at that). But that doesn’t mean conservatives and health care lobbyists won’t go after Vista. They will. For while Vista would not, in the short run, pose a challenge to the private-sector health care market, in the long run it’s a different story.

Again, the VA experience is instructive. Thanks to quality improvements, many veterans not currently qualified for VA health care benefits are demanding access to VA hospitals. Among the American Legion’s top legislative priorities this year is to allow veterans on Medicare to be able to receive their treatment at the VA.

Similarly, imagine that Vista is put into place and works as advertised. Over time, word gets out that the quality of treatment in Vista is pretty good -- indeed, better than what most people with employer-provided health care receive. Pretty soon, individuals who are not eligible for Vista start clamoring for the right to buy into the system. And employers, realizing that Vista is doing a better job of controlling costs than their own private-sector health providers, start pressuring Washington for permission to contract with Vista to provide health care for their employees.

If this kind of competition were allowed to happen, private health care companies would either lose customers to Vista or be forced to find ways to curb overtreatment, reduce medical errors, and in general provide better, more cost-efficient care. Either way, the competition would lead to dramatic improvements in American health care. Just as the existence of state universities puts competitive pressure on private universities to pursue excellence, the existence of the Vista network would force the rest of the health care system to try matching it on quality and value.

Conservatives and health care lobbyists can be expected, of course, to denounce anyone who supports the Vista plan as advocates of "socialized medicine." They would do the same to any serious attempt to provide universal health care. The difference is that with Vista, it may be harder to make that case stick in the public mind.

For one thing, the model for Vista comes not from Canada or France, but from the U.S. military. Is the health care system we provide our troops really "socialism"? Also, the competition that the industry is worried about will happen -- if it happens -- down the road, only if Vista turns out to be a big success, and only if elected officials later decide to open up the system. The Vista program that today’s politicians would be voting on would not alter the health care most Americans have -- and this is a major political advantage.

In reality, "socialized medicine" is not the phrase to use when describing the Vista system. Nor is "single payer." The plan would expand the role of government in health care and achieve universal access, but no one would be compelled by law to join the Vista network, just as no one is compelled to receive treatment at the VA. In replicating the best features of the VA, Vista might offer the best care anywhere, but its existence would not erode our all-American right to make bad choices in health care.

Yes, there is a solution to the health care crisis. It starts with the comparatively limited step of creating a high-quality health care delivery system for the uninsured, as opposed to simply throwing more money in their direction or mounting an all-at-once overhaul of the entire health care sector. It ends with future generations of Americans wondering why we took so long to open our hearts and our minds and create the Vista "Health for Life" network.

The Imperial Fallacy

Cecille Isidro — Mon, 01 Oct 2007 07:09:00 -0400

"The Age of Imperialism is ended," Sumner Welles, Franklin D. Roosevelt’s under secretary of state, declared in 1942. Welles would have been shocked to learn that six decades later a number of American foreign policy thinkers would matter-of-factly describe the United States as an empire. "The fact of American empire is hardly debated these days," Thomas Donnelly, a neoconservative foreign policy analyst, wrote in Foreign Affairs in 2002. Donald Rumsfeld’s Defense Department asked selected historians what lessons Americans could learn from empires of the past. Marxists, to be sure, had always described the United States as an empire, and for generations conservative isolationists have complained that the American republic gave way to an empire with the Spanish-American War, or the world wars, or the Cold War. The America-as-empire theme has now been taken up by two eminent scholars who do not belong to the neocon, radical, or isolationist traditions. But the popularity of an idea does not necessarily indicate that it is well-conceived.

In Day of Empire, Amy Chua, a professor at Yale Law School, writes that her book is a response to Samuel Huntington’s claim in Who Are We? (2004) that immigration is weakening American society by dividing it between Spanish and English speakers. On the contrary, Chua asserts, diversity is strength: "For all their enormous differences, every single world hyperpower in history -- every society that could even arguably be described as having achieved global hegemony -- was, at least by the standards of its time, extraordinarily pluralistic and tolerant during its rise to preeminence. Indeed, in every case, tolerance was indispensable to the achievement of hegemony."

Chua’s first book, World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability (2002), is a brilliant and provocative study of economic conflicts between ethnic majorities and minorities. But her attempt in her second book to build a monocausal ethnic-diversitarian theory of how to succeed in world politics is flawed in its conception.

Chua lumps societies as different as the 21st-century United States, the 17th-century Dutch Republic, and the Persian, Roman, Chinese, Mongol, Mughal, Spanish, and Ottoman empires together in the elastic category of "hyperpowers." This broad definition elides key distinctions. Great powers in a system of multiple states are fundamentally different from universal empires whose boundaries are those of a civilization. Militaristic continental land powers also need to be distinguished from countries such as the Netherlands, Great Britain, and the United States that achieve financial and commercial hegemony and maritime supremacy without militarily dominating other great powers. The United States today has the world’s primary reserve currency and what the political scientist Barry Posen calls military "command of the global commons" of sea, air, and space, but it lacks the power to dictate policies to France, Germany, or Japan, much less China, Russia, or India. In the same way, British and Dutch naval mastery and financial supremacy never translated into British or Dutch military hegemony in the European state system.

Besides blurring these critically important distinctions, Chua conflates two radically different conceptions of tolerance. "By tolerance, I don’t mean political or cultural equality. Rather, as I will use the term, tolerance simply means letting very different kinds of people live, work, and prosper in your society -- even if only for instrumental or strategic reasons." By this standard, illiberal, autocratic empires that were indifferent to the religions and customs of the ethnic groups on which they preyed were as "tolerant" as modern liberal democracies that grant equal rights to citizens of different ancestries and beliefs.

Chua compiles a long list of allegedly tolerant "hyperpowers" as evidence that there is a "path the United States could take that would virtually ensure its decline: a turn to xenophobic, anti-immigration policies." But the comparison between imperial expansion and voluntary immigration doesn’t work. Of course, vigorous empires became increasingly multiethnic as they expanded because they were subjugating and incorporating more tribes! Not a single one of the "tolerant" empires that Chua cites, including the racist British Empire, was a voluntary federation of sovereign nations, like the European Union, or a nation-state enlarged by voluntary immigration, like the United States.

The relevant modern history does not support Chua’s attempt to correlate ethnic diversity with economic and military success. All modern nation-states, including the multiracial, immigrant-friendly U.S. and multiethnic India, are much less ethnically diverse than the multinational empires that formerly ruled them. Yet far more progress in civil rights, economic growth, and democracy has occurred in post-imperial nation-states than ever occurred in the former empires. The most generous welfare states in the world were created in the 20th century by the ethnically homogeneous Nordic democracies. Equally homogeneous East Asian nation-states provide most of the success stories in economic development since World War II. Most failed states in the world, including Iraq, Afghanistan, and arguably Pakistan, are multiethnic polities with borders arbitrarily created by European or Soviet colonial administrators.

Nor does it make any sense to compare the United States to polyglot, multinational agglomerations like the dynastic and national empires of the past. The United States is a multiracial nation-state with an overwhelming Anglophone cultural majority, where the diaspora cultures of voluntary immigrants usually fade away after a generation or two as a result of assimilation and intermarriage. Indeed, there may be a tragic trade-off between diversity and social solidarity. The recent work of political scientist Robert Putnam shows that such measures of civic health as mutual trust and political participation decline in ethnically diverse areas in the United States. The economists Edward Glaeser and Alberto Alesina have argued that around half the difference in welfare spending between the United States and Europe is attributable to the greater ethnic and racial diversity of the U.S. population. This is hardly news. In the late 19th century, Friedrich Engels attributed the weakness of socialism in the United States to ethnic divisions among European immigrants and native-born Americans. Both the New Deal and the civil-rights movement achieved their goals during the period of restricted immigration between the 1920s and the mid-1960s, when rapidly melting ethnic differences among whites and a shrinking foreign-born population forged a supermajority secure enough in its common identity to support the integration of black Americans.

Reasonable people can disagree about the desirable scale and composition of legal immigration to the United States. But not even proponents of more generous immigration policies are likely to take seriously Chua’s argument that the U.S. should take in more immigrants because the Achaemenid Empire at the height of its power roped together a lot of conquered ethnic nations.

****

In his book Among Empires, Charles S. Maier, professor of history at Harvard, questions the very enterprise of comparing the United States to empires of the past. "Does the United States have an empire?" and "Can the United States possibly be construed as being an empire?" he asks. He answers both questions with a qualified no: "Far-flung military bases are a prerequisite for imperial influence but do not themselves constitute an empire." As to "whether the United States is an empire at home," he says, "Not yet, at least."

If the contemporary United States is not an empire, what is it? "Critics of the term empire have suggested that the United States is instead a hegemonic power," Maier writes. "Hegemon is a Greek term that means preeminence and leadership." The United States "has been ‘merely’ hegemonic in Europe and Latin America" and "potentially imperial" only in the Caribbean and possibly Afghanistan and Iraq.

These careful distinctions are persuasive. To carry out his comparative project, however, Maier frequently ignores the very distinctions he has drawn. For example, he treats U.S. policy toward American Indians as imperialism comparable to overseas colonialism: "Modern imperial forces have also met defeat, often in overconfident expeditions in frontier regions -- Custer against the Sioux in 1876, the British against the Zulu in 1879, the Italians against the Ethiopians in 1885 and again in 1896, the Spanish against the Moroccans in 1921." But in most of the European settler states of the Americas, as well as in Australia and New Zealand, white or mestizo majorities displaced and confined indigenous populations. It seems odd to describe Canada and Mexico as "empires" for this reason.

Even more questionable is Maier’s use of the concept of empire in connection with trade and investment. Maier describes the global trading system as America’s "empire of production" that has evolved into an "empire of consumption": "Free trade was the pendant of monetary hegemony. The 1960s became for the United States the analogue of the Victorians’ ‘empire of free trade,’ an era in which the technological superiority of the major economic power meant that its interests coincided with as broad an opening of international markets as possible." Maier’s discussion of U.S. trade policy, like his analysis of U.S. security strategy, is insightful and deeply informed. But what is gained by using the term "empire" instead of less loaded phrases such as commercial or financial hegemony?

Maier’s reference to "the Victorians’ ‘empire of free trade’" is an allusion to an influential 1953 article by Ronald Robinson and John Gallagher, "The Imperialism of Free Trade." Robinson and Gallagher argue that private British overseas investment, much of which was outside of the formal British Empire, should be treated as part of the empire as well. By this definition, ranches in Wyoming and factories in Pittsburgh financed by British investors were part of the British Empire. Maier’s notion of an "empire of consumption," in which Chinese factories making goods for the U.S. market are part of an American "imperial" system, is vulnerable to the same objection.

Maier is a subtle and erudite historian. But his ambitious attempt at comparative politics suffers from what he himself calls "the difficulty of shoehorning the United States into the received models of imperial power." If hegemony in a pluralistic state system is imperialism, and an unequal alliance is imperialism, and voluntary trade is imperialism, and the treatment of indigenous minorities is imperialism, then everything is imperialism, and the concept is too multivocal to be useful.

This might be dismissed as a scholastic quibble over semantics, were it not for the implications for contemporary politics. When distinguished mainstream scholars like Chua and Maier, and not just neoconservative polemicists like Victor Davis Hanson and Max Boot, seek to compare the United States to ancient and modern colonial empires, the Zeitgeist has become truly ominous.

What happened to the story that American liberals and moderate conservatives alike used to tell about the role of the United States in the world? Mid-20th-century liberal internationalists like Franklin D. Roosevelt and Wendell Willkie shared the not altogether implausible view that the secession of the American colonies from the British Empire, the Monroe Doctrine, the Open Door Policy in Asia, the Fourteen Points, and the Atlantic Charter were successive stages in the erosion of imperialism and the establishment of a single global society of sovereign states based on popular self-determination and united by collective security organizations and voluntary trade and investment. Marxists and realists have always treated liberal internationalism as imperialism in disguise -- to the benefit, it turns out, of neoconservatives who can cite both leftists and realists in attempts to show that their neoimperialism is the natural culmination of America’s foreign policy tradition, rather than the aberration that it actually is. If liberal internationalism is to be restored as the basis of U.S. foreign policy, then the first step must be to insist that liberal internationalism is not simply another kind of imperialism and that the United States is not simply another empire.

Day of Empire: How Hyperpowers Rise to Global Dominance -- and Why They Fall
by Amy Chua (Doubleday)
Among Empires: American Ascendancy and its Predecessors
by Charles S. Maier (Harvard University Press)

Public Investment Works

Cecille Isidro — Sun, 30 Sep 2007 10:16:00 -0400

An important debate over fiscal policy is beginning to take place within the Democratic Party. For the past 15 years, deficit hawks within the party have argued that addressing America’s fiscal challenges should take priority over our public investment needs, suggesting that, in effect, we cannot afford to increase public investment until we have reduced the federal deficit.

But there is an alternate view, holding that the deficit hawk position neither accurately reflects America’s true economic strength nor represents good policy in light of the very significant changes that have occurred in the economy over the past decade and a half. In fact, the nature of the American economy today is radically different than it was in the early 1990s, when the current notion of fiscal responsibility took shape. Over the past decade and a half, the economy has become more globalized, knowledge-based, and wealth-driven. Behind this transformation have been major structural developments in the world economy, most notably the increased integration of the world’s financial markets; the dramatic improvement in productivity growth associated with the information-technology revolution; and the expanded supply of labor, savings, and productive capacity that has resulted from the integration of China, India, and the former Soviet Union. Together, these developments allow the American economy to grow more rapidly with lower wage and goods inflation than was possible in the supply-constrained, slower-growth period of the early 1990s.

Deficit hawks seem not to have fully incorporated these changes into their understanding of the U.S. economy, nor have they changed the way they measure the economy’s output to reflect the increased importance and value of wealth and intangibles. As a result, they underestimate the capacity of the economy. Misjudging the economy’s potential, much like misunderstanding the economy’s challenges, can lead not only to bad policy choices but also to missed opportunities for policy reforms that would help ensure future economic prosperity. This is the case today when it comes to the question of public investment in our physical and innovation infrastructure.

Contrary to the opinion of the deficit hawks, the United States can comfortably afford a robust public-investment program without first reducing the deficit. Indeed, given excess global savings and historically low interest rates, increased spending on productive public investment is a fiscally responsible and effective way to put excess global savings to work to ensure future economic prosperity. It is also a proven way to stimulate private investment and job creation and, at the same time, distribute more widely the capital and skills for wealth creation, thus achieving a fairer and more balanced society with higher living standards for all Americans.

New Economic Realities

The current conventional wisdom within the Democratic Party regarding deficit reduction is an outgrowth of the successful experience of the Clinton Administration. Faced with congressional opposition to its initial fiscal package, which included some added public investment spending, the Clinton White House opted for measures that would reduce the budget deficit in a bid to gain the cooperation of Federal Reserve Chairman Alan Greenspan to lower interest rates. No doubt the Clinton years produced outstanding results in terms of job creation, economic growth, and business investment. But how much the Administration’s measures to cut the deficit contributed to this economic performance is open to debate. Arguably, structural changes in the economy -- such as improving productivity associated with the information revolution and the coming online of massive new production capacity in Asia -- were more significant to the economy’s performance than were any of the Administration’s budget measures.

But even if one accepts that the budget deficit was a problem in the early 1990s and needed to be addressed, it does not follow that putting deficit reduction ahead of public investment is the correct policy today. Economic conditions are far different than they were in 1993, and what was appropriate 15 years ago is wholly inappropriate for 2008.

Deficit Reduction Is Less Important in Today’s Economy
To start, the federal government has much more room to run deficits than it did 15 years ago, when the budget deficit stood at 4.7 percent of gross domestic product (GDP). By comparison, the 2006 budget deficit of 1.9 percent of GDP is relatively small, and it is projected to decline further to about 1.5 percent of GDP this year. Even with President Bush’s tax cuts and the escalating cost of the war in Iraq, the deficit is below America’s norm of 2.2 percent of GDP over the last 40 years. Likewise, the federal debt held by the public is below its average for the 20-year period since 1987 and lower than it was in 1993. Gross federal debt in 1993 was 49.4 percent of GDP; by 2006, it had fallen to 36.8 percent.

The current budget deficit and federal debt would be even lower if we properly accounted for national income and the increased importance of wealth and intangibles in today’s economy. Business investment in intangibles, such as research and development, are critical to long-term profitability, but most economists don’t count them as national output. Yet, according to an estimate by BusinessWeek’s Michael Mandel, spending on unmeasured intangibles is almost as large as spending on physical capital and software. For the period 2000 to 2003, the annual average of investment in intangibles was $978 billion, or almost 10 percent of GDP. In other words, if we properly accounted for intangibles, national output would be nearly 10 percent larger, and the budget deficit and federal debt would be proportionately smaller as a percentage of GDP.

The same problem of measurement affects how we view America’s current account deficit. At first glance, the U.S. current account deficit, now running at 6.5 percent of GDP, may seem worrying. But as it is currently calculated, this measurement understates America’s financial position. For one thing, it misses a big portion of the export of know-how and intellectual property that enable U.S. multinationals to reap high returns on their overseas investments and operations. Mandel estimates these hidden exports may be as high as $100 billion a year. Harvard economists Ricardo Hausmann and Federico Sturzenegger argue that they are even larger -- large enough, in fact, to bring the U.S. trade deficit in balance. This argument gains further support from the fact that the United States has, until this past year, continued to enjoy net investment income in spite of its external debt.

Nor does the current account reflect the fact that a sizeable portion of U.S. imports are the products of American-owned and -controlled companies that operate worldwide. If those imports were accounted for in the trade figures, the U.S. current account would, again, be much smaller. The McKinsey Global Institute, for example, has calculated that trade with foreign affiliates accounted for one-third of the U.S. current account deficit in 2004. As it is, that unaccounted-for production generates well-paid jobs in U.S. corporate headquarters and shows up as increased profits, and thus as increased wealth. In other words, the current account deficit is less a reflection of a fatal weakness in America’s financial position than it is of the fact that American-owned and -operated companies have expanded abroad more quickly than foreign companies have expanded in the United States. It may affect who is benefiting from the new global economy, but it does not portend a major financial crisis.

A second reason to worry less about the budget deficit is that the economy’s capacity to borrow has increased significantly, largely due to improved productivity growth. In the 1980s, productivity growth was a dismal 1.46 percent. But over the past decade and a half, technological advancements and communications innovations, along with efficiency revolutions in finance and materials, have substantially accelerated U.S. and world productivity expansion: U.S. productivity growth has jumped from an average of 1.53 percent for the period between 1973 and 1995 to 2.7 percent for the period from 1996 to 2006. World productivity has shown a similarly impressive increase, and this has helped tame inflation worldwide and increase the wealth and profitability of American companies operating globally.

Stronger productivity growth means stronger economic growth and lower inflation, which in turn makes it easier to run deficits yet still reduce the overall public debt burden. As long as the economy is growing faster than the budget deficit, as it has in the last two years, the federal debt as a percentage of GDP will decline. Thus, stronger productivity growth has helped give the federal government room to run deficits to increase public investment and, if necessary, to counter an economic slowdown. (To be sure, productivity growth has slowed in the last three quarters, but some economists attribute this to a mid-cycle slowdown and expect it to pick up again as capital expenditures and economic growth increase.) Moreover, there are a number of reasons to expect further productivity gains from information technology as it diffuses more thoroughly throughout the economy, as workers gain greater competence in using it, as its cost continues to decline, and as its weight in the economy as a whole increases.

A third reason to accord deficit reduction a much lower priority is that there is less risk that increased public borrowing will crowd out private investment. In contrast to the early 1990s, the financial and corporate sectors are awash in capital and liquidity. Take, for example, corporate profits and balance sheets. Because of improved productivity growth and the introduction of more efficient business practices, corporate profits have increased significantly over the last decade and remain robust, at around 12 percent of GDP. As a result, private companies can more easily finance expansion than they could in the early 1990s. This, together with the liquidity generated by the new international financial system, has significantly lowered the cost of capital for most businesses. In fact, many firms are sitting on too much cash to invest wisely, and so are using it to buy back stock. Under such circumstances, increased public investment and borrowing may in fact be useful to help "crowd in" private investment.

Similarly, the U.S. banking and financial system has undergone a sea change since the early 1990s, when banks faced serious capital constraints. America’s capital markets have become more efficient in the allocation of capital, more effective in monetizing wealth for additional investment and consumption, and more resilient in weathering financial crises relating to asset bubbles. A proliferation of new financial instruments -- from derivatives to a variety of home-equity loans -- allows both individuals and companies to tap previously illiquid assets for working capital and consumption, and private equity firms and hedge funds have added liquidity to the capital markets in new ways. These changes have created new risks, but overall they have effectively unlocked wealth that was previously unavailable for consumption and investment, enabling the financial system to provide lower cost capital to both government and businesses.

These changes are taking place against the backdrop of even more dramatic shifts in the international financial system. The integration of China, India, and the former Soviet Union into the global economy has created what economists call positive supply-side shocks, resulting in surplus labor, capital, and productive capacity. Their entry into the world economy has doubled the global labor force in the course of a decade, raising the return on capital, lowering inflation pressures, and temporarily slowing wage growth. But even more important has been their influence on the availability of savings. The global stock of savings, as reflected in net capital outflows, has exploded in recent years -- from $691 billion in 2003 to more than $1.3 trillion in 2006 -- creating what Federal Reserve Chairman Ben Bernanke has called a global savings glut. The greatest increase in savings has come from emerging Asia (excluding Japan), with China responsible for a large part of it. But the oil-exporting countries of the Persian Gulf and Russia have also increased their current-account surpluses as a result of rising oil prices. And at the same time that the stock of world savings has increased, the globalization of capital markets has unlocked national savings, creating a global pool of capital.

This combination of the global savings explosion and the increased integration of world capital markets has altered the rules governing macroeconomic policy in the United States. For one thing, it has allowed the United States to run larger current account deficits for longer periods than possible a decade ago. The United States may absorb nearly 70 percent of the world’s excess savings, but as data from the International Monetary Fund shows, the pool of global savings has also grown rapidly. In fact, the United States has had no choice but to absorb much of the world’s savings glut -- in part because it is the only economy with capital markets wide and deep enough to absorb savings of this magnitude. Just as important, the increase in global savings has put downward pressure on interest rates nearly worldwide, especially in the United States. Analysts estimate that the flow of money from emerging economies to the United States has alone reduced long-term interest rates by 150 basis points. That helps explain why the real yields on U.S. long bonds, even after the recent increase in yields, are still hovering near the bottom of their 25-year range, and more than 100 basis points below their average in the late 1990s.

Deficit hawks acknowledge the favorable effects of global financial integration on U.S. interest rates, but they worry about a run on the dollar nonetheless. This worry, however, is misplaced given the problem of excess savings and the foreign reserve-currency reserve practices of large surplus countries. Indeed, there are good reasons to believe that excess global savings will remain the central condition of the international financial system for the foreseeable future. In the short to medium term, the weight of high-savings economies, such as China, in the world economy will grow. China is forecast to become the world’s second-largest economy within the next decade, followed by Japan and Germany, which are also high-savings societies. Likewise, demographic shifts will likely prop up savings for at least the next five years, as large generational cohorts in these societies reach their peak savings age before retirement. The McKinsey Global Institute estimates the current account surpluses of these economies will increase to $2.1 trillion by 2012. In other words, the underlying source of global liquidity is not likely to disappear anytime soon.

There are also reasons to believe that the foreign reserve-currency practices of countries like China will not change enough to cause a real dollar crisis as opposed to the orderly decline in the dollar we have recently experienced. Surplus countries may want to diversify their foreign currency practices, but they still have to make sure the U.S. current account is well-funded, because their own growth depends on it and because they do not want their currencies to appreciate too much. They are thus unlikely to stop financing the U.S. current account deficit for any length of time, as our experience with Japan and other current account surplus countries over the last 20 years suggests. Moreover, there are few reserve-currency alternatives to the dollar other than the euro, and there is a limit to how much even the euro can appreciate before money starts flowing back into U.S.-denominated assets. As the Bank of International Settlements has pointed out, the total reserve accumulation by sovereign investors this year could easily exceed by 100 percent the net new issuance of all U.S. and Euro-zone sovereign and agency debt. In other words, as Terrence Keeley, managing director of Central Bank Services at UBS, has pointed out, "There is simply not enough new, high-quality debt in the world to sate sovereign demand."

Public Investment: a More Important Policy Priority
While changes in the way the economy works have made it easier for the United States to finance both private and public borrowing at a lower cost, many of the same changes have made public investment more important. In a globalized economy, public investment has become more critical to creating good jobs, enabling American-based companies to compete with lower-wage economies, and ensuring the strength of our increasingly knowledge-based economy. Indeed, what should be America’s most worrying deficit is not the budget deficit, but rather the deficit we have been slowly accumulating in public investment. As economist Jeff Madrick has noted, much of the economic growth of the past generation has depended on previous high levels of public investment in everything from transportation systems to high technology to high school and college education. Indeed, the productivity boom of the 1990s would not have been possible without the earlier government investment in areas like telecommunications and computer development.

But we are now in danger of exhausting much of the public capital we created in earlier decades of healthy public investment spending. From 1950 to 1970, for example, we spent more than 3 percent of GDP on public infrastructure. Since 1980, we have spent less than 2 percent. As a result, we are beginning to experience the effects of a backlog of public investment needs. Not surprisingly, infrastructure bottlenecks -- traffic-choked roads, clogged-up ports, an antiquated air transportation system -- are undercutting our nation’s efficiency and costing our economy billions in lost income and economic growth. The Department of Transportation reports, for example, that freight bottlenecks cost the American economy $200 billion a year -- the equivalent of more than 1.6 percent of GDP. And the 2005 report of the American Society of Civil Engineers offers an array of other examples of underinvestment in infrastructure: 27.1 percent of our nation’s bridges are structurally deficient or functionally obsolete, a fact that painfully came to the fore with this summer’s bridge collapse in Minneapolis; most of our airports are not equipped to accommodate the new super-jumbo jets scheduled for introduction later this decade or to handle the expected growth in small regional jets necessary for commerce in smaller business centers; and nearly 50 percent of the 257 locks operated by the U.S. Army Corps of Engineers are functionally obsolete. Perhaps most worrying, because of these and other problems, uncertainties about the future reliability of our energy, water, and transportation systems are beginning to impede investment in some parts of the United States. The American economy also is being hurt by the fact that we are now lagging behind on the deployment of the infrastructure of the information age. The United States now ranks 16th in the world in broadband penetration, according to the International Telecommunications Union. Only 33 percent of U.S. households have access to broadband, which is increasingly critical for successful commercial and educational applications. And the costs of broadband in the United States are rising relative to those in other countries, putting American-based companies at a growing disadvantage. American consumers, for example, are forced to pay nearly twice as much as their Japanese counterparts for connections that are 20 times slower.

The fact that we have not kept up with the training of skilled workers, particularly scientists and engineers, is also beginning to create problems for the economy. The United States now graduates fewer engineers per capita than nearly all other advanced industrialized countries. American firms are beginning to complain about the shortage of skilled workers in some sectors of the economy, forcing them either to import the talent or rely more than they would like on offshore outsourcing. We have also underinvested in basic science and research and development. Such efforts make possible the technological breakthroughs that historically revolutionize the economy and the way we live, and they are responsible for the innovation from which American companies derive premium returns on capital. But research and development spending as a share of GDP has declined over the last two decades, caused by steady declines in the federal government’s support for research and development. To date, these problems have had only a modest impact on our robust economy. But given the nature of today’s global economy, the more we delay correcting this shortfall in public investment, the more vulnerable we will become to more serious problems in the future.

First, in an age of globalization, public investment is the best way to help American-based companies compete against lower-wage economies -- which they now must do if we are to maintain the standard of living of American workers. Public investment allows the United States to pursue a "high road," non-protectionist strategy toward international competition. By providing businesses with a better high-tech infrastructure, more skilled workers, and access to cheaper and cleaner energy, it lowers the cost of doing business and increases the efficiency of investment in the United States. Without more public investment, our choice is more protectionism or the loss of more good jobs.

Second, public investment is even more important in today’s global economy because knowledge, wealth, and innovation contribute a far greater share to our national income than they did 15 to 20 years ago. Adequate public spending on research and development is especially important at a time when many private companies are cutting back to reduce costs and increase short-term profits. As noted earlier, to an unacceptable degree, we have been living off the investments of the past that helped seed our aerospace, computer, and biotech industries, and we will need to make comparable levels of public investment now to ensure future technological advancements that generate new wealth.

Finally, in an age in which there are limits to how much one can redistribute income through the tax code, public investment has become an even more essential tool of social policy. Today, a robust public investment program would help correct income inequality and wage stagnation by creating good jobs. A program to upgrade our transportation and communications infrastructure to world standards and to lay the foundations for a new energy and water infrastructure for the twenty-first century would alone create millions of higher-skill jobs that would pay above median wages and could not be outsourced. This kind of public investment program would also help correct a labor market that has become overly weighted toward low-wage, low-skilled jobs, and it would be an important complement to the earned-income tax credit, which tends to subsidize low-wage occupations.

Too often, deficit hawks portray public investment as a financial burden. Instead it should be seen for what it is: an economic opportunity to create new middle-class jobs and stimulate new private investment in America’s economic future. Indeed, the greatest benefit of a robust program of public investment would be its positive impact on the real productive economy and on future productivity growth.

Public Investment First

Some proponents of a "deficit reduction first" strategy do acknowledge the importance of public investment to the American economy, but they nonetheless argue that it must wait until we have brought our fiscal deficit under control. This brings us to the core question of the debate: Which policy priority is most likely to contribute to a stronger economy in the long term? As should be apparent from our analysis, making a priority of cutting the deficit would do little to meet our most critical economic and social challenges, while contributing relatively little to our long-term financial health. Deficit hawks want to cut the deficit in order to reduce our external deficit and reduce the risk of a dollar crisis. But contrary to current conventional wisdom, cutting the budget deficit would not necessarily lead to a reduction in the current account deficit. As our experience of the last two decades shows, budget deficits do not closely correlate with current account deficits. In fact, the two often move in opposite directions: The budget deficit increased in the early 1990s as the current account deficit narrowed; and the current account deficit increased dramatically in the late 1990s as the budget deficit went into surplus.

Deficit hawks also want to cut the deficit in order to lower interest rates and prevent government borrowing from crowding out private investment. But lower interest rates would not do much to stimulate more investment when the cost of capital is already low by historical standards, or when companies are overflowing with cash and have ready access to relatively low-cost credit. In fact, in such an environment, cutting the budget deficit might lead to more speculation and asset bubbles rather than real investment, as happened in the late stages of the tech boom. And if deficit reduction does little to stimulate new private investment, it also means it will do little to counter a possible housing-related slowdown, or create better jobs for working Americans, or strenghten America’s underlying productive economy.

By contrast, public investment, beginning with a program to rebuild our public infrastructure, is ideally suited to those challenges. It is the fastest and most reliable way to create good jobs. But it is also the best way, in an economy with ample capital and low interest rates, to stimulate new private investment and thus set off a new cycle of investment, innovation, and productivity growth.

A program of public investment, however, need not increase public spending significantly. This is especially true of a program that focuses on public infrastructure investment. If properly structured to involve government guarantees for state and local long-term bonds, this type of program could rely almost exclusively on private financial markets to fund a variety of state and local infrastructure projects. Such a program of government guarantees would lower the cost of borrowing for many infrastructure needs and would thus stimulate important new public infrastructure projects carried out by private contractors. This program might also entail the creation of a federal agency that would select among municipal, state, and regional infrastructure projects that would best meet criteria for cost effectiveness, public need, and job creation. Because such a program would rely mainly on federal guarantees, it would not increase the budget deficit (although it would technically increase the national debt), but rather it would ensure a wise use of public and private resources.

However it is financed, a public infrastructure investment program could be quickly designed, easily implemented, and adjusted to fit the economy’s needs. Moreover, such a program would have almost immediate benefits in terms of job creation, income growth, and private investment. This increased economic activity in turn would generate new tax revenues and thus more than offset any increase in public spending. And what is true in the short term is even more so over the longer term -- economic activity and innovation build off each other, creating a virtuous cycle.

In this way, increased spending on public investment and stronger economic growth would offer a better way of ensuring America’s future standard of living than would a strategy of cutting the budget deficit first. Indeed, the American way of securing our future is not by "nickel and dime-ing" public investment but by investing robustly to improve productivity and grow the economy. That philosophy has worked well in the past, and it will work even better today.

The Shadow Army

Cecille Isidro — Sun, 30 Sep 2007 08:15:00 -0400

If there is a quagmire in Iraq, it was created more than a decade ago when the United States instituted a flawed system governing the use of contractors to perform governmental functions. Now, despite Iraqi fury at Blackwater USA, some of whose employees are accused of fatally shooting Iraqis, Washington is so reliant on the firm that it dare not order it from the field.

General Accounting

Cecille Isidro — Mon, 24 Sep 2007 12:28:00 -0400

Last December, the Army released a document entitled “Counterinsurgency,” an updated field manual designed to guide United States forces to victory in guerrilla wars. “Legitimacy Is the Main Objective” is one heading above its thematic advice. To defeat a resistance force in irregular war, the manual observes, it is essential to recognize “that political factors have primacy” and may account for as much as four-fifths of the struggle -- an insight ascribed, a little showily, to a strategist on Mao Zedong’s central committee.

The general who oversaw the field manual’s rewriting, David H. Petraeus, was dispatched to Iraq upon its completion in order to apply its principles to one of the less credible wars in American history. Since then, Petraeus, perhaps the most scholarly American officer ever to wear four stars, has been preoccupied by a political imperative -- justifying the “surge” of thirty thousand additional troops who accompanied him to Baghdad. The General, a fitness compulsive who excels at pushups, has given much time to hosting congressional delegations and providing journalists with interviews, which he often conducts amid the stirring atmospherics of his airborne command helicopter. This summer, Petraeus crafted a campaign to publicize signs of progress he claimed to see in Iraq, and it became clear that he regarded America’s restive democracy as a theatre in his counterinsurgency operations.

By the time he returned to Washington last week to deliver a flinty and unrevealing report on the war, the General’s achievements on the Iraqi front appeared, at best, to amount to a muddle, but his success at forestalling war skeptics in Congress looked more impressive. Petraeus has arguably made himself more important to the future of Iraq’s war than has the lame-duck President he serves -- a situation that President Bush, understandably, seems pleased about. The General was tense and uncharismatic during his congressional testimony, yet he exuded integrity; after his second day at the witness table, the Times felt compelled to publish a graphic annotating his medals.

Petraeus is not Bush’s lackey; his views of the Iraq war overlap with the President’s, but they arise from very different antecedents. In 1987, Petraeus completed a three-hundred-and-thirty-seven-page doctoral dissertation at Princeton entitled “The American Military and the Lessons of Vietnam,” a lucid and subtle review of civil-military relations in the United States from the Korean War until the mid-nineteen-eighties. In his conclusion, Petraeus argued against the Army doctrine that had been reaffirmed in reaction to the Vietnam War -- an “all or nothing” approach, as he labelled it, which held that the United States should enter wars only with overwhelming force and with clear, achievable objectives that would enjoy public support. This was later called the Powell Doctrine, for General Colin Powell, its practitioner until he endorsed the inadequately manned invasion of Iraq four and a half years ago.

Petraeus saw the doctrine as potentially unrealistic because small, nasty wars -- where there would be no “clear-cut distinction between peace and war” -- seemed to him the coming trend. He quoted approvingly former Defense Secretary James Schlesinger’s belief that the United States should not limit itself to fighting only “popular, winnable wars.” To prepare for such a future, Petraeus argued for rebuilding America’s counterinsurgency capabilities.

He observed that American public opinion often wavers during a protracted conflict, and he quoted General George C. Marshall’s admonition that “a democracy cannot fight a Seven Years War”; his tone betrayed a hint of professional irritation at weak-kneed tendencies among the people. Still, Petraeus could see that not all counterinsurgencies are easily won, no matter the public’s fortitude. He cited in particular the Soviet Union’s brutal struggles in Afghanistan:

After all, if a country with relatively few public opinion concerns or moral compunctions about its tactics cannot beat a bunch of ill-equipped Afghan tribesmen, what does that say about the ability of the United States -- with its domestic constraints, statutory limitations, moral inhibitions, and zealous investigative reporters -- to carry out a successful action against a guerrilla force?

Academic questions of that kind require field work to answer; two decades later, Petraeus has his controlled experiment, and his research is remarkably well funded. It is far from clear, however, whether he is asking all the right questions.

If General Petraeus privately believes President Bush’s facile rhetoric about the pursuit of “victory” in Iraq, it would be a departure from the thinking evident in his dissertation and counterinsurgency field manual. More likely, the General sees himself as scrapping toward a moderately intolerable mess in Iraq, as an alternative to utter cataclysm. He has compared his goals to the British campaign in Northern Ireland, which produced “a level of violence that actually the Northern Ireland citizens learned to live with.” Britain’s democracy, however, saw crucial interests in its historical ties to Northern Ireland. The American public has made plain that it sees no comparable interest in the interminable pursuit of a less bad Iraq.

Petraeus’s recent strategy of playing for time through the application of spin politics is straining the health and vitality of the Army to which he has devoted his life. It is also deepening mistrust between civilian politicians and the military. Surely, for example, the General is conscious of the partisan Republican campaign to promote him as “Bush’s Grant,” and is aware of the cause: the Party expects to lose the next Presidential election because of the war, but Petraeus offers hope, however faint, that a Republican nominee might find something in Iraq to embrace. Petraeus’s ambition is legendary; his pride and his professional devotion to counterinsurgency have now become entangled in an exploitive electoral machine.

Petraeus also apparently clings to the belief that Iraq’s sectarian leaders might reconcile if American forces stay the course. This opinion, shared by many in the Bush Administration, has encouraged yet another generation of unconvincing strategic plans that assume that a unified Iraq governed from Baghdad is attainable and that thousands of American troops might help patrol the capital’s streets for years. A more plausible strategy, devoted to managing as successfully as possible the informal sectarian partition of Iraq which is already well under way, has again been postponed, along with substantial troop reductions.

American majorities repudiated the Vietnam War and have repudiated the invasion of Iraq. They did not lack guts then or now; they saw past the false promises and manipulations of their leaders, and called time. George W. Bush and Osama bin Laden appear to share the belief that the United States is chronically afflicted with a cut-and-run syndrome, but they are both wrong: the most striking aspect of American democracy during the catastrophe in Iraq today is not the public’s inconstancy but, rather, its capacity to absorb thousands of casualties on behalf of a war that is widely understood as a mistake and has no foreseeable end.

Why Latinos Will Miss Bush

Cecille Isidro — Mon, 24 Sep 2007 06:32:00 -0400

Republicans these days insist that their anti-immigration stance has nothing to do with race or ethnicity. It’s the left, they say, that injects identity politics into everything. I caught the well-coiffed, permanently snarling ideologue Michelle Malkin making that exact point on television a few weeks back. "Let me drive this through the thick skulls of the open-border zealots at The New York Times and elsewhere," she barked. "This [illegal immigration] crisis has nothing to do with race. It’s about peaceful citizens of all colors and creeds demanding that their government do everything possible to secure the blessings of liberty." And then, as if she couldn’t control herself, Malkin punctuated her diatribe with a sarcastic bit of Spanish: "Comprende?"

OK, so immigration isn’t about Latinos. I guess that follows because as far as the Republicans are concerned, nothing is about Latinos.

Witness the Republican presidential candidate debate on the Spanish-language TV network Univision. Oh wait, that debate didn’t happen. All the contenders save Sen. John McCain claimed scheduling conflicts.

Sure, relatively few Latinos actually vote in the Republican primary. And a majority of likely Latino voters -- 61% -- don’t even watch Spanish-language television. But it was still stupid for the candidates to snub Univision. It’s just one more sign of how the GOP is retreating from its big-tent strategy, which had made sizable gains in attracting Latino voters.

Difficult as it is to imagine, Latinos actually may have a reason to miss President Bush when he’s gone. No, not because he accomplished the "Latino strategy" that his advisors touted when he was running for president in 2000 -- passing comprehensive immigration reform and putting a Mexican American on the Supreme Court -- but because he brought more attention to the Latino electorate than any major American politician before or since.

Think back to the Democratic Convention in Los Angeles seven years ago. By August of 2000, Bush’s Latino outreach had begun to broaden the appeal of the GOP, and that was sending ripples through the Democratic Party. During the convention, prominent Latino Democrats successfully leveraged Bush’s appeal to get their own party to pay more attention to the fast-growing Latino electorate. One Latino pollster complained that, in contrast to the GOP convention, he’d seen no signs that Democrats "have any effort geared toward Latinos." Even Bill Richardson, who was then U.S. Energy secretary, conceded that the GOP strategy was working and could "hurt Democratic presidential candidate Al Gore."

The Democratic Party’s response? Strengthen its Latino outreach, give Latino Dems a higher national profile and pledge to stop taking the Latino vote for granted.

But what exactly had Bush done to raise the stakes on the Latino vote? Trotted out his elementary Spanish-language skills? Delivered on a long list of promises as governor of Texas? No, not quite. In fact, I don’t think his initial appeal had anything to do with language, ideology or immigration. Mostly what Bush did is what today’s Republican presidential hopefuls apparently cannot. He simply showed up.

When he first started wooing Mexican American voters in 1998, while running for reelection as governor, he didn’t have much of a policy record to brag about. Indeed, it was a combination of inertia on the part of the Democrats and the symbolism of a Republican courting Latinos that helped him garner an unprecedented 40% of Texas’ Latino votes. Bush’s Latino-friendly image also helped eclipse the snarling and racially-tinged voices on the right wing of the GOP.

In 2000, Bush got a respectable 35% of the national Latino vote by running as a softer, kinder Republican who (unlike Gerald Ford) knew to take off the corn husk before biting into a tamale. That year, he talked up immigration reform. But by 2004, Osama bin Laden had knocked immigration reform off the table, and Bush’s compassionate conservative shtick had given way to the candidacy of a strong-willed and determined wartime president who spent little time talking to Latino audiences. That year, to the surprise of many observers, Bush’s share of the Latino vote jumped to a phenomenal 40%, most likely because many Democrats wanted to support the commander in chief during wartime. What do you know -- immigration isn’t the only issue that Latino Americans care about.

Some GOP hacks are promising that their eventual nominee will pay more attention to Latino voters once primary season is over. By that time, however, the snarling ideologues will have solidified the party’s hostile image. And that won’t be good for anyone. The Republicans will be a disproportionately white party in a diversifying nation. The Democrats will again take Latinos for granted, and Latino voters will be nostalgic for that brief moment when they were the most courted belle at the ball. In other words, it’ll be just like the good old days. Comprende?

Why Bush Won't Attack Iran

Cecille Isidro — Wed, 19 Sep 2007 04:52:00 -0400

During a recent high-powered Washington dinner party attended by 18 people, Zbigniew Brzezinski and Brent Scowcroft squared off across the table over whether President Bush will bomb Iran.

Brzezinski, former national security advisor to President Carter, said he believed Bush's team had laid a track leading to a single course of action: a military strike against Iran's nuclear facilities. Scowcroft, who was NSA to Presidents Ford and the first Bush, held out hope that the current President Bush would hold fire and not make an already disastrous situation for the U.S. in the Middle East even worse.

The 18 people at the party, including former Pakistani Prime Minister Benazir Bhutto, then voted with a show of hands for either Brzezinski's or Scowcroft's position. Scowcroft got only two votes, including his own. Everyone else at the table shared Brzezinski's fear that a U.S. strike against Iran is around the corner.

In the national debate about America's next moves in the Middle East, an irrepressible and perhaps irresponsible certainty that America will attack Iran now dominates commentary across the political spectrum. Nerves are further frayed by stories like this one, about the Pentagon making a list of 2,000 military targets inside Iran.

The left -- and much of the old-school, realist right -- fears that Bush means to bomb Iran sometime between now and next spring. Both would like to rally public opinion against the strike before it happens. The neoconservative right, meanwhile, is asserting that we will bomb Iran but that we need to get to it posthaste.

But both sides are advancing scenarios that are politically useful to them, and both sides are wrong. Despite holding out a military option, ratcheting up tensions with Iran about meddling in Iraq and Afghanistan, and deploying carrier strike-force groups in the Persian Gulf, the president is not planning to bomb Iran. But there are several not-unrelated scenarios under which it might happen, if the neocon wing of the party, led by Vice President Cheney, succeeds in reasserting itself, or if there is some kind of "accidental," perhaps contrived, confrontation.

One of the reasons so many believe action is near is the well-known neoconservative preference that it be so. There is still a strong neoconservative faction within the Bush team, and their movement allies outside the administration, such as Michael Ledeen, John Bolton and Norman Podhoretz, have openly advocated striking Iran before it can develop nuclear weapons. The neoconservatives believe that in the end, Bush's team will indeed launch a military strike against Iran, or will nudge Israel to do so.

There is also evidence that the administration has given serious thought to the bombing option. In June 2006, I helped organize a round table on Iran for the New America Foundation, where I work, that attracted some heavy hitters in the national security world, including some of the names associated with the Aspen Strategy Group co-chaired by Brent Scowcroft and former National Intelligence Council chairman and Harvard Kennedy School dean Joseph Nye. As at the Aspen Strategy Group, comments made in my session were on a "not for attribution" basis. Several current and former Bush administration officials were in attendance.

I moderated the session. The task of those participating was to think and talk through the "unthinkables." On the one hand, was an Iran with nukes so hard to live with that the potentially disastrous consequences of an attack, even if it negated Iran's nuclear gains, would be worth it? Would an Iran with nukes be less paranoid about its security and thus less prone to meddling in other countries, or would it use the nukes as a shield to protect itself while continuing to finance terrorism?

Alternatively, if we bombed Iran would we be prepared to cede American primacy over the world's fossil fuel regime and see Iran, China and Russia develop what Flynt Leverett calls a "new axis of oil"? Would we be prepared for a post-bombing terrorist superhighway to erupt from Iran and race through Iraq, Syria and Jordan to the edge of Israel? America might not just see its global geo-energy position undermined, but could see a set of falling dominoes among Sunni Arab states that could dramatically remake the map of the Middle East -- and not in America's favor.

In other words, the task was to ponder what each of these bleak binary choices meant for America. They are often framed as "bombing" vs. "appeasement." The emerging polite term for the appeasement option is "strategic readjustment."

After the session, two Bush administration senior officials who were not present sent me letters, one to say the binary "to bomb or not to bomb" scenario was premature, the other to say it was not premature.

But a former administration official who was present at the session vigorously and emphatically embraced the either/or formula. He also had this to share about the inner workings of the Bush White House on Iran and the inevitability of military action:

The President is going to receive a memo -- some time in the next 6 to 12 months -- that presents a "bleak binary choice". Either he takes action to preempt Iran from reaching a nuclear threshold and calls for a military strike or he stands down and accepts a future with Iran with nuclear weapons.

Condi's job is to develop a "third option". She will dance round and round, waltzing with that third option. She will dance faster and faster with it, spinning and spinning, all around she'll go -- but when she's done she'll see that she's dancing with a corpse.

This President is the kind of president who believes it is his moral responsibility to address serious problems now and not to leave these tough actions to a successor.

Those are the cold, harsh realities that we face -- and to me, as I look ahead, I don't see how we come out of this without military action. Unless Iran abandons its nuclear weapons intentions, which I don't see happening, there will be a war.

So 15 months later, the president has now, presumably, received that memo, and those who hold the deterministic view that bombing Iran is around the corner could argue that they are in good company.

To try to discern what the president himself thinks, however, is very difficult. It's particularly hard when Bush is trying to convince Iran that the military option is real, and that if Iran doesn't work out a mutually acceptable deal with the U.S., he will launch a strike.

To date, however, nothing suggests Bush is really going to do it. If he were, he wouldn't be playing good cop/bad cop with Iran and proposing engagement. If the bombs were at the ready, Bush would be doing a lot more to prepare the nation and the military for a war far more consequential than the invasion of Iraq. There is also circumstantial evidence that he has decided bombing may be too costly a choice.

First, journalist Joe Klein documents a December 2006 meeting in which Bush met in "the Tank" with his senior national security counselors and the military's command staff and walked out with the impression that either the costs of military action against Iran were simply too high, or that the prospects for success for the mission too low.

Klein writes:

Then Bush asked about the possibility of a successful attack on Iran's nuclear capability. He was told that the U.S. could launch a devastating air attack on Iran's government and military, wiping out the Iranian air force, the command and control structure and some of the more obvious nuclear facilities. But the Chiefs were -- once again -- unanimously opposed to taking that course of action.

Why? Because our intelligence inside Iran is very sketchy. There was no way to be sure that we could take out all of Iran's nuclear facilities. Furthermore, the Chiefs warned, the Iranian response in Iraq and, quite possibly, in terrorist attacks on the U.S. could be devastating. Bush apparently took this advice to heart and went to Plan B -- a covert destabilization campaign reported earlier this week by ABC News.

After this meeting, Bush immediately tilted away from the Cheney-dominant view that military action was the most preferable course and empowered and released other parts of his administration to animate a third option.

Secondly, we know via material first reported on my blog, the Washington Note, and subsequently confirmed by the New York Times, Time and Newsweek, that Cheney and his team have been deeply frustrated by the "engage Iran team" that the president empowered and felt that they were losing ground to Secretary of State Condoleezza Rice, Secretary of Defense Robert Gates, Director of National Intelligence Mike McConnell and the president's new chief of staff, Joshua Bolten.

One member of Cheney's national security staff, David Wurmser, worried out loud that Cheney felt that his wing was "losing the policy argument on Iran" inside the administration -- and that they might need to "end run" the president with scenarios that may narrow his choices. The option that Wurmser allegedly discussed was nudging Israel to launch a low-yield cruise missile strike against the Natanz nuclear reactor in Iran, thus "hopefully" prompting a military reaction by Tehran against U.S. forces in Iraq and the Gulf. When queried about Wurmser's alleged comments, a senior Bush administration official told the New York Times, "The vice president is not necessarily responsible for every single thing that comes out of the mouth of every single member of his staff."

We know Bush rebuffed Cheney's view and is seeking other alternatives. That is the most clear evidence that Bush is not committed to bombing Iran. Even if Bush wanted to make the Iranians believe that he could go either way -- diplomacy or military strike -- Bush would not so clearly knock back one side in favor of the other to the point where the "bad cops" in a good cop/bad cop strategy would tell anyone on the outside that they did not enjoy the favor and support of the president.

Bush is aware that America's intelligence on Iran is weak. Even without admitting America's blind spots on Iraq, the intelligence failures on Iraq's WMD program create a formidable credibility hurdle.

Bush knows that the American military is stretched and that bombing Iran would not be a casual exercise. Reprisals in the Gulf toward U.S. forces and Iran's ability to cut off supply lines to the 160,000 U.S. troops currently deployed in Iraq could seriously endanger the entire American military.

Bush can also see China and Russia waiting in the wings, not to promote conflict but to take advantage of self-destructive missteps that the United States takes that would give them more leverage over and control of global energy flows. Iran has the third-largest undeveloped oil reserves in the world and the second-largest undeveloped natural gas reserves.

Bush also knows that Iran controls "the temperature" of the terror networks it runs. Bombing Iran would blow the control gauge off, and Iran's terror networks could mobilize throughout the Middle East, Afghanistan and even the United States.

In sum, Bush does not plan to escalate toward a direct military conflict with Iran, at least not now -- and probably not later. The costs are too high, and there are still many options to be tried before the worst of all options is put back on the table. As it stands today, he wants that "third option," even if Cheney doesn't. Bush's war-prone team failed him on Iraq, and this time he'll be more reserved, more cautious. That is why a classic buildup to war with Iran, one in which the decision to bomb has already been made, is not something we should be worried about today.

What we should worry about, however, is the continued effort by the neocons to shore up their sagging influence. They now fear that events and arguments could intervene to keep what once seemed like a "nearly inevitable" attack from happening. They know that they must keep up the pressure on Bush and maintain a drumbeat calling for war.

They are doing exactly this during September and October in a series of meetings organized by the American Enterprise Institute on Iran and Iraq designed to reemphasize the case for hawkish, interventionist deployments in Iraq and a military, regime-change-oriented strike against Iran. And through Op-Eds and the serious political media, the "bomb Iran now" crowd believes they must undermine those in and out of government proposing alternatives to bombing and keep the president and his people saturated with pro-war mantras.

We should also worry about the kind of scenario David Wurmser floated, meaning an engineered provocation. An "accidental war" would escalate quickly and "end run," as Wurmser put it, the president's diplomatic, intelligence and military decision-making apparatus. It would most likely be triggered by one or both of the two people who would see their political fortunes rise through a new conflict -- Cheney and Iranian President Mahmoud Ahmadinejad.

That kind of war is much more probable and very much worth worrying about.

Exporting Instability

Cecille Isidro — Mon, 10 Sep 2007 08:44:00 -0400

Under the guise of promoting a "security dialogue" in the Persian Gulf, the Bush Administration has proposed $63 billion in arms transfers to the Middle East over the next ten years. As is so often the case, team Bush seems to prefer to let the weapons do the talking, even when it claims to be engaging in diplomacy. The foundation of the deal is a pledge to sell $20 billion worth of high-tech arms to Saudi Arabia and the other oil-producing states in the Gulf. Items in the package reportedly include upgrades to Riyadh’s US-supplied fighter planes, satellite-guided bombs and combat ships. To ease any concerns about the Gulf buildup, the plan calls for increasing military aid to Israel and Egypt to $3 billion and $1.3 billion per year, respectively. That’s $43 billion in US taxpayer support over the next decade.

Why pour more weapons into the region now? The principal rationale appears to be to send a message to Iran that it must bend to US pressure to end its nuclear program, stop the flow of Iranian weapons to Iraqi insurgents and cease its support for Hamas and Hezbollah. Otherwise, the argument goes, not only will Tehran face the prospect of US military action but it will also be surrounded by neighbors armed with top-of-the-line US weaponry. The arms package will be seen as even more provocative by Iran in light of the latest move in the Bush Administration’s campaign to turn up the pressure on the regime: the recent decision to label its Islamic Revolutionary Guard Corps a terrorist organization.

Threatening Iran with military strikes and arms sales to potential adversaries is more likely to spur Tehran to add to its own arsenal while being less open to talks on its nuclear program. If the Bush Administration is looking for a new designated enemy to stand in for the late Saddam Hussein, this approach will work just fine. But if it wants to solve the security problems of the region, it would be hard to come up with a more counterproductive policy.

Secretary of State Condoleezza Rice and Secretary of Defense Robert Gates have tried to paper over the real intent of the deal by arguing that it will promote "stability" by bolstering moderate regimes. This is a strange assertion, especially as regards Saudi Arabia. Not only are funds from Saudi sources supporting insurgents in Iraq, but they are financing Islamic extremism around the world. The Saudis also operate one of the most repressive regimes on the planet, in direct contradiction of the Administration’s continuing claims to be promoting democracy. The State Department’s latest human rights report on Saudi Arabia contains this upbeat passage: "Religious police harassed, abused and detained citizens and foreigners of both sexes." The most recent Human Rights Watch Saudi report points out that "the government undertook no major human rights reforms in 2006, and there were signs of backsliding in issues of human rights defenders, freedom of association, and freedom of expression." Sending more weapons will not reverse these trends, which does not bode well for long-term stability in the Saudi kingdom.

In Egypt, decades of US aid have had no positive impact on human rights or democracy. Egyptian President Hosni Mubarak runs a quasi-Stalinist regime that won 88 percent of the vote in the last national elections while jailing numerous democracy advocates. As the State Department has acknowledged, torture is still widely practiced in Egyptian prisons, while Cairo’s overall human rights record is described as "poor." Rewarding the Egyptian government with an increase in US military aid is tantamount to condoning these repressive practices -- practices that are producing a popular backlash that could eventually lead to the end of the regime. If that happens, whatever government comes to power next will inherit huge stockpiles of US-supplied weaponry.

As for Israel, more military aid is the last thing it needs. In recent times Tel Aviv has used its military in ways that have undermined its own security as well as that of its neighbors. From the ongoing attacks on Gaza to last summer’s invasion of Lebanon, the Israeli government has unintentionally offered aid and comfort to hard-line forces, both among the Palestinians and in Lebanon. Israel has plenty of weapons; what it needs is a return to genuine diplomacy, ideally prodded by its closest ally, Washington.

Sixty years of arms racing has repeatedly undermined prospects for Middle East peace. Why should this latest round be any different? The only clear beneficiaries of this mega-deal will be US arms makers. Already gorging on expenditures for the wars in Iraq and Afghanistan, companies like Boeing, General Electric and General Dynamics can anticipate ten years of lucrative foreign sales if the deal goes forward. The arms lobby can be expected to vigorously support the deal if it is challenged on Capitol Hill.

Thankfully, there has been early opposition in Congress. Representative Anthony Weiner has pulled together a group of 114 House members opposed to the deal. Now the foreign affairs committee chairs in the House and Senate, Representative Tom Lantos and Senator Joe Biden, need to move from skepticism to opposition. They should hold hearings as soon as Congress comes back in September. And Hillary Clinton and Barack Obama need to join their rival John Edwards in roundly denouncing the deal. If there is a significant public debate about its likely impacts, it won’t withstand even minimal scrutiny.

Mideast stability can’t be promoted with arms, any more than democracy can be imposed through the barrel of a gun. Stopping or scaling back the Bush Administration’s Mideast arms package would be a step toward learning this lesson.

It's Pakistan's Choice

Cecille Isidro — Thu, 06 Sep 2007 09:23:00 -0400

As Pakistan’s president, Pervez Musharraf, struggles to retain power, the United States finds itself in a familiar predicament, one that illustrates a recurring pathology in its foreign policy. Having yet again cast its lot with a strongman, Washington is confounded now that his political position has become precarious. It’s the Anastasio Somoza, shah of Iran, Ferdinand Marcos dynamic in a different guise. Though Musharraf won’t be forced into exile like those friends of Washington, the best he can hope for is to survive the current turmoil with vastly reduced authority.

The Bush administration’s problem in Pakistan is that it has had a Musharraf policy but not one that engages the interests and aspirations of Pakistan’s citizenry. Pakistanis may have welcomed Musharraf in 1999 when, as army chief, he overthrew the inept and corrupt government of Prime Minister Nawaz Sharif, but that enthusiasm has evaporated.

Pakistan’s Islamic extremists, of whom the militants associated with the Red Mosque are representative, want Musharraf dead. Al Qaeda and the Taliban, which share this sentiment, enjoy considerable support among radical Islamist circles within Pakistan. They also have established bastions in the country’s wild northwest, which Pakistani governments, like the British imperial authorities that preceded them, have never been able to control. The commercial class may be divided on Musharraf, but the professionals and intelligentsia generally revile him. In their eyes, he acquired power illegally and has retained it by serially subverting the democratic process.

There is disquiet even within Musharraf’s principal bastions of support -- the armed forces and the intelligence services. His plummeting political stock makes him a liability and threatens their political clout and vast economic empire. But if they turn to another general, Washington will again become identified with a leader who wields raw power but enjoys little popular appeal; worse, Pakistanis will hold the U.S. responsible for arranging another coup.

Faced with Musharraf’s mounting weakness, the administration has pressed him to come to terms with his nemesis, the exiled former Prime Minister Benazir Bhutto, who cannily, if transparently, has been hyping the threat posed by terrorism and Islamic extremism, knowing that this is music to Washington’s ears. She has much to gain if, under U.S. pressure, Musharraf agrees to her terms (the most important being that he resign as head of the armed forces before running for president again and guarantee that she will not be arrested on corruption charges if she returns), enabling her to come home as something of a conquering hero.

But even if the two longtime foes do come to terms, it won’t matter nearly as much as news reports here and abroad suggest. Having invoked principle and having opposed Musharraf for years, Bhutto risks being diminished politically by striking a backroom bargain with him. Already, Sharif, leader of the Muslim League (two parties bear this name, one of which supports Musharraf), has been positioning himself as the unbending defender of democracy and lambasting Bhutto for what he portrays as her clandestine maneuvers with a discredited coup-maker. Sharif also is preparing to return from exile.

Even some of Bhutto’s supporters are dismayed. They believe that Musharraf is reeling and don’t want an accord with her to be the bell that saves him.

More important, the hope the Bush administration is investing in Bhutto is misplaced and is another instance of a personality-driven policy. There is no reason to assume that she will be any more successful in expelling Al Qaeda and the Taliban from their redoubts or curbing Pakistani jihadists than Musharraf has been, and she will certainly have less support within the national security bureaucracy.

Nor will Pakistanis bless the alignment with Washington if, in fact, they elect her prime minister. To the contrary, to be seen as a legitimate, independent leader, she will have to take account of their deep disaffection with U.S. policy. The White House and much of Congress seem unaware that most Pakistanis, regardless of their political outlook, oppose their country’s role in the Bush administration’s war on terrorism. The vast majority do not support the agenda of Al Qaeda, the Taliban and their local acolytes, and have never voted for the Islamist political parties in overwhelming numbers. But most believe that Pakistan has gained little from aiding the American offensive -- it’s India with whom the United States is forging a strategic partnership. And they fear that there will be more violence and instability if Pakistan continues being a platform for Washington’s anti-terrorism campaign.

The administration’s best course of action in Pakistan is inaction. Let Pakistanis find a solution to their crisis. Any made-in-America remedy will not only fail to make matters better, it will make them worse. President Bush would do well to remember the aphorism "First do no harm" or, given his penchant for the informal, a folksier variant: "Don’t do something, just stand there."

The War on Poppies

Cecille Isidro — Sun, 02 Sep 2007 02:41:00 -0400

Stepping onto the balcony of the governor’s mansion in Uruzgan in southern Afghanistan, you quickly grasp the scale of the drug problem gripping the country. Beginning at the walls of the mansion and stretching as far as the eye can see are hundreds of acres of poppy fields ready for harvesting for opium sap, pretty much the only way to earn a living in poverty-stricken Uruzgan.

In late April, at the height of poppy-growing season, a team of more than 200 police officers from Kabul led by contractors working for the American company DynCorp International arrived in Uruzgan to undertake the first eradication efforts in the province. After some tense negotiations with local officials, the teams went out to begin destroying the poppy fields. For two days, nothing much happened, mostly because of a dispute about which fields were to be eradicated. But on the third day, when the work was getting underway in earnest, a Taliban-led force bearing small arms, rocket-propelled grenades and mortars appeared from nowhere and attacked the eradication teams as they destroyed the fields. Four Afghan police officers were seriously injured.

The Uruzgan attack demonstrated, for those who hadn’t yet figured it out, just how the Taliban is seeking to exploit popular resentment against eradication efforts. All across the country, Afghan support for poppy cultivation is on the upswing; 40% of Afghans now consider it acceptable if there is no other way to earn a living, and in the southwest, where much of the poppy crop is grown, two out of three people say it is acceptable. In Uruzgan’s neighboring province, Helmand -- which supplies about half the world’s opium, the raw material for heroin -- favorable ratings for the Taliban now run as high as 27% (compared with 10% in the whole of Afghanistan).

Instead of taking such findings to heart, the Bush administration’s counter-narcotics policy over the last three years has placed eradication at its center, even though it has been met with growing Afghan skepticism and, in some cases, violence, and has coincided with a general decline in public support for the U.S. and NATO mission in Afghanistan. Why is the policy so unpopular? Consider that Afghanistan’s farmers will produce an estimated 9,000 tons of opium this year from 477,000 acres, according to a United Nations report released last week, and that the total farm value of the crop will be about $1 billion. Most farmers who cultivate poppies do so because few other options -- either alternative crops or alternative livelihoods -- exist in their part of the world. You simply cannot eviscerate the livelihoods of the estimated 3 million Afghans who grow poppies and not expect a backlash.

What’s more, our policy is not effective. Though the U.S. spends about the same amount on counter-narcotics activities in Afghanistan annually as all Afghan poppy farmers combined take home in a year, our policies have not prevented record-setting poppy crops from springing up with every succeeding year, nor have they prevented Afghanistan from becoming a quasi-narcostate where corruption is rampant. Last week’s U.N. report said Afghanistan continues to be the center of the world’s heroin trade, accounting for 93% of global opium production. It noted a 17% spike in poppy cultivation in the last year, on the heels of a record 59% rise the year before.

The U.S. government, in short, is deeply committed to an unsuccessful drug policy that helps its enemies. The Taliban derives not only substantial financial benefits from the opium trade, according to U.S. military officials in Afghanistan, but wins political benefits from its supportive stance on poppy growing, masterfully exploiting situations in which U.S.-sponsored eradication forces are pitted against poor farmers.

Eradication has also become a wedge in the fragile relationship of the NATO countries that are part of the coalition in Afghanistan. Many European countries, including the Dutch, who have forces stationed in Uruzgan, oppose the American eradication policy. The U.S. needs its NATO partners to maintain the legitimacy of the multinational force in Afghanistan. Holding to a failed eradication policy threatens those relationships.

In early August, the U.S. State Department presented its updated counter-narcotics strategy for Afghanistan. For the most part, the proposal offered few new initiatives other than a welcome emphasis on cracking down on drug kingpins. At its center, the strategy still depends on eradication efforts, along with veiled hints that the U.S. government may also pursue aerial chemical spraying, a tactic that many fear will further alienate the Afghan population. The increased funds set aside in the new plan to help farmers find alternative livelihoods -- $50 million to $60 million -- are woefully inadequate and constitute a paltry 6% of American counter-narcotics spending in Afghanistan for 2007. Eradication continues to receive the largest share of the budget.

The State Department strategy misses the forest for the trees. The priority of the United States and NATO should be first to thwart the Taliban insurgency while bettering the lives of typical Afghans through significant economic and reconstruction efforts to win hearts and minds. Doing nothing on the poppy front would do more to achieve this goal than the counterproductive eradication path the U.S. currently pursues. The U.S. should adopt a "first do no harm" policy that temporarily suspends eradication while implementing a promising portfolio of new initiatives to build up alternatives for farmers.

To begin with, the U.S. needs to invest in building up the legitimate Afghan economy. Though poppy fetches much higher prices than most other crops, subsidies, price supports and seeds for alternative crops should be offered to offset that price gap. Because other crops often face pitfalls such as the absence of distributors, domestic demand or consistent prices abroad, the international community should help Kabul set up an agency, modeled on the Canadian Wheat Board, that would purchase crops from farmers at consistent prices, and market and distribute them internationally. The U.S. and other NATO countries should open their markets and extend trade preferences to Afghan agricultural products and handicrafts.

Currently, the U.S. funds alternative livelihoods at one-third the rate of eradication efforts -- and the money is still not making its way into the pockets of farmers. Because of bureaucratic inefficiencies, only 1% of the $100 million in funds for alternative livelihoods had been disbursed as of March, according to the U.N. Office on Drugs and Crime. One reason for this is that the Afghan narcotics ministry lacks the staff and skills to quickly and effectively disburse funds. So the task should be outsourced -- in the same manner the U.S. outsources its eradication efforts to private companies like DynCorp -- until the Afghan government develops the capacity to get the job done.

The U.S. and NATO should also endorse a pilot project proposed by the Senlis Council, an international nongovernmental organization with offices in southern Afghanistan, to harness poppy cultivation for the production of legal medicinal opiates such as morphine for sale to countries, such as Brazil, that are in short supply of cheap pain drugs for patients.

The U.S. must stop targeting poor farmers and focus on the traffickers who make the bulk of the profits from heroin. The U.S. Drug Enforcement Administration agents on the ground should step up efforts to interrupt money-laundering networks and interdict labs and shipments. The DEA should also turn Afghanistan’s shame-based culture to its advantage by making public the list of top Afghan drug suspects, including government officials, as it did in the 1990s, when it publicized the names of Colombia’s drug kingpins.

The U.S. Government Accountability Office and the Council on Foreign Relations estimate that the elimination of narcotics from the Afghan economy will take well over a decade. Given that time frame, our counter-narcotics policy needs to be guided by a clear strategic purpose -- providing security and defeating the Taliban. These are not simple drug dealers but narcoterrorists with a political agenda. A "first do no harm" approach would ensure that battling the drug trade does not compromise the fight against the terrorists.

Share the Credit

adminn — Sat, 01 Sep 2007 08:55:00 -0400

The Democrats are a potential majority party in need of a major idea with potential. The major idea that built a Republican majority starting with Ronald Reagan's election was simple: cutting income taxes, with or without cuts in spending. The Republicans reduced income tax rates and then they cut big holes in those rates by creating new or enlarged tax credits available only to Americans who pay income tax.

Meanwhile payroll taxes have risen for working Americans who, because they pay little or no income tax, are ineligible for a range of tax breaks from the $1,000-a-year child tax credit to the home mortgage interest deduction.

Some progressives hope to reverse a generation of Reaganism by repealing George W. Bush's income tax cuts in order to pay for major new spending programs. But the stigma attached to "tax-and-spend" liberalism by a generation of conservative propaganda remains. Equally dubious is the strategy proposed by neoliberal Democrats, whose slogan seems to be: "no pain, no gain." Their formula of budget-balancing fiscal conservatism plus tiny, symbolic subsidies has no popular appeal.

Instead the Democrats should take a leaf from the Republican playbook and position themselves as the party of deep tax cuts for working Americans. What the Reaganites did for affluent income tax payers, Democrats (and like-minded Republicans) can do for America's working-class majority.

Here is a majority-making idea: Make all Americans who pay payroll taxes eligible for every existing income tax credit -- the child tax credit, the home mortgage interest deduction, all of them. With a single stroke, this would accomplish two important goals. First, it would provide substantial tax relief for working Americans who pay only, or chiefly, payroll taxes. Second, it would permit these same payroll tax payers to enjoy the same tax breaks that more affluent income tax payers now enjoy exclusively.

The party that opens up all income tax breaks to all payroll tax payers might be able to consolidate the next majority in American politics, a majority built on center-left, tax-cut Reaganism for the masses, not the elites.

* * * * *

If you're like most Americans, you pay the federal government more money in the form of the 15.3 percent payroll tax taken out of your paycheck every two weeks than you pay in income tax. Even Americans making between $65,000 and $100,000 a year, well above the national median income, pay a greater share of their federal tax dollar for payroll tax than for income tax. You have to be in the highest-earning 20 percent of Americans to pay more income tax than payroll tax.

You'd think that politicians in Washington would be eager to relieve voters of the payroll tax burden, right? Wrong.

Since 1980 the payroll tax has been hiked several times. Meanwhile federal income taxes have been slashed repeatedly -- to the benefit, chiefly, of the rich. The wealthiest 5 percent of taxpayers saw their effective federal tax rates fall from 30.1 percent in 2001 to 25.6 percent in 2004, according to the Congressional Budget Office (CBO). And they have benefited even more from steep reductions in taxes on capital gains and dividends.

To make matters worse, more and more of the burden of paying for the federal government has shifted to the payroll tax, which hits middle-class workers the hardest. As a percentage of federal revenue, the payroll tax rose from 27 percent in 1973 to a whopping 40 percent in 2003.

It gets even worse. In the past generation, Congress has quietly expanded an invisible welfare state for the well-to-do -- a generous system of income tax subsidies that is off limits to tens of millions of working-class and middle-class Americans.

Here's how the tax-break welfare state for the affluent works: The IRS allows them to take advantage of a number of different tax credits, from the home mortgage interest deduction to the $1,000-a-year child tax credit to a separate credit for money spent by working parents on child care. Under the current tax system, the affluent are also able to shelter large amounts from taxes in tax-preferred savings vehicles like IRAs and Keogh Plan pensions.

Here's the catch: You can only claim these tax credits against income taxes, not against payroll taxes. One-third of American families pay only payroll tax and no income tax. If you belong to one of those families, you're out of luck.

And even if you pay income tax on top of payroll tax, you can only claim these credits for your income tax liability. In theory income tax payers can claim thousands of dollars in total for various deductions -- but only if they pay that amount or more in income taxes. The more money you make, the greater your subsidy from the government! Here's one example: In 2005 families earning more than $75,000 saved twice as much money using the child tax credit as families earning less than $30,000.

And we haven't even mentioned corporate income tax breaks that chiefly benefit the economic elite in this country. Hundreds of billions of dollars in potential federal revenues are lost each year because of private company health care plans and pensions -- including "gold-plated" plans for corporate executives. If you work for an employer who does not provide either health care or a pension, you're out of luck again.

Reforms in recent decades have created a three-caste society for purposes of taxation. At the bottom, the poor have largely been exempted from taxation and receive such generous tax subsidies as the Earned Income Tax Credit (EITC). At the top, income tax rates have fallen, and the reduced rates, in turn, have been hollowed out by a system of generous tax credits for upper-income households. Stuck in between the affluent and the poor are working-class Americans. They make too much money to receive means-tested subsidies for the poor like the EITC. But they do not qualify for the income-tax welfare state of the affluent because they pay little or no federal income tax. The chief federal tax they pay is the combined Social Security/ Medicare payroll tax, for which there are no tax credits comparable to those available to affluent income tax payers.

To put it another way, the United States has moved away from a system of universal social insurance for the broad middle class toward two means-tested welfare states taking the form of tax expenditures and administered by the IRS: a tax-credit welfare state for the poor (the EITC) and another tax-credit welfare state for the affluent.

* * * * *

The idea of granting payroll tax relief has been around since the 1980s. Until now ideas for payroll tax relief have taken four forms: abolition of the payroll tax, permanent payroll tax rate cuts, rebates for payroll taxes, and the extension of the child tax credit to workers who pay payroll tax but not income tax.

Al Gore has proposed abolishing the payroll tax and replacing it with a carbon tax. In our book The Radical Center (2001), Ted Halstead and I proposed replacing the payroll tax with a progressive consumption tax. There is little political support, however, for completely substituting a new tax for the payroll tax.

In the early 1990s, Senator Daniel Patrick Moynihan proposed permanently cutting payroll taxes so that they met only annual Social Security obligations. Richard Darman, the budget director for President George H.W. Bush, called it "the most irresponsible budget idea of the 1990s." Moynihan's proposal went nowhere in a decade marked by hysteria about the alleged looming bankruptcy of Social Security.

Robert Reich, in this magazine, was just one of a number of writers who floated the idea of payroll tax rebates in the early 2000s, as part of efforts to devise a progressive alternative to the further round of income tax cuts proposed by the current President Bush and enacted by the Republican Congress. Like proposals for the abolition of payroll taxes and Moynihan's proposed rate cuts, the rebate proposals would help many working Americans. But all three kinds of proposed reforms are completely unconnected to the question of income tax expenditures, which would continue to exist and continue to be unavailable to payroll tax payers.

The link between income tax credits and the payroll tax was actually made by Newt Gingrich and his Republican colleagues in the 1994 Contract with America. The Contract proposed extending the then-novel child tax credit to working parents who paid payroll taxes but not income taxes. Once in power, the Republicans reneged on their promise, and to this day the child tax credit is available only to parents who pay income tax. But the idea did not die. It was recently revived by the Center for American Progress, which has proposed making the child tax credit refundable to all families who pay payroll taxes.

This is an excellent idea -- but why limit the reform to only one tax credit? Here is a simple, bold, and elegant proposal which at one stroke would universalize the income tax credit system and, at the same time, grant significant payroll tax relief to stressed American households: Make all Americans who pay payroll taxes eligible for all existing income tax credits for children, housing, education, savings, and other purposes. Every single tax credit that can now be claimed by individual income tax payers, from the child tax credit to the home mortgage interest deduction, should be available to all Americans who pay the payroll tax. Every single one. No exceptions.

Call it the Total Tax Credit (TTC) system. Under the TTC system, even if you don't pay income taxes, your employer would let you deduct your tax credits from the payroll tax that is sent to the government every two weeks. Result: fatter biweekly paychecks for all American workers. The biggest winners would be those who could claim the most TTC deductions: home-owning families with dependent children. But even single, childless renters who don't pay income tax, or pay only a small amount, could benefit as well -- for example, from tax credits for savings. In this way, today's tax credit system exclusively for income tax payers would be turned overnight from a professional-class gated community into a mainstream middle-class neighborhood.

* * * * *

But wait. Wouldn't allowing payroll tax payers to claim credits against the payroll tax blow a huge hole in revenues? Wouldn't we need to make up for the lost revenue in order to fund Social Security and Medicare? Of course we would. And we could, in various ways.

The first step would be to lift the cap on payroll taxation, which is now $97,500 a year. The American public supports the idea of lifting the cap on Social Security payroll taxes. In a February 2005 Washington Post poll, 81 percent said that Americans who make more than the present limit should pay Social Security tax on their wage income. There is a precedent for this long-overdue reform: In 1993 Congress removed the similar cap that previously existed on Medicare taxes on wage income.

Would lifting the cap hurt mainstream Americans? Hardly. Only the top 5 percent or 6 percent of wage earners would see their Social Security tax go up. These are the same people who have received most of the benefits from tax cuts over the past 30 years. They can afford it.

Lifting the cap while keeping benefits for affluent retirees unchanged would produce a surplus for Social Security for the next 75 years. But this assumes no payroll tax relief for middle-income workers. If we adopt the Total Tax Credit system, then the money that streams in from applying payroll taxation to wage income higher than $97,500 would fill part of the revenue shortfall created by extending income tax credits to payroll tax payers. But we would still need to cut spending elsewhere or come up with new revenues.

How about imposing a cap on tax expenditures -- while lifting the cap on payroll tax? Right now the benefits of the home mortgage deduction go disproportionately to the richest Americans with the biggest houses. Capping the home mortgage interest deduction at, say, the median amount spent by homeowners would result in new revenue flowing from the rich into federal coffers -- without raising existing federal income tax rates at all. Politically speaking it's much more attractive to raise revenue by capping income tax loopholes than to raise income tax rates. Reducing the amount of money the wealthy can shelter in tax-favored savings vehicles alone would result in a flood of new revenues to the Treasury. The price of extending today's income-tax-only credits to all American payroll tax payers without bankrupting the government may be to make all tax credits -- for housing, children, and education -- more modest. But that's how it should be, anyway.

The Total Tax Credit system would also affect the economy indirectly, to the benefit of the broad middle class. As take-home pay for working people increased, the economy's spending on housing, day care, and other sectors would come to include the less affluent. A universalized home mortgage interest deduction capped below the current $1 million would encourage realtors to build a greater number of modest homes, rather than second homes and McMansions. Day-care centers would find a new clientele in working-class parents as well as professionals. Allowing payroll tax payers to cut their payroll tax by saving money in tax-favored retirement accounts would create an entirely new source of capital for banks. America's tax-credit-subsidized economy would shift downmarket -- and about time, too.

Lifting the cap on payroll taxes while capping the newly universal tax credits might still result in revenue shortfalls. We could increase other taxes that fall lightly on working people, such as income taxes, taxes on capital gains and dividends, and estate taxes. Or we could raise revenue from new taxes, like a national sales tax or value-added tax (VAT) on luxury goods. Think about it -- a national tax on luxuries enjoyed by the wealthy could help to pay the cost of extending tax breaks now enjoyed by elite income tax payers to ordinary payroll tax payers.

But our representatives should prefer to raise new revenue to pay for the Total Tax Credit system by means of consumption taxation rather than higher income taxes, and the reason is political, not economic. Consumption taxes, like national VATs elsewhere in the world, state and local sales taxes in the United States, and, for that matter, payroll taxes, have the political advantages of being inescapable and invisible. Payroll and consumption taxes are difficult if not impossible to avoid. And even more importantly, because they are relatively invisible compared to highly transparent taxes like the income tax and property tax, consumption taxes and payroll taxes are less likely to provoke tax revolts.

In Europe the architects of generous social-insurance systems have been wise to rely heavily on non-transparent taxes like payroll taxes and consumption taxes. While these are regressive, in Europe their effect has been moderated by progressive spending. In the taxophobic United States, we could achieve the same result by making our tax burden more progressive. Social-democratic purists may lament the fact that so much public policy in the United States is done via the tax code rather than direct spending programs. But instead of complaining that the United States is not Sweden, American progressives and centrists ought to make a virtue of necessity and make the existing tax-expenditure welfare state nearly universal (by allowing payroll tax payers to participate) and more progressive (by capping the new federal total tax expenditures).

* * * * *

What about the politics of the total tax credit proposal? Two questions must be addressed: Would it endanger public support for Social Security? And would it be popular with voters?

The first question is whether it is wise partly to sever the link between payroll taxes and Social Security expenditures, something that any major payroll tax relief plan without major Social Security spending cuts would do. Franklin D. Roosevelt conceded that the payroll tax was a regressive tax, but argued that the link between contributions and payouts was necessary so that "no damn politician can ever scrap my Social Security program." The same logic has inspired many progressives as well. Like FDR, they fear that Social Security would no longer be viewed as social insurance for the middle class but as a redistributive welfare program for the elderly poor. And as the saying goes, "programs for the poor are poor programs."

The evidence suggests, however, that there is little basis for the fear that Social Security will lose public support if it is funded by taxes other than payroll tax. Some of the evidence comes from abroad, from countries that fund their public pension systems partly or wholly out of general revenues. But the most convincing evidence comes from here in the United States. Medicare is divided into two programs, Part A and Part B. Part A is funded by the Medicare payroll tax. Part B is funded in part from general revenues. In spite of this mixture of streams of funding, support for Medicare as a whole remains strong -- so strong, in fact, that Bush and the Republican Congress presided over the biggest expansion in Medicare expenditures since the program's inception, in the form of the Medicare drug benefit.

The truth is that whether programs are popular or not seems to have no connection to how they are funded. Social Security in particular remains the "third rail" of American politics. By endorsing partial privatization of Social Security, Bush boldly seized the third rail -- and was promptly shocked. Public reaction to his idea was so hostile that the idea died, even in a Republican Congress.

The same fate undoubtedly awaits proposals to impose radical means-testing and steep cuts on middle-class Social Security payments as an alternative to raising taxes to cover Social Security costs. By paying for Social Security out of general revenues or other dedicated taxes, the solvency of Social Security can be assured, even as the Total Tax Credit system slashes payroll tax for most Americans.

* * * * *

The larger political issue remains to be addressed: Will the Total Tax Credit system play in Peoria? The answer is obvious: It is hard to imagine a proposal that would be more popular with the American public.

The swing vote in American politics since the 1960s has consisted of high-school-educated white working-class populists -- Reagan Democrats or Jim Webb Republicans. A slight shift of these voters gave Congress to the Republicans in 1994 and took it away in 2006. In theory the Democrats can build a bare-majority coalition on the basis of affluent liberal whites, blacks, and Latinos. But a veto-proof Democratic supermajority in Congress capable of passing reform legislation, with or without a Democratic president, cannot exist in the foreseeable future unless white working-class swing voters are welded to the party. And these are the very voters who would benefit the most from the Total Tax Credit system.

What do today's Democrats offer these voters? The neo-liberal wing offers Rubinomics -- deficit reduction, cuts in middle-class entitlements like Social Security, and symbolic microsubsidies. For the working class, Rubinomics is all pain and no gain -- their Social Security benefits would be slashed under most neoliberal Social Security solvency plans, and new subsidies would be means-tested programs for the poor for which the working class is ineligible.

The left wing of the Democratic party is more in tune with the operational economic liberalism of working-class voters, who tend to be New Deal liberals when it comes to spending (if not taxing) and moderate conservatives when it comes to social issues. But the 2006 election was a referendum on a lost war, not a sign that the public in general -- and working-class swing voters in particular -- want more direct public spending.

The TTC system offers Democrats a third way: putting money in the pockets of working-class voters by cutting their taxes, not by appropriating more money for federal programs. This Reaganism for the masses is immune to political attack by Reaganites themselves. The gloomy deficit hawks in both parties can flap their wings and squawk about how irresponsible it is to cut the payroll tax, even if the cap is raised. But progressives are likely to find allies among two groups of conservatives: populist supply-siders and family-values social conservatives like Allan Carlson, who have been arguing for tax relief for working-class families for years.

Conservatives have had considerable success in arguing against making income tax credits refundable for the non-tax-paying poor. They argue that the very concept of "tax expenditures," which treats special-purpose tax breaks like the child tax credit as the equivalent of government spending, is an academic fiction. In reality, they argue, these tax breaks are not government subsidies at all. The government is simply allowing taxpayers to keep more of their own money.

But this argument against extending income tax credits to Americans with little or no tax liability does not work against extending income tax credits to Americans with another kind of tax liability -- payroll tax liability. Conservatives may argue that the untaxed poor don't deserve tax breaks -- but working-class Americans are taxpayers themselves. Conservatives cannot argue that Americans who pay payroll tax should be discriminated against in favor of Americans who pay income tax. Doing so would be political suicide.

In an ideal world, the Total Tax Credit would be refundable so that non-taxpayers among the working poor would get them, too, in the form of federal subsidies like the EITC. However, abandoning the goal of making the Total Tax Credit refundable to the non-tax-paying poor might be the price of a bipartisan coalition to enact this important reform.

Besides, Republicans who oppose the TTC will doubtless have it pointed out to them it was Newt Gingrich who in 1994 proposed making the child tax credit available to payroll tax payers -- a key element of the Total Tax Credit proposal. And it was Bush who in 2006 proposed capping "gold-plated" income tax expenditures, a precedent for another key element of the TTC system: capping "gold-plated" tax expenditures that benefit the affluent.

Nor would the TTC pit income tax payers against payroll tax payers. On the contrary, large numbers of income tax payers would be able to add their payroll tax to their income tax, against which they could claim bigger tax credits. Many in the upper-middle class as well the lower-middle and working classes would benefit from a Total Tax Credit law.

Making payroll tax payers eligible for all income tax credits is a big idea that can shake up the stagnant domestic policy debate. We've had three decades of income tax cuts for the elites; now it's time for payroll tax cuts for the masses. "Lift, cap, and share" should be the motto of proponents of the TTC system. Lift the cap on payroll taxation; cap all income tax expenditures; and share all existing income tax expenditures with Americans who pay payroll tax, even if they pay no income tax at all. If Democrats are shrewd enough to take up this cause, they could immunize themselves against conventional right-wing attacks. How could conservatives possibly object to cutting taxes and modifying existing programs to make them more fair? (There would still be the option of adding new tax credits in the future, like one to help people buy health insurance under an individual mandate system or to offset public health programs paid for by state taxes.)

It's time to share the credit -- the tax credit. The next president should work with Congress to ensure that all taxpayers get exactly the same tax breaks, whether they pay income tax on top of payroll tax or payroll tax alone. That's not only fair -- it's the American thing to do.

Defense Vision MIA?

Cecille Isidro — Thu, 30 Aug 2007 12:33:00 -0400

Recent Democratic debates on national security have focused on charges and countercharges over who is better prepared to be commander in chief. Not enough attention has been paid to whether any of the major Democratic candidates offers a vision of U.S. foreign policy substantially different from that set out by the Bush administration.

While Barack Obama has criticized Hillary Clinton for promoting a "Bush lite" foreign policy, his own advocacy of preventive strikes against al Qaeda sanctuaries in Pakistan is uncomfortably close to the Bush doctrine of striking first and asking questions later.

And Mrs. Clinton’s insistence on keeping "all options on the table" in dealing with potential adversaries -- presumably including the use or threat of use of nuclear weapons -- represents old thinking that should have no place in a post-September 11, 2001, foreign policy.

But perhaps the most troubling sign that an Obama or Clinton administration would be more likely to pursue business as usual than a new national security vision is their call for building up U.S. armed forces. Both have urged adding 80,000 troops beyond current levels.

Advocating more troops raises an obvious question. What would the additional troops be for? Since all Democratic candidates claim to favor a withdrawal of U.S. combat troops from Iraq in relatively short order, the increase could not be meant to reinforce the U.S. presence there, unless they plan to maintain the occupation far longer than advertised.

Do Mrs. Clinton and Mr. Obama want to ensure that the U.S. military is ready to engage in future Iraq-style occupations? Do they contemplate multiple humanitarian interventions that would involve hundreds of thousands of troops? Or is the call for more troops simply a political insurance to insulate them from Republican claims they are "soft" on terrorism?

None of these rationales is persuasive. In fact, a case can be made that an increase in troop strength is just as likely to detract from U.S. security as improve it.

As currently configured, the U.S. military is better at overthrowing governments or dealing with conventional threats than it is at fighting insurgencies or striking terrorist strongholds. Bringing in more troops without radically altering the way current forces are trained and equipped will not change this reality.

Increasing Special Forces for use in antiterrorist actions is a reasonable mission but does not require 80,000 more troops. Some of these units can be developed by training personnel already in the armed forces, rather than using new recruits who would take several years to attain adequate readiness. Unless Mrs. Clinton and Mr. Obama can clearly articulate the mission or missions requiring additional forces, they would be better served sticking to the issue of how to rebuild forces at existing levels after the trauma of Iraq.

Despite all of his talk of military reform and a "revolution in military affairs," Donald Rumsfeld was only able to make changes at the margins of Pentagon procurement and strategy. For their part, none of the major Democratic candidates have seriously taken up the challenge of planning to reconfigure our sprawling military apparatus to meet current threats.

One place to start would be canceling programs like the F-22 combat aircraft, the V-22 Osprey, and the Virginia class submarine. These systems were designed when the Soviet military was deemed the primary threat, rather than the current challenge posed by a loose network of terrorist groups waging unconventional warfare.

In his first campaign for the White House, even George W. Bush talked about the need to discard "Cold War relics" in favor of lighter, more maneuverable weapons systems. And despite former Defense Secretary Donald Rumsfeld’s penchant for alienating the very constituencies he needed to implement military reform, two major systems -- the Crusader artillery system and the Comanche helicopter -- were canceled on his watch.

Unless the Democratic front-runners begin criticizing unnecessary weapons and defining new missions for the armed forces, their record on military reform -- if elected -- may not even match the Bush administration’s disappointing performance.

Drucker's Lessons for China

adminn — Fri, 17 Aug 2007 06:55:00 -0400

The most dangerous thing being produced in China is neither lead paint-laden toy cars nor magnet-spewing Polly Pocket dolls and Batman action figures. Rather, it is a booming capitalist culture that, far too often, places value over values.

This reality was brought home again this week, as Mattel announced its second big recall of Chinese-made merchandise in a fortnight. The news, coming on the heels of Chinese food, drugs, and other items being recalled or fingered as potentially hazardous, resulted in a renewed round of pleas in Washington for heightened vigilance by the Consumer Product Safety Commission. Watchdogs, meanwhile, advocated independent, third-party testing of toys being imported into the U.S.

All of this is reasonable. But it won't get at the real issue: the need to instill in China's burgeoning population of factory owners and managers the fundamental idea that the only way to sustain a business -- indeed, the only way to sustain Chinese capitalism -- is to make sure that they cultivate a sense of social responsibility.

On Message

Earlier this summer, I took part in a symposium at Claremont Graduate University in California, where a group of Chinese entrepreneurs expressed serious concerns that in the eyes of far too many young people in their country, becoming rich and being ethical are somehow mutually exclusive.

The occasion for this gathering, which drew attendees from 10 different nations and all over the U.S., was to discuss the work of the late Peter Drucker, the renowned management philosopher who held that "free enterprise cannot be justified as being good for business; it can be justified only as being good for society."

Drucker, who died two years ago at age 95, was no starry-eyed sloganeer. And he sure wasn't against making money. "Actually," he wrote, "a company can make a social contribution only if it is highly profitable."

And so, through a career during which he authored 39 books, Drucker helped instruct countless executives, including Intel's Andy Grove and General Electric's Jack Welch, on how to do just that. He preached the essentials of sound management: marketing and innovation, financial planning, the effective deployment of human and physical resources, and much more.

First, Do No Harm

Yet all of it was premised on a notion that, all too often, gets lost in the never-ending race to produce more and more goods at ever-cheaper prices. "The first responsibility of a professional," Drucker explained, "was spelled out clearly, 2,500 years ago, in the Hippocratic oath of the Greek physician: Primum non nocere, 'above all not knowingly to do harm.'" More than anything else, Drucker said, this "is the basic rule of professional ethics."

China, of course, is hardly the only spot around the globe that could stand to be reminded of this. A steady drumbeat of headlines about American executives -- accused in the last few weeks alone of insider trading, conflicts of interest, and overcharging customers -- makes clear that no nation has a monopoly on scruples.

But the rapidity with which China's economy is expanding makes it especially important that Drucker-like thinking be woven into the fabric of everyday life there.

Thankfully, this is starting to happen. The Chinese delegation to Claremont was led by Minglo Shao, who heads a cluster of management-training academies in China based on Drucker's teachings. (Shao is also a member of the board of the Drucker Institute, which sponsored the event and which I run.)

Inspirational Reading

He came to Drucker the hard way. Shao was born in 1949, when the Communist government took over China. The Cultural Revolution unfolded when Shao was a teenager. He was sent to a remote part of northwestern China where he worked as a farmer and was so poor, he lived in a cave. Finally, in the early 1980s, friends helped Shao relocate to Hong Kong.

There, in his early 30s, he launched a trading company and began to invest in other ventures on the mainland. Eventually, he won the franchise contract in China for ServiceMaster, the lawn care and pest-control giant. Later, Shao branched out into a host of other industries and also became a major philanthropist.

Along the way, Shao read Drucker and was so taken with his ideas and ideals that he ultimately pitched him on the concept of establishing an educational institution based on them in China. Drucker not only blessed the proposal, he immediately grasped how far-reaching it could be.

"A developing country can easily import technology," Drucker noted. "It can easily import capital. But technology and capital are simply tools. They only become effective if properly used…by competent and effective management." The creation of such a pool of managerial talent, he added, "is both China's greatest need and China's greatest opportunity."

Today, Shao's Peter F. Drucker Academy trains more than 3,000 students a year, with plans in the works to train 10,000-plus. "You are not opening a university or business school of the traditional sense," Drucker told Shao, "but you are trying to build a kind of new managerial culture."

Imparting Drucker to a new generation of Chinese isn't a panacea. But it's certainly not a bad place to start.

Government's Attention Span Needs Repair

Cecille Isidro — Tue, 07 Aug 2007 12:27:00 -0400

So now they tell us that 73,764 American bridges last year were rated "structurally deficient" -- the same rating as the Interstate 35 bridge that collapsed last week in Minneapolis.

That doesn’t mean all those bridges are deadly dangerous, but it does mean nobody really knows. One might think, after 7,000 years of civilization, that the governing class would have figured out how to keep bridges from killing its citizens, but evidently our betters have had other priorities.

In the meantime, a lot of cheap short-term political points will be scored on this tragedy -- before we get to the long-term reality, which will be really expensive.

First, the politics: Joshua Holland, writing for the left-leaning AlterNet.org, summed up the instant liberal spin: The bridge disaster was "a predictable outcome of the rise of ‘backlash’ conservatism; we’ve swallowed 30 years of small-government rhetoric, and it’s led us to a point in which our infrastructure, once the pride of the developed world, is falling apart around us."

Most likely, Holland was thinking back to California’s Proposition 13, the 1978 property-tax-cut initiative overwhelmingly enacted by Golden State voters. Did that tax revolt signal the "gutting" of the Golden State’s ability to spend? Let’s take a look: In 1978, the state government alone spent $18.8 billion; in 2007, it will spend $103.1 billion -- more than five times as much. And that figure doesn’t include local governments, or various "off-budget" debts.

But what about the federal government? Did tax cuts favored by Ronald Reagan and George W. Bush "slash" Washington’s ability to provide for us? Let’s go to the tape: In 1980, the last year of Jimmy Carter, federal revenue amounted to $517 billion; eight tax-rate-cutting years later, in 1988, revenue came to $909 billion. Incidentally, those numbers would seem to vindicate the "supply side" argument -- that lower rates lead to more economic activity, which leads to more revenue -- but we can save that for another time.

But what about now? What about the incumbent presidency? In the last year of Bill Clinton, the feds took in $2.025 trillion. This year, after a string of Bush tax cuts, the supply-side magic worked once again: Revenue are projected to be $2.458 trillion -- despite 9/11 and everything else. So if today’s government wanted to do so, it could pay for lots of infrastructure.

But what is the federal government’s priority these days? After the Minnesota tragedy, the president and Congress quickly coughed up $250 million for a new bridge.

So one could ask, what have the feds been up to? On CNN, Jack Cafferty declared that the cost for bridges was "a drop in the bucket compared with $450 billion wasted in Iraq." Well, it is hard to defend the Iraq expenditures. And indeed, the $1.6-trillion "infrastructure deficit," as calculated by the Urban Land Institute, is a daunting figure.

But during the 4 1/2 years since Uncle Sam "liberated" Iraq, he has kept plenty of money for other things; total federal expenditures, for all purposes, have been around $12 trillion. And state and local governments have shelled out an additional $8 trillion.

Of course, some folks will still insist there is "no money." That is, after we get through with such vital priorities as Iraq and Social Security benefits for billionaires, there’s nothing left in the federal till. So such folks can then point to the larger American economy, which has generated some $55 trillion in gross domestic product over the past five years. If government spending is tight as a tick, let the political class step forward and ask the taxpayers for still more money.

Because we have plenty of wealth in this country. We can afford to be safe and sound. We just need our leaders to focus close to home, on topics as boring as infrastructure and public safety.

Occupational Hazard

Cecille Isidro — Mon, 06 Aug 2007 12:55:00 -0400

"Take off your veil!" the Somali soldier shouted at the woman in the mostly empty street. Steadying his assault rifle with his right hand, he ripped away the woman's black niqab with his left. "Why are you coming so close to us? You have explosives?" He leveled the muzzle of his gun against the bridge of her nose. Her mouth, suddenly embarrassed and exposed, broke into a jester's forced grin.

"I just want a juice," she pleaded. Except for a handful of armed soldiers, the only other person on the deserted street was a man selling mango juice from behind a table. (A few weeks earlier, the stall he had operated for 14 years had been blown up.) The woman held up her empty palms and backed away. The soldiers let her be and hustled back to their waiting Jeep.

We were in Tawfiq, the most contested neighborhood of Mogadishu, where soldiers of the current Somali government are busy trying to root out militia members of the Union of Islamic Courts (UIC), which ruled Mogadishu for six months last year and managed to bring relative peace for the first time in 16 years. It was overthrown late last year by a force sent by neighboring Ethiopia with America's tacit blessing. Now the UIC's military wing, the shebab ("youth"), has retreated into a maze of shallow bunkers and sandy berms in the Tawfiq neighborhood from which the Islamist group drew most of its local support. A sign on a daub wall nearby advertised the (now closed) new falluja cafe -- named after the Iraqi city razed by the Americans in late 2004 where the insurgency continues to simmer.

The government soldiers' overreaction to the woman buying juice is at least somewhat understandable. The first real suicide bomber in Somalia's history blew himself up last September, in a failed attempt to assassinate President Abdullahi Yusuf Ahmed, whom many Somalis see as a puppet of Ethiopia and, by proxy, the United States. Since then, suicide bombers have detonated every few months.

During its brief tenure, the UIC had defeated Mogadishu's U.S.-backed warlords and quelled the clan divisions that riddle Somali life. It also set up sharia courts to administer justice and instill order in the name of Islam. To some degree, it worked. Somalis backed the UIC less for religious reasons than because, for the first time in almost two decades, Mogadishu wasn't a free-fire zone.

But the UIC had a much darker side: The shebab dug up and tossed out the bones of more than 700 dead Italians from an "infidel" cemetery and forced men to shave their heads as punishment for un-Islamic hairdos. They banned watching the World Cup and chewing the popular leafy stimulant qat. The head of the UIC's shura council, Sheik Hassan Aweys, was the military leader of Al Ittihad Al Islami, which launched several attacks against Ethiopia in the 1990s and had links to Al Qaeda. Also, in the second half of 2006, hundreds of foreign fighters reportedly arrived in Somalia to fight alongside the shebab. The UIC harbored several members of Al Qaeda, including Fazul Abdullah Mohammed, the elusive mastermind reportedly behind the 1998 U.S. Embassy bombings in neighboring Kenya and Tanzania, which killed 225 people.

And so, last Christmas Eve, the Christian-led government of Ethiopia invaded and -- supported, later, by U.S. air strikes -- successfully dislodged the Islamist UIC, largely because it believed (correctly) that rebels backed by its enemy, Eritrea, were using Somalia as a staging area for attacks. The result is an occupation by Ethiopian soldiers that fuels the local insurgency, threatens to destabilize the Horn of Africa, and offers Al Qaeda an additional talking point in its campaign to persuade Muslims that the West has declared war upon them. Many of the region's Muslims saw the Ethiopian invasion as a Christmas present from Ethiopia's leaders to America's. "When the Americans started backing the Ethiopians around Christmas," one woman who supported the courts said, "we started calling the Ethiopians kafir, or infidels."

"The occupation in Somalia is having roughly the same effect as in parts of Iraq," John Prendergast, an analyst at the International Crisis Group and founder of the enough Project, says. "We know by now that the one thing that unifies Somalis and brings them into the streets for guerrilla-style operations is occupation." In other words, Somalia is shaping up to be a third blundered front, after Afghanistan and Iraq, in the war on terrorism.

As in Iraq, the overthrow of the UIC government has left widespread chaos in its wake. In the streets of Mogadishu, grazing cows and children sniffing glue compete to eat from piles of garbage. Qat is back too: Few dare to travel after 3 p.m., the hour at which government soldiers begin to chew. While qat is ostensibly a stimulant, the glassy, pink eyes of soldiers in the late afternoon, and their indifference to pulling the triggers of their automatic weapons, make it seem a soporific.

Casualties from the occupation and insurgency fill the 60 beds of a local hospital. When I visited, I met Abdi Ghani Mohammed Ali, a 30-year-old English teacher who clutched the drainage tube protruding from his abdomen. Out of work since war shut his school some months ago, Abdi sold mobile phones to Ethiopian soldiers to support his family. One day, he told me, the Ethiopians shot him, stole $1,000, and left him in the street to die. An 18-year-old boy had been admitted to the hospital several days earlier bleeding from his rectum. He had been gang-raped by government soldiers who belonged to one of Somalia's rival clans. ("It's not sexual; it's about power," an onlooker said.) A woman in intensive care was waiting for her sister, shot during a carjacking, to wake from a coma. "Under the Islamic courts," she said, "it wasn't possible for anyone to do this." Meanwhile, in the crowded room next door, a woman named Rogia poked at the cast on her right knee, where she had been shot by an Ethiopian sniper. "The Ethiopians hate our religion," she said. The hospital's one doctor was slightly embarrassed but translated for her nonetheless: "Muslims wouldn't do anything like this."

This is certainly how Al Qaeda would like the world's 1.3 billion Muslims to view what's happening in Somalia. In early 2007, Ayman Al Zawahiri called for attacks against the occupying Ethiopian soldiers using "ambushes, mines, raids, and martyrdom-seeking campaigns to devour them as the lions devour their prey." But his message wasn't meant merely for Somali ears; it was also intended to inflame Muslims worldwide by suggesting, once again, that the Christian West is at war with Islam.

Al Qaeda's interest in Somalia dates back to the early ‘90s, when, according to a recent report by the Combating Terrorism Center at West Point, an "Africa Corps" made up of a dozen or so Al Qaeda members set out for Mogadishu from nearby Sudan. "Al Qaeda saw Somalia as being really crucial long before the U.S. did," explains Lawrence Wright, author of The Looming Tower. "They look at the Horn of Africa as the gateway to the Red Sea: Egypt and Saudi Arabia are their main prizes." But, like the American peacekeepers sent by President Clinton in the early ‘90s, Al Qaeda's Africa Corps members found the failed state too problematic to build the infrastructure they needed. Their jihad ideology, moreover, was a tough sell among the Sufi-influenced Somalis, and it was hard to tear militants away from their clan loyalties and salaries. The Africa Corps letters make fascinating reading, tracing the evolution of Al Qaeda's mission from combating Somali communism to confronting "crusaders."

Al Qaeda has claimed some public relations victories in Somalia, notably Osama bin Laden's boast that his foot soldiers helped to bring down a Black Hawk helicopter and kill 18 American Rangers in Mogadishu in October 1993. That attack, he bragged later, set the "paper tiger" of the United States alight. And, as terrorism expert (and TNR contributor) Peter Bergen notes, Al Qaeda's first act of terrorism, the 1992 bombing of a hotel in Aden, Yemen, targeted American soldiers staying there -- soldiers on their way to Somalia. "Al Qaeda saw Somalia as part of the American grab for Muslim lands that began in Saudi Arabia," Bergen says. "When you talk about ‘cutting off the head of the snake,' where do you begin? Somalia."

In the end, though, resentment toward the U.S.-backed occupation may prove to be a greater destabilizing force for the entire region than Al Qaeda ever was, especially in Kenya, where the war on terrorism is directly linked to the rise of radical Islamic identity. In the name of chasing a few bad men, the Christmas invasion played into millennia of distrust between predominantly Christian Ethiopia (40-50 percent of the population is Muslim) and Somalia, which is almost 100 percent Muslim. "The popular perception is that Christian soldiers are occupying a Muslim land," says Roland Marchal, a senior research fellow at Sciences-Po in Paris.

Ethiopians see Somalia as a haven for Islamic militants and insurgents backed by Eritrea, which would like to overthrow the repressive Ethiopian regime. But they also play up this analysis to encourage U.S. backing for their efforts to destroy the rebels. In 2002, during a visit by Senator Arlen Specter, Ethiopian President Meles Zenawi called the U.S. war on terrorism "something of a godsend." As Ethiopian Envoy to Somalia Fesaha Shawal recently explained, "Ethiopia and America have a common strategy, a common thinking, and a common enemy."

It's a point on which both sides concur. Ahmed Mohammed Hashim, an emaciated 25-year-old shebab foot soldier, told me, "Ethiopia is our first enemy. Right now, they go into our mosques with their shoes on; they shit and pee there." Second is the Ethiopia-backed interim government, "because it is illegitimate." And third: "America. America is the father of our enemy. America is using the Ethiopians to take over our country, and we're against them."

When I visited one head of the interim government, Prime Minister Ali Mohammed Gedi, at his home, he argued that the de facto alliance between Ethiopia and the United States would eventually work to everyone's benefit. Surrounded by armed, glowering teenagers belonging to his clan in the heavily fortified Mogadishu neighborhood that one Somali journalist called the Lime Zone (to Baghdad's Green), Gedi told me: "The United States government is very cooperative. ...Somalia is a very important country from a geopolitical point of view in the war on terror."

A few hours later, a suicide truck bomber crashed through the gate of his compound, killing six people and injuring ten more. The prime minister was rushed to an undisclosed location. It was at least the third attempt on his life, and a great opportunity for spin. Soon after, my phone rang. It was the prime minister calling me directly -- apart from the photographer Seamus Murphy, I was evidently the only Western journalist in Mogadishu. "This bombing will make the international community pay attention," he told me. "It is the mark of Al Qaeda."

Rising Gulf

Cecille Isidro — Mon, 06 Aug 2007 12:39:00 -0400

We all know the headlines by now: the Middle East is burning, right? So it seems, as Palestinians and Iraqis wage civil war, Lebanon seethes, Syria and Israel trade barbs and Iran spits defiance. Yet beyond the smoke a very different story is emerging nearby. In the Arab states of the Persian Gulf, times have never been better. Business is booming. And political conflict has become a foreign phenomenon, watched on flat-screen TVs in the air-conditioned living rooms of Doha, Dubai, Kuwait City, Muscat and Riyadh.

It’s no exaggeration to say that the oil-rich states of the Gulf Cooperation Council (GCC) -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates -- are enjoying a transformational moment, one that could deeply affect the region if not the world. Buoyed by unprecedented oil prices, these states are awash with cash. In the past five years, they have earned a staggering $1.5 trillion for their petroleum, according to the Institute of International Finance (IIF). And there’s no end in sight: by the close of 2007, the IIF says, the GCC will have picked up an additional $540 billion, more than the combined exports of Brazil, India, Poland and Turkey

All that green has turned the once backward region into the world’s 16th largest economy, according to IIF. And if present trends continue, the GCC zone could become the world’s sixth largest by 2030. What’s most remarkable, however, is how the new money is being spent. The gulf has experienced oil booms before, but rarely managed to capitalize on them; three decades ago an oil windfall helped states modernize infrastructure and health services, but many leaders blew much of the money on defense or vanity projects, or simply hid profits in Western banks.

Today, by contrast, the gulf’s farsighted, business-minded political leaders are joining with their more mature and innovative private sectors to ensure the money is wisely spent. Led by Dubai, which is fast becoming a modern banking and financial-services hub, cities in the region are embracing reform and charting an ambitious agenda for the future. "A new gulf is dawning," says Edmund O’Sullivan, the Dubai-based editorial director of the Middle East Economic Digest (MEED). "And it’s moving much faster and smarter than it did in the 1970s."

The revival, says Fareed Mohammed of PFC Energy in Washington, D.C., is due to "excellent macroeconomic policies, strong technocratic capacity, a vastly improved regulatory environment, a private sector willing to both invest and innovate, and strong global links in services." As he notes, "All of these ingredients have come together to support sustainable growth."

Consider: the IIF estimates that $1 trillion of the $1.5 trillion windfall has stayed in GCC states, being spent on imports or development. That’s a big improvement on the past, when much money was stashed in Swiss banks or squandered on weapons. True, some of today’s spending, especially on the red-hot real-estate market and extravagant tourist projects, has raised concerns. But industrial investments, which are critical to helping the region diversify its economy beyond oil, are rising.

This is especially so in Saudi Arabia, which, according to Georgetown’s Jean-François Seznec, is on target to become the world’s top petrochemicals producer by 2015. New steel, aluminum and plastics plants are also on the way.

In fact, a new breed of company is now emerging in the region, one that is highly efficient, ambitious and globalized. These new gulf firms are creating jobs, feeding the growth cycle and helping economies diversify. And they are starting to affect other economies around the world. Leading the pack is Emirates Airline, an award- winning company that in the next decade is expected to become the planet’s largest air-travel operator. (At a Paris air show in June, Airbus booked an astounding $32 billion in orders from gulf-based businesses.) Meanwhile, the Dubai-based Emaar real-estate firm is now building projects from Casablanca to Karachi, and the U.A.E.’s Etisalat is winning telecom contracts from West Africa to Pakistan.

Some of these businesses may be government-owned or -controlled, but they are a far cry from the inefficient state-sponsored enterprises of the past. These are not sinecures for tea-sipping bureaucrats; they attract top talent, compete globally and win international awards. They’re also supporting the growth of related but truly independent gulf-based companies, such as Aramex, a regional transport company based in Dubai. Fadi Ghandour, the company’s founder, directly credits his success to the "astonishing growth of Dubai as a business hub," saying that his company simply could never have grown so rapidly in his native Jordan.

On the government level, a lot of money is still being invested in safe havens like the United States (about $300 billion this time) and Europe (about $100 billion). But in the past five years, Gulf states have also invested $60 billion in the needy regions of the Middle East and North Africa and have put another $60 billion in Asia. This has led to the creation of gulf-driven boom pockets in Egypt, Morocco and Jordan. It has also led to the creation of a New Silk Road, as trade between the GCC and Asia has quadrupled in the past decade. Gulf investors are now lining up to buy Asian assets; when the Industrial and Commercial Bank of China held an IPO last year, for example, the biggest buyers hailed from Kuwait, Qatar, the United Arab Emirates, and Saudi Arabia.

Taken together, these trends have given the gulf a higher global profile than it has ever enjoyed. For example, the vast debts of countries like the United States are now being financed with cash from three areas of the world: China, Japan and the gulf. This means that the GCC states have become a major force in growing concern over global imbalances. It also means that they have a clear stake in stoking global growth led by the United States, lest their own fortunes fall.

Of course, for the trend to continue, the Gulf states must keep pushing reform. By enacting business-friendly laws, Dubai has already become the Hong Kong of the Middle East: a free trade hub that fuels the larger economies. The regional heavyweight, Saudi Arabia, has also taken positive steps, dramatically trimming its debt, enacting pro-business laws and joining the World Trade Organization last year. The Saudi private sector has started pulling its weight; in the 1970s it accounted for less than 10 percent of the country’s GDP, whereas today the figure is more like 60 percent. And King Abdullah has launched a $600 billion infrastructure development plan, aiming to create several new multi-billion-dollar industrial, financial and manufacturing "cluster" cities. These include the $27 billion King Abdullah Economic City that could, on its completion, house 2 million people and create 1 million jobs in an area the size of Paris.

But laggards remain. Saudi Arabia’s education system needs to start producing more high-tech graduates and fewer experts in Islamic studies. Kuwait seems content to follow its old model, growing fat off oil profits and investing in blue-chip companies. And Oman, though ruled by a modernizing sultan, has been slow to embrace the new turbocharged business climate. Throughout the region, says Alex Theocarides, a Geneva-based private banker, "the rule of law and transparency remain weak" and crony capitalism still holds sway: business is dominated by a closed circle of princes and merchants who prevent the development of a truly independent entrepreneurial culture.

Still, what’s impressive is how even the quality of those cronies has improved, says O’Sullivan of MEED. "The majority of [the gulf’s] ruling princes are modernizers with their eyes on business," he notes. Unlike the military-minded autocrats of other Arab states, these merchant princes are adding "shareholder value" even as they grow fat off insider deals. Thus, according to the World Bank and World Economic Forum, the GCC now offers a far better business climate than the rest of the Arab world.

Of course, the other Middle East could still interfere with the gulf’s progress. Conflict in Lebanon or the Palestinian territories would be unlikely to have much effect, but Iraq’s unraveling has probably already limited foreign investment. And a U.S. conflict with Iran, which sits right across the Persian Gulf from the GCC, would slow business and threaten tanker traffic in the vital Strait of Hormuz, through which 90 percent of gulf oil passes. That said, even conflict could have its upside: Iranian capital is already fleeing to Dubai (at last count, Dubai had 9,000 Iranian-owned businesses), and the exodus could increase in the event of war.

Absent these gloomy scenarios, the gulf boom seems likely to continue. As Sheik Mohammed, the ruler of Dubai, likes to say about his ambitious city-state, what we see today is just a slice of his master plan. It’s exciting to ponder what the rest of it will bring, and the effect it will have on the gulf -- and the world.

The Thirty-Year Itch

Cecille Isidro — Tue, 31 Jul 2007 14:49:00 -0400

I’ve always resisted the idea that there is "an inherent cyclical rhythm in our national affairs," as the late Arthur M. Schlesinger Jr. put it. Schlesinger suggested that American history moves in 30-year cycles between liberalism and conservatism, between public and private concerns. But it’s hard not to notice that it was exactly 30 years ago that the conservative era dawned, with the introduction of the then-audacious Kemp-Roth tax-cut proposal, in 1977, followed by California’s tax-limiting Proposition 13 the next year. Also in those two years, a freshman Utah senator named Orrin Hatch led a 19-day filibuster that brought down a major labor-law reform bill (after which the idea of restoring unions’ bargaining power went unmentioned until this year), and Phyllis Schlafly led campaigns to defeat the Equal Rights Amendment and the Panama Canal Treaties. Only the first succeeded, but both mobilized the base for the Reagan revolution to come. In 1978 Republicans gained 15 seats in the House; among the new members were Newt Gingrich and Dick Cheney.

Conservatives still lacked institutional power; even after the 1978 election, Democrats outnumbered Republicans by 119 seats in the House and 18 seats in the Senate, and they also held the White House. But the right had taken control with its agenda, and it was an ambitious and confident one. Its basic principles -- cutting taxes as an end in itself, keeping unions weak, deregulating business, embracing unilateral American power, and deploying social issues as needed -- have dominated the 30 years since. The Clinton presidency, in retrospect, was a modest interregnum within this long cycle, in which Democrats simply struggled to manage, and to make some incremental progress within, the confines of the conservative agenda, even as they shared some of its assumptions.

It is now a commonplace that the most recent six-year experiment in one-party governance is coming to an ugly end, with little left of the Bush-DeLay agenda except to push the war-on-terror button ever more frantically. But it’s possible that even more is going on than that. Perhaps this recent period, a bizarre and unsustainable warp in the sweep of American politics, was just the decadent late phase of the dying culture of post-1978 conservatism.

But a liberal agenda, or an agenda that puts public values above private ones, must be ready, ambitious, and confident enough to take over the next 30 years. Much of the timidity and passivity that have characterized Democrats through the past several decades remains deeply institutionalized in the consultants, candidates, and organizations of the center-left, often presenting itself as hard-nosed political realism. But the Iraq War vote in 2002 has been a sharp reminder to Democratic politicians that caution also carries risks, and the 2006 election a reminder that audacity can sometimes bring rewards.

In the presidential race, and in the work of some creative governors and senators, the outlines of a new agenda are emerging, one every bit as ambitious as the Kemp-Roth bill was in its day: Combine the common elements in Democratic proposals on health care and climate change, and the alliances with business that are possible (but not certain) in both areas, and one can foresee a day when the public sector accounts for a much larger share of gross domestic product, while the economy grows faster, prosperity is more broadly shared, working families are more secure, and, above all, business largely endorses this agenda. By stabilizing health costs and sharing the risks, and by building a series of other supports to help workers navigate confidently through a dynamic economy, we can imagine a new social contract in which government’s role in providing security is yoked to, and not considered a drag on, economic growth. The most oppressive assumption of the conservative era, so powerful that it has been largely shared by liberals, has been that we are passive in the face of economic forces, such as globalization, and that anything we do to manage those forces will cause harm. Taking charge of health care and climate change are not just policy initiatives to be viewed in isolation; they are part of an agenda that directly, if belatedly, challenges that assumption.

The problem with cyclical theories of history, though, is that they are too passive, as if all we had to do was to wait for the great wheel to make its next turn. As the historian Kevin Mattson has pointed out, Schlesinger and his cohorts were somewhat complacent about conservatism for that reason. The opportunity to set a new agenda may be before us, but it can’t happen unless liberals are as daring now as Orrin Hatch and Phyllis Schlafly were then.

George Bush I

Cecille Isidro — Sun, 22 Jul 2007 14:43:00 -0400

None of us can control our ancestors. Like our children, they have minds of their own and invariably refuse to do our bidding. Presidential ancestors are especially unruly — they are numerous and easily discovered, and they often act in ways unbecoming to the high station of their descendants.

Take George Bush. By whom I mean George Bush (1796-1859), first cousin of the president’s great-great-great-grandfather. It would be hard to find a more unlikely forebear. G.B. No. 1 was not exactly the black sheep of the family, to use a phrase the president likes to apply to himself. In fact, he was extremely distinguished, just not in ways that you might expect. Prof. George Bush was a bona fide New York intellectual: a dabbler in esoteric religions whose opinions were described as, yes, “liberal”; a journalist and an academic who was deeply conversant with the traditions of the Middle East.

There was a time when the W-less George Bush was the most prominent member of the family (he is the only Bush who made it into the mid-20th-century Dictionary of American Biography). A bookish child, he read so much that he frightened his parents. Later he entered the ministry, but his taste for arcane controversy shortened his career, and no church could really contain him. Ultimately, he became a specialist at predicting the Second Coming, an unrewarding profession for most, but he thrived on it.

In 1831 he drifted to New York City, just beginning to earn its reputation as a sinkhole of iniquity, and found a job as professor of Hebrew and Oriental languages at what is now New York University. That same year, he published his first book, “The Life of Mohammed.” It was the first American biography of Islam’s founder.

For that reason alone, the book would be noteworthy. But the work is also full of passionate opinions about the prophet and his times. Many of these opinions are negative — as are his comments on all religions. Bush often calls Muhammad “the impostor” and likens him to a successful charlatan who has foisted an “arch delusion” on his fellow believers. But he is no less critical of the “disastrous” state of Christianity in Muhammad’s day. And throughout the book, Bush reveals a passionate knowledge of the Middle East: its geography, its people and its theological intensity, which fit him like a glove. For all his criticism of Muhammad, he returns with fascination to the story of “this remarkable man,” who was “irresistibly attractive,” and the power of his vision.

“The Life of Mohammed” went out of print a century ago, and there it was expected to remain, in perpetuity. But in the early 21st century, it was reissued by a tiny publisher simply because of the historical rhyme that a man with the same name occupied the White House. The first George Bush never witnessed the Second Coming, but now his book was enjoying an unexpected afterlife.

Predictably, it enraged some readers in the Middle East, where rage is an abundant commodity. In 2004, Egyptian censors at Cairo’s Al-Azhar Islamic Research Academy denounced the book by President Bush’s “grandfather” as a slander on the prophet, and the State Department was forced to issue a document clarifying the family relationship. That document may have unintentionally fanned the flames when it pointed out that “The Life of Mohammed” never compares Muslims to insects, rats or snakes, though it does, on occasion, liken them to locusts.

The stage was set for conspiracy theories to spread across the Middle East like sandstorms. But then something really strange happened. The same censors read carefully through the book and in 2005 issued an edict that reversed their earlier ruling, admitting that it was O.K. Bush’s theological intensity might kill him with an American audience, but in the Middle East it seems to have allowed him to pass muster. Clearly this passionate religious scholar was no enemy of Islam. You could almost say that he was part of the family.

Perhaps the Egyptians could sense something honorable about this distant life, which dedicated itself to the search for knowledge. After George Bush died, a friend remembered the feeling of walking into his apartment, a third-story walk-up on Nassau Street, “a kind of literary Gibraltar,” where he would find the professor surrounded by his piles of rare and ancient volumes.

It all seems so improbable. George Bush? A bookworm? In a crummy apartment? A mystic might look at this history and find evidence that God is indeed inscrutable. But as the first George Bush knew, religions, like families, contain plentiful contradictions. As the current George Bush has discovered, no place can tease them out like the Holy Land.