Democracy: A Journal of Ideas

Our Bodies, Our World

Erin Drankoski — Fri, 25 Sep 2009 07:20:00 -0400

In the third day of Justice Sonia Sotomayor's Supreme Court confirmation hearings, Senator Tom Coburn asked, "Do you believe that the court's abortion rulings have ended the national controversy over this issue?" Sotomayor was curt: "No." Coburn went further: "You don't have to name them, but do you think there are other similarly divisive issues that could be decided by the court in the future?" A measured Sotomayor again declined to get specific. "That, I can't answer," she said. "I can only answer what exists. People are

The Case for Goliath

Cecille Isidro — Wed, 01 Jul 2009 09:33:00 -0400

On June 3, 2003, the Treasury Department’s James Gilleran brought a chainsaw to a photo-op. While speaking to reporters, he promised to cut up piles of paper representing regulations of the financial sector. Joining him were representatives of four other U.S. regulatory agencies in charge of overseeing finance, armed with less formidable (but still sharp) gardening shears. The message was clear: The Bush Administration was tearing down the final pieces of the New Deal regulatory wall.

Total Tax Credit

Ron Tang — Wed, 19 Mar 2008 21:00:00 -0400

The Social Security payroll tax hurts working Americans -- and it’s getting worse. Because the tax (a flat levy of 15.3 percent, combining the nominal employer portion with the nominal employee portion) applies to income only up to $97,500 (with a scheduled increase to $102,000 this year), it is inherently, grossly regressive, falling far more heavily on working Americans than on the rich. At the same time, as a result of rising pre-tax wage inequality, the payroll tax system is growing dramatically more regressive. In 1983, 90 percent of wages and salaries were subject to payroll taxation; today, thanks to ballooning elite incomes above the Social Security payroll tax cap, only 84.9 percent of wages and salaries are subject to the payroll tax. As Christian Weller of the Center for American Progress has pointed out, this represents a huge, invisible tax cut for the affluent. At the same time, two-thirds of taxpayers owe more payroll taxes than income taxes.

Meanwhile, Americans who do not make enough money to need to file individual income tax returns are frozen out of tax credits for which they would otherwise be eligible. Right now, the child tax credit is only partly refundable (payable by the Treasury to citizens who do not pay income taxes), and the home mortgage interest deduction is not refundable at all. This means that millions of working-class Americans who benefit society at great personal expense by raising children and buying property are denied subsidies that their middle-class neighbors enjoy.

To address both these challenges with a single reform, we should apply all existing income tax credits against income and payroll taxes combined in a Total Tax Credit system. The total tax calculation -- adding income taxes and Social Security payroll taxes, and deducting tax credits from the sum -- could be done annually. In order to avoid requiring all Americans, including those who owe no income taxes, to file tax returns, we could let employers do the simple math. Employees with homes and children would get a fraction of the home mortgage deduction and the child tax credit left in their payroll taxes every two weeks. They would not need to wait for rebates after April 15. More take-home pay would show up in every paycheck. Working Americans who pay no income taxes would not be the only citizens who would be helped by the Total Tax Credit system. Many income tax payers would have a larger personal tax base against which to claim credits.

Wouldn’t this blow a hole in Social Security revenues? Indeed, it would. But the hole could be filled partly by lifting the cap on the payroll tax and -- if more revenue is necessary -- by an infusion of general revenues, perhaps augmented by a value-added tax (VAT) or another federal consumption tax. Medicare already is paid for by a mixture of payroll taxes and general revenues, and there is no reason why this could not be as well.

Rare is the single reform that can accomplish several important objectives at once, by methods that are simple, straightforward and politically attractive. The cap-and-share Total Tax Credit system is such a reform. It would make the Social Security payroll tax more progressive, while retaining it rather than abolishing it; and it would allow millions of households that pay no income tax to enjoy tax breaks for home ownership, children and other purposes. Best of all, instead of requiring the establishment of new programs, the Total Tax Credit system would require only the modification of existing laws. That’s a combination that’s hard to beat.

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.

Fight Al Qaeda

Cecille Isidro — Sun, 30 Sep 2007 07:47:00 -0400

One of the most bitter ironies of the Iraq tragedy is that our occupation has been a godsend to Al Qaeda and its affiliates, drawing thousands of foreign fighters to the country over the past four years. As a result, jihadist terrorists have, for the first time, secured a substantial presence in a country at the heart of the Middle East. The Iraq war has also inspired a rising wave of terrorist attacks, from London to Kabul, and it has helped to spread militant ideas among Iraq’s Sunnis, who were previously more secular than most other Muslims in the region.A persistent Al Qaeda safe haven in Iraq will be a launching pad for attacks against American interests in the region, and even against the United States itself. The National Intelligence Estimate made public in July explains that Al Qaeda "will probably seek to leverage the contacts and capabilities of Al-Qaeda in Iraq, its most visible and capable affiliate and the only one known to have expressed a desire to attack the Homeland." In addition, a safe haven would be an ideal location from which to attack "near enemy" American allies such as Saudi Arabia and to disrupt the world’s oil supply, which Osama bin Laden has made a priority according to tapes he has released since 9/11. According to one U.S. counterterrorism official, an Al Qaeda haven in Iraq would also be a psychological boost for jihadist terrorists: "The reason Iraq is different than Afghanistan, especially for Al Qaeda is, Iraq is Arab land [and] Al Qaeda is still a predominantly Arab organization."

Indeed, America’s top strategic challenge post-drawdown is to position itself in such a way as to prevent the emergence of a long-term Iraqi safe haven for Al Qaeda and affiliated terrorist groups. Establishing such a stronghold in the Muslim world has been an integral part of Al Qaeda’s strategy. As Al Qaeda’s number-two, Ayman al Zawahiri, explained in 2001 in his autobiographical Knights Under the Prophet’s Banner, "Liberating the Muslim nation, confronting the enemies of Islam and launching jihad against them require a Muslim authority, established on a Muslim land that raises the banner of jihad and rallies the Muslims around it. Without achieving this goal our actions will mean nothing more than mere and repeated disturbances."

Such a jihadist haven would then become a launching pad for attacks on the United States and its allies. We have already seen previews: In 2005, the Al Qaeda affiliate in Iraq launched suicide attacks against three American-owned hotels in Amman, Jordan, killing 60. Earlier this year, Saudi authorities arrested 172 jihadists, some of whom had trained in Iraq, who were planning large-scale attacks on oil facilities, Westerners, and government officials. In May, the Los Angeles Times reported that the Iraqi branch of Al Qaeda -- a quite profitable enterprise thanks to donations, kidnappings, and protection money -- is now wealthy enough to provide funding to Al Qaeda central on the Afghanistan-Pakistan border. And in July, an Iraqi doctor who may have had connections to Al Qaeda in Iraq launched attempted terrorist attacks in London and Glasgow.

What, then, is the best strategy to disrupt Al Qaeda in Iraq -- now known by the more Iraqified name of the Islamic State of Iraq -- especially given the likely withdrawal of at least a substantial portion of American troops in the next couple of years? The successful elimination in Anbar province of Al Qaeda forces suggests one approach -- persuading, empowering, and bribing tribal leaders to do the work for you. Of course, like a game of whack-a-mole, Al Qaeda fighters have now migrated to other provinces such as Diyala. Applying the Anbar model to fight Al Qaeda in other parts of the country is a promising strategy, particularly since it uses relatively few U.S. troops to leverage larger local forces. The Shia-dominated Maliki government is not happy with such an approach, believing -- probably correctly -- that enhancing the powers of the Sunni tribes in any manner hurts its own interests. That unhappiness is a price the United States should feel comfortable accepting, given that its own interests are far from identical with those of the Maliki government’s.

However, the United States cannot wholly rely on tribes of uncertain loyalties to secure its interests in Iraq, which include not only disrupting Al Qaeda but also securing a number of bases and the enormous embassy that is being built in Baghdad. Other important functions the U.S. military will have to sustain after a withdrawal include training the Iraqi army and any other groups who might help American interests; gathering intelligence; maintaining some kind of reserve combat force; regularly deploying several thousand Special Forces troops for operations against Al Qaeda; and, of course, maintaining the logistical tail to supply all of those functions and soldiers. Given the need to successfully continue those various tasks, some estimate the United States will have to maintain a reinforced division of about 20,000 soldiers combined with logistical delivery teams of a further 10,000 to 15,000 to supply them. Those soldiers should not be stationed "over the horizon" in countries like Kuwait, but should remain inside Iraq for the foreseeable future. This is not only a practical demand of defeating Al Qaeda; after all, we don’t want to have to "reinvade Iraq" in some future emergency. It is also an important symbolic move, as a total U.S. withdrawal would confirm what Osama bin Laden has said for more than a decade -- that the United States is a weak superpower, just as the Soviet Union was in Afghanistan during the 1980s.

Another terrorism-related challenge will be mitigating the blowback from the Iraq war, specifically, the creation of a whole cohort of insurgents and terrorists indoctrinated and trained to fight America and the West. Considering that Al Qaeda in Iraq has fought more of an unconventional terrorist war of suicide attacks and IEDs against the best army in modern history, the blowback stands to be more intense than what we saw from the alumni of the Afghan war against the Soviets in the 1980s. Compounding this risk is the fact that Al Qaeda’s ideas have found more fertile ground among Iraqis than was the case among Afghans, who are culturally quite different than the Arabs who form the core of Al Qaeda. What’s more, there is the growing Iraqi refugee population: Already there are two million Iraqi refugees outside the country, most of them Sunnis, and two million more have been displaced internally. Those numbers are likely to increase significantly as the United States draws down in Iraq. We know from the experiences of the Afghan refugee camps in Pakistan that refugee populations can be breeding grounds for militants. Considering that there are substantial refugee populations in places like Jordan and Egypt, this could prove a significant problem to important American allies and a huge destabilizing force throughout the region.

The best approach to managing this blowback from Iraq is for the United States and its allies to build a database that maps the social networks of the terrorists inside Iraq, as well as the foreign fighters who have gone back and forth between Iraq and their home countries. This master database of all the militants who have joined the jihad in Iraq would then be used to monitor, disrupt, and capture terrorists in the future. (Imagine if such a database had been available to the United States and its allies after the Afghan conflict in the 1980s.)

The first building block of such a database should be identifying the suicide attackers in Iraq -- who are mostly foreigners -- a process that can be accomplished using DNA samples, accounts on jihadist web sites, good intelligence work, and media reports. We know from former CIA officer Marc Sageman’s investigations of the histories of hundreds of jihadist terrorists that friends and family are the ways most terrorists join the global salafi jihad, and so this investigatory work should include an effort to identify friends and/or family members who brought the suicide attackers into the jihad.

Mapping social networks must also include identification of the clerical mentors of the suicide attackers, as it seems likely that only a relatively small number have persuaded their followers of the religious necessity of martyrdom in Iraq. Armed with that intelligence, the United States can turn to the governments of countries like Saudi Arabia and Morocco -- where many of the suicide bombers in Iraq originate -- and demand they rein in particularly egregious clerics. The U.S. government can make the argument that not only do those militant clerics and their followers threaten American interests, but that they will cause problems in their home countries (much like Afghan war veterans did in Algeria in the 1990s) as well.

According to counterterrorism officials, the U.S. government is already doing some of the work necessary to create such a database -- for instance, by fingerprinting captured insurgents, using social-network software to map the insurgency, and beginning to collect some information on the foreign fighters who have gone to Iraq. However, much remains to be done to improve the quality of the information that is gathered in Iraq. According to a veteran U.S. counterterrorism official, "we don’t have the resources" to do a master database of all the jihadist terrorists in Iraq and their social networks. The official says that such a database, in addition to examining the family relationships of the jihadists, also needs to map the other "facilitative nodes" that bring young men into the jihad, such as web sites, operational planners, financiers, and jihadist underground networks.

In Iraq, the United States faces a list of bad options, and the task is to pick the least of the worst. A complete pullout would deeply imperil U.S. interests in the region by making it difficult if not impossible to battle our main strategic threat in the region: a resurgent Al Qaeda bent on gaining a haven in the Middle East. On the other hand, keeping a force of around 30,000 American soldiers in Iraq for the foreseeable future (about the size of the force the United States presently has in Afghanistan), persuading or bribing the Sunni tribes to take on Al Qaeda’s Iraqi affiliates, and building a master database of all the jihadist terrorists in Iraq and their social networks are all elements of a strategy that will allow the United States to salvage something from the Iraq debacle.

Mismatching Funds

Cecille Isidro — Sat, 31 Mar 2007 20:14:00 -0400

Ten years ago, the United States held its first billion-dollar election -- that was roughly the amount spent by all candidates for Congress and the presidency put together. The same year brought the first large-scale campaign finance scandal since Watergate, best remembered for the almost accurate metaphor of President Bill Clinton selling overnights in the Lincoln Bedroom in exchange for large contributions to the Democratic Party. And both took place at a time when Americans were deeply disconnected from politics; the 1996 election was the only presidential election since 1960 in which turnout of the voting-age population fell below 50 percent.

In reaction to this dual landmark, the modern campaign finance reform movement was born. It wasn’t the first time Washington had tried to bring the influence of money on our democracy under control. Campaign finance reform had been a live issue since at least the time of Watergate, in the mid-1970s. But since the radical changes of the 1974 Campaign Finance Act, it had been an insiders’ game, with little effort to build a grassroots movement or do more than sand down the rough edges of the system. In the early 1990s, the greatest concern was political action committees (PACs), through which lobbyists and their clients channeled their influence in donations.

But the rise of "soft money" in the mid-1990s -- unlimited contributions, often directly from corporations, which had been barred from politics since 1907 -- made the old worry about PACs seem quaint. In response, a new generation of reformers aimed to make campaign finance reform a public priority. With support from across the political landscape -- the editorial boards of almost every major newspaper; a handful of older good-government organizations like Common Cause, Public Citizen, and the League of Women Voters; and newer groups like Public Campaign and the Brennan Center for Justice -- elected officials, most notably Senator John McCain, took up the charge.

And a lot of liberal activists turned from other issues to these questions of process. I was one of them. After several years on Capitol Hill working on education, urban development, welfare reform, and taxes, I became convinced that we were spinning our wheels on these narrow substantive issues when it was really democracy itself that was broken. As reformers like to say, campaign finance would be the reform that made all other reforms possible. So when I left Capitol Hill, I went to work for one of the major foundations that was supporting the movement.

Reformers moved in two general directions, which split the movement into roughly two factions. One, Washington-based and incremental, found a fierce ally in McCain and his Democratic counterpart Senator Russell Feingold and set out to ban soft money from federal elections. The other, more ambitious and usually tied (as I was) to other progressive causes, turned away from Washington and toward the states, setting out to stir up popular interest in an idea that long had been dismissed as impractical at the federal level: generous public financing for all candidates.

A decade has now passed, and it’s time to ask some critical questions about campaign finance reform. Has it been worth the money and effort? Has the reformers’ analysis of politics circa 1996 been borne out by events? Have their solutions been plausible -- politically, constitutionally, or as policy? Have they broadened the movement beyond the good-government core of public radio listeners and editorial writers? Is economic inequality still reflected in and reinforced by the political process? Is the politics of 2007 improved in any measurable way over the politics of 1996? And if not, is that because real campaign finance reform didn’t happen or because what was passed into law didn’t work?

Steps Forward and Back

Each of the two main factions had some undeniable successes in the decade of reform. The passage of the McCain-Feingold Bipartisan Campaign Reform Act (BCRA) in 2002 was a victory for the cause, and its vindication in the Supreme Court was seen by legal scholars as a significant step toward the Court giving greater deference to legislatures on regulation of money in politics. The public financing faction had notable victories as well, winning ballot initiatives in the late 1990s to create fully public systems (sometimes called "clean money") in Maine, Arizona, and Massachusetts (although the latter was never implemented and later repealed).

Nevertheless, judged by the most visible results on promises like getting big money out of politics or cleaning up politics, campaign finance reform has been, to put it mildly, a disappointment. Ten years after the first billion-dollar election, the United States is headed into an election in which over a billion dollars is likely to be spent by the candidates for a single office: the presidency. Politics has gotten more expensive at other levels as well. The average amount spent by a congressional candidate in 2006 was $1.3 million, and many states have begun to see million-dollar campaigns for seats in the state legislature.

As for corruption, recent congressional scandals make the banal cash-for-access deal of the Lincoln Bedroom episode seem insignificant. The scandals involving Jack Abramoff and other lobbyists and contractors have ensnared a House majority leader, the chair of the House Rules Committee, the chair of the House Administration Committee, and a key member of the Defense Appropriations Subcommittee, and involve hundreds of millions of dollars of public spending. Major policy initiatives, from the Medicare prescription drug program to the 2004 energy bill, appear to have been wildly distorted by the influence of campaign donors and their lobbyists. During the vote on the Medicare bill, one member of Congress said he was offered $100,000 for his son’s congressional campaign if he would change his vote. Similar examples of direct quid pro quo exchanges abound.

What’s more, the obsolete system of partial public financing for presidential campaigns has slowly collapsed. George W. Bush chose not to participate in 2000, both major party candidates opted out in 2004, and in 2008 it is likely that no major candidate will accept the voluntary spending limits that go with public money in either the nominating or general election campaigns. As for BCRA, that great triumph? The Federal Election Commission (FEC) weakened it through regulations, while election lawyers found its seams and loopholes, so that what’s left resembles the last tattered patch of a toddler’s well-worn baby blanket, just enough to provide a memory of comfort and optimism but not enough to provide any real warmth or protection. And the Supreme Court has now agreed to revisit one of the most controversial aspects of its decision upholding the law, namely the provision requiring TV ads that mention a candidate to be paid for with regulated funds. If that provision falls, all that would be left is a prohibition on candidates themselves raising soft money, a modest accomplishment.

Given this lurching pace, it’s no surprise that elite supporters of campaign finance reform have drifted away. The foundations that had supported the movement, such as the Pew Charitable Trusts, the Ford Foundation, and George Soros’s Open Society Institute (where I worked from 1997 to 2004 and which was a key supporter of public financing), have either had second thoughts or turned to other issues of political reform. The new progressive activists of the "netroots" are mostly either indifferent to reform or, as with Daily Kos founder Markos Moulitsas Zuniga, openly oppose it. And African-American and Latino activists remain unmoved by the insistence of the white, affluent campaign finance reformers that they should see the issue as more important than traditional agenda items like voting rights or policies to improve their economic prospects. Even McCain, whose reputation for free thinking and integrity was based on this issue and without whom the modest achievement on federal reform would have been impossible, has left the field.

The difficulties of campaign finance reform and the waning of its institutional support point to an uncomfortable fact: All along, there had been doubt among even progressives and Democrats about its value. Even as they marched in lockstep support of BCRA, many admitted that they thought it would hurt their party, which was more dependent than Republicans on soft money because the Democratic Party did not have as reliable a base of individual hard-money donors. (Those who can, after BCRA, give up to $2,000 -- now $2,300 -- per election cycle, usually do not hail from the Democrats’ poor or middle-class base.) Their fears were never realized, if only because other channels for large contributions emerged and the Democrats finally developed their own base of individual donors. But as the arc of politics has begun to swing back toward the left, many progressives have begun to think that process reforms, such as campaign finance, might not be so important after all. Real progress would require enormous political effort and luck, they reason, and if we had the energy and were blessed with those political circumstances, why not use it to enact something like universal health care? This is the old "reform that makes all others possible" argument turned on its head -- if reform were possible, wouldn’t everything else be possible as well? Given that political capital is finite, why spend it on pure process reforms? Unsurprisingly, while they moved quickly to pass ethics and lobbying reform, campaign finance reform was barely on the new Democratic majority’s agenda (although recently a number of Democratic governors have indicated support for public financing).

Ironically, there have been some tremendously positive developments in our politics. The political culture of 2006 is not merely a more expensive and more corrupt version of 1996. While the policies are much worse, the public is engaged with politics as never before; voter turnout has increased; and -- perhaps because of the stark choices created by the apocalyptic politics of the current administration -- politics is significantly more substantive. Moreover, the Internet and new technologies -- from cell phones to powerful database and mapping programs -- have fundamentally changed how politics is practiced. The 72-hour program, Karl Rove’s massive neighbor-to-neighbor effort to identify and turn out voters, has been emulated by the Democrats, a healthy development that would have been difficult to execute a decade ago. In addition to this return of retail, face-to-face politics, we have seen the emergence of a true small-donor fund-raising base in both parties, a base driven more by ideas and passion about the direction of the country than by a desire for access to promote a particular interest.

This, in turn, has affected who can run and which voices are heard. It still takes a lot of money to run for Congress. But in the past, if you wanted to run, you would have to go to, say, the Democratic Congressional Campaign Committee (DCCC) and ask for help. The committee would reply, in effect, "call us when you have $150,000." But where would you get $150,000? Very few people are connected enough to get that start. The netroots, however, have given candidates an alternative, and while many successful candidates in 2006 were recruited directly by the DCCC, there are some who were able to go to the party from a position of strength because they had met the viability threshold through raising money from a small-donor base. As a result, they could be more outspoken on issues and more independent of the party’s consultants, as well as independent of lobbyist money.

Thus, we stand at a critical point in the history of campaign finance reform: A movement that has so far largely failed to change the system, at least on the terms promised, has witnessed the system change around it and now has the chance to effect a lasting transformation. But first it must revisit the principles on which it was founded.

Questioning the Assumptions

Where should reform go now? Before attempting to answer that question, let’s first note that there are two groups to whom the questions about the effectiveness of campaign finance reform would be of no interest. The first are reformers themselves, particularly the BCRA advocates. To many of them, the solutions are evergreen, and failure is the inevitable result of trying to convince politicians to fix politics. All elected officials, they reason, are beneficiaries of the existing rules and resist changing them. Skeptics in the netroots, the Democratic establishment, and minority groups are written off by reformers as just looking for ways to gain influence.

This attitude has two effects on the movement. First, it makes it impervious to criticism, as any skeptic can be dismissed as a self-interested agent. Second, it renders the movement oddly complacent about its own ineffectiveness. Failure reinforces the underlying assumption that all politicians are corrupt, instead of leading reformers to reexamine their assumptions. In reality, elected officials have been the best friends reform has ever had, and "the people" the worst. Reformers in the mid-1990s dreamed of going over the heads of legislators to pass reform through ballot initiatives. Yet no statewide ballot initiative for reform has passed since 1998, and quite a few have failed spectacularly, including in Oregon and Missouri in 2000, Ohio in 2005, and California in 2006. (To be sure, several cities have embraced public financing by voter initiative, including Portland, Oregon.) Meanwhile, the only significant progress toward reform has come from elected legislatures, even if they often acted reluctantly. Besides passage of the BCRA at the federal level, there is the recent enactment of full public financing by Connecticut’s legislature, an experiment with public financing in a few legislative districts in New Jersey, and legislative improvement of older systems in Minnesota and several localities.

The other group that takes failure for granted are skeptics of reform, who contend that campaign finance reform was a fool’s errand from the start because nothing at all can be done about money in politics. This might be called the "hydraulic" argument, after a 1999 article in the Texas Law Review by Pamela Karlan and Samuel Issacharoff titled "The Hydraulics of Campaign Finance Reform." Karlan and Issacharoff argued, essentially, that money in politics was like water, governed by physical laws that make any efforts to restrict its flow not just futile but counterproductive. But even water can be diverted, redirected, and put to uses either productive or destructive. Similarly, rules governing campaign spending and contributions can have all sorts of effects, for good or for ill. Regulations can reorder incentives, change how candidates and parties seek money, strengthen or weaken parties or interest groups, enhance the role of small donors, force candidates to spend all their time raising money, or lift that burden from them entirely. Regulations can encourage campaigns to bombard swing voters with negative ads or to use grassroots efforts to mobilize people who haven’t voted before.

And, in fact, regulations do all these things. The politics of 2007 is qualitatively different from the politics of 1996, largely because of changes in the regulation of money in politics. Thanks in part to BCRA, much more money moves through channels that are not controlled by or coordinated with candidates or parties, for example, which means -- in theory -- that it is less corrupting than money raised directly by elected officials. But it also means that this outside money is more unaccountable. It can fuel more negative attacks and innuendo, such as 2004’s Swift Boat Veterans for Truth ads aimed at Sen. John Kerry. At the same time, because the parties and candidates are out of the business of raising soft money, the money that does come in tends to be more ideologically driven. A large portion of the major soft-money funders of the mid-1990s tended to be corporations that gave to both parties and were interested mainly in access; the major funders of the 527 organizations (independent political groups that can spend freely) that have emerged in their place are liberals like Soros or conservatives like Mallory Factor, whose main objective is to elect people who share their worldview. That makes a big difference in the tone of our politics and the potential for corruption. In some ways it is better because ideologues are less likely to be angling for pure influence, but in other ways it is worse, in that the leverage of the very few people who have the capacity to organize and fund 527s is greatly enhanced, specifically because other avenues are closed off. Yet instead of thinking of politics as a system, with incentives and disincentives, behavior that can be changed or improved, limits-based reformers have tended to take a wildly literal approach: Money is a bad thing that should be kept out of politics. "Big money" is worse. "Private money" is bad, "public money" is good. Instead of asking, "How can we encourage the kind of things we think are healthy for democracy?" their own literalism steers them straight into the hydraulic argument. They see the money move to another stream, and they try to dam that stream, then the next and the next.

How to Revive Campaign Finance Reform

Campaign finance reform has fallen short of its promises not because politicians are evil or because money will always find a way into the political system, but because the movement has failed to challenge or refine its own assumptions. Yet in a world in which economic inequality has become so extreme, it is more necessary than ever and certainly of greater value than any other pure process reform. (There are also substantive policies that would counter the power of economic inequality, such as tax reform or making it easier to organize unions.) The most urgent cause in our democracy is to prevent the profound inequalities of our economic system from being echoed, reinforced, and exacerbated in the political system. The movement desperately needs a fresh start, a reality that both factions -- the proponents of limits and the advocates for public financing -- must recognize.

What are some of the principles that might breathe some new life into the campaign finance reform movement?

Encourage the healthier developments in politics, don’t fight them. Nothing has been more disheartening to me than watching the campaign finance reformers take up arms against the bloggers and the netroots. Reformers look at the blogs and all they see are loopholes. Most of 2005 at the FEC was spent in a lengthy fight over the rules for political use of the Internet. In theory, of course, if the Internet is exempt from regulation, there is a way for big donors to use that as a loophole to get back into the soft money game. But on balance, the good that the netroots have done for the political process -- bringing in small donors, making it easier for candidates to get started, and allowing a more substantive political conversation -- far outweighs the danger of a hypothetical loophole. Fortunately, the eventual resolution at the FEC was quite reasonable, although it leaves the loophole mostly intact. But the spectacle of reformers going after the healthiest development in politics alienated an important constituency for reform and showed the narrowness of the reform vision.

Political organization is good. Going back to the fight against PACs, reformers have often seemed confused over whether they were fighting money or organized money. Even now, partly for legal reasons, the focus is on incorporated groups, such as 527 committees, while disorganized individuals are constitutionally free to do the same things, without limits. From fighting organized money, it is a short step to fighting political organization itself. Underlying the reform movement seems to be a vision of unmediated political communication that writes organization out. Yet political organizations -- parties, interest and affinity groups, community organizations, non-profits, even blogs and other media -- can help people find and sort through their shifting and conflicting policy preferences, and, by organizing, can help give power to people who are not economically powerful on their own. Political organization is an alternative to money. Unmediated politics -- TV-ad politics -- is one in which money matters much more, not less. The campaign reform movement should first stop fighting organization itself. During the battle over regulation of 527 committees last year, a number of reformers noticed that non-profits could serve a similar purpose as a channel for big money, and that regulations might have to be considered -- to which the answer, as with blogs, is not to exempt nonprofits, but to consider how you got on a path that made such a regulation plausible and turn back. Reform should, instead, strengthen those forms of political organization that help give people power in the system, as citizens, voters, and even contributors. Indeed, some systems of reform could strengthen political parties and other organizations, making them more than just banks for large contributions. Small-donor PACs, for example -- an idea that was briefly floated in California a decade ago -- is one such innovation, as are matching-fund systems.

Don’t overtax the "corruption" rationale. The smartest recent insight into campaign reform has come from Judge Guido Calabresi of the Second Circuit. Reform efforts, Calabresi said, in a concurring opinion on a decision regarding Vermont’s mandatory spending limits, were "constrained" by trying to push too much into the "impoverished" rationale of reducing "corruption and the appearance of corruption." They were actually trying to achieve other goals -- such as political equality and greater opportunity for candidates to run and be heard -- but trying to justify those goals in terms of corruption. "Efforts to tailor all campaign finance regulation to corruption," Calabresi wrote, "surely have constrained possibilities for creative proposals that may not fit comfortably into the proffered box."

The other problem with "corruption and the appearance of corruption" is that, while "corruption" is a well-defined concept but too narrow, "appearance of corruption" is the opposite -- a vague, boundary-free concept. This past January, The Washington Post used the appearance of corruption to justify a story about the financial dealings of someone to whom former Senator John Edwards had sold his house, even though he had no dealings with them beyond that single, arms-length transaction. Lobbying reform is also twisted by this overly literal attempt to legislate on the concept of "appearance of corruption." For example, Jack Abramoff entertained the lawmakers who were in his pocket at his restaurant; therefore ban members and staffers from accepting meals. Abramoff took members on golfing trips to Scotland; therefore ban trips to Scotland.

But you can’t legislate integrity simply by banning things that have the same external form as things corrupt people do. Instead of going at things so literally, change the incentives so that members of Congress are accountable to voters. Many of the legislators caught up in the recent scandals were defeated in 2006, but they had been virtually unopposed in previous elections, which created a breeding ground for an attitude of moral impunity. Making sure that there is a viable, adequately funded competitor in every election is the best way to encourage integrity.

Accept that there is a place for private money in politics. Elsewhere in his marvelous concurring opinion, Calabresi wrote that making political contributions is not something to be discouraged but a reasonable means of expressing "intensity of desire" for a political outcome. Indeed. We all have one vote, but we have preferences of varying intensity, which politics should reflect. And we must choose among a finite number of candidates, which money helps sort out. That’s not unreasonable. What made the 2004 Senate candidacy of Barack Obama (who entered the race for the Democratic nomination as the underdog against one fabulously wealthy candidate and one backed by the party machine) possible, for example, was the fact that a small but significant number of people who knew him believed so strongly in his leadership that they were willing to do much more than just vote for him. It’s not a perfect way to sort out candidates, but we lack a better one that adequately reflects intensity. Imagine a hypothetical campaign financing system that gave every candidate who qualified for the ballot by signature an exactly equal amount of funds and prohibited private funds; it would be chaotic and unrepresentative because it would strip this element of intensity of desire from the system.

The obvious problem, as Calabresi wrote, is "that, given the unequal distribution of wealth, money does not measure intensity of desire equally for rich and poor," and reform should allow "both poor and rich to give financial expression to the relative intensity of their desires." The closest thing to such a balance has been achieved by matching fund systems such as New York City’s four-to-one match on small contributions, created by a fortuitous political compromise in the late 1980s. Under this system, the $50 contribution of a poor person is worth $250 to the candidate, while large contributions aren’t matched at all. Because the system is open-ended, almost all candidates participate; there is very little spent by outside groups; and there have been hotly contested, multiple-candidate races for many city council seats. Although a self-financed billionaire won the mayoralty twice, the system gave Michael Bloomberg’s 2001 and 2005 opponents more than enough to be heard, $17 million and $9.2 million, respectively.

Don’t dismiss the libertarian arguments. For every argument in favor of campaign reform, there is a libertarian counter-argument. If a reformer says, "We don’t want big corporate donors spending money on ads that support a candidate," the libertarian responds, "You’re going to have a government agency decide that one kind of speech is permitted, because it’s about an issue or a product, and another is regulated, because it might influence the election?" Both are legitimate points. Campaign reformers often dismiss these dilemmas on the grounds that "money isn’t speech." But, needless to say, if you prohibit money from being spent on speech, you are restricting the speech itself.

The issue that the Supreme Court has agreed to take up this term -- whether TV ads that mention a candidate during the period before an election should be treated as campaign ads for purposes of regulation -- goes to the heart of this dilemma. Some pure political speech unrelated to campaigns, such as an ad urging people to call a senator to vote a certain way on a bill, is going to get caught in this web. Perhaps, as empirical studies have shown, it would only be a tiny percentage. But will that always be the case? And what level of accidental restrictions on pure political speech -- the kind of speech most vigorously protected under any interpretation of the First Amendment -- do we accept as the price for getting a potential loophole under control? The fact that the Court has taken the case, after earlier upholding that provision of BCRA, suggests that the justices are likely to take the libertarian argument here seriously. But reformers should too. It should always be a painful choice to limit political speech, never something to be done lightly. If a campaign finance arrangement forces one into a position where you can only make it work if you can limit these ads, then it’s time to rethink that approach.

Some libertarians, incidentally, would argue at this point that the only regulation needed is a requirement for instant disclosure of all contributions. Disclosure is, to be sure, better than non-disclosure, and "sunlight is the best disinfectant," as Justice Louis Brandeis famously said. But the idea that disclosure is by itself an alternative to regulation is one deeply rooted in the "appearance of corruption" fallacy. Much malfeasance hides in the fog of too much information. Simply knowing that some individual contributed to some politician is not enough information to fully understand what’s going on, and whether it should be a matter of concern. Even in the Abramoff case, where not only was all information about his Native American-tribe clients’ contributions publicly available, but so were many years’ worth of his e-mails, it has proved impossible to determine with any certainty whether his clients’ contributions to certain Democrats were made as part of his wheeling and dealing or for other reasons. Disclosure does very little to reduce real corruption and nothing at all to promote political equality or greater opportunity for candidates or ideas to be heard.

Expand, don’t restrict. The singular focus on corruption tends to lead reformers toward policies primarily intended to restrict the amounts and sources of money. Restrictions have the effect of increasing the power of those who are unrestricted. In other words, if you can’t close every loophole, the person or entity who controls the loophole that remains open will be significantly more powerful. If every channel of political communication except the Internet were regulated, the people who have the greatest ability to be gatekeepers of Internet access -- which might be a blog or might be Time Warner -- will have a greatly enhanced level of power.

And even if you could restrict every avenue, would you want to? The goal of political reform should be to expand the range of choices and voices in the system. It should be easier to run for office, easier to be heard, easier to find alternatives to the potentially corrupting corporate funding. Such alternatives change the incentives for candidates and parties.

Small-Donor Democracy

What sort of approach to reform would these principles produce? A tempting, risky approach might be what the American Civil Liberties Union used to call "floors without ceilings": public funding that was not tied to limits on spending and that did not attempt to shut down all sources of outside money. In the past, this always seemed, to me at least, a crazy strategy, in effect throwing good money after bad. But compared with the path we’ve been on, it makes sense. It would open up the system, help strengthen real political organizations, and increase political equality and voice without a frontal test of the First Amendment.

But we needn’t go that far, and perhaps we shouldn’t. An approach similar to the New York City matching system, or a system like Minnesota’s (which combines a tax credit for small contributions with a matching system), is another way of meeting most of these principles. Yale Law Professor Bruce Ackerman’s proposal to give every American "Patriot Dollars" -- vouchers with which they can make a contribution to the campaign or organization of their choice -- serve a similar purpose, as do arrangements like Arizona’s "clean money" system.

Such systems might fall under the general rubric of "small-donor democracy": Give small donors the same opportunity to express the intensity of their preferences as large donors. Don’t build complex systems that put government in the position of trying to equalize all resources or ban all contributions. Instead, let voters shape the process through their own preferences, through organizing to enhance their power, and by using public funds to echo and enhance the preferences of ordinary citizens. Avenues by which large contributions influence politics will remain, whether they take the form of PACs, 527 committees, other nonprofits, or blogs. The best we can do is to offset their influence by broadening the range of voices that can be heard, as opposed to enhancing their influence by closing off other channels of money.

The general rule that reformers should follow, if they have any hope of salvaging their efforts, is to think of politics as if it were an organic system. Every intervention has multiple effects, and every intervention can help create either a vicious or a virtuous cycle. In 1996, politics was caught in a vicious cycle -- the public was detached, it was more and more costly to run for office, big contributors controlled who could run, and the party soft money loophole empowered those large donors, who in turn limited the scope of what politics could be about, leaving the public more alienated. Today we have the makings of a virtuous circle -- voters are more engaged, small donors have returned, and the most corrupt members of Congress have been held accountable. Reformers should ask: What are the modest, non-restrictive interventions that would help push this virtuous cycle in the right direction? If they begin to approach the question in that way, the next decade of reform might be more productive than the last.

A Matter of Pride

Cecille Isidro — Tue, 02 Jan 2007 11:49:00 -0500

While there are deep and divisive fissures across the political spectrum over how to combat terrorism, there is a surprising level of agreement as to its cause. "We fight against poverty because hope is an answer to terror," George W. Bush told an audience in Mexico in 2002. "Today, billions of people live on the knife’s edge of survival, trapped in a struggle against ignorance, poverty, and disease. Their misery is a breeding ground for the hatred peddled by bin Laden and other merchants of death," Howard Dean declared during his 2004 presidential run. Kim Dae Jung, the former dissident who became the president of South Korea and won the Nobel Peace Prize, agrees: "At the bottom of terrorism is poverty." And the editors of The New York Times, arguing that reducing duties on exports from Pakistan can play a significant role in the war on terrorism, wrote in 2004, "Economics cannot be separated from national security. Young Pakistanis who can’t get jobs in factories that export to America sometimes go to training camps to learn how to kill Americans."

This analysis, at its root, is an optimistic one. It holds out the prospect that widespread prosperity can be a universal solvent for political violence employed by stateless actors and states alike. Conflict, in this view, is not endemic to the human condition; it is simply a relic of primitive stages in social development, which can be corrected by enlightened policy. Liberals tend to prefer the idea of a global or regional "Marshall Plan," while conservatives and libertarians claim that cutting subsidies and promoting free trade will produce development in poor countries. Despite their different prescriptions, many on the left and right agree that fighting world poverty is important in the fight against transnational terrorism since it removes the attractiveness of these revolutionary and utopian worldviews.

But it is a mistake to treat human beings as profit-maximizing rationalists who can be persuaded to put aside their differences in order to collaborate on a common project of promoting global prosperity. Individuals and communities often have incompatible secular or religious visions of the good society. And, for better or worse, human beings are social animals, deeply concerned about rank and status, both as individuals and as members of communities. Ambition and humiliation, personal and collective, inspire more political conflict than economic deprivation. In short, if our goal is to understand the conditions that give terrorist movements popular appeal and to understand how virulent ideologies spread from madmen and isolated sects to mass movements, our emphasis must be on subjective perceptions of national, religious, and ethnic humiliation, rather than on the humiliation, genuine as it may be, which is associated with poverty.

Revolutionary Violence

In order to understand the roots of both terrorism and war, we must free ourselves from conceptual confusions. Terrorism and war are tactics that have been used to promote radical ideologies, depending upon whether revolutionaries control a government or not. And to understand radical ideologies, it is necessary to understand radical ideologues, few of whom have been found among the ranks of the poor.

A stateless group that uses terrorism while out of power may, if it gains control of a state, attempt to promote the same goals by the instruments of traditional statecraft, such as war, espionage, and perhaps state-sponsored terrorism. Communist leaders like Vladimir Lenin, Josef Stalin, and Mao Zedong went from being underground terrorists to heads of state, and in doing so changed their tactics for expanding control drastically, even while their revolutionary ideologies remained relatively intact. In a similar vein, Osama bin Laden and the other al Qaeda leaders would prefer to control at least one government as opposed to being forced to operate as a stateless organization. Ayman al Zawahiri, al Qaeda’s chief strategist, concluded his 2001 biography, Knights Under the Banner of the Prophet, with the following observation: "Liberating the Muslim nation, confronting the enemies of Islam, and launching jihad against them require a Muslim authority, established on a Muslim land that raises the banner of jihad and rallies the Muslims around it. Without achieving this goal our actions will mean nothing more than mere and repeated disturbances."

The key factor, then, is not whether a group is stateless or controls a state, but whether or not it is promoting a revolutionary ideology that justifies both terrorism and interstate war to promote its goals. If today’s militant Islamism is understood in these terms-as a revolutionary ideology whose adherents seek to gain state power and exercise it to realize their vision -- then it can be viewed as the latest in a series of revolutionary political doctrines of the past few centuries, which included radical Jacobin liberalism, anarchism, communism, and fascism and other forms of radical nationalism.

While some of these revolutionary faiths found their greatest support in poor countries, others took root in some of the richest and most educated societies in the world. And even in poor countries, revolutionary extremists have almost invariably come from the comfortable and well-educated upper or middle class. Revolutions may be waged in the name of the poor and dispossessed, but they are usually made by the relatively rich.

The members of al Qaeda are no exception. They are not the dispossessed, but the empowered. Many studied for high-end careers in medicine and engineering at universities, rather than at some dirt-poor madrassa. The top lieutenant to bin Laden is an upper-class Egyptian doctor; al Qaeda’s top military planner has a degree in psychology and spent time in California as an IT specialist. Rifia Ahmed Taha, an Egyptian terrorist and a co-signatory of bin Laden’s 1998 declaration of war against America, is by training an accountant. Mamdouh Mahmud Salim, another top al Qaeda official, studied electrical engineering in Iraq and went on to a successful business career. And even bin Laden himself studied economics and later spent time working at his family’s giant construction business.

Looking more broadly, consider the work of former CIA case officer -- and now forensic psychiatrist-Marc Sageman. After studying the backgrounds of 172 al Qaeda members and associates for his 2004 book Understanding Terror Networks, he concluded that this was not a group of feckless, unemployed no-hopers. In his sample of jihadist terrorists, two-thirds had gone to college; they were generally professionals; their average age was 26; three-fourths were married; and many had children.

Similarly, Peter Bergen and Los Angeles Times researcher Swati Pandey examined five of the most spectacular anti-Western attacks of the past decade or so -- the 1993 attack on the World Trade Center, the bombings of two U.S. embassies in Africa five years later, the September 11 attacks, the Bali bombings of 2002 that killed 200 Western tourists, and the London attacks of July 2005 that killed 52 commuters. Of the 79 Islamist terrorists involved in these attacks, 54 percent had attended college, which compares favorably to the 52 percent of Americans who have done so. Around a quarter of the terrorists had studied at universities in Europe or the United States, an elite activity for the mostly Middle Eastern and Asian terrorists involved in the attacks. Moreover, Robert Leiken of the Nixon Center has found that of 373 Islamist terrorists arrested or killed in Europe and the United States from 1993 through 2004, few were desperate refugees from the Third World. Leiken discovered that an astonishing 41 percent were Western nationals who were either naturalized or second-generation Europeans or converts to Islam. Leiken also found twice as many French nationals as Saudis among the terrorists.

To that end, the Library of Congress issued a study in 1999 asking, "Who becomes a terrorist and why?" and concluded that there were only a few "major exceptions to the middle- and upper-class origins of terrorist groups" and that terrorists generally "have more than average education." In other words, asking, "Who becomes a terrorist?" turns out to be much like asking, "Who becomes a Rotarian?"

This recent research demonstrating that terrorism is a largely bourgeois endeavor echoes the work of French academic Gilles Kepel during the mid-1980s, which focused on 300 militants prosecuted for the 1981 assassination of Egyptian President Anwar Sadat. Of those who were of working age, 17 percent were professionals (such as engineers), 24 percent worked as government employees, 41 percent were artisans or merchants, 9 percent were in the military or police, and only 5 percent were unemployed. Of those who were students, around a third were studying in the elite faculties of medicine and engineering.

With their middle- and upper-class backgrounds, the leaders of al Qaeda represent not an exception but the rule among militants who use terrorist methods in the Middle East. According to Claude Berrebi of the RAND Corporation, 57 percent of Palestinian suicide bombers have at least some post-high school education -- as opposed to only 15 percent of their age cohort. While one-third of Palestinians are impoverished, only 13 percent of Palestinian suicide bombers hail from poor backgrounds. In fact, Palestinian pollster Kahalil Shikaki found that the readiness to commit suicide attacks actually rises with one’s education level.

In a paper for the National Bureau of Economic Research (NBER), Princeton’s Alan Krueger and Jitka Maleckova of Charles University in Prague also found scant proof of a connection between personal poverty and participation in international terrorism. Hezbollah militants killed during the 1980s and 1990s were as likely to be well-educated and well-off as they were to be uneducated and poor. Abu Nidal, the Palestinian terrorist, came from a wealthy Jaffa family. Krueger and Maleckova’s study shows similar backgrounds among Israeli Jewish extremists who plotted to destroy the Dome of the Rock mosque. They "were overwhelmingly well-educated and in high-paying occupations. The list includes teachers, writers, university students, geographers, an engineer, a combat pilot, a chemist, and a computer programmer."

Beyond the Middle East, the leftist terrorists in Western countries between the 1960s and the 1980s tended to come from similar elite backgrounds. In West Germany, the majority of members of the Red Army Faction (the Baader-Meinhof gang) were middle class, like most of the members of Italy’s Red Brigades and the Weathermen in the United States. Notorious terrorist Carlos the Jackal is the son of a wealthy Venezuelan lawyer. Militants in Latin American movements like Sendero Luminoso (the Shining Path) and the Tupamaros and Monteneros likewise tend to be educated and from the upper strata of society. The "black bloc" anarchists who fly around the world to commit acts of vandalism in cities that host IMF and World Bank meetings are obviously affluent (just consider the cost of airfare alone). And Lenin, Mao, Pol Pot, and Fidel Castro all hailed from relatively affluent families. Even Adolf Hitler was the son of a prosperous Austrian civil servant. He had enough money from his mother and aunt to live a bohemian existence in the expensive metropolis of Vienna in his youth. This pattern would not have surprised Aristotle, for whom ambition was a more powerful incentive to sedition and revolution than deprivation: "Men do not become tyrants in order to avoid exposure to cold."

In the face of this evidence, many invoke twentieth-century Germany as Exhibit A in the argument for the deprivation thesis. The Great Depression, the argument goes, with the immiseration of much of the German middle class, helped to create the conditions for Hitler to be appointed chancellor and to consolidate power. But while it was a factor in Hitler’s rise, the Depression does not explain why his National Socialists were better able than other groups to capitalize on public discontent. Their appeal was to followers in all social classes, and their ideology of racial nationalism, anti-Semitism, and plans to make Germany a superpower long antedated the global crash of 1929. As the sociologist Michael Mann wrote in his book Fascists, the data show that the Hitler movement received strong support from middle-class and elite Germans, including college students and academics. "Supposedly, the best guarantor of a free society and of democracy is a dense network of sociability centered on voluntary associations," Mann writes. "Unfortunately, the Germany that became Nazi was exactly this, a very dense ‘civil society’ -- and the Nazis were at its very heart ... Led by Nazis it became a strong, but evil civil society."

Humiliation

What motivates someone to join these revolutionaries, terrorists, and murderers, if not economic conditions? In a word, humiliation. Look again at Nazi Germany. While economically weak in between the world wars, what really motivated many to embrace Nazism was that they lost World War I, and the conditions of that loss. Hitler’s goal, supported by much of the German elite and the vast Prussian officer class, was to reverse the verdict of World War I and proceed to create a Eurasian empire capable of dominating the world. No concessions by the Western democracies short of acquiescence in National Socialist imperialism would have satisfied Hitler and like-minded Germans. Indeed, the outcome of World War I enraged Arab nationalists as well as German nationalists -- and it still does today. Bin Laden sees the Sykes-Picot Agreement, which led to the carving up of the Ottoman Empire, as the beginning of Arab humiliation. For bin Laden, the Sykes-Picot Agreement, like the Versailles agreement for Hitler, is a humiliation that must be avenged and reversed: "We still suffer from the injuries inflicted by ... the Sykes-Picot Agreement between Britain and France which divided the Muslim world into fragments," he said.

The central role of communal humiliation in inspiring terrorism is the key finding of University of Chicago political scientist Robert Pape’s study of suicide bombers, Dying to Win. According to Pape, two factors have linked Tamil, Palestinian, Chechen, and al Qaeda suicide bombers. First, they are members of communities that feel humiliated by genuine or perceived occupation (like the perceived occupation of the sacred territory of Saudi Arabia by virtue of the presence of U.S. bases, in the eyes of bin Laden and his allies). Second, suicide bombers seek to change the policies of democratic occupying powers like Israel and the United States by influencing their public opinion -- in a sense making the occupying power suffer the same level of humiliation they have felt.

The "humiliation theory" of radical violence helps explain why so many terrorists come from middle-class or wealthy backgrounds. Unlike economic deprivation, national or religious humiliation can be painful to all members of a community. In fact, communal humiliation is likely to aggrieve the affluent members the most, precisely because their freedom from a day-to-day struggle to survive liberates them to brood over slights to the community in which they are natural leaders. It may also explain why so many are willing to sacrifice innocent bystanders for their cause. They are fighting for an abstract idea of national, ethnic, or religious pride, not the masses.

To be sure, humiliation can be an outgrowth of poverty. New York Times columnist Thomas Friedman has suggested a variant of the deprivation theory, citing the sense of personal and collective humiliation associated with poverty: "Sure, poverty doesn’t cause terrorism -- no one is killing for a raise. But poverty is great for the terrorism business because poverty creates humiliation and stifled aspirations and forces many people to leave their traditional farms to join the alienated urban poor in the cities -- all conditions that spawn terrorists." This has the merit of making humiliation a possible intermediary between poverty and political violence. But the possibility of a connection between poverty and humiliation nevertheless fails to provide a sufficient cause. A 2002 UN study of the Arab world showed that it has the second-lowest per capita growth of any region worldwide, which seems to support the deprivation thesis. But consider that while sub-Saharan Africa has done even worse economically, and while it has been the location of major terrorist attacks (the bombing of the U.S. Embassy in Kenya by al Qaeda, for example) and is the home of 160 million Muslims, the region has not given birth to either an indigenous terrorist group or a radical ideology. To be sure, impoverished Sudan briefly served as a base for al Qaeda’s (overwhelmingly affluent) Saudi and Egyptian leadership. But it was never more than that. It will always be the case that well-organized, well-funded, and well-educated terrorists will make use of failed states, but those states are rarely if ever the source of terrorism. As historian Walter Laqueur has noted, "In the forty-nine countries currently designated by the United Nations as the least developed hardly any terrorist activity occurs." And in the same way that poverty is never the primary cause of terrorism, prosperity is hardly the cure. Alexis de Tocqueville was only the first of many to recognize that revolutions often occur in times when populations experience rising expectations about living standards. At least in some societies, the diffusion of wealth and education may help radicals recruit new allies.

Depriving the Jihadists of Allies

Regardless of where they stand on this debate, it is clear to most that no conceivable concessions, short of acquiescence to their scheme of expunging Western influence from the Muslim world and bringing Taliban-like regimes to power throughout it, can appease bin Laden, his followers, and his allies. Moreover, "Marshall Plans" for the Middle East, however justified they may be on other grounds, will not make al Qaeda and its sympathizers feel less humiliated. For instance, as a result of the 1978 Camp David peace accords the United States has transferred tens of billions of dollars to Egypt. This transfer of aid coincided with the worst period of terrorism in Egypt’s history; Islamist terrorists assassinated President Anwar Sadat in 1981 and killed more than 1,000 other Egyptians during the 1990s.

The first priority, therefore, of an anti-radical strategy must be defending the people, territories, and interests of the United States and other targeted regimes against terrorist attacks. Passive defenses to keep terrorists out are important, along with active security measures. Israel has successfully reduced the infiltration of suicide bombers by means of its security fence, and Saudi Arabia is building a fence of its own to prevent terrorists from crossing into and out of Iraq. While making it more difficult for terrorists to inflict damage, the United States must work with other nations, including unsavory ones, to apprehend jihadists if possible and kill them if necessary. The military has a role to play in some circumstances, but this is primarily a task for international police and intelligence collaboration. Disrupting clandestine cells and networks is particularly important, because of the role of peer-group socialization in the making of jihadists.

While bin Laden and his allies must simply be defeated, their appeal to potential new recruits can be limited by policies that reduce feelings of collective humiliation in the Arab and Muslim worlds. According to a recent National Intelligence Estimate, the American occupation of Iraq is now inspiring jihadists in the way that the Israeli occupation of the Palestinian territories, Russian control of Chechnya, and Indian rule over Kashmiri Muslims long have done. Ending the humiliating occupation of Muslim populations by non-Muslim nations will remove some of the major grievances that jihadists use as a recruiting tool. Conversely, to perpetuate these deeply resented occupations in the name of fighting "Islamofascism" will only help the jihadists.

In addition, major Muslim nations that are sources of jihadist recruits must change too. Along with fighting non-Muslim occupiers, al Qaeda seeks to topple governments in Muslim countries like Saudi Arabia, Egypt, and Pakistan. Al Qaeda draws many of its recruits from closed societies that are intolerant of dissent; it is no coincidence that Saudis and Egyptians play such a key role in al Qaeda. If there were more open societies in the Muslim world, there might be more political space for Islamists who reject terrorism when out of power and who, if they gained power, would abide by the norms of the international system. This would likely reduce the appeal of al Qaeda as an alternative to conventional political participation.

Reducing poverty in the Middle East and around the world is a laudable goal in itself, for humanitarian reasons. But it would be a mistake to treat prosperity as a universal solvent that can deprive jihadists like bin Laden of allies and sympathizers in populations that feel humiliated by foreign domination or frozen out of politics. Ultimately, both foreign occupation and domestic autocracy are political problems that must find political, not economic, solutions. The campaign against jihadism and the campaign against global poverty are both justified. But they are not the same war.

Reality Check

Cecille Isidro — Sun, 01 Oct 2006 19:51:00 -0400

Michael Signer’s essay ["A City on a Hill", Issue 1] is yet another in an all-too-numerous list of recent works by center-left intellectuals arguing that America can recover from its present international difficulties by changing the style of its approach to the world without significantly changing its policies. He denounces the "vulgar exceptionalism" of the neoconservatives and the Bush Administration but does not realize that we are well past the days when a tonier, more agreeably phrased American exceptionalism could command real support from most of the rest of the world. Signer’s argument reflects the fact that, in the end, by far the greater part of the Republican and Democratic establishments share the same basic myths of American nationalism concerning the righteousness of American power, the same commitment to U.S. supremacy in the world, and a common adherence to the same set of basic imperial strategies. And until progressive foreign policy thinkers confront these myths, they only will offer up alternative slogans or tactics but nothing resembling a foreign policy vision.

Take Signer’s supposed alternative to the failed policies of the Bush Administration, "exemplarism." He writes, "[In today’s globalized environment], it is simply impossible for any country, even one as powerful as the United States, to ignore or neglect its interconnections with other nations." At the same time, Signer is a strong believer both in America’s superpower status and in innate American virtue: What he calls "the ineluctable attractions of [America’s] own unique capabilities and goodwill -- by the charisma of its own great character."

Signer compares America’s role in the world to the quarterback of a football team: "He leads by example, but it’s the team that wins the game." One might say that Signer’s choice of sporting metaphor exposes the limits of his entire philosophy -- because, of course, far from leading the world in American football, the United States is more or less the only country in the world that plays the sport. Moreover, this entire metaphor is -- to put it mildly -- inappropriate. The whole point of team games is that the central purpose and the governing rules do not have to be debated and cannot be opposed: They are laid down a priori. If this were the case in international affairs, things would certainly be simpler, but this is unlikely to happen any time soon. Second, if the quarterback repeatedly flounders, he is removed by his coach, and if he repeatedly breaks the rules, he is banned by the authorities. Signer’s America, by contrast, is the permanent quarterback, by its own decision and some kind of divine right.

If this system of appointing quarterbacks were adopted by selected football teams, I do not think that it would lead to many victories. Signer does not seem to appreciate that, like any other country -- like any quarterback, for that matter -- America is judged by others not just on its present actions and declarations, but on its past record. If, as he himself says, the recent record of the United States has been so awful, why should other countries automatically trust America in the future? Like so much of the U.S. foreign policy establishment, Signer fails in what Hans Morgenthau laid down as one of the most fundamental virtues of true statesmen: The ability to put themselves in the shoes -- or cleats -- of other countries.

Signer declares that "exemplarism would value both strength and international prestige equally, seeing them not as mutually exclusive but rather as mutually reinforcing" and that "America’s economic, political, and military strength, when deployed wisely, enhances our prestige around the world." Who could possibly disagree? But, once again, what does "deploying American strength wisely" actually mean in practice? And who gets to decide what is "wise"? Is it America alone, or do American allies get a real say when it comes to designing and changing American policies? Without a real willingness to change American policies, it may be possible to bring about the kind of sullen acquiescence to the United States that one sees at present in Western Europe, for example, but it will be quite impossible to get nations outside that sphere to make real sacrifices for the sake of those policies and thereby lighten the present unsustainable burden on American resources. It is easy to talk of a need for more diplomatic approaches by the United States, and it is true that leading members of the Bush Administration have been notoriously and dangerously contemptuous of the very idea of diplomacy. But the liberal hawks who praise diplomacy in principle also appear to misunderstand its true nature. When they speak of engaging other countries diplomatically, what they usually mean is talking at them more loudly and sweetly, but with the same ends in mind. True, this has always been a key feature of diplomacy. But real diplomacy also means a recognition of other states’ vital interests and a willingness to reach compromises accordingly. This, by contrast, is too often called -- by Democrats as well as Republicans -- "accommodation" or even "appeasement."

The weakness of Signer’s approach is exemplified by his treatment of the Iraq war. As with so many of his Democratic colleagues, he wriggles out of saying whether the war itself was a good or bad thing. Instead, he suggests that if only the Bush Administration had diplomatically enlisted European help, what happened in Iraq would have been very different. This is arrant nonsense. The Europeans were never going to be able to give serious help to the United States in Iraq. They have no effective military help to give, and their readiness to make financial sacrifices was always going to be severely limited by the -- entirely correct -- opinion of European policymakers and electorates that the whole U.S. strategy was fundamentally misguided.

The countries whose aid the United States really needed to enlist in Iraq (and presently needs for the wider war on terrorism) are Muslim countries, especially Iraq’s neighbors. Gaining their effective support, however, would require radical changes to U.S. strategy in the region: toward the Israeli-Palestinian conflict and Israel’s policies towards its other neighbors, toward compromises with Iran and Syria, and toward the exercise of U.S. power in the region. None of this is discussed by Signer, nor by the vast majority of his other center-left foreign policy colleagues. Indeed, to claim, as the bipartisan U.S. establishment does at present, to be spreading democracy while in fact relying on authoritarian regimes to crush popular protests against the United States and Israel is an approach that goes beyond hypocrisy to something nearing Orwellian doublethink.

Signer does make a very powerful case against Michael Ledeen and the other extreme neoconservatives, with their hatred of even the appearance of diplomacy and their brutish talk of preferring fear over love. But he does not seem to realize that when he speaks of "placing the United States in a community, but as its leader," he himself is proposing a strategy of world dictatorship, albeit of a more civilized kind. Communities get to choose and change their leaders and to shape the way in which they are led. Signer is so convinced of the obvious goodness of America’s "essential national character" that he cannot imagine how any country could legitimately or intelligently desire not to have the United States as its leader. In the end, as a true product of the American nationalist tradition, he too believes in U.S. world domination by right of America’s unique virtue. Such a program is far beyond both the material and the moral resources of any nation -- even one so genuinely good and great in many ways as the United States.

Urban Legend

Cecille Isidro — Mon, 25 Sep 2006 19:17:00 -0400

Cities have always served many functions: as centers of religion, political power, and commerce. But one of their most important tasks has been to serve as engines of upward mobility and aspiration. Nowhere has this been more true than in American cities. From the earliest period of American settlement, European observers were often struck by the remarkable social mobility found in America’s urban centers. The average nineteenth-century American factory worker, whether native-born or an immigrant, enjoyed a far better chance -- and his offspring an even better one -- of rising into the middle or even upper classes than his European counterpart.

This is not to say that Industrial-era American cities constituted a workers’ paradise. Virtually every major city had its share of slums, and in the most important American metropolis, New York, the rate of infant mortality actually doubled in the mid-nineteenth century. Yet aspiring newcomers kept traveling to American cities, from both the surrounding countryside and the rest of the world, for one reason: the prospect of upward mobility. As historians Charles and Mary Beard noted in 1930, there may have been poverty "stark and galling enough to blast human nature," but "all save the most wretched had aspirations." There was, as they put it, "a baton in every toolkit."

So newcomers in search of a better life -- the Irish in the 1840s, Italians and Eastern Europeans toward the century’s end, African Americans from the South following the first World War-propelled urban growth. As late as 1850, the United States had only six cities with a population of over 100,000, constituting barely five percent of the population. By 1900, there were 38 such cities, and they now housed roughly one in every five Americans. "A metropolitan economy, if it is working well, is constantly transforming many poor people into middle class people ... greenhorns into competent citizens," the great urbanist Jane Jacobs wrote. "Cities don’t lure the middle class, they create it."

Sadly, in recent decades, this notion of cities as mechanisms for upward mobility has broken down. Many cities, rather than trying to uplift their working class and nurture a middle class, have chosen to concentrate on "luring" the affluent, the hip, and the young as their primary development strategy. In some cities, such as in Boston, New York, and San Francisco, this has created the basis for a new kind of urban area, the "boutique city," which effectively abandons the middle class for the allure of an elite-based strategy focused on top-tier business services, arts, and hip culture.

Many other cities, particularly hard-pressed former industrial centers like Baltimore, Cleveland, Philadelphia, and Detroit, have attempted to follow this "cool city" model without much success. They may have developed Potemkin villages of coolness in their center, but they remain among the poorest and most neglected regions of North America. Cleveland, for instance, with its much-ballyhooed downtown renaissance catalyzed by the Rock and Roll Hall of Fame, ranked first in urban poverty in 2004.

In contrast, there is a group of cities which most commentators consider chronically unhip -- primarily sprawling new cities of the South and West -- but which are actually the most dynamic in the creation of middle-class residents. These cities -- such as Phoenix, Houston, Charlotte, and Las Vegas -- have traditionally put their focus on their basic infrastructure and economic competitiveness and, for the most part, enjoy relatively low costs of living, particularly for housing. As unhip as they may seem, it is these cities that present a model for how urban America can not only rejuvenate itself, but rejuvenate America’s central promise of upward mobility, as well.

The Rise of the Boutique City

Traditionally, progressive urban leaders embraced Jane Jacobs’s mission of building the middle class and providing avenues of aspiration. The old political machines did this crudely, dispensing patronage and finding jobs for newcomers. Later, the Progressive movement, the New Deal, and the Truman Administration promoted upward mobility largely by building critical, wealth-creating infrastructure: schools, roads, bridges, mass transit, public parks, and housing.

Culture did play an important role in this traditional urban model, but generally it wasn’t a major part of the city government’s job -- rather, the arts were funded by those individuals who made fortunes there. Indeed, the great cultural assets of places like St. Louis, Cleveland, or Philadelphia -- such as these cities’ world-class orchestras -- owe their existence to the cities’ own aspirational past. This is true even in some newer cities like Los Angeles, whose greatest artistic monuments bear the names of those -- Getty, Disney, Geffen -- who found that city a place of unlimited opportunity.

In other words, the economy came first, and the amenities followed. But such an approach has been gradually abandoned over the past few decades, replaced with a strategy that puts the cultural horse before the aspirational cart. This shift well predates the early 2000s rage over public policy scholar Richard Florida’s gospel asserting the primary need for a "creative class" of well-educated, hip, single, and gay people in the urban core. Rather, it began as urban decline became painfully evident in the 1960s and 1970s. Aware that the middle class as well as many companies were moving out, cities, particularly New York and Chicago, placed their future hopes on seizing "the commanding heights" of the global economy-notably the finance, design, project coordination, and information industries. Although planning for the "commanding heights" did leave an appropriate legacy of high-rise office towers, this elitist strategy fundamentally failed to reverse the out-migration of headquarters, jobs, and the middle class outside the urban core.

Like aging dowagers, many cities have sought to arrest their decline by applying both a touch of rouge and some serious cosmetic surgery. This is the urban landscape of the "boutique city" -- one dominated not by middle- or working-class concerns, but by elite culture and the antics of celebrities, whether cultural icons, financial titans, foundation bosses, or media moguls. The boutique city is the playground of Paris Hilton and P. Diddy, as well as the assorted "masters of the universe"; it not a place with playgrounds for working-class and middle-class kids. These cities are almost obsessively concerned with "coolness" and "hipness," being "with it" and "trendsetting." Boutique cities, like a high-end specialty merchandiser, have little use for the general run of the working and middle class, whose needs are assigned to the domain of Target, Wal-Mart and other suburban merchandisers. Indeed, if the makers of the boutique city worry about anything besides themselves, it is usually not the disappearance of this hardworking middle class, but how to deal with the potential threat represented by the alienated underclass, with its potential for lethal mayhem. Many denizens of these environments do not see the city as a place that holds their commitments, but only one locale that, for a period of time or a particular season, seizes their fancy. Many are not even full-timers, instead flitting to Florida, Malibu, Palm Springs, Europe, or the Hamptons, depending on the season and their latest whims (since the 1990s, for example, the number of Manhattan residences serving as second homes has grown by as much as three-fold).

Spatially, the boutique city can be found in certain locations -- Manhattan, Chicago’s "Gold Coast," much of San Francisco, Seattle, and West Los Angeles -- but it can best be viewed as an interconnected archipelago of interrelated elite communities. Its fundamental economic power lies not so much in the efficiency of place but in harnessing the influence of the media and financial elites. It depends also on the energies of a steady stream of young, educated workers and legions of poorly paid, often immigrant, service workers.

To understand the change from a traditional to a boutique city, it is instructive to look into the evolution of our greatest urban center, New York. For much of its history until the 1950s, New York’s economy, including its manufacturing sector, more than held its own against the rest of country. Although it always had its slums, the city also boasted scores of solidly middle- and working-class neighborhoods. But starting in the mid-1960s, New York’s job engine began to sputter as manufacturing firms and corporate headquarters decamped, and the city failed to find industries of comparable size and quality to replace them. By 2000, the city’s overall employment stood at less than that in 1969 (and this during a period in which the number of positions grew by 61.3 million, an increase of 87 percent). Five years later, despite a much-ballyhooed recovery, yet another 100,000 more private-sector jobs had been lost.

Equally troubling, throughout this period the city’s employment pattern became ever more characterized by a mix of elite and low-wage employment. Since 2002, much job growth has been concentrated in the lower-paying retail and hospitality industries. As a result, median average wages, including for college graduates, have not kept up with inflation. Yet, at the same time, there has been robust income growth, paced by often-spectacular gains at the upper echelons of the financial and business service sectors. There may be as little as a third as many Fortune 500 headquarters in New York today compared with 1955, but those that remain employ a relatively small number of people at rapidly escalating wages. These changes have had a severe impact on New York’s demography. While it is true that the city continues to attract legions of talented people under 35, this inflow is more than balanced by an out-migration of people over that age. Nor does the current "boom" seem to be changing this reality. Since 2000, in New York City and its environs, rates of domestic out-migration, already among the highest nationwide, have actually accelerated.

These developments suggest a tragic conclusion: the decline of New York’s historic role as an incubator of upward mobility. Back in the ‘60s, Jane Jacobs could still predict that Latino immigrants to New York, mainly from Puerto Rico, would inevitably make "a fine middle class." Yet today in the Bronx, the city’s most heavily Latino borough, roughly one in three households live in poverty, the highest rate of any urban county in the nation. At the other extreme, Manhattan, where the rich are concentrated, the disparities between the classes have been rising steadily. In 1980, it ranked seventeenth among the nation’s counties for social inequality; today it ranks first, with the top fifth of wage-earners earning 52 times that of the lowest fifth, a disparity roughly comparable to that of Namibia.

It’s not just New York, either. Beyond the Big Apple, the middle class has disappeared from many urban communities, and nowhere more so than in cities that consciously promote their boutique status. A recent Brookings Institution found that, since 1970, cities have become dramatically more bifurcated between rich and poor neighborhoods. Fewer than one in four urban neighborhoods had a middle-class "profile" in 2000, compared with almost two in four three decades earlier; although suburban areas also suffered a decline in middle-class neighborhoods, overall they had nearly twice the percentage. San Francisco, despite its avowedly liberal, even radical politics, is becoming a particular poster child for social inequality -- a cross, in the words of historian Kevin Starr, "between Carmel and Calcutta." The difference between African American and white incomes in this liberal bastion, for example, is almost three times the national average.

In many cities, the shrinking of the middle class has brought about an overall drop in population. Although New York, with its large immigrant population, still enjoys slowing yet positive population growth, many other boutique cities, including some which gained population in the 1990s -- such as Boston, San Francisco, and Chicago -- have all lost population over the past five years. Some boosters explain this depopulation as a sign of a "qualitative" improvement in the population, a kind of genteel version of ethnic cleansing where middle- and working-class families are being replaced by well-educated, affluent, and often childless households. They point to certain positive developments, such as the proliferation of upscale restaurants, art galleries, trendy shops, and architecturally pleasing hotels and condos. Yet look at what’s missing: middle-class jobs and families. Boutique cities like San Francisco, Seattle, Boston, and Portland, Oregon, rank among the American cities with the lowest percentages of children. In San Francisco, there are more dogs than children. And why? Extremely high housing costs and an economic environment that provides few middle-class opportunities. Since 2000, almost all these cities have produced far fewer jobs -- even in business services -- than the nation as a whole or their surrounding suburbs. Put simply, all but the richest families don’t see a future that they can afford.

The Potemkin City

Despite the limitations of the boutique city, many other urban areas’ fondest wish seems to be to emulate their example. This includes less-favored cities like Philadelphia, Cleveland, Cincinnati, Baltimore, Detroit, St. Louis, and Newark. Both political and business leaders in these cities have pegged their future on luring the hip and affluent demographics to their long-benighted burgs with a slew of high-cost cultural amenities. The results are Potemkin villages of art museums, performance centers, tourist attractions, luxury hotels, and condos enthusiastically promoted both to locales and visitors as evidence of urban renewal. Yet these projects have rarely done much more than restore property values in a small area, and not one can claim that its economy has had anything remotely like a major rebound. If you measure job growth in the new century, much-heralded "renaissance" places like Baltimore and Philadelphia sit at the bottom of the pack, well behind even the most anemic boutiques.

There is perhaps no more searing evidence of the limitations of the Potemkin strategy than New Orleans. Once a great industrial and commercial center, the city’s economy -- despite its huge port -- has lost most of its sources of middle- and working-class employment. Even before Katrina, it had roughly half the percentage of jobs in manufacturing and wholesale trade than the national average. Instead, over the past quarter-century, New Orleans chose to focus on arts, culture, and tourism. Unfortunately, tourism does not readily provide much middle-class employment or social mobility. Before Katrina, nearly 40 percent of New Orleans households, nearly all of them black, earned less than $20,000 a year, twice the proportion in the rest of the country. Whatever might have worked for Garden District elites or the operators of the tourist hotels failed the rest of the city’s population on a staggering scale.

Yet while New Orleans gets the tragic opportunity to rebuild itself anew, most older industrial cities do not. They lack New Orleans’ natural appeal, but they still think that Potemkinism can work for them. In Michigan, for example, Governor Jennifer Granholm’s urban strategy has focused on the notion of creating "cool cities." Since 2002, she has promoted the growth of art galleries, coffee houses, and other yuppie accoutrements as a means to restart the state’s urban areas. Although perhaps some urban Michiganders now might see themselves as cooler, their cities -- most notably Detroit, led by its self-professed "hip-hop Mayor" Kwame Kilpatrick -- still rank consistently at the bottom of American urban areas in terms of job growth and near the top in terms of population loss.

In Baltimore, Mayor Martin O’Malley has identified the migration of gays and artists as key to his city’s revival. Even before O’Malley’s administration, Baltimore had looked to tourism-centered around the Inner Harbor "festival marketplace," two new sports stadiums, and the National Aquarium -- to revive its long-sagging fortunes. In 2003, O’Malley packaged all this around what has to be among the most bizarre slogans in recent memory -- "The Greatest City in America." To be sure, things in early, twenty-first century Baltimore were pretty good for real-estate speculators, who cashed in on a property bubble and the migration of some professionals from an even more overheated Washington, D.C. property market. But Baltimore’s overall performance was far from the "greatest." Demographic decline has continued apace -- population, which dropped 11 percent in the ‘90s, has fallen another 2.3 percent. The city still has thousands of abandoned homes and, to make things worse, a homicide rate that is perennially among the nation’s highest. "What good is it to be hip and cool," one local talk-show host asked me, "if you’re dead?"

Cities of Aspiration

Surveying the urban landscape, one lesson of the past few years starts to become clear: It is hip to be square. In an age of loft condos and lattes, the least appreciated American urban form may turn out to be the one that still best adheres to the traditional role of cities as generators of upward mobility. These are the new Sunbelt cities -- places like Houston, Charlotte, Orlando, and Phoenix -- whose sprawl and rough edges often elicit derision from traditional urbanists, even as they attract newcomers and create middle-class jobs and entrepreneurial opportunities. Between 1994 and 2005, the Phoenix area expanded its job base by 52 percent, Orlando by 48 percent, Charlotte by 31 percent, and Houston by 25 percent. In comparison, New York and greater Chicago expanded by only single digits, while the Cleveland, Baltimore, and Philadelphia areas all lost jobs.

The differentials in housing are, if anything, starker. In cities like San Francisco, less than one tenth of households could afford a median-priced home; in Phoenix, one-third can do so, as can over half in Dallas, San Antonio, Charlotte, and Houston. Of course, one can argue that there are cities with even lower housing costs, notably in the depressed Midwest. But, unlike those old industrial centers, the Sunbelt cities are in a rapid growth mode, creating large numbers of new jobs while attracting new residents both domestically and, increasingly, from abroad.

What drives the growth of these cities are the very aspirations that have created great urban centers throughout history. Phoenix and Houston, in terms of their job growth and appeal to those seeking a better life, resemble New York, San Francisco, Chicago, or Pittsburgh at the turn of the last century. Like the great American boomtowns of the nineteenth and early twentieth centuries, today’s aspirational cities are protean, being constantly redefined by newcomers. In fact, almost a third of all Phoenix residents, according to the 2000 census, arrived within the past five years. The prototypical Phoenician, or Houstonian, like their counterpart in New York a century earlier, is often someone who came with little more than hopes to create a better life. "We came with nothing. We came here because it had wealth that was increasing. You can find opportunities," Phoenix entrepreneur Deb Weidenhamer told me. "People come here for a new start and come with ambitions... Longevity here doesn’t matter here. You can be here ten years and it’s like you’re an old fogey -- on the East Coast, you’d be like a newcomer."

Of course, even within Phoenix or other aspirational cities, some, particularly in the media, yearn to follow the trends observed in boutique cities like Boston, Seattle, or San Francisco. These cities are held up as paragons of urban progress, in large part because of their concentration of high-wage jobs and "creative" professionals. This approach misses many critical points. First of all, even hip, educated young people migrate to where the jobs are; according to the 2000 census, Las Vegas, Charlotte, Atlanta, and Phoenix experienced a higher rate of migration by the young, single, and college-educated than San Francisco or Seattle. These patterns have likely accelerated since San Francisco, Boston, and other boutiques saw their economies slow in the ensuing five years.

Equally important, the lower cost of living in most aspirational cities translates into a better lifestyle, including for professionals. San Francisco and the Silicon Valley may generate higher wages in fields like software of financial services, but weighted against the cost of living, Phoenix, Dallas, and Houston actually deliver to their workers, in real terms, higher purchasing power. Critics also make much of the fact that cities like Phoenix have experienced somewhat lower per capita income growth than other regions. This, however, stems in large part from the area’s rapid growth in both household size and population. Places with few children, like San Francisco and Seattle, tend to have higher per-capita incomes; the little tykes can have a powerfully negative impact on such incomes, as do new arrivals who often come with more hope than money in their pocket.

Yet, despite these facts, many journalists and policymakers seem determined to spread the boutique model. This approach often has a certain political logic. The construction of new hotels, condos, art museums, and performing arts centers presents mayors with tangible assets to show off to their constituents. Large property owners, developers, hotel and construction unions, and arts foundations also tend to support such an approach to urban development, for obvious reasons.

One can see this pattern in cities like Los Angeles, which straddles the line between an aspirational city -- with strong population growth and grassroots entrepreneurialism -- and a boutique city. Mayor Antonio Villaraigosa, an erstwhile progressive firebrand, has put much of his prestige on the line to back huge subsidies for entertainment, condos, and hotel development in the city’s downtown. As a result, his popularity has been soaring among billionaire developers, such as Phillip Anschutz, a right-wing Coloradan whose massive $2.5 billion LA Live project depends heavily on a $300 million city subsidy for a luxury condo and hotel tower next door. As is so often the case, the goal is to "lure" not only tourists but the rich, powerful, and hip to the urban core. Villaraigosa has also signed up to back the schemes of another billionaire, Eli Broad, in his attempt to turn downtown’s doughty Grand Avenue into a West Coast "Champs d’Élysées." This development also has been made possible through sweetheart deals with government agencies, in this case Los Angeles County, for the land to build Broad’s vision, and may need other, more direct subsidies to pencil out. Broad, who made his fortune building suburban tract homes, is a particularly peculiar case: a self-made Sunbelt billionaire (originally from the Detroit area) whose view on urban greatness nevertheless follows a conventional twentieth-century notion of a downtown-centric city.

It is dubious how much this kind of policy promotes upward mobility outside of a selected group of hotel workers and those involved in the building of these structures. Meanwhile, the city’s economy consistently underperforms compared with others in the region, in large part due to higher taxes, a difficult regulatory regime, decaying road systems, and dysfunctional schools. Not surprisingly, Los Angeles, according to research by the Brookings Institution, has lost middle-class residential areas at a high rate, as well as endured a growing concentration of poorer neighborhoods.

Towards a New Urban Strategy: Back to Basics

Today it appears that most cities -- even if they have the money -- will not invest it in ways to stimulate the middle class and broad-based economic growth. Instead, once a city’s fiscal picture brightens, the first people to be rewarded are the public employee unions. In the summer of 2006, for example, both New York and San Francisco, each benefiting from the real estate bubble, rewarded city workers with good raises that did not include tough productivity incentives. They also failed to confront the thorny issues that threaten their long-term future, such as their massive pension obligations (in the case of New York, this obligation has been estimated at roughly $40 billion). As the property markets -- that fueled much of this revenue growth -- continue to cool in the coming months, the foolhardiness of these decisions will become ever more apparent. As a result, the city is stuck with declining revenues and increasing payrolls, without enjoying any of the added productivity benefits that would have resulted from smart investments in labor.

These political realities are just part of the problem; many of the biggest barriers are the products of economic evolution. Late twentieth-century cities like Houston, Phoenix, Charlotte, and Dallas were essentially built to meet the tastes of the mass of Americans for a detached house, a yard, and an automobile commute. They also enjoy, for the most part, more up-to-date infrastructure, such as major airports surrounded by lots of land allowing for expansion, which is increasingly critical to urban growth. In this respect, older cities -- even if they had a change of heart politically -- have more limited possibilities for middle-class mobility and economic growth. In many cases, these cities have scarce open land to develop and are, for better or worse, stuck with a housing stock and infrastructure dating back, in some cases, to the nineteenth century. Yet at least some of these depressed older cities, and even parts of some of the most prominent boutique cities -- such as outlying sections within the cities of Chicago as well as the outer boroughs of New York -- still have the potential for aspirational growth. In some cases, as in parts of Queens, middle-class families, many of them immigrants, have already moved into once-declining neighborhoods and turned them around.

However, America’s older cities do not need to face this choice between growing irrelevance and continued decline. For all their problems, they retain an impressive array of physical building blocks for future success: critical infrastructure, a varied housing stock, universities, hospitals, research institutions, and attractive residential neighborhoods. They offer options to walk or take public transit to work, options that appeal to a small but significant part of the workforce. These opportunities could be seized by a new approach that focuses not on an essentially ephemeral strategy of making cities themselves "cool," but by a longer-term approach that seeks to reclaim them for the middle class and the upwardly mobile. This requires a return to the basics of urban policy, focusing on such things as infrastructure -- development, improved schools, and enhancing the efficiency of urban governance. Rebuilding and reclaiming housing in inner-city areas for those who live there, as well as new middle-class residents, would be one start. Making the climate more attractive for entrepreneurs and small businesses would be another, coupled with expanding skills and vocational training for local residents so that they can take the jobs these firms create. Improving urban schools, a more daunting task, could be accelerated, perhaps by developing more charter schools or drastic reform of frequently union-dominated school administrations.

This "back to basics" approach would work not just for traditional urban centers, but also for those outlying areas, particularly older suburbs, that now confront many of the opportunities and challenges usually associated with core cities. In many cases, particularly in the Northeast and Midwest, these areas are not so dissimilar in their densities and development patterns from Sunbelt cities and they can more readily follow their model. These include places like Arlington, outside Washington, D.C., or close-in suburbs, such as University City and Maplewood, just outside the physically constrained borders of St. Louis.

Perhaps the most spectacular example of this approach can be found in Houston. For decades, the city has focused largely on the fundamentals of growth, pressing relentlessly to dredge its harbor, improve drainage, and construct state-of-the-art industrial facilities. With a gritty efficiency, the city has transformed itself into a major global center, assuming leadership of the world’s energy industry and quietly building the world largest medical complex. [Full disclosure: I am a working on a project about the future of Houston for the Greater Houston Partnership. I have also worked on projects in Los Angeles, New York, St. Louis, among other cities, all of which, along with Houston, I feel free to criticize.]

This did not happen by coincidence. During the ‘90s, Bob Lanier, the son of an oil refinery worker who grew up in nearby Baytown, served as mayor. When he took office, the city he inherited was in deep trouble; it had lost some 200,000 jobs in the near-total economic meltdown after the energy bust of the 1980s. Its once-proud skyline was filled with "see-through" towers, empty of workers. Lanier, a former developer and lifelong Democrat, helped turn the city around by doing the little things and doing them right, such as filling potholes, streamlining regulations, reducing crime, and improving services to the city’s varied neighborhoods. Most of all Lanier focused on infrastructure: roads, sewers, and cleaning the streets. At a time when many cities have chosen to eschew road- building and actually encourage gridlock, sometimes with the hope of forcing greater densification, Houston has chosen to build new roads, including tollways, as well as an expanding mass-transit system. As a result, it is among the few major American cities to see commute times diminish over the past decade.

This is not to say Houston is without problems. It has significant rates of poverty and large areas of poor housing. It is also struggling to accommodate upward of 100,000 Katrina evacuees, many of them poor African Americans. Yet what has come out clearly in scores of interviews and discussions with a broad array of Houstonians -- from business leaders and current Mayor Bill White to community activists in the predominately African American Third Ward and Katrina refugees -- is that many residents regard opportunity as their city’s primary attribute. Certainly, people do not move primarily to humid and flat Houston for the weather or topography; they come largely for the chance to succeed.

Other cities, such as Charleston, South Carolina, also have thrived using this approach. Led for over three decades by Mayor Joseph Riley, Charleston is best known for its well-preserved downtown, but it has also made major investments in education and critical infrastructure, such as its rapidly expanding port, which has doubled its activity in the past decade. As a result, Charleston, once a prototype of Deep South somnolescence, has enjoyed not only remarkable job growth, but also a rapid diversification of its economy. Over the past decade, professional and business-service employment in the area jumped 80 percent, twice the growth of the hospitality industry. Key blue-collar industries, such as trade, construction, and even manufacturing, which rose 9.1 percent between 1994 and 2004, also enjoyed steady growth. At the same time, Charleston has made a successful shift toward an information-oriented economy: Its ranks of college-educated people, once well below the national average, now surpass that of the country as a whole. The changes are particularly striking at the high end; since 1980, the number of Charleston-area residents with advanced degrees has expanded almost 160 percent, eight times the rate for the rest of the country. It may not be on the level of New York or San Francisco, but its rate of progress is far more rapid.

Yet perhaps the best case for back to basics may not be in the Sunbelt, but rather in the hard-hit industrial Midwest. At the dawn of the twenty-first century, places like Kalamazoo, Michigan, an industrial city in the southwestern part of the state, was told by Granholm that its future lay in attracting "the creative class." A new image, "Cool Kalamazoo," was going to remake the region of 350,000 people. It didn’t turn out that way. As Michigan’s economy has declined, the notion that being "cool" was the key to survival became something of a bad joke. Recent surveys, for example, find that one in three Michiganders considers theirs a "dying state," and four in ten are thinking of fleeing, including the young. "It’s still Depression-era around here," Ron Kitchens, head of Southwest Michigan Now, a local economic development group, told me. But one thing may be said for the hard times in places like Kalamazoo: It has spurred young leaders like Kitchens to focus on a different strategy. They are raising capital for new startups in information, life sciences, services, and other growth industries, many of them operating out of an abandoned General Motors plant. They are looking at improving the transportation infrastructure -- particularly the regional airport -- to better connect the city with the rest of world. Perhaps most important of all, they are investing in the skills of their people. Local foundations are financing what is now called "the Kalamazoo promise," which essentially guarantees 65 percent of college tuition costs for those who attend the city’s schools.

"Hungry people’s first priority is not to eat cake," Kitchens said. "You can have an art center but it does not sustain your city. Making a successful city is not magic. It’s blocking and tackling. Government can be a catalyst in doing that, and that’s what we’re doing. You’ve got to give the ordinary people a sense of hope. That’s what successful places always do."

The Future of American Cities

Ultimately, the critical question for cities boils down to what essential purpose they should serve. Are cities to become, as H.G. Wells predicted over a century ago, merely entertainment districts -- what he called "places of concourse and rendezvous"? Or have cities been rendered irrelevant as economic units by technology, as George Gilder has argued? After all, a broadband hook-up in Bismarck, North Dakota is just as connected to the world economy as one in Brooklyn. Or it could well be that cities, under current trends, will devolve into socially bifurcated regions increasingly irrelevant to America’s mainstream political culture, islands of ultra-affluence and poverty, many of whose residents are either temporary or part-time.

As a lifelong urban dweller, I don’t believe that our cities’ best days must lie behind them, particularly if we are to include more sprawling, multi-polar cities like Phoenix or Houston. Cities still possess many critical assets like historic neighborhoods, freight and rail connections, major hospitals, universities, and research institutions, which make them invaluable assets to the surrounding regions and the nation as a whole. There are also intangible assets that make the fate of cities critical to the future of the republic. For one thing, they are repositories of much of our historical memory; no matter how much the suburbs and exurbs evolve, they are unlikely to provide the sense of place and cultural focus that resides in the urban core. This is most true in older cities, such as New York, Philadelphia, and Boston, but also, to a much more limited extent, in more vital places like Houston, Dallas, and Charlotte.

And as today’s aspirational cities show, America’s urban centers can still be, with the right leadership and smart policies, the engines of upward mobility that have powered this country for the past century. But to do so, they must pursue such basic strategies as encouraging entrepreneurial growth, reducing regulatory and tax barriers to business, creating efficient transportation systems, improving education, and prioritizing public safety and public open space. It would be far better to spend the hundreds of millions now wasted by many cities on convention centers, boutique hotels, performing arts centers, and subsidized condo development on these more essential services, the true sinews of an expanding urban economy.

To be sure, fancy bookstores, organic markets, sushi bars, and art galleries are important parts of urban life, but they only represent a critical factor for a small slice of the population. And they will come along naturally, as arts and amenities tend to, with economic growth and wealth creation; focusing on amenities first gets the urban equation completely backward.

Great cities are about many things, but none more than being a place for a broad spectrum of people to improve their lives and that of their families. Great cities are about real diversity of ages, family types, and incomes, not just agglomerations of the affluent. What we want for our cities is what we should want for our country as a whole: to be a place of great opportunity, hope, and a better life, particularly for those who still consider this part of their American dream.

Not-So-Great Liberalism

Cecille Isidro — Wed, 02 Aug 2006 05:42:00 -0400

In March 1997, the neoconservative pundit David Brooks published a cover story in The Weekly Standard titled "A Return to National Greatness: A Manifesto for a Lost Creed" in which he called for a conservatism committed to a "national mission and national greatness." In an op-ed that following September, Brooks and Weekly Standard editor William Kristol elaborated on the argument, explaining that the American people are not great unless they are engaged in heroic collective projects, such as the Cold War. In both articles they set forth prescriptions for just how to embark on such a project.

What wasn't included in their list was waging a war on global Islamist terrorism. Of course, the attacks of September 11, 2001, would rocket that cause to the top of the Brooks-Kristol agenda. Yet, it would be left to a well-known liberal, The New Republic's Peter Beinart, to make the national greatness case for the war on terrorism. And although he does not explicitly use the term "national greatness liberalism," it is precisely what Beinart is calling for in his new book, The Good Fight: Why Liberals -- and Only Liberals -- Can Win the War on Terror and Make America Great Again.

There are, of course, differences between the visions of Beinart and Brooks-Kristol. Writing for an audience of Democrats rather than Republicans, Beinart finds his heroic age not in the Reagan era but in the years between Truman and Vietnam, when anti-communist Cold War liberals dedicated to reform at home and abroad were the dominant faction in the Democratic Party. And Beinart directly criticizes the "national greatness" neoconservatives for their espousal of U.S. triumphalism and for their neglect of economic development as a goal of U.S. foreign policy in addition to democratization.

But these differences are less significant than the fundamental similarity between national greatness conservatism and Beinart's national greatness liberalism. Like the neoconservatives, Beinart argues that American national greatness requires a highly activist U.S. foreign policy; like the neoconservatives, Beinart argues that the war on terror should define U.S. foreign policy; and like the neoconservatives, Beinart equates it with World War II and the Cold War. Indeed, Beinart goes as far as to echo neoconservative thinkers Eliot Cohen and Norman Podhoretz when he describes the war on terror as "World War IV," World War III being the Cold War.

Accusing his fellow liberals of "ideological amnesia," Beinart writes that "conservatives have a crucial advantage: they have a usable past." The Good Fight is his attempt to provide contemporary liberals with a similar past, which he claims they can find in "the heritage they have tried to escape. Its roots lie in an antique landscape, at the dawn of America's struggle against a totalitarian foe." Beinart's progressive heroes are anti-communist liberals Arthur Schlesinger, Jr., Eleanor Roosevelt, Hubert Humphrey, Reinhold Niebuhr, and others who met at Washington's Willard Hotel in 1947 to found Americans for Democratic Action (ADA), a liberal organization that repudiated the pro-Soviet, Henry Wallace wing of the Democratic Party. By purging communist sympathizers and supporting the policies and institutions that ultimately would win the Cold War, this small group assured the moral and political viability of the Democratic Party. Tragically, according to Beinart, American liberalism took a wrong turn when opposition to the Vietnam War turned much of the Democratic Party not only against the Cold War, but also against the very idea that the United States can legitimately use force on behalf of the national interest and the international system. But a generation later, anti-communist liberalism stands vindicated. The Cold War concluded not only peacefully, but also with the total capitulation and then collapse of the Soviet Union. Marxism-Leninism as a political creed imploded with it (outside of such relic Stalinist regimes as North Korea, Vietnam, and Cuba), vindicating anti-communist liberals who insisted that the struggle was about ideology as well as power. The timing is propitious, then, for Beinart's polemical retelling of history.

Beinart is an excellent writer and a good historian, and his defense of the Cold War liberal tradition is persuasive. His critique of what he calls the "anti-imperialist left," which continues reflexively to reject the legitimacy of any U.S. military action, is generally on the mark as well. But the problem with The Good Fight arises from Beinart's attempt to draw lessons for contemporary U.S. strategy from the early years of the Cold War. While the spirit of the Cold War liberals can inspire us, their particular policies cannot serve as precedents today because the threat of stateless jihadist terrorism is simply too different from the threat posed by the Soviet Union and communist China.

At the core of The Good Fight is the conviction, shared by Beinart with the Bush Administration and leading neoconservatives, that the war on terrorism is the equivalent of the Cold War and the world wars, requiring a similar level of commitment and focus on the part of the American people. But is the campaign against Al Qaeda and other jihadist networks a world war in any but a misleading, metaphorical sense? True, the events of September 11 show that the threat of mass-casualty terrorism on the part of jihadists is real; stateless groups might now inflict damage on a scale that once only hostile states could aspire to achieve. In every other respect, however, parallels between the Cold War and the anti-jihadist struggle break down. Having lost their state sponsor in Afghanistan's Taliban regime, Osama bin Laden and his allies are on the run; they are less like the Soviet Union in 1948 than like the scattered Bolshevik militants before they seized power in 1917. Preventing jihadists from capturing a Muslim state, and using it as a beachhead in their campaign to bring radical theocratic regimes to power throughout the Muslim world, is essential. But that is chiefly a matter of policing and intelligence-sharing among Muslim countries and other states, including the United States. While difficult, the task is made easier by the fact that all of the major nations are threatened to some degree by jihadist terrorism-not since the days of the murderous anarchists a century ago has a stateless terrorist movement united every great power against it.

Beinart also argues that a key difference between the anti-communist era and our own is the centrality of states within the international arena. "In the first two decades of the Cold war, one of the hidden assumptions of the American right was that what really mattered in the world were states," Beinart writes. "It remained hidden because liberals believed the same thing." And yet here again he draws the wrong lesson -- arguing that stateless terrorism has eclipsed traditional power politics, Beinart says next to nothing about the relationship of the United States to other great and midlevel military and economic powers and what sort of a world the country faces outside the threat from radical Islam. Indeed, most of America's strategic challenges have nothing to do with Al Qaeda or jihadism, including the rise of Chinese military and economic power, tensions between Russia and the West, the quest by Iran for nuclear weapons, and the trend toward anti-American populism in Latin America.

Beinart further concurs with the neoconservatives that nothing short of the wholesale democratization of the Muslim world is necessary to eliminate the jihadist threat. "In America's new anti-totalitarian fight," he writes, "the Bush Administration has gotten one big thing right: Tyranny does foster jihad. And while terrorism can spike during chaotic transitions to freedom -- as the police state crumbles and jihadists find it easier to do their deadly work -- in the long term, liberal democracy can help drain the hatred on which totalitarianism feeds. Conservatives have traveled a tortured path to this realization. And if liberals deny it now, they forfeit their own heritage." But, while Beinart claims that "their own heritage" compels liberals to join with neoconservatives in the project of democratizing the Muslim world, he fails to address the obvious objection that democratizing the Muslim world, or anywhere else for that matter, was never a priority of the Cold War liberals whose legacy he invokes. Their abstract preference for a world of liberal democracies notwithstanding, the Truman, Kennedy, and Johnson administrations did not engage in efforts to change Middle Eastern autocracies, like those of Saudi Arabia and Iran, which were instead valued allies in the geopolitical struggle against the Soviet Union. The United States likewise refrained from military intervention to support anti-communist forces in East Germany in 1953, in Hungary in 1956, and in Czechoslovakia in 1968.

Nevertheless, to the democratic crusade preached by neoconservatives, Beinart wants to add an equally grandiose project of economic development from Morocco to Malaysia, on the model of the Marshall Plan and Harry S Truman's Point Four foreign aid program. "Combine all the Bush administration's non-military aid to the Muslim world and you get a bit more than $1.5 billion a year. Add in economic resources for Afghanistan and Iraq, and you're a bit over $8 billion, still only one-twentieth of the Marshall Plan. What kind of way is that to fight World War IV?" he asks. Beinart demands a massive aid program to achieve this mission. Consequently, in its strategy for victory in "World War IV," Beinart's national greatness liberalism is even more ambitious and expensive than the national greatness conservatism of Brooks and Kristol.

But that doesn't bother Beinart, because for him "salafist totalitarianism" is what the Cold War liberal Walt W. Rostow called communism -- "a disease of the transition to modernization." He ignores the explanation provided by French scholar Olivier Roy, who has argued that jihadism is not a result of poverty or repression in the Muslim world, but rather of an identity crisis on the part of elite Muslims like Osama bin Laden and Mohammed Atta, who have been exposed to Western modernity. Robert A. Pape of the University of Chicago, in an exhaustive study, has shown that suicide-bombing is a tactic used by populations under real or perceived occupation against occupying powers with democratic governments susceptible to public opinion, including Israel and the United States. If Roy is right, then the center of gravity of the struggle is Europe, not the Muslim world; and if Pape is right, the United States can somewhat reduce the appeal of jihadism by withdrawing from Iraq and limiting the American military presence in other Muslim countries. In either case, Beinart's prescription is based on a misdiagnosis of the disease.

More than that, Beinart -- while recognizing the perils of previous courses of treatment -- does not seem to have heeded these lessons. Throughout The Good Fight, Beinart argues that Cold War liberals like Reinhold Niebuhr can teach contemporary progressives the importance of national humility. "For conservatives -- from John Foster Dulles to George W. Bush -- American exceptionalism means that we do not need [international] constraints," he writes. "But in the liberal vision, it is precisely our recognition that we are not angels that makes us exceptional. Because we recognize that we can be corrupted by unlimited power, we accept the restraints that empires refuse... They make us a great nation, not a predatory one." Beinart is honest enough to admit that the disastrous results of the U.S. invasion of Iraq, which he and the other editors of The New Republic enthusiastically supported, have convinced him that "the morality of American power relies on the limits to American power. It is a grim irony that this book's central argument is one that I myself ignored when it was needed most." But Beinart does not acknowledge the contradiction between his hard-won appreciation for national humility and his program for the U.S. -- sponsored democratization and development of the entire Muslim world -- a program far more grandiose than the neoconservative program of externally sponsored democratization alone. Beinart's national greatness liberalism is not neoconservatism lite; it is neoconservatism on steroids.

Beinart is right in proposing that liberals can find inspiration for a sound foreign policy in their own tradition. But he has defined that tradition too narrowly, identifying it with Cold War liberalism and attempting to transpose the concepts and policies of that era in too mechanical a way onto today's world. Cold War liberalism itself was simply one phase of what might be called "World War liberalism," running between 1917 and 1989. What united the World War liberals was not a single threat, but a vision of a post-imperial, peaceful liberal international system banning aggressive war and united on the basis of international law and global commerce. The world would be policed, not by the United States as a solitary hegemon or empire, but by a concert of cooperating (though not necessarily democratic) great powers with the United States as first among equals. Woodrow Wilson called for "some definite concert of power which will make it virtually impossible" for world wars to recur, while Theodore Roosevelt similarly hoped that "those great powers honestly bent on peace would form a League of Peace." Sharing this vision, Franklin D. Roosevelt not only came up with the name and design of the United Nations, the successor to the League of Nations, but also provided for a posse of great powers to keep the peace in the form of the Security Council, which began to function as intended in the 1990s when post-Soviet Russia abandoned an aggressive foreign policy. A definition of U.S. strategy in terms of the goals of such liberal internationalism provides a positive and enduring vision, unlike a strategy that defines itself in terms of a particular threat.

Intended to stimulate debate among American liberals, The Good Fight was overtaken by events before it was published. The anti-American backlash as a result of the Iraq war has doomed the legitimacy of U.S.-led democratization efforts in the Muslim world. The price of the war, which may end up in the trillions of dollars, will prevent the kind of large-scale foreign aid that Beinart calls for. And the American public, having turned against the war, is likely to be hostile to U.S. military interventions abroad for years to come. The costs of the war that he supported rule out the strategy that Peter Beinart proposes in The Good Fight.

The Good Fight: Why Liberals -- And only Liberals -- Can Win
the War on Terror and Make America Great Again
By Peter Beinart • HarperCollins • 2006
304 pages • $25.95