Big Picture Thinking
#1
A variety of news reports caused me to think a little bit, and to think in depth. Your comments appreciated. Exception: 'it's all about oil' is a tired sound byte with no depth, please leave that garbage on the curb if tempted. As to the charges that this war is about the 2004 election in the U.S. . . . hmmmmm, I am puzzled by conflicting signals on that one. In any case, GWB must have noted that his father, who was far better received on any number of counts than he, won a war and lost an election in that order. The time horizon for any change post-war is too short to help him in 2004, as I see it. But let's get away from who the president is, and look at Strategy from a more neutral position.

Let's look at long term goals and desired outcomes for the US in re the Mid East and the Arab world in general, and a few other things.

1. Reduce the footprint of US troops in the region. I am referring to the increase in US forces since 1990. More Americans are stationed/deployed there on an annual basis since 1991. This is allegedly one of the beefs of the folks like OBL, who are opposed to Americans 'defending the holy land' rather than Arabs. Not sure he does not have a bit of a point on that one, if one assumes that 'if you call them, they will always come to help you but you really don't like them the rest of the time.' One of the lines that the Saudi's I met a few years back used was odd from my point of view. Not sure how much they bought into it, but here it goes:

"Well, from where we sit, the Holy Land (the land of Meccah and Medina) needed to be defended, the Americans came to help the King, the war was won, so the Americans can now leave." (Of course the problem is the 'ease' of coming back should the need arise again to help the King, hence the forward deployed posture.)

So, if Iraq has a regime change, and if (a risk, not a certainty) that reduces any threat to Saudi stability and security by being a 'better neighbor' then: why not bring most, or all, of the Americans in uniform home from Saudi Arabia except for the usual attaches and military assistance (you know, the guys who help them fix that high tech stuff they buy from our companies, like F-15's). That stance would appeal to a lot of Americans who prefer folks defend themselves, and to a lot of Arabs who would like to see less American uniforms in the Arab world on a day to day basis. Win Win.

2. Smoke out terrorists. Risky move, but possibly effective. Even if the link to Al Qaeda seems tenuous, some interesting news shows that expatriate Iraqi's and other Arabs who dont care for the Stars and Stripes, are apparently showing up in Iraq to 'fight for Iraqi's against American aggression.' Martyrdom has a far more powerful label in the Arab world than it does in the West, at present. However, if these folks are as unprofessional as most militias, they may just build a martyrdom data base and die in any case. Now, the trick to this is: does that martyrdom build a more pro-fundamentalist Islamic reaction, in the Mideast, or will long term 'stability' mitigate those effects? There are plenty of progressives who you don't read about in the news. Very hard to predict, but smoking out the fighters and then destroying them in a lost cause may have a positive side effect. Hard to tell if that was an intended outcome.

3. Smoke out Terrorists part II. The real payoff. This action in Iraq, rather than quiteing various cells, has quite possibly stirred any number of them into action, possibly precipitously. That means that some will act When We Are Looking For Them and either be foiled or get taken down by their action. This actually makes sense to me. The more the various cells try to do, the more likely they are to be discovered.

Risk? Big! Another effective attack takes place. However, since Sec Def Rumsfeld seems to have accepted (over the past 6 months in a variety of public statements) that it is a matter of "when not if on the next big terror attack" then this course of action seems to have some merit. Smoke them out, with a spoiling attack on Iraq, so that they tip their hands a bit earlier. That may reduce the tools for reactionaries in

4. Iran. A stable and prosperous Iran is, IMO and the opinion of some others, the key to stability in the Persian Gulf. (Hey, it even has their name on it!) With Iraq less of a threat to them, absent Hussein, Iran either is less paranoid, or is emboldened to spread the Islamic Revolution. The big Risk is that the latter is the case, but with a less bellicose Iraq, the US can continue to try to move forward and try to thaw relations with Iran. This represents a major Long Term project, which the "axis of evil speech" did nothing to help. :P

5. Afghanistan. The play in Iraq is a complement to the play in Afghanistan. Containment II maybe, in re Iran? Less bellicosity, better chances for stable region, which helps the global economy. I am on very shaky ground with my thought process on this one, as the Central Asian Republics, the various Stans, that were once in the USSR need local stability to enter the global economy more fully. Last few journal articles I read on that left me with mixed feelings. However, the Russians have their own ideas on that score, so we once again return to

6. Russia. How does this latest move help our long term, not short term, relations with Russia? Some folks, on whose side I sit, advocate getting Russia into NATO in the long term. Seriously. That goal is to me the ultimate aim for any intelligent American long term strategic policy. We made a lot of moves forward in working with them in Yugoslavia, however, EU issues will be strongly tied to that. What may actually happen is a repeat of the Triple Entente, with Russia, France, and England in a bloc . . . more economic than military. Or, Russia joins the EU rather than NATO. Should that occur, the likelihood of war among the EU and US would, some suggest, increase, but I contend that it would decrease. The European model of collective security is generally: do everything we can do to avoid another bloody war!

US in Iraq, had we gotten Russian cooperation, would have iced our relationship, but sadly, that bit of statecraft did not come to pass. Could be that Putin needed a time and a place to show that 'Russia once again can stand up to the Americans' and he took the opportunity.

This piece is very unclear to me.

7. Eastern Bloc. You will note that the new NATO nations, such as Poland, Czech, Slovak, and others seem to have 'joined the coalition.' The long term effects of this on European policy is to me positive, though others will point to this 'spooking' the Russians.

8. Turkey. (Full disclosure: I worked for a Turk for about 3 years.) A pivotal nation in European and MidEast security, IMO, and Russian security. With a calmer Iraq, Turkey has one less enemy at the gates. (Look at their historical situation, and the map, and one can see that they are the perfect opposite to the US situation: we have nothing but friends on our borders, while they have an enemey, or a potential enemy, at every point of the compass on their borders.) With a stable Iraq, what chance any change in the better for Turkey? And, for that matter

9. Syria. Hassad the Second has the opportunity to be the Gorbachev of the MidEast. Will he take it? He can make breakthroughs if he significantly reforms Syria's government. Don't know enough to go into more depth, and I need to read up on that one. What he does effects

10. Israel. With Iraq less bellicose (that assumes the risk up top pays off) then US can, and I would hope they would, use our action as leverage to strong arm them into moving forward with the Palestinians to find an acceptable solution to both parties. That pays dividends with all Arab states.

11. And last but not least, long term ending of the aristocratic model of government in most of the Arab states who are our 'friends.' How long will the _whole world_ put up with that medeival model of governance? Can't constitutional monarchies, ala UK, be the model for the royal families of the Mid East?

Anyway, while a lot of folks are looking at short term detail, I have tried to think long term.

Look forward to your replies.
Cry 'Havoc' and let slip the Men 'O War!
In War, the outcome is never final. --Carl von Clausewitz--
Igitur qui desiderat pacem, praeparet bellum
John 11:35 - consider why.
In Memory of Pete
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#2
Hi,

Most of the outcomes favorable for the Mideast, for the USA, or for the world in general are going to require a fair bit of diplomatic horse swapping. Failure in the diplomatic department may very well mean that the USA could "win the war and lose the peace". Considering the track record of this administration in diplomacy so far (when was the last time the USA was so strongly and so widely feared and hated? And over an issue where there was widespread accord just a decade earlier, too.) what reasonable expectations are there that they will not continue screwing the pooch? That they'll get their collective heads out and stop making off hand comments that are insulting nations whose support and cooperation we need?

So, yes, Operation Force Feed Democracy (or whatever the pundits are calling it this week) could have good results. But not under the present policies of the present administration. Either there will be a sea change in their behavior ("Sincerity is everything. Once you learn to fake that, you have it made."), or the war will last long enough that another administration will handle the peace, or the final outcome will be worse than anything we've seen in years, if not ever.

The glass is just there. Whether Shrub and company can fill it more than half full remains to be see. Their track record does not, IMHO, make it a good bet.

--Pete

How big was the aquarium in Noah's ark?

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#3
...but to some extent, they become 'American' nonetheless. Aye, I know, not strictly speaking. America is not imperialist in this sense; however, once the American 'way' becomes the way of the people, there is no turning back and countries become VERY susceptible to becoming branch plant economies to that of the United States. To that extent, democratic "friends" of the United States, without the presence of a "pro-independant ownership" government (such as that in France), will have a large proportion of their corporate infrastructure bought up by American firms - so long as it is profitable.

Quote:A variety of news reports caused me to think a little bit, and to think in depth. Your comments appreciated. Exception: 'it's all about oil'

Indeed, this conflict is not "ALL about oil". However, I am extremely curious as to how the imposition of an American-style "free democracy" will impact the American GNP in the long-term. I find it curious that the current administration has done so much damage to the economy at home to (I would contend) markedly little response from the corporate community. Could it be that access to between 220-250 billion barrels of (potential) Iraqi oil reserves would have some lasting impact on the American economy? (sarcasm intended) I'm not suggesting that Americans are attempting to "take over" Iraq in any military sense; rather, it seems apparent to me that with the placement of a "free-trading" democracy in what was formerly a hostile regime participating in the potentially harmful trading practices of OPEC could provide an incredible, perhaps unparalleled, REAL (as in not bogus, read: tech) boost to the American economy.

Let me put it to you this way - I live in a country in which upwards of 70% of our corporate structure is controlled by American interests. Yes, we are neighbours, but I have seen the impact of American corporate imperialism firsthand. Once the material benefits of American ownership are reflected in one's domestic economy, there is no turning back. The diplomatic hostility of the American government towards governing bodies resistant to trade is well documented. Case in point? Pearson's election over Diefenbaker (who, perhaps, could have done himself in on his own), whose pro-Canadian ownership, pro-Canadian independence (yes, this was partially to do with Diefenbaker's unwillingness to arm nuclear warheads; he would not allow himself to be dominated or railroaded) stance enraged Kennedy to the point of publicly supporting the Liberal, and is rumoured (perhaps even documented) to have partially funded his campaign. He viewed Canada as a potential branch-plant of America and wanted a government in place who would live up to those expectations. With the election of Pearson, it became all but formality. (Of course, recent events suggest otherwise... I'm going to assume that this will be the exception, not the rule) Traditionally, Canadians had been anti-free trade; however, once we became 'American', there was no turning back, as our own corporate infrastructure would have no part in it. The values of the Canadian people experienced a marked shift with the influx of American wealth into the economy.

A friendly Iraq with a democratic regime imposed under American supervision would seem to me to be much easier pickings for American corporate interests than was that here in Canada. The conditions need not be set nor supervised by the United Nations for such a democracy - they're not involved, and even if they become involved, the Americans have already demonstrated their relative unimportance. Thus, it seems likely that this war is at least partly motivated out of concern for the economic benefits that will be reaped from its success. Athough you have asked me NOT to respond with "oil" concerns, I do believe that in the long term, we will see a definite, marked impact on the American economy if all goes as Bush and company hope. To my mind, although it may have some greater diplomatic, regional objective, a large portion of this war is motivated by a 'Big Picture' that includes oil and consists of an American economy that is a.) no longer as dependant upon OPEC pricing (I know that you contend that they are not particularly dependant; however, the early and late 70's speak for themselves) and b.) a GNP and GNP per person that could vastly improve, impacting millions of Americans in the long term and ensuring the economic supremecy of the United States for decades to come. Direct access to that kind of a market for oil will, provided the conditions of trade are what the US is hoping for, have just such an impact.

The diplomatic impacts that you discuss are quite intriguing - I would have to say that, with the possible exception of number two which seems a tad fanciful (given the highly organized status of many of these terror groups), they all seem quite credible.
But whate'er I be,
Nor I, nor any man that is,
With nothing shall be pleased till he be eased
With being nothing.
William Shakespeare - Richard II
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#4
1. I do not agree that it is in the US long term interest to reduce its troop presence in the Middle East, unless you are talking very long term. The troops currently in Saudi Arabia are there because of Saddam. Forcibly moving the troops in Saudi Arabia into Iraq solves the problems posed by Saddam and the troop presence in Saudi Arabia, without seeming to be appeasement.

2. "Kill terrrorists in Iraq" is a good idea. US long term strategy is to kill terrorists everywhere, so this is consistent.

3. "Provoke terrorists world wide to expose themselves" I think this is not a strategy, just a consequence that may not even happen.

4. The Iranian gov't is hostile and I don't agree that it is in the US interest to thaw relations with that gov't. I want to see a different Iranian gov't. It has taken since 1979 for the US to finally get Iran encircled, the opportunities presented with this accomplishment ought to be exploited somehow. Given demographic trends in Iran, containment is plausible. However, the regime is racing to gain nuclear weapons so there may not be time for containment to play out before a nuclear confrontation occurs.

5. Afghanistan helps complete the encirclement of Iran, and the country must be denied to terrorists.

6. Russia doesn't want the US at war in Iraq because they still view Iraq as in their sphere of influence. They lose commercially and diplomatically when the US wins this war, not just in Iraq but thoughout the region. Russian and American interests diverge, this war makes that obvious.

7. Eastern european nations demonstrated independence from French/German/Belgium EU leadership, which is good for them, the US and the EU.

8. Turkey is the loser here. If the US gains a reliable ally in Iraq, we need Turkey less. Also, there is the difficulty of the Kurdish population of Iraq living in a nation with a free press: what will they say? Will they foment revolution by the Kurds in Turkey?

9. Syria's day are numbered because because they are state sponsors of terrorism against Isreal. They occupy Lebanon and support the Hezbollah there. Syria should be on the Axis of Evil. Yes I know they are formally declared to be cooperating in the war against terror, but they are lying. President Bashar al-Assad is not even the key figure, the entire police state must be dismantled. Isreal won't stand down militarily until Syria's regime changes too.

10. I agree that with less military threats against Isreal, the US will find it easier to influence the Isrealis. But if the Isreali-Palistinian situation is solved, the various Arab police states will find something else with which to distract their populations. Furthermore, there is a religious faction of Islam that will remain unrelentingly anti-Isreal regardless of what happens to the Palestinians. Therefore this will never really go away.

11. I agree the Arab police states must go. Hopefully a domino-effect occurs. Calling them "aristocratic" is far too kind.

Long term objectives not yet mentioned:

12. Destroy a hostile power before it gains nuclear weapons.

13. Opportunity to establish an Arab free market for a free press. Al-Jazeera's customer base lives in police states, and that affects how they slant the news. What would an Arab press with a free readership look like? The various neighboring police states and extreme religious sects will sponsor a great deal of propaganda in the guise of native Iraqi opinion in the hope of influencing Iraqi politics. Will the Iraqi's be able to handle it?

14. Reestablish some credibilty for the conventional US military as a deterrent force, hopefully preventing open conflict in the future. 'Asymmetric warfare' only works so long as the US military is not active.

Growler
Growler

"To excuse such an atrocity by blaming U.S. government policies is to deny the basic idea of all morality: that individuals are responsible for their actions." -- Salman Rushdie writing of September 11th
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#5
Just one point about the long term oil issue. I have every reason to believe that any 'new' Iraq will stay in OPEC as a method of exercising power, even though the internal OPEC squabbling will never go away. I could be wrong.

The long term oil opinion in your post, while it has merit, strikes me as actually missing the bigger picture: global, not US, economy. If the global cost of oil goes down, the global economy may be a bit more robust. However, Mexico and Venezuela stand to lose a bit if the cost to produce goes down . . .

Every trading nation, US/France/Germany/UK/China benefits from a more robust global economy. I am not convinced of the efficacy of a 'global trickle down effect' as each nation has different, or no, controls and constraints on pure capitalism. As well, environmental regulation enforcement is extremely unevenly applied from a global context.

Pure and unconstrained capitalism is to me a frightening thought: without checks and balances, it would usher in a new global aristocratic class (who says it does not already exist?) and increase the global gap between rich and poor. We could devolve into a global feudal structure, or mayhap an oligarchical structure, if unfettered and completely unrestrained 'pure capitalism' were to become the golbal norm. While I am not a socialist, there are elements of the socialist model = state provided public education for one = that I find very appealing. I am not sophisticated enough to have a strong position on universal health care, although that too has some strong points. Of course, as with any 'public program' it has its merits and demerits, and works better in some places than others.
Cry 'Havoc' and let slip the Men 'O War!
In War, the outcome is never final. --Carl von Clausewitz--
Igitur qui desiderat pacem, praeparet bellum
John 11:35 - consider why.
In Memory of Pete
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#6
Quote:I find it curious that the current administration has done so much damage to the economy at home to (I would contend) markedly little response from the corporate community.

Sorry, I just can't let this slide. How?

During the Clinton administration, it was Greenspan who coined the understated phrase "irrational exuberance". I am one of those unfortunate (sort of) people who's retirement is invested in stocks and so have an avid (or maybe rabid) interest in the economy. The US economy in the late 90's was expanding rapidly, but the expansion was empty and hollow. Too many IPO's in companies started by people with a "great idea", but no idea on how to make a profit or run a company. Venture capital was literally hemorrhaging into Wall street. The bubble burst, and no the emperor was not wearing any clothes. The economy was well into decline (my Intel stock went from the high 70's to mid 30's), prior to 9/11. After that it has been a roller coaster full of analysts trying to figure out how, and when the economy will get started again.

This war is certainly a distraction for Wall street, but it will be over someday soon, and then we will see how businesses are going to move forward. The US government can do some things to stimulate the economy, and has within the oversights of congress. One could just as easily make the case that it was the poor business and trade decisions of the major EU countries, and the decade long economic woes of the Japanese that provided drag, and then the tech boom bubble bursting being the last straw for the world's investors. Having lived through the mid 80's recession, my experience is that when company's exhibit fear and retrench, the inevitable recession is a self-fulfilled prophecy.

Anyway, I'm interested in how you are ascribing blame on the Bush administration for this world wide recession?
”There are more things in heaven and earth, Horatio, Than are dreamt of in your philosophy." - Hamlet (1.5.167-8), Hamlet to Horatio.

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#7
I agree with you - the Bush administration retained power at precisely the wrong economic time; however, for an economy that is remarkably dependant upon that of the United States and was just as wrapped up in the tech craze as were our neighbours to the south, we seem to be doing alright... Pretty good, in fact.

It seems strange to me to react to such a precarious position by proposing what will amount to permanent tax cuts, en masse, in the wake of war. The administration's argument runs somewhere along the lines of "it'll stimulate job production". Uhhhhh, yeah, and.... A reduction of tax revenue coupled with an impending, unparalleled deficit of 400 billion + dollars is going to more than negate any economic stimulus that such a move may have, not to mention the fact that it will make it more difficult to survive the expense of interest payments on the already swollen debt load over the long term.

Once these taxes are cut, who's going to reinstate them? Speaks to me of a governing body more concerned with the party line and policy than any real-world concerns - a dangerous road to traverse in times such as these.

Edit: "ten out of ten nobel laureates agree!" (If you can't trust Robert Solow, who can you trust) :) Just found this story:

http://news.bbc.co.uk/2/hi/business/2735269.stm
But whate'er I be,
Nor I, nor any man that is,
With nothing shall be pleased till he be eased
With being nothing.
William Shakespeare - Richard II
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#8
Quote:The long term oil opinion in your post, while it has merit, strikes me as actually missing the bigger picture: global, not US, economy. If the global cost of oil goes down, the global economy may be a bit more robust. However, Mexico and Venezuela stand to lose a bit if the cost to produce goes down . . .

Indeed, fair enough. However, I tend to believe that if such a move will be of such benefit to the other nations of the world, they would have been much more likely to hop on board... Perhaps the costs outweigh the benefits for the rest of the world? Or... nah... well, it could be perceived as evidence that the war is just a tad reckless... :)

I would still argue that in a free economy in a new Iraq, the nation which stands to benefit most in terms of a direct influx of dollars back home is the United States. "Elf Fina? Lukoil? What contracts? That was with the old regime... time to pay the piper. No more of this pandering crap, the big boys are in town now. Exxxxxcellent :)"
But whate'er I be,
Nor I, nor any man that is,
With nothing shall be pleased till he be eased
With being nothing.
William Shakespeare - Richard II
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#9
Well, generally I would say that the government only has the power to impact economies by their policies.

The tax cut theory is based on the notion that it is high taxes that are draining capital from investments and growth. Investments in the end need to be made to construct new businesses, or enhance existing businesses. So, by freeing up more money to devote toward growth, eventually the momentum of capital generation will more than make up for the sacrifice of a few percentage points of tax revenue. IMHO, in order for this to work you must also create entrepeneur incentives for businesses to take risks to spend those tax cuts, rather than sock them away, or distribute them to share holders as ficticious profits. This theory was considered "wild" before Reagan, but the "Reagan Tax Cuts For The Rich" and "trickle down" economics was the precursor to the economic boon of the late 80's and 90's. Now supply side ("voodoo") economics is the nom de jeur.

Actually, I agree with the more conservative (which is strangely backed by democrats) approach of either reducing taxes for a finite period (non-permanent tax cuts scaled to some economic indicator), or creating a package of entrepeneur incentives to encourage small and startup business growth. Tax cuts have become so appealing as a campaign plank that it has been adopted by both parties, with the differentiator now being that the "Republicans" press for permanent tax relief. Personally, I think we should do something even more radical; eliminate business taxes altogether and slowly transform our individual taxes to be based on consumption rather than income.

The best formula based on income taxes, IMHO, would be a permanent system that would increase taxes when the economy was growing and getting over heated, and would decrease as the economy slows down. The problem is that quite the opposite, in revenue terms, is what is needed. When times are hard, the most people need social services. So, in order for that "best formula" to work according to "voodoo economics" is that when times are good you pay off the debt, and when times are lean you borrow to pay for services.

The breakdown in this plan happened mostly during Clinton's reign, as we never actually paid down the debt, but started to divert the money into new government programs. Many politicos thought it was sufficient to get to a "balanced" budget, thinking it would be maintained in perptuity. Foolish. The other traditional way that America has jumped started its economy it through spending (and war it the fastest way to spend). Hmmmm.

I guess it shows why politicians should not be in charge of economies.
”There are more things in heaven and earth, Horatio, Than are dreamt of in your philosophy." - Hamlet (1.5.167-8), Hamlet to Horatio.

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#10
Hi,

But I do have a lot of trouble with ". . . eliminate business taxes altogether and slowly transform our individual taxes to be based on consumption rather than income."

That is really combining a few concepts. The arguments for elimination of business taxes have some merit. Business taxes are typically handled as an expense and passed on to the consumer. Business taxes usually have a detrimental effect on expansion, and so hold the economy back. And business taxes can make a business less competitive against companies in nations that have no business tax (or even give business loans and then forgive them). OTOH, business taxes make it possible for the government to increase its control of business. By giving tax breaks for such things as R&D or plant modernization, the government can prod business in certain directions without directly passing laws/regulations to achieve the same objectives. Keeps the fiction of free enterprise in place while abetting socialism :) Whether that's good or bad depends, I guess, on whether you trust government or industry less.

However, changing the basis of individual taxes from income to consumption is a very dicey proposition. For one thing, the percentage of total income spent for goods and services goes down rapidly with income. Thus, the tax burden of a consumption based plan usually hits hardest those who can afford it the least. Another problem is the establishment and reinforcement of a wealth based aristocracy. Those with higher income would have more disposable income to invest, which in turn would raise their income.

Now, it is a fact that the present income tax laws have become too complex, with too many special dispensations for special interests. And, too often, the income tax laws have been used for social purposes (such as the deduction for home loans). However, I believe that the solution is a better income tax implementation rather than some other form of tax. In the extreme, if someone demands just one form of tax, then I believe that form should be an income tax. However, I think all single tax policies are too simple minded to achieve all that a tax policy should do (which is more than just generate revenue for the government).

--Pete

How big was the aquarium in Noah's ark?

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#11
Quote:The breakdown in this plan happened mostly during Clinton's reign, as we never actually paid down the debt, but started to divert the money into new government programs. Many politicos thought it was sufficient to get to a "balanced" budget, thinking it would be maintained in perptuity. Foolish.

If a nation can maintain a balanced budget, there is only one reason that it should pay down the debt - in order to lower its interest payments on said debt which will raise along with the nation's CPI/GDP deflator as the years go on. The relative value of the debt will not be "maintained in perpetuity", in fact, as time goes on, the relative value of the debt will fall to a point where it is actually cheaper to pay off the debt than it will be to continue paying off the interest payments. I agree, paying down the debt should be of some concern in an economy as it ultimately serves to somewhat lessen the load on future generations in terms of interest payments. However, considering the fact that surplus money could be used for a variety of purposes which may actually pay greater dividends in the future, both fiscal and social, than would the minimal reduction in interest rate payments on the debt load, (e.g. R & D, health care, lower taxation) the majority of economists that I have encountered would encourage only minimally paying down the debt with government surpluses and allowing its relative value to shrink while stimulating the economy in other ways and providing for social programs with the funds derived therefrom.

The fact that money injected into the economy by government in such a way is "multiplied" so to speak, through fractional reserve banking and other such factors is a benefit which gives investment and spending the leg up, when it comes to surpluses, over debt reduction. Given the fact that inflation will render it moot in the long term, and that it is a "one time only" expenditure that will not have the multiplicative effect of growth on the economy that can be derived from other expenditures, it can be argued with relative success IMO, that a redistribution of surpluses rather than paying down the debt will make the relative pain of paying down the debt and making interest payments lighter in both the short and long term.

However, as to your comments regarding the lowering of taxation: I would contend that the extensive overvaluing of stocks and their subsequent fall does not represent a "recession" of the sort that we are used to. It does, no doubt about it, represent a recessive market adjustment; however, due to the prevalence of insubstantial stock pricing in the gross overvaluation of the American economy rather than other factors that have been, traditionally, more indicative of actual production, it seems to me that the effects of this recession will be less substantially effected by lower taxation than what you think. I don't believe for one second that it is the car manufacturers or the oil companies that are paying for inflation here - it is the grossly overvalued tech stocks that vanished, disappeared into thin air that are having the detrimental effect on the economy and thus I doubt if the encouragement of an increase in capital stocks will have quite the dramatic effect that you argue it will. This "recession" is nothing more than the rapid elimination of much of the "chaff" from the market, in the form of insubstantial tech companies, that had previously existed, leaving you with more money than you have value. Period. Lower taxation will, no doubt, stimulate the economy. However, whether it will be able to make such a dramatic difference as you contend, is, I would argue, VERY debatable. The wealth upon which the economy had come to depend was not merely overvalued - it was completely nonexistent. Those companies that were of value remain, those that were not are quickly vanishing, leaving a void in the economy, but not devaluing more traditional stocks in any drastic way - they were not particularly overvalued to begin with. (although the fact of a fall in consumer spending and higher gas pricing will effect them to a certain degree) The people are feeling a pinch; however, encouraging investment in capital stocks through lower taxation will only stimulate the economy to a certain, less-than-desired extent - the rest will just take time. The question is - is a revival of EXCESSIVE deficit spending the answer? An increase in economic output will take time; in the meantime, interest payments on the debt are increasing rapidly and the expense of these policies may ultimately outweigh the benefit...
But whate'er I be,
Nor I, nor any man that is,
With nothing shall be pleased till he be eased
With being nothing.
William Shakespeare - Richard II
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#12
Hi,

Those companies that were of value remain, those that were not are quickly vanishing, leaving a void in the economy, but not devaluing more traditional stocks in any drastic way - they were not particularly overvalued to begin with.

If this were true, then the overall market would be down, but that part of the market based on "solid" stocks would not be. Now, the Dow Jones Industrials is one of the most quoted market metrics. It went from a high of over 11,000 down to a low of under 8,000 in the last couple of years, a loss of almost a third (an average loss of 12% per year over the past 3 years). The Dow Jones Industrials are some of the most "solid" stocks out there http://indexes.dowjones.com/jsp/index.jsp and follow the link to "components". I have heard a number of people say the same thing, which to me just proves that economists not only cannot predict the future, they don't even understand the past.

And the argument that the national debt gets smaller with time is predicated on a positive inflation rate and on the debt grown slower than that rate. Neither is a given, and if either fails, the debt can become an unbearable burden. Enough so as to destroy an economy (e.g., Brazil a few years ago). I think that the "it's better to let the debt go" arguments are based on an optimistically flawed model generated by people who *think* they are clever.

--Pete

How big was the aquarium in Noah's ark?

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#13
on the subject of tax cuts.... i support a tax which would be across the board, not just for the top 1-10% of the nation as well as reform of the tax code. this would create several positives 1) allow both small and big businesses to hire employees 2) relieve the government from social service spending since the vulnerable population would have more disposable income 3) give everyone more money to spend on consumer goods and thus give incentive for more business expansion. otherwise, the burden of this war and the deficit spending will fall on the middle and poorer economic classes. because someone has to pay for this war. war is not free!

i also think at a time of war, the price tag to re-build Iraq and maintain a force in Afghanistan, cutting taxes is a pre-mature idea. we have not yet officially won the war, neither have we won the peace. the states and local governments need more funding if they are to actually build up our own defenses here at home. state and local revenue is down at a time when spending for local defense should be up. emergency rooms are closing and SARS is not contained.

and back to the original topic of this post, i don't think we would even be entertaining the idea of war in Iraq if the number one export was say oranges. i just wish for once the motivations would be real. let's all just say it, "i love my SUV." the anti-terrorism deal is part true but would be better served by invading Saudi Arabia and Pakistan instead. that is where the majority of the 9-11 terrorists are from. the Al Qaeda started there.

i don't believe that bringing democracy to the region is the truth either. in the news, there are reports that they are considering bringing back Ahmed Chalabi, a controversial Iraqi National Congress leader who fled Iraq in 1958 to become leader after Saddam is gone. there is a twist for your knickers, replace a totalitarian regime with a crocked one. Chalabi was convicted of bank fraud in absentisa in Jordon and is not welcome in most of the middle east. but hey the Pentagon loves him. so much for democracy all. in all sarcasm, i suppose that the Pentagon can replace the mighty electoral college over here.

so before you fry bake and shoot me to death, i just want for once, someone to get up and say the truth and then give me the tax cut instead of rich america.
Your friend,

[Image: tufchicblackmat.gif]
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#14
Hi,

i don't think we would even be entertaining the idea of war in Iraq if the number one export was say oranges.

That notion has been destroyed so many times, it's past the glue stage.

I realize that Afghanistan was a considerably smaller effort. But the principle applies. If you still believe in the "blood for oil" argument, then I think your understanding of the issues is too shallow to make your opinions interesting or valid.

--Pete

How big was the aquarium in Noah's ark?

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#15
Quote:And the argument that the national debt gets smaller with time is predicated on a positive inflation rate and on the debt grown slower than that rate. Neither is a given, and if either fails, the debt can become an unbearable burden. Enough so as to destroy an economy (e.g., Brazil a few years ago). I think that the "it's better to let the debt go" arguments are based on an optimistically flawed model generated by people who *think* they are clever.

Well, unless you know of a big money fire anywhere, I think that we'll be ok on the deflation front - it ain't gonna happen. The government is in more than sufficient control of the money supply to account for any such occurence, which has been markedly rare - even in economies that aren't able to maintain such stringent control over such factors (people always want more money, not less). I don't have any fear that that will become any sort of a long-run trend. As for the notion that the debt may outpace the inflation rate. That may be true in isolated cases; however, so long as government spending is tempered by a little bit of common sense and matched to sufficient taxation to support one's spending habits, there should be no problem. The Keynesian era has been tempered by a dose of reality and the "need" to overspend in order to stimulate transitory shocks to the economy is no longer felt to be viable as its own sole remedy. I don't believe that the problems you mention with the theory hold much weight in North America's tightly controlled contemporary economic systems. Barring the effects of some sort of cataclysmic nuclear attack or series of tremendous natural disasters, I don't see how it could be a problem.

As for your contention that the Dow Jones fell along with the Nasdaq... Well, for one, it didn't fall as far. I am willing to concede your point to a certain extent; however, it would seem to make sense that if the economic climate was clouded by uncertainty in the Nasdaq, the loss of confidence would, doubtless, spill over into both the Dow Jones and the S&P 500. That being said, perhaps the truth, as usual, lies somewhere in the middle.
But whate'er I be,
Nor I, nor any man that is,
With nothing shall be pleased till he be eased
With being nothing.
William Shakespeare - Richard II
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#16
The Spice must flow! :lol:

disclaimer- This is *not* a serious reply, but the image of "no blood for heroin" was just too amusing not to share!
Why can't we all just get along

--Pete
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#17
Hi,

Did I miss the CNN pictures of the sand worms? ;)

--Pete

How big was the aquarium in Noah's ark?

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#18
The people would rather see links to Jarulf's Guide than sandworms. :P

-Griselda
Why can't we all just get along

--Pete
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#19
Hi,

Game, set and match -- all yours ;)

--Pete

How big was the aquarium in Noah's ark?

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#20
I agree with you mostly, but for this:

Quote:13. Opportunity to establish an Arab free market for a free press. Al-Jazeera's customer base lives in police states, and that affects how they slant the news. What would an Arab press with a free readership look like?

What would an free Arab press (note: this is subtly different from an Arab press with a "free" readership, but I will ignore that for the moment)? Actually, it would be Al-Jazeera. Despite Western denounciation of Al-Jazeera, it is in fact nearly the only free press in the Middle East. I believe they are based in either Qatar or Bahrain, whose government has allowed a free press in the Al-Jazeera network. This is remarkably different from neighboring countries (including our nominal allies, the Saudi) who have tightly state-controlled medias.

What we see as anti-Western bias is simply capitalism. Sell to your base. FOX News, most would say, is fairly biased, and yet hopefully we would agree that Americans are fairly "free" as well. FOX News sells well because it sells to its base of viewers.

So to address the original point, a free readership may in fact prefer Al-Jareeza (which, if I recall correctly, has said positive things about the United States before, though anti-Western sentiment is stronger). Just because you and I cannot see why someone would prefer that particular bias does not mean a "free" person would not.

Note: By muzzling Al-Jareeza, one would be in fact undermining plans to usher in democracy in the Middle East. Part of the kit and bundle of democracy is a free press. Free does not mean unbiased. It means not goverment controlled/influenced. (BBC, CBC, ABC and their ilk are not goverment influenced ... actually, I believe in the charters setting them up, it states rather strictly that the government cannot control what they report.)
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