Archives: August, 2010

Collateral Murder, Indeed

I finally found the time to go through the WikiLeaks’ Afghan War Diary entries containing accounts of my 2004 tour in Afghanistan (my third tour; appropriate bio and disclaimer can be found here).

I am underwhelmed. I am not sure what Julian Assange thought the release of these documents would tell people about the war in Afghanistan, beyond the fact that people are shooting at each other and that, generally speaking, war is Hell. If I identified the entries associated with my service in Afghanistan, you would read summaries of the firefights and rocket attacks that my unit faced, with metrics of rounds fired and received and associated casualties.

Parallel to Noah Schachtman’s excellent write-up contrasting his experiences while embedded with Marines in Helmand Province versus what WikiLeaks provides, you would have little visibility on the actual maneuver of troops, the relationship that they have with the populace, and the effectiveness of Afghan forces. Reading WikiLeaks alone would give you a picture of the Afghan War that falls short of what you can get from normal press outlets.

This skewed portrait of our policy comes at no small price. The identification of our intelligence contacts and sources is sure to put their lives in danger, as Steve Coll and (more importantly) Taliban spokesmen point out.

Unfortunately, Assange has taken Afghan War policy as an acceptable loss as well, no matter how you define it. Whether you support a COIN-centric approach, a reduced footprint in Afghanistan, a counterterrorism model, or even letting the CIA run the war, this is a disaster. This release of information is actually more damaging to downsizing strategies, since we will end up leaning on tribal alliances and intelligence assets more, not less.

Assange is facilitating the deaths of our intelligence contacts because he believes that the benefits outweigh the cost of their lives. That’s mighty rich, coming from a guy who labeled a 2007 case of mistaken identity in Iraq that resulted in the death of civilians as “collateral murder.” In that case, helicopter pilots misidentified a reporter’s zoom lens as the tail end of an RPG launcher, but armed men were in the reporters’ entourage that may have independently met the criteria for using force under the rules of engagement.

That’s (possibly) a mistake in the distinction of combatants, not an intentional approval of the loss of innocent life that is deemed acceptable in proportion to the direct military advantage anticipated. The latter is the definition of collateral damage, and Assange seems to have no problem with asserting his moral judgment in this realm.

Collateral murder, indeed.

Deflation

I was listening to NPR in the car yesterday, when a report came on about the implications of deflation — which apparently is the latest concern regarding financial markets. The report nearly made me fall out of my seat from bewilderment and frustration.

Adam Davidson, the NPR reporter, waxed eloquent about how deflation turns normal economic and investment calculus on its head.  But his explanation was so poor that he ended up saying exactly the opposite of what he should have said.

Here’s how it went for me:

Davidson: “Ladies and gentlemen, I have an amazing investment opportunity for you. Give me $100, just a hundred, and in one year I promise it will be worth 93 bucks. We call it the deflation special.”

My reaction: No, sir! Under deflation, $100 today would increase in value to $107 (assuming your implicit rate of deflation).  Help! Stop the car! …Wait, I’m the one driving…what just happened?

Davidson: “All right, seriously, nobody is giving anybody a hundred bucks just so they can lose seven.”

My reaction: No, no, please, please take my money! I’d give you a million dollars if I had that amount. I really would!

Davidson: “That’s the opposite of an investment opportunity, which is precisely why economists and central bankers get terrified when they hear the word deflation.”

My reaction: Well, a small amount of deflation can be consistent with flexible prices. It’s only rapid spiraling deflation that we should worry about.  But the same is true about rapid spiraling inflation.

Davidson: “Technically, deflation means that the prices of all kinds of goods and services keep falling, rather than what they normally do, which is rise. And deflation means that not just one investment but all investments are worth less next year because the currency they are based on — like the U.S. dollar — is going to be worth less next year.”

My reaction: That word “technically” should be banned from his vocabulary.  Again, the confusion here arises from using the word “currency.” Deflation means lower prices tomorrow compared to today and, therefore, a higher value of each dollar.  Indeed, all debts appreciate in value in a deflationary environment.

Davidson: “Why pay money to build a new factory or buy a house or hire an employee or go to school if the payoff will be worth (less) than the money you put in?”

My reaction: Lenders would be happy to lend money for investment projects because deflation implies a higher rate of return on them. It’s the borrowers and entrepreneurs who would not want to borrow funds because deflation escalates the real value of debtors’ liabilities.

Davidson: “Deflation, once it starts, is extremely hard to stop. Which is why the Federal Reserve is doing everything it can to prevent it.  Although, all the tools used to prevent deflation, like increasing the money supply and keeping interest rates incredibly low, can cause another problem: inflation.”

My reaction: What is it that you want, man? Make up your mind!

Davidson: “Now, central bankers tend to think that they can stop inflation more easily than deflation. So given the choice, they’ll inflate.”

My reaction: Those horrible Fed officials! I always suspected they were up to no good — always ginning up inflation. Now I know why!

I wonder which economics school Davidson (and his editor) attended. My guess: none. Let’s see … what’s on the next radio channel?

New Attack Ad Provides an Early Look at the Fall Campaign

The Jack Conway for Senator campaign has run an attack ad on The New Republic website disguised as an article about Rand Paul by one of the magazine’s interns.  The tipoff is the word “radical” which appears five times in a short article along with “eccentric,” “unconventional” and similar words. (Doesn’t TNR bother to edit the web-only stuff?) Yeah, yeah, you’re saying by the end of the article, I get it: Paul is a radical, weirdo libertarian.

The evidence so far suggests that the Conway for Senate campaign seeks to paint Paul as an extremist while Jack, of course, is a moderate who will provide plenty of pork and don’t worry about the debt. Like most Democrats, Conway is facing a tough electorate this year, and he is responding by the party’s political playbook: demonize, mobilize, and spend. He will have adequate funds to pursue that strategy along with more than a little help from affiliated outside groups like TNR.

Parts of the article provide a useful political analysis of Kentucky’s different regions, presumably provided by the Conway campaign. So the article does offer a look into how Conway thinks he can win this.

Our intern concludes that the Conway-Paul race “is suddenly a close race.” It is true that a survey at the end of June, cited by TNR, indicated an even division. But the article appeared on August 4, and three polls in July showed Paul up by 3 to 9 points, the last one having Paul over fifty percent for the first time. That most recent poll also indicated that Paul had the support of one-quarter of Democrats and two-thirds of independents in the state.

With TNR flailing around like this, the Conway campaign seems pretty desperate pretty early.

Taxpayer Choice + Parental Choice = Good, Constitutional Education Reform

Arizona grants income tax credits for contributions made to school tuition organizations (“STOs”).  STOs must use these donations for scholarships that allow students to attend private schools.  This statutory scheme broadens the educational opportunities for thousands of students by enabling them to attend schools they would otherwise lack the means to attend.  Still, several taxpayers filed a lawsuit challenging the program as creating a state establishment of religion.

Although the Ninth Circuit acknowledged that increasing educational opportunities is a valid secular purpose for a legislative act, it found that the tax credit program nonetheless violates the Establishment Clause because many of the STOs—as it happens, a decreasing majority—provide scholarships for students to attend parochial schools.  Earlier this year, Cato filed a brief supporting the request for Supreme Court review filed by the various parties defending the program.  The Court granted cert.

Now Cato (led by Andrew Coulson and myself) has filed another brief, joined by four education reform groups, urging the Supreme Court to overturn the Ninth Circuit’s decision because it was based on faulty reasoning:  It equated the private and voluntary choices of individuals who donate to religious STOs with state sponsorship of religion.  The lower court also made the dubious assertion that Arizona parents feel pressured to accept scholarships to religious schools, in spite of the fact that the share of STO scholarships available for use at secular schools is almost twice as large as the share of families actually choosing secular schools. Moreover, the tax credit scheme is indistinguishable from similar charitable tax deduction programs that the Court has previously held to pass constitutional muster.

We urge the Court to reaffirm its longstanding jurisprudence—especially the 2002 school-choice case, Zelman v. Simmons-Harris—whereby instances of “genuine and independent choice” are insulated from Establishment Clause challenge. Far from being an impediment to parental freedom, the autonomy Arizona grants to taxpayers and STOs is ultimately essential to it.  More generally, should the lower court’s opinion be allowed to stand, the progress made to broaden the educational opportunities of students across the country will be stifled.

The case of Arizona Christian School Tuition Organization v. Winn will be heard by the Court this fall, probably in November.

Missourians Don’t Like Mandate

As Roger Pilon mentioned, yesterday’s Politico question was “Is Health Care Repeal Gaining Steam?” A timely question in light of Monday’s court decision allowing a lawsuit against the health care mandate to proceed.

And perhaps an even more timely question today, now that 71 percent of Missouri voters have voted for a proposition to exempt the state from the mandate.

Polls show continuing opposition to the Obama-Reid-Pelosi health care overhaul. It’s constitutionally dubious. And now, in the only popular vote on the bill, it received a full 29 percent of the vote. Just maybe this wasn’t a good idea.

President of Mexico Calls for Debate on Legalization of Drugs

For the first time ever, Mexican President Felipe Calderón said yesterday that it was “fundamental” to have a debate on the legalization of drugs. Calderon, from the conservative National Action Party (PAN), had until now been reluctant to pay heed to the growing calls in Mexico and Latin America for a hemispheric debate on drug legalization. Once they left office, two of Calderón’s predecessors—Ernesto Zedillo and Vicente Fox—have also engaged in the debate, calling for the need to legalize drugs as a way to battle the drug violence that is crippling Mexico. Others, such as Jorge Castaneda, former foreign minister of Mexico, have also called for an end to prohibition.

In today’s edition, El Universal newspaper in Mexico City claims [in Spanish] that Calderón’s turn around had something to do with a meeting he had a few days ago with Juan Manuel Santos, president-elect of Colombia. According to the newspaper’s sources, Santos told Calderón that drug trafficking is not under control in Colombian territory and that Mexico should be the country leading a public debate on legalization or decriminalization of drugs.

As I’ve written before, there is a growing consensus within Latin America about the failure of the war on drugs and the need to implement a sensible approach to drug policy. The question remains: Is anyone in Washington paying attention?

Democrats Ignore 80% of Workers in Service Sector

In a bid to revive their sagging election prospects, congressional Democrats have hit on the theme of promoting domestic U.S. manufacturing. As a front-page story in the Washington Post reports today, the party has adopted the bumper-sticker slogan, “Make It in America.”

I’m all for making things in America, when it makes economic sense to do so. But the Democratic plan opens a window for all sorts of government intervention, including trade barriers, higher taxes on U.S.-owned affiliates abroad, and subsidies for “clean energy” and make-work infrastructure projects.

The campaign relies on two major but faulty assumptions: That U.S. manufacturing is in deep trouble, and that creating more manufacturing jobs is the key to prosperity. Neither assumption is true.

As I explained in a Washington Times column yesterday:

Despite worries about “de-industrialization,” America remains a global manufacturing power. Our nation leads the world in manufacturing “value-added,” the value of what we produce domestically after subtracting imported components. The volume of domestic manufacturing output, according to the Federal Reserve Board, has rebounded by 8 percent from the recession lows of a year ago. Even after the Great Recession, U.S. manufacturing output remains 50 percent higher than what it was two decades ago in the era before NAFTA and the WTO.

Manufacturing jobs have been in decline for 30 years, not because of declining production, but because remaining workers are so much more productive.

Again, I’m all for manufacturing jobs supported by a free market, but members of Congress need to wake up to the reality that America today is a middle-class service economy. As I wrote in the column yesterday:

More than 80 percent of Americans earn their living in the service sector, including a broad swath of the middle class gainfully employed in education, health care, finance, and business and professional occupations.

It is one of the big lies of the trade debate that manufacturing jobs are being replaced by low-paying service jobs. Since the early 1990s, two-thirds of the net new jobs created have been in service sectors where the average pay is higher than in manufacturing. Members of Congress who belittle the service sector are ignoring the interests of a large majority of their constituents.

Congress and the president should focus on economic policies that promote overall economic growth, not policies that favor one sector of the economy over all the others.