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Hayek Raps Keynes

6th February 2010

Right here:

And here's the story behind it.

It's very good.

 

 

 

 

The Trilemma

6th February 2010

Via the Browser, this heavyweight piece by Yves Smith at naked capitalism which looks at the issues swirling around the parlous position of Greece within the Eurozone and the wider implications.

Including this bold thought by Dani Rodrik:

I have an “impossibility theorem” for the global economy that is like that. It says that democracy, national sovereignty and global economic integration are mutually incompatible: we can combine any two of the three, but never have all three simultaneously and in full…

To see why this makes sense, note that deep economic integration requires that we eliminate all transaction costs traders and financiers face in their cross-border dealings. Nation-states are a fundamental source of such transaction costs. They generate sovereign risk, create regulatory discontinuities at the border, prevent global regulation and supervision of financial intermediaries, and render a global lender of last resort a hopeless dream. The malfunctioning of the global financial system is intimately linked with these specific transaction costs.

Or is that a truism, wrapped up in clever language? That as long as there are many different market-places there is no one market-place?

Maybe the Climate/Copenhagen debacle reminds us that nation-states are not planning to abolish themselves for what is proclaimed the Greater Good?

The Great Question

5th February 2010

Is this.

Do you want to use about a minute of your fleeting, oh-so-precious time left on Earth to watch a ridiculous cartoon of a vigorously dancing pair of buttocks?

Yes. You. Do.

So, what are you waiting for?

 

Swedish Bandy And Other Anti-Spurs Anti-Semitism

4th February 2010

Following Swedish developments closely as one must, I found this story linking my team Tottenham to an individual example of Swedish bandy extremism.

And is some furtive ethnic cleansing busily under way in Malmo? 

It is always difficult to work out when something is just an idiotic if unpleasant episode of local and no wider significance, and when something is part of a wider, really worrying trend.

Partly because this is just not easy to prove anyway with scientific confidence even when all the facts are clear, as they never are.

And partly because each side of the argument will tend to play up evidence it likes and downplay evidence it does not like.

Not to mention media and politicians making whatever noise suits their immediate purposes.

So is anti-semitism on the rise in Sweden?

If so, is it nonetheless still a marginal and at worst nasty phenomenon?

How would we tell?  

Business And Politics: Crawford's Diplomatic Despatches

4th February 2010

Time to branch out.

Not least on the dynamic Business and Politics Blog, where my first (albeit somewhat laconic) Diplomatic Despatch has just been posted.

More to come...

Corporations: Free Speech Or Not?

31st January 2010

Here in full gush is our friend Johann Hari, this time bewailing the end of democracy in the USA:

For more than a century, the US has slowly put some limits – too few, too feeble – on how much corporations can bribe, bully or intimidate politicians. On Tuesday, they were burned away in one whoosh... 

It is this corruption that has prevented Barack Obama from achieving anything substantial in his first year in office. How do you re-regulate the banks, if the Senate is owned by Wall Street? How do you launch a rapid transition away from oil and coal to wind and solar, if the fossil fuel industry owns Congress? How do you break with a grab-the-oil foreign policy if Big Oil provides the invitation that gets you into the party of American politics?

... Yet the corporations that caused this crisis are now being given yet more power. Bizarrely, the Supreme Court has decided that corporations are "persons", so they have the "right" to speak during elections.

But corporations are not people. Should they have the right to bear arms, or to vote? It would make as much sense. They are a legal fiction, invented by the state – and they can be fairly regulated to stop them devouring their creator.

Our hero, you recall, is the person who wrote a long review of Atlas Shrugged and got a key passage completely wrong. It seems that here again he has not done his minimal homework.

Mind you, in interpreting the Supreme Court's decision President Obama too (a lawyer withal) likewise erred on the side of inaccurate populist exaggeration in his SOTU speech, and has had to be corrected at Huffington Post no less:

There is "a century of law" restricting direct corporate contributions to candidates. Last week's decision didn't address that law.

While the logic of the opinion -- which says corporate speech is entitled to the same protection as individual speech -- calls into question the corporate contribution ban, it doesn't overturn it. And the Court has traditionally treated direct contributions differently from so-called "independent expenditures" -- ads that discuss candidates but financed by private parties without the candidate's help.

Those who oppose the Supreme Court's decision would make themselves a tad more credible if they acknowledged that the law the Court struck aside was oppressive and odious, and a threat to free speech as any normal person would understand it:

“Our argument in the case wasn’t complicated,” says Bossie. “It was about freedom, and it ended up hinging on a very simple question: If the FEC is comfortable banning political films, like Citizens United’s Hillary: The Movie, around election time, would it also be fine with banning political books financed by corporations? The Justice Department’s attorney answered yes, the government did have the power to prohibit the publication of a book. When they admitted that, everything changed.”

“I think that answer sent a chill through the Court,” says Bossie. “It was that moment that was a catalyst for us, and gave us the opportunity to win on much bigger constitutional grounds than we anticipated. It became apparent that the government believed that they could ban anything: movies, books, pamphlets, the Kindle, you name it. It was a shocking revelation.”

Roger Pilon at Cato:

Relax.  Half of our states, states like Virginia, have minimal campaign finance laws, and there’s no more corruption in those states than in states that strictly regulate.  And that’s because the real reason we have this campaign finance law is not, and never has been, to prevent corruption.  The dirty little secret — the real impetus for this law — is incumbency protection. 

Sounds plausible to me.

Leetspeak

31st January 2010

Noting this in passing I was struck by the title of the video link:

Nick Gillespie pwns Blond Health Nazi

What on earth is pwns? This.

Which takes one to the anarchic future of the English language, and maybe of others too.

From English Lit to English Leet.

The tragedy of getting old.

The Strange Decline Of European National Diplomacy

29th January 2010

A friendly reader asks:

Thank you for producing such a thought-provoking and readable blog.

I thought you may be interested in this link to a press release from the Swedish MFA. They plan to close 6 Posts and open 10.

http://www.sweden.gov.se/sb/d/12653/a/138250

Several of these post closures are in the EU. I would be interested in reading your view in the blog (if you have time) about their choices.

Do you think it is a good strategy to close EU posts or is it better to shrink them? Also now with the development of the European External Action Service, is it more important to have posts in EU capitals than outside the EU (not counting the US, China, etc)? 

Then a Member State can lobby in each EU capital to push for the EU to follow a foreign policy most likely to benefit that Member State's national interest.

Well.

It depends upon what each country believes its diplomacy is for.

In the UK's case, we are a major net contributor to the EU budget. Plus we have allowed all sorts of issues within the EU to be decided by 'qualified majority voting'. Which means that EU decisions we disagree with and which may cost us a lot of taxpayers' money to implement can be imposed on us by a majority vote.

So we have very good reasons to want to make sure that we have an effective diplomatic network around the EU, both (a) to work out what dire schemes are out there and (b) to lobby hard to get other governments to support us in blocking stupid measures intended to damage our competitiveness. See the heroic work by the Embassy in Warsaw to work with Poland to fend off the evil Working Time Directive.

This, by the way, is another reason why HMG Targets for the FCO as proclaimed by Brown/Miliband have been utterly malign.

It takes only one successful intervention by an Embassy in Europe to save the taxpayer hundreds of millions of pounds. Yet there is no way to make that calculation in the way the Brown/Treasury targets allocate the money to the FCO. Hence the FCO is now facing another round of heavy cuts, footling in overall terms but more than enough to create real risks to national interests. Madness.

We also have a strong diplomatic tradition far beyond Europe, which more than justifies itself in terms of giving the UK international impact and insight. The idea that we are 'punching above our weight' is annoying. Our collective British weight is substantial, and we should punch away, preferably below the belt now and again to show we mean it.

Meanwhile the EU External Action Service is creeping into the picture.

It is going to take a long time (say 10 years) for this new formation to acquire coherence and a clear role. Its own position within the EU system is still complex and not fully defined (eg what is it meant to be doing with and in eastern European countries covered by the Enlargement Commissioner?).

Yet slowly but surely it will take on some sort of shape on the ground. And member states diplomats will be seconded to it. Rumours suggest that a sizeable number of FCO staff have put their names forward for secondments, no doubt dismayed by the collapse of the FCO's morale and impressed by the higher salaries EAS offers.

Thus we have a perverse situation (or not, depending what you want). The EAS is deconstructing national diplomatic services in favour of some ambivalent European supranational formation. Taxpayers are seeing their national foreign services eroding for lack of funds, and this new organisation growing.

All of which rests on one profound Euro-collectivist premise: that in the EU 'national' foreign policies are on the whole a negative phenomenon.

So to answer (I hope) the questions.

Most EU member states' embassies in other EU countries these days are mainly symbolic or heavily focused on a tiny number of issues.

Only the larger member states' Embassies play a serious role in lobbying locally on foreign policy questions, since only the larger EU member states actually have foreign policies (ie positions matched to some resources for advancing them).

Those small/medium member states aspiring to wider diplomatic/political influence and impact beyond the EU lose little by scaling back their diplomatic presence in EU capitals. They just have to take their chances in Brussels with Voting; they can not deploy firepower of sufficient intensity to lobby much on internal EU issues in all those EU capitals.

Hence we see Sweden not unreasonably cutting back in EU Europe but redeploying in non-EU Europe and some places in Africa, where Swedish diplomacy can make a difference.

That would be unwise for the UK, as it would make us all the more vulnerable to fatuous EU decisions with dangerous implications for our national budget. Yet Brown/Beckett/Miliband have been busy for years doing just that.

One way to fend off Eurosceptics in the UK is to show that we almost always thwart the stupid aspects of EU integration, but that just can not be done by bickering between bureaucratic experts in capitals and last-minute haggling in Brussels alone.

You need a team of excellent energetic people (UK-based and Locals alike) on the ground too, to lobby for UK positions and to identify weak points in the positions and psychologies of others - just as I had in Warsaw.

Oh, and a government in Westminster which has not completely lost sight of common sense.

US Intelligence Policy (And Google)

26th January 2010

One of the pleasures of writing this website is that new e-friends appear, usually people who know all sorts of things I don't know.

Thus I am pleased to share with you this interesting contribution about Google/China and US/Switzerland as sent to me from a reader who closely follows IT security questions and knows how things work:

Google/China
An intelligence operation sophisticated enough to author successful targeted attacks on infrastructures of high tech companies is incapable of hiding its tracks.  Oh really?  Trying to sell the Chinese as "dumb" might work in the US, but I have an other angle of sight.  Big question, this one.
 
"You are hacking us so we want to stop censorship!"  Huh?  I can't quite connect the two..
 
Google is not doing well at all in China, but it can't just pull out without some sort of explanation (keep that in your head for a moment)
 
Google founders have announced they intend to sell shares.  News of failure to beat the competition in one of the biggest markets will affect the price of those shares.  Ah, how interesting.  A motive to camouflage item (3).  How?  Well..
 
Any company in China is likely to have a couple of insiders.  Of course, that makes it easy to "discover" them and start yelling about being hacked.  However, bizarrely nobody called the Chinese police.  But the screeching unleashed a couple of other things like statements that "China is never a safe place to do business or to keep things and IP safe" - which must have given Apple a shock as they have been using Chinese assembly and manufacturing for ages.  See the back of any iPhone..
 
Google was initially quite happy to go along with censorship.  What changed?  As for Human Rights, privacy is also a Human Right, yet Google is trying to ignore that in countries like Japan and Switzerland.
 
In my opinion, this whole storm was kicked up by Google to camouflage its flagging Chinese performance to keep share prices afloat - no news there, although I'm impressed by the sheer arrogance of Google of trying to force a whole sovereign nation into letting it do something that is disallowed by local law.  That is about as ambitious as an ant climbing an elephant's leg with rape in mind.  It was disappointing (though not surprising) that this resulted in politicians trying to ride the publicity, upfront Mrs Hilary Clinton who appears to have forgotten the global effort that has very large golf balls spread all over the world, the UK location of which is Menwith Hill.  Yes, Echelon, the SIGINT setup that the UK gets tiny snippets from if they ask nicely..  

Oh, and for spying on the locals the US appears to do better than the Chinese as well, as a recent report into FBI PATRIOT activities revealed on page 45 that in some cases the formal authorisation was .. a Post-It note.  It's not that I'm defending the Chinese, but a bit of honesty and level headedness would have gone a long way.  But that would not provided the cover for Google.  It could also have yielded the annoying observation that practically all Internet censorship is actually performed by US companies with US equipment - and we all know a US company needs to seek permission before it can supply high tech to China.  Oops..
 
Google are now claiming they want to stay, but not censor, knowing well that isn't going to happen.   I reckon it'll bumble along for another month, and then they will either "reach an agreement" (read: censorship is back) or they'll bail out, claiming " loss of trust" or something.  Most certainly not "we could push our competitor off the market".
 
US versus Switzerland
 
That other war, US vs Switzerland, is also heating up again. 
As the Swiss court recently came to the conclusion that handing bank client data to the US was illegal without specific claims ("John Doe" fishing expeditions are not permitted under Swiss law) it threw somewhat of a spanner into the "agreement" reached with the US (it was simply blackmail, but let's call it an "agreement").  A couple of interesting facts have since emerged:

-   it appears no details were handed over yet

-   the US "agreement" details a total number of 10'000 IRS cases for the terms to be satisfied.  As it so happens, a total of 14'700 have reported to the IRS, so if 10'000 of those were UBS, Switzerland could effectively tell the US it has delivered, and close shop as the voters want it to.  That the US simply ignored the existing agreements (appears to be a habit) has not gone down well with the population and has lead to US Citizens become virtual banking pariahs.  Most Swiss banks with sensible management were already pulling out of the US market, and have gratefully used the UBS affair to accelerate their risk reduction programmes.  It's even so bad that someone living and working in Switzerland but with a US passport has trouble keeping even a current account open - there are few banks left that allow it.
 
There is a very ugly side effect that the US hasn't quite "banked" on yet: Switzerland is where all the stable, "old" money goes, partly because it also has stable currency.  No Swiss banks in the US means no access to Swiss held funds for the US economy, and that will eventually hurt.  Not yet, I give it another year.  It will also probably not manage blackmailing Switzerland again, not only are law changes planned, but the new president of Switzerland, Doris Leuthard, is quite a different animal to Merz.  Under that good exterior is, amongst others, a high grade, Swiss precision steel spine, and she's a lawyer as well..

 
Fascinating what goes on. And what seems to be going on. And what goes on even though it seems not to be going on.

Strategic Forecasting (Or Not)

24th January 2010

Here via a reader is a neat glimpse at how every ten years for a hundred years the world has changed in quite unexpected new directions. Have a look.

It brings out just how difficult it is to be 'strategic'. The more so when there is a whirring positive feedback loop going on with Creativity - the cheaper the IT, the more people can do things, the more new processes get invented, the faster everything happens, the cheaper the IT gets ... and so on.

This means that within almost a matter of a few hundred weeks, the planet has brought in to the global means of production of ideas anything up to a billion people.

The transformative implications of this, for better or worse, quite outstrip the capacity of governments to plan ahead, since planning per se requires a lot of things to be relatively static or at least developing in a steady way, not exponentially.

Which is the real reason why the sort of cumbersome, bossy government structures as evolved in Europe and the 'West' are creaking at the seams. The sheer complexity of the task they now face is overwhelming them. Though admittedly the Brown Labour government here in the UK looks to be in a class of its own for sheer dysfunctionality.

As described eloquently in the fine book Seeing Like a State, a great deal of government activity has been centred on measurement.

Why? Because without measurement things can not be put in the countless arbitrary categories governments need for their own purposes, above all tracking down people to get money from them.

And once governments have set up measurement and categories, they also have a requirement to dish out government processes 'equally'. Hence ever-increasing standardisation eg of schools and so on - one-size-fits-all in the state sector, since anything else would be unfair.

Which sounds fine, but in fact is 100% incompatible with the innovation and creativity needed to cope with pell-mell Change.

So, in short, looking very far into the future is now next to impossible. But it is possible to identify policies and attitudes which look unwise, since instead of creating more flexibility they reduce it. 

Read this interesting Reason interview with John Mackey, who has built up a superb business through 'conscious capitalism' and who looks forward with optimism:

reason: How do you think the 21st century is going?

Mackey: Well, entrepreneurs tend to be very optimistic people, and I’m a very optimistic person. I never would have started a business if I wasn’t.

If you just watch the news at night or read reports on all the things that are going wrong, you can really become frightened with all the problems that are out there. I do think we have enormous challenges right now.

You’ve got to make a distinction between the short term and the long term, because I think things move in spirals, and if you look at a spiral, sometimes it loops back on itself. It’s kind of like it takes three steps forward and one step back. In some ways, I think we’re taking a step back right now, but I’ve got great hope that we’ll take three steps forward over the next several years.

… I like the quote by Michelangelo. He said, “Criticize through creating.” It’s easy to be a critic. It’s much harder to create something. I always want to encourage young people to take their passion for making the world a better place and channel it to help us create new solutions to our challenges.

I’ve devoted my life to trying to build a business that makes a difference in people’s lives and in the not-for-profit world, in ways that I think also serve our society and culture. So I’m optimistic, because I’ve seen how much progress we’ve made.

If we can just get people to become more conscious about what capitalism is, because I think capitalism is a tremendous force for positive change in the world, and take the collective human intelligence and creativity and begin to channel it in constructive ways, there’s really no limit to where humanity will be in the 21st century.

Spot on.

Diplomats And Mediation: Neutrality (And Shrek)

23rd January 2010

The tumultuous launch of ADRg Ambassadors gives way to a requirement to write an article for DIPLOMAT magazine about Diplomats and Mediation.

One interesting theme is 'neutrality'. Is it possible for any international mediator in a dispute or problem to be truly impartial, and does it matter if that is not achieved or achievable?

It is probably possible for diplomats to be adequately neutral for most practical purposes if they have no evident axe to grind in the dispute concerned. Hence small smart countries geographically removed from a problem can have an impressive impact - a classic modern example being the way Norway used diplomatic nimbleness to broker the Oslo Accords.

On the other hand, one of the hardest tasks facing a mediator is not to get personally 'involved'. Hence mediators who are seen as impartial (enough) on the substance themselves usually have reputations to win or lose, so they might end up over-pressing one or other of the parties to reach a settlement - itself a form of non-neutrality.

Is this a bad thing? Maybe not, when issues of war or peace are at stake. On the other hand, a party which feels that it has been coerced or bamboozled into a settlement against its better judgement or instincts may just not try to implement that settlement, so the much-praised deal falters anyway.

Then there are mediations where divisions between the mediators themselves start to affect the outcome. See this fascinating account of how a German, American and Russian team of senior diplomats tried to broker a deal between Kosovo and Serbia. The Kosovo/Serbia problem in effect became a new place for their other rivalries playing themselves out.

Another option is to outsource mediation efforts to non-diplomats, people who are skilled, modest and anonymous - people who derive their authority as mediators from really being detached from the politics of it all, and who look rather at the emotional and even spiritual factors at play.

Such as the Quakers, who have had a long and usually creditable record in trying to find common ground in some of the world's toughest hot-spots, relying on sophisticated 'impartial listening'.

One important part of their method lies in denying to themselves as far as possible any sense of satisfaction, one reason why career diplomats tend to have no understanding whatsoever of this sort of work - diplomats are impressed by their own cleverness, or at least are told to bring home some glory for their Minister:

If a conciliator believes in confidentiality, he or she must deny themself `many elements of ego satisfaction', maintains Mike Yarrow in his book, Quaker Experiences in International Conciliation. `It takes a certain amount of courage to intervene in a complicated, dangerous situation,' he continues. `To keep it up the conciliator needs some sense of satisfaction. All this can readily build up to a feeling that the individual is essential to the resolution of the conflict, and even that he or she has the solution. Such feelings are fatal to this kind of unofficial effort.'

Conclusion?

None, other than to point to the array of examples of mediating interventions which have made a difference, and the many more where despite heroic efforts by well meaning mediators to help the parties identify sensible outcomes, the problem just keeps dragging on. And all concerned lose out.

Perhaps this happens because, as we all know, issues are like Shrek the Ogre. They have layers:

Shrek:     Ogres are like onions.
Donkey:   They stink?
Shrek:      Yes. No.
Donkey:   Oh, they make you cry...
Shrek:      NO. Layers. Onions have layers. Ogres have layers. 
You get it? We both have layers.

And you have to be a superhuman mediator to be able to identify all those stinky tear-inducing layers, and then help the parties to deal with them simultaneously.

Advice For Would-Be Writers

23rd January 2010

Mark Steyn has it:

Whenever aspiring writers ask me for advice, I usually tell 'em this:

Don't just write there, do something. Learn how to shingle a roof, or tap-dance, or raise sled dogs. Because if you don't do anything, you wind up like Obama and Fineman – men for whom words are props and codes and metaphors but no longer expressive of anything real.

America is becoming a bilingual society, divided between those who think a pickup is a rugged vehicle useful for transporting heavy-duty items from A to B, and those who think a pickup is coded racism.

More:

"The same thing that swept Scott Brown into office swept me into office," said Obama. "People are angry, and they're frustrated, not just because of what's happened in the last year or two years but what's happened over the last eight years."

Got it. People are so angry and frustrated at George W. Bush that they're voting for Republicans. In Massachusetts. Boy, I can't wait for that 159th interview.

Presumably, the president isn't stupid enough actually to believe what he said. But it's dispiriting to discover he's stupid enough to think we're stupid enough to believe it.

Don't go around blaming other people. Take responsibility.

Good advice?

A Good Week In The USA

22nd January 2010

A most satisfactory and philosophically interesting week in the United States.

The startling Scott Brown victory in the Massachusetts election for the ex-Kennedy seat in the US Senate has prompted an avalanche of analysis. Obviously it was an unqualified calamity for the Democrats.

But what conclusions do Democrats and Republicans alike draw from the evident groundswell of voter anger at the complacent Big Government tendencies exhibited by both parties?

The Democrats, having heavy majorities in both House and Senate, have the harder task in working this out. Better to be even more radical before it is too late eg to cram through their vision of new healthcare reforms? Or a lot less radical?

Charles Krauthammer makes a good point about grassroots 'tea party' protesters:

You would think lefties could discern a proletarian vanguard when they see one.  

OK, Scott Brown's surge is unlikely to be sustained across the States. But what if it were?

Michael Barone runs some numbers. Any district which did not vote as strongly 64% for Obama could be vulnerable to falling to the Republicans. Which in turn means that some 155 of 256 House Democrats could be waving goodbye to their terms in office. This is tending to make them, hem, cautious about ploughing on with their unpopular healthcare agenda. 

Is a key lesson that in the USA a version of broad 'libertarian' thinking - socially liberal, fiscally conservative - is starting to lead independent opinion?

And that any party which taps into that is going to find its fortunes looking up? And that the establishment Democrats as currently constituted are so bogged down in the tar-pit of their leftish Huge Government instincts that they are unable to manoeuvre successfully? 

One can but hope so. More please, and some for us over here too.

Meanwhile non-US readers may have missed the powerful Supreme Court ruling which knocks away great slabs of legislation controlling freedom of speech, especially during election campaigns.

These laws, driven in good part by outright leftist opposition to business (which seems to disappear when politicians are being generously lobbied after they are elected) have spawned ridiculous and oppressive bureaucracy edging the USA towards some sort of banana republic approach to freedom :

The majority said that "Campaign finance regulations now impose 'unique and complex rules' on '71 distinct entities.' These entities are subject to separate rules for 33 different types of political speech. The FEC has adopted 568 pages of regulations, 1,278 pages of explanations and justifications for those regulations, and 1,771 advisory opinions since 1975. 

This excellent analysis at Future of Capitalism is well worth reading since it covers in some detail the arguments of the Supreme Court judges who ended up in the minority on this one. But even though President Obama is warning of a strong response to the Court's decision, it is hard not to agree with the majority:

These onerous restrictions thus function as the equivalent of prior restraint by giving the FEC power analogous to licensing laws implemented in 16th- and 17th-century England, laws and governmental practices of the sort that the First Amendment was drawn to prohibit.

Matt Welch wisely reminds us of the issue in the case concerned. A documentary film critical of Hillary Clinton was not allowed to be aired on TV!?

And he argues that the massed networked power of individuals is now more than enough counterweight to see off murky 'corporate interests':

It has never been easier for groups of citizens to swarm together and flow money through the Internet toward campaigns and candidates who excite them. Ask Ron Paul -- or more relevantly, Barack Obama -- what's more powerful: $10 million from Dr. Evil Industries, or $10 each from 1 million people who can actually vote?

Exactly.

Finally, the new moves proposed by President Obama to recalibrate risk-management by banks may have rattled stock markets round the world, but the President wins praise for his approach in the WSJ:

In calling for an end to proprietary trading at firms with a federal safety net, the President showed that he now understands an important principle: Risk-taking in the capital markets is incompatible with a taxpayer guarantee...

Yesterday's announcement is a critical departure from the reform plan Mr. Obama introduced last year—largely incorporated in the House and Senate bills written by Barney Frank and Chris Dodd. Those plans all sought to expand the universe of too-big-to-fail companies eligible for taxpayer rescue.

Mr. Obama has at last joined the most important policy discussion: How to eliminate the moral hazard now embedded in the U.S. financial system. Political assaults on banker compensation have done nothing to address this core problem that enables gargantuan bonuses.

Quite right. Let's get rid of the too-big-to-fail approach.

If senior business people think that however outlandishly they behave, the taxpayer will foot the bill, are we more likely to get better or worse behaviour?

Yet beyond that is the definitive moral hazard in government itself: how to stop greedy and stupid politicians plundering taxpayers to bribe their friends?

Not easy.

But as Scott Brown's magnificent election shows, the threat of a tidal wave of voter anger may help a little.

Haiti v Bosnia: Assistance Dramas

21st January 2010

Edging back to normal life again after three days running around bewinter'd Poland. What a pleasure to be in a country able to cope sensibly with snow.

Far from snow is Haiti.

Ben Macintyre blames the French for brutalising Haiti into paying ruinous reparations for its temerity in wanting to espouse the Liberty part of the French Revolution. An interesting example of the Foreign Policy of Compound Interest - the wealth sucked out from Haiti over many decades has not had a chance to grow steadily to the local population's benefit.

The problem is that once a country ends up in too weak a state to prosper, all sorts of bad people flourish, and all sorts of clever people show up with ingenious schemes to make things better:

Before the earthquake, Haiti had 10,000 non-governmental organizations working there, the highest rate per capita in the world. In 2007, notes Bret Stephens of the Wall Street Journal, it had ten times as much foreign aid as investment.

If people are determined to blame Haiti’s problems on someone other than the Haitians, perhaps they could start by looking at the damage done by the foreign-aid industry.

Except that they won't.

Now the usual international or even national feuding is breaking out over who should do what to help the victims. Should the US Army get involved in directly helping people, or is that best left to 'assistance professionals'?

There was a classic case of this in Afghanistan where DFID demanded that some British Army local project-work be stopped because the work was insufficiently strategic.

They probably were right. Digging a well or putting a roof on a ruined school is not (on one way of looking at it) as strategic as more patiently identifying water and education plans for the region as a whole, preferably with 'full local participation' and 'due account paid to local gender issues and sensitivities' and so on.

Yet while that work trundles on there is no water from the well, and the school can't function.

Maybe the best or indeed only strategy is to get people in a position to start to do practical things for themselves, and then let them work out the strategies.

It reminds me of when Clare Short created DFID. The new Department's bureaucrats were full of themselves, keen to show new and above all strategic thought. So DFID support for the pioneering network of ad hoc local projects in Bosnia as previously run by the British Army soon stopped. Not strategic.

Clare Short herself came on a visit to Bosnia and we went to a small village where there had been a British plan to replace the electricty lines destroyed in the war; this very local scheme had been dropped by DFID as insufficiently 'strategic'.

The Bosnians told her that without power they could do nothing. Clare Short (being a domatic but practical Leftist) saw immediately that they were right and told her people to find the DFID funds to get the powerlines back up. 

A few large, slow, well thought-out, all-embracing, top-down plans?

Or many small, improvised, suck-it-and-see initiatives which together may add up to something - and which give the people who live in these places the chance to mobilise their own resources?

No right answer.

Socialist Eugenics

16th January 2010

Guido rightly lambasts the Fabian Society for their erstwhile adoration of the pseudo-science of Eugenics - the corrupt ideology beloved by snooty middle class intellectuals which was a sort of cross-breed of über-Darwinianism with Nietzschean/Germanic ideas of Supremacy.

See also the merciless analysis of this odious 'progressive' doctrine and its highbrow supporters in Liberal Fascism.

I mention this because I have downloaded the fab Stanza reading software on to my iPhone. And through it I have been busy piling up lots of free e-books, including various early works by P G Wodehouse (of course) but also essays and novels of G K Chesterton.

The Father Brown detective stories are strangely improbable yet a valiant effort to write clever mysteries with impeccable theological top-spin.

The Queer Feet is a witty one - a crafty robber turns up at a posh club dinner and tries to steal the valuable silverware, tricking the waiters by pretending to be a guest, and tricking the guests by pretending to be a waiter. Father Brown cracks the case by hearing his footsteps as he rushes jerkily from one mode to another. 

Here is an extended 1922 essay by Chesterton demolishing Eugenics once and for all. He seemed to think that the sobering effect of WW1 had ended its influence but of course it lasted in various forms well after that, with H G Wells famously calling for born again enlightened Nazism in a speech at the Oxford Union in 1932.

Anyway, get Stanza and get as many G K Chesterton free e-books as the various free e-book purveyors offer.

Sparkling uncompromising and profound writing, a bracing change from so much of the shifty post-modern 'theory' of our own dark times. 

Haiti Meets The UN's Clusters

15th January 2010

Most societies have some sort of organised physical and psychological reserves ready to help them through disasters.

Haiti is an exception, a place impoverished financially and institutionally for reasons going back deep into history (notably French history).

Only a massive military-style humanitarian intervention can make a difference in Haiti, and only the Americans have the resources and generosity to make that difference. Well done the Obama administration.

There also are contingency plans in place as led by the United Nations to try to coordinate international efforts in such ghastly circumstances, so that resources are not wasted in 'unnecessary duplication'. 'Clusters' of assistance forms are set up. 

The problem they are trying to solve is that in real life some forms of assistance can be delivered faster than others, for either reasons of geography or available supplies.

Yet it makes no sense to ship in (say) huge numbers of tents and bags of food if there is no way to get those supplies distributed; those piles of assistance in the few available storage centres themselves can start to block more essential supplies which have taken longer to arrive. Getting relief supplies into a country is the easy bit - distributing them sensibly and with minimal fairness thereafter is always far harder.

And it's all made worse if the local authorities are unable to cope at the best of times - who from outside leads the operations and takes moral and legal responsibility when things go wrong, as they invariably will?

In short, terrible confusion reigns, and many more people die.

Development expert Chris McDowell is one way in to the complicated world of clusters and how the relief effort in this case can be followed online. 

How To Start A Speech: Tell A Story

15th January 2010

Welcome Iain Dale readers

I was helping someone the other day with some well-chosen words for a senior private occasion of some 100 people.

The task? Suggesting ideas for the seemingly simple task of opening the proceedings and introducing the main speaker(s).

Of course ... not so simple. The words had to be both effective and touching (given the occasion).

So we worked up some pithy phrases, saying several Big Things in a few words, and with a personal touch.

On the night, a huge success. Three loud bursts of spontaneous applause from the distinguished audience in a four minute opening.

The main speakers too were both excellent , drawing on personal anecdotes to convey a sense of warmth, appreciation and admiration just right for the occasion.

So, folks, if you are out there grappling with the scary task of having to make a speech and finding your bowels tightening (or otherwise) with nerves, think about telling a story, then linking that story to the point of the gathering. The more unobvious the story is when it starts, the better.

People will not remember extended courtesies and flowery language. In fact, they probably won't even listen to them, waiting instead for something interesting to be said.

They will remember - and more important enjoy - words which appear to come from deep in you.

Words which tell a story which (even if it sounds corny when you look at it on the page) means something to you or the occasion.

The story need not even be true - you can use the story motif to pretend to tell a true story but which leads into a roundabout joke which links back to the occasion. The one of the multilingual dog applying for a job always works in all contexts. 

"Ladies and Gentlemen - you probably were expecting me to give you a speech. But I am no good at public speaking. So you'll be pleased to hear that I am going to tell you a story instead.

What's more, it's a true story...no, it really is"

Within seconds you'll have them all hanging on your every word. Agog, wanting you to keep going, not to shut up and sit down.

Can't miss.

Update

When I say that 'the story need not be true', I do not mean telling lies.

Rather speak from the start using ideas and imagery grounded in real-life events (or apparently real-life events) rather than animated abstractions. That can be done by drawing on episodes which have happened to you, or on funny stories/jokes which have a real-life feel to them.

A speech is an artificial event, in that the speaker has to try to engage as if personally with a large group of people, many of whom s/he has never met and may be quite some distance away in the room - even harder outside.

So to avoid their attentions drifting out of the window, catch their attention right from the start, maybe by asking a question:

"Do you know what I saw yesterday?"

"I was delighted to get the invitation to come here today. Let me tell you why..."

"This morning I sat down to prepare this speech. After two hours' work, I ripped it all up. This is why I found it so difficult..."

Any of these openings and many more like them will quickly get the audience tending to like you - and wanting More...

Bosnia And Peace And Democracy

15th January 2010

I have been asked by the FCO to give a talk there later in January to a group of foreign visitors about Using Democracy for Peace. Or maybe it was Using Peace for Democracy.

I forget. One or the other.

As always the Balkans is/are a laboratory for cutting-edge research on such scientific issues.

Take Bosnia and Herzegovina. Here is Baroness Ashton at her European Parliament hearings:

... noting that there is no other choice but for the differing communities to live together.

At her parliamentary hearing in front of MEPs Ashton noted that: “They can have as many referendums as they like but at the end this is about one country coming together''.

... she expressed Brussels’ concern about the political situation in the country and said Brussels needs an “effective strategy to overcome the political stalemate in Bosnia-Herzegovina”.

She said she will have regular contact with High Representative Valnetine Inzko in an attempt to find a strategy to overcome the current situation. “The prospect of EU membership is the glue'' that holds the country together, she said.

That (I assume) ad-libbed statement - “They can have as many referendums as they like but at the end this is about one country coming together'' - is remarkable.

Here is Baroness Ashton on the subject of referenda in a different context:

On practically every question ever put to the British public on any subject, when asked if they would like a referendum on that subject, they have said that of course they would. I think that that is a measure of a healthy and thriving democracy.

The point there, where she argues against the British people having a referendum on the Lisbon Treaty, is that she appears to be assuming that such a referendum would have full democratic legitimacy, but that in this case it is for Parliament and not a referendum to decide.

Yet in Bosnia referenda are relegated by her to miserable, second-class, irrelevant affairs of no consequence.

That can't be right, if only because it makes no sense for the EU to organise elections in BH then expect politicians to ignore their electorates.

A Bosnian referendum on an issue which shows a strong public mood in favour of Option X duly empowers Bosnian leaders to insist on Option X, whether the EU likes it or not.

And what if a referendum result eg in Republika Srpska one day says that the voters there do not want the country as covered in EU glue to 'come together'?

That said, even though Republika Srpska keeps threatening referenda on this and that does not mean that they are going to hold them: the threat of doing so may help win handy concessions:

For months, the Bosnian Serbs had prevented the country's authorities from extending the contracts of international judges and prosecutors working in Bosnia's highest court – now numbering just 11. The last contract was to expire on Tuesday (15 December). Inzko explained to Ashton, and also to diplomats from the countries that oversee the OHR's work, that he would have to impose an extension...

But Inzko was told that imposing an extension of the judges' contracts was out of the question because nobody had the appetite for a confrontation with Dodik. (It turned out that Canada, Japan and Turkey did – but that was of little interest to the EU.) The international judges and prosecutors working on organised crime and corruption cases in Bosnia would lose their jobs on 15 December – and they did. Inzko was allowed to extend only the contracts of international judges and prosecutors working on war crimes, an issue that is of far less personal interest to Dodik and other Bosnian politicians.

... Dodik announced that the decision to extend the war-crimes judges' contracts carried no weight and might be subject to a referendum in the Republika Srpska.

For the second time in as many months, the EU, together with the US, had tried to appease Dodik, only to find him unappeasable. There could hardly have been a less auspicious start to Ashton's term of office.

Roger Boyes is pessimistic:

The country is bubbling with hatred and it is clear that the Dayton agreement has failed in its central aim of creating a new state capable of forging bonds with its citizens. The old multi-ethnic Bosnian culture, the Balkan melting pot, no longer exists. It has been replaced by a weak state hovering on the brink of collapse.

If Richard Holbrooke still considers Dayton to be a successful model for nation-building, then God help Afghanistan.

How does that help me writing my FCO presentation?

Conflict within a country over who rules it can be managed (more or less) through Democracy.

Conflict within a country over whether that country should exist in its current form is far less manageable - you may get a majority for a continuation of the status quo, but what do you do about the large minority who demanded something different, and who keep using democratic rights to block national integration?

Islam - Culturally Different?

15th January 2010

An ever-alert reader moves on from the wonders of Ask Imam to a British website for what I take to be Fairly Militant Muslims, notably this analysis of the difference between a lion and a lioness:

What would a lion without a mane look like? That’s right, it would look like a lioness!

Nothing wrong with lioness, its mashallah a beautiful creation of Allah, but it would be wrong for the lion to imitate the lioness.

Now Allah commanded us to keep the beard, mashallah beautifully showing our manhood and Islam to the world, so what does a man look like if he shaves his beard?

He will look like a woman at best, if not a ladyboy faggot.

I mean this, men without beards look seriously gay and should remember that Allah made them that way for a reason.

Not easy to follow the last point. Is the argument that Allah deliberately created seriously gay ladyboy faggots? Or that Allah created men to have beards and so that's what men must have?

No, I stick with Ask Imam, since he is just more ... rigorous. Here he is in full-on agony aunt mode answering a question said to have come from the UK about the mysteries of Islamic courtship:

Today while I was out shopping on my own (I was in hijaab and burqah), a brother approached me; He asked me questions such as my nationality and if I spoke his language (Arabic). Innocently I answered him thinking that he was looking for something but because he did not speak the language (English) he didn?t know how to ask the shopkeeper something. But then he asked my age and if I lived in the area and out of politeness I answered him.

He asked if I was married and if I could take his number and give it to my dad so that he could speak with him about marrying me. I refused. He then asked what mosque my dad attended and that at jumuah salah on Friday he would approach my dad if he saw him. Many hours later I am thinking that what I did was wrong. Please advise me on whether I was right or wrong in what I did and what I should have done in that situation or what I should do if this situation arises again.

It was incorrect of you to converse with this stranger. Your conversation was unnecessary, hence, prohibited. Should this situation arise in future, refuse to be drawn into conversation by declining to speak from the very beginning.

Slut! Just stay at home:

Can I attend women only functions? Like mehndi, bridal/baby showers? if husband drops off & picks me up?

Mehndi, bridal/baby showers are all un-Islamic customs. A Muslim is not permitted to attend such un-Islamic functions even if the function is open to ladies exclusively.

There is an unrelenting Otherness about all this as far as we decadent Westerners are concerned. But how in practice to deal with its more nasty manifestations such as honour killings?

Should a Christian judge or jury be allowed to take part in any legal process involving a Muslim charged with killing another Muslim - they just won't understand?

Or is failing to understand some of these oppressive if not inhuman Islamist strictures not a bug but a feature?

Sub-Nation States - For Sale

14th January 2010

Back in Moscow in 1994 or thereabouts I asked a top Russian foreign policy pundit what would happen to Ukraine, then languishing in a deacying post-communist stupor.

"We'll just buy it," came the sardonic reply.

But what about less obvious places, such as Nauru, which has just recognised Abkhazia and S Ossetia as independent states, fulfilling a key Nauru foreign policy priority namely for its vote to be up for sale?

Thus:

A new player has emerged in the roiling political theater of the Caucasus: the tiny, destitute Pacific island nation of Nauru, which on Tuesday became the fourth country to formally establish diplomatic relations with Abkhazia, effectively recognizing its sovereignty...

Nauru, an eight-square-mile rock in the South Pacific with about 11,000 inhabitants, was no pushover, according to the influential Russian daily newspaper Kommersant. In talks with Russian officials, Nauru requested $50 million for “urgent social and economic projects,” the newspaper reported, citing unnamed Russian diplomats.

When in doubt on such issues turn to Mark Steyn, who unlike me knows a high percentage of the population of Nauru and eruditely links this subject to various musicals:

In the early Nineties, I met a couple of bigwigs from the capital, Yaren, in London when the Nauruan government, in the wake of Cats and Les Miserables and Phantom Of The Opera, decided to invest in a British musical about Leonardo written by a couple of guys whose only hit song was the long ago Number One “Concrete And Clay”. Oh, come on. You must remember:

Which was literally the situation the bird-pooped-out Nauruans found themselves in.

But there is also this:

First, Russia’s imperialist ambitions are an issue that resonates far beyond Russia’s backyard. Australia has been concerned for some time about a China/Taiwan competition to, in effect, buy up hastily decolonized Commonwealth territories in the Pacific. It will have a terribly corrupting effect on the region’s politics if Russia is determined on a piece of the action.

Secondly, we underestimate the importance of sub-jurisdictions. Nauru is sovereign but not quite independent:  Its Appellate Court rulings can be overturned by the High Court of Australia, a country to which Nauru also contracts its national defense. Why would they object to Abkhazia entering into similar relations with Russia?

But look at the other side, too: Poti sits on the eastern coast of the Black Sea, and Georgia has just sold a 51 per cent stake in the port to Ras Al Khaimah, one of the United Arab Emirates, to run it as a “free industrial zone”.  Like the bankrupt Dubai, Ras Al Khaimah is also a sub-national jurisdiction. These are cross-currents in the undertow of the Big Pond: Arab money, Russian ambition, Chinese subversion, and emerging statelets susceptible to all three.

You’ll notice who seems largely irrelevant to all of the above: us. America and its allies. In a globalized world, the west defers increasingly to the transnational institutions, without apparently even noticing the destabilization by key players at sub-national level.

Foreign Policy in the twenty-first century: stop me and buy one...

“The concrete and the clay beneath my feet begins to crumble…”

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What The Critics Say…

Such honesty has no place in modern goverment...it's bloody dangerous!

Andrew Dodge, Samizdata comment 2005

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