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Monthly Archives: August 2011

Mark Perry’s excellent Carpe Diem blog rehearses the miserable track record of President Obama’s new designee for chairman of the Council of Economic Advisors, Prof. Alan Krueger of Princeton. Back in 1994, after New Jersey raised its minimum wage to $5.05 an hour from $4.25, Krueger (with economist David Card) published a paper claiming that the higher cost of labor led to more rather than less hiring at New Jersey fast food restaurants. Demand curves, as Perry observes, slope downward on this planet (if something costs more, people buy less of it, including labor). But on Planet Krueger, demand curves slope upward, by magic.

Card and Krueger proudly announced the repeal of the most fundamental law of economics: “Our empirical findings challenge the prediction that a rise in the minimum reduces employment. Relative to stores in Pennsylvania, fast food restaurants increased employment by 13 percent.” Except they didn’t. Their data, gathered by telephone survey, turned out to be “so bad that no credible conclusions can be drawn,” another study concluded. Other economists used actual payroll data instead of a phone survey and found just the opposite: the state-mandated pay hike reduced employment.

“Let’s hope that labor economist Alan Krueger, as he assumes his new position as Chief Economist to the President, remembers that demand curves really do slope downward,” Perry concludes.

Once again, it appears that Obama has hired the best incompetence that money can buy. Larry Summers may have one of the highest IQ’s on record, but he believes that the mathematical models which which he plays so cannily have something to do with the real world in which investors lose sleep over risk, entrepreneurs lose sleep over making the payroll, and large-company executives lose sleep over making their numbers.

Large corporations who already have health care plans, and have serried ranks of lawyers to deal with the regulators, are doing very well, in fact. S&P 500 corporations increased employment by 10% over the past year while overall employment was flat. Start-ups who have to deal with Obamacare and the rest of the Washington regulatory burden can’t get over the threshold. Remove the obstacles and let Americans do what they do best and the economy will recover.

 

The Elusive Meaning of Life

August 29th, 2011 - 1:53 pm

At Asia Times Online: “Why you won’t find the meaning of life.” The problem is that you’re looking for it. That’s what happens when you spend Sunday watching the Weather Channel.

Talented Muslims and Israeli Settlers

August 28th, 2011 - 4:45 pm

Some respondents to my post on Fr. Schall question my comment that there are plenty of talented Muslims who would contribute to America as immigrants. Maybe they’re posting from bunkers in northern Idaho. It’s hard to work in any quantitative field without encountering large numbers of extremely smart and well educated Muslims. I hired plenty of them when I ran research groups on Wall Street.

I urge these posters to visit Israel and tour the settlements. No-one is more convinced of the talents of Arabs (not to mention Turks, Pakistanis and others) than my Israeli friends. Especially the settlers in Judea and Samaria. I wrote some weeks ago (under the title “Israel, Ireland and the Peace of the Aging”):

 5,800 Palestinians are working at technology companies on the West Bank, and the booming Israeli software sector is outsourcing to the West Bank, with a third of Palestinian software companies filling orders for Israeli firms, Bloomberg News reported March 15.

And the top school for Palestinian computer science students is Ariel University in Samaria, in the midst of a settlement near Nablus. “Administrators at the Ariel University Center are proud to have the Arab students, saying their enrollment is an example of loyalty and equality among Israeli citizens. For their part, the Arab students seem not to feel uncomfortable attending the college despite its reputation and location,” wrote the Chronicle of Higher Education.

“On campus the fact that we are in occupied territory is irrelevant – it doesn’t affect us at all. We leave all the politics outside,” the Chronicle quoted Manar Dewany, a 20-year-old student in math and computer science who commutes each day from the Israeli Arab town of Taybeh. “I never even considered it a reason for not coming here,” Ms Dewany added. “I have no problem with it. Why not come here? This place is full of Arabs.”

No one outsources computer technology to Egypt, where very few of each year’s crop of 700,000 college graduates meets world standards. The education that young Arabs receive at the settlers’ university on the West Bank is better than anything available among Israel’s Arab neighbors. In a quiet way, the settlers of Samaria may do more for peace than the diplomats.

In May 2010 I gave a speech at a conference at Ariel sponsored by my friend Richard Landes. It was the first time I had visited the “settler’s university.” The first thing I noticed was that there were girls with headscarves everywhere. The Samaria settlers work with local Palestinian officials to recruit talented Arab kids and bring them to Ariel. And that’s outreach, not affirmative action. The Arab kids are smart and work hard. Something similar, by the way, is going on at Israel’s music conservatories.

The  settlers of Samaria are doing the right thing. And they live directly under Muslim guns. America is founded on the principle of the sanctity of the individual, which comes from the Torah that the settlers observe. As individuals Muslim are owed the same rights and respect as the rest of us.

It Isn’t (Just) About Islam

August 28th, 2011 - 4:24 pm

My last post  about Fr. James Schall’s comparison of Islam and Communism elicited a pandemonium of posts, including some that should embarrass the posters. As a new blogger at PJ Media I did not censor even the most egregious violations of good taste, mainly because I wanted to see what was out there. But I want to make clear how repulsive I find proposals to “expel” Muslims from America and the like. There is such a thing as a Constitution, and also such a thing as basic decency.

Consider the following: If every radical Muslim disappeared today, we still would confront a culture of death that contaminates almost every aspect of daily life, and has harmed every family in America, even the most cohesive and the most religious. This is the deadliest threat to our existence. We still could go down the drain, along with most of the other industrial nations.

My new book is titled How Civilizations Die (And Why Islam is Dying, Too), and it is about us as much as it is about Islam. Iran, Turkey and other Muslim countries are dying of their own loss of faith, heading into a demographic death-spiral that makes them more dangerous. But they are following the example of some Western countries. Consider Italy and Poland, with fertility rates of 1.3 or so. By the end of this century, if this persists, Poland’s population will fall by half and the average Pole will be almost 60 years of age. And that is the Poland of John Paul II, this brave and talented nation whose resistance to Communism formed the spearhead of the West during the Cold War. My family visited Rome when my children were small and I brought them to Vatican Square on a Sunday so that they might might catch a glimpse of this spiritual leader of the West, this great friend of the Jewish people. In 1989 Poland was an inspiration to the West. But today’s Poles do not care enough about their future to bring a new generation into the world! The same is true of most of industrial nations.

America and Israel are the only industrial nations with fertility rates above replacement. But it is not yet clear whether we Americans really are an enduring exception, or just the lepers with the most fingers. Consider my own people: Secular Jews have a fertility rate around 1, and capital-c Conservative Jews 1.3. The Reform are at 1.2 or so, and by their own account have lost a third of their synagogue-going members in the past decade. The Modern Orthodox, by contrast, have between 3 and 4 children, and the ultra-Orthodox more than 7, but we Orthodox are just a tenth of American Jews. Episcopalians and Presbyterians are at 1.3. The overall birth rate is sustained by two large groups: Evangelicals (at 2.6) and Hispanics (and close to 3).  And the pessimists don’t think that will continue.

It’s easy to fulminate against Muslims. It’s harder to fight the endemic culture of death here. And it’s easy to deal with Iran (for example) as soon as we choose to do so. Soviet Russia — now there was a frightening enemy, one capable of annihilating us. Iran is a danger, but a trivial one compared to the Evil Empire that Ronald Reagan defeated. If we let Iran get nuclear weapons, it could be a very dangerous enemy, but probably not an existential danger like the Soviet Union.

That’s why I wrote a book that deals with the crisis within Islam, but by reference to our own crisis — and past crises in the West, including the depopulation of the Hellenic and Roman worlds. There but for the grace of God go we.

I believe America is exceptional, and that we will prevail. But that requires us Americans to ask ourselves every day whether we’re still good enough to be Americans.

 

Father Schall on the Fragility of Islam

August 26th, 2011 - 1:40 pm

Fr. James V. Schall S.J. remains at the age of 83 an indispensable voice in foreign policy, combining theological depth and strategic acuity. “The Fragility of Islam” is the subject of his latest pronouncement at the Catholic Thing blog. Western analysts tend to accept the narrative of Muslim triumphalism, the assertion that the strong faith of the Islamic world will overwhelm the temporizing and vacillating West. Not so, Fr. Schall argues: Islam itself is “as fragile as communism.” He writes:

The major change Islam looks to is not modernization or objective truth but, in a stable world, the submission to Allah of all men under a caliphate wherein no non-believers are found.

We still look back at communism, at least the non-oriental variety, with some astonishment in this regard. Almost no one thought it could “fall” without a major military encounter. That it disintegrated so quickly and so completely seems incomprehensible to anyone but a John Paul II. He understood its frailty, its failure to understand the human soul and its origins….

Religion or faith, even in Islam through Averroes, has been conceived as a myth designed to keep the people quiet. The scholars could quietly let the caliphs and the imams rule if the intelligentsia were left free to pursue philosophy, which was conceived to be anti-Koranic in the sense that the Koran did not hold up under scrutiny about its claims.

The fragility of Islam, as I see it, lies in a sudden realization of the ambiguity of the text of the Koran. Is it what it claims to be? Islam is weak militarily. It is strong in social cohesion, often using severe moral and physical sanctions. But the grounding and unity of its basic document are highly suspect. Once this becomes clear, Islam may be as fragile as communism.

A tiny minority of analysts, this writer included, have argued instead that Islam cannot be reformed or situated in democratic institutions; its militancy, rather, stems from the realization that it cannot survive modernity. “Koranic criticism yet may turn out to be the worm in the foundation of radical Islam,” I wrote in 2003. Much of the Muslim world is repeating the West’s transition out of traditional society, but in lapsed time.

That is the subject of my forthcoming book, How Civilizations Die (and Why Islam is Dying Too).

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Saudi Ascendancy After Arab Spring

August 25th, 2011 - 6:41 pm

It was delusional to expect the so-called Arab Spring to foster democracy; the  uprisings occurred because Chinese pigs will eat before the Arab poor, as I wrote last February. Dictators who deliver basic necessities of life might be tolerated, but not dictators who don’t. Far from strengthening democratic movements, the spiraling economic collapse of the non-oil-producing Arab countries has strengthened the position of Saudi Arabia.

It has been clear for some time that Riyadh regards the Obama administration with hostility and contempt, if only for its incompetent handling of Iran; that much was clear from Wikileaks reports of Saudi-American consultations after 2009. Because the Saudis do not trust the clown show on the Potomac, the usual American sources are out of the loop, so it is harder to work out what Riyadh is up to than ever before. Nonetheless, a few straws in the wind are worth special attention.

MEMRI reported on Thursday that a prominent Saudi academic and newspaper columnist, Amal ‘Abd Al-’Aziz Al-Hazzani, “called on the Arab rulers to learn from Israel’s handling of the social protests there, contrasting the swift measures taken by the Israeli government and Prime Minister Binyamin Netanyahu with Syrian President Bashar Al-Assad’s use of military force against his own people.”  The translation is eye-popping:

If only some of the Arab leaders would emulate Israel’s leaders in their precision in defining and dealing with their enemies. The Israelis see anyone who tries to revoke their right to the land as an enemy, and treat them as an enemy in speech and in deed – but they consider the rights of the Israeli citizen to be a red line.

In contrast, Syria’s leaders see as an enemy anyone who poses a threat to their remaining in power, even if he is a Syrian citizen – while the lands of the Golan, sadly, are a green line.

Grudging admiration for one’s enemy shouldn’t be confused with sympathy, to be sure, but it is hard to remember anything quite like this. Saudi Arabia never will reconcile itself to a permanent Jewish presence in the Land of Israel, but the fact is that Iran represents a clear and present danger to the Kingdom while Israel represents no danger at all. If Iran exploits the hopelessness of the Arab poor, the Saudi monarchy will be at risk. And that makes Israel a strange sort of ally of convenience.

It is instructive to watch what the Saudis actually are doing. For one thing, they are delaying payments to the Palestinian Authority, which cannot meet its payroll. They also appear to be bankrolling Egypt, which turned down the International Monetary Fund’s offer of urgently-need loans. They are offering Pakistan whatever economic aid it might require — what some Pakistani sources reporting on the prime minister’s recent visit to Riyadh call a “blank check.”

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US Economy: The Glass is Only Half-Poisoned

August 22nd, 2011 - 12:55 pm

In fact, the glass is half full: the non-bubble parts of the US economy are functioning reasonably well. That suggests that the whole economy could function well, if the glass were not half-poisoned (if oppressive taxes and regulation did not hobble the great American startup machine).

I contrast America’s two economies in piece this morning at Asia Times Online:

 

  • Item: Final sales of domestic product rose by 3.8% (without adjustment for inflation) from the second quarter of 2010 to the second quarter of 2011. Sales of S&P 500 corporations rose by 10%.
  • Item: Employment in the S&P 500 corporations rose by 10.6% between 2009 and 2010, to a total of 18.666 million. Total employment in the United States rose by 0.7% over the same period, to 130.26 million. Employees of the S&P 500, that is, comprise less than 8% of total US employment, and their employment pattern bears no resemblance to the aggregate.
  • Item: Profits of S&P 500 corporations rose by 19% between the second quarter of 2010 and the second quarter of 2011. Nominal GDP (gross domestic product) of the US rose by 3.7%.
  • Item: 47% of S&P 500 sales are overseas.
  • Item: Americans with no college-level education have an unemployment rate of 9.9% and (which is much more revealing) a labor-force participation rate of just 61%. Americans with some college education have an unemployment rate of 8.6% and a participation rate of 70%. And Americans with a bachelor’s degree or more have an unemployment rate of 5%, but a participation rate of 76%. Huge numbers of less-educated Americans, that is, don’t ”participate” in the labor force because there is nothing for them to do. But Americans with a college degree (as devalued as those degrees are) have little unemployment and a very high rate of ”participation.”

The problem isn’t that the economy is busted, but that parts of it are busted. But the fact that the other part is working reasonably well is encouraging.

Conclusion:

For the moment, investors will not buy an 8% earnings yield on the S&P 500 even while 10-year Treasury yields trade around 2%. They are all the more reluctant to take risks on startups, which in the past 40 years have accounted for more than two-thirds of job growth. The right combination of economic policies could revive the startup engine, albeit slowly and fitfully. Lower taxes on corporations and capital income and less oppressive regulation (especially US President Barack Obama’s health care mandates for businesses) would help. So would a rational immigration policy that favored entrepreneurs and highly skilled professionals.


A graduate student researching the Obama administration’s national security policy stumbled upon a key document at the White House website that clarifies, perhaps for the first time, precisely what Obama’s national security policy is.

The Bill for our Iranian Blunder

August 18th, 2011 - 1:44 pm

In the past I have outraged some of my conservative friends by insisting that nation-building in Iraq was a dreadful idea, for two reasons. The first is that it wasted American lives, treasure, and political capital (it certainly helped elect the odious Barack Obama) on a Quixotic commitment to social engineering; the second (and more important) is that it made American forces de facto hostages of Iran, and blocked us from confronting our most urgent enemy. Unpopular as this view was in some parts of the conservative spectrum, it was shared by many senior American officers.

Now Iran feels emboldened to make its move in Iraq. We hear today from AP:

WASHINGTON (AP) — Iranian-backed militias present the most dangerous security threat for Iraq, outpacing al-Qaida-linked terrorists who have been blamed for the spike in violence there, a senior U.S. military officer said Tuesday.

Maj. Gen. Jeffrey S. Buchanan, the top U.S. military spokesman in Iraq, said the Shiite militias — together they have several thousand insurgents — are working to keep the Baghdad government weak and isolated. Decisions on the number of types of attacks launched by the three main militia groups, he said, are made inside Iran, including through their ties with the powerful Quds force.

The escalating threat underscores the dangers as the U.S. prepares to pull its troops out by the end of the year. Iraqi officials are discussing whether they want to have some American forces stay in the country past that deadline.

What are we to do about Iran? Our dithering has made the problem much more difficult.

What I understand from well-informed US military sources is that after years of digging its nuclear program into mountainsides, Iran has little fear from surgical strikes, either from Israel or the US. The hardware of its nuclear weapons program is buried too deep, and too dispersed, to be knocked out from the air. To stop the Iranian nuclear program now would require a broader program of destroying Iranian command and control, which means in effect knocking out the Iranian government. My view is that we should have done this yesterday. But it is hard to imagine the Obama administration taking preemptive action against any Muslim country. That means the worst is yet to come.

As America reduces its troop presence in Iran, I am told, American troops still will be hostage to Iranian-backed terrorism, and all the more vulnerable, because they remain deployed where they can be attacked in ever smaller numbers.

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Should Israel ban Wagner?

August 17th, 2011 - 1:03 pm

At the Jewish webzine Tablet this morning, I offer reluctant support for Israel’s de facto ban on public performance of the music of Richard Wagner. The brilliant journalist David Samuels, a frequent contributor to New Yorker and The Atlantic, has just become Tablet’s literary editor–a conservative antipode, I hope, to the likes of Leon Wieseltier. David has asked me to write on classical music for his desk.

Daniel Barenboim and other left-wing Israel musicians draw a parallel between suppression of Wagner and the occupation of Judea and Samaria–maybe not the best way to win friends and influence people. But the issue is trickier than it appears. I conclude (paraphrasing Mark Twain) that banning Wagner’s music is a better idea than it sounds:

The Nazis embraced Wagner not by accident or opportunism but because they recognized in him the cultural trailblazer of the world they set out to rule.

It should not be the business of any state to impose moral criteria on artists; in that case one might ban Mozart’s “Don Giovanni,” which Beethoven thought immoral…Art, nonetheless, does not reside in the clouds of Mount Parnassus. It has consequences in the real world in which ordinary humans live and suffer, and society in extreme cases must draw a line. Wagner may not have been the only anti-Semite among the composers of the 19th century, nor even the worst, but he did more than anyone else to mold the culture in which Nazism flourished. The Jewish people have had no enemy more dedicated and more dangerous, precisely because of his enormous talent. In a Jewish state, the public has a right to ask Jewish musicians to be Jews first and musicians second. With reluctance, and in cognizance of all the ambiguities, I think the Israelis are right to silence him.

Most of my musician friends will be horrified. I struggle with the issue myself, among other reasons because hearing Wagner live on the opera stage helps us understand why the West went down the drain at the turn of the 20th century, as I argued in First Things here and here.  What do you think?