Take Your Pick

The BBC reports that British intelligence agencies have stopped sharing information with the United States because of U. S. intelligence leaks:

Police investigating the Manchester Arena bomb attack have stopped sharing information with the US after leaks to the media.

UK officials were outraged when photos appearing to show debris from the attack appeared in the New York Times.

It came after the name of bomber Salman Abedi was leaked to US media just hours after the attack, which left 22 dead.

Theresa May said she would tell Donald Trump at a Nato meeting that shared intelligence “must remain secure”.

The US’s acting ambassador to the UK “unequivocally condemned” the leaks in a BBC radio interview.

“These leaks were reprehensible, deeply distressing,” Lewis Lukens said.

“We have had communications at the highest level of our government … we are determined to identify these leaks and to stop them.”

Who’s responsible?

  1. Trump
  2. Obama
  3. Hillary Clinton
  4. NeverTrumpers in the U. S. intelligence services
  5. The U. S. news media
  6. There are so many to choose from
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China’s Credit Downgrade

As you may or may not know Moody’s has downgraded China’s credit rating. Remarks Michael Schulman at Bloomberg:

On Tuesday night, Moody’s Corp. downgraded China’s sovereign credit rating for the first time in 28 years. In doing so, the rating agency is acknowledging the dragon in the room: China will have to pay the price for its epic debt binge, whatever policymakers do from here.

The burning question in China these days is whether the government is serious about tackling the debt pile that’s exploded since the global financial crisis. Total outstanding credit grew to around 260 percent of GDP at the end of last year, from 160 percent in 2008 — one of the biggest and fastest expansions ever. Officials say they’re keenly aware of the need to deleverage, and there’s evidence that recent efforts to deal with the problem are starting to have an impact. What’s uncertain is whether the government has the will to push ahead with reforms even as companies start to default and the economy slows.

Here’s my question. China is a monetary sovereign, almost all of its debt is internal, and the government has a majority ownership of most of its banks. What difference does its credit rating really make?

Just for perspective, the U. S. does not have the very highest credit rating. That’s reserved for countries like Canada, Australia, Luxembourg, and Switzerland.

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Boosting Self-Image

I found Virginia Postrel’s post at Bloomberg on the boosterism of China’s “Belt and Road” program entertaining:

As a product of the New South, I know boosterism when I see it.

I recognize the underlying insecurities, frequent wastefulness, and over-eager efforts to demonstrate importance. I also understand boosterism’s valid purposes and claims. Boosters have something to prove — to themselves as well as outsiders — but that doesn’t mean they’re wrong to make the effort. Their offended pride often drives achievements surpassing those of more established and complacent places. Jaded westerners may cringe at the video of multicultural children singing praises of the Belt and Road, but it’s hardly the worst way for an ambitious world power to assert its ascendency.

China’s authorities need a victory for domestic political purposes and as victories go the “Belt and Road” program seems pretty benign. And, as I’ve noted before, they write a heckuva good press release.

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Objectives in Afghanistan

In an op-ed at Time.com Admiral James Stavridis, formerly the NATO Supreme Allied Commander, outlines the objectives for our military commitment to Afghanistan:

Which brings us to another key point: what does success look like? Afghanistan is not going to resemble Singapore anytime soon; but it can have a functioning democratic government, general control over much of its borders, the ability to minimize impact from the insurgency, armed forces with high public approval, and a reduction in both corruption and narcotics — the latter two issues posing a longer term threat to the nation than even the Taliban. Getting to that point of success will require security and thus the additional forces.

Frankly, I’m skeptical of the practicality of all of those objectives but that isn’t my question. Leaving aside the vital questions of whether we should have troops in Afghanistan at all and how many, does that sound like “mission creep” to you? It certainly does to me. Actually, it sounds to me as though Admiral Stavridis were casting around for objectives.

There’s a way of evaluating movie sequels that goes something like this. If the sequel had been made first, would it have justified a sequel? Perhaps we should start thinking about wars something like that. Would we have gone to war with those objectives? In the case of Afghanistan I don’t think so.

Either we should withdraw from Afghanistan or adjust our objectives there to things we would have gone to war to achieve in the first place.

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The Guard Dies But Does Not Surrender!

I found this piece by Peter Zeihan on what he sees as the collapse of the center-left not just here but in Europe as well interesting:

The only significant country where the Left is holding any ground is Germany, a country artificially re-constructed after World War II to have a very specific — and durable — political system. And even there the Social Democrats are on course to lose their fourth consecutive election this fall. (Yes, the center-left actually rules Canada — the only place of note that it still does. but Canada both lives in strategic nirvana and is disastrously complicated from a domestic political organizational point of view so I’d not draw too many lessons from the Great White North.)

What’s left of the economic Left is being subsumed by populism, a movement that broadly speaking is unhappy with the current state of affairs, thinks that everyone is out to get them, wants change, wants it now, and wants to use a mass government overhaul in order to force the issue (in the 1930s we would have called this national-socialism). Populism has managed to capture much of the Left’s thunder in a wide variety of countries including — but hardly limited to — Hungary, Poland, Austria, Finland, Israel, France, Italy, the Netherlands and Turkey. Yes, Trump is a symptom of the Populist rise. But so too are Bernie Sanders and Elizabeth Warren. (There are many types of populists. None have ever ended up delivering what they promise.)

It is tempting to say that politics is cyclical and the Left will recover, or that it botched the chance to rule in the past two decades and it just needs a little time in the wilderness to reconnect to its roots, or that the Left can embrace other issues like identity politics and social issues to reinvigorate itself. But that misses the point. The economic Left has lost power everywhere. The grab bag that remains is important and will obviously color political and social evolutions, but it cannot define the era. Such awkward coalitions can garner votes, but not in the quantities sufficient to govern. The term “Left” itself may be appropriated by new and varied causes — the most likely is to support the coalition of those devastated by Apple, Amazon, Uber and the rest — but those are not workers, but instead the opposite. The rubric that has defined the Left for nearly two centuries is gone.

One incidental point: both Germany and Canada operate in protective cocoons we’ve devised. Neither is emblematic of anything other than Germany and Canada.

As I’ve said before I think I don’t think we’re seeing a collapse of the Left. I think we’re seeing a much broader political realignment. Yes, progressives in the United States continue to believe, without a great deal of evidence, that bargaining organizations established for craft workers and industrial workers can be expanded to cover unskilled service workers effectively and those will heal a wide variety of ailments. But conservatives have their own articles of faith, for example that tax cuts in the top marginal rates always produce robust economic growth.

I think the realignment has multiple causes including the pace of change in the modern world, China’s entering the global scene, and the failure of the established political parties to see today’s world for what it is. You can’t expect a dichotomy laid out in the 18th century to be relevant forever.

Our problem is that regardless of state of denial or relevancy our political parties continue to hold power. Power without relevancy. There’s an idea to conjure with.

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The Key Paragraph

I read hundreds or even thousands of op-eds, editorials, blog posts, and other opinion pieces every week, commenting on only a few. One of the things I’ve noticed is how padded so many of them are. Just as one example I think that Allan Golombek’s RealClearMarkets article on the U. S., China, and free trade can be distilled into just this paragraph:

The first thing to keep in mind is that free trade opponents are not just looking for a fair deal. They’re looking for a mercantilist advantage. But the goal of free trade isn’t to export more than you import; the goal is to facilitate the overall creation of wealth, by fostering competition, opening import alternatives, providing consumer choice, and ensuring conditions the economy needs – secure access, stable relationships, a positive business environment and a large base of workers.

Now focus on just the portion I’ve highlighted above. Is that actually the goal? Or is the goal, rather than “ensuring conditions the economy needs” ensuring conditions that the people of the country need? The two are not synonymous.

Getting to specifics and dealing solely with the U. S.-China relationship, what specific measures that liberalize trade and that can be implemented by the U. S. alone will effect the goal?

I don’t think there are any but the list of reforms that China needs to implement is enormous—everything from instituting a robust system of civil law to allowing wages to grow, expanding the ownership of banks, allowing the yuan to be exchanged freely, ending the subsidies to government-owned enterprises, and import and export quotas, and so on.

There’s a great lesson of which I think that Mr. Golombek should be reminded: some times you must climb a hill to descend into the valley below.

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What Schools?

The American Prospect wants to spend a lot more money “fixing” school buildings:

Public school facilities—mostly ignored in discussions of the nation’s crumbling roads, bridges, ports, and highways—face an urgent infrastructure crisis of their own. Indeed, it has been getting worse for decades: In 1995, the U.S. Government Accountability Office issued a report estimating that $112 billion was needed to repair and modernize the nation’s school facilities, and that as many as 28 million students attended schools deemed unhealthy, uncomfortable, and unsafe. The problem was most acute for poor students and racial minorities. In 1997, President Bill Clinton declared: “We cannot expect our children to raise themselves up in schools that are literally falling down. With the student population at an all-time high, and record numbers of school buildings falling into disrepair, this has now become a serious national concern.”

But little progress was made, and inequities between rich and poor school districts grew wider. By 2013, the American Society of Civil Engineers gave public school facilities a “D+” grade on its national report card. The group found that school construction had diminished to approximately half the level spent before the Great Recession, even as public school enrollment continued to grow. By one 2016 estimate, it would take $145 billion a year to properly repair and maintain the nation’s school buildings.

Once again the civil engineers’ professional organization is mute on which schools should be repaired. It merely quotes figures on the expense of repairing existing facilities.

Last year the enrollment in Chicago’s public schools decreased by more than 11,000 students and that’s been going on for decades. The graph at the top of the page illustrates the decline in Chicago public school enrollment over time.

Should Chicago’s decrepit schools be refurbished? Or should they be consolidated and torn down? Now repeat that exercise for hundreds of medium sized and large cities in the Northeast and Midwest.

You know what the civil engineers’ report doesn’t show? The number of schools being built and where.

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The Better Statistic

In his Wall Street Journal column, a paean to immigration, James Freeman repeats a frequently-cited statistic (quoting Guyuanese immigrant Mohamed Ali):

Forty percent of Fortune 500 companies were founded by immigrants or the children of immigrants. Intel founder Andy Grove was a refugee from communist Hungary. Apple cofounder Steve Jobs is the son of Abdulfattah Jandali, an immigrant from Syria. Today, the trend continues. A recent study of billion-dollar startups found more than half were founded by immigrants. Our next generation of great companies, too, will depend on immigrants — as will the American economy as a whole.

I think there’s a better statistic. How many Fortune 500 companies or unicorns were started by illegal immigrants? I suspect it’s much, much smaller than 40% and smaller than the percentage of the population they represent.

The discussion of immigration is overly populated by strawmen arguments. Although I’m confident that some of those who oppose immigration to the United States do so for, frankly, racist reasons not all do. Some, like me, think that the present citizenry has a right to pick who is admitted into the country.

That most expansive of documents the Universal Declaration of Human Rights does not recognize a right of immigration. Neither to the best of my knowledge does any country in the world. Most countries impose restrictions on immigration and some, like Canada and Australia, impose significantly more stringent restrictions than we do.

The evidence that there is a growing need for workers who don’t have even a high school education and who don’t speak English is meager. If there were such a need, you’d expect the wages for such workers to be growing. They aren’t.

Although the effects of immigration on wages are controversial, most of the studies have found that immigration by workers without high school educations pushes the wages of those who also fit that profile down, as you would expect. Many of those workers are members of the immediately previous cohort of immigrants.

That’s why I support a serious regime of workplace-based enforcement of immigration.

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The Profile

If he does indeed prove to have been the perpetrator of the mass murder in Manchester, Salman Abedi fits a familiar profile. Consider:

  • He was born in the country that he attacked.
  • He was a Muslim.
  • His parents were immigrants, in his case from Libya.
  • He had shown signs of radicalization which went largely unremarked upon.

Nidal Hasan (Fort Hood), the Tsarnaev brothers (Boston), Rizwan Farook (San Bernardino), and Omar Mateen (Orlando) all fit similar profiles. I think that the pressures of being in an immigrant family both from the society at large and from within the family can be just too much for some people to handle.

My conclusion is not that we should ban immigration, the immigration of Muslims, or the immigration of Muslims from certain countries. I think we should recognize the pattern, consider it a cost of immigration, and engage in early interventions to head off future problems.

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The Silence

This is an analysis blog not a news blog. That’s why I’m not writing about the atrocity at a music concert in Manchester, England other than to take note of it, offer condolences to the survivors, their families, and those of the slain, and to sit in silence until there’s something to analyze.

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