Can We Tolerate an Islamist NATO Member?

I can’t decide whether Adm. James Stravidis’s op-ed at Bloomberg is accurate analysis, closing the stable door after the horse has bolted, wishful thinking, or some combination of all three. His thesis is that Turkey is just too strategically important to eject from NATO:

There is no understating how important it is that the U.S. and other NATO allies quickly mend fences with Turkey and help it through its regional crisis.

The Turks are under great strain from the fight against terrorists in Syria and Iraq, a rare instance of sustained warfare along NATO’s southern flank. Russia is moving ever closer to Turkey, coordinating military operations in the Middle East and agreeing to sell the Turks a top-of-the-line S-400 air-defense system, over protests from the U.S. and other NATO countries.

Domestically, President Recep Tayyip Erdogan is a highly polarizing figure who continues to fume over the failed coup against him last summer. More than 50,000 Turks have been jailed and 150,000 have lost their jobs, actions that will reverberate in Turkish politics for a generation. Crackdowns against “unruly journalists” and “suspect jurists” are common. And the independence movement among the Kurds of Iraq and Syria has put an end to hopes for progress on relations with Turkey’s own restive Kurdish minority.

Meanhwile, U.S.-Turkish relations have cratered following a string of confrontations that run from the profound to the petty. Erdogan continues to be obsessed with extraditing Fethullah Gulen, a Turkish cleric now living in Pennsylvania, whom he believes to have been at the heart of the coup. His security detail is under indictment in the U.S. after they beat a group of protesters in Washington. This month, a Turkish citizen working for the U.S. State Department was jailed, triggering visa retaliations back and forth between Ankara and Washington and dealing a staggering blow to the Turkish lira. And the U.S. is understandably concerned about Turkish moves in Syria, which seem to be more aligned with the interests of Russia and Iran than the U.S.

Let’s turn our minds back to the 1970s. We had strong relationships with the two major non-Arab Middle Eastern powers with Muslims majorities—Turkey and Iran. Iran was strategically important, too, until it became our implacable enemy and then it wasn’t. That’s the nature of strategy, a subject about which Annapolis grad Adm. Stavridis surely knows more than I. When a strategy becomes untenable, you change strategies.

There’s a basic question which I do not see Adm. Stravidis addressing let alone grappling with. That Turkey under Erdogan is no longer the secularist Kemalist country it was for its first 90 years. Under Erdogan it is an increasingly authoritarian Islamist state and as such has a lot more in common with Iran than it does with us. I don’t think he’s taking Turkey’s religious turn seriously. Like most secularist Westerners he assumes, incorrectly in my view, that Islamism is just a ploy.

Let’s talk about that question. NATO has accepted military dictatorships since its inception (PortugaL, Greece, Turkey). Can it tolerate an Islamist member? I don’t believe so but I’m willing to listen to arguments.

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Restaurant Economics in One Lesson

New York’s Le Cirque is closing. It can’t make ends meet.

Before I continue let me establish my bona fides. I am probably the best cook you know. I am an excellent cook, I cook fundamentally in the classical French style but I can also produce credible dishes in most of the world’s cuisines, particularly cuisines paysannes (which I tend to prefer). I like to eat; I like and understand food. And, as fate would have it, I know a little about the restaurant business as well.

Just about every restaurant, whether Alinea or a McDonald’s store, has the same critical success factors: location, rent, payroll, the cost of food. Of those three location and rent are by far the most important. The cost of food is almost an after-thought, particularly for a better restaurant in which it wouldn’t be surprising for it to spend ten times as much for rent as for food, as is the case for Le Cirque. That’s the reason that so many restaurants serve such large portions. It’s a relatively cheap way to offer value.

The linked article omits two significant factors without which I can’t really tell you what Le Cirque’s problem was: revenue per customer and number of customers per operating day. To my eye and based on its online menu, its prices appear to be too low for a restaurant in its location and of its class but let’s assume that its prices are what would be expected and it can’t raise prices without losing business.

The only conclusion I could draw is that Le Cirque can’t afford to operate in New York City. San Francisco, take note.

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Resolved

Now here’s a good debate topic. Resolved: that Hong Kong, Estonia, Latvia, Lithuania, the Czech Republic, Slovakia, Hungary, and Poland are reasonable models for determining the effect of policies if adopted by the United States.

Just as some simple examples of the differences between the U. S. and that list, with the exception of Hong Kong all of those countries have a net negative immigration rate and Hong Kong is a city not a country, for goodness sake.

The sad thing is that I agree with the premise of the Reason article that implicitly makes the claim that we can draw any conclusions at all about the effect a policy would have if adopted by the United States given its performance in Latvia. I do think that the world would be better off if every country adopted free trade. I don’t agree that the United States benefits when it adopts a trade policy to benefit a handful of sectors to the detriment of the others while our trading partners maintain mercantilist policies.

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Thought Experiment

Donald Trump does not have the temperament of a person I would wish to see in the presidency. I wish he responded with more decorum and forebearance. But there he is.

Let’s engage in a little thought experiment. Let’s assume that the media engaged in a persistent, concerted campaign of attack against the president and his or her administration, with little regard for facts, fairness, or the good of the country. Let’s further assume that the president responded or, more accurately, didn’t respond by counter-attacking as Trump routinely does, also without regard for facts, fairness, or the good of the country.

What would happen?

Is the moral do not tease the animals?

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Are Fed Screw Ups Inevitable?

There’s an interesting cross-blog conversation about supply, demand, inflation, and Fed policy going on. First, John Cochrane wrote a highly technical post with a rather simple message—inflation is hard:

Why is it so hard? The standard story goes, as there is less “slack” in product or labor markets, there is pressure for prices and wages to go up. So it stands to perfect reason that with unemployment low and after years of tepid but steady growth, with quantitative measures of “slack” low, that inflation should rise, as Ms. Yellen’s first quote opines.

That paragraph contains a classic economic fallacy, that of composition; the confusion of relative prices and the level of prices and wages overall. If labor markets get “tight,” companies finding it hard to find workers, then yes, one expects wages to rise. But one expects wages to rise relative to prices. You only tempt workers to move to your company by offering them wages that allow them to buy more. Similarly, if there is strong demand for a company’s products, its prices will rise. But those prices rise relative to other prices and to wages. Offering a company higher prices when its wages, costs, and competitor’s prices are all rising does nothing to get it to produce more.

which highlighted a number of misconceptions about inflation, including misconceptions shared by the board of governors of the Federal Reserve. Then Tyler Cowen linked to it. Then Scott Sumner responded to it:

This is one of those cases of two things that look superficially similar but are actually radically different, like eels and snakes. When money became very tight in 1921, 1930, 1938 and 2009, the equilibrium price level fell sharply. Nominal wages also needed to adjust downwards. Unfortunately, nominal wages are sticky, so wage growth slowed much too gradually to prevent high unemployment. Thus even though nominal wage growth slowed in all four cases, real wages actually increased sharply. Cochrane’s right that the wage changes we see in this sort of labor market have nothing to do with microeconomic models where a high level of demand means rising prices and a low level of demand means falling prices. Those micro models refer to real or relative prices, not nominal prices.

Hidden in the posts are a number of interesting points:

  • The Fed has maintained a tight money policy for some time. Some (like me) have suspect that the problem the Fed has actually been addressing rather than, say, persistently low inflation or slow growth, has been big bank insolvency which, unfortunately, they’ve abetted.
  • The Taylor Rule actually would be doing a better job.

all of which, naturally to my mind, raise the point are Fed screw ups inevitable? I believe they are. The Great Depression, the Capital Strike of 1938, and the Great Recession are all, arguably, the consequences of mistakes by the Fed rather than the myriad of explanations that have been presented for them. The reality is that there are just too many moving parts for any small group of individuals however well intentioned, educated, and informed to execute all of the tasks the Federal Reserve is presently undertaking.

What to do? I think that the Fed’s mandate should be limited to bank governance and the popular press and the public need to discard the image of the Fed governors as all-mighty and all-knowing wizards.

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Ziva and Nola

That’s Ziva on the left and Nola on the right. I guess it’s true what they say—everybody looks cooler in shades.

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Ounces

As I’ve mentioned in the past, as I practice it the art of blogging is a responsive one. I read an article, editorial, or op-ed. I respond to it.

Today I’ve read about a dozen pieces in which there have been about an ounce of insight to several pounds of verbiage. You can’t make bricks without straw.

How ’bout them Cubs? Should there be a “slaughter rule” in the majors?

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Making China Great Again

There’s an interesting article at the European Council on Foreign Relations by diverse authors on China’s grand strategy which I commend to your attention. If you haven’t been paying attention, China’s objective is to become the world’s pre-eminent power, something many Chinese believe is their rightful place, first cultivating economic strength and then military strength. They will accomplish this by exploiting their greatest strength: being a command economy controlled from the top. That is the context in which I see Chinese President Xi’s consolidation of power in his own hands.

Read the whole thing.

Unlike many I tend to see China as a challenge but not a threat. I continue to believe that what China perceives as a strength is actually a weakness and that what the Chinese authorities have been referring to as their “rise” and now refer to as their “rejuvenation” has been much more the consequence of Western fecklessness than of Chinese acumen.

Is China now the world’s pre-eminent power? By purchasing power parity standards they already have the world’s largest economy although by nominal standards they’re still lagging behind the U. S. by about a third. I wonder how the accounts would stand if debt were taken into account. IMO China’s own internal contradictions will be their downfall and it can happen catastrophically and abruptly.

I don’t honestly care whether the U. S. is the world’s pre-eminent power or not as long as our real economy grows, median incomes rise, and standards of living improve. We should stick to our knitting and worry about our own internal contradictions rather than about China.

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Where Does Demographics End?

There is an article at Science that asks an interesting if stomach-churning question: were the Chinese authorities right in implementing the “One Child Policy” 40 years ago? What’s the dividing line separating demographics, the study of populations, from politics and morality?

Read the whole thing.

There are many, many courses of inquiry that have become taboo (and more that probably should be) because they are so prone to be misused. Is demographics one of them? What are the limits of legitimate demographic inquiry?

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Risks, Sunk Costs, and Buttinsky

I have a basic question about Mark Mackie’s post, re-posted at RealClearDefense, “Solving the Siege of Seoul”. Why is it any of our business?

That the residents of Seoul are at the mercy of North Korea’s Kim regime is not headline news. It’s been true for well over half a century. They’ve accepted the risk. They may not really understand the risk; they may underestimate it. But it’s their risk not ours.

If American interest requires that we act against North Korea militarily, we will need to ignore sunk costs and, sadly, the lives of the people of Seoul (not to mention Pyongyang) are among them.

All of that is why I don’t believe we should engage in preventive war. If Seattle or Guam or Japan or a U. S. aircraft carrier (or Seoul!) are attacked by the North Koreans, it’s a different story.

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