4/29/11



Food & Water Watch: Advocating for our right to safe, affordable, healthy food and water.


Is Your Strawberry Shortcake Toxic?
Stop the Use of Methyl Iodide for Your Strawberries!



 

Dear  Figrd Reader,

We Have Until April 30th to Stop the Use of Poison on Our Strawberries!


Sign the Petition to Keep Methyl Iodide off Your Strawberries!

Will strawberry shortcake become known for causing cancer, birth defects and miscarriages? California, the state where 90 percent of U.S. strawberries are grown, approved the use of a highly toxic chemical for strawberry fields last year. We've got a chance to get this chemical banned at the federal level, but we need to get your comments in by April 30th. Can you take action to stop the use of methyl iodide for strawberries?

A panel of Nobel laureates and expert scientists called methyl iodide, "one of the most toxic chemicals used in manufacturing," and even though it was banned in Washington state, California approved its use on strawberry fields last year. T
he use of methyl iodide can cause significant problems for people, including cancer, miscarriages and brain damage in children.

California's decision has prompted a national Environmental Protection Agency review of methyl iodide, so we have an important opportunity to ban this chemical once and for all.

It's time to put our health and our children's health before the profits of the pesticide industry. They should be finding safer, healthier ways to produce strawberries instead of introducing more toxins into our bodies and our environment.

Sign the petition against the use of methyl iodide on our strawberries:

http://action.foodandwaterwatch.org/p/dia/action/public/?action_KEY=6659


Thanks for taking action,

Elanor Starmer
Western Region Director
Food & Water Watch


Food & Water Watch is a nonprofit consumer organization that works to ensure clean water and safe food. We challenge the corporate control and abuse of our food and water span>

4/28/11


Via :The Vox
used by permission  source:http://www.voxeu.org/index.php?q=node/6383

“The people want the fall of the regime”: Schooling, political protest, and the economy

Filipe R Campante   Davin Chor
25 April 2011
Political drama continues to unfold in the Middle East. This column uncovers education’s role in the recent uprisings. It finds that one unforeseen effect of increased investment in education has been the creation of a generation of well-educated but frustrated political activists. It concludes that – in more ways than one – the Middle East autocrats have contributed to their own downfall.

The wave of political protest that has shaken the Middle East since late 2010 has been a textbook example of a “prairie fire” revolution (Kuran 1989). The tragic act of protest of a Tunisian street vendor set off a contagious streak of demonstrations that has so far claimed two seemingly unshakeable incumbents in Tunisia and Egypt and still threatens a number of fellow strongmen. In seeking to explain the underlying causes of these protest movements, the popular narrative has pointed to the confluence of two structural forces, namely demographics and economic conditions. On the one hand, these were countries with a sizeable cohort of young, tech-savvy individuals with aspirations for the future. Combined with the simmering discontent over negative economic conditions – long-term unemployment, corruption, and the recent worldwide rise in food prices – this provided a powerful tandem that eventually motivated large numbers to demonstrate publicly for change.
Somewhat neglected in this picture – and eminently consistent with it – is the role of education. It is a robust and well-known fact in the political economy literature that more educated citizens display a greater propensity to engage in virtually all forms of political activity, ranging from more mundane acts, such as voting and discussing politics, to the more public forms of mobilisation at the forefront of the recent Arab episodes, such as attending political events, demonstrating, and presumably organising rallies through Facebook or Twitter (see for example Verba and Nie 1987, Putnam 1995, and Glaeser et al. 2007).
Recent research has furthermore shown that favourable economic circumstances can mute the propensity of individuals to engage in political activities (Charles and Stephens 2009). In a similar vein, in our earlier work (Campante and Chor forthcoming), we have found that factors at the country or industry level that raise the labour-market returns to the skills acquired through education in turn have a systematic impact on an individual’s incentives to engage in political activities. The lower the returns to human capital in the production sector, the more likely that it will be channelled to political participation instead.
Motivated by the recent developments in the Middle East, we have uncovered additional evidence on the political economy implications of the interaction between individual education and economic circumstances that affect the opportunity cost of devoting human capital to political activities (Campante and Chor 2011).

Individual opportunities and political protests

From a micro perspective, we examine data from the World Values Survey on political participation at the individual level. Pooling together close to 200,000 survey observations from more than 80 countries, we first construct a measure comparing an individual’s income to that predicted by observable characteristics, such as age, gender, education, and occupation. More negative residuals from a regression of income on a comprehensive set of individual variables, including education, indicate a greater degree of income “under-performance” relative to what is predicted from the individual’s observable characteristics. In fact, most of the Middle East countries in the World Values Survey exhibit, on average, large negative income residuals for individuals with some secondary education, suggesting an unusually high level of income under-performance compared to the rest of the world.
As it turns out, we find very robust evidence that individuals with more schooling who exhibit large negative income residuals also tend to be especially likely to engage in political activities.
Moreover, this finding does not hold uniformly for all kinds of political activity, but rather is confined to those, such as attending demonstrations, joining strikes or occupying buildings, that are more effort-intensive. (We find no similar statistically significant pattern with less effort-intensive forms of political participation, such as signing petitions and discussing politics.) This is consistent with our opportunity cost logic. That is, we associate a lower opportunity cost of production income foregone, as proxied for by income under-performance, with increased participation in political activities. This seems to suggest that the link between education, economic circumstances, and political participation is not just about “grievance”. After all, it is not clear that pure disaffection – as distinct from opportunity cost – would have an impact only on effort-intensive forms of political participation.

Education, opportunity, and regime change

Our paper then asks whether a similar interaction between schooling and economic under-performance might be coupled with an increased threat to incumbent regimes in the aggregate. We therefore shift to a macro cross-country panel setting, and investigate whether increases in schooling, when coupled with poor macroeconomic conditions that detract from the returns to that schooling, are associated with a greater probability of incumbent turnover. Here we use data on country schooling from the widely used Barro-Lee dataset, as well as information on leadership turnovers compiled by Campante et al. (2009) and extended to cover 1976-2010. We show that the interaction of increases in schooling with deteriorating real GDP per capita raises the likelihood and frequency that incumbent rulers will be displaced.
Consistent with the popular narratives on the Middle East revolts, we do find that incumbent turnover is also more likely in countries with a combination of a large youthful population share and poor income per capita performance, but our findings on the role of schooling continue to hold over and above this “youth revolution” effect. Also, our results are obtained while including both country and time fixed effects, so that the findings are based in part on the within-country variation in economic and political conditions. This is important as it implies that it is not just about rulers being more vulnerable in poorer countries, but also that incumbents can become more vulnerable if an increasingly well-educated population is faced with worsening economic prospects.
How does the above analysis inform our view on the recent events in the Middle East? As it turns out, the Barro-Lee data reveals that many Arab countries have in fact witnessed aggressive increases in schooling in recent years. Egypt and Tunisia, for instance, all registered large gains in total years of schooling among the population aged 15 and above, respectively rising from 2.6 to 7.1 years and from 3.2 to 7.3 years between 1980 and 2010. Out of the top 20 countries in the world as ranked by increases in general schooling during this period, there were eight Arab League countries, not to mention non-Arab Iran. At the same time, the typical Middle Eastern economy is far from skill-intensive. For instance, Clemens et al. (2008) estimate that skilled Egyptians who migrate to the US earn almost nine times as much as those who stay in their home country.
In other words, the increasingly educated populaces within the Arab World have not seen a commensurate improvement in the labour-market returns to their newly acquired human capital. Investing in educating is of course a good thing in its own right, but in an ironic twist it seems that by doing so without providing sufficient economic opportunities, the Middle East autocrats appear to have contributed greatly to the situation that now afflicts them.
It is telling that the Tunisian street vendor, Mohamed Bouazizi, whose self-immolation was the spark behind the wave of protests, was rumoured to be a university graduate. Although that last detail about his education status now appears to be apocryphal (Fahim 2011), the fact that it gained such currency is itself illustrative of the broader trend of graduate unemployment in Tunisia.
As for the prospects for the regimes that might emerge from the political turmoil, we also find that the interaction of rising country schooling and declining income per capita tends to be associated with a subsequent increase in country democracy scores (from the Polity IV dataset). While we refrain from any specific predictive exercise, or even from causality claims, this does suggest that the ensuing incumbent turnover is frequently accompanied by some move towards democracy.

References

Campante, Filipe R and Davin Chor (forthcoming), “Schooling, Political Participation, and the Economy,” Review of Economics and Statistics.
Campante, Filipe R and Davin Chor (2011), ““The People Want the Fall of the Regime”: Schooling, Political Protest, and the Economy”, Harvard Kennedy School Faculty Research Working Paper Series RWP11-018.
Campante, Filipe R, Davin Chor, and Quoc-Anh Do (2009), “Instability and the Incentives for Corruption”, Economics and Politics, 21:42-92.
Charles, Kerwin Kofi and Melvin Stephens Jr. (2009), “Local Labour Market Shocks and Voter Turnout: The Role of Political Attentiveness”, mimeo.
Clemens, Michael A, Claudio E Montenegro, and Lant Pritchett (2008), “The Place Premium: Wage Differences for Identical Workers across the US Border”, mimeo.
Fahim, Kareem (2011), “Slap to Man’s Pride Set Off Tumult in Tunisia”, The New York Times, 21 January.
Glaeser, Edward, Giacomo Ponzetto, and Andrei Shleifer, (2007), “Why does Democracy Need Education?”, Journal of Economic Growth,12:77-99.
Kuran, Timur (1989), “Sparks and Prairie Fires: A Theory of Unanticipated Political Revolution”, Public Choice, 61:41-74.
Putnam, Robert D (1995), “Tuning In, Tuning Out: The Strange Disappearance of Social Capital in America”, PS: Political Science & Politics, 28:664-683.
Verba, Sidney and Norman H Nie (1987), Participation in America: Political Democracy and Social Equality, University of Chicago Press.
Posted: 26 Apr 2011 09:56 PM PDT
The very fact that this item “LPS fires back with motion seeking sanctions against Alabama attorney,” was treated as a news story by Housing Wire is further proof that Housing Wire is above all committed to promoting client and mortgage industry interests and only incidentally engages in random acts of journalism.
LPS is desperate to create a shred of positive-looking noise in the face of pending fines under a Federal consent decree, mounting private litigation, and loss of client business under the continued barrage of bad press. Housing Wire, who has LPS as one of its top advertisers, is clearly more than willing to treat a virtual non-event as newsworthy to help an important meal ticket.
If you know anything about litigation, particularly when small fry square off against large companies, it’s standard for the well funded party to engage in a war of attrition against the underdog. One overused device is to threaten or file for sanctions. Even when they are weak or groundless, they still waste opposing counsel’s time and energy.
In this case, anyone with even a smidge of familiarity with the matters at hand would know the charges by LPS against attorney Nick Wooten, who has launched a series of cases charging LPS with impermissible fee sharing and other violations of bankrutpcy court rules, is a sign of weakness, not strength.
The background is pretty simple. Wooten filed a case against LPS in which he included a series of LPS contracts as exhibits. LPS settled the case and had Wooten sign a confidentiality agreement. Now LPS is trying to claim that the confidentiality agreement extends to the exhibits filed in the earlier case.
This is pathetic. You can’t contract to make public information confidential. If you get me to sign an agreement that the fact that water boils at 212 degrees Farenheit at sea level is confidential, and then you sue me because I mention that later in a public setting, you’d be laughed out of court if you tried to enforce that provision. The same idea applies here.
So this part of the article, which sound logical unless you understand the rules of the road, is nonsensical:
Wooten and LPS entered into a confidentiality agreement in the Wood case in May 2010, according to the court filing. That agreement stated that any material in the case deemed proprietary, private or commercially sensitive by either party would be kept secret.
This confidentiality provision was not imposed by the judge (as in “sealing the records” which would have been the normal route to try to protect sensitive LPS material), but entered into later pursuant to settlement discussions.
When Wooten filed the case, he made the contracts public. He was under no obligation to keep LPS material confidential at that juncture. The party for LPS to have pursued legally was whoever violated their confidentiality agreement with LPS by providing those contracts to Wooten. LPS can’t use the later confidentiality agreement to turn the clock back. Wooten makes an argument based on this logic in regards to a deposition LPS arguing Wooten has to exclude from his current case:
Wooten claims that the Newland deposition was distributed to over 2,000 lawyers a year before anyone asked for confidentiality, noting that it was taken in June 2009. “They knew and have known that deposition has been all over the country. It’s got more frequent flier miles than Delta airlines and every passenger they have booked,” he said.
Consider the idiocy of the LPS position. Let’s say they manage to push Wooten out of the picture. Any Joe admitted to the bar in any state where he has filed the litigation can refile the same case. word for word, exhibit for exhibit (once they locate and sign up the client). And the next guy might well have deeper pockets. If LPS thinks they are going to make this litigation go away by huffing and puffing, they are smoking something very strong.
It’s rather ironic that LPS accuses Wooten of disparagement, when its blowhard lawsuit looks to be a long form effort to use litigation as an excuse to dump every bit of information it can spin to put Wooten in a bad light and make it look more meaningful by including it in a court filing.
The Housing Wire story also suffers from a want of fact gathering. The article makes hay out of a Wooten loss in the US v. Congress case, which Adam Levitin and this site dismissed as narrow and of no precedential value. It fails to mention that Congress is being appealed (by Wooten’s co-counsel) and that Wooten subsequently won a case that is far more significant as a precedent.
Another sign of bias in the reporting is the amusing internal contradiction of LPS asserting that its agreements with lawyers are a state secret, as contrasted with an analyst at Stevens asserting that it’s impossible that 200 attorneys are “in cahoots” with LPS on fee splitting. He’s basically arguing that the arrangement set forth in the contracts that LPS is belatedly trying to call confidential couldn’t possibly be secret. Wooten could have a lot of fun calling this guy as an expert witness.


Posted: 26 Apr 2011 12:08 PM PDT
Readers may know that tomorrow at 2:30 PM, Ben Bernanke is hosting the first press conference ever held by a Federal Reserve chairman ever. It’s remarkable that an official widely described as “the second most powerful person in America” has managed to sidestep basic measures of accountability to the public and transparency like this for so long.
We are participating in an effort spearheaded by the Dylan Ratigan show to crowdsource questions for reporters tomorrow. Please post your suggested questions in comments below. Members of the Twitterati, please use hashtag #FedSpeaks to tag your question.
I’d like to toss in the question I posed to Larry Summers:
Given the extraordinary level of support extended to major banks during the crisis and now, via measures like super low interest rates and continued regulatory forbearance, why does the Fed continue to maintain the fiction that they are private companies? Why doesn’t the Fed treat them as humble utilities and regulate them accordingly?

4/27/11


 via:FireDogLake

Obama on Manning: “He Broke the Law.” So Much for that Trial?

By: Michael Whitney Friday April 22, 2011 8:17 am
President Barack Obama made stunning accusations about accused Wikileaks whistleblower PFC Bradley Manning, directly asserting that Manning “broke the law.” Apparently the President of the United States of America and a self-described Constitutional scholar does not care that Manning has yet to be tried or convicted for any crime. In a discussion yesterday with Logan Price, a Bradley Manning supporter who was part of a group of activists who sang a song during the President’s San Francisco fundraiser, President Obama flatly stated that Bradley Manning “dumped” documents and that “he broke the law.” A rough transcript follows, provided by UK Friends of Bradley Manning:
OBAMA: So people can have philosophical views [about Bradley Manning] but I can’t conduct diplomacy on an open source [basis]… That’s not how the world works.
And if you’re in the military… And I have to abide by certain rules of classified information. If I were to release material I weren’t allowed to, I’d be breaking the law.
We’re a nation of laws! We don’t let individuals make their own decisions about how the laws operate. He broke the law.
[Q: Didn't he release evidence of war crimes?]
OBAMA: What he did was he dumped
[Q: Isn't that just the same thing as what Daniel Ellsberg did?]
OBAMA: No it wasn’t the same thing. Ellsberg’s material wasn’t classified in the same way.
This is the President of the United States speaking about a US military soldier detained for almost a year on charges of leaking classified (but not top secret, the level of files released by Ellsberg) documents. Manning’s lawyer is considering considered (corrected: his transfer made the writ moot) filing a writ of habeus corpus for the length of time and totality of abuse suffered by Manning while in military custody.
President Obama has already made up his mind. He thinks Manning “broke the law.” It’s no wonder he considered Manning’s abuse to “meet our basic standards” when he thinks Manning is already guilty.
This is vile.
As a reminder: the Pentagon plans to hold Manning indefinitely. Might as well, since they think he’s guilty already.
art  by Nikainleyuk

Leaked memo reveals 'discovery of God particle'

By Louise Wells
Monday, 25 April 2011


It is the most elusive subatomic particle in the universe and its discovery could revolutionise nuclear physics.
So it is no wonder that a rumoured encounter with the Higgs boson, also known as the "God particle", at the Large Hadron Collider (LHC) near Geneva has led to hysteria among some scientists. However experts have urged caution over a leaked internal memo, warning it could well be a false alarm.
Finding the Higgs is one of the main goals of the LHC, a 17-mile underground tunnel. The Higgs was proposed in the 1960s to explain why matter has mass and is the missing piece of the standard model of particle physics. Speculation has now run wild on the internet after an anonymous note was posted on the blog of Columbia University mathematician Peter Woit.
The memo revealed that one of the LHC detectors had picked up a signal consistent with what Higgs is expected to produce. The scientists noted that "the present result is the first definitive observation of physics beyond the standard model".
But Cern, the European organisation for nuclear research, stressed the note was only preliminary. Spokesman James Gillies said it was "way, way too early" to confirm whether Higgs had been detected, and he told Wired magazine: "The vast majority of these notes get knocked down before they ever see the light of day."

4/26/11





Posted: 24 Apr 2011 02:00 AM PDT Via: http://www..nakedcapitalism.com/ Yves Smith used by permission!
Yves Smith-A funny thing happened at the INET conference. First, I got to ask Larry Summers a question because Martin Wolf, who was moderating the session, is a good sport. Normally, at this sort of event, only At Least Semi Big Names get to interact with Big Names. Yours truly is a minimum of a rank or two below At Least Semi Big Names.
You will find our question at 55:35.
Second, my recollection of his long answer (which ducked my question, as various people remarked to me that evening and the next day) seems to not all be on the tape, which led me to think I was losing my mind. I distinctly recall two parts, the first being a bit of a detour that led to a diss of the question. In that, I recall him citing someone (I didn’t recognize the name, but I may also not have heard it clearly since I was at a table in the back) and then mentioning “socialist” and “communist” or “socialism” and “communism”. I was gobsmacked by that. In the second part, he posed his own question, which had very little do do with what I had asked, and answered that.
But when I went to look at the tape, lo and behold, no mention of either dirty word that I thought I heard I pinged a couple of buddies who were at the speech, neither remembers Larry’s answer.
But there is a clear editing break at just after 60:30 where the camera changes and at least a word appears to be missing. So maybe I have an over active imagination or maybe that bit was edited out for not-nefarious reasons (like Larry got lucky and and that bit got mangled between the two cameras).
And someone drew the same inference I did, regardless of whether the s/c words were uttered. From Stephan Richter on The Globalist (hat tip Amar Bhide):
For example, when the irrepressible Yves Smith asked Larry Summers about whether banking risks in the United States could not be helpfully diminished if its large institutions were run (read: compensated at the top) more like utility companies, he immediately aborted any effort at an intellectually honest answer by making it sound as if she were proposing to bring state socialism to banking.
A man who reportedly earned millions for having advised hedge funds one day a week for a year shortly before serving in the Obama Administration (and who is quite likely, now that he’s out, to do so again), he ought to have been patriotic and intellectually honest enough to provide a real answer.
Alexander Hamilton Statue at Treasury

Posted: 25 Apr 2011 10:41 AM PDT
By William Hogeland, the author of the narrative histories Declaration and The Whiskey Rebellion and a collection of essays, Inventing American History who blogs at http://www.williamhogeland.com. Cross posted from New Deal 2.0
The father of the founding debt may have been most concerned with his wealthy friends, but his ideas spawned the liberal view of government.
At FrumForum, Kenneth Silber has posted a funny interview with Alexander Hamilton, deploying actual Hamilton quotations in order to suggest how our first Treasury Secretary, the founding architect of U.S. finance policy, might advise us in the current debate on national debt. Hamilton’s world was so different from ours that in the post, Hamilton comes off a bit like a wind-up toy:
FrumForum: the 1790s, as the nation’s first treasury secretary, you consolidated state debts into a national debt and ensured the U.S. would pay its Revolution-era commitments. What do you think of S&P’s negative outlook on treasuries now?
Hamilton: When the credit of a country is in any degree questionable, it never fails to give an extravagant premium, in one shape or another, upon all the loans it has occasion to make. Nor does the evil end here; the same disadvantage must be sustained upon whatever is to be bought on terms of future payment.
And:
FF: … you created revenue cutters, what later became the Coast Guard, to collect fees from ships. What were your instructions to the officers?
Hamilton: They will always keep in mind that their countrymen are freemen, and, as such, are impatient of everything that bears the least mark of a domineering spirit. They will, therefore, refrain, with the most guarded circumspection, from whatever has the semblance of haughtiness, rudeness, or insult.
Still, the conceit is clever, because Hamilton’s founding national finance ideas are embraced both by certain kinds of modern conservatives (the writers Richard Brookhiser and David Brooks, among many others) and by certain kinds of modern liberals (former Obama budget director Peter Orszag, the Brookings Institution, etc.). But Hamilton is also criticized across the political spectrum (by left-influenced historian Woody Holton, by sometime right-wing Republican strategist Kevin Phillips, etc.). Amid our current finance debates, especially regarding the purpose and legitimacy of public debt — and most immediately on the height of the federal debt ceiling — Hamiltonian finance raises questions that can spark controversy in all political quarters about debt, banking, taxes, and founding American values. Hamilton was conservative in the sense that he dedicated his policies to keeping his moneyed friends — the traditional elites — wealthy. Yet he founded institutions that led to modern liberal ideas about the role of government.
People bring heat to Hamilton. “The bastard brat of a Scotch peddler,” John Adams’ characteristically mean-spirited slam, is matched today by those who call Hamilton everything from a Tory to a fascist and condemn his national finance plan of the 1790’s as the hijacking of an economically democratic revolution supposedly intended by the patriots of 1776. Defenders, meanwhile, invoke the national financial straits that Hamilton faced, marginalize the popular finance movement he intended his measures to demolish, and pooh-pooh any casting of Hamiltonian finance as a socially regressive effort to establish an American money elite.
Anachronistic slurs like “fascist” cloud the important issues; the period American slur “Tory” does too. And despite the overlooked importance to the founding of American popular finance, and the financial elitism the framers meant to build into the Constitution, it’s possible to see the Constitution that empowered Hamiltonian finance as more aligned with the Declaration than opposed to it. Yet Hamilton’s motives and goals for the country, controversial in their time, remain controversial today, and for good reason.
Hamilton is famous for putting the country on what historians like to call sound financial footing and building confidence in what they call the credit of the United States. What those terms meant for 18th-century America was better understood by Hamilton himself than it is by many today, including some historians. To Hamilton, sound national finance meant concentrating national wealth in a small number of government-connected hands, thus enabling the financing of ambitious national projects. And good U.S. credit meant ensuring that holders of federal bonds — those government-connected high-finance men, the public creditors he hoped would invest in building the nation — could count on staying rich and getting richer by collecting their government interest payments.
To that end, rather than pay off the federal domestic debt (as he is reflexively credited with wanting to do), Hamilton was perfectly articulate about wanting to grow and finance that debt, making it an engine of national purpose. In that process, he showed the influence of his mentor, the Revolutionary War financier Robert Morris, who had recommended Hamilton to Washington for the Treasury job. Working with Morris in the 1780s, the young Hamilton had bent every effort to swelling the debt and making it federal.
Then, with ratification of the Constitution, the student succeeded where the master had failed. Persuading Congress to assume the states’ debts in the federal one, and then to fund it all, Hamilton achieved Morris’ longstanding goal of placing all public debt, much held by nationalist financiers themselves, in the hands of the national government. If there had been a debt ceiling, Hamilton would have had Congress raise it. Both new taxes and a central bank formed natural parts of that plan.
It’s hardly surprising, then, that Hamilton’s high regard for both national debt and government power in banking can run him afoul of some on the right, who see him as the founder of a big, sprawling, debt-ridden federal government meddling tyrannically in financial markets. The FrumForum “interview” puts it this way:
FrumForum: But if you’re such a liberty-minded guy, how could you have created a central bank, a predecessor to the Fed, when many conservatives and libertarians these days want to end the Fed?
Hamilton “responds” with some tepidly reasonable sounding truisms about how all successful nations utilize central banking. Those observations wouldn’t cut it with the conservative libertarians FrumForum invokes; they didn’t cut it with James Madison, many libertarians’ hero, who objected to the bank on constitutional grounds. Hamilton made the winning argument (also cited in Silber’s post) that Congress enjoys both enumerated and unenumerated powers. If Congress determines that exercising the constitutionally enumerated power to do what is “necessary and proper” in the discharge of its duties means exercising an unenumerated one and forming a bank, it can form a bank.
Hamilton thus laid out an idea about the role of the federal government that would appeal to liberals today. It’s a long, strange trip from Hamilton’s bank to the National Guard in Little Rock; that trip includes a Civil War, a bunch of amendments, and a civil rights movement, which Hamilton of course had nothing to do with. Yet with his argument about the bank, Hamilton sowed seeds for an activist vision of federal power, with national government an instrument for national good, now generally associated with political liberalism.
So Hamilton was a kind of modern liberal. But he wasn’t the current kind of modern liberal. His commitment to immense energy in the executive branch and a firm government hand in the national economy did set a founding precedent for FDR and the New Deal. But he wanted to use federal power not to improve economic equality but to distribute wealth upward and keep it there. Hamilton supporters, dismissing all criticism as caviling, perpetually celebrate their man for his brilliance and boldness in creating national stability in a difficult time. Anti-Hamiltonians may think there were better ways the young nation could and should have gone.
What if blending government activism with elite finance, and pushing back the advances of the democratic finance movement, did serve purposes critical in establishing our nationhood? All the more reason to delve into the social, political, and cultural conflicts those policies embodied and the difficult legacies they have left us.


Posted: 26 Apr 2011 12:17 AM PDT
Posts will probably be thin tonight because I lost a big chunk of the afternoon getting to and from and then doing a filming session for a French TV documentary on Goldman Sachs to be broadcast in the fall. The focus is whether the firm is too dangerous and powerful. They are interviewing some of the other logical suspects on this topic, such as Nomi Prins, John Carney, and Anat Admati. The session was fun even though it put me behind the eight ball.
One amusing tidbit: they were desperately pumping me to put them on to anyone credible who would say something positive, or even mixed, on camera about Goldman. They have been unable to find anyone independent of even moderate stature who will defend the firm.

Posted: 26 Apr 2011 03:34 AM PDT
It’s time we come up with a new handle for the Office of the Controller of the Currency. It is difficult to convey how shameless this regulatory-agency-turned-slut for the banking industry has become. It’s the Stage 4 disease version of where our government is heading at a rapid clip: officials masquerading as serving the public interest when they are uber lobbyists for the pet whims of their supposed charges.
So what do we call the OCC? The Office of Capital Corruption? The Office of Criminal Capitulation? I have no doubt readers will have even better ideas (and don’t be constrained by the acronym).
As we’ve written in some of our posts on the foreclosuregate settlement negotiations, the OCC has engaged in what even those of us at a remove can tell is bureaucratic warfare against the FDIC and the yet to be operational Consumer Financial Protection Bureau. For the OCC to undermine the CFPB is a twofer. First, it helps to beat back meaningful mortgage reform. Second, the CFPB has the potential to hamper the OCC’s real mission, which is to make sure that the banks come first and everyone else pounds sand. It recognizes the need to make the occasional concession to keep the pitchfork crowd at bay, but otherwise it really has no interest in making the banks toe the line. Note that the Treasury and the Fed have pretty much the same worldview, but the OCC is more shameless and bloodyminded about pursuing it.
For instance, it is pretty clear that someone in the officialdom, probably the OCC, painted a target on Elizabeth Warren’s back. As much as we’e been critical of what appear to be some of the steps she has taken, the flip side is that she does not buy the Team Obama modus operandi of coddling the banks and persuading the chump public to go along via a heavy dose of propaganda and Potemkin reforms.
The CFPB and Warren in particular, have been depicted as behind-the-scenes drivers of the 50 state attorney general settlement talks. Given that the yet-to-be-formed agency wasn’t even in the room during the first round of negotiations, that seems like quite a stretch. It appears that what happened is that Tom Miller, in the two nanoseconds when he was talking tough about mortgage abuses, asked the CFPB for some analytical input as to how to think about what level of fines might be appropriate. It’s not clear whether Miller gave the CFPB some grounds for action (as in “if they didn’t settle, we could sue them for X, Y, and Z” which would then give more concrete parameters for thinking of fines, since the banks would never agree to pay more than what they might lose if the cases went to trial) or gave them free rein to formulate the analysis.
So the goal of that exercise was “What’s the most we could possibly argue for as damages?” or alternatively directly, “What’s a reasonable economic argument for a settlement?” The fact that this analysis came up with bigger numbers than the banksters expected has led the industry defenders to try to turn this finding on its head by depicting these pretty petty fines as monstrously big and therefore proof that Warren is a modern day Savonarola. Ironically, we’ve argued the suggested fines of $20 to $30 billion are way too low if you are coming at this from the perspective of harm done.
So look at how Chief Banking Shill, otherwise know as acting comptroller of the currency John Walsh, insists that the banks can’t be asked to pay for anything remotely resembling the damage they’ve done. This by the way, winds up being the reverse of what any respectable economist wold recommend. For markets to function properly, businesses that do damage are not only supposed to pay for any harm they do to their customers, but also to third parties. That’s why polluters are either regulated, or else subject to extra charges so that the cost of their goods reflects the true social cost. Even conservative economists like Harvard’s Greg Mankiw firmly support this notion.
By contrast, what Walsh is effectively recommending in this Financial Times interview is not only letting polluters get away with doing harm, but also effectively subsidizing them. Of course, his responses are carefully coded, so you need to be alert and read between the lines (view the clip here):
Screen shot 2011-04-26 at 3.04.33 AM
You can see the signs of Walsh’s misdirection and/or complicitness:
The claim that robosigning came to light in September of last year. False, it had been coming up repeatedly in court filings for at least two years before that; the bank regulators chose to ignore it until it erupted into a national scandal.
Characterizing forged documents and false affidavits as “mishandling”. The spin on this gets more and more disconnected from reality. These were systematized, industry-wide practices, not occasional innocent screw ups per the persistent bank Big Lie.
Staunchly supporting the fiction that all foreclosures are warranted, and worse, positive. This is a misrepresentation on two levels. Walsh effectively admits what we’ve long been pretty certain was true: that the touted “Foreclosure Task Force” review of servicer practices last fall was garbage in, garbage out exercise. How did they determine whether the foreclosures were warranted? By looking at ONLY the banks’ records. These same records have produced obvious screw ups like people being foreclosed upon who had no mortgage, plus the more pernicious and from what we can tell, not at all uncommon practice of impermissible application of fees, using suspense accounts to increase fees, holding payments to make them late, using force placed insurance, padding or double dipping (charing the same fee to both investors and the borrower), and applying fees so as to produce fee pyramiding. There are numerous cases where these fees have led to charges that have been larger than the mortgage past due amounts. They can easily escalate to thousands of dollars of unwarranted and illegal charges in a six to eight month time frame.
The second canard here is that borrowers that are behind on their mortgage should lose their house. In every other type of creditor relationship, when the borrower gets in trouble, the first question the lender asks is whether they are worth more to him dead than alive. This isn’t charity, it’s a cold blooded financial assessment. A lender will always restructure a loan if he thinks the borrower can realistically stay current on the new, lower payment amount and it looks more profitable than liquidating the loan.
The reason, as we’ve stressed again and again that banks aren’t modifying mortgages (and remember, the servicers only do the work of restructuring, they don’t eat the cost of the writedown) is the they have terrible incentives. They make money foreclosing and they’ve automated it so it’s profitable to them; they need the proceeds from foreclosures to reimburse themselves for money they’ve advanced to investors; they aren’t set up to do mods, and have no interest in setting up new infrastructure; and if they did enough mods, they’d have to write down second mortgages they own, which they have no intention of doing. So despite the OCC’s claims to the contrary, the parties that have skin in the game, the homeowners and the investors, would benefit from well screened mods, as would the broader housing market. But Walsh is operating from a bogus Mellonite “liquidate the borrowers” logic. The first three years of the Depression tell you how well that idea worked.
There were also several references to bogus notions like “being overly intrusive into their businesses”, overregulation, and the OCC being concerned that regulations or fines might damage bank safety and soundness.
As we have argued, and analyses by the Bank of England director of financial stability Andrew Haldane support, bank crises destroy so much value that you could appropriate all the big banks and it wouldn’t even begin to pay for the damage done. That alone is a justification for extremely intrusive regulation to make them less destructive. Another way to arrive at the same conclusion is to look at the massive level of subsidies the TBTF banks got before, during, and after the crisis. They are not private sector entities, given the massive, one-sided “heads I get huge bonuses, tails I put a drip feed into your national Treasury” arrangement , yet we allow them to launder that into egregious top executive and “producer” pay packages. Walsh’s presentation is completely backwards, and he has to know better.
And as to the idea that the a $20 to $30 billion penalty might hurt the banks, although I questioned the logic of that fine, this document sets out clearly why this no big deal to the banks in question:
CFPB Settlement Presentation
But there was a final troubling theme in the Walsh presentation. It sounds as if the CFPB has already capitulated. Notice how Walsh says the agency is assuring people that it’s going to stay in its cage and worry about documentation. That’s better than nothing, but far less than American citizens deserve.
Via:Yves Smith/Nakedcapitalism
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4/25/11

 
Tomgram: McCoy and Reilly, An Empire of Failed States
[Note for TomDispatch readers: Last week, I asked you to consider writing friends, colleagues, relatives, and others to urge them to go to the "subscribe" window at the upper right of TD's main screen, put in their email addresses, hit “submit,” answer the “opt-in” email that instantly arrives in your email box (or, unfortunately, spam folder), and receive notices whenever a new TD post goes up. (Word of mouth is still the major kind of publicity this site can afford.) A number of you did so and TD got a spectacular stream of new subscribers! Many thanks indeed. If some of you meant to do this but didn't quite get around to it, now's as perfect a time as any! Also let me remind you that a personalized, signed copy of the new paperback of Andrew Bacevich’s bestselling book -- a TD favorite -- Washington Rules: America’s Path to Permanent War can still be obtained in return for a $75 contribution to this site.  Click here to check the offer out.  Finally, my apologies.  It’s been a wild week at this site.  As a result, I simply haven’t been able to keep up with all the messages you’ve sent me.  Whether I have a chance to answer them all or not, know one thing: sooner or later I read with care everything that comes in.  Tom]
Imperial powers hedge their bets.  The most striking recent example we have of this is in Egypt.  While the Pentagon was pouring money into the Egyptian military (approximately $40 billion since 1979), it turns out -- thank you, WikiLeaks! -- that the U.S. government was shuttling far smaller amounts (millions, not billions) to various “American government-financed organizations” loosely connected with Congress or with the Democratic and Republican parties. Some of that money, in turn, was being invested in “democracy-building campaigns” aimed at teaching young Egyptian activists how to organize a movement against their autocratic ruler, how to make the best use of social networking sites, and so on.
In other words, in Egypt (and elsewhere in the Middle East), Washington was funding both the autocrats and the young activists who opposed them and who, in Egypt, would be crucial players in the Tahrir Square movement that overthrew President Hosni Mubarak.  As one of those activists told the New York Times, “While we appreciated the training we received through the NGOs sponsored by the U.S. government, and it did help us in our struggles, we are also aware that the same government also trained the state security investigative service, which was responsible for the harassment and jailing of many of us.”
Meanwhile, thanks to other State Department documents WikiLeaks recently released, we know that, in at least one Middle Eastern country where Washington did not enthusiastically support the local autocrat -- Syria -- the State Department was channeling significant sums of money into “secretly financ[ing]... political opposition groups and related projects, including a satellite TV channel that beams anti-government programming into the country.“ It was, in other words, preparing a new elite for a “regime change” future.
Think of it as a kind of grim irony that a significant part of the Egyptian military’s high command was in northern Virginia, attending an annual U.S.-Egypt Military Cooperation Committee meeting in late January, when all hell broke loose in Tahrir Square, thanks to those Egyptian activists, some trained with Washington’s money. The creation or support of elites has, as Alfred McCoy and Brett Reilly write, always been crucial to running global empires.  And yet client elites are one of those subjects seldom given much thought, even though Great Britain, for instance, ruled its Indian Raj with striking, if oppressive, efficiency for endless decades with surprisingly few personnel from England.  How else, after all, could a global empire continue?  And yet, as a great power’s strength and influence wane, those bets -- like the one Washington placed in Egypt -- begin to go awry, from an imperial point of view.  If McCoy, a TomDispatch regular and the author most recently of Policing America’s Empire, and Reilly are right, Washington’s touch, when it comes to keeping local elites in line, may indeed be “on the rocks.”  (To catch Timothy MacBain’s latest TomCast audio interview in which McCoy discusses why Washington is likely to cling disastrously to empire in the midst of decline, click here, or download it to your iPod here.) Tom
Washington on the Rocks
An Empire of Autocrats, Aristocrats, and Uniformed Thugs Begins to Totter
By Alfred W. McCoy and Brett Reilly
In one of history’s lucky accidents, the juxtaposition of two extraordinary events has stripped the architecture of American global power bare for all to see. Last November, WikiLeaks splashed snippets from U.S. embassy cables, loaded with scurrilous comments about national leaders from Argentina to Zimbabwe, on the front pages of newspapers worldwide. Then just a few weeks later, the Middle East erupted in pro-democracy protests against the region’s autocratic leaders, many of whom were close U.S. allies whose foibles had been so conveniently detailed in those same diplomatic cables.
Suddenly, it was possible to see the foundations of a U.S. world order that rested significantly on national leaders who serve Washington as loyal “subordinate elites” and who are, in reality, a motley collection of autocrats, aristocrats, and uniformed thugs. Visible as well was the larger logic of otherwise inexplicable U.S. foreign policy choices over the past half-century.
Why would the CIA risk controversy in 1965, at the height of the Cold War, by overthrowing an accepted leader like Sukarno in Indonesia or encouraging the assassination of the Catholic autocrat Ngo Dinh Diem in Saigon in 1963? The answer -- and thanks to WikiLeaks and the “Arab spring,” this is now so much clearer -- is that both were Washington’s chosen subordinates until each became insubordinate and expendable.
Why, half a century later, would Washington betray its stated democratic principles by backing Egyptian President Hosni Mubarak against millions of demonstrators and then, when he faltered, use its leverage to replace him, at least initially with his intelligence chief Omar Suleiman, a man best known for running Cairo’s torture chambers (and lending them out to Washington)? The answer again: because both were reliable subordinates who had long served Washington’s interests well in this key Arab state.
Across the Greater Middle East from Tunisia and Egypt to Bahrain and Yemen, democratic protests are threatening to sweep away subordinate elites crucial to the wielding of American power. Of course, all modern empires have relied on dependable surrogates to translate their global power into local control -- and for most of them, the moment when those elites began to stir, talk back, and set their own agendas was also the moment when it became clear that imperial collapse was in the cards.
If the "velvet revolutions” that swept Eastern Europe in 1989 tolled the death knell for the Soviet empire, then the "jasmine revolutions" now spreading across the Middle East may well mark the beginning of the end for American global power.
Putting the Military in Charge
To understand the importance of local elites, look back to the Cold War’s early days when a desperate White House was searching for something, anything that could halt the seemingly unstoppable spread of what Washington saw as anti-American and pro-communist sentiment. In December 1954, the National Security Council (NSC) met in the White House to stake out a strategy that could tame the powerful nationalist forces of change then sweeping the globe.
Across Asia and Africa, a half-dozen European empires that had guaranteed global order for more than a century were giving way to 100 new nations, many -- as Washington saw it -- susceptible to “communist subversion.” In Latin America, there were stirrings of leftist opposition to the region’s growing urban poverty and rural landlessness.
After a review of the “threats” facing the U.S. in Latin America, influential Treasury Secretary George Humphrey informed his NSC colleagues that they should “stop talking so much about democracy” and instead “support dictatorships of the right if their policies are pro-American.” At that moment with a flash of strategic insight, Dwight Eisenhower interrupted to observe that Humphrey was, in effect, saying, “They’re OK if they’re our s.o.b.’s.”
It was a moment to remember, for the President of the United States had just articulated with crystalline clarity the system of global dominion that Washington would implement for the next 50 years -- setting aside democratic principles for a tough realpolitik policy of backing any reliable leader willing to support the U.S., thereby building a worldwide network of national (and often nationalist) leaders who would, in a pinch, put Washington’s needs above local ones.
Throughout the Cold War, the U.S. would favor military autocrats in Latin America, aristocrats across the Middle East, and a mixture of democrats and dictators in Asia. In 1958, military coups in Thailand and Iraq suddenly put the spotlight on Third World militaries as forces to be reckoned with.  It was then that the Eisenhower administration decided to bring foreign military leaders to the U.S. for further “training” to facilitate “the ‘management’ of the forces of change released by the development” of these emerging nations. Henceforth, Washington would pour military aid into the cultivation of the armed forces of allies and potential allies worldwide, while “training missions” would be used to create crucial ties between the U.S. military and the officer corps in country after country -- or where subordinate elites did not seem subordinate enough, help identify alternative leaders.
When civilian presidents proved insubordinate, the Central Intelligence Agency went to work, promoting coups that would install reliable military successors --replacing Iranian Prime Minister Mohammad Mossadeq, who tried to nationalize his country's oil, with General Fazlollah Zahedi (and then the young Shah) in 1953; President Sukarno with General Suharto in Indonesia during the next decade; and of course President Salvador Allende with General Augusto Pinochet in Chile in 1973, to name just three such moments.
In the first years of the twenty-first century, Washington’s trust in the militaries of its client states would only grow.  The U.S. was, for example, lavishing $1.3 billion in aid on Egypt’s military annually, but investing only $250 million a year in the country’s economic development. As a result, when demonstrations rocked the regime in Cairo last January, as the New York Times reported, “a 30-year investment paid off as American generals... and intelligence officers quietly called... friends they had trained with,” successfully urging the army’s support for a “peaceful transition” to, yes indeed, military rule.
Elsewhere in the Middle East, Washington has, since the 1950s, followed the British imperial preference for Arab aristocrats by cultivating allies that included a shah (Iran), sultans (Abu Dhabi, Oman), emirs (Bahrain, Kuwait, Qatar, Dubai), and kings (Saudi Arabia, Jordan, Morocco). Across this vast, volatile region from Morocco to Iran, Washington courted these royalist regimes with military alliances, U.S. weapons systems, CIA support for local security, a safe American haven for their capital, and special favors for their elites, including access to educational institutions in the U.S. or Department of Defense overseas schools for their children.
In 2005, Secretary of State Condoleezza Rice summed up this record thusly:  “For 60 years, the United States pursued stability at the expense of democracy… in the Middle East, and we achieved neither.”
How It Used to Work
America is by no means the first hegemon to build its global power on the gossamer threads of personal ties to local leaders. In the eighteenth and nineteenth centuries, Britain may have ruled the waves (as America would later rule the skies), but when it came to the ground, like empires past it needed local allies who could serve as intermediaries in controlling complex, volatile societies. Otherwise, how in 1900 could a small island nation of just 40 million with an army of only 99,000 men rule a global empire of some 400 million, nearly a quarter of all humanity?
From 1850 to 1950, Britain controlled its formal colonies through an extraordinary array of local allies -- from Fiji island chiefs and Malay sultans to Indian maharajas and African emirs. Simultaneously, through subordinate elites Britain reigned over an even larger “informal empire” that encompassed emperors (from Beijing to Istanbul), kings (from Bangkok to Cairo), and presidents (from Buenos Aires to Caracas). At its peak in 1880, Britain's informal empire in Latin America, the Middle East, and China was larger, in population, than its formal colonial holdings in India and Africa. Its entire global empire, encompassing nearly half of humanity, rested on these slender ties of cooperation to loyal local elites.
Following four centuries of relentless imperial expansion, however, Europe’s five major overseas empires were suddenly erased from the globe in a quarter-century of decolonization. Between 1947 and 1974, the Belgian, British, Dutch, French, and Portuguese empires faded fast from Asia and Africa, giving way to a hundred new nations, more than half of today’s sovereign states. In searching for an explanation for this sudden, sweeping change, most scholars agree with British imperial historian Ronald Robinson who famously argued that “when colonial rulers had run out of indigenous collaborators,” their power began to fade.
During the Cold War that coincided with this era of rapid decolonization, the world’s two superpowers turned to the same methods regularly using their espionage agencies to manipulate the leaders of newly independent states.  The Soviet Union’s KGB and its surrogates like the Stasi in East Germany and the Securitate in Romania enforced political conformity among the 14 Soviet satellite states in Eastern Europe and challenged the U.S. for loyal allies across the Third World.  Simultaneously, the CIA monitored the loyalties of presidents, autocrats, and dictators on four continents, employing coups, bribery, and covert penetration to control and, when necessary, remove nettlesome leaders.
In an era of nationalist feeling, however, the loyalty of local elites proved a complex matter indeed.  Many of them were driven by conflicting loyalties and often deep feelings of nationalism, which meant that they had to be monitored closely.  So critical were these subordinate elites, and so troublesome were their insubordinate iterations, that the CIA repeatedly launched risky covert operations to bring them to heel, sparking some of the great crises of the Cold War.
Given the rise of its system of global control in a post-World War II age of independence, Washington had little choice but to work not simply with surrogates or puppets, but with allies who -- admittedly from weaker positions -- still sought to maximize what they saw as their nations’ interests (as well as their own). Even at the height of American global power in the 1950s, when its dominance was relatively unquestioned, Washington was forced into hard bargaining with the likes of the Philippines’ Raymond Magsaysay, South Korean autocrat Syngman Rhee, and South Vietnam’s Ngo Dinh Diem.
In South Korea during the 1960s, for instance, General Park Chung Hee, then president, bartered troop deployments to Vietnam for billions of U.S. development dollars, which helped spark the country's economic "miracle." In the process, Washington paid up, but got what it most wanted: 50,000 of those tough Korean troops as guns-for-hire helpers in its unpopular war in Vietnam.
Post-Cold War World
After the Berlin Wall came down in 1989, ending the Cold War, Moscow quickly lost its satellite states from Estonia to Azerbaijan, as once-loyal Soviet surrogates were ousted or leapt off the sinking ship of empire. For Washington, the “victor” and soon to be the “sole superpower” on planet Earth, the same process would begin to happen, but at a far slower pace.
Over the next two decades, globalization fostered a multipolar system of rising powers in Beijing, New Delhi, Moscow, Ankara, and Brasilia, even as a denationalized system of corporate power reduced the dependency of developing economies on any single state, however imperial.  With its capacity for controlling elites receding, Washington has faced ideological competition from Islamic fundamentalism, European regulatory regimes, Chinese state capitalism, and a rising tide of economic nationalism in Latin America.
As U.S. power and influence declined, Washington’s attempts to control its subordinate elites began to fail, often spectacularly -- including its efforts to topple bĂȘte noire Hugo Chavez of Venezuela in a badly bungled 2002 coup, to detach ally Mikheil Saakashvili of Georgia from Russia’s orbit in 2008, and to oust nemesis Mahmoud Ahmadinejad in the 2009 Iranian elections. Where a CIA coup or covert cash once sufficed to defeat an antagonist, the Bush administration needed a massive invasion to topple just one troublesome dictator, Saddam Hussein.  Even then, it found its plans for subsequent regime change in Syria and Iran blocked when these states instead aided a devastating insurgency against U.S. forces inside Iraq.
Similarly, despite the infusions of billions of dollars in foreign aid, Washington has found it nearly impossible to control the Afghan president it installed in power, Hamid Karzai, who memorably summed up his fractious relationship with Washington to American envoys this way: “If you're looking for a stooge and calling a stooge a partner, no. If you're looking for a partner, yes.”
Then, late in 2010, WikiLeaks began distributing those thousands of U.S. diplomatic cables that offer uncensored insights into Washington’s weakening control over the system of surrogate power that it had built up for 50 years. In reading these documents, Israeli journalist Aluf Benn of Haaretz could see “the fall of the American empire, the decline of a superpower that ruled the world by the dint of its military and economic supremacy.” No longer, he added, are “American ambassadors… received in world capitals as ‘high commissioners'... [instead they are] tired bureaucrats [who] spend their days listening wearily to their hosts' talking points, never reminding them who is the superpower and who the client state.”
Indeed, what the WikiLeaks documents show is a State Department struggling to manage an unruly global system of increasingly insubordinate elites by any means possible -- via intrigue to collect needed information and intelligence, friendly acts meant to coax compliance, threats to coerce cooperation, and billions of dollars in misspent aid to court influence. In early 2009, for instance, the State Department instructed its embassies worldwide to play imperial police by collecting comprehensive data on local leaders, including “email addresses, telephone and fax numbers, fingerprints, facial images, DNA, and iris scans.” Showing its need, like some colonial governor, for incriminating information on the locals, the State Department also pressed its Bahrain embassy for sordid details, damaging in an Islamic society, about the kingdom’s crown princes, asking: “Is there any derogatory information on either prince? Does either prince drink alcohol? Does either one use drugs?"
With the hauteur of latter-day imperial envoys, U.S. diplomats seemed to empower themselves for dominance by dismissing “the Turks neo-Ottoman posturing around the Middle East and Balkans,” or by knowing the weaknesses of their subordinate elites, notably Colonel Muammar Gaddafi’s “voluptuous blonde” nurse, Pakistani President Asif Ali Zardari’s morbid fear of military coups, or Afghan Vice President Ahmad Zia Massoud’s $52 million in stolen funds.
As its influence declines, however, Washington is finding many of its chosen local allies either increasingly insubordinate or irrelevant, particularly in the strategic Middle East. In mid-2009, for instance, the U.S. ambassador to Tunisia reported that “President Ben Ali… and his regime have lost touch with the Tunisian people,” relying “on the police for control,” while “corruption in the inner circle is growing” and “the risks to the regime's long-term stability are increasing.” Even so, the U.S. envoy could only recommend that Washington “dial back the public criticism” and instead rely only on “frequent high-level private candor” -- a policy that failed to produce any reforms before demonstrations toppled the regime just 18 months later.
Similarly, in late 2008 the American Embassy in Cairo feared that “Egyptian democracy and human rights efforts... are being suffocated.” However, as the embassy admitted, “we would not like to contemplate complications for U.S. regional interests should the U.S.-Egyptian bond be seriously weakened.” When Mubarak visited Washington a few months later, the Embassy urged the White House “to restore the sense of warmth that has traditionally characterized the U.S.-Egyptian partnership.” And so in June 2009, just 18 months before the Egyptian president’s downfall, President Obama hailed this useful dictator as “a stalwart ally... a force for stability and good in the region."
As the crisis in Cairo’s Tahrir Square unfolded, respected opposition leader Mohamed ElBaradei complained bitterly that Washington was pushing “the whole Arab world into radicalization with this inept policy of supporting repression.” After 40 years of U.S. dominion, the Middle East was, he said, “a collection of failed states that add nothing to humanity or science” because “people were taught not to think or to act, and were consistently given an inferior education.”
Absent a global war capable of simply sweeping away an empire, the decline of a great power is often a fitful, painful, drawn-out affair. In addition to the two American wars in Iraq and Afghanistan winding down to something not so far short of defeat, the nation’s capital is now writhing in fiscal crisis, the coin of the realm is losing its creditworthiness, and longtime allies are forging economic and even military ties to rival China. To all of this, we must now add the possible loss of loyal surrogates across the Middle East.
For more than 50 years, Washington has been served well by a system of global power based on subordinate elites. That system once facilitated the extension of American influence worldwide with a surprising efficiency and (relatively speaking) an economy of force. Now, however, those loyal allies increasingly look like an empire of failed or insubordinate states. Make no mistake: the degradation of, or ending of, half a century of such ties is likely to leave Washington on the rocks.
Alfred W. McCoy is professor of history at the University of Wisconsin-Madison, a TomDispatch regular, and author most recently of the award-winning book, Policing America’s Empire: The United States, the Philippines, and the Rise of the Surveillance State. He has also convened the “Empires in Transition” project, a global working group of 140 historians from universities on four continents. The results of their first meetings were published as Colonial Crucible: Empire in the Making of the Modern American State, and the findings from their latest conference, at Barcelona last June, will appear next year as Endless Empires: Spain’s Retreat, Europe’s Eclipse, and America’s Decline. To listen to Timothy MacBain’s latest TomCast audio interview in which McCoy discusses why Washington is likely to cling disastrously to empire in the midst of decline, click here, or download it to your iPod here.
Brett Reilly is a graduate student in History at the University of Wisconsin-Madison, where he is studying U.S. foreign policy in Asia.