From: The New York Times
The Magic Lever
By DAVID BROOKS
The world economy is a complex, unknowable organism. Most of us try to diversify our investments and balance risk and security to protect against the unexpected.
But a few years ago a group of bankers thought they had the magic tool to help them master financial trends and predict the future. Sophisticated risk assessment models would enable them to rewrite the rules and make more money.
Their arrogance was soon exposed. Along came the financial crisis.
In the middle of the crisis another group emerged, believing it had the magic lever to alter the economy’s trajectory. Democrats argued that through gigantic deficit spending, they could bring unemployment rates down sharply and produce a “summer of recovery.”
The spending they began must have done some good to cushion the recession, but either through a failure of theory or a failure of implementation, their lever was not as powerful as they promised. Federal spending rose from 19.38 to 24.91 percent of gross domestic product, but the economy refused to rebound and the world is awash in oceans of debt.
Now a third group has emerged, also claiming that it has the magic lever to control the economy. Staunch Republicans argue that taxes are central to determining economic growth. Tax cuts, they argue, have huge positive benefits and tax increases have disastrous negative effects.
In the middle of the current budget negotiations, these Republicans argue that the tax increases the Democrats are proposing — ending some deductions for the affluent, hitting oil and gas companies — would be terrible for the economy. These unacceptable increases would be worse than the threat of national default, worse than a decade of gigantic deficits.
Not many Americans have this expansive view on the power of tax policy. According to the Gallup Organization, only 20 percent of Americans believe the budget deal should consist of spending cuts only. Even among Republicans, a plurality believes there should be a mixture of tax increases and spending cuts.
Yet the G.O.P. is now oriented around this 20 percent. It is willing to alienate 80 percent of voters and commit political suicide because of its faith in the power of tax policy.
These three groups — bankers, Democratic Keynesians and staunch Republicans — have one thing in common: They all believe they have identified the magic lever. They believe they can control their economic fate.
Some of us do not believe there is a magic lever. Deficit spending stimulates growth, but not by that much. Tax increases are bad, but they are not disastrous. We believe that there are a thousand factors that go into economic growth, and no single one is dispositive.
We look at the tax cuts of 2001 and do not see tremendous gains. We look at the tax increase of 1982 and do not see a ruinous disaster. We look at high deficit eras and low deficit eras and do not see an easy correlation between deficit spending and growth. On the contrary, if you look around the world there’s a slight negative correlation between government size and prosperity.
We believe that if you rest everything on a single lever (Increase deficits! Cut taxes!), you give people a permission slip to be self-indulgent. They will spend or cut to their hearts’ content and soon you’ll be facing national bankruptcy. We believe that even if you are theoretically right, your policies will be distorted by human frailties and special interests.
The people in my group (you might call us conservatives) are more likely to embrace a low and steady approach to fiscal policy. Control debt. Control entitlements. Keep tax levels reasonable and the tax code simple. Work on the economic fundamentals: human capital, productivity, labor market flexibility, open trade, saving and investment. Don’t believe you can use magic levers to manipulate growth month to month.
People in my camp form a silent majority. But we have been astonishingly passive during these budget negotiations. The tax cut brigades and the Medicare/Spending brigades are well organized. The people who believe in balance and the fundamentals sit piously on the sidelines.
The tragedy is that in Barack Obama and John Boehner we have leaders who would like to do something big. They seem to know that you need bipartisan cover if you want to really cut spending. They seem to know circumstances for deficit reduction will only get worse in the years ahead.
But they are bracketed on all sides — by the tax cut and Medicare brigades, by the wonks hatching budget gimmicks that erode trust, by political hacks who don’t want to lose their precious campaign issues: tax cuts forever, Medicare spending without limit.
Mostly, they are buffeted by the proud, by those who think they have a magic lever to control human destiny and who will not compromise it away. This is the oldest story known to man.
Tuesday, July 12, 2011
Thursday, July 7, 2011
What I Read Today - Thursday July 7, 2011
From: The Wall Street Journal
Casey Anthony: The System Worked
Even if it is 'likely' or 'probable' that she committed the murder, she must be acquitted. The standard is proof beyond a reasonable doubt.
By ALAN M. DERSHOWITZ
'This case [is] about seeking justice for Caylee . . ." So argued the prosecutor in the Casey Anthony murder case. He was wrong, and the jury understood that.
A criminal trial is never about seeking justice for the victim. If it were, there could be only one verdict: guilty. That's because only one person is on trial in a criminal case, and if that one person is acquitted, then by definition there can be no justice for the victim in that trial.
A criminal trial is neither a whodunit nor a multiple choice test. It is not even a criminal investigation to determine who among various possible suspects might be responsible for a terrible tragedy. In a murder trial, the state, with all of its power, accuses an individual of being the perpetrator of a dastardly act against a victim. The state must prove that accusation by admissible evidence and beyond a reasonable doubt.
Even if it is "likely" or "probable" that a defendant committed the murder, he must be acquitted, because neither likely nor probable satisfies the daunting standard of proof beyond a reasonable doubt. Accordingly, a legally proper result—acquittal in such a case—may not be the same as a morally just result. In such a case, justice has not been done to the victim, but the law has prevailed.
For thousands of years, Western society has insisted that it is better for 10 guilty defendants to go free than for one innocent defendant to be wrongly convicted. This daunting standard finds its roots in the biblical story of Abraham's argument with God about the sinners of Sodom.
Abraham admonishes God for planning to sweep away the innocent along with the guilty and asks Him whether it would be right to condemn the sinners of Sodom if there were 10 or more righteous people among them. God agrees and reassures Abraham that he would spare the city if there were 10 righteous. From this compelling account, the legal standard has emerged.
That is why a criminal trial is not a search for truth. Scientists search for truth. Philosophers search for morality. A criminal trial searches for only one result: proof beyond a reasonable doubt.
A civil trial, on the other hand, seeks justice for the victim. In such a case, the victim sues the alleged perpetrator and need only prove liability by a preponderance of the evidence. In other words, if it is more likely than not that a defendant was the killer, he is found liable, though he cannot be found guilty on that lesser standard.
That is why it was perfectly rational, though difficult for many to understand, for a civil jury to have found O.J. Simpson liable to his alleged victim, after a criminal jury had found him not guilty of his murder. It is certainly possible that if the estate of Caylee Anthony were to sue Casey Anthony civilly, a Florida jury might find liability.
Casey Anthony was not found innocent of her daughter's murder, as many commentators seem to believe. She was found "not guilty." And therein lies much of the misunderstanding about the Anthony verdict.
This misunderstanding is exacerbated by the pervasiveness of TV shows about criminal cases. On television and in the movies, crimes are always solved. Nothing is left uncertain. By the end, the viewer knows whodunit. In real life, on the other hand, many murders remain unsolved, and even some that are "solved" to the satisfaction of the police and prosecutors lack sufficient evidence to result in a conviction. The Scottish verdict "not proven" reflects this reality more accurately than its American counterpart, "not guilty."
Because many American murder cases, such as the Casey Anthony trial, are shown on television, they sometimes appear to the public as if they were reality television shows. There is great disappointment, therefore, when the result is a verdict of not guilty. On the old Perry Mason show, the fictional defense lawyer would not only get his client acquitted but he would prove who actually committed the murder. Not so in real life.
The verdict in the Casey Anthony case reflected the lack of forensic evidence and heavy reliance on circumstantial inferences. There was no evidence of a cause of death, the time of death, or the circumstances surrounding the actual death of this young girl. There was sufficient circumstantial evidence from which the jury could have inferred homicide. But a reasonable jury could also have rejected that conclusion, as this jury apparently did. There are hundreds of defendants now in prison, some even on death row, based on less persuasive evidence than was presented in this case.
Juries are not computers. They are composed of human beings who evaluate evidence differently. The prosecutors in this case did the best they could with the evidence they had, though I believe they made a serious mistake in charging Casey Anthony with capital murder and introducing questionable evidence, such as that relating to the "smell of death" inside the trunk of Casey Anthony's car.
The defense also made mistakes, particularly by accusing Ms. Anthony's father of sexually abusing her. Although they leveled this unfounded accusation in an effort to explain why Casey had lied, it sounded like the kind of abuse excuse offered to justify a crime of violence. But a criminal trial is not about who is the better lawyer. It is about the evidence, and the evidence in this case left a reasonable doubt in the mind of all of the jurors. The system worked.
Mr. Dershowitz is a law professor at Harvard. His latest book is "Trials of Zion" (Grand Central Publishing, 2010).
Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved
This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit
Casey Anthony: The System Worked
Even if it is 'likely' or 'probable' that she committed the murder, she must be acquitted. The standard is proof beyond a reasonable doubt.
By ALAN M. DERSHOWITZ
'This case [is] about seeking justice for Caylee . . ." So argued the prosecutor in the Casey Anthony murder case. He was wrong, and the jury understood that.
A criminal trial is never about seeking justice for the victim. If it were, there could be only one verdict: guilty. That's because only one person is on trial in a criminal case, and if that one person is acquitted, then by definition there can be no justice for the victim in that trial.
A criminal trial is neither a whodunit nor a multiple choice test. It is not even a criminal investigation to determine who among various possible suspects might be responsible for a terrible tragedy. In a murder trial, the state, with all of its power, accuses an individual of being the perpetrator of a dastardly act against a victim. The state must prove that accusation by admissible evidence and beyond a reasonable doubt.
Even if it is "likely" or "probable" that a defendant committed the murder, he must be acquitted, because neither likely nor probable satisfies the daunting standard of proof beyond a reasonable doubt. Accordingly, a legally proper result—acquittal in such a case—may not be the same as a morally just result. In such a case, justice has not been done to the victim, but the law has prevailed.
For thousands of years, Western society has insisted that it is better for 10 guilty defendants to go free than for one innocent defendant to be wrongly convicted. This daunting standard finds its roots in the biblical story of Abraham's argument with God about the sinners of Sodom.
Abraham admonishes God for planning to sweep away the innocent along with the guilty and asks Him whether it would be right to condemn the sinners of Sodom if there were 10 or more righteous people among them. God agrees and reassures Abraham that he would spare the city if there were 10 righteous. From this compelling account, the legal standard has emerged.
That is why a criminal trial is not a search for truth. Scientists search for truth. Philosophers search for morality. A criminal trial searches for only one result: proof beyond a reasonable doubt.
A civil trial, on the other hand, seeks justice for the victim. In such a case, the victim sues the alleged perpetrator and need only prove liability by a preponderance of the evidence. In other words, if it is more likely than not that a defendant was the killer, he is found liable, though he cannot be found guilty on that lesser standard.
That is why it was perfectly rational, though difficult for many to understand, for a civil jury to have found O.J. Simpson liable to his alleged victim, after a criminal jury had found him not guilty of his murder. It is certainly possible that if the estate of Caylee Anthony were to sue Casey Anthony civilly, a Florida jury might find liability.
Casey Anthony was not found innocent of her daughter's murder, as many commentators seem to believe. She was found "not guilty." And therein lies much of the misunderstanding about the Anthony verdict.
This misunderstanding is exacerbated by the pervasiveness of TV shows about criminal cases. On television and in the movies, crimes are always solved. Nothing is left uncertain. By the end, the viewer knows whodunit. In real life, on the other hand, many murders remain unsolved, and even some that are "solved" to the satisfaction of the police and prosecutors lack sufficient evidence to result in a conviction. The Scottish verdict "not proven" reflects this reality more accurately than its American counterpart, "not guilty."
Because many American murder cases, such as the Casey Anthony trial, are shown on television, they sometimes appear to the public as if they were reality television shows. There is great disappointment, therefore, when the result is a verdict of not guilty. On the old Perry Mason show, the fictional defense lawyer would not only get his client acquitted but he would prove who actually committed the murder. Not so in real life.
The verdict in the Casey Anthony case reflected the lack of forensic evidence and heavy reliance on circumstantial inferences. There was no evidence of a cause of death, the time of death, or the circumstances surrounding the actual death of this young girl. There was sufficient circumstantial evidence from which the jury could have inferred homicide. But a reasonable jury could also have rejected that conclusion, as this jury apparently did. There are hundreds of defendants now in prison, some even on death row, based on less persuasive evidence than was presented in this case.
Juries are not computers. They are composed of human beings who evaluate evidence differently. The prosecutors in this case did the best they could with the evidence they had, though I believe they made a serious mistake in charging Casey Anthony with capital murder and introducing questionable evidence, such as that relating to the "smell of death" inside the trunk of Casey Anthony's car.
The defense also made mistakes, particularly by accusing Ms. Anthony's father of sexually abusing her. Although they leveled this unfounded accusation in an effort to explain why Casey had lied, it sounded like the kind of abuse excuse offered to justify a crime of violence. But a criminal trial is not about who is the better lawyer. It is about the evidence, and the evidence in this case left a reasonable doubt in the mind of all of the jurors. The system worked.
Mr. Dershowitz is a law professor at Harvard. His latest book is "Trials of Zion" (Grand Central Publishing, 2010).
Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved
This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit
What I Read Today - July 7, 2011
From: The New York Times
Taxes and Billionaires
By NICHOLAS D. KRISTOF
The House speaker, John Boehner, suggests that the Republican threat of letting the United States default on its debts is driven by concern for jobs for ordinary Americans.
“We cannot miss this opportunity,” he told Fox News. “If we want jobs to come to America, we’ve got to give American businesspeople the confidence to invest in our economy.”
So take a look at one of the tax loopholes that Congressional Republicans are refusing to close — even if the cost is that America’s credit rating blows up. This loophole has nothing to do with creating jobs and everything to do with protecting some of America’s wealthiest financiers.
If there were an award for Most Unconscionable Tax Loophole, this one would win grand prize.
Wait, wake up! I know that “tax policy” makes one’s eyes glaze over, but that’s how financiers have gotten away with paying a lower tax rate than their chauffeurs or personal trainers. Tycoons have bet for years that the public is too stupid or distracted to note that in many cases they’re paying just a 15 percent tax rate.
What’s at stake is the “carried interest” loophole, and President Obama is pushing to close it. The White House estimates that this would raise $20 billion over a decade. But Congressional Republicans walked out of budget talks rather than discuss raising revenues from measures such as this one.
The biggest threat to the United States this summer probably doesn’t come from Iran or Libya but from the home-grown risk that the nation will default on its debts. We don’t know the economic consequences for America or the world, and some of the hand-wringing may be overblown — or maybe not — but it’s reckless of Republicans even to toy with such a threat.
This carried interest loophole benefits managers of financial partnerships such as hedge funds, private equity funds, venture capital funds and real estate funds — who are among the highest-paid people in the world. John Paulson, a hedge fund manager in New York City, made $4.9 billion last year, top of the chart for hedge fund managers, according to AR Magazine, which follows hedge funds. That’s equivalent to the average per capita income of 184,000 Americans, according to my back-of-envelope calculations based on Census Bureau figures.
Mr. Paulson declined to comment on this tax break, but here’s how it works. These fund managers are compensated mostly with a performance bonus of 20 percent or more of the profits they make. Under this carried interest loophole, that 20 percent is eligible to be taxed at the long-term capital gains rate (if the fund’s underlying assets are held long enough) of just 15 percent rather than the regular personal income rate of 35 percent.
This tax loophole is also intellectually vacuous. The performance fee is a return on the manager’s labor, not his or her capital, so there’s no reason to give it preferential capital gains treatment.
“The carried interest loophole represents everyone’s worst fear about the tax system — that the rich and powerful get away with murder,” says Victor Fleischer, a law professor at the University of Colorado, Boulder, who has written about the issue. “Closing the loophole won’t fix the budget by itself, but it gets us one step closer to justice.”
At a time when the richest 1 percent of Americans have a greater collective net worth than the entire bottom 90 percent, there are other ways we could raise money while also making tax policy more equitable. The White House is backing some of them in its negotiations with Congress, but others aren’t even in play.
One important proposal has to do with founder’s stock, the shares people own in companies they found. Professor Fleischer has written an interesting paper persuasively arguing that founder’s stock is hugely undertaxed. It, too, is essentially a return on labor, not capital, and shouldn’t benefit from the low capital gains rate.
Likewise, Europe is moving toward a financial transactions tax on trades made in financial markets. That is something long championed by some economists — especially James Tobin, who won a Nobel Prize for his work — and it would also raise tens of billions of dollars at a time when it is desperately needed. It makes sense.
The larger question is this: Do we try to balance budget deficits just by cutting antipoverty initiatives, college scholarships and other investments in young people and our future? Or do we also seek tax increases from those best able to afford them?
And when Congressional Republicans claim that the reason for their recalcitrance in budget negotiations is concern for the welfare of ordinary Americans, look more closely. Do we really want to close down the American government and risk another global financial crisis to protect the tax bills of billionaires?
I invite you to visit my blog, On the Ground. Please also join me on Facebook, watch my YouTube videos and follow me on Twitter.
Taxes and Billionaires
By NICHOLAS D. KRISTOF
The House speaker, John Boehner, suggests that the Republican threat of letting the United States default on its debts is driven by concern for jobs for ordinary Americans.
“We cannot miss this opportunity,” he told Fox News. “If we want jobs to come to America, we’ve got to give American businesspeople the confidence to invest in our economy.”
So take a look at one of the tax loopholes that Congressional Republicans are refusing to close — even if the cost is that America’s credit rating blows up. This loophole has nothing to do with creating jobs and everything to do with protecting some of America’s wealthiest financiers.
If there were an award for Most Unconscionable Tax Loophole, this one would win grand prize.
Wait, wake up! I know that “tax policy” makes one’s eyes glaze over, but that’s how financiers have gotten away with paying a lower tax rate than their chauffeurs or personal trainers. Tycoons have bet for years that the public is too stupid or distracted to note that in many cases they’re paying just a 15 percent tax rate.
What’s at stake is the “carried interest” loophole, and President Obama is pushing to close it. The White House estimates that this would raise $20 billion over a decade. But Congressional Republicans walked out of budget talks rather than discuss raising revenues from measures such as this one.
The biggest threat to the United States this summer probably doesn’t come from Iran or Libya but from the home-grown risk that the nation will default on its debts. We don’t know the economic consequences for America or the world, and some of the hand-wringing may be overblown — or maybe not — but it’s reckless of Republicans even to toy with such a threat.
This carried interest loophole benefits managers of financial partnerships such as hedge funds, private equity funds, venture capital funds and real estate funds — who are among the highest-paid people in the world. John Paulson, a hedge fund manager in New York City, made $4.9 billion last year, top of the chart for hedge fund managers, according to AR Magazine, which follows hedge funds. That’s equivalent to the average per capita income of 184,000 Americans, according to my back-of-envelope calculations based on Census Bureau figures.
Mr. Paulson declined to comment on this tax break, but here’s how it works. These fund managers are compensated mostly with a performance bonus of 20 percent or more of the profits they make. Under this carried interest loophole, that 20 percent is eligible to be taxed at the long-term capital gains rate (if the fund’s underlying assets are held long enough) of just 15 percent rather than the regular personal income rate of 35 percent.
This tax loophole is also intellectually vacuous. The performance fee is a return on the manager’s labor, not his or her capital, so there’s no reason to give it preferential capital gains treatment.
“The carried interest loophole represents everyone’s worst fear about the tax system — that the rich and powerful get away with murder,” says Victor Fleischer, a law professor at the University of Colorado, Boulder, who has written about the issue. “Closing the loophole won’t fix the budget by itself, but it gets us one step closer to justice.”
At a time when the richest 1 percent of Americans have a greater collective net worth than the entire bottom 90 percent, there are other ways we could raise money while also making tax policy more equitable. The White House is backing some of them in its negotiations with Congress, but others aren’t even in play.
One important proposal has to do with founder’s stock, the shares people own in companies they found. Professor Fleischer has written an interesting paper persuasively arguing that founder’s stock is hugely undertaxed. It, too, is essentially a return on labor, not capital, and shouldn’t benefit from the low capital gains rate.
Likewise, Europe is moving toward a financial transactions tax on trades made in financial markets. That is something long championed by some economists — especially James Tobin, who won a Nobel Prize for his work — and it would also raise tens of billions of dollars at a time when it is desperately needed. It makes sense.
The larger question is this: Do we try to balance budget deficits just by cutting antipoverty initiatives, college scholarships and other investments in young people and our future? Or do we also seek tax increases from those best able to afford them?
And when Congressional Republicans claim that the reason for their recalcitrance in budget negotiations is concern for the welfare of ordinary Americans, look more closely. Do we really want to close down the American government and risk another global financial crisis to protect the tax bills of billionaires?
I invite you to visit my blog, On the Ground. Please also join me on Facebook, watch my YouTube videos and follow me on Twitter.
Tuesday, July 5, 2011
What I Read Today - Tuesday July 5, 2011
From: The New York Times
The Mother of All No-Brainers
By DAVID BROOKS
The Republicans have changed American politics since they took control of the House of Representatives. They have put spending restraint and debt reduction at the top of the national agenda. They have sparked a discussion on entitlement reform. They have turned a bill to raise the debt limit into an opportunity to put the U.S. on a stable fiscal course.
Republican leaders have also proved to be effective negotiators. They have been tough and inflexible and forced the Democrats to come to them. The Democrats have agreed to tie budget cuts to the debt ceiling bill. They have agreed not to raise tax rates. They have agreed to a roughly 3-to-1 rate of spending cuts to revenue increases, an astonishing concession.
Moreover, many important Democrats are open to a truly large budget deal. President Obama has a strong incentive to reach a deal so he can campaign in 2012 as a moderate. The Senate majority leader, Harry Reid, has talked about supporting a debt reduction measure of $3 trillion or even $4 trillion if the Republicans meet him part way. There are Democrats in the White House and elsewhere who would be willing to accept Medicare cuts if the Republicans would be willing to increase revenues.
If the Republican Party were a normal party, it would take advantage of this amazing moment. It is being offered the deal of the century: trillions of dollars in spending cuts in exchange for a few hundred million dollars of revenue increases.
A normal Republican Party would seize the opportunity to put a long-term limit on the growth of government. It would seize the opportunity to put the country on a sound fiscal footing. It would seize the opportunity to do these things without putting any real crimp in economic growth.
The party is not being asked to raise marginal tax rates in a way that might pervert incentives. On the contrary, Republicans are merely being asked to close loopholes and eliminate tax expenditures that are themselves distortionary.
This, as I say, is the mother of all no-brainers.
But we can have no confidence that the Republicans will seize this opportunity. That’s because the Republican Party may no longer be a normal party. Over the past few years, it has been infected by a faction that is more of a psychological protest than a practical, governing alternative.
The members of this movement do not accept the logic of compromise, no matter how sweet the terms. If you ask them to raise taxes by an inch in order to cut government by a foot, they will say no. If you ask them to raise taxes by an inch to cut government by a yard, they will still say no.
The members of this movement do not accept the legitimacy of scholars and intellectual authorities. A thousand impartial experts may tell them that a default on the debt would have calamitous effects, far worse than raising tax revenues a bit. But the members of this movement refuse to believe it.
The members of this movement have no sense of moral decency. A nation makes a sacred pledge to pay the money back when it borrows money. But the members of this movement talk blandly of default and are willing to stain their nation’s honor.
The members of this movement have no economic theory worthy of the name. Economists have identified many factors that contribute to economic growth, ranging from the productivity of the work force to the share of private savings that is available for private investment. Tax levels matter, but they are far from the only or even the most important factor.
But to members of this movement, tax levels are everything. Members of this tendency have taken a small piece of economic policy and turned it into a sacred fixation. They are willing to cut education and research to preserve tax expenditures. Manufacturing employment is cratering even as output rises, but members of this movement somehow believe such problems can be addressed so long as they continue to worship their idol.
Over the past week, Democrats have stopped making concessions. They are coming to the conclusion that if the Republicans are fanatics then they better be fanatics, too.
The struggles of the next few weeks are about what sort of party the G.O.P. is — a normal conservative party or an odd protest movement that has separated itself from normal governance, the normal rules of evidence and the ancient habits of our nation.
If the debt ceiling talks fail, independents voters will see that Democrats were willing to compromise but Republicans were not. If responsible Republicans don’t take control, independents will conclude that Republican fanaticism caused this default. They will conclude that Republicans are not fit to govern.
And they will be right.
The Mother of All No-Brainers
By DAVID BROOKS
The Republicans have changed American politics since they took control of the House of Representatives. They have put spending restraint and debt reduction at the top of the national agenda. They have sparked a discussion on entitlement reform. They have turned a bill to raise the debt limit into an opportunity to put the U.S. on a stable fiscal course.
Republican leaders have also proved to be effective negotiators. They have been tough and inflexible and forced the Democrats to come to them. The Democrats have agreed to tie budget cuts to the debt ceiling bill. They have agreed not to raise tax rates. They have agreed to a roughly 3-to-1 rate of spending cuts to revenue increases, an astonishing concession.
Moreover, many important Democrats are open to a truly large budget deal. President Obama has a strong incentive to reach a deal so he can campaign in 2012 as a moderate. The Senate majority leader, Harry Reid, has talked about supporting a debt reduction measure of $3 trillion or even $4 trillion if the Republicans meet him part way. There are Democrats in the White House and elsewhere who would be willing to accept Medicare cuts if the Republicans would be willing to increase revenues.
If the Republican Party were a normal party, it would take advantage of this amazing moment. It is being offered the deal of the century: trillions of dollars in spending cuts in exchange for a few hundred million dollars of revenue increases.
A normal Republican Party would seize the opportunity to put a long-term limit on the growth of government. It would seize the opportunity to put the country on a sound fiscal footing. It would seize the opportunity to do these things without putting any real crimp in economic growth.
The party is not being asked to raise marginal tax rates in a way that might pervert incentives. On the contrary, Republicans are merely being asked to close loopholes and eliminate tax expenditures that are themselves distortionary.
This, as I say, is the mother of all no-brainers.
But we can have no confidence that the Republicans will seize this opportunity. That’s because the Republican Party may no longer be a normal party. Over the past few years, it has been infected by a faction that is more of a psychological protest than a practical, governing alternative.
The members of this movement do not accept the logic of compromise, no matter how sweet the terms. If you ask them to raise taxes by an inch in order to cut government by a foot, they will say no. If you ask them to raise taxes by an inch to cut government by a yard, they will still say no.
The members of this movement do not accept the legitimacy of scholars and intellectual authorities. A thousand impartial experts may tell them that a default on the debt would have calamitous effects, far worse than raising tax revenues a bit. But the members of this movement refuse to believe it.
The members of this movement have no sense of moral decency. A nation makes a sacred pledge to pay the money back when it borrows money. But the members of this movement talk blandly of default and are willing to stain their nation’s honor.
The members of this movement have no economic theory worthy of the name. Economists have identified many factors that contribute to economic growth, ranging from the productivity of the work force to the share of private savings that is available for private investment. Tax levels matter, but they are far from the only or even the most important factor.
But to members of this movement, tax levels are everything. Members of this tendency have taken a small piece of economic policy and turned it into a sacred fixation. They are willing to cut education and research to preserve tax expenditures. Manufacturing employment is cratering even as output rises, but members of this movement somehow believe such problems can be addressed so long as they continue to worship their idol.
Over the past week, Democrats have stopped making concessions. They are coming to the conclusion that if the Republicans are fanatics then they better be fanatics, too.
The struggles of the next few weeks are about what sort of party the G.O.P. is — a normal conservative party or an odd protest movement that has separated itself from normal governance, the normal rules of evidence and the ancient habits of our nation.
If the debt ceiling talks fail, independents voters will see that Democrats were willing to compromise but Republicans were not. If responsible Republicans don’t take control, independents will conclude that Republican fanaticism caused this default. They will conclude that Republicans are not fit to govern.
And they will be right.
Tuesday, June 28, 2011
What I Read Today - Tuesday June 28, 2011
From: The Daily Beast
Bachmann’s No Joke
Her campaign for president just launched, but she’s already being dismissed as a delusional flake. Mark McKinnon says it’s the media who are crazy—Michele Bachmann is a real player.
by Mark McKinnon (/contributors/mark-mckinnon.html)
June 27, 2011 7:26 PM EDT
The world is flat. We know it is. It’s what we were taught—in the Dark Ages. Michele Bachmann is a “delusional, paranoid zealot,” a “flake.” We know she is. That’s what we’ve been told—by a mainlining media.
Conservative women in politics run a punishing gauntlet. They endure psychological evaluations and near-gynecological exams their male and liberal counterparts do not. The public is force-fed only their gaffes in 10-second fixes, while similar misstatements by the current president are forgiven as momentary lapses.
Bachmann is not crazy, but the media are if they continue to view her as such.
Ranked the top fundraiser in the House during the 2010 election cycle, Rep. Bachmann was also the first Republican woman to be elected to the U.S. House of Representatives from Minnesota, in 2006. Prior to serving in Congress, in 2000 she was elected to the Minnesota state Senate, where she championed a taxpayers' bill of rights, drawing from her professional experience as a federal tax-litigation attorney. But her first introduction to politics came out of her frustration as a foster parent with inadequate curriculum standards set by state government, standards she was later successful in repealing in the state legislature.
Bachmann’s frustration again turned to action in the fight over health-care reform in 2009. Whether she or the Tea Party movement was the catalyst, the reaction of heat and light was spontaneous at the Tea Party rally held outside the Capitol building on Nov. 5, 2009. And the conversion of this onetime supporter of President Carter to a leader of a conservative movement was complete.
From her official announcement of her candidacy for the GOP 2012 presidential nomination on Monday in Waterloo, Iowa: “As a constitutional conservative, I believe in ... a limited government that trusts in and preserves the unlimited potential of the American people. I don’t believe that the solutions to our problems come from Washington. More than ever, Washington is the problem, and the real solutions will come from our businesses, our communities, our schools, and the most basic and powerful unit of all—our families.”
Her challenge to the president: “In February 2009, President Obama was very confident that his economic policies would turn the country around within a year. He said: ‘A year from now, I think people are going to see that we’re starting to make some progress. If I don’t have this done in three years, then there’s going to be a one-term proposition.’ Well, Mr. President, your policies haven’t worked. Spending our way out of this recession hasn’t worked. And so, Mr. President: We take you at your word!”
She’s not my kind of candidate. And no one I know supports her. But I know enough to know she has been underestimated and treated unfairly by the mainstream press.
On whom she represents: “It is the voice of constitutional conservatives who want our government to do its job and not ours, and who want our government to live within its means and not our children’s and grandchildren’s.”
Her debate performance in New Hampshire made many in the public and the media take her candidacy seriously for the first time. Here was a woman with more depth, clarity, and strength of conviction than portrayed in those selective soundbites. And the shockwaves were palpable. But for every force, there is an equal and opposite force, and Bachmann’s detractors are now more vicious in their ridicule.
She will be challenged, as every candidate ought to be: Is her vision of America inclusive enough? Is her experience in the House deep enough? Will her ideas lead the nation out of the economic morass we are experiencing? And the all-important question: as she competes with Herman Cain and possibly Gov. Rick Perry for the same social and economic conservative voters in the GOP primary, can she also win against Barack Obama in the general election?
She’s not my kind of candidate. And no one I know supports her. But I know enough to know I shouldn’t judge American voters and candidates by my own distorted circle. She is a rock star with the Tea Party set and social conservatives. And I also know enough to know that Michele Bachmann has been underestimated and treated unfairly by the mainstream press.
She is now a frontrunner in Iowa. And will likely do well in South Carolina.
She’s gonna be a playah.
McKinnon Electability Index
The top 10 factors, using a 40-chad scale (with a maximum of **** for each category).
1. Rationale for running: “Together we can once again strengthen America and restore the promise of the future.” ***
2. Emotional connection: She swings a visceral hammer. ****
3. Resonance/Relevancy of message: She lights up with the constitutionalists. ****
4. Message discipline: Shaky generally, but did well at debate. ***
5. Candidate preparation: Generally on message and focused. ***
6. Life experience: Brings real-world experience. ***
7. Political/government experience: Eleven years of legislative experience, and a movement leader. ***
8. Fundraising strength: Off the charts. She raised $13 million for a congressional race! ****
9. Base: Strong among Tea Party and social conservatives, especially in Iowa. ***
10.General-election appeal: Limited. *
June 27, 2011 7:26pm
Bachmann’s No Joke
Her campaign for president just launched, but she’s already being dismissed as a delusional flake. Mark McKinnon says it’s the media who are crazy—Michele Bachmann is a real player.
by Mark McKinnon (/contributors/mark-mckinnon.html)
June 27, 2011 7:26 PM EDT
The world is flat. We know it is. It’s what we were taught—in the Dark Ages. Michele Bachmann is a “delusional, paranoid zealot,” a “flake.” We know she is. That’s what we’ve been told—by a mainlining media.
Conservative women in politics run a punishing gauntlet. They endure psychological evaluations and near-gynecological exams their male and liberal counterparts do not. The public is force-fed only their gaffes in 10-second fixes, while similar misstatements by the current president are forgiven as momentary lapses.
Bachmann is not crazy, but the media are if they continue to view her as such.
Ranked the top fundraiser in the House during the 2010 election cycle, Rep. Bachmann was also the first Republican woman to be elected to the U.S. House of Representatives from Minnesota, in 2006. Prior to serving in Congress, in 2000 she was elected to the Minnesota state Senate, where she championed a taxpayers' bill of rights, drawing from her professional experience as a federal tax-litigation attorney. But her first introduction to politics came out of her frustration as a foster parent with inadequate curriculum standards set by state government, standards she was later successful in repealing in the state legislature.
Bachmann’s frustration again turned to action in the fight over health-care reform in 2009. Whether she or the Tea Party movement was the catalyst, the reaction of heat and light was spontaneous at the Tea Party rally held outside the Capitol building on Nov. 5, 2009. And the conversion of this onetime supporter of President Carter to a leader of a conservative movement was complete.
From her official announcement of her candidacy for the GOP 2012 presidential nomination on Monday in Waterloo, Iowa: “As a constitutional conservative, I believe in ... a limited government that trusts in and preserves the unlimited potential of the American people. I don’t believe that the solutions to our problems come from Washington. More than ever, Washington is the problem, and the real solutions will come from our businesses, our communities, our schools, and the most basic and powerful unit of all—our families.”
Her challenge to the president: “In February 2009, President Obama was very confident that his economic policies would turn the country around within a year. He said: ‘A year from now, I think people are going to see that we’re starting to make some progress. If I don’t have this done in three years, then there’s going to be a one-term proposition.’ Well, Mr. President, your policies haven’t worked. Spending our way out of this recession hasn’t worked. And so, Mr. President: We take you at your word!”
She’s not my kind of candidate. And no one I know supports her. But I know enough to know she has been underestimated and treated unfairly by the mainstream press.
On whom she represents: “It is the voice of constitutional conservatives who want our government to do its job and not ours, and who want our government to live within its means and not our children’s and grandchildren’s.”
Her debate performance in New Hampshire made many in the public and the media take her candidacy seriously for the first time. Here was a woman with more depth, clarity, and strength of conviction than portrayed in those selective soundbites. And the shockwaves were palpable. But for every force, there is an equal and opposite force, and Bachmann’s detractors are now more vicious in their ridicule.
She will be challenged, as every candidate ought to be: Is her vision of America inclusive enough? Is her experience in the House deep enough? Will her ideas lead the nation out of the economic morass we are experiencing? And the all-important question: as she competes with Herman Cain and possibly Gov. Rick Perry for the same social and economic conservative voters in the GOP primary, can she also win against Barack Obama in the general election?
She’s not my kind of candidate. And no one I know supports her. But I know enough to know I shouldn’t judge American voters and candidates by my own distorted circle. She is a rock star with the Tea Party set and social conservatives. And I also know enough to know that Michele Bachmann has been underestimated and treated unfairly by the mainstream press.
She is now a frontrunner in Iowa. And will likely do well in South Carolina.
She’s gonna be a playah.
McKinnon Electability Index
The top 10 factors, using a 40-chad scale (with a maximum of **** for each category).
1. Rationale for running: “Together we can once again strengthen America and restore the promise of the future.” ***
2. Emotional connection: She swings a visceral hammer. ****
3. Resonance/Relevancy of message: She lights up with the constitutionalists. ****
4. Message discipline: Shaky generally, but did well at debate. ***
5. Candidate preparation: Generally on message and focused. ***
6. Life experience: Brings real-world experience. ***
7. Political/government experience: Eleven years of legislative experience, and a movement leader. ***
8. Fundraising strength: Off the charts. She raised $13 million for a congressional race! ****
9. Base: Strong among Tea Party and social conservatives, especially in Iowa. ***
10.General-election appeal: Limited. *
June 27, 2011 7:26pm
What I Read Today - Tuesday June 28, 2011
From: The New York Times
Convener in Chief
By DAVID BROOKS
This is a column about management styles. What sort of leader can get things done in an age of austerity?
Our first case study is what you might call the Straight Up the Middle Approach. When Chris Christie ran for governor of New Jersey, he campaigned bluntly on the need to reduce the state’s debt. After he was elected, he held 30 contentious town meetings with charts to explain how the debt would crush homeowners in each municipality.
Christie makes himself the center of the action and is always in the room. He sat down with Democratic leaders at meeting after meeting and hammered out compromises, detail after detail. The bipartisan pension reform bill Christie signed this month is controversial, but it is a huge step toward avoiding fiscal catastrophe. Christie, needless to say, quotes Springsteen to describe his approach: “No retreat. No surrender.”
Our second case study exemplifies the Insurgent Approach. While campaigning to be mayor of Chicago, Rahm Emanuel also spoke bluntly about the tough steps he would take to reduce the city’s $650 million deficit.
But, in office, he hasn’t led a single frontal assault. Instead, Emanuel has introduced a flurry of initiatives in all directions. He took away credit cards from many city officials. He’s moved to lengthen the school day. He redeployed 650 cops from offices to the streets. He cut $75 million from the 2011 budget. He induced United Airlines to bring 1,300 jobs.
At any given moment there seems to be six Mayor Emanuels announcing six different initiatives. The measures to reduce spending are submerged in a frenetic reinvigoration agenda.
The key for Emanuel is to know which fights to pick (making it harder for teachers to strike, for example), and sequencing those fights within broader narratives about city growth.
It’s almost physical. Christie relies on power and mass. Emanuel relies on dexterity and speed. Both have begun their administrations in spectacular fashion.
The third case study is the most unexpected: President Obama’s Convening Approach. First, some context: In 1961, John F. Kennedy gave an Inaugural Address that did enormous damage to the country. It defined the modern president as an elevated, heroic leader who issues clarion calls in the manner of Henry V at Agincourt. Ever since that speech, presidents have felt compelled to live up to that grandiose image, and they have done enormous damage to themselves and the nation. That speech gave a generation an unrealistic, immature vision of the power of the presidency.
President Obama has renounced that approach. Far from being a heroic quasi Napoleon who runs the country from the Oval Office, Obama has been a delegator and a convener. He sets the agenda, sketches broad policy outlines and then summons some Congressional chairmen to dominate the substance. This has been the approach with the stimulus package, the health care law, the Waxman-Markey energy bill, the Dodd-Frank financial reform bill and, so far, the Biden commission on the budget.
As president, Obama has proved to be a very good Senate majority leader — convening committees to do the work and intervening at the end.
All his life, Obama has worked in nonhierarchical institutions — community groups, universities, legislatures — so maybe it is natural that he has a nonhierarchical style. He tends to see issues from several vantage points at once, so maybe it is natural that he favors a process that involves negotiating and fudging between different points of view.
Still, I would never have predicted he would be this sort of leader. I thought he would get into trouble via excessive self-confidence. Obama’s actual governing style emphasizes delegation and occasional passivity. Being led by Barack Obama is like being trumpeted into battle by Miles Davis. He makes you want to sit down and discern.
But this is who Obama is, and he’s not going to change, no matter how many liberals plead for him to start acting like Howard Dean.
The Obama style has advantages, but it has served his party poorly in the current budget fight. He has not educated the country about the debt challenge. He has not laid out a plan, aside from one vague, hyperpoliticized speech. He has ceded the initiative to the Republicans, who have dominated the debate by establishing facts on the ground.
Now Obama is compelled to engage. If ever there was an issue that called for his complex, balancing approach, this is it. But, to reach an agreement, he will have to resolve the contradiction in his management style. He values negotiation but radiates disdain for large swathes of official Washington. If he can overcome his aloofness and work intimately with Republicans, he may be able to avert a catastrophe and establish a model for a more realistic, collegial presidency.
The former messiah will have to become a manager.
Convener in Chief
By DAVID BROOKS
This is a column about management styles. What sort of leader can get things done in an age of austerity?
Our first case study is what you might call the Straight Up the Middle Approach. When Chris Christie ran for governor of New Jersey, he campaigned bluntly on the need to reduce the state’s debt. After he was elected, he held 30 contentious town meetings with charts to explain how the debt would crush homeowners in each municipality.
Christie makes himself the center of the action and is always in the room. He sat down with Democratic leaders at meeting after meeting and hammered out compromises, detail after detail. The bipartisan pension reform bill Christie signed this month is controversial, but it is a huge step toward avoiding fiscal catastrophe. Christie, needless to say, quotes Springsteen to describe his approach: “No retreat. No surrender.”
Our second case study exemplifies the Insurgent Approach. While campaigning to be mayor of Chicago, Rahm Emanuel also spoke bluntly about the tough steps he would take to reduce the city’s $650 million deficit.
But, in office, he hasn’t led a single frontal assault. Instead, Emanuel has introduced a flurry of initiatives in all directions. He took away credit cards from many city officials. He’s moved to lengthen the school day. He redeployed 650 cops from offices to the streets. He cut $75 million from the 2011 budget. He induced United Airlines to bring 1,300 jobs.
At any given moment there seems to be six Mayor Emanuels announcing six different initiatives. The measures to reduce spending are submerged in a frenetic reinvigoration agenda.
The key for Emanuel is to know which fights to pick (making it harder for teachers to strike, for example), and sequencing those fights within broader narratives about city growth.
It’s almost physical. Christie relies on power and mass. Emanuel relies on dexterity and speed. Both have begun their administrations in spectacular fashion.
The third case study is the most unexpected: President Obama’s Convening Approach. First, some context: In 1961, John F. Kennedy gave an Inaugural Address that did enormous damage to the country. It defined the modern president as an elevated, heroic leader who issues clarion calls in the manner of Henry V at Agincourt. Ever since that speech, presidents have felt compelled to live up to that grandiose image, and they have done enormous damage to themselves and the nation. That speech gave a generation an unrealistic, immature vision of the power of the presidency.
President Obama has renounced that approach. Far from being a heroic quasi Napoleon who runs the country from the Oval Office, Obama has been a delegator and a convener. He sets the agenda, sketches broad policy outlines and then summons some Congressional chairmen to dominate the substance. This has been the approach with the stimulus package, the health care law, the Waxman-Markey energy bill, the Dodd-Frank financial reform bill and, so far, the Biden commission on the budget.
As president, Obama has proved to be a very good Senate majority leader — convening committees to do the work and intervening at the end.
All his life, Obama has worked in nonhierarchical institutions — community groups, universities, legislatures — so maybe it is natural that he has a nonhierarchical style. He tends to see issues from several vantage points at once, so maybe it is natural that he favors a process that involves negotiating and fudging between different points of view.
Still, I would never have predicted he would be this sort of leader. I thought he would get into trouble via excessive self-confidence. Obama’s actual governing style emphasizes delegation and occasional passivity. Being led by Barack Obama is like being trumpeted into battle by Miles Davis. He makes you want to sit down and discern.
But this is who Obama is, and he’s not going to change, no matter how many liberals plead for him to start acting like Howard Dean.
The Obama style has advantages, but it has served his party poorly in the current budget fight. He has not educated the country about the debt challenge. He has not laid out a plan, aside from one vague, hyperpoliticized speech. He has ceded the initiative to the Republicans, who have dominated the debate by establishing facts on the ground.
Now Obama is compelled to engage. If ever there was an issue that called for his complex, balancing approach, this is it. But, to reach an agreement, he will have to resolve the contradiction in his management style. He values negotiation but radiates disdain for large swathes of official Washington. If he can overcome his aloofness and work intimately with Republicans, he may be able to avert a catastrophe and establish a model for a more realistic, collegial presidency.
The former messiah will have to become a manager.
Tuesday, June 21, 2011
What I Read Today - Tuesday June 21, 2011
From: The New York Times
Smart Power Setback
By DAVID BROOKS
So far, few politicians have embraced my plan for a Marshall Plan Tax. The idea is that every time a think-tanker, op-ed writer or retired senator calls for a new Marshall Plan or a moonshot-type initiative to solve a social problem, they would have to pay a tax of $50. Within a few months, we’d have enough money to pay for an actual new Marshall Plan.
The problem with my proposal is this: Do Marshall Plans work? If this country really did galvanize its best minds and billions of dollars to alleviate poverty somewhere or to solve some complicated problem, could we actually do it?
Well, the U.S. has been engaged in a new Marshall Plan for most of the past decade. Between 2002 and 2010, the U.S. spent roughly $19 billion to promote development in Afghanistan. Many other nations have also sent thousands of aid workers and billions of dollars.
In some spheres the results have been impressive. Nearly two-thirds of Afghans now have access to basic health services, up from 9 percent a decade ago. Under the Taliban, 900,000 boys and no girls attended schools. Now more than seven million Afghans attend school, and 35 percent of them are girls, according to the United States Agency for International Development.
But when it comes to laying the foundation for economic growth and stability, the results have been discouraging.
Stuart Gordon of Chatham House, a British think tank, studied aid efforts in Helmand Province and concluded that in places where state capacity is weak and security is uncertain, foreign aid “may have as many negative, unintended effects as positive ones.” After a thorough two-year review of U.S. aid efforts in Afghanistan, the staff of the Senate Foreign Relations Committee emphasized, “The unintended consequences of pumping large amounts of money into a war zone cannot be underestimated.”
Much of the aid effort was premised on the assumption that development would foster stability. Young men with jobs wouldn’t plant roadside bombs. Communities with growing economies would reject the Taliban. This assumption was based on the modern prejudice that bad behavior has material roots. Give people money and jobs and you will improve their character and behavior.
In Afghanistan, as elsewhere, this assumption seems not to be true. A conference of experts brought together last year in Wilton Park in Britain concluded that there is a “surprisingly weak evidence base for the effectiveness of aid in promoting stabilization and security objectives” in Afghanistan.
Violence doesn’t stem from poverty. It stems from grudges, tribal dynamics and religious fanaticism — none of which can be ameliorated by building new roads. The poorest parts of the country are not the most violent.
Meanwhile, the influx of aid has, in many cases, created dependency, fed corruption, contributed to insecurity and undermined the host government’s capacity to oversee sustainable programs.
In the district of Nawa, for example, Usaid spent $400 per person last year. The per-capita income before aid was $300. According to the World Bank, 97 percent of Afghanistan’s G.D.P. derives from spending related to the military and donor community presence.
This incredible infusion distorts labor markets. An Afghan can make $75 a month as a teacher but more than $1,000 a month as a translator or driver for aid workers. The most talented people get sucked out of the real economy and into the aid economy.
It overwhelms provincial governments. It fuels corruption. As aid workers grow frustrated by nonfunctioning Afghan bureaucracies, they build their own parallel ones that, in turn, take responsibility from and infantilize the Afghan agencies that are going to have to administer the country in the long run.
Meanwhile, turnover among U.S. civilians in Afghanistan is about 85 percent a year, according to the Senate report. Many in Congress fixate on “burn rates” — how fast a program can disperse money — not effectiveness.
Many gains that have been made may be unsustainable. A flood of money washed into Afghanistan, and the reports warn about what will happen when the flood dries up in a few years.
The sad thing is, we are not foreign aid rookies. People have spent years trying to learn from past foreign aid disappointments and still, with all these resources, the results are discouraging.
This experience should have a chastening influence on the advocates of smart power. When she became secretary of state, Hillary Clinton sketched out a very attractive foreign policy vision that would use “the full range of tools at our disposal: diplomatic, economic, military, political, legal and cultural.” But it could be that cultural and economic development works on a different timetable than traditional foreign policy.
Perhaps we don’t know enough, can’t plan enough, can’t implement effectively enough to coordinate nation building with national security objectives.
The peace and security timetable is measured in years or decades. Development progress, if it comes at all, is measured in generations.
Smart Power Setback
By DAVID BROOKS
So far, few politicians have embraced my plan for a Marshall Plan Tax. The idea is that every time a think-tanker, op-ed writer or retired senator calls for a new Marshall Plan or a moonshot-type initiative to solve a social problem, they would have to pay a tax of $50. Within a few months, we’d have enough money to pay for an actual new Marshall Plan.
The problem with my proposal is this: Do Marshall Plans work? If this country really did galvanize its best minds and billions of dollars to alleviate poverty somewhere or to solve some complicated problem, could we actually do it?
Well, the U.S. has been engaged in a new Marshall Plan for most of the past decade. Between 2002 and 2010, the U.S. spent roughly $19 billion to promote development in Afghanistan. Many other nations have also sent thousands of aid workers and billions of dollars.
In some spheres the results have been impressive. Nearly two-thirds of Afghans now have access to basic health services, up from 9 percent a decade ago. Under the Taliban, 900,000 boys and no girls attended schools. Now more than seven million Afghans attend school, and 35 percent of them are girls, according to the United States Agency for International Development.
But when it comes to laying the foundation for economic growth and stability, the results have been discouraging.
Stuart Gordon of Chatham House, a British think tank, studied aid efforts in Helmand Province and concluded that in places where state capacity is weak and security is uncertain, foreign aid “may have as many negative, unintended effects as positive ones.” After a thorough two-year review of U.S. aid efforts in Afghanistan, the staff of the Senate Foreign Relations Committee emphasized, “The unintended consequences of pumping large amounts of money into a war zone cannot be underestimated.”
Much of the aid effort was premised on the assumption that development would foster stability. Young men with jobs wouldn’t plant roadside bombs. Communities with growing economies would reject the Taliban. This assumption was based on the modern prejudice that bad behavior has material roots. Give people money and jobs and you will improve their character and behavior.
In Afghanistan, as elsewhere, this assumption seems not to be true. A conference of experts brought together last year in Wilton Park in Britain concluded that there is a “surprisingly weak evidence base for the effectiveness of aid in promoting stabilization and security objectives” in Afghanistan.
Violence doesn’t stem from poverty. It stems from grudges, tribal dynamics and religious fanaticism — none of which can be ameliorated by building new roads. The poorest parts of the country are not the most violent.
Meanwhile, the influx of aid has, in many cases, created dependency, fed corruption, contributed to insecurity and undermined the host government’s capacity to oversee sustainable programs.
In the district of Nawa, for example, Usaid spent $400 per person last year. The per-capita income before aid was $300. According to the World Bank, 97 percent of Afghanistan’s G.D.P. derives from spending related to the military and donor community presence.
This incredible infusion distorts labor markets. An Afghan can make $75 a month as a teacher but more than $1,000 a month as a translator or driver for aid workers. The most talented people get sucked out of the real economy and into the aid economy.
It overwhelms provincial governments. It fuels corruption. As aid workers grow frustrated by nonfunctioning Afghan bureaucracies, they build their own parallel ones that, in turn, take responsibility from and infantilize the Afghan agencies that are going to have to administer the country in the long run.
Meanwhile, turnover among U.S. civilians in Afghanistan is about 85 percent a year, according to the Senate report. Many in Congress fixate on “burn rates” — how fast a program can disperse money — not effectiveness.
Many gains that have been made may be unsustainable. A flood of money washed into Afghanistan, and the reports warn about what will happen when the flood dries up in a few years.
The sad thing is, we are not foreign aid rookies. People have spent years trying to learn from past foreign aid disappointments and still, with all these resources, the results are discouraging.
This experience should have a chastening influence on the advocates of smart power. When she became secretary of state, Hillary Clinton sketched out a very attractive foreign policy vision that would use “the full range of tools at our disposal: diplomatic, economic, military, political, legal and cultural.” But it could be that cultural and economic development works on a different timetable than traditional foreign policy.
Perhaps we don’t know enough, can’t plan enough, can’t implement effectively enough to coordinate nation building with national security objectives.
The peace and security timetable is measured in years or decades. Development progress, if it comes at all, is measured in generations.
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