Sunday, November 11, 2018

Globalization is a threat not an insurance

You hear it often: more trade means that we get to know each other better and that there is less chance that we start a war against each other. It is one of the main arguments in favor of free trade.

I have serious doubts about this. The first World War happened when the world was very integrated. And when the world resumed globalization after World War I it ended in the Depression of the 1930s - very much an economic war between countries. More recently we see Trump taking on China - despite huge trade ties.

The problems with trade are many:
- First of all there are the terms of trade: they are to be negotiated and that can make them quite arbitrary. Just look at the oil price to get the idea.
- A related problem is dependency: if you depend on other countries to produce certain goods for you they are in a position to blackmail you. The increasing use by the US of economic sanctions is a good example.
- The theory of relative advantage made sense in a time when most trade was about natural resources. But nowadays most trade is about industrial products. And you can place a factory everywhere. Nowadays free trade often means the advantage of the incumbent: they have the patents, the infrastructure, the skilled workers, etc. and it takes a lot of effort for a country that doesn't have that to build it up.
- Some sectors are seen as important strategically either because they are believed to be growth industries or because they are related to defense industries. If you want to be able to build tanks you better have some steel works.
- Finally there is the issue of perception. If there are problems and you are dependent on others, it is easy to blame those others. That was what we saw happening in the 1930s and that is what Trump is doing now. If the US would be self sufficient Trump wouldn't be able to blame other countries for America's economic problems.

Trade has two important functions: it allows poorer countries to catch up and it helps spreading technology. But I believe that outside that its benefits are limited.

Just imagine that the US would be self-sufficient. Trump would have nothing to complain about America's trade partners. A politician like him would be forced to focus on internal issues instead.

I believe that - when all things are equal - we should strive to localize production. It is a matter of giving people as much control over their life as possible.

The depressed president Trump

There has been lots of speculation about the psychological health of president Trump. Some Democrats would even like to impeach him as "unfit" for the job under the 25th amendment. There is even a book where 27 mental health experts discuss Trump and come with diagnoses like hedonistic, bully, sexual predator, narcissist, paranoia, sociopath and dementia. My take would be depression.

Did you ever see Trump enthusiastic? His voice is dark and monotonic. Even about becoming president he was ambivalent.

One property of depression is realism. When you ask in any organisation who is above average a wide majority will claim to believe they are - what is statistically impossible. Normal people see the world through rose tinted glasses and are often more optimistic than the facts justify. Under depression that falls away and people see reality in all its ugliness. It is that realism that enabled Trump to win the primaries and consequently the elections. He saw his adversaries in all their weaknesses and used that against them. It is also what the voters loved from him: he said things like they were.

The backside of realism is a kind of Machiavellian realism. Pretending to be better than you are works. So Trump shamelessly does so. Being demanding works too. It evades Trump that the world would be a living hell when everyone would behave that way.

Depression is often associated with a lack of energy. Trump spends much less time and effort on his job as his predecessors.

Depression is also linked to overuse of social media. Trump's addiction to Twitter certainly counts.

Depression makes on self-centered. That strengthens the narcissist tendencies that Trump already had.

Trump can be quite aggressive. That doesn't fit the image many people have of depression. However, irritability is a quite common symptom of depression.

Depression is often associated with feeling locked in by your own assumptions. Trump's conviction that the world is divided in winners and losers and that he should be a winner at any price is certainly the kind of conviction that can lock one in.

Is it good to have such a president? It depends on your view of the world. Many Republicans like it to see someone who says things like they are and acts accordingly. On the other hand: in the real world many things are quite complicated. It takes effort to understand them. And Trump isn't likely to put in that effort.

Thursday, August 30, 2018

What Obama forgot to do and why he was a weak president

In this post I will provide a list of policies that Obama should have done if he had followed really Democratic policies and hadn't sold out to the establishment. Like FDR he should have exposed the crimes of the rich and brought them to justice. Instead he chose for subtle policy changes.

- Obama could in 2008 have ordered investigations in the financial malversations and sent people to jail. He instead for some subtle rule changes accompanied by massive financial aid. As a consequence the financial industry is now more centralized than ever.
- Obama chose to ignore the Clinton Foundation - laying the foundation for the public acceptance of Trump troublesome financial past.
- Obama did nothing to punish the torturers of the Bush era. As a consequence the CIA is now headed by a torturer.
- Obama did nothing to address all the increasingly absurd voting suppression and district meandering schemes. He should have introduced a proposal for reform. He should also have used his position as a pulpit to expose abusive practices. And he should have done so in an explicit way, comparing some states with authoritarian regimes.
- Obama did nothing to reduce the influence of money on politics.
- Obama took some measures to stop government subsidies to fraudulent education institutes. He should have gone much further and prosecuted them as the frauds they were. If Trump had been prosecuted for his fraudulent "Trump University", (ex-)employees and students had been asked to testify and the premises of the institution had been searched for evidence Trump wouldn't be president now. Sure, given the dubious state of the judicial system this might not have resulted in a conviction - but that would only have been an excuse to campaign for stricter laws and against "judges" who are incapable of understanding that justice should be blind.
- Obama did nothing to attack the Koch Brothers. Wouldn't it be time to have a really good look at all the pollution that their companies cause? Sure, these guys can afford judicial fire power that will prolong procedures forever. But in the end the government is the strongest and it can make life very hard for them.
- Obama didn't abolish the Patriot Act.
- With Obamacare he did implement a reform, but only after endless foot dragging and compromising. He erroneously assumed that such an important law needed to be bi-partisan - forgetting that support from a majority of the population is at least as important. Few people understood how the law would work out and as a consequence the Republicans were able to demonize the law. So it was a big mistake to allow endless discussions. The correct strategy would have been to quickly launch a proposal and then to be open to amendments by the Republicans - but without allowing them to delay the introduction.

The consequences of the Obamacare debacle were far reaching. They cost him the midterms and they taught the Republicans that obstruction pays. And then we saw Obama carry on with executive orders. In fact he could have taken back the initiative by looking what the Republican Congressmen wanted. That would have broken Republican unity while helping Obama to look like someone who achieved things. But he never did so and his contact with Republicans was notoriously poor.

A special mention deserves Obama's relationship with Israel and - specially - Netanyahu. As a recent good analysis based on the new book from Ben Rhodes shows, Obama started with a rather balanced policy and then became gradually increasingly pro-Israel under pressure from Netanyahu and Israel lobby. I watched it happen with astonishment. Netanyahu is a classical bully. When you give in to him he will see that as weakness and he will push even harder. In that light I was astonished to see Obama react to Netanyahu's early transgressions with a huge financial support package for Israel. We saw the same thing later when Netanyahu insulted Obama by addressing Congress. Any skillful politician would have found a way to punish Netanyahu - for example by not vetoing some UN resolution or by giving some kind of support to his enemies. Obama did nothing. He kept silent and hoped that the complaints of his supporters would have any effect. But predictably the Congress and the American Jewish lobby became increasing aggressive for pro-Israel policies. Many of them just joined a winning team: what is the point of supporting Obama on a point where you know he won't achieve anything.

We see this same respect for power in many of his policies. He strengthened the secret services and went after journalists and people like Assange. The scene in Michael Moore's new film about the Flint water crisis where he sides completely with the authorities and abandons the people who have to drink polluted water is painful to watch. Despite being the most powerful man on earth he still felt the need to please authorities rather than the responsibility to use his power to make the world a better place.

Sure, the Obama administration did impose quite a lot of fines on companies. But those fines worked just like a cost of business. Companies became a bit more careful but the public expectations didn't change. Obama should have had something like the FDR's Pecora commission of the Senate that exposed financial malversations for the big public in the 1930s and greatly contributed to public support for financial reform. If you want change you shouldn't be shy to say what is wrong with the present situation.

As Rhodes remarks: he doesn't read much and obviously isn't an intellectual. And that made that - although he might sympathize with certain ideas - he didn't have the strength of conviction to make them reality. The vagueness of his ideas made him time and again hesitate.

But intellect isn't the most important thing. He could have hired someone and listened to him. The most important thing is leadership=strength=chutzpah=balls: the ability to go against the stream and win. And that was what Trump was showing. By making politically incorrect remarks and standing for them he showed that he wasn't a pushover. People want leadership and he offered signs of it. And although his actual program turned out to be quite different from what he promised he certainly hasn't been afraid to impose his will.

Sunday, July 29, 2018

What Soros did wrong

Recently the New York Times has a magazine article about George Soros. The title "George Soros Bet Big on Liberal Democracy. Now He Fears He Is Losing.". Of course the article mostly refers to Hungary and Poland, with also some reference to Trump. In this article I will explain why he is losing.

According to the article Soros' main intellectual inspirator was Popper from who he got the concept of the "open society". In this context Soros' Jewish identity is mentioned: he wants societies where Jews feel welcome. The big question is of course how you can achieve that.

For many people the melting pot of New York and London is the inspiration. You can meet there people from many ethnic groups living together without problems. I am not convinced. Such places are mainly for people in their 20s who haven't settled down. They usually don't have deep interests and ties. Such places aren't very attractive to raise a family: when people settle down they do it somewhere else.

Another point of inspiration are the "cosmopolitans": these are people like diplomats and businessmen working for big companies who move regularly from one country to the next. But these people form their own tribe. They tend to have their own schools and churches and to mainly form ties among each other. Sometimes they don't even move: the Eurocrats in Brussels are (in)famous for the extent to which they form their own tribe that looks down on their compatriots back home as "provincials". Cosmopolitans don't care about democracy. They just want what they see as "good government". And if they don't like what they see many will just move to another country.

Some people see the mono-ethnicity of many Western countries as the problem. Hitler happened in mono-ethnic Germany - not in the multi-ethnic Habsburg empire. And the Armenian genocide happened in mono-ethnic Turkey and not in its predecessor the Ottoman empire. I have met several influential Jews who openly stated that they are in favor of mass immigration because that would end the mono-ethnic character of my country and improve the position of the Jews.

But the facts don't support this position. Those multi-ethnic empires faced quite regularly ethnic uprisings - to which they often reacted very brutally. Sure, Jews were often treated quite well. But that was just because their dispersion and low social status guaranteed that they were no threat to the central government. Europe's most anti-Jewish country is Poland. Poland is now rather mono-ethnic, but before World War II there were many areas where Germans, Poles and Jews formed similarly sized segments of the population. It looks like multi-ethnicity is a source of friction while in a mono-ethnic state you at least know who is the boss. As part of a minority you may not always like that but at least you have peace.

What does work?
Real openness depends on mutual trust and respect. Yet Soros has done the opposite. In many of the formerly communist countries Soros supported the liberal parties while doing everything he could opposing conservative - often Christian-democratic - parties.

This was a gross violation of democracy. Democracy is something between the people of a country or a region. Outsiders should not interfere. They can be very harmful. It is not only that they can help shift the election results so much that a minority becomes the majority and can rule the country. Even more harmful is that they can poison the political discussion in a country.

Politics isn't black and white. You can support refugees and also respect the feelings of people who feel no longer at home in their own region because too may strangers with foreign habits are arriving. You can be an atheist and still respect people who are deeply religious. You can support free trade yet care about the fate of those who lose their jobs.

Sure, this means that you will need to make compromises. But isn't that at the core of democracy? But when you are a foreign outsider like Soros you don't hear what the other side says. And you force the party that you support to ignore it too. What of course blocks the local dialogue.

Now his puppets have started to lose. And instead of concluding that his approach was wrong Soros is doubling down. He now tries to employ the EU to do his bidding and force those countries to behave like he wishes.

It is just as stupid as the Democrats in the US who keep whining about Russian influence. Real politics starts with listening and a dialogue. Making noise about things that people don't care about will just annoy them.

Sunday, February 25, 2018

The "influencing the elections" madness

So the Russians have influenced the US elections... Really?

The Russians operate one or more "alternative news" operations. But so do American groups. And it is not punishable as the US has freedom of press. So instead an obscure law forbidding foreigners to influence the elections was unearthed. Of course such a law is plainly ridiculous in the internet era. What about all those newspapers and bloggers who wrote what a horrible person Trump is? Shouldn't they be persecuted too? And all those non-Americans who posted something on Facebook - or just "liked" some post regarding Trump or Clinton?

Of course there is a fake news problem. See for example this issue about how a fake claim that one of the spokesmen of the children of the Florida high school were there was a shooting was an actor. But the main problem was that Youtube promoted it so much. But the problem here is not the fake news. It is that Youtube promotes is so much. As long as Youtube - and other social media - promote anything that catches eyeballs it will stay attractive for people to provide fake news.

In the meantime Western politicians have used the fake news issue to open the attack on the freedom of media. But actually it isn't about fake news. They recognize that themselves when they accuse the Russian campaign as polarizing the US. As anyone who follows censorship issues in dictatorships knows this is one the favorite arguments of dictators too for censorship. We may be losing our freedoms.

Friday, February 02, 2018

Merkel's negotiation "strategy"

As the Independent described it, Merkel ridicules Theresa May's Brexit demand during secret press briefing.

Angela Merkel reportedly left journalists “laughing uproariously” after mocking Theresa May‘s attempts to negotiate a trading relationship post-Brexit.

The German chancellor said she had been trapped in a recurring conversation with the British Prime Minister since the EU referendum in 2016.

Speaking to a “secret” press meeting at the World Economic Forum in Davos, Ms Merkel claimed Ms May had repeatedly asked her to “make me an offer”, according to a report by ITV political pundit Robert Peston.

Ms Merkel said that when she replied “but you’re leaving – we don’t have to make you an offer. Come on what do you want?”, Ms May replied again, “Make me an offer.”

“And so, according to Mrs Merkel, the two find themselves trapped in a recurring loop of ‘what do you want?’ and ‘make me an offer’,” Mr Peston wrote on his Facebook page.

The journalists seemed to believe Merkel was right. I believe she is terribly wrong and just showing how shallow and malicious she is.

May has made proposals and Merkel has rejected them. It is no more than decent that after rejecting a proposal you make a counter-proposal. But not for Merkel. She likes to keep other people in a dependent position and keep saying "no" until they exactly "propose" what Merkel wants.

Merkel had the same "strategy" in the Greek debt crisis. It worked for her: she got what she wanted. But it certainly didn't result in the best possible solution. For that you need to talk and to exchange arguments. Not naked power plays.

Merkel is showing herself a superficial "leader" who in the end only cares about herself and "winning".

Saturday, January 13, 2018

The downsides of civil disobedience

One of the most important achievements of humankind is the state. For most people anarchy is one of the worst situations you can have and people tend to be happy when some crime boss or war lord fills the vacuum: anything is better than nothing.

Of course there have always been people who thought otherwise. The anarchists of yore and some libertarians nowadays are examples. But these are marginal groups that operate in the shadows of states. When they try to live out their ideals in some kind of community of their own it either doesn't last very long or it stays very small scale.

But there is one remarkable exception nowadays: our media have started to paint civil disobedience against dictators and even democratically elected rulers that they don't like (think of Yanukovych) as a good thing. One standard element of modern color revolutions is the occupation of the most central square in an effort to make the government look weak. And all the theatre and amusement that if offered to the protesters mocks the ruler as powerless and incompetent.

Unlike what many think this is not in the spirit of Gandhi. Gandhi's famous action against the salt tax was more a kind of tax evasion. And the days long walk they took to go to the sea was an indirect recognition of the supreme power of the (colonial) government.

This denigration of the state in the color revolutions has long term negative consequences in the form of instability. The authority of the state stays weakened long after the dictator has left. In some cases you even see that after a few years a new dictator arises to "clean up the mess".

The problem with any revolution is discontinuity. Even when considerable attention is paid to integrating the old order - like in Tunisia - the discontinuity causes long lasting friction and problems. You don't see such friction in countries like South Korea and Taiwan where the transition to democracy comes from the government. They have their own problems in the form of long lasting elements of the old order - but these tend to be less detrimental.

Another type of civil disobedience we see in Catalonia. Puigdemont may have thought that he was smart organizing a referendum but he was just using another trick where are mob is mobilized to make the state look powerless. To understand where this could lead one has to think up a scenario where the opponents of independence would simultaneously organize a similar mass mobilization in support of their case - for example painting a Spanish flag on every lamppost. The region would be on the brink of civil war. What went wrong in the Catalan case was not that the government tried to block the referendum - although you can always argue that they could have done it smarter. If the government has stayed idle Puigdemont would have continued his policy of creating "facts on the ground" and at some point Madrid would have been forced to either recognize independence or to use even more violence as many independence supporters would believe that they had already won and feel robbed.

This kind of conflict should be solved by politicians in parliaments and negotiations. It should not be solved between mobilized mobs: that is a recipe for civil war. What Madrid did wrong in this case was that waited to long to interfere. As soon as the Catalan parliament had decided to hold a referendum it should have suspended that parliament, made arrests and take other measures to prevent the referendum to take place.