Streetwise Professor

July 28, 2016

Consigning Another US Syrian “Training” Farce to the Memory Hole

Filed under: Military,Politics — The Professor @ 7:35 pm

Today there were numerous stories in most major news outlets about a “vast new trove” of intelligence about ISIS, with the NYT (AKA administration mouthpiece and cheerleader) taking the lead in pushing the story.

You had to look a lot harder-and a lot faster-to find another story which casts US intelligence in a much, much worse light. Specifically, ISIS captured a cache of weapons and computer disks from the latest group that the US has been training in Syria, the New Syrian Army. (Coming next: The New New Syrian Army. Or maybe: And Now for a Completely Different Syrian Army.)

ISIS released some of the video contained on the captured disks, complete with English subtitles (because the dialogue is in Arabic) and commentary, and some snazzy editing. The video that got the most play featured a douchy looking American, presumably CIA, who looks like he just wandered away from a kegger at his frat. In one part of the video frat boy gives instruction to a beefy uniformed Syrian. What is the content of the instruction, you ask? Close quarter combat? Demolitions? Combat shooting?

Surely you jest. No, frat boy was giving a lesson in public communications. He was instructing the Syrian on how to deliver a recorded propaganda statement, telling him things like it’s OK to move your hands, but keep your feet still and don’t shift your weight around on your legs. He gave demonstrations of proper body language. He assured the nervous pupil that they had plenty of time to master this.

Years ago, when I joined the UH faculty, the dean had me and several other new senior hires take a course in media relations that included a virtually identical session on how to act on camera.

In another part of the video, the American gives a disquisition on why ISIS propaganda is effective. In a nutshell, it is because actions reinforce the verbal message.

So, apparently, a part of the American training operation is how to win hearts and minds through killer presentation skills. No doubt another part of the training was the art of effective PowerPoint presentations.

Meanwhile ISIS propaganda effectively wins hearts and minds through demonstrating killer killing skills.

The video really has to be seen to be believed. But that’s easier said than done. The videos were posted on Twitter. The CIA guy’s face is plainly visible, and because of this, Twitter yanked tweets embedding the video. I was able to grab it, and was planning to embed it here. I still might, but don’t want to do anything precipitatous, and I understand that there are issues with disclosing the identities of US operatives.

It’s a close call, though, because it is the (presumably) CIA’s  recklessness that created this problem. It was the CIA who allowed its operative to be filmed with his face fully visible. It was the CIA that allowed the video to be stored unencrypted on the drives captured by ISIS. It was the CIA that trained a group that was beaten by ISIS, which resulted in the capture of not just the videos and other electronic information, but weapons. Since this fiasco is completely of the CIA’s making, it is a little rich to invoke the importance of maintaining the secrecy of US operatives when the Agency itself was grossly incompetent in its personal and operational security. Methinks that this CIA CYA was more about protecting the faceless bureaucrats in Langley than protecting the face of the hapless Lawrence wannabe in the Syrian desert.

This is yet another episode in the ongoing farce that is the American effort to train fighters in Syria. Remember the tragicomic Five Guys incident? The hundreds of millions spent to outfit a handful of “fighters” who almost immediately capitulated to Al Qaeda-linked insurgents? That program was eventually terminated, but the ones that have replaced it have been conspicuous only for their utter lack of impact on the battlefield, whether it be against ISIS or against Assad. Of late, the most prominent American action in Syria has been to whinge about the Russians and Assad bombing “our” fighters (and bases used by US and UK special forces to train them–and perhaps to operate in Syria), and to attempt to negotiate some bizarre deal with the Russians to prevent that from happening again.

In fact, the effort has been so woeful that it actually makes more sense that it is intended to fail, than to succeed. Obama is under pressure to do something in Syria, but he doesn’t want to. What better way to split the baby than to fund a farcical effort? If it is intended to fail, at least we can claim a success, for fail it has.

Regardless of the explanation for the farce, there is no denying that it is a farce. One look at the video just adds an exclamation mark to that statement, but there is plenty of documentation in the public record that the effort is a litany of abject failure unblemished by a single success. (Involvement with the Kurds is a different story. I am focusing on training of Arab fighters in Syria.)

And consider this irony: a comical effort to train anti-ISIS Syrians in propaganda resulted in handing a huge propaganda victory to ISIS. Because rest assured, even though you can’t see the video, the audience in the Islamic world that matters to ISIS has or will. What better way to make a laughingstock of the US than to show some communications major lecturing about the effectiveness of ISIS propaganda, and engaging in pitiful efforts to train Syrians in fighting ISIS propaganda?

Which raises the issue: just what is the objective in Syria? Who are we fighting? Why? To achieve what? The administration goes through the motions of supporting the anti-Assad insurgency, but its heart is clearly not in it. I can understand that, and actually agree with it: the US has little strategic interest in who wins the Syrian civil war, and an Assad defeat would almost certainly empower head chopping, terrorist, anti-American Islamists. But if that’s the policy, stop the cynical game of training a few deluded fools and sending them to be killed. This accomplishes nothing strategically, and damages the reputation of the US. It bolsters the Islamist/ISIS narrative that the US is ineffectual, unreliable, and feckless.

If the objective is to fight ISIS, well, to paraphrase Napoleon speaking of Vienna–fight ISIS. And do so using proven methods. But the US now proudly boasts that it is not using methods that have worked in the past. SecDef Carter (in whom Obama has finally found a reliable water boy after firing three predecessors who dared defy him) brags that the US is NOT engaged in counterinsurgency (COIN) warfare. Why not? Because it has actually worked before? Because it is linked with the Bush administration and General Petraeus? I can’t think of a reason based on actual military realities.

The press would be savaging a Republican administration for such colossal ineptitude and cynicism. Hell, the press might even savage some Democratic administrations. But Obama is given a free pass, and the utter failure–and patent absurdity–of his Syria policy draws nary a cross word from the panjandrums of the press. Indeed, they trumpet alleged intelligence triumphs while remaining mute about proven intelligence debacles: the timing of the release of the intelligence coup story raises the real possibility that it was intended to counter to intelligence boner story. Twitter goes so far as to clean up after the circus parade to conceal the mess that the CIA made: I presume Google has too, because the video is not to be found on YouTube.

It is a performance worthy of Putin’s press, but worse, actually. It is worse because at least Putin’s press does not pretend to hold him accountable, whereas America’s preens and primps about its vital role in our democracy, and declares that it is a vital check on the skulduggery and incompetence of elected officials and bureaucrats. To the extent that it is, it is extremely selective, and this is even more dangerous in many ways than a lapdog press like Putin’s. Consigning the video of the public comms 101 class to the memory hole is just another sad demonstration of why.

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July 24, 2016

A Remedial Lesson in Internet Research for Michael McFaul

Filed under: Politics,Russia — The Professor @ 7:21 pm

I responded to a typically smarmy Tweet from ex-US ambassador to Russia Michael McFaul (@mcfaul), and this started a set-to that is so amusing that I have to share it.

Don’t bother looking for the conversation. You can see my half, but the brave Sir Robin McFaul deleted his Tweets. Gutless. But understandable, given how he fared. But (as the conversation demonstrates) Mr. McFaul is not exactly Internet savvy, and he didn’t count on the wonders of screencaps. So like a bad burrito, Mike, this conversation is going to come back up. Enjoy.

The smarmy Tweet was McFaul’s contribution to the attempt to distract attention from the DNC leak. He said (I can’t show it b/c he deleted it and since it is what I replied to it doesn’t show up in my Notifications) something to the effect that he hopes that our intelligence services are investigating Russian involvement in an attempt to influence the US election. Crucially, he said that he hoped that they would inform us of the outcome soon.

I replied:

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He responded (smarmily):

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I replied:

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His retort:

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Me:

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But then McFaul lost interest in substance, and resorted to the ad hominem fallacy that has become so prominent in the Clintonoid response to embarrassing facts. Don’t argue the facts, raise questions about the person with the temerity to bring those facts to light.

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“We professors.” LOL.

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Here’s where it gets hilarious. He couldn’t figure it out!

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Try it at home! I bet you can do it. I bet your three year old can do it. Maybe if you have a really smart cat.

Then he gets nasty and personal:

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“I’m guessing the avatar isn’t you too?” Too funny! What was his first clue?

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Finally, 20 minutes later–I kid you not!–he figures it out:

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Don’t like me telling you to stick it, Mike? You got off easy. Try talking that smack to my face and see how it works out for you. And as for your “we at Stanford” snark: not impressed. More ad hominem, appeal to authority fallacies.

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As a service to other Internet challenged geniuses who are dying to know my super-secret identity in two clicks, here is a step-by-step instruction.

First, click on the link to my blog in my Twitter bio:

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Second, click on the “bio” link in the upper right hand corner:

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And voila! You learn–I hope you are sitting down–that I am Craig Pirrong. Who knew?

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Behold, ladies and gentlemen, the point man of US Russian policy 2012-2014.* Hillary, of course, was the architect of US Russian policy from 2009-2013. Should we be surprised what a total clusterfail it was?

Seriously, it is beyond rich that Hillary and McFaul and others who were involved in US foreign policy during that era shriek about how awful Putin and the Russians are today. They enabled it. Yes, Putin et al are who they are, but incompetent and feckless US policy–and policymakers–bear a large share of the blame for the dysfunctional state of US-Russia relations, and for emboldening Putin.

This is also exactly why I think people are nuts to conclude that Putin wants Trump in the White House. He has to be licking his chops at the prospect of a Hillary presidency. After all, who else than this would he want leading his primary adversary?:

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A picture is worth 1000 words. Need I say more?

* More humor. The mainstream media drooled all over McFaul because of his use of Twitter. So techie of him! Oh, and by the way, his main accomplishment on Twitter as an ambassador was to provide the world with a stream of entertaining Russian Tweets trolling his idiocy.

 

 

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Hypocrites for Hillary

Filed under: History,Politics — The Professor @ 12:17 pm

The hysteria about the DNC hack and the frenzied efforts to focus blame on Putin and Russia have brought to the fore many anti-Russian/anti-Putin types who are so revolted by the prospect of a Trump presidency (in part because of Trump’s alleged admiration for Putin) that they have come out foursquare for Hillary. Most notable among these is Garry Kasparov. Neocons like Robert Kagan too. Journalists like Julia Ioffe of the Washington Post and Miriam Elder (formerly Moscow correspondent for the Guardian, now with BuzzFeed) qualify, as do myriad other journalistic and think tank pilot fish who are not really deserving of mention by name.

But here’s the funny thing. One of this crowd’s main indictments of Putin is his corruption and venality. They have a point about that, but if corruption and venality are reasons to detest a politician, how can they then turn around and support Hillary? For she is corrupt and venal as they come in American politics.

There are actually some similarities in Vladimir’s and Hillary’s trajectories of corruption. Putin’s schemes began not when he was at the center of power in Moscow, but when he was a functionary in the administration of a regional official, the mayor of St. Petersburg. Hillary’s career as a grifter also began in the sticks, when she was First Lady of Arkansas.

For who can forget cattle futures? Some years ago some academics calculated the odds that the typical trader could have turned $1000 into $100,000 in such a short period of time with such a high frequency of winning days. What were those odds, you ask? A mere 31 trillion (with a t!) to one. Yeah. It could happen to anyone who read the WSJ (which didn’t have a commodities page at the time, mind you).

Now you tell me. Would you have stopped trading if you were that good–or on that good a roll? As if: nobody would. But if these profits were part of a scheme (e.g., buying and selling the same contract, and allocating the winners to her account and the losers to the briber’s account) to pay off $100,000 to the governor and/or his wife, you’d have to stop as soon as that number was hit. So both the making of the money, and the stopping of the even trying to make more money, are damning.

Then of course there was Whitewater and Castle Grande, for which Hillary did legal work–and the developers went to jail.

Like Putin, Hillary went from the sticks to the center of power in the capital in one leap. There’s no indication that Hillary profited directly from her position in the White House, but the entire eight years of the Clinton presidency was a litany of stories about dodgy campaign finance schemes. Ironically, given Hillary’s harrumphing about the audacity of foreigners influencing American elections, the 1996 Clinton campaign assiduously courted foreign donors attempting to influence American elections–in anticipation of seeing their favors repaid by the winner.

After leaving the White House, Hillary complained of her straitened financial circumstances. Those soon changed, through the magic of her “charity”–the Clinton Foundation. The main beneficiaries of this “charity” have been herself, Bill, and daughter Chelsea. It is notorious for raising large amounts of money, very little of which goes to the causes (e.g., earthquake relief in Haiti) for which it was ostensibly intended–and large amounts of which go into salaries, travel, and “overhead.” Then there are passing mysteries, like how Bill gets paid $16.5 million dollars over a few years for being the “honorary” chancellor of a for profit education company (that is closely linked with George Soros).

With considerable justice, Putin critics look askance at his purported fortune and claim that it is evidence of his deep corruption. How can you possibly not say the same of Hillary’s wealth? For the Clinton Foundation was collecting tens of millions of dollars in contributions from corrupt governments (especially in the Middle East) at the same time as Hillary was dealing with these governments as Secretary of State. Purely a coincidence, no doubt! The Saudis are deeply, deeply concerned with the long-suffering Haitian people, aren’t they?

The nexus between the Clinton Foundation and Hillary’s role as Secretary of State shows a complete disregard for appearances of impropriety and conflict of interest, and reeks of pay-for-play. Indeed, one of the leaked DNC emails frets that “Clinton Foundation quid pro quo worries are lingering.” The DNC feared that more than her secret emails.

Such blurring of the lines between private interest and public office is also evident in Putin’s Russia, where Putin’s friends  (like the Rotenbergs and Gennady Timchenko) have profited handsomely in deals with the Russian state. There is of course suspicion that Putin shares in these windfalls. There is no suspicion that Hillary’s foundation has received windfalls from  governments with whom Hillary dealt as Secretary of State: it is a documented fact.

Hillary did her part as a high-ranking member of The Most Transparent Administration in History® by having meetings with donors, and then either (a) not recording these meetings in her schedule, or (b) the most recent revelation–burning her schedules! If there’s nothing to hide, why go to such lengths to hide them? (We can of course be completely confident that emails deleted from her private server contained only yoga routines and wedding plans, and no communications with foreign governments or their agents who are donors to the Foundation.)

Putin’s opacity is of course another subject of criticism amongst the Putin hating/Hillary loving crowd. Yet he has nothing on Hillary in that department. The entire email scheme was a pre-planned, preemptive coverup to prevent the release of information that could be used to hold Hillary to account. Putin also clearly understands the importance of the control of information.

And of course, when it comes to Russia in particular, how do Kasparov et al square their support for Hillary with this?:

The article, in January 2013, detailed how the Russian atomic energy agency, Rosatom, had taken over a Canadian company with uranium-mining stakes stretching from Central Asia to the American West. The deal made Rosatom one of the world’s largest uranium producers and brought Mr. Putin closer to his goal of controlling much of the global uranium supply chain.

But the untold story behind that story is one that involves not just the Russian president, but also a former American president and a woman who would like to be the next one.

At the heart of the tale are several men, leaders of the Canadian mining industry, who have been major donors to the charitable endeavors of former President Bill Clinton and his family. Members of that group built, financed and eventually sold off to the Russians a company that would become known as Uranium One.

Beyond mines in Kazakhstan that are among the most lucrative in the world, the sale gave the Russians control of one-fifth of all uranium production capacity in the United States. Since uranium is considered a strategic asset, with implications for national security, the deal had to be approved by a committee composed of representatives from a number of United States government agencies. Among the agencies that eventually signed off was the State Department, then headed by Mr. Clinton’s wife, Hillary Rodham Clinton.

The Canadian behind that deal (Frank Giurstra) and others associated with it have paid a mere $145 million to the Clinton Foundation. More bleeding hearts for Haiti, no doubt.

Indeed, there is a nexus between Rosatom and the email scandal. Politico(!) has documented numerous and extended lacunae in Crackberry addict Hillary’s emails. Most of the gaps are temporal: there are long time periods for which no emails on any subject have been produced. The Rosatom gap is different. During the entire period of her tenure, Hillary personally and the State Department generally were involved in Russian nuclear matters generally  (remember that Nunn-Lugar was operative until 2012) and Rosatom in particular. But despite the fact that there was extensive State Department cable traffic discussing the company, there was one lonely and innocuous email in what Hillary produced:

But then there is an instance where the State Department cable traffic rises and there are few if any Clinton corresponding emails. It’s the case of Rosatom, the Russian State Nuclear Agency: Clinton and senior officials at the State Department received dozens of cables on the subject of Rosatom’s activities around the world, including a hair-raising cable about Russian efforts to dominate the uranium market. As secretary of state, Clinton was a central player in a variety of diplomatic initiatives involving Rosatom officials. But strangely, there is only one email that mentions Rosatom in Clinton’s entire collection, an innocuous email about Rosatom’s activities in Ecuador. To put that into perspective, there are more mentions of LeBron James, yoga and NBC’s Saturday Night Live than the Russian Nuclear Agency in Clinton’s emails deemed “official.”

What could explain this lack of emails on the Russian Nuclear Agency? Were Clinton’s aides negligent in passing along unimportant information while ignoring the far more troubling matters concerning Rosatom? Possibly. Or, were emails on this subject deleted as falling into the “personal” category? It is certainly odd that there’s virtually no email traffic on this subject in particular. Remember that a major deal involving Rosatom that was of vital concern to Clinton Foundation donors went down in 2009 and 2010. Rosatom bought a small Canadian uranium company owned by nine investors who were or became major Clinton Foundation donors, sending $145 million in contributions. The Rosatom deal required approval from several departments, including the State Department.

When you’re the Dem darling, and you’ve lost Politico . . . . But she hasn’t lost the loudly anti-Russian, anti-Putin crowd, despite the fact that the stench of this particular Russian connection would make even a Rotenberg gag.

Oh, and Bill Clinton was paid $500,000 by Renaissance Capital, a Russian investment bank controlled by oligarch Mikhail Prokhorov. Clinton said “I’ve gotta pay the bills.” I guess baby’s too old to need new shoes. But the anti-Putin Hillary hive bats not an eye.

Putin critics also attack him-with good reason-for his high handed approach to the law. Who can witness what Hillary has done with regards to her server and her handling of classified information before, during, and after the fact and not conclude that she is lawless too, and also believes herself to be above the law? (FBI Director Comey’s excuse for her conduct is mental defect: she’s was too stupid to form criminal intent. He said this the day after Obama claimed that she is the most qualified candidate for the presidency since Jefferson. Maybe he meant George.)

Her complicity in the jailing of a hapless filmmaker to deflect attention from her failings in Benghazi also has more than a slight Russian smell to it: the case of the wife of a Kursk crewman who was tranquilized and bundled off while protesting against the Putin government’s handling of the sinking comes to mind. Going back to the beginning of her public career, Hillary’s desire to run roughshod over the law  was noticed during her time as a staffer on the House Judiciary Committee during the Watergate investigations. Legal nihilism is a term often used to describe Russia (Medvedev employed the term, in fact): it would be a fair way of describing Hillary’s attitude to the law.

When campaigning recently with Hillary in Charlotte (complete with a break from tradition by allowing her to speak from a podium displaying the Presidential Seal), Obama praised her for dedicating her life to public service. Whenever I hear that phrase, I reach for my wallet with one hand, and a airsickness bag with the other. This is particularly true when the alleged public servant is Hillary Clinton, who has served herself first, last, and always, grasping for more power, and more money. Putin, of course, often portrays himself as a mere humble servant, toiling ceaselessly for the benefit of the Russian people, for which he is paid a pittance. Both inveigh against the greed of others, while having fared quite well themselves. Both claim they are advocates for the little guy, while doing all they can to avoid actually spending any time with them.

I can understand disliking Putin, including because of his venality, corruption, lack of transparency as a public official, and disregard for legal norms. But if those Putin traits outrage you, you have to be outraged by Hillary too. Indeed, Putin is the product of a system that is notoriously corrupt and where the rule of law is more of an object of derision than an ideal. Hillary is contending for the highest office in a nation that believes that it operates according to a far higher standard (though her getting a pass for her flouting of the law with her private server calls those pretensions into serious doubt). For all his sins, Putin is not nearly the hypocrite Hillary is. And her coterie of Putin-hating supporters are as hypocritical as she.

Hillary’s Putinesque corruption and mendacity should be disqualifying. Her incompetence should be as well. She took pride in Libya, for crying out loud, and that was only one of the things that makes her the Mr. Magoo of international statecraft, merrily and blindly plunging ahead while leaving havoc and destruction in her wake.

But as shocking as these disqualifications are, they might not represent the greatest danger that she poses–which happens to be the very thing that attracts the neocons in particular to her, despite their professed dislike for Putin. As Libya demonstrates, Hillary is an adventurer with a predilection to intervention–another similarity with VVP (and whom the neocons berate for it). During her tenure at State, she had a reputation for advocating a far more truculent foreign policy than Obama. Libya is one example. Since her departure, she has been an advocate for a more muscular approach to Syria. In contrast, Trump has expressed skepticism about American intervention abroad.

The prospect of a corrupt, dishonest, not too bright, and demonstrably incompetent person as president should give anyone pause, especially so to alleged policy mavens. But neocons are overlooking all that, because she is the best prospect to give them the interventions-and wars-they want.

 

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Hillary Doubles Down on Blame Putin! Fat Lot of Good It Will Do Her.

Filed under: History,Politics — The Professor @ 11:57 am

Hillary is officially going with the Putin Did It! strategy to distract attention from the DNC leak. This follows official DNC response of the initial reports of a leak which says the leak may be part of a “Russian disinformation campaign.”

No one from the Clinton camp or the DNC has disputed the veracity of the material released. So we have a novel theory: the leaking of actual information is disinformation. I’ll have to remember that one. It might come in handy someday. Again, though, two! two! two! logical fallacies in one: ad hominem and appeal to motive.

Clinton better get the spin machine in prime condition, because the really good stuff might be on its way: the Clinton Foundation emails were also hacked.

Let the games begin!

Pause a moment, though, and consider this. On the one hand, Hillary blames the Russians for hacking the DNC. On the other hand, Hillary claims that her private server was immune to hacking and had never been hacked.

Yeah. That’s believable.

I mentioned Hillary’s flying monkeys yesterday, and indeed, they are swarming out of the castle as we speak, screeching that Trump is Putin’s bitch. Prominent examples include Josh Marshall and Jeffrey Goldberg. (With Obama leaving, Goldberg is busy finding another throne to sniff.)

Politically I think this is a non-starter. Most Americans don’t really give a damn about Russia. They are not enamored with it, but they don’t dread it either. It doesn’t haunt their thoughts the way that it did in the Cold War. This in fact is something that drives the Russians generally, and Putin in particular, crazy. They would much rather be hated and feared than ignored: the irrelevant are ignored, but if you are feared, you matter. The Russians want to matter. They don’t to most Americans, which will mean that Hillary’s invocation of the Russian bogeyman will likely have little effect.

In the meantime, though, I am sure Putin is basking in the attention.

But what else does she have? Zip. So she’s gotta go with what she’s got.

It is also quite rich for Hillary to bemoan foreign influence on elections. For one thing, she is the woman who brought us Johnny Chung, Maria Hsia, James Riady, and John Huang. For those of you not of a certain age, these were sources of big (and illegal) foreign donations to the Clinton campaign in the mid-1990s.

For another thing, Bill Clinton was intensely involved in influencing the Russian presidential election in 1996. He took the “just win, baby” mindset to Russia, and frankly stated that the end (re-electing Yeltsin) justified any means:

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The irony in all that is just too much, especially the turning a blind eye to Putin’s elevation part.

As for the conventional wisdom that Putin favors Trump, I am a contrarian. Trump is mercurial, unpredictable, and protean. He has been on every side of every issue. Anyone who believes that he can predict what Trump would do in office is deceiving himself. His current statements are probably the least reliable guide to his future actions. No one, least of all Putin, can have any confidence in predicting what a Trump presidency would be like. Even if he makes equivocal comments about Estonia today, he could turn around and send a division there when in office.

Hillary, on the other hand, is predictable, stupid, predictably stupid, and stupidly predictable. Putin has run rings around her before, and should be licking his chops at the prospects of doing it again.

The only reasons for Putin to favor a Trump election are that he wants more of a challenge, and he’s long gamma and hence relishes volatility.

Regardless of what Putin’s views are, facts are facts. Whoever leaked the DNC emails leaked facts. Moreover, it cannot be argue that the leak was selective, and thereby misleading: everything dropped. More leaked facts are almost certain to come, from the Clinton Foundation and perhaps even Hillary’s private server. And regardless of their provenance, the facts are damning.

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July 23, 2016

The Medium is NOT the Message: Hillary’s Scheming Is

Filed under: Politics,Regulation — The Professor @ 12:35 pm

Wikileaks released over 20,000 documents from the Democratic National Committee. As one would expect when such a rock is turned over, this exposed a lot of disgusting wriggling creatures.

Yes, there is a lot of traffic regarding Trump. But the most damning material relates to the fact that the DNC was/is in the tank for Hillary, and schemed continuously and extensively to undermine Bernie Sanders.

The corruption of Hillary and the DNC is hardly surprising. It is her–and their–DNA. But it is illuminating to actually witness evidence of the machinations of this crowd.

One of the more fascinating aspects of this is the reaction of those who are at pains to ignore the content of the emails, and focus on Russia’s supposed  responsibility for the leak. Just a cursory scan of Twitter and the Internet revealed a disparate and rather motley cast of characters pushing this story, including John Schindler (status of pants unknown), BuzzFeed’s Miriam Elder, neocon thinktanker James Kirchick, and Gawker.

To some it is axiomatic. Wikileaks=Russia. At least Kirchick felt obligated to come up with a more elaborate theory. Putin wants Trump to win, and the leaked emails will enrage the Bernie supporters who are also Wikileaks and RT afficionados. These disaffected Berners will either not vote or will go to Trump.

Whatever. In these situations, ALWAYS use Occam’s Razor, and that cuts against such a baroque theory. The far more parsimonious explanation is that an outraged Bernie supporter in the DNC (you don’t think there are Feel the Berners working as IT geeks at DNC?), or an outraged Bernie supporter with hacking skillz, did it. Come on. Look around. A lot of hardcore lefties are outraged at Hillary’s and the DNC’s underhanded and dirty treatment of their guy. That’s a much more straightforward explanation than Putin Did It!

There are other things that cut against the Putin theory. The reflexive attribution of Russian control to anything coming out of Wikileaks undermines the impact of the leak. If the Russians want to hurt Hillary, they would want to use an outlet that is not widely associated with them, if only to deprive Hillary and her flying monkeys and her tribe of acolytes of a way to discredit the leak–which is exactly what they are doing. The Russians aren’t stupid. They wouldn’t rely on an outlet that could be discredited precisely because of its alleged connection to them when there are many other ways of releasing the information. It would be in their interest to use a cutout that is not associated with them.

Further, if Russian hacking is so powerful (and I agree that it is), the DNC emails would not be the most damaging material. Hillary’s server material and Clinton Foundation emails would be far more damning.

As for Schindler’s argument that (unproven and implausible) Russian interference in US elections is beyond the pale: even if Russia is involved, influence by revealing facts is a different thing altogether from attempts to influence by manipulation, lies, disinformation, propaganda, or coercion. What the leak reveals is that the DNC actively manipulated the US primary elections in order to benefit Hillary: that kind of influence is more malign than influencing by making that fact known. Keeping the DNC’s and Hillary’s machinations secret would also influence upcoming presidential election. It’s better that our elections are influenced my more facts rather than less, and to argue that these facts should be ignored because of their (alleged) provenance is to commit two logical fallacies: ad hominem argument (reasoning/facts are judged based on the source) and appeal to motive (arguments/facts are to be judged based not on their logic/truth, but the motive of the party making the argument/presenting the facts).

The irony-and hypocrisy-of those rushing to pin this on Russia in order to distract attention from the content is also remarkable. Some (like Miriam Elder) have been big Wikileaks and Bradley Manning supporters in the past. Funny how alleged Russian manipulation of Wikileaks escaped their attention when Assange was leaking things that hurt their political opponents, but all of a sudden becomes THE STORY when one of theirs is targeted.

But the irony and hypocrisy don’t stop there. The DNC emails reveal that it used Russian tactics that today’s critics of the DNC data dump have assailed in the past: paying people to troll political opponents and their supporters on Twitter and elsewhere, and using employees to participate in Astroturf “demonstrations.”

And there’s more! The Attack the Messenger strategy is exactly the one that the Kremlin has employed in response to leaks about it. Putin’s spokesman Peskov tried to discredit the Panama Papers by claiming that they were a CIA information operation. Those attacking Wikileaks today went ballistic. How are they any different?

No. The medium is not the message, and attempts to make it so are discreditable and fallacious ways to distract attention from the real message in the DNC emails: namely, that the party, and its standard bearer, are corrupt, unethical slugs who have rigged the nomination process to save a wretched candidate who couldn’t win fair-and-square despite her huge advantages. Regardless of who turned over the rock to reveal that, it’s a good thing that the world can see them for what they are.

 

 

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For All You Pigeons: Musk Has Announced Master Plan II

Filed under: Climate Change,Commodities,Economics,Energy,Politics,Regulation — The Professor @ 11:29 am

Elon Musk just announced his “Master Plan, Part Deux,” AKA boob bait for geeks and posers.

It is just more visionary gasbaggery, and comes at a time when Musk is facing significant head winds: there is a connection here. What headwinds? The proposed Tesla acquisition of SolarCity was not greeted, shall we say, with universal and rapturous applause. To the contrary, the reaction was overwhelmingly negative, sometimes extremely so (present company included)–but the proposed tie up gave even some fanboyz cause to pause. Production problems continue; Tesla ended the resale price guarantee on the Model S (which strongly suggests financial strains); and the company has cut the price on the Model X SUV in the face of lackluster sales. But the biggest set back was the death of a Tesla driver while he was using the “Autopilot” feature, and the SEC’s announcement of an investigation of whether Tesla violated disclosure regulations by keeping the accident quiet until after it had completed its $1.6 billion secondary offering.

It is not a coincidence, comrades, that Musk tweeted that he was thinking of announcing his new “Master Plan” a few hours before the SEC made its announcement. Like all good con artists, Musk needed to distract from the impending bad news.

And that’s the reason for Master Plan II overall. All cons eventually produce cognitive dissonance in the pigeons, when reality clashes with the grandiose promises that the con man had made before. The typical way that the con artist responds is to entrance the pigeons with even more grandiose promises of future glory and riches. If that’s not what Elon is doing here, he’s giving a damn good impression of it.

All I can say is that if you are fool enough to fall for this, you deserve to be suckered, and look elsewhere for sympathy. Look here, and expect this.

As for the “Master Plan” itself, it makes plain that Musk fails to understand some fundamental economic principles that have been recognized since Adam Smith: specialization, division of labor, and gains from trade among specialists, most notably. A guy whose company cannot deliver on crucial aspects of Master Plan I, which Musk says “wasn’t all that complicated,” (most notably, production issues in a narrow line of vehicles), now says that his company will produce every type of vehicle. A guy whose promises about self-driving technology are under tremendous scrutiny promises vast fleets of autonomous vehicles. A guy whose company burns cash like crazy and which is now currently under serious financial strain (with indications that its current capital plans are unaffordable) provides no detail on how this grandiose expansion is going to be financed.

Further, Musk provides no reason to believe that even if each of the pieces of his vision for electric automobiles and autonomous vehicles is eventually realized, that it is efficient for a single company to do all of it. The purported production synergies between electricity generation (via solar), storage, and consumption (in the form of electric automobiles) are particularly unpersuasive.

But reality and economics aren’t the point. Keeping the pigeons’ dreams alive and fighting cognitive dissonance are.

Insofar as the SEC investigation goes, although my initial inclination was to say “it’s about time!” But the Autopilot accident silence is the least of Musk’s disclosure sins. He has a habit of making forward looking statements on Twitter and elsewhere that almost never pan out. The company’s accounting is a nightmare. I cannot think of another CEO who could get away with, and has gotten away with, such conduct in the past without attracting intense SEC scrutiny.

But Elon is a government golden boy, isn’t he? My interest in him started because he was–and is–a master rent seeker who is the beneficiary of massive government largesse (without which Tesla and SolarCity would have cratered long ago). In many ways, governments–notably the US government and the State of California–are his biggest pigeons.

And rather than ending, the government gravy train reckons to continue. Last week the White House announced that the government will provide $4.5 billion in loan guarantees for investments in electric vehicle charging stations. (If you can read the first paragraph of that statement without puking, you have a stronger stomach than I.) Now Tesla will not be the only beneficiary of this–it is a subsidy to all companies with electric vehicle plans–but it is one of the largest, and one of the neediest. One of Elon’s faded promises was to create a vast network of charging stations stretching from sea-to-sea. Per usual, the plan was announced with great fanfare, but the delivery has not met the plans. Also per usual, it takes forensic sleuthing worthy of Sherlock Holmes to figure out exactly how many stations have been rolled out and are in the works.

The rapid spread of the evil internal combustion engine was not impeded by a lack of gas stations: even in a much more primitive economy and a much more primitive financial system, gasoline retailing and wholesaling grew in parallel with the production of autos without government subsidy or central planning. Oil companies saw a profitable investment opportunity, and jumped on it.

Further, even if one argues that there are coordination problems and externalities that are impeding the expansion of charging networks (which I seriously doubt, but entertain to show that this does not necessitate subsidies), these can be addressed by private contract without subsidy. For instance, electric car producers can create a joint venture to invest in power stations. To the extent government has a role, it would be to take a rational approach to the antitrust aspects of such a venture.

So yet again, governments help enable Elon’s con. How long can it go on? With the support of government, and credulous investors, quite a while. But cracks are beginning to show, and it is precisely to paper over those cracks that Musk announced his new Master Plan.

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July 19, 2016

Paths to Redemption and the Differential Susceptibility of Religions to Terrorism

Filed under: Economics,History,Politics — The Professor @ 6:57 pm

Many human conflicts and struggles are universal, but they manifest themselves very differently in different cultures. One universal struggle is between religion and morals and carnal desire. Religions and cultures differ in how sins can be redeemed, and this strongly shapes how this conflict is resolved.

In evangelical Christianity, one manifestation of this struggle is extreme hypocrisy. As La Rochefoucault said, “hypocrisy is the tribute [or homage] that vice pays to virtue.” Public acknowledgement of sin, pledges of a devotion to Christ as the redeemer of sins, and efforts to bring other sinners to Christ are all paths to redemption. The greatest sinners, and those upon whom sins weigh most heavily (in large part because they have internalized the religion’s moral code), are often the most profuse in their public acknowledgements, most intense in their pledges, and most driven in their evangelizing efforts. This is what produces types epitomized in fiction by Elmer Gantry, and in real life by the likes of Jimmy Swaggert. Bible thumpers in public, drunkards and perverts in private.

For many Muslims, martyrdom in jihad against infidels is a path to redemption of sin. Many strongly believe that dying while killing in the name of Allah is a get out of hell free card.

This comes to mind after reading a story about the mass murderer in Nice, who was apparently violent, a drug abuser, a man with an “out of control sexual life” (including bisexuality–with septuagenarians!), and a violator of Muslim dietary strictures. His sordid and dissolute and unobservant life is being seized upon to claim that since he “did not practice the Muslim religion,” Islam is absolved of any role in his heinous acts, and could not have been his motivation.

To the contrary. The fact that Muslims believe that martyrdom in waging jihad against infidels is a path to redemption means that a widely-held set of Islamic beliefs contributes directly to the murderous acts of  men like Mohamed Bouhlel. It is precisely those whose sins are so great who are most in need of redemption, and who are most likely to turn to suicide terrorism as a means of obtaining it. That’s a path offered to them by their culture and religion.

Such tortured individuals are the most susceptible to the proselytizing efforts of ISIS and its ilk. These are the people who are most vulnerable to online radicalization. These are the people who are the perfect prey for radical recruiters who can readily exploit the intense cognitive dissonance of the extreme sinner who wants to be a good Muslim.

I therefore hypothesize that suicide terrorists and recruits to terrorist groups will be disproportionately “bad Muslims”: criminals, heavy drug users, and sexual deviants (where deviance is defined by Muslim mores). An unsystematic recollection of some notable cases (e.g., the 911 hijackers) provides support to this hypothesis, but it deserves more systematic testing. (There is conflicting information on whether Orlando shooter Omar Mateen is consistent with they hypothesis.)*

Violent, drug abusing, sexual deviants are less of a concern when they are utterly amoral, and uninterested in redemption in the confines of any religion: they harm mainly themselves, a small circle of people around them, and sometimes an unfortunate stranger. They become dangerous when such people believe in a religion that offers redemption through violent action. Then large numbers of random strangers are at risk. Eighty-three corpses in Nice are only the most recent example of that.

Religions differ in the ways that they allow adherents to resolve the conflict between belief and sinfulness, and the way that Islam allowed Mohamed Bouhlel to resolve his conflict poses a grave risk to the societies in which men like him live. Europe generally, and France in particular, are at great risk because they have large populations of young, unattached, and alienated Muslim men with high rates of criminality, drug abuse, and other anti-social behaviors. Combined with ubiquitous online proselytization and a network of (often very ascetic) recruiters (including recruiters in prison), this is a combustible mix. This population isn’t going anywhere, and in fact is growing due to Europe’s immigration choices, economic malaise, and demonstrated incompetence at integrating immigrants. Islam isn’t going anywhere either, and shows no signs of leaving behind martyrdom as a path to redemption. To the contrary, Wahhabism and other fundamentalist strains of Islam are ascendent, due in no small part to massive Saudi spending to spread them.

Connect these dots, and you draw a very disturbing picture. Neither of the two things that combine to create terrorism are readily amenable to change, and if anything appear to be growing in virulence. That portends ill for the future, not just in France, but world-wide.

* There can be another causal mechanism that would create such a correlation. A game theoretic explanation of strictures against suicide in Catholicism where sins can be absolved by confession is that absent eternal damnation for suicide, one could commit mortal sins to one’s heart’s content, confess, commit suicide immediately afterward, and go to heaven. Thus, damnation for suicide is necessary to make afterlife punishments for other sins a credible deterrent when confession absolves sins. If martyrdom while committing a terrorist act absolves one for other sins, the punishments for these other sins are less credible, and they are more likely to be committed, and martyrdom through violence is also more likely.

 

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July 17, 2016

Antitrust to Attack Inequality? Fuggedaboutit: It’s Not Where the Money Is

Filed under: Economics,Politics,Regulation — The Professor @ 12:09 pm

There is a boomlet in economics and legal scholarship suggesting that increased market power has contributed to income inequality, and that this can be addressed through more aggressive antitrust enforcement. I find the diagnosis less than compelling, and the proposed treatment even less so.

A recent report by the President’s Council of Economic Advisors lays out a case that there is more concentration in the US economy, and insinuates that this has led to greater market power. The broad statistic cited in the report is the increase in the share of revenue earned by the top 50 firms in broad industry segments. This is almost comical. Fifty firms? Really? Also, a Herfindahl-Hirschman Index would be more appropriate. Furthermore, the industry sectors are broad  and correspond not at all to relevant markets–which is the appropriate standard (and the one embedded in antitrust law) for evaluating concentration and competition.

The report then mentions a few specific industries, namely hospitals and wireless carriers, in which HHIs have increased. Looking at a few industries is hardly a systematic approach.

Airlines is another industry that is widely cited as experiencing greater concentration, and which prices have increased with concentration. Given the facts that a major driver of concentration has been the bankruptcy or financial distress of major carriers, and that the industry’s distinctive cost characteristics (namely huge operational leverage and network structure) create substantial scale and network economies, it’s not at all clear whether the previous lower prices were long run equilibrium prices. So some of the price increases may result in super competitive prices, but some may just reflect that prices before were unsustainably low.

Looking over the discussion of these issues gives me flashbacks. There is a paleo industrial organization (“PalIO”?) feel to it. It harkens back to the ancient Structure-Conduct-Performance paradigm that was a thing in the 50s-70s. Implicit in the current discussion is the old SCP (LOL–that’s the closest I come to being associated with this view) idea that there is a causal connection between industry structure and market power. More concentrated markets are less competitive, and firms in such more concentrated, less competitive markets are more profitable. Those arguing that greater concentration increases income inequality go from this belief to their conclusion by claiming that the increased market power rents flow disproportionately to higher income/wealth individuals.

The PalIO view was challenged, and largely demolished, in the 70s and 80s, primarily by the Chicago School, which demonstrated alternative non-market power mechanisms that could give rise to correlations (in the cross-section and time series) between concentration and profitability. For instance, firms experiencing favorable “technology” shocks (which could encompass product or process innovations, organizational innovations, or superior management) will expand at the expense of firms not experiencing such shocks, and will be infra marginal and more profitable.

This alternative view forces one to ask why concentration has changed. Implicit in the position of those advocating more aggressive antitrust enforcement is the belief that firms have merged to exploit market power, and that lax antitrust enforcement has facilitated this.

But there are plausibly very different drivers of increased concentration. One is network and information effects, which tend to create economies of scale and result in larger firms and more concentrated markets. Yes, these effects may also give the dominant firms that benefit from the network/information economies market power, and they may charge super competitive prices, but these kinds of industries and firms pose thorny challenges to antitrust. First, since monopolization per se is not an antitrust violation, a Google can become dominant without merger or without collusion, leaving antitrust authorities to nip at the margins (e.g., attacking alleged favoritism in searches). Second, conventional antitrust remedies, such as breaking up dominant firms, may reduce market power, but sacrifice scale efficiencies: this is especially likely to be true in network/information industries.

The CEA report provides some indirect evidence of this. It notes that the distribution of firm profits has become notably more skewed in recent years. If you look at the chart, you will notice that the return on invested capital excluding goodwill for the 90th percentile of firms shot up starting in the late-90s. This is exactly the time the Internet economy took off. This resulted in the rise of some dominant firms with relatively low investments in physical capital. More concentration, more profitability, but driven by a technological shock rather than merger for monopoly.

Another plausible driver of increased concentration in some markets is regulation. Hospitals are often cited as examples of how lax merger policy has led to increased concentration and increased prices. But given the dominant role of the government as a purchaser of hospital services and a regulator of medical markets, whether merger is in part an economizing response to dealing with a dominant customer deserves some attention.

Another industry that has become more concentrated is banking. The implicit and explicit government support for too big to fail enterprises has obviously played a role in this. Furthermore, extensive government regulation of banking, especially post-Crisis, imposes substantial fixed costs on banks. These fixed costs create scale economies that lead to greater scale and concentration. Further, regulation can also serve as an entry barrier.

The fixed-cost-of-regulation (interpreted broadly as the cost of responding to government intervention) is a ubiquitous phenomenon. No discussion of the rise of concentration should be complete without it. But it largely is, despite the fact that it has long been known that rent seeking firms secure regulations for their private benefit, and to the detriment of competition.

The CEA study mentions increased concentration in the railroad industry since the mid-80s. But this is another industry that is subject to substantial network economies, and the rise in concentration from that date in particular reflects an artifact of regulation: before the Staggers Act deregulated rail in 1980, that industry was inefficiently fragmented due to regulation. It was also a financial basket case. Much of the increased concentration reflects an efficiency-enhancing rationalization of an industry that was almost wrecked by regulation. Some segments of the rail market have likely seen increased market power, but most segments are subject to competition from non-rail transport (e.g., trucking, ocean shipping, or even pipelines that permit natural gas to compete with coal).

Another example of how regulation can increase concentration and reduce concentration in relevant markets: EPA regulations of gasoline. The intricate regional and seasonal variations in gasoline blend standards means that there is not a single market for gasoline in the United States: fuel that meets EPA standards for one market at one time of year can’t be supplied to another market at another time because it doesn’t meet the requirements there and then. This creates balkanized refinery markets, which given the large scale economies of refining, tend to be highly concentrated.

Reviewing this makes plain that as in so many things, what we are seeing in the advocacy of more aggressive antitrust is the prescription of treatments based on a woefully incomplete understanding of causes.

There is also an element of political trendiness here. Inequality is a major subject of debate at present, and everyone has their favorite diagnosis and preferred treatment. This has an element of using the focus on inequality to advance other agendas.

Even if one grants the underlying PalIO concentration-monopoly profit premise, however, antitrust is likely to be an extremely ineffectual means of reducing income inequality.

For one thing, there is no good evidence on how market power rents are distributed. The presumption is that they go to CEOs and shareholders. The evidence behind the first presumption is weak, at best, and some evidence cuts the other way. Moreover, it is also the case that some market power rents are not distributed to shareholders, but accrue to other stakeholders within firms, including labor.

Moreover, the numbers just don’t work out. In 2015, after-tax corporate income represented only about 10 percent of US national income. Market power rents represented only a fraction of those corporate profits. Market power rents that could be affected by more rigorous antitrust enforcement represented only a fraction–and likely a small fraction–of total corporate profits. If we are talking about 1 percent of US income the distribution of which could be affected by antitrust enforcement, I would be amazed. I wouldn’t be surprised if its an order of magnitude less than that.

With respect to how much of corporate income could be affected by antitrust policy, it’s worthwhile to consider a point mentioned earlier, and which the CEA raised: the distribution of corporate profits is very skewed. Further, if you look at the data more closely, very little of the big corporate profits could be affected by more rigorous antitrust–in particular, more aggressive approaches to mergers.

In 2015, 28 firms earned 50 percent of the earnings of all S&P500 firms. Apple alone earned 6.7 percent of the collective earnings of the S&P500. Many of the other firms represented in this list (Google, Microsoft, Oracle, Intel) are firms that have grown from network effects or intellectual capital rather than through merger for market power. They became big in sectors where the competitive process favors winner-take-most. It’s also hard to see how antitrust matters for other firms, Walt Disney for instance.

Only three industries have multiple firms on the list. Banking is one, and I’ve already discussed that: yes, it has grown through merger, but regulation and government are major drivers of that. There have also efficiency gains from consolidating an industry that regulation historically made horrifically inefficiently fragmented, though where current scale is relative to efficient scale is a matter of intense debate.

Another is airlines. Again, given the route network-driven scale economies, and the previous financial travails of the industry, it’s not clear how much market power rents the industry is generating, and whether antitrust could reduce those rents without imposing substantial inefficiencies.

Automobiles is on the list. But the automobile industry is now far less concentrated than it used to be in the days of the Big Three, and highly competitive.  Oil is represented on the list by one company: ExxonMobil. Crude and gas production is not highly concentrated, when one looks at the relevant market–which is the world. This is another industry which has seen a decline in dominance by major firms over the years.

Looking over this list, it is difficult to find large dollars that could even potentially be redistributed via antitrust. And given that this list represents a very large fraction of corporate profits, the potential impact of antitrust on income distribution is likely to be trivial.

(As an exercise for interested readers: calculate industry profits by a fairly granular level of disaggregation by NAICS code, and see which ones have become more concentrated as a result of merger in recent years.)

In sum, if you want to ameliorate inequality, I would put antitrust on the bottom of your list. It’s not where the money is because the kind of market power that antitrust could even conceivably address accounts for a  small portion of profits, which in turn account for a modest percentage of national income. Market power changes in many profitable industries have almost certainly been driven by major technological changes, and antitrust could reduce them only by gutting the efficiency gains produced by these changes.

 

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July 13, 2016

Which Side is Obama on? Now We Know: Feeding the Flames of Racial Discord

Filed under: Politics — The Professor @ 5:20 pm

Obama’s greatest opportunity as president was to advance race relations in this country. They have obviously improved almost miraculously since the Civil Rights and Jim Crow eras, but in 2008 they could have definitely improved even further. Sadly, in the past seven plus years, they have regressed rather than progressed. Obama squandered an opportunity that he was uniquely placed to exploit.

Uniquely placed, but sadly not uniquely qualified, as events have made all too clear. For rather than pour oil on troubled waters, Obama has thrown it on the fire. He does it with such regularity that I must conclude that is hardwired, or a conscious choice: which is worse, I can’t say. The horrific events of the past days represent the zenith of this behavior–at least I hope so.

The crux of the problem is that Obama is an echo chamber for Black Lives Matter memes, and a defender of and advocate for the organization. BLM is a divisive, confrontational, and frankly racist organization that is exacerbating tensions, rather than doing anything to reduce them, or to correct the underlying problems. BLM marches routinely involve chants advocating the murder of police (“Pigs in a blanket, fry ’em like bacon”). Obama has hosted leaders of this group at the White House, and praised their effectiveness, saying that he was “confident that they are going to take America to new heights.” A sobering thought, that.

The less incendiary part of BLM rhetoric is still fundamentally dishonest, and it is this part that Obama repeats on every occasion in which these issues are even tangentially relevant–or sometimes when they are appallingly inappropriate, as at the memorial service in Dallas yesterday. In particular, the BLM/Obama rhetoric cites racial disparities in deaths in confrontations with police; arrest and incarceration rates; and capital sentencing rates as evidence of deep-seated “institutional racism.”

These statistics–and those citing them–are fundamentally dishonest because these numbers are clearly not the whole truth, and fractional truths (I will not dignify them by calling them “half-truths”) can be as manipulative and misleading as an outright lie. These certainly are.

Telling the whole truth would require confronting an ugly reality: there are substantial racial disparities in criminality (and in rates of victimization–a fact BLM is outrageously silent about with the exception of police killings).

Take, for instance, the oft-repeated statistic that African Americans represent a proportion of those killed by police that is double their proportion of the population. But they commit murder in a proportion four times that of their share of the population: and they also are victimized by murder in a similarly disproportionate ratio (which should be your major concern if you truly believe black lives matter). In every statistic related to violent crime, African Americans are disproportionately represented as both perpetrators and victims–and in ratios that typically exceed the 2-1 police killing statistic. This is true in the case of murders of police officers, where African Americans are the killer 43 percent of the time, in contrast to their 12 percent share of the population: they make up about 26 percent of those killed by police.

These hard facts have hard implications that speak directly to how to interpret statistics not just on arrest and incarceration rates, but on deaths at the hands of law enforcement. Namely, because of their greater involvement in crime, African Americans are  disproportionately likely to have hostile interactions with law enforcement. Further, police will rationally infer, based on the limited information that they inevitably have to act on, that all else equal African Americans pose a greater threat to  them than do non-African Americans. This makes a bad outcome more likely when a police officer confronts an African American than when confronting someone of a different race.

Most of the law enforcement shootings are ruled justified. But citing statistics embracing all shootings, and failing to put those into the sad context of life in many minority neighborhoods in the United States, BLM–and Obama and the left generally–insinuate that they are prima facie evidence of racial injustice.

This is a pattern for Obama. Further, he routinely expresses tendentious opinions about controversial cases, some of which (Trayvon Martin) are hard cases, and some of which (the shooting of Michael Brown) prove not to be, once the facts are known (often only after a Herculean effort to rescue those facts from mendacious misinformation). After Ferguson, Obama told the UN–the UN!–the following:

I realize that America’s critics will be quick to point out that at times we too have failed to live up to our ideals; that America has plenty of problems within its own borders.  This is true.  In a summer marked by instability in the Middle East and Eastern Europe, I know the world also took notice of the small American city of Ferguson, Missouri — where a young man was killed, and a community was divided.

A low, dishonest characterization, that. One that slyly embraces the utterly false narrative about the death of Michael Brown. For although Obama describes the death in the passive voice (“a young man was killed”) and does not identify the killer, this is of little moment when (a) everyone knows that the “young man” was black and he was killed by a white policeman, and (b) this episode was raised in a paragraph beginning with an admission that American has “failed to live up to our own ideals.” The judgment that Obama renders about Brown’s death in that paragraph is blindingly obvious, regardless of the Delphic phrasing. Indeed, by comparison the rhetoric of BLM is refreshingly honest and preferable in that respect.

This tendency was on display again in the aftermath of two police shootings in the last week, one in Baton Rouge the other in a Minneapolis suburb. Speaking about the second episode, the death of Philando Castile, Obama repeated the as yet uncorroborated statements of Castile’s girlfriend, who was in the car with him when he was shot. The live stream she put on Facebook was indeed disturbing, but it starts after Castile was shot, and as yet we know not what chain of events culminated in the shooting: we have just heard her version. But without knowing the facts, Obama validated the narrative that the shooting was unjustified, and then used the tragedy as another opportunity to deliver a soliloquy on racial disparities in the American criminal justice and law enforcement systems.

This rush to judgment contrasted jarringly with Obama’s reticence to pass judgment on the motives of the mass killer of five Dallas policemen despite the fact that the (black) police chief of Dallas had said that the murderer–Micah Xavier Johnson–had expressed his solidarity with BLM, his hatred of whites, and his intention to kill white police officers. Obama’s reticence to interpret Johnson’s avowed motives also clashed with his easy assertion that Charleston church shooter Dylann Roof was driven by racial hatred.

Speaking yesterday at a memorial service for the officers, Obama did acknowledge Johnson’s racism: he really had little choice after the blowback from his initial claim that Johnson’s intent was inscrutable (and his previous refusal to acknowledge the avowed motives of Muslim murderers in Orlando and San Bernardino). But the speech was nonetheless another exercise in his obfuscation of realities in order to insinuate pervasive institutional racism. He mentioned Philadro Castile and Baton Rouge shooting victim Alton Sterling in the same sentence as the five dead officers, thereby drawing a sort of equivalence where none exists, other than the fact that people are dead. But it got worse:

But America, we know that bias remains. We know it, whether you are black, or white, or Hispanic, or Asian, or native American, or of Middle Eastern descent, we have all seen this bigotry in our own lives at some point. We’ve heard it at times in our own homes. If we’re honest, perhaps we’ve heard prejudice in our own heads and felt it in our own hearts. We know that. And while some suffer far more under racism’s burden, some feel to a far greater extent discrimination’s stain. Although most of us do our best to guard against it and teach our children better, none of us is entirely innocent. No institution is entirely immune, and that includes our police departments. We know this.

And so when African-Americans from all walks of life, from different communities across the country, voice a growing despair over what they perceive to be unequal treatment, when study after study shows that whites and people of color experience the criminal justice system differently. So that if you’re black, you’re more likely to be pulled over or searched or arrested; more likely to get longer sentences; more likely to get the death penalty for the same crime. When mothers and fathers raised their kids right, and have the talk about how to respond if stopped by a police officer — yes, sir; no, sir — but still fear that something terrible may happen when their child walks out the door; still fear that kids being stupid and not quite doing things right might end in tragedy.

When all this takes place, more than 50 years after the passage of the Civil Rights Act, we cannot simply turn away and dismiss those in peaceful protest as troublemakers or paranoid.

Again, the recitation of incomplete and decontextualized statistics in the most inflammatory–and inappropriate–circumstances. Suggesting that law enforcement is racist at the funerals of five policemen (killed by an admitted racist, no less) is to insinuate that as part of that system these officers were racist too.

One particularly outrageous line is another BLM theme: “When mothers and fathers raised their kids right, and have the talk about how to respond if stopped by a police officer — yes, sir; no, sir — but still fear that something terrible may happen when their child walks out the door.” Tragically, something terrible may indeed happen to those children with shocking likelihood, but it is orders of magnitude more likely that the perpetrator of the terrible thing will not be a policeman, but another African American. And what about all those children whose mother and father did not raise them right, and all too often don’t raise them at all? Obama’s framing is yet another denial of some very unpleasant realities.

In the aftermath of the Trayvon Martin death, Obama said that the son he never had could have looked like Trayvon. He has not said the same about the dozens of young men shot down within blocks of his former Kenwood home.

Another particularly outrageous slur is the statement that “peaceful protest[ers]” are “dismissed” as troublemakers or paranoid. Check out the BLM-led protests in Ferguson, Atlanta, or Minnesota, which have been anything but peaceful. As for the rhetoric of BLM leaders, it is more than fair to characterize it as paranoid and intended to stir up trouble and strife–or worse. But since he insinuates that all protesters are peaceful, even when some are not, and that their complaints are valid, even when almost all are not, he absolves the violent and the provocateurs, and encourages the distortion of the truth.

Perhaps the worst line in the speech–again completely inappropriate in this setting–was this: “We flood communities with so many guns that it is easier for a teenager to buy a Glock than get his hands on a computer or even a book.”

Unpacking the mendacity of that statement would take many posts. A few things. First, just who is this “we”? I haven’t flooded guns anywhere: have you? This invocation of collective guilt (excluding himself, of course) is a common leftist trope. Second, it is patently absurd to say that it is easier for a teenager to get a Glock (starting price around $500) than a computer or a book. This is not an issue of availability or cost: it is an issue of choice. Third, and perhaps worst of all, is the denial of individual responsibility and moral agency to the “teenager” who chooses a gun over a book. But recognizing that would raise thorny and uncomfortable questions, when Obama’s purpose is to push easy nostrums (namely, gun control) and to condemn Americans and American institutions.

This is not a matter of mere rhetoric. There is a short distance between words, especially a president’s words, and especially a black president’s words on a racially charged matter, and actions. An extremely dangerous dynamic is at play, and incredible care is needed to avoid accelerating it.

Micah Johnson targeted police because of his belief that they target black men. In the day after the Dallas atrocity, police officers in Missouri, Tennessee, and Georgia were targeted. When police are targeted (and this has been a concern of police since Ferguson, and events in Baltimore) they are more likely to perceive a threat and shoot in response, which creates another cause célèbre which inflames the likes of Micah Johnson. And on and on it goes.

By repeating and embracing crucial elements of the fundamentally dishonest BLM narrative, Obama validates the aggrieved, and aggravates the dynamic. When a Sister Souljah moment is needed, Obama instead enables latter day Sister Souljahs–and worse.

So what is to be done? Honesty, and the avoidance of inflammatory fractional truths, would be a start.

So would be a full-throated condemnation of BLM and a concerted effort to marginalize it and to empower more responsible voices.

But I hold out little hope that Obama will do these things. He has already made plain his allegiances.

Indeed, he made them even more abundantly clear today: rather than condemning BLM, he is embracing it. The day after the memorial service in Dallas, he hosted BLM organizer Deray McKesson at the White House for a private meeting for three hours. (How many  people does Obama meet with privately for three hours? In his own cabinet, even?) (McKesson called the meeting a “convening.” What the hell is a convening? It’s not a noun!)

To meet with McKesson any time would be bad, but to do so the day after speaking at a memorial service for five police officers murdered by  a man who had told Dallas police negotiators that he was “upset by Black Lives Matter,” is beyond appalling. Step back for a minute and think about this. The day after turning a speech intended to honor slain policemen into another of his dreary lectures on America’s inveterate racism, he confers with the leader of an organization dedicated to the proposition that law enforcement routinely oppresses and assassinates African Americans.

Back in the ’60s, the refrain was “which side are you on?” We know exactly which side Obama is on.

It is deliberate, and it is a signal. And what it signals is that rather than using the power of his office to push back against an inflammatory movement that is in the midst of ramping up confrontations (with demonstrations planned in 37 cities on Friday), he is putting his power and authority behind that movement. Again, rather than pouring oil on troubled waters, throwing fuel on the fire. It is beyond disturbing.

What can others do? Perhaps the most practical and feasible step would be to enhance the credibility of investigations of law enforcement officers who employ deadly force, and to punish officers who employ it unjustifiably. This does not mean whitewashing police conduct–the exact opposite. Officers acting reasonably will prevail even searching investigations. But at the same time, it does mean that concerted efforts must be taken to de-politicize these investigations and cases. When major political figures (not just Obama, but Minnesota governor Dayton or the mayor of Baltimore) express their opinions on these police shootings, especially when the gun smoke still hangs in the air and the facts are not known, justice cannot prevail, and the credibility of the process is undermined. Demagogues like BLM exploit such doubts about process to fuel conflict.

The only margin I can see on which it is practically possible to reduce the frequency of confrontational interactions between police and African Americans in particular is the drug laws. This is obviously a complex and fraught subject, but criminalization of drugs clearly is a major reason for hostile interactions between police and people of all races, but African Americans in particular. It also contributes to violent criminality in minority communities most notably. The War on Drugs is problematic to say the least, and one of its most problematic aspects is how it exacerbates tensions between minorities and law enforcement. This is a good reason to rethink how it is fought, and whether it is worth fighting at all.

But that isn’t going to happen overnight, and maybe not ever. In the meantime, perhaps the best that can be achieved is “first, do no harm.” Unfortunately, a president in the best position to do good cannot muster even that.

 

 

 

 

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July 6, 2016

Brexit: Breaking the Cartel of Nations. Could Position Limits Be a Harbinger?

Filed under: Clearing,Commodities,Derivatives,Economics,Politics,Regulation — The Professor @ 7:50 pm

One of the ideas that I floated in my first post-Brexit post was that freed from some of the EU’s zanier regulations, it could compete by offering a saner regulatory environment. One of the specific examples I gave was position limits, for as bad as the US position limit proposal is, it pales in comparison to the awfulness of the EU version. And lo and behold! Position limits are first on the list of things to be trimmed, and the FCA appears to be on board with this:

Britain-based commodity exchanges may have some leeway in the way they manage large positions after the UK exits the European Union, but they will still have to comply with EU rules from 2018, experts say.

Position limits, a way of controlling how much of an individual commodity trading firms can hold, are being introduced for the first time in the Markets in Financial Instruments Directive II (MiFID II) from January 2018.

Britain voted to leave the EU last month, but its exit has to be negotiated with the remaining 27 members, a process that is meant to be completed within two years of triggering a formal legal process.

“It is too early to say what any new UK regime will look like particularly given pressure for equivalence,” James Maycock, a director at KPMG, said, referring to companies having to prove that rules in their home countries are equivalent to those in the EU.

“But UK commodity trading venues may have more flexibility in setting position limits if they are not subject to MiFID II.”

. . . .

Britain’s Financial Conduct Authority (FCA) said in a statement after the Brexit vote that firms should continue to prepare for EU rules. But it has previously expressed doubts about position limits on all commodity contracts.

“We do not believe that it is necessary, as MiFID II requires, to have position limits for every single one of the hundreds of commodity derivatives contracts traded in Europe. Including the least significant,” said Tracey McDermott, former acting chief executive at the FCA in February this year.

“And I know there are concerns, frankly, that the practical details of position reporting were not adequately thought through in the negotiations on the framework legislation.”

Here’s hoping.

This could explain a major driver behind the Eurogarchs intense umbrage at Brexit. Competition from the UK, particularly in the financial sector, will provide a serious brake on some of the EU’s more dirigiste endeavors. This is especially true in financial/capital markets because capital is extremely mobile. Further, I conjecture that Europe needs The City more than The City needs Europe. Hollande and others in Europe are talking about walling off the EU’s financial markets from perfidious Albion, but the most likely outcome of this is to create a continental financial ghetto or gulag, A Prison of Banks.

If financial protectionism of the type Hollande et al dream of could work, French, German and Dutch bankers should be dancing jigs right now. But they seem to be the most despondent and outraged at Brexit.

A (somewhat tangential) remark. Another reason for taking umbrage is that the UK has served as a safety valve for European workers looking to escape the dysfunctional continental labor markets. This is especially true for many younger, high skill/high education French, Germans, etc. (especially the French). With the safety valve cut off, there will be more angry people putting pressure on European governments.

This could be a good thing, if it forces the Euros (especially the French) to loosen up their growth-and-employment-sapping labor laws. But in the short to medium term, it means more political ferment, which the Euro elite doesn’t like one bit.

This all leads to a broader point. Cooperation is a double edged sword. The EU’s main selling point is that intra-European cooperation has led to a reduction in trade barriers that has increased competition in European goods markets. But the EU has also functioned as a Cartel of Nations that has restricted competition on many dimensions.

I note that one major international cooperative effort spearheaded by the Europeans is the attempt to reduce and perhaps eliminate competition between nations on tax. “Tax harmonization” sounds so Zen, but it really means cutting off any means of escape from the depredations of the state. But tax is just one area where governments don’t like to compete with one another. Much regulatory harmonization and coordination and imposed uniformity is intended to reduce inter-state competition that limits the ability of governments to redistribute rents.

This is one reason to believe that Britain’s exit will have some big upsides, not just for the UK but for Europe generally. It will invigorate competition between jurisdictions that statists hate. And it is precisely these upsides which send the dirigistes into paroxysms of anger and despair. Feel their pain, and rejoice in it.

 

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