Wednesday, 18 November 2015 13:10

A Word from London

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A Word from London

Herbert London

Herbert London is author of Decade of Denial, published by Lexington Books, and publisher of American Outlook. He can be reached at: www.herblondon.org.

Victory in Iraq?

For detractors of the war in Iraq the telling question, the winning argument, is "How do you define victory?" Presumably, if you cannot define it, you cannot achieve it. From Murta to Obama, from the fever swamps of radicals to the thoughtful liberal, this question haunts the debate about the war.

So let me try to address this question that has even eluded most defenders of the war. Victory in a conventional sense with land ceded and documents signed hasn't any application to Iraq. Hence conventional notions don't work.

What does work is a reduction in hostility so that the normal functions of life may go on largely undisturbed. As an analogue, consider the FBI war against the Mafia. The underworld has not been eliminated, but the FBI's "victory" has translated into business activity mainly without extortion and a reduction of Mafia involvement with commercial areas it once controlled, e.g., the Fulton Fish Market, the Garment Center.

Considering the sectarian hostilities in Iraq and attempts by insurgents to cause disruption, a period of irenic tranquility is not over the horizon. However, one dimension of victory would be sufficient stability for the normal public functions of life to proceed unabated, i.e., shopping, education, socializing.

The tocsin in the Iraqi air will not soon disappear, but an environment in which insurgents are hard-pressed to engage in violence and cannot dictate to the government or force the hand of American troops represents a form of victory. In other words, when the initiative in this war is ours, when we take the battle to the enemy, when the average Iraqi is fearful of assisting al Qaeda, then stability is achievable.

Second, victory can be declared when the Iraqi government is sufficiently ensconced that it has support from the three major constituencies: Sunni, Shia, and Kurds. While Maliki's leadership has not elicited widespread confidence, it is possible to envision a time when group loyalty is subordinate to national loyalty. This condition has not yet evolved fully but progress on this front has been made, notwithstanding the many claims to the contrary.

Third, victory is at hand when the trouble makers in the region, i.e., Syria and Iran, consider the cost of spreading chaos not worth the potential benefit. Despite suicide bombers seeking their role as martyrs, there is a point at which pain exceeds rewards. That point has not been reached, but it is not a stretch to imagine this scenario, particularly if there is regime change in Iran.

Fourth, although President Bush may have made premature claims about the fighting capability of Iraqi forces, they are getting better each day, as every analyst on the scene has noted and, in several instances, have acted decisively without U.S. intervention. An Iraq that can attend to its military needs with minimal U.S. involvement, will most definitely be an independent nation.

Last, a stable Iraq in a neighborhood that has only known chaos could be an example, a kind of reverse domino in which democratic institutions might gain traction in time and influence other national movements.

As I see it, victory is possible if one of these several conditions emerge. At the risk of seeming pollyannish, I believe that is possible. Hence withdrawal at this time would be counterproductive. Victory may not be complete and may not be as apparent as we might like, but the signs of it are evident, even as the naysayers engage in denial.

Iraq is a watershed in the war against radical Islam. If we stabilize this nation, we will have dealt a significant blow to the forces of radicalism. Victory in this war is not unequivocal, but Americans will recognize it nonetheless. Our expectations are becoming realistic at the very moment opponents of the war escalate the rhetoric of unrealistic total victory or retreat. If the constraints of realism prevail, the war in Iraq can be won and the forces of light will have plunged a sword into the heart of darkness.

The Entangling Relationship with China

While trade sanctions against China are being discussed on Capitol Hill, the Chinese government has begun a concerted campaign of economic threats against the United States in a game called "Who will blink first?"

Several leading Chinese Communist officials have warned that Beijing may use its $1.33 trillion foreign reserves as a political weapon to counter Congressional plans for trade sanctions. Some have called this China's "nuclear option," since dumping U.S. bonds could trigger a dollar crash at a moment when the currency is already breaking down through historic support levels.

Such a move could cause a spike in U.S. bond yields, hammer the already vulnerable housing market and perhaps tip the economy into recession. Therefore these threats cannot be taken lightly.

It is estimated that China holds over $900 billion in a mix of U.S. bonds, clearly the bulk of its foreign reserves. Xia Bin, chief at the Development Research Center, indicated that Beijing's foreign reserves should be used to influence U.S. trade policy in what is an unambiguous threat. "Of course," he added "China doesn't want any undesirable phenomenon in the global financial order."

He Fan, an official at the Chinese Academy of Social Science, said China has the power to set off a "dollar collapse if it chooses to do so." He noted:

China has accumulated a large sum of U.S. dollars. Such a big sum, of which a considerable portion . . . contributes . . . to maintaining the position of the dollar as a reserve currency.

Clearly China is unlikely to follow this scenario as long as the yuan's exchange rate is stable against the dollar. Moreover, the U.S. has some leverage in this arrangement, since a recession would diminish U.S. buying and importing power, thereby adversely affecting Chinese markets.

But there is little doubt the Chinese intend to play the blackmail card and contend the U.S. is hostage to economic decisions made in Beijing. China's having control of over 44 percent of the U.S. national debt undoubtedly leaves America acutely vulnerable.

The timing of these threats is particularly troubling. They come at a time when credit markets are already fearful of contagion from subprime mortgage troubles. That may explain why Secretary of Treasury Henry Paulson said any trade sanctions would undermine America's authority to promote free trade and open markets.

While some compromise with China is likely to be worked out, as it has been in the recent past, the backdrop for decision making is colored by the large sum of U.S. dollars sitting in Chinese hands. The Chinese government has allowed the yuan to appreciate 9 percent against the dollar over the last two years under a crawling peg, but it has not diminished the current account imbalance and the growing Chinese trade surplus.

From a strategic perspective the Chinese have a nuclear arsenal to thwart American interests in Asia and now have a financial nuclear option to influence U.S. political judgments as well.

Where this will lead is hard to say. But on the central issue no guess is needed: American options are circumscribed by the real threats China may impose.

China is not an enemy of the U.S., but neither is it a friend. Recognizing the potential collision of interests in the Taiwan Straits and elsewhere, it is best to keep in mind the dangers that could result from an entangling relationship. Unfortunately this has already occurred and it is not possible to see how the U.S. can easily extricate itself from the entanglement.

The Subprime Mortgage Market in Perspective

The subprime mortgage market has caused a convulsion on Wall Street with several analysts insisting it foreshadows a deep recession. There is little question that a sharp increase in delinquent mortgage payments has been due to loans made to borrowers with weak credit.

The combination of an accommodative Federal Reserve, political pressure to assist poor home owners and a belief that property appreciation would offset debt resulted in a perfect market storm.

The subprime market caters to borrowers with impaired credit histories. Of the $7.8 trillion in residential mortgage debt outstanding in the United States, subprime debt accounts for $824 billion, or about 10 percent of the total. Although subprime represents only a small proportion of the debt, a rapid rise in early payment defaults has strained lenders and caused heightened concern over the quality of loan originations.

Further problems could occur as adjustable rate mortgages are reset at much higher interest rates resulting in payment spikes. Financially strapped borrowers are experiencing difficulty refinancing or selling properties while lenders, sensitive to roiling property markets, are tightening their underwriting standards and reducing the availability of credit.

As is often the case when a benign economic environment turns volatile, the magnitude of risk taking is coming into focus. The environment of abundant liquidity may have had its roots in an extended period of easy monetary policy, but the driving influence in the past few years has been rampant credit expansion in the financial sector.

While the working class homeowner may face foreclosure -- a matter that goes right to the heart of American culture (cite "It's A Wonderful life") -- the odds of a systematic financial crisis, notwithstanding "the sky is falling" economists, are slim. Credit problems are likely to spread across a number of investors and lenders rather than be concentrated in banks, as often occurred in previous credit stress.

Recognizing the impending crisis, the Fed, largely uninterested in bailing out investors from bad decisions and having taken the view investors have been far too aggressive in pricing risk, will nonetheless move to deal with the threat to the intermediation of credit. My guess is the Fed will ease rates and the Congress, bent out of shape by the political fallout of foreclosures, will call for measures that distinguish between sound and loose credit features.

Scarcely a soul will recall that political pressure over red-lining was partially responsible for the subprime failures in the first place. It is reminiscent of John Edwards' lamentation about the subprime mess while at the same time investing in a mortgage company that benefits from the foreclosures.

Although the mortgage problem will adversely affect the poor and those areas such as Florida that engaged in wildcat real estate speculation, the global economy has displayed remarkable resilience. Inflation is low, the equity bull market is in its fifth year, valuations are reasonable in most regions, and employment numbers and consumer spending are robust. That is the backdrop for the subprime mortgage problem.

Should the housing market stress persist, there is little doubt equities will struggle and the bears will rouse from a long slumber. But rather than wager on a recession, I would contend the current problem will introduce a degree of sobriety into credit markets and, in the long term (five years?), the supply side effect of globalization, technological innovation, and market reform will shift the markets into a positive stance.

In the short term, however, there will be social detritus. The subprime borrower may face bankruptcy and foreclosure, a prospect that even the most hard-hearted will lament. Typically these borrowers take out equity in their homes to pay off outstanding consumer debts. With the on-going tightening in the credit market, those days are past and with it will come economic gloom for many and credit reverberations through the economic system. As noted, this won't be a recession, but for many it won't be a pretty picture either.

A Republic vs. a Liberal State

Ben Franklin, when asked to describe the goal of the Constitutional Convention, said, "A Republic, if you can keep it." The last five words are critical. For in the succeeding two hundred years the Republic has undergone shifts and dramatic changes. Surely the limited government envisioned by the Founders does not resemble the government of today that by happenstance, pandering, or addressing real and perceived needs, is elephantine.

But perhaps the most significant challenge to a republican form of government is the liberal state that emphasizes rights as its critical feature. Rights tend to be inviolable; moreover, a privilege vouchsafed over several months morphs easily into a right.

Rent control in New York City, for example, proffered as a temporary measure to assist G.I.s returning from World War II, was transmogrified into a right that doesn't make economic sense and certainly has little application to the city 60 years after its introduction.

The liberal state is fond of finding and then defending rights the Founders could not possibly have imagined. Reproductive rights, the right to healthcare, the right to marry a member of the same sex, are clearly contemporary rights that come to mind.

The problem with newly created rights is that they take on a status like those in the Bill of Rights; they must be defended and applied as if they were the First Amendment. And there isn't any end to their invention and metamorphosis from idea to privilege to right.

Rights are also universal; they apply to those who pay taxes and those who don't; they apply to new immigrants and the old; they may even be applied to those who arrive on our shores illegally. Hence rights can fundamentally alter the character of a nation, even as we take pride in many rights (individual rights, property rights) as being essential for the continued qualities in our nation.

Republicanism is summarized in three words, "we, the people." Our Constitution does not refer to "we, the states" or to "a polity." The government presumably serves the will of the people and acts on the consent of the governed. Therefore, rights must be seen against a backdrop of consent. If the people are willing to abjure some rights in order to enhance security, that is their privilege.

Liberalism has so encroached on the essence of the republic that the courts have arrogated to themselves the right to make laws the Constitution earmarked for Congress. And this has occurred without much of an outcry from the public.

In my judgment the reason for the failure of the recent Immigration bill is that the proposed legislation represented liberal overreaching. By suggesting people who violated American sovereignty should be rewarded with the rights of citizens struck those with a republican orientation as absurd. This was seen, rightly or wrongly, as the frivolous dissemination of rights.

The proliferation of rights is not accompanied by a devotion to duties. People assume rights are manufactured -- as indeed they often are -- and are served to the American people cost free. As a consequence, there is a natural constituency for rights proliferation and not one for a traditional republican form of government.

Yet there are many areas of public life where the consent of the governed should prevail. If the public is wary of radical Islam and its penchant for violence, must we say rights should be applied to radical Muslims and Muslims alike? If the people are unwilling to embrace guest workers who do not have any interest in being American -- speaking our language, learning our customs and history and sacrificing for the nation -- does it make sense to extend the rights of American citizens to these workers?

Clearly the tension between the liberalism of John Stuart Mill and the republicanism of Jefferson is embedded in our history. This moment, in a sense, is not different from others. But I would contend we have tilted so far in a liberal direction, we have lost our way. It's time to rebalance philosophical assumptions and restore consent of the governed into the national debate on public policy issues.

The Limits of Economics

At a recent conference on the trade deficit a distinguished economist noted that the issue of oil imports will in time rectify itself as the market adjusts to high prices by instituting energy alternatives. It is a sensible argument buoyed by economic theory. But in this case economic theory has its limits.

As long as the United States relies on imported oil from Arab nations to meet its energy needs, dollars are used to fuel terrorism. It is not importation per se that is the problem, but the attitude and venue of the importers.

Of course, over time our markets will adjust because of the price of oil. The key phrase is "over time." Over time we may be dead; over time, we may have many attacks on our soil; over time hatred may metastasize.

While I recognize the veracity of free markets and, in theory, see the trade deficit as an accounting measure, in my opinion, national security trumps all other judgments. Since Saudi Arabia uses its outsized capital to promote Wahhabism, an extreme version of Islam, through madrassas worldwide, we have an obligation to stem the flow of capital to the region.

Browbeating the Saudi government has not worked because the underwriting for extremists is, in fact, an extortion payment to protect the existing regime. The Saudi princes pay so they can stay.

Our position must be a government-directed program to move as quickly as possible away from dependence on Middle Eastern oil. And we must do so without necessarily picking the "energy winner," e.g., ethanol.

The free market model may get the country to the same place, but the timeliness is unpredictable. Moreover, the price of oil can be manipulated by the OPEC cartel thereby influencing the pace of change.

As a conservative I am reflexively suspicious of government-directed programs; in this case, however, I don't see an alternative. Only the government has the ability to mitigate the effect of manipulated oil prices. Presumably OPEC can charge less for oil when alternatives are being introduced into the market at the same price. Does anyone remember the abortive syn-fuels project?

This time decisions must be insulated from price, since what is at stake is nothing less than national security. If terror mechanisms are starved, they cannot function.

Some will argue, indeed have argued, that if we buy less oil China and India will buy more. But surely these nations do not want to be reliant on insecure oil sources if an alternative is available. China would have to protect its sea lanes now patrolled by American vessels. In this scenario, transactional costs would escalate putting China and India in the market to secure energy alternatives.

The issue, as I see it, is timing. This nation should consider moving to hybrid automobile engines as quickly as possible. Getting 125 miles to the gallon will change the energy calculus dramatically. Similarly, nuclear plants should produce almost all of the nation's electricity needs. At the moment nuclear plants account for 16.5 percent, albeit oil accounts for about 2.5 percent of electrical production. The source carrying the load for the grid is coal, available within the nation in abundance. Yet every step away from oil dependence, however small, is desirable.

Winning the war against the radical Islamic terrorists means preventing them from buying the bombs, weapons, and personnel that promote destruction. The way to win, alas, the way to wage the war, is to divest the United States from its reliance on foreign oil. We must win this war on foreign battlefields and we must win this war at home by weaning ourselves from "black gold" and an unholy alliance with Arab nations.

Corrupting Sports

For me sports represented the last best hope for accomplishment. I have long been a cynic about politics and I have decried the degradation in popular culture. But until recently, sports were a refuge. I would commit baseball statistics to memory because I believed that the numbers embodied achievement. But all of that is now lost. Sports have sunk into the sink hole of corruption.

A gambling scandal involving referee Tim Donaghy has challenged the integrity of NBA games. In a sense Commissioner David Stern cannot possibly fathom, the NBA has come to resemble WWF (World Wrestling Federation) where there cannot be any trust in the outcome of a match. Who knows how many games were ultimately determined by the corrupt ref's call? The nobility of basketball has been thoroughly compromised.

Of course professional basketball is not alone. With Barry Bonds breaking Hank Aaron's career home run record, the claim of steroid use will forever serve to blemish his accomplishment. The most acclaimed statistic in sports will now have an asterisk on it -- "the juiced era" and the prejuiced era.

In fact, baseball was a game dependent on numbers. I was a member of a generation that went to the bathroom with the baseball encyclopedia. But what can the numbers mean for contemporary players of the Mark McGuire, Sammy Sosa, and Barry Bonds variety?

Allegations of doping have also affected the bicyclists in the much-heralded Tour de France with a number of the front runners this year disqualified because they failed drug tests.

And it is certainly suspicious when 250-pound college linemen report to professional teams at 320 pounds a year after college. Try gaining 70 pounds of muscle through weight lifting alone. Such contentions defy reality.

Some argue that illegal substances should be legalized. Presumably if everyone uses them, there isn't any obvious advantage for the abusers. What this claim overlooks is the history of the games, a time when some didn't have an edge.

Others maintain that since corruption afflicts every aspect of society from business to Hollywood, why should sports be immune? Well, for kids who look up to athletes, the accomplishment on the field of play seemed pure, an arena different from the rest of life. Sports were not merely entertainment; they possessed life lessons. That explains why fans can rationalize the bad behavior of players off the field.

Babe Ruth was known for his transgression with women, booze and hot dogs. But this behavior could be rationalized or excused because his 714 homers were real. At a time of the "dead ball" Ruth hit more homers than most teams in the American League.

In my judgment the legitimacy of competition has been called into question. It appears as though all professional sport is moving in the direction of pro wrestling, a faux sport designed to entertain, but having nothing at all to do with an unchoreographed outcome.

A public inured to athletic events might forget and forgive as it did the cocaine scandal in baseball during the 1980s, the NFL gambling problems of the 1960s, and Pete Roses' imbroglio with gamblers when he was managing the Philadelphia Phillies.

I would like to forgive as well, but my distrust is difficult to overcome. I have to deny my level of disbelief. I have to ask myself whether what I see and read is true. I have to regain faith in the numbers that once gave sports their texture. And I have to have faith that the fix isn't in.

This is a lot to ask for. Yet without the legitimacy these alterations could bring about, sports are today's youthful audience.

I remember, with great fondness, the Chip Hilton books written by Claire Bee I read as an adolescent. These books molded my character. Like Chip I wanted to achieve great feats on the playing field, but not by cheating and not by breaking the rules. If one relies on ref Donaghy and Barry Bonds, it appears that Chip Hilton is dead and with him all the standards about sports that really matter. *

"The shortest and surest way to live with honor in the world is to be in reality what we would appear to be." --Socrates

Read 1931 times Last modified on Wednesday, 18 November 2015 19:10
Herbert London

Herbert London is president of the London Center for Policy Research and is co-author with Jed Babbin of The BDS War Against Israel.

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