In Somalia today, there are ominous parallels with 1992: pervasive
fighting among rival clans, far too little rain, and an inability among
international peacekeeping forces to restore order or ensure that food
aid reaches those in need. Nineteen years ago, the result was the death
by starvation of 300,000 Somalis. Will it happen again?It doesn't have to. But everything depends on how the world responds.In
some ways, the current situation is more complicated. One reason lies
outside of Somalia altogether: the painful set of memories associated
with our attempts to help in 1992, particularly in the United States.
Then, the U.S. response was a forceful military intervention. President
George H.W. Bush dispatched 25,000 American troops to Somalia, allowing
food deliveries to resume, and preventing as many as 200,000 additional
deaths. But in October 1993, famously,
two Black Hawk helicopters were shot down in Mogadishu, 18 U.S.
soldiers died, and the body of one dead American was dragged
triumphantly through the streets. Public outrage forced President
Clinton to terminate the mission. As a consequence, it's unlikely that
U.S. policy makers will come close to taking similarly dramatic steps
today.Meanwhile, two factors on the ground in Somalia itself
threaten to make the current crisis more dangerous than the previous
one. First, the drought is much worse this time -- perhaps the worst of
its kind in 60 years. Second, there is now an Islamist militant
controlling the southern region of Somalia, where the drought has been
most severe. The 2 million people living in this region cannot get food
aid, because Al-Shabab's leadership, which brags about its close ties to
Al-Qaeda, distrusts food-aid workers as spies. The propaganda they
project among those living under their control is that it is better to
starve than to accept help from the West.Under these seemingly
intractable circumstances, what can those outside Somalia do to prevent
mass deaths on the scale of the 1990s? Setting up relief camps in
neighboring countries and waiting for starving Somalis to walk across
the border is not a good option, because many do not survive the trip,
and those that do become helpless refugees. Camps along Somalia's
borders with Kenya and Ethiopia already hold 500,000 destitute people.
Paying large bribes to Al-Shabab fighters could get some food through on
the ground, but it is obviously not a sustainable solution, among the
reasons being that the government agencies financing the aid will not
ultimately tolerate it. Dropping food from UN airplanes will help, but
not nearly on the scale needed to make a significant difference.The
best policy option that the international community has available to it
in Somalia is to support as much as possible the feeding operations now
underway in the sizeable territories not controlled by Al-Shabab. The
United Nations World Food Programme (WFP) is currently feeding 1.5
million people in Somalia, including 300,000 in Mogadishu itself, but
these operations are constantly in danger of running out of resources.
For the Horn of Africa as a whole, WFP is facing a funding shortfall of
$252 million, so those wishing to help can start by focusing on ways to
make up this shortfall.The international community can also do
things beyond Somalia, and indeed beyond the exigencies of emergency
food aid. Rich nations, including the United States, can start by
delivering the support they have promised to build Africa's own
food-production capabilities. Small farmers throughout sub-Saharan
Africa need help to boost their productivity. If you visit a typical
farming community in Uganda, or Kenya, or Cameroon, or Benin, most of
those you meet will be women, most will be illiterate, and most will be
living at least a 30-minute walk from the nearest paved road. As well,
most will be farming with hand hoes, no irrigation, no electrical power,
no modern seeds, and no veterinary medicine for their animals. These
women are hardworking and highly resourceful, yet the returns on their
labor are minimal because they have so little to work with. Their cereal
crop yields are only one-tenth as high as those in Europe or North
America, their average income is only $1 a day, and one-in-three of them
is undernourished.What these farming communities need, above
all else, is increased public investment in rural roads, electrical
power, irrigation, clinics, schools, and agricultural research. But in
recent decades, most African governments failed to make these
investments because of a lack of international support. Between 1978 and
2006, the share of World Bank loans that went to agricultural
development fell from 30 percent to only 8 percent.The United
States has also reduced its aid to small farmers since the 1980s. U.S.
official development assistance to agriculture in Africa fell from $400
million annually in the 1980s to only $60 million by 2006. The political
right promoted this abandonment of agricultural-development assistance
on the erroneous assumption that private investment alone could do the
job. The political left went along on the equally erroneous belief that
modernizing African farming might be bad for social justice and the
environment.As international donors walked away from long-term
agricultural-development efforts in Africa, per capita food production
fell, leading predictably to an even greater need for emergency food
aid. By 2006, perversely, the United States was spending 20 times as
much shipping free food to Africa as it was spending to help Africans
produce their own food.A shock of much higher world food prices
in 2008 finally led donors to promise revived support for Africa's
smallholder farmers. President Obama announced in 2009 that he would ask
Congress for a doubling of U.S. agricultural-development assistance
worldwide, up to more than $1 billion by 2010. Later that year, at a
summit meeting of the G8, he convinced the world's rich nations to
pledge $22 billion collectively over three years to promote food
security and agricultural development. By 2010, however, donors in
Europe were facing a debt crisis, opted for budget austerity, and began
backing away from these promises.In the United States, the right
- and the Tea Party movement, in particular -- began demanding budget
cuts as well. In fiscal year 2011, Congress accordingly cut the expected
U.S. contribution to a new Global Agricultural Food Security Program
from $400 million down to only $100 million. And now a House
Appropriations subcommittee has just cut FY 2012 funding for the Obama
Administration's Feed the Future program by 18 percent. Only about half
of 1 percent of our federal budget goes to poverty-focused foreign aid,
so cutting these programs will have no significant budget impact at home
-- only damaging humanitarian effects abroad.In Somalia, if
these effects are to be prevented from cascading into a full-scale
disaster of the kind the country suffered through in the 1990s, the
international community will have to focus as much effort as possible,
as quickly as possible, where we can be most effective. This will mean
covering shortfalls to protect current WFP feeding operations in the
Horn of Africa. But also, especially from the United States, it will
mean delivering on promised support for farming across Africa (which in
turn will depend on Congressional appropriations committees feeling as
much pressure as the U.S. public can muster that they deliver on this
promised support). Around the Horn of Africa today, roughly 11 million
people face food risks, while on the continent as a whole there are now
an estimated 390 million Africans consuming less than the nutritional
target of 2,100 calories per day. Most of these hungry people are
farmers. Understanding what they need for a sustainable response to the
food crisis they face, and responding to that need directly, will be the
pivotal challenge in alleviating African famine.
Despite all the recent talk of “grand bargains,” little attention has been paid to the unraveling of a truly grand bargain that has been at the center of public policy in the United States for more than a century.
That bargain—which emerged in stages between the 1890s and 1930s—established an institutional framework to balance the needs of the American people with the vast inequalities of wealth and power wrought by the triumph of industrial capitalism. It originated in the widespread apprehension that the rapidly growing power of robber barons, national corporations and banks (like J.P. Morgan’s) was undermining fundamental American values and threatening democracy.
Such apprehensions were famously expressed in novelist Frank Norris’s characterization of the nation’s largest corporations—the railroads—as an “octopus” strangling farmers and small businesses. With a Christian rhetorical flourish, William Jennings Bryan denounced bankers’ insistence on a deflationary gold standard as an attempt to “crucify mankind upon a cross of gold.” A more programmatic, and radical, stance was taken by American Federation of Labor convention delegates who in 1894 advocated nationalizing all major industries and financial corporations. Hundreds of socialists were elected to office between 1880 and 1920.
Indeed, a century ago many, if not most, Americans were convinced that capitalism had to be replaced with some form of “cooperative commonwealth”—or that large corporate enterprises should be broken up or strictly regulated to ensure competition, limit the concentration of power and prevent private interests from overwhelming the public good. In the presidential election of 1912, 75 percent of the vote went to candidates who called themselves “progressive” or “socialist.”
Such views, of course, were vehemently, sometimes violently, opposed by more conservative political forces. But the political pressure from anti-capitalists, anti-monopolists, populists, progressives, working-class activists and socialists led, over time, to a truly grand bargain.The terms were straightforward if not systematically articulated. Capitalism would endure, as would almost all large corporations. Huge railroads, banks and other enterprises—with a few exceptions—would cease to be threatened with nationalization or breakup. Moreover, the state would service and promote private business.
In exchange, the federal government adopted a series of far-reaching reforms to shield and empower citizens, safeguarding society’s democratic character. First came the regulation of business and banking to protect consumers, limit the power of individual corporations and prevent anti-competitive practices. The principle underlying measures such as the Sherman Antitrust Act (1890), the Pure Food and Drug Act (1906) and the Glass-Steagall Act (1933)—which insured bank deposits and separated investment from commercial banking—was that government was responsible for protecting society against the shortcomings of a market economy. The profit motive could not always be counted on to serve the public’s welfare.
The second prong of reform was guaranteeing workers’ right to form unions and engage in collective bargaining. The core premise of the 1914 Clayton Act and the National Labor Relations Act of 1935—born of decades of experience—was that individual workers lacked the power to protect their interests when dealing with large employers. For the most poorly paid, the federal government mandated a minimum wage and maximum hours.
The third ingredient was social insurance. Unemployment insurance (1935), Social Security (1935), and, later, Medicaid and Medicare (1965) were grounded in the recognition that citizens could not always be self-sufficient and that it was the role of government to aid those unable to fend for themselves. The unemployment-insurance program left unrestrained employers’ ability to lay off workers but recognized that those who were jobless through no fault of their own (a common occurrence in a market economy) ought to receive public support.
These measures shaped the contours of U.S. political and economic life between 1940 and 2000: They amounted to a social contract that, however imperfect, preserved the dynamism of capitalism while guarding citizens against the power imbalances and uncertainties that a competitive economy produces. Yet that bargain—with its vision of balance between private interests and public welfare, workers and employers, the wealthy and the poor—has been under attack by conservatives for decades. And the attacks have been escalating.
The regulation of business is decried now, as it was in 1880, as unwarranted interference in the workings of the market: Regulatory laws (including antitrust laws) are weakly enforced or vitiated through administrative rule-making; regulatory agencies are starved through budget cuts; Glass-Steagall was repealed, with consequences that are all too well known; and the financial institutions that spawned today’s economic crisis - by acting in the reckless manner predicted by early twentieth-century reformers—are fighting further regulation tooth and nail. Private-sector employers’ fierce attacks on unions since the 1970s contributed significantly to the sharp decline in the number of unionized workers, and many state governments are seeking to delegitimize and weaken public-sector unions. Meanwhile, the social safety net has frayed: Unemployment benefits are meager in many states and are not being extended to match the length of the downturn; Republicans are taking aim at Medicaid, Medicare, Social Security and Obamacare. The real value of the minimum wage is lower than it was in the 1970s.
These changes have happened piecemeal. But viewed collectively, it’s difficult not to see a determined campaign to dismantle a broad societal bargain that served much of the nation well for decades. To a historian, the agenda of today’s conservatives looks like a bizarre effort to return to the Gilded Age, an era with little regulation of business, no social insurance and no legal protections for workers. This agenda, moreover, calls for the destruction or weakening of institutions without acknowledging (or perhaps understanding) why they came into being.
In a democracy, of course, the ultimate check on such campaigns is the electoral system. Titans of industry may wield far more power in the economic arena than average citizens, but if all votes count equally, the citizenry can protect its core interests—and policies—through the political arena. This makes all the more worrisome recent conservative efforts to alter electoral practices and institutions. Republicans across the nation have sponsored ID requirements for voting that are far more likely to disenfranchise legitimate (and relatively unprivileged) voters than they are to prevent fraud. Last year, the Supreme Court, reversing a century of precedent, ruled that corporate funds can be used in support of political campaigns. Some Tea Partyers even want to do away with the direct election of senators, adopted in 1913. These proposals, too, seem to have roots in the Gilded Age—a period when many of the nation’s more prosperous citizens publicly proclaimed their loss of faith in universal suffrage and democracy.
Given how much sway the Tea Party has among Republicans in Congress and
those seeking the Republican presidential nomination, one might think
the Tea Party is redefining mainstream American politics.
But in fact the Tea Party is increasingly swimming against the tide of
public opinion: among most Americans, even before the furor over the
debt limit, its brand was becoming toxic. To embrace the Tea Party
carries great political risk for Republicans, but perhaps not for the
reason you might think.
Polls show that disapproval of the Tea Party is climbing. In April 2010,
a New York Times/CBS News survey found that 18 percent of Americans had
an unfavorable opinion of it, 21 percent had a favorable opinion and 46
percent had not heard enough. Now, 14 months later, Tea Party supporters have slipped to 20 percent, while their opponents have more than doubled, to 40 percent.
Of course, politicians of all stripes are not faring well among the
public these days. But in data we have recently collected, the Tea Party
ranks lower than any of the 23 other groups we asked about—lower than
both Republicans and Democrats. It is even less popular than much
maligned groups like “atheists” and “Muslims.” Interestingly, one group
that approaches it in unpopularity is the Christian Right.
The strange thing is that over the last five years, Americans have moved
in an economically conservative direction: they are more likely to
favor smaller government, to oppose redistribution of income and to
favor private charities over government to aid the poor. While none of
these opinions are held by a majority of Americans, the trends would
seem to favor the Tea Party. So why are its negatives so high? To find
out, we need to examine what kinds of people actually support it.
Beginning in 2006 we interviewed a representative sample of 3,000
Americans as part of our continuing research into national political
attitudes, and we returned to interview many of the same people again
this summer. As a result, we can look at what people told us, long
before there was a Tea Party, to predict who would become a Tea Party
supporter five years later. We can also account for multiple influences
simultaneously—isolating the impact of one factor while holding others
Our analysis casts doubt on the Tea Party’s “origin story.” Early on,
Tea Partiers were often described as nonpartisan political neophytes.
Actually, the Tea Party’s supporters today were highly partisan
Republicans long before the Tea Party was born, and were more likely
than others to have contacted government officials. In fact, past
Republican affiliation is the single strongest predictor of Tea Party
What’s more, contrary to some accounts, the Tea Party is not a creature
of the Great Recession. Many Americans have suffered in the last four
years, but they are no more likely than anyone else to support the Tea
Party. And while the public image of the Tea Party focuses on a desire
to shrink government, concern over big government is hardly the only or
even the most important predictor of Tea Party support among voters.
So what do Tea Partiers have in common? They are overwhelmingly white,
but even compared to other white Republicans, they had a low regard for
immigrants and blacks long before Barack Obama was president, and they
More important, they were disproportionately social conservatives in
2006—opposing abortion, for example—and still are today. Next to
being a Republican, the strongest predictor of being a Tea Party
supporter today was a desire, back in 2006, to see religion play a
prominent role in politics. And Tea Partiers continue to hold these
views: they seek “deeply religious” elected officials, approve of
religious leaders’ engaging in politics and want religion brought into
political debates. The Tea Party’s generals may say their overriding
concern is a smaller government, but not their rank and file, who are
more concerned about putting God in government.
This inclination among the Tea Party faithful to mix religion and
politics explains their support for Representative Michele Bachmann of
Minnesota and Gov. Rick Perry of Texas. Their appeal to Tea Partiers
lies less in what they say about the budget or taxes, and more in their
overt use of religious language and imagery, including Mrs. Bachmann’s
lengthy prayers at campaign stops and Mr. Perry’s prayer rally in
Yet it is precisely this infusion of religion into politics that most
Americans increasingly oppose. While over the last five years Americans
have become slightly more conservative economically, they have swung
even further in opposition to mingling religion and politics. It thus
makes sense that the Tea Party ranks alongside the Christian Right in
On everything but the size of government, Tea Party supporters are
increasingly out of step with most Americans, even many Republicans.
Indeed, at the opposite end of the ideological spectrum, today’s Tea
Party parallels the anti-Vietnam War movement which rallied behind
George S. McGovern in 1972. The McGovernite activists brought energy,
but also stridency, to the Democratic Party—repelling moderate voters
and damaging the Democratic brand for a generation. By embracing the Tea
Party, Republicans risk repeating history.
On Sunday, I talked about about Wall Street's wild
week with two of the world's top economists. We discussed what the
market volatility means or doesn't mean, and what may lay behind it and
what lies ahead of us.Paul Krugman won the 2008 Nobel Prize in Economics, and he is a columnist for The New York Times. Kenneth Rogoff
is a former chief economist at the International Monetary Fund, now a
professor of economics at Harvard University. Here's a lightly edited
transcript of our conversation:Fareed Zakaria: Paul, let me start with you. The one
thing we saw over the week was markets up, markets down, but the one
trend that seemed persistent was there is a great demand for U.S.
treasuries despite the fact that the S&P downgraded it.You've been talking a lot about this. Explain in your view what does
it mean that in moments like this U.S. treasuries are still in demand
and what that does is push interest rates even lower than they are.Paul Krugman: Well, what it tells you is that the
investors, the market, are not at all afraid of what the policy elite or
people like Standard & Poor's are telling them they should be
afraid of.You know, we've got all of Washington, all of Brussels, all of
Frankfurt saying debt, deficits, this is the big problem. And what we
actually have in reality is markets are terrified of prolonged
stagnation, maybe another recession. They still see U.S. government debt
as the safest thing out there, and are saying, if this was a reaction
of the S&P downgrade, it was the market's saying, "We're afraid that
that downgrade is going to lead to even more contractionary policy,
more austerity, pushing us deeper into the hole."So it's a reality test, right? So we just had a wake-up call that
said, "Hey, you guys have been worrying about the entirely wrong things.
The really scary thing here is the prospect of what amounts toa
somewhat reduced version of the Great Depression in the Western world."Fareed Zakaria: Ken Rogoff, worrying about the wrong thing?Ken Rogoff: Well, I think the downgrade was well
justified. It's a very volatile world. And the reason there's still a
demand for treasuries is they've been downgraded a little bit to AA
plus. That looks pretty good compared to a lot of the other options
right now.It's a very, very difficult time for investors. There is a financial
panic going on at some level. Some of it's adjusting to a lower growth
expectations, maybe a third of what we're seeing. Two-thirds of it is
the idea no one's home – not in Europe, not in the United States.
There's no leadership. And I really think that's what's driving the
panic.Fareed Zakaria: But you wrote in an article of yours
that you think that this is part of actually a broader phenomenon which
is that people are realizing this is not a classic recession, this is
not a classic cyclical downturn. This is what you call a "Great Contraction". Explain what you mean by that.Ken Rogoff: Well, recessions we have periodically
since World War II, but we haven't really had a financial crisis as
we're having now. And Carmen Reinhart and I think of this as a great
contraction, the second one, the first being the Great Depression, where
it's not just unemployment, it's not just output, but it's also credit,
housing and a lot of other things which are contracting. These things
last much longer because of the debt overhang that we started with.
After a typical recession, you come galloping out. Six months after it
ended, you're back to where you started. Another six or 12 months,
you're back to trend.If you look at a contraction, one of these post-financial crisis
events, it can take up to four or five years just to get back to where
you started. So people are talking about a double dip, a second
recession. We never left the first one.Fareed Zakaria: So, Paul Krugman, what the
implication of what Ken Rogoff is saying is spending large amounts of
money on stimulus programs is not going to be the answer because, until
the debt overhang works its way off, you're not going to get back to
trend growth. So, in that circumstance, you'll be wasting the money. Is
that – is -Paul Krugman: No, that's not at all what it implies.
I think my analytical framework, the way I think about this, is not
very different from Ken's. At least I certainly believed from day one of
this slump that it was going to be something very different from one of
your standard V-shaped, down and up recessions, that it was going to
last a long time.One of the things we can do, at least a partial answer, is in fact to
have institutions that are able to issue debt - namely the government -
do so and sustain spending and, among other things, by maintaining
employment, by maintaining income, you make it easier for the private
sector to work down that overhang of debt.Fareed Zakaria: Ken, are you in favor of a – a second or a significant additional stimulus in the way that I think Paul Krugman is?Ken Rogoff: No. I think that's where we part ways on
this. I think that creates a debt overhang in the terms of future taxes
that is not a magic bullet because it's not a typical recession. I do
think, if we used our credit to help facilitate one of these plans to
bring down the mortgage debt in this targeted way, and it could involve a
significant amount - that I would definitely consider. I mean, that's
how I would do it.Now, obviously, things go from bad to worse, then you start taking
out more and more things from the toolkit, but I would start with
targeting the mortgages, then higher inflation, try to do some
structural reforms and, of course, if things are still going badly, I'm
open to more ideas.Paul Krugman: I would say things have already gone
from bad to worse. I mean, this is a terrible, terrible situation out
there. You know, we talk about it, we look at GDP, whatever. We have
nine percent unemployment and, more to the point, we have long-term
unemployment at levels not seen since the Great Depression. Just an
incredibly large number of people trapped in basically permanent
unemployment.This is something that desperately needs addressing. And I would be
saying we should not be trying one tool after another from the toolkit a
little bit at a time. At this point, we really want to be throwing
everything we can get mobilized at it.I don't think fiscal stimulus is – is a magic bullet. I'm not sure
that inflation is a magic bullet in the sense that it's kind of hard to
get, unless you're doing a bunch of other things. So we should be trying
all of these things.How did the Great Depression end? It ended, actually, of course,
with World War II, which was a massive fiscal expansion, but also
involved a substantial amount of inflation, which eroded the debt. What
we need - hopefully we don't need a world war to get there - but we need
this kind of all-out effort which we're not going to get.Fareed Zakaria: You say World War II got us out of
the Depression. This was a massive stimulus, massive fiscal expansion.
But aren't we in a different world?We are, right now, the United States with a budget deficit 10 percent
of GDP, which is the second highest in the industrial world. In two our
debt-to-GDP ratio goes to 100 percent. That strikes me as a situation,
which presumably has some upper limit. You can't just keep spending
money and incur these larger and larger debt loads.Paul Krugman: I think those numbers are a bit high, about the debt levels a couple years out. It takes longer than that.But the main thing to say is, look, think about the costs versus
benefits right now. Basically, the U.S. government can borrow money and
repay in constant dollars less than it borrowed. Are we really saying
that there are no projects that the federal government can undertake
that have an even slightly positive rate of return? Especially when you
bear in mind that many of the workers and resources that you employ on
those projects would be otherwise be unemployed.The world wants to buy U.S. bonds. Let's supply some more, and let's
use those bonds to do something useful which might, among other things,
help to get us out of this terrible, terrible slump.Ken Rogoff: Well, I think you have to be careful
about assuming that these low interest rates are going to last
indefinitely. They were very low for subprime mortgage borrowers a few
years ago. Interest rates can turn like the weather.But I also question how much just untargeted stimulus would really
work. Infrastructure spending, if well spent, that's great. I'm all for
that. I'd borrow for that, assuming we're not paying Boston Big Dig kind
of prices for the infrastructure.Fareed Zakaria: But, even if you were, wouldn't John
Maynard Keynes say that if you could employ people to dig a ditch and
then fill it up again, that's fine. They're being productively employed,
they pay taxes, so maybe the Boston's Big Dig was just fine after all?Paul Krugman: Think about World War II, right? That
was actually negative for social product spending, and yet it brought us
out. I mean, partly because you want to put these things together, if
we say, "Look, we could use some inflation." Ken and I are both saying
that, which is of course anathema to a lot of people in Washington, but
is in fact what the basic logic says.It's very hard to get inflation in a depressed economy. But if you
have a program of government spending plus an expansionary policy by the
Fed, you could get that. So if you think about using all of these
things together, you could accomplish a great deal.If we discovered that space aliens were planning to attack and we
needed a massive buildup to counter the space alien threat - and really
inflation and budget deficits took secondary place to that - this slump
would be over in 18 months. And then if we discovered, oops, we made a
mistake there aren't actually any space aliens.Ken Rogoff: So we need Orson Wells is what you're saying?Paul Krugman: There was a Twilight Zone
episode like this, which scientists fake an alien threat in order to
achieve world peace. Well, this time we need it in order to get some
fiscal stimulus.Fareed Zakaria: But Ken wouldn't agree with that, right? The space aliens wouldn't work -Ken Rogoff: I think it's not so clear that Keynes
was right. I mean, there have been decades and decades of debate about
whether digging ditches is such a good idea.And my read of the debate is when the government does really useful
things and spends the money in useful ways, it's a good idea. But when
it just dig ditches and fills them in, it's not productive and leaves
you with debt.I don't think that's such a no-brainer. There are people going around
saying, "Oh, Keynes was right. Everything Keynes said was right." I
think this is a different animal, with this debt overhang that you need
to think about from the standard Keynesian framework.Paul Krugman: I guess I just don't agree. I mean,
the debt overhang was an issue in the '30s, too - private sector debt
overhang. We came into this with higher public debt than I would have
liked, right? We're really, in some ways, paying the cost to the Bush
tax cuts and the Bush unfunded wars, which leave us with a higher
starting point of debt.But the thing that drives me crazy about this debate, if I can say,
is that we have these hypothetical risks. All those hypothetical things
are leaving us doing nothing about the actual thing that's happening,
which is mass unemployment, mass waste of human resources, mass waste of
physical resources.This is what's happening. We are hemorrhaging economic possibilities
and also destroying a lot of lives by letting this thing drift on. And
we're inventing these phantom threats (sometimes ghosts are real, I
guess) to keep us from acting.Fareed Zakaria: Do you think that the lesson from
history, Ken, in terms of these kind of great contractions - we have not
had something like this since the 1930s, but there have been other
examples - tells you that until you get these debt levels down, no
matter what the government does, it's not going to get you back to
robust growth?Ken Rogoff: I do, because what happens as you're
growing slowly, the debt problems start blowing up on you. That's
happening very dramatically in Europe. They had a philosophy and
approach of things are going to get much better - 'if we can just hang
on, we're going to grow really fast, the debt problems will go away.'Well, guess what? They're not growing fast enough. The debt problems
are imploding. That's slowing growth, and it's a self- feeding cycle.Paul Krugman: I guess I'm a little puzzled here
because, again, the thing that's holding us back right now in the United
States - although there are those peripheral European countries that
are having a very different kind of problem, partly because they don't
have their own currencies - but, in the United States, what's holding us
back is private sector debt. And, yes, we're not going to have a self
sustaining recovery unless that private sector debt could be brought
down.Fareed Zakaria: Just to be clear, Paul, what you mean by that is individuals have a lot of debt on their balance sheets?Paul Krugman: Yes, that's what's holding us back,
and we do need to bring that down - at least bring it down relative to
incomes. So what you need to do is you need to have policies to make
incomes grow.That can include government spending, which is going to add to public
debt, but it's going to reduce the burden of private debt. It can
include inflationary policies, and it can include deliberate
forgiveness.The idea that this has all faded, that we cannot do anything to grow
because we have to wait for some natural process to bring that debt
down, that doesn't follow from the analysis. There is a huge overhang of
debt, which is, at least as I see it, exactly the reason why we need
very activist government policies.
The way to restoring America's AAA credit-rating starts with President Obama moving beyond
blaming the economy on the admittedly inept George W. Bush.
Standard & Poor's recent downgrade of the U.S. government shows how far the world has moved into a crisis of governments.
The official reactions to the S&P action have not been promising. The Obama administration attacked S&P's competence, and the U.S. Congress has threatened hearings, apparently aimed at bullying S&P and the other agencies from further downgrades.
The main substantive criticism was that S&P made a $2 trillion mistake in its baseline projection of 10-year deficits. Of course, these projections came from the Congressional Budget Office, which lost its credibility in these matters when it scored President Obama's health care reform plan as reducing 10-year deficits - mostly because of the inclusion of phantom reductions in Medicare payments to doctors.
In truth, S&P's downgrade stemmed mainly from its legitimate concern that the U.S. government has no coherent medium- or long-term plan to eliminate budget deficits and stabilize the path of public debt. This judgment is accurate and courageous and goes some distance in offsetting the hit to S&P's reputation that came from the AAA ratings that it gave not so long ago to mounds of mortgage-backed securities built on subprime garbage.
Unfortunately, Obama's main response to S&P's downgrade and the economic crisis more generally has been to continue blaming almost everything on his admittedly inept predecessor, George W. Bush, and on the Republican Congress.
Another familiar theme is the unwillingness of the evil rich to pay more taxes. (I have one modest proposal that could save the President valuable time in this regard. Rather than continuing to repeat the long phrase "millionaires and billionaires," I suggest a merger: "mibillionaires." I know it looks funny and is hard to say on a first try, but after three or four repetitions it becomes strikingly mellifluous.)
The way forward to restoring our AAA rating begins with Obama taking seriously the surprisingly sound report by his recent bipartisan debt and deficit commission. Building on those recommendations, I have constructed a fiscal plan:• Make structural reforms to the main entitlement programs starting with increases in ages of eligibility and a shift to an economically appropriate indexing formula.
• Eliminate the unwise increases of federal spending by Bush and Obama, including added outlays for education, farm and ethanol subsidies, and expansions of Medicare and Medicaid.
• Lower the structure of marginal tax rates in the individual income tax.
• Pay for the rate cuts by gradually phasing out the main tax-expenditure items, including preferences for home-mortgage interest, state and local income taxes, and employee fringe benefits.
• Permanently eliminate federal corporate and estate taxes, levies that are inefficient and raise comparatively little money.
• Introduce a broad-based expenditure tax, such as a value-added tax (VAT). Depending on the structure of exemptions, a rate of 10% should raise about 5% of GDP in revenue.
The VAT system is present in most developed countries and can be highly efficient because it has a flat rate, falls on consumption and has built-in mechanisms for ensuring compliance. However, a VAT is also a magnet for criticism by conservatives - who worry about the promotion of a larger government.
I share this concern and would defend a VAT only if it can be firmly linked to the other parts of the reform package. But more fundamentally, given the projected path of entitlement spending, I see no reasonable alternative.
It is hard to imagine President Obama becoming the leader of this kind of broad fiscal initiative. Though he has endorsed some pieces of some of these components, the embrace has been halting. He is hedging, not leading.
Thus, as S&P observed, uncertainty about our fiscal path will likely not be resolved at least until the outcomes of next year's crucial elections.
The one person with the power to eliminate part of this uncertainty is the President, who could nobly decide not to stand for reelection, thereby following in the footsteps of Lyndon Johnson and Calvin Coolidge. Johnson was forced out by a different type of crisis, Vietnam, and he hung on too long, delaying his announcement until he saw his poor performance in the New Hampshire primary and in subsequent electoral polls. Coolidge is a more dignified model, as he opted out in 1927 while things were going fine. In fact, Obama could borrow Coolidge's memorable phrase, "I do not choose to run."
The desire for dignity is universal and powerful. It is a motivating force behind all human interaction—in families, in communities, in the business world, and in relationships at the international level. When dignity is violated, the response is likely to involve aggression, even violence, hatred, and vengeance. On the other hand, when people treat one another with dignity, they become more connected and are able to create more meaningful relationships. Surprisingly, most people have little understanding of dignity, observes Donna Hicks in this important book. She examines the reasons for this gap and offers a new set of strategies for becoming aware of dignity's vital role in our lives and learning to put dignity into practice in everyday life.Drawing on her extensive experience in international conflict resolution and on insights from evolutionary biology, psychology, and neuroscience, the author explains what the elements of dignity are, how to recognize dignity violations, how to respond when we are not treated with dignity, how dignity can restore a broken relationship, why leaders must understand the concept of dignity, and more. Hicks shows that by choosing dignity as a way of life, we open the way to greater peace within ourselves and to a safer and more humane world for all.
Two decades ago affairs between the United States and Cuba had seen little improvement from the Cold War era. Today, US-Cuban relations are in many respects still in poor shape, yet some cooperative elements have begun to take hold and offer promise for future developments. Illustrated by the ongoing migration agreement, professional military-to-military relations at the perimeter of the US base near Guantánamo, and professional Coast Guard-Guardafrontera cooperation across the Straits of Florida, the two governments are actively exploring whether and how to change the pattern of interactions.The differences that divide the two nations are real, not the result of misperception, and this volume does not aspire to solve all points of disagreement. Drawing on perspectives from within Cuba as well as those in the United States, Canada, and Europe, these authors set out to analyze contemporary policies, reflect on current circumstances, and consider possible alternatives for improved US-Cuban relations. The resulting collection is permeated with both disagreements and agreements from leading thinkers on the spectrum of issues the two countries face—matters of security, the role of Europe and Latin America, economic issues, migration, and cultural and scientific exchanges in relations between Cuba and the United States. Each topic is represented by perspectives from both Cuban and non-Cuban scholars, leading to a resource rich in insight and a model of transnational dialogue.
Rafael Hernandez is the editor of Revista Temas, Cuba's leading magazine in the social sciences. He has been professor and researcher at the University of Havana and the High Institute of International Relations; director of US studies at the Centro de Estudios sobre America; and a senior research fellow at the Instituto Cubano de Investigacion Cultural "Juan Marinello" in Havana.Loren Barberia is a program associate at the David Rockefeller Center for Latin American Studies at Harvard University.
They were abolitionists, speculators, slave owners, government officials, and occasional politicians. They were observers of the anxieties and dramas of empire. And they were from one family. The Inner Life of Empires tells the intimate history of the Johnstones—four sisters and seven brothers who lived in Scotland and around the globe in the fast-changing eighteenth century. Piecing together their voyages, marriages, debts, and lawsuits, and examining their ideas, sentiments, and values, renowned historian Emma Rothschild illuminates a tumultuous period that created the modern economy, the British Empire, and the philosophical Enlightenment.
One of the sisters joined a rebel army, was imprisoned in Edinburgh Castle, and escaped in disguise in 1746. Her younger brother was a close friend of Adam Smith and David Hume. Another brother was fluent in Persian and Bengali, and married to a celebrated poet. He was the owner of a slave known only as "Bell or Belinda," who journeyed from Calcutta to Virginia, was accused in Scotland of infanticide, and was the last person judged to be a slave by a court in the British isles. In Grenada, India, Jamaica, and Florida, the Johnstones embodied the connections between European, American, and Asian empires. Their family history offers insights into a time when distinctions between the public and private, home and overseas, and slavery and servitude were in constant flux.Based on multiple archives, documents, and letters, The Inner Life of Empires looks at one family's complex story to describe the origins of the modern political, economic, and intellectual world.
In 2009–2010, in conjunction with the Weatherhead Center for International
Affairs, the Harvard University Center for the Environment, and the
Initiative on Religion in International Affairs at the Harvard Kennedy
School, the Center for the Study of World Religions at the Harvard
Divinity School presented a series of programs to explore several
dimensions of an ecology of human flourishing—economic, sociological,
religious, ethical, environmental, historical, literary; how notions of
human flourishing, quality of life, and common good have been
constructed; and in the contemporary world, how they are illuminated or
are challenged by issues of distributive justice, poverty and economic
inequality, global health, and environmental sustainability.
The ripples from the debates in the capitals of European powers concerning military intervention in an oil-producing Middle Eastern country run by an enigmatic dictator once thought to have a WMD program spread far. Accusations of military adventurism under the cloak of humanitarian intervention strain alliances. This could be a description of the relationship between the Bush administration and the United Kingdom on one side, and France and Germany in the 2002–03 buildup to the Iraq War.
But now the roles have changed. US Defense Secretary Robert Gates urged caution and limited goals and methods. French President Nicolas Sarkozy and Foreign Minister Alain Juppe recognized the Libyan rebels as the legitimate government and flew the first sorties against targets in Libya before the allies could agree on a proper course of action. Only Germany has remained constant by effectively withdrawing from not only the campaign in Libya, but from its Mediterranean NATO presence. What has changed?
The drama of the Surge, followed by the new administration in Washington, made uncertain the possibility of another military intervention in the Middle East or elsewhere. In the US and in France, Obama and the new French President Sarkozy opposed the war in Iraq and sought to rebuild their alliance. Although Sarkozy changed the direction of France’s foreign policy during the Chirac years, Rumsfeld’s label of Old Europe remained.
Sarkozy pushed and received parliamentary support for France's military mission in Afghanistan and, while holding the EU rotating presidency, spearheaded the effort to begin negotiations and a ceasefire for the Russia-Georgia War in 2008. France, from the opposition, began turning into a member of the “coalition,” leading up to a more aggressive role patrolling the Horn of Africa, conducting military operations in West Africa, and most recently in the Libyan and Ivory Coast interventions.
So what caused this change? New leadership in France, the United Kingdom and the United States? A spirit of multilateralism over unilateralism? Another period of UN activism, similar to the early 1990s—at least before the Somalia failure?
The legal explanation would be to assert that unlike the current campaign in Libya, the invasion of Iraq in 2003 had no direct and public support from the United Nations, the European Union, NATO, or the Arab League. However, while UN Security Council Resolution 1973 authorized a no-fly zone over Libya, France acted unilaterally, conducting offensive operations before the allies, both Atlantic and Middle Eastern, agreed to a course of action and the scope of operations. The public support of Arab states, absent in 2003, might have also added to the legitimacy of the French unilaterally beginning kinetic operations and recognizing the rebel leadership. The Tricolor can be seen waving in the streets of Benghazi.
But skeptics remain. Following a slow start getting in sync with the "Arab Spring," Sarkozy's charge in Libya comes from a desire to recover prestige lost in Egypt and Tunisia and hopes for his countrymen to rally around the flag during election season. A show of successful military intervention in the cause of humanitarian intervention can help in the polls. Still material determinists look to the oil refineries at Ras Lanuf or Brega and see an explanation there, but Ivory Coast is less of a clear-cut case.
While the true motivators for France’s “return” may remain unclear in perpetuity, a more assertive France has large implications for business-as-usual across Europe, the Middle East and Africa. When many European powers have contributed men and firepower to the mission in Libya, the European Union has been remarkably absent. When discussions of the Common Security and Defense Policy of the EU begin, the question "Where were you in Libya?" might be a difficult one to overcome.
Ironically, European states seem to take more action when the EU is not involved. Cathy Ashton, the bloc’s high representative for foreign affairs and security policy, was hardly central in the decision to intervene or the coordination of the multinational force. The unintended consequence of Sarkozy’s policy may be the erosion of the EU as a security policy-making institution. Until the crowds in places like Benghazi or Yamoussoukro cheer a flag with golden stars on a blue background, the Tricolor, the Union Jack, and the Stars and Stripes will continue to be the key players in international security.
Co-author Wilder Bullard is a research assistant at the Program on New Approaches to Research and Security in Eurasia.
In 1959 South Korea was mired in poverty. By 1979 it had a powerful industrial economy and a vibrant civil society in the making, which would lead to a democratic breakthrough eight years later. The transformation took place during the years of Park Chung Hee’s presidency. Park seized power in a coup in 1961 and ruled as a virtual dictator until his assassination in October 1979. He is credited with modernizing South Korea, but at a huge political and social cost.
South Korea’s political landscape under Park defies easy categorization. The state was predatory yet technocratic, reform-minded yet quick to crack down on dissidents in the name of political order. The nation was balanced uneasily between opposition forces calling for democratic reforms and the Park government’s obsession with economic growth. The chaebol (a powerful conglomerate of multinationals based in South Korea) received massive government support to pioneer new growth industries, even as a nationwide campaign of economic shock therapy interest hikes, devaluation, and wage cuts—met strong public resistance and caused considerable hardship.
This landmark volume examines South Korea’s era of development as a study in the complex politics of modernization. Drawing on an extraordinary range of sources in both English and Korean, these essays recover and contextualize many of the ambiguities in South Korea’s trajectory from poverty to a sustainable high rate of economic growth.
Since America’s racial disparities remain as deep-rooted after Barack Obama’s election as they were before, it was only a matter of time until the myth of postracism exploded in our collective national face.
–Peniel Joseph, The Chronicle of Higher Education, July 27, 2009In electing me, the voters picked the candidate of their choice, not their race, which foreshadowed the historic election of Barack Obama in 2008. We’ve come a long way in Memphis, and ours is a story of postracial politics.
–Congressman Steve Cohen, Letter to the Editor, The New York Times, September 18, 2009Race is not going to be quite as big a deal as it is now; in the America of tomorrow . . . race will not be synonymous with destiny.–Ellis Cose, Newsweek, January 11, 20101Are racial divisions and commitments in the United States just as deep-rooted as they were before the 2008 presidential election, largely eliminated, or persistent but on the decline? As the epigraphs show, one can easily find each of these pronouncements, among others, in the American public media. Believing any one of them—or any other, beyond the anodyne claim that this is “a time of transition”—is likely to be a mistake, since there will be almost as much evidence against as for it. Instead, it is more illuminating to try to sort out what is changing in the American racial order, what persists or is becoming even more entrenched, and what is likely to affect the balance between change and continuity. That, at any rate, is what we propose to do (if briefly) in this article.
In 1959 South Korea was mired in poverty. By 1979 it had a powerful industrial economy and a vibrant civil society in the making, which would lead to a democratic breakthrough eight years later. The transformation took place during the years of Park Chung Hee’s presidency. Park seized power in a coup in 1961 and ruled as a virtual dictator until his assassination in October 1979. He is credited with modernizing South Korea, but at a huge political and social cost.South Korea’s political landscape under Park defies easy categorization. The state was predatory yet technocratic, reform-minded yet quick to crack down on dissidents in the name of political order. The nation was balanced uneasily between opposition forces calling for democratic reforms and the Park government’s obsession with economic growth. The chaebol (a powerful conglomerate of multinationals based in South Korea) received massive government support to pioneer new growth industries, even as a nationwide campaign of economic shock therapy—interest hikes, devaluation, and wage cuts—met strong public resistance and caused considerable hardship.This landmark volume examines South Korea’s era of development as a study in the complex politics of modernization. Drawing on an extraordinary range of sources in both English and Korean, these essays recover and contextualize many of the ambiguities in South Korea’s trajectory from poverty to a sustainable high rate of economic growth.
Global trade is of vital interest to citizens as well as policymakers, yet it is widely misunderstood. This compact exposition of the market forces underlying international commerce addresses both of these concerned groups, as well as the needs of students and scholars. Although it contains no equations, it is almost mathematical in its elegance, precision, and power of expression.Understanding Global Trade provides a thorough explanation of what shapes the international organization of production and distribution and the resulting trade flows. It reviews the evolution of knowledge in this field from Adam Smith to today as a process of theoretical modeling, accumulation of new empirical data, and then revision of analytical frameworks in response to evidence and changing circumstances. It explains the sources of comparative advantage and how they lead countries to specialize in making products which they then sell to other countries. While foreign trade contributes to the overall welfare of a nation, it also creates winners and losers, and Helpman describes mechanisms through which trade affects a country's income distribution.The book provides a clear and original account of the revolutions in trade theory of the 1980s and the most recent decade. It shows how scholars shifted the analysis of trade flows from the sectoral level to the business-firm level, to elucidate the growing roles of multinational corporations, offshoring, and outsourcing in the international division of labor. Helpman’s explanation of the latest research findings is essential for an understanding of world affairs.
In the wake of the Cold War, the United States faced an ongoing dilemma of superpower proportions: Should it accept the global policeman’s badge and use its military might to patrol the world’s trouble spots? In many cases, it did. Ironically, following a decade-long spending spree, the question is no longer whether the US should continue honoring this responsibility, but rather whether it can afford to do so.Trumpeting the benefits of economic interdependence around the globe, US policymakers have overlooked the potential costs of free trade and unrestricted capital flows that developing country politicians internalized years ago. Now U.S. officials are reminded that when economic interdependence turns into economic dependence, it creates a harsh reality where the politics of possibility can quickly become the politics of austerity. A growing foreign debt has not only changed US domestic politics, but also infused more of a multilateral tone into its global politics. Notwithstanding the US’s seismic economic and military strength, partisan conflict over domestic budgetary pressures exposes the fault lines of the post-Cold War hegemonic order.
Over the last decade, the US government adopted a strategy from the Latin American playbook, opting to use foreign funds to finance its budget deficits. In a management blunder of historic magnitude, George W. Bush swung the federal budget surplus deeply into the red. Borrowing trillions of dollars from foreigners, including China, the Bush administration funneled debt proceeds toward lofty tax cuts, a dual-front war in Iraq and Afghanistan, “global war on terror,” and homeland security spending. Shockingly, the Bush administration not only expanded national debt by one-quarter of its size in eight short years, but in doing so, became increasingly reliant on foreign creditors. This practice was a clear break from the past. By the end of Bush’s time in office, foreigners held about two-thirds of the government’s total debt.
In light of the dollar’s global reserve currency status, the US government should continue to readily attract foreign capital for the foreseeable future. However, the US suffers from a more immediate vulnerability. Against the backdrop of the Republicans’ mid-term election victory, spending cuts have again taken center stage. Reminiscent of the Contract for America, House Speaker John Boehner and his cadre of Republican peers are proposing billions in budget cuts that include foreign military and developmental aid. In his State of the Union address, President Obama similarly seized the “post-crisis” political window, emphasizing the need to reverse the country’s “legacy of deficit spending.”
The emergence of austerity politics in North America has important geopolitical implications. Is the United States’ ability for global leadership waning? While a wave of democratization and the proliferation of new states flourished in the 1990s under the watchful eyes—and active support—of the United States (and its allies), today this commitment may be wavering. The substantial drop in US foreign aid, investments and contributions toward weak states around the developing world could be seen as important signs of this trend. Pundits have commented on the US absence in the most recent wave of protests in the Middle East; part of this was dictated by the politics of austerity at home. Despite its low-profile and multilateral approach during the Libyan intervention, the Obama administration still met significant domestic resistance from across the political spectrum.
In the hopes of enhancing its geopolitical sphere of influence, the US government has often invested in the smallest nations (e.g. trading preferences, IMF financing privileges, military investments, and development aid). Indeed, although the economic rules of the game are skewed in its favor, the US sometimes changes these rules to benefit the smallest nations for political purposes. With the rise of austerity politics, however, the U.S. may not be as willing—or able—to extend such trade and finance benefits to smaller nations.
Cloaked in a rhetoric of economic nationalism and austerity, the US may withdraw support from small, strategically less important countries, like Djibouti, placing the latter’s economic and political survival at risk. The US urges developing nations to open their borders, yet it champions “Buy American” shovel-ready projects and its own protection for pharmaceuticals. Refusing to liberalize its agricultural sector, the US has left the multilateral Doha development round mired in a stalemate, instead aggressively negotiating bilateral deals with South Korea, Panama, and Colombia.
Faced with such economic institutional gridlock globally and higher budget constraints domestically, does the United States still have the political will and resources to preserve all of its spheres of influence? Is it willing to be the world’s sheriff, especially given its recent difficulties in Afghanistan and Pakistan?
There is a very real temptation for the United States to neglect the prosperity and security of the periphery. Mired in its own economic struggles, the US may contemplate withdrawing from its geopolitical commitments. But there is rarely a void in the international system. Other actors, such as Iran, Russia or China, may seek to fill it. Whether conflict is instigated internally such as in Libya or by the interference of stronger neighbors such as in Bahrain, political opportunism could quickly escalate into full-blown conflict. Like the slow plunging of ice shelves into the arctic, the vulnerabilities least visible from the center may be precisely those that most threaten the global system’s long-term viability.
Co-author Stephen B. Kaplan is an assistant professor of Political Science and International Affairs at George Washington University.
This article examines the compelling enigma of how
the introduction of a new international law, the North American Agreement on
Labor Cooperation (NAALC), helped stimulate labor cooperation and collaboration
in the 1990s. It offers a theory of legal transnationalism—defined as processes
by which international laws and legal mechanisms facilitate social movement
building at the transnational level—that explains how nascent international
legal institutions and mechanisms can help develop collective interests, build
social movements, and, ultimately, stimulate cross-border collaboration and
cooperation. It identifies three primary dimensions of legal transnationalism
that explain how international laws stimulate and constrain movement building
through: (1) formation of collective identity and interests (constitutive
effects), (2) facilitation of collective action (mobilization effects), and (3)
adjudication and enforcement (redress effects).
The provision of educational opportunities is one of the highest priorities of refugee communities. Refugee mothers, fathers, and children the world over emphasise that education is “the key to the future,” that it will help bring peace to their countries, that despite not knowing “what will happen tomorrow,” education brings stability and hope. Access to education is a basic human right and is linked to poverty reduction, holding promises of stability, economic growth, and better lives for children, families, and communities. In 1948, the Universal Declaration of Human Rights recognised compulsory primary education as a universal entitlement. The 1979 Convention on the Elimination of All Forms of Discrimination Against Women (United Nations, 1979) called for no discrimination in educational provision for men and women, and the 1989 Convention on the Rights of the Child (CRC) affirmed the right of all children, regardless of status, to free and compulsory primary education, to available and accessible secondary education, and to higher education on the basis of capacity (United Nations, 1989, Article 28). The right to education for refugees is articulated in Article 22 of the 1951 Convention relating to the Status of Refugees, resolution 64/290 (July 2010) of the Human Rights Council of the United Nations General Assembly on the right to education in emergencies (United Nations, 2010a), and in the draft resolution to the Human Rights Council on the right to education for refugees, migrants and asylum seekers (June 2011) (United Nations, 2010b).
“Injustice anywhere upsets me deeply. Too many children living in conflict face the great injustice of being denied their right to education. This book captures the voices of children and teachers in their craving for a better world. Education is the key to that world. Inspiring and refreshing, this book is hopeful. Its new ideas give promise to children living in conflict for the chance at a quality education, a better future, and lives of peace.” —Archbishop Emeritus Desmond Tutu
Inspired by the work of the late Dr. Jacqueline Kirk, this book takes a penetrating look at the challenges of delivering quality education to the approximately 39 million out-of-school children around the world who live in situations affected by violent conflict. With chapters by leading researchers on education in war and other conflict zones, the volume provides a comprehensive and critical overview of the links between conflict and children’s access to education, as well as a review of the policies and approaches taken by those offering international assistance in this area. Empirical case studies drawn from diverse contexts—Afghanistan, Sierra Leone, Rwanda, and Uganda (among others)—offer readers a deeper understanding of the educational needs of these children and the practical challenges to meeting these needs.