Monthly Archives: May 2016

How Does Anyone Still Defend the Bombing of Hiroshima?

As you likely heard, President Obama became the first sitting US President to visit Hiroshima, Japan last week, and laid a wreath at the atomic bombing memorial. Predictably, this brought on a wave of discussion of the subject, most of which was bad. Conservatives saw it as a continuation of Obama’s mythical apology tour, which never has and never will occur, no matter how justified it might be at this point. In reality, Obama’s speech employed the passive voice “death fell from the sky” with no apparent perpetrator, and no apology was to be found. Given by most other people–those that do not have vast amounts of blood on their hands from the wars and assassinations they are actively overseeing–it would have been a beautiful speech. As it happened, with Obama as the messenger, it comes off mostly as a kind of cruel sarcasm. Some examples:

Technological progress without an equivalent progress in human institutions can doom us. — [er, like the US drone assassination program?]

… 

But among those nations like my own that hold nuclear stockpiles, we must have the courage to escape the logic of fear and pursue a world without them. 

We may not realize this goal in my lifetime, but persistent effort can roll back the possibility of catastrophe. We can chart a course that leads to the destruction of these stockpiles… — [Yes, we can. Unfortunately, President Obama has committed $1 trillion to modernizing the nuclear weapons arsenal instead of reducing it. ]

I suspect you get the idea.

My deep frustrations with President Obama aside, he should be commended for at least making the trip. And it’s returned the spotlight to a question that, frankly, should be rhetorical by now. Was the US justified in bombing Hiroshima?

And to answer this question, there are two dimensions to consider: moral and strategic.

Moral Considerations
On this count, the issue is rather straightforward. The prevailing justification is, as we all learned growing up, that the atomic bombing was necessary to shorten the war and prevent a bloody invasion that would have cost thousands of American soldiers’ lives in the process. There’s good reason to doubt that narrative, as we’ll see shortly. But for now, let’s grant the assumption.

Now, it’s important to note that Hiroshima (and Nagasaki, for that matter), were not militarized cities for the Japanese. The US was not bombing the equivalent of Pearl Harbor or West Point; it was bombing a city that had relatively little significance to the Japanese military effort. Indeed, that’s why the city hadn’t been bombed before then; it was far down on the priority list. As such, the overwhelming majority of victims in the strike were civilians, and this reality was known in advance.

Thus, the question is whether it is justified to intentionally kill civilians (nuking a population center) in pursuit of political ends (unconditional Japanese surrender)? And before we answer, it’s worth considering the definition of terrorism. According to the FBI, one essential characteristic of terrorist activities is that they:

Appear to be intended (i) to intimidate or coerce a civilian population; (ii) to influence the policy of a government by intimidation or coercion; or (iii) to affect the conduct of a government by mass destruction, assassination, or kidnapping;

Or stated more simply, terrorism is intentionally harming, intimidating a civilian population for the purpose of achieving a political end. And we should note that saving American lives or revenge for Pearl Harbor can’t be a valid justification either. If it were, consistency would demand that we also endorse the rationale adopted by most of the terrorists that have attacked (or tried to attack) American and Western civilians in recent years–namely to try to stop military intervention in their home countries (save lives) or avenge fallen victims in the Middle East. The details and magnitudes of the attacks are different; the predominant justification underlying them is not. I don’t know about you, but I’m not about to justify those other acts of terrorism.

It may be uncomfortable to think about the issue in those terms, but it should not be. Relatively few of us were even alive when the Hiroshima occurred; fewer still were old enough to vote for the Roosevelt-Truman ticket that carried it out; and virtually no one at all directly influenced Truman’s decision to use the bomb, or even knew of the possibility in advance. So why should any of us feel a reflexive need to justify that barbarous action our government undertook over 70 years ago? We should not. War crimes are still war crimes, no matter how sophisticated the justification or the colors of the flag that sponsored them. And if American Exceptionalism is to ever mean anything worth a damn, it should be more than pretending the US government has never done anything wrong.*

Strategic Considerations
Above, we took for granted that the US had a choice between a brutal invasion of Japan or dropping atomic bombs to end the war effort. And it is in the context of this choice that many will defend the bombings as necessary. However, there’s actually good reason to doubt this conventional narrative. And for the details, we recommend this excellent piece at Harper’s, which addresses the most important historical questions on the subject with the person who wrote the book on them. And you can probably tell from the title which side of the issue they come out on. Here’s the link:

Unjust Cause

*For more on this line of argument, also check out this article at the Independent Institute.

Libertarian Party Nominates Johnson and Weld for President, Failure Imminent

The Libertarian Party convention occurred this weekend and the delegates selected Gary Johnson and William Weld to be the party’s nominees for President and Vice President. Johnson and Weld are both former Republican governors in New Mexico and Massachusetts, respectively, and the case for their nomination was made almost exclusively in terms of electability–which is something of an odd criterion for a party that has never garnered above 1% of the vote in any previous presidential race.

Of course, this year is going to be different. Never in recent memory has the American electorate been this dissatisfied with their two primary choices. Indeed, in acknowledgement of this fact, the party actually awarded Hillary Clinton and Donald Trump a Liberty Outreach award for helping the American people search for political alternatives. Further confirmation comes from recent polls that featured Gary Johnson gaining at least 10% support in a hypothetical election contest among him, Trump, and Clinton. If this support rises to 15%, Gov. Johnson would likely be featured in the Presidential debates, which would be a major coup for the Libertarian Party. Moreover, there have even been unconfirmed whispers that Johnson’s campaign could be the beneficiaries of millions of dollars of campaign contributions from disenfranchised wealthy Republican donors.

Anyway, this is the context in which the nomination decision was made. And in this context, one can almost understand the desire to choose the compromise candidacy that Gary Johnson and especially William Weld represent, over a more consistently libertarian choice like Austin Petersen or Darryl Perry. Johnson and Weld were viewed as the pragmatic choice, and both managed to win on the second ballot of their respective races (the LP holds separate votes for the VP and President).

I don’t think it’s all that debatable that the Johnson and Weld ticket will get more media coverage than the libertarian alternatives. Even before their nomination, they gained significant coverage and it’s likely to continue. But having a platform to deliver the message is only part of the battle. It also matters what that message is. In the case of Johnson and Weld, the message is going to be many things; confusing is probably going to be near the top of the list.

Before we go further, it should go without saying that Johnson is preferable to Trump or Clinton (or Sanders) on basically every issue. That said, he and his running mate have been sufficiently bad on foreign policy at this point that my vote is likely to go elsewhere.

The Candidates
The former New Mexico governor comes off as eminently likable and real. He was also the first sitting governor to call for legalization of marijuana, way back in 1999, before it was trendy. And to his credit, he takes the libertarian stand on most issues.

The trouble with Gary, however, is that his positions seem to be driven more by instinct than by a set of consistent principles or study on any subject. While this may not seem like a huge deal, it becomes apparent in debates and interviews on a regular basis. The end result is missteps that are likely to turn off disenfranchised Republicans, Democrats, and independents alike. Some choice examples:

  • On the minimum wage in an interview with the Huffington Post:
    • Here, he’s making the economic argument in a general way, which is fine. But then he literally says, “nobody works for minimum wage.” This is obviously incorrect, and certain to be insulting to a left-leaning audience. On the contrary, the correct argument on this, to such an audience, is to emphasize that this policy is likely to make many poor worse off┬áby reducing their employment opportunities and eliminating their ability to gain experience in the workforce. Meanwhile, if the same argument needs to be framed for a more conservative audience, the key is to emphasize freedom of contract and protecting the free market.
  • On the issue of climate change and whether government should do more about it, in the debate Saturday night (start at 41:00):
    • Here, Johnson ends up taking the correct libertarian position (that government shouldn’t do anything else), but unfortunately his justification is factually and obviously incorrect. He claims that the free market shifted away from coal naturally as people voluntarily opt for less carbon-intensive fuels. While it’s true that there has been a shift, it’s wrong to claim the free market was a driver. In reality, increased regulations on the coal industry (and the threat of more in the future), in addition to incredibly low natural gas prices produced by the fracking boom, drove the shift away from coal. One of these is a market force, but the other is decidedly not. Here, by taking what might be seen as a middle ground (care about the issue but don’t want government to fix it), he actually alienates both sides of the political spectrum. (His former competitor Austin Petersen, corrected the record immediately when it was his turn to answer the question in the debate.)
  • Worst of all, on the question of the Iran Deal, again in Saturday’s debate (start at 1:07:00):
    • Here, Johnson starts out by saying he was initially for the deal, but then came to oppose it because he didn’t want the US to give money to Iran, because the country finances terrorism. Of course, the money belongs to Iran already and relates to assets that were frozen (that is, confiscated) as a part of sanctions. Johnson’s reply implied that he understood this fact, but he opposed it anyway. This is tantamount to believing the US should be able to steal from other countries if we dislike their foreign policy choices.

      Additionally, while it’s true that Iran sponsors organizations that the US has labeled terrorist groups, it’s also true that the main such group, Hezbollah, has also been one of the principal enemies of extremist groups like Al Qaeda and ISIS in Syria. If standard Washington “enemy of my enemy is my friend” logic were to prevail on this subject, Iran, would actually be a natural ally in the current scenario. Obviously, I don’t endorse any such alliance, but it just goes to show how shallow and misleading Johnson’s characterization is. Furthermore, if financing terrorism were sufficient to justify abolishing trade with other countries, most of the US allies in the Middle East would be off-limits. Just as important, Iran’s president ran on a platform of normalizing relations with the West precisely so he could improve Iran’s domestic situation–so it’s not at all clear how much of Iran’s money will ultimately be spent on military efforts / terrorism anyway.

      Another problem here is how this contradicts Johnson’s professed support for diplomacy and his skepticism of military intervention. Above everything else, the Iran Deal mattered because it moved the US further away from war with that country and was a step toward freer trade. The details make it even easier to support from an American perspective, but even just that broad outline should make it readily supportable from a libertarian, noninterventionist perspective. Thus, getting this issue wrong is likely to be a bridge too far for antiwar voters on the left and among libertarians (quite likely including yours truly). Yet because he wasn’t hawkish enough, it’s also unlikely to do him any favors among more conventional conservatives.

In short, the pattern is clear and depressing. Gary Johnson’s left-leaning social tendencies make him most suited to appeal to Democrats that can’t stand Hillary. But his free market leanings and gaffes could easily turn them off. On foreign policy, he’s likely to more peaceful than Trump and Hillary because the bar is so low, but his principles can be abandoned on core issues, making him a no-go for antiwar voters. And then on economic issues, he will occasionally take the right position for the wrong reason.
Regrettably, Gary’s running mate, Governor Bill Weld, is likely to make matters far worse. To prove this point, all one needs to do is survey the list of endorsements Weld has made over the past few cycles: George W. Bush in 2004 (for foreign policy, of all things), Barack Obama in 2008, Mitt Romney in 2012 (that is, neither Ron Paul nor Gary Johnson), and initially John Kasich in 2016 until switching to become a libertarian. And to top it all off, Weld is known for being bad on gun control. Thus, as a practical matter, what this means is that any conservative that wasn’t already alienated by Gary Johnson himself, will be successfully enraged by his vice president.
The end result is a ticket that finds a way to disappoint just about everyone in one way or another, without inspiring many in the process. This is seen as a pragmatic choice, but in reality, it’s anything but. Johnson and Weld will likely manage to get in the debates, but as a libertarian myself, I’m deeply concerned how they will represent the ideas once they’re there. The most probable outcome seems to be that the American people will be more familiar that libertarians exist, and more confused than ever about what they stand for.
Ultimately, the Libertarian Party has elected two compromise candidates, both of which are former politicians, in a year when much of the electorate despises compromise and politicians with equal fervor. And just as Rand Paul failed to garner sufficient support when he attempted to dilute the message of libertarianism, it is likely that Johnson and Weld will meet the same fate.

The Federal Reserve’s War on Retirement and Pensions

In spite of the minor interest rate hike last December, interest rates in the US remain at historically low levels. This is not a natural phenomenon, and it is not caused by the “free market”. Rather, it’s a direct and deliberate result of the Federal Reserve’s monetary policy, and its effects on the broader economy are rarely appreciated. It’s bad for banks, which few people are likely to have sympathy for. It encourages government deficits by lowering the costs of government borrowing. And similarly, it encourages everyone else in the economy, from corporations to students, to take on more debt than they otherwise would.

But while all these things are important, the most destructive impact of artificially low interest rates is that it destroys the ability to save and invest. And, like most central planning policies that are designed to stimulate the economy, the people hit hardest by low interest rates are invariably the people who can least afford it–in this case, the middle class, the working class, and the elderly. Many pensions around the country are deep underwater on the verge of bankruptcy in the coming years, and elderly income insecurity and poverty are on the rise. These are real problems, and they are likely to come to a boiling point soon. But to address them, we need to first understand how they came to be. And the answer isn’t greed or unbridled capitalism; it’s one of the most significant distortions of the market system that exists in the economy today–artificially low interest rates.

How It Works
When the Federal Reserve decides to lower interest rates, it has the effect of shifting all interest rates down across the board. This occurs because all US banks have to be part of the Federal Reserve System. If the Fed lowers the main interest rate they control by 1%, we can expect other interest rates in the economy to shift down by about the same amount.

Banks will be willing to offer corporations loans at lower rates, and this in turn means that corporate bonds offered to the public will go for lower rates. Similarly, as banks start offering lower interest rates to borrowers (the banks’ source of income), they will also shift down the already low rates they pay their depositors on savings (the banks’ expense), to preserve a consistent spread. And generally, the Federal Reserve will also make purchases of the US Treasury Bonds (loans to the Government) to help drive down rates there as well. All of this has the practical effect of depressing interest rates across the whole economy for borrowers and savers alike, in bonds, loans, and deposits.

Source: Multpl.com

In this low-interest rate environment, however, individuals are still going to want to save about the same amount of money for retirement. Or if they’re already retired, they need to continue making a decent return on their existing savings to maintain their standard of living. Prior to interest rates being cut, this might have been possible with a high-yield certificate of deposit, a basic savings account, or investments in government or corporate bonds. But as interest rates shift down, all of these options become less attractive. For example, consider how much lower 10-year Treasury yields have become over time, falling from over 6% at the turn of the millennium, to a mere 1.8% today. While it may seem small, that’s a massive difference. At 6%, investors could earn a respectable return that was all-but risk-free. Today, the same security would barely outpace official inflation (and would be unlikely to keep up with real inflation if rent, healthcare were tossed into the mix).

The end result, then, is that individuals can no longer afford to keep their investments in safe assets, because they don’t earn enough to be worthwhile. Now they have to look for riskier assets that have a chance to generate higher returns. (Riskier investments always tend to carry the promise of higher returns, because they have to compensate investors for the risk. This is why poor people or those with bad credit will generally have to borrow money at higher interest rates–to compensate the bank for taking a risk on them.)

At first, the riskier investments may be stocks. But then, as everybody pours into stocks, the earning potential here falls as well–the price of stocks will be driven up (for example, from $20 to $40 per share) even though the underlying profits will remain the same (say, $1.00 per share). In this example, that would mean the effective yield for anyone that buys at $40 would be $1 / $40 = 2.5%, where as it used to be $1 / $20 = 5%.* As more people pour into stocks, which are already somewhat risky, the return is driven down. This necessarily causes people to find the next, even riskier asset to continue trying to get a higher return. And the cycle repeats itself, with people becoming more and more exposed to risk as it progresses, while still struggling to earn a decent return. This process is referred to as chasing yield, and it only gets triggered in a down interest rate environment.

It’s worth noting here that nothing I’ve suggested so far is controversial. Different economists disagree whether low-interest rates are a good thing (with most mainstream / Keynesian types generally believing they are indeed), but the yield-chasing behavior follows naturally from the incentives it creates.

And this is why the Fed’s low-interest policies are effectively a war on retirement and the elderly. People plan to save a certain amount of money in order to live comfortably in retirement–but this plan necessarily assumes they will be able to earn a decent return. The low-interest rate policies diminishes the prospect for earning a healthy return and thereby plunges numerous elderly people into an income insecure situation.

A Practical Example
To see exactly how much more difficult it would be to retire under this low-interest rate environment, it’s useful to see some real numbers. Back when I was in high school, I was obsessed with money to a completely absurd degree (circa 2006-2007 especially). And in particular, I was really focused on being able to have enough money to retire early. At the time, you could get an online savings account that paid 5% interest. And since I lived in the fantastically affordable city of Boise, Idaho, I figured I could live quite comfortably off of just $50k a year. To do that, I needed to save about $1,000,000. It’s a big number of course, but it’s not an insurmountable one. And then I could live off basically risk-free interest income forever.

Fast forward to today, and I’m not nearly as obsessed. That’s a good thing for many reasons, but one of them is that being focused on money or retiring today would be incredibly depressing. If you’re lucky, and willing to lock your money away for some time, you might be able to get a certificate of deposit around 2%. Assuming costs of living are the same, that means I’d now have to save 250% as much as before ($2.5 million) to achieve the same standard of living I had planned on.

For me, that’s not a big deal. I’m in my twenties, and it’s easy for me to adapt to that new reality (and eventually, interest rates will go back up). But imagine how hard this would be if you were nearing retirement age around the time of the financial crisis, when interest rates officially fell off a cliff. People could have already met their goals, only to see the goalposts get abruptly moved out beyond their worst fears. Then they might gamble on high-risk investments to try to catch up, and the end result may be that they fall even more behind.

Pensions As Collateral Damage
In many ways, pension funds, public or private, face a lot of the same challenges as the average saver does in a low-rate environment. They likely have more robust resources to research markets and find decent investments. But at the end of the day, they’re still stuck chasing yield like everyone else. They’re also likely to be based on somewhat aggressive return assumptions to begin with.

You needn’t know the nuances of pension accounting to understand this discussion, but the basic idea is this. Employers contribute money to pension plans and bake in certain assumptions about how much that money will grow over time. Meanwhile, employees are earning more pension benefits over time, and if those benefits include medical coverage, the cost of their lifetime benefits will rise over time. By comparing projected lifetime expenses of the pension (based on how much people are expected to earn, how long they’ll live, etc.) and lifetime assets / returns of the pension, we can determine whether a pension is adequately funded or not. If the pension is not adequately funded (projected expenses exceed projected revenues), we would say it’s underwater. For instance, using this calculation, the Social Security system is deeply underwater currently. That doesn’t mean it will go broke tomorrow, but it means, if nothing changes, things will break down eventually.

Right now, many US pension funds find themselves in an underwater position. Indeed, the pension for the Teamsters Union is so underfunded that it recently filed for de facto bankruptcy protection (to try to cut the benefits it’s supposed to pay to its members), though its petition was denied. These trends are also a direct result of low-interest rate policy. Pensions take money from employers on the assumption they’ll make (for example) 6% a year. Then if they only make 2% a year, the fund becomes underfunded until they manage to catch up. So they chase yields and expose all of their pensioners to more risk and uncertainty in the process. But they have no other options.

We can actually see this chasing yield phenomenon emerge over time. A recent piece at Zero Hedge, shows how the pension of the International Red Cross, has gradually shifted to more and more risky and uncertain assets as the years have rolled by in a historically low rate environment.** Where they once owned mostly standard, well-understood securities like stocks, bonds, and US Treasuries, now their portfolio has shifted toward more complicated, illiquid investments to try to increase returns. They don’t really have a choice, but the consequences for their pensioners could be substantial.

In the face of these looming disasters, Senator and presidential candidate Bernie Sanders, proposed a bill that would apparently require the federal government to provide more assistance (that is, bailout) to underfunded pension funds to protect the workers. But a more pragmatic and sustainable solution is to begin by asking why so many pension funds are failing in the first place. And the answer is that the Federal Reserve’s interest rate policies made it so.

Why Keep Interest Rates Low?
Given all the calamities associated with artificially low interest rates, you might be wondering exactly why they’ve become the dominant policy. The best answer seems to lie in economists’ and politicians’ unholy focus on gross domestic product (GDP) as a metric of overall economic health. To you and me, GDP is completely meaningless. Other than academic curiosity, it obviously doesn’t matter to me what the total net value of all goods and products produced in the US was over a given year. I care whether I have a good job, whether my company still has customers, and whether I can still buy the things I need at reasonable prices. But to economists that love statistical aggregates, GDP is the gold standard, if you’ll pardon the expression.

The trouble is that it’s really easy to mess with. To be counted in GDP, goods and services basically have to be sold to an end-user, and government spending counts as part of that. Thus, in some ways, it’s basically a measure of total spending. And if all we’re measuring is spending, it’s easy to see how low-interest rates help that goal. Low-interest rates decrease incentives to save money (as discussed) and make it easier for me to borrow extra money and spend that. It also makes it easier for the government to borrow and spend more money. Therefore, it should be no surprise at all that lowering interest rates can have the effect of increasing GDP. However, it should be equally obvious that this is not an automatic social good.

To see this, we just need to ask the following question. Which is likely to be more important for economic health: The amount of money spent in any given year or quarter (i.e. GDP) in total, or whether people have a reasonable ability to save and invest for their future? That is not a hard question. But unfortunately, most economists and politicians have agreed on the wrong answer for years.

Summing Up
It’s entirely appropriate for people to be concerned about the plight of the working class and the elderly as the economy continues to struggle along. Many people see expanding the role of government as a means to help address these problems, while people like me would be deeply skeptical of the incentives for government to do things correctly. But before we debate the potential for government to do more to help these people, we should begin by considering the ways that current policies are actively sabotaging them. Artificially low interest rates should be near the top of that list. It’s also a great example of an issue where partisanship can be cast aside. Whether you lean left, right, or libertarian, the case against manipulated interest rates, as outlined here, should be compelling.

*In effect, this model assumes that the company pays out all its profits as dividends. That’s unlikely to be the case in reality. But since theoretically, the value of a stock is really based on its underlying earnings and earnings potential, this is a good enough calculation for our present purposes.

**Not at all important, but I can’t stand when people put an “an” before a word beginning in “hi-“. Anyway, I’m aware that this is not technically correct, and I’ve decided prevailing grammar rules just got this one wrong, and I don’t abide by it.

Syrian Islamists Fight for Practical Reasons, Not Ideological Ones

Our main story today is a new study which involved personal interviews with over 300 Syrians to understand why so many have joined the ongoing civil war. Interviews were conducted with people who have already participated in the war and those actively considering it, as well as family and community members.

The study found that an overwhelming majority of Syrians were motivated to join the civil war (against President Assad) based on pragmatic and political reasons, not religious ones. Even those Syrians who have joined the radical Al Qaeda’s affiliate in Syria, Jabhat Al-Nusra, still cited very practical reasons for their decisions. Some of them join because all other economic opportunities have been decimated as a result of war. Others joined out of desire for revenge, gravitating toward extreme groups like Al-Nusra because they’ve proven to be among the most effective fighting forces against the Syrian government.

All of this matters because it goes against the prevailing understanding that is taken for granted in the West. It’s true that the situation in Syria is somewhat different than the one that currently prevails in Afghanistan or Iraq. In Afghanistan and Iraq, Islamic movements that rise up against the central government (which is backed by the US in both countries) are automatically considered militants and/or terrorists by default. But in Syria, many in the West look favorably upon the rebellion, as a kind of grassroots push for democracy or self-governance. And initially, that may have been the dominant drive. But today in Syria, the most extreme groups, like Al-Nusra, Ahrar Al-Sham, and ISIS, are also the most significant forces combating the Syrian government. If these same forces were fighting against the government of Saudi Arabia or Qatar, they would be uniformly denounced as terrorists. But since they’re fighting a government we oppose, members and allies of Al-Nusra and Ahrar Al-Sham often get referred by the more favorable term of “rebels” instead. It’s more a function of semantics than any meaningful difference between the prevailing ideology of each group’s leadership. All these groups, from ISIS to Ahrar Al-Sham share a fundamentalist version of Sunni Islam, use suicide terrorism as a tactic, and have no qualms about attacking civilians.

Thus, this new study is really telling us what causes people to join extreme militant or terrorist groups. And the  answer is not religion. For many Syrians, even the path to joining Al-Nusra (again, a group that celebrates 9/11), is not about religion. It’s about practical desperation, survival, and, in some cases, vengeance. Islam is the banner these groups often fall under, but it is not the main source for its members.

This in turn, should have major implications for US policy. If the source of terrorism / extremism is primarily about practical and political considerations (economic desperation, family members killed, etc.) rather than ideological ones (they hate us because we’re free, seriously?), obviously the solution required is rather different. Expanded bombing campaigns is unlikely to do the trick, and neither is funding moderate Islamic preachers. Instead, we should simply try to stop the actions that helped cause these grievances in the first place–stop supporting brutal dictatorships in the Middle East, stop constant drone attacks and their inevitable collateral damage, and stop engaging in regime change operations, that almost always produce a more desperate and dire situation in their wake. It won’t solve the problem of terrorism overnight, but it could stop a lot of the recruiting in the future. It’s certainly better than our current approach, which amounts to trying to put out a fire with gasoline.

For more, check out The Intercept’s write-up on this study. And note that the piece is so critical of the Syrian government that it almost seems to be calling for the US to do more to overthrow the government. (I don’t think the author actually holds that view, but it’d be easy to interpret that from this piece.) While it’s unquestionable that President Assad is a terrible human being, it’s not at all clear how regime change would be helpful for the people of Syria. Obviously, Libya was not improved by the overthrow of Qaddafi, even though he was a similarly brutal dictator. Anyways, with that disclaimer, here’s the link:

Trauma and Deprivation Lead Syrian Youths to Extremist Groups, Says New Report

Other News of Note
Hillary Email Scandal Update
A new inspector general report from the State Department has concluded that Hillary did indeed violate department procedures and guidelines with her private email set up. However, the report also indicated prior Secretaries of State also violated the rules, if in less severe ways. Naturally, the Hillary camp is emphasizing that she just did what everyone else did. It’s unclear whether the new report will actually lead to any legal proceedings–but given that Hillary is still an incredibly powerful politician, the smart money says it will not.

Daily Summary

The Worst New Thing in the World
Israel’s Government Gets More Violent
Israel’s extremely hawkish government managed to get even more extreme recently with a new Defense Minister joining the cabinet. The previous Defense Minister, Moshe Ya’alon was not known as a moderate himself. But he resigned recently due to ethical and moral disagreements with Prime Minister Netanyahu–that is, Ya’alon felt that Netanyahu was pushing the Israeli military to be so aggressive and violent that it would violate their own standards. Remarkable in its own right, Ya’alon will be replaced by the thoroughly crazy Avigdor Lieberman, who has previously called for the summary beheading of people disloyal to Israel, among various other horrible positions.
More Bad News
A Helpful List of Everyone Who’s Paid to Hear Hillary Speak
Zero Hedge recently featured an article showing all the myriad organizations that have paid Hillary Clinton six figures (usually > $200k). Of course, this is interesting because it goes without saying that she’s not an engaging speaker. (Even if you like what she says, you should concede that she’s no great orator.) So why would all these organizations, including many large corporations on Wall Street incidentally, be willing to pay her that sum to hear her speak?
Good News
Israel’s Military Pushes Back
It’s not ideal when you have to count on the military to be the voice of relative restraint on matters of war and peace. But in Israel, that’s now the situation that’s emerging, particularly after outgoing Defense Minister Ya’alon had encouraged them to speak out against the policies of the government. A new piece in the New York Times catalogs all the senior officials that are speaking out against Netanyahu’s extremism. And it’s an important story, not only for the growing rift it exposes in Israeli politics, but also because it’s in the New York Times where criticism of Israeli leadership is decidedly uncommon.
If You Only Read One (More) Thing
Make it the New York Times write-up on the situation in Israel. Too soon to tell, but we may be witnessing a turning point in US popular opinion on PM Netanyahu.

Daily Summary: ISIS Attacks in Syria and Trump Revives Bill Clinton Rape Accusations

The Worst New Thing in the World Today
ISIS Attacks in Syria Kill 148 and Counting
Syria’s often a source of bad news these days, but today is particularly bad. A series of coordinated suicide bombing attacks were carried out by ISIS in areas that are held by the Syrian government and which house a portion of Russia’s military presence. Antiwar.com is reporting a death toll of 148 people, mostly civilians. Tragedies in Syria are so common that this almost isn’t even newsworthy. But it’s always worth considering what the reaction would have been if this occurred in Europe or the US. It looks like this attack will have killed more than either the Paris or Brussels attacks when all the bodies are counted. But the victims in this case were Syrians–and not just any Syrians either, ones living in an area controlled by / loyal to Assad–so the probability of significant attention or sympathy for this incident from the West rapidly approaches zero.

Mixed Bag
Cop Involved in Freddie Gray Death Acquitted
One of the officers who participated in the needless and ultimately fatal arrest of Baltimore resident Freddie Gray was acquitted yesterday. Readers will recall that Freddie Gray’s death in police custody was another incident in a string of dubious high-profile deaths of black men that occurred at the hands of the authorities. And given this background, it’s tempting to view this as another case where a cop got away with murder, but the case for this particular officer appears somewhat more complicated. According to summary at The Washington Post, the officer was more of a bystander than a participant. Given the nature of what was happening–and the fact that being a police officer involves protecting the citizens from harm (including the ones accused of crime)–it seems like passive acquiescence ought to warrant at least some kind of negligence. But the officer was not charged with that, and at least at first glance, it appears the trial had some legitimacy in the eyes of Baltimore residents. Minor protests occurred in the wake of the verdict, but no large-scale riots yet. Let’s hope that part continues.

Also, we should mention that, whatever one thinks of today’s verdict, the prosecutors still deserve a lot of credit for actually trying to prosecute the officers involved. Yes, it is their job, but it’s an aspect that often goes unmet for many prosecutors around the country. By attempting to prosecute this incident, the prosecutors of Baltimore are frankly giving the city a chance to heal and avoid further unrest.

Silver Lining
Today’s semi-positive story comes once again, with our apologies, from the 2016 Election cycle. In particular, the general election contest between Donald Trump and (presumably) Hillary Clinton is heating up, and Donald’s campaign team appears to be living up to expectations. They just released a new ad reminding Americans that Bill Clinton was accused of rape by multiple different women.

You might be wondering why a candidate’s spouse’s sexual (and/or criminal) transgressions should matter at all. And the answer is obviously very little. But so long as Hillary is intent on making women a central issue in the campaign, Trump is smart to revive old stories on the depravity of Hillary’s partner–particularly since at least some of them appear to be quite credible and even claim that Hillary knew about them. In a way, it’s also a helpful microcosm for the main difference I can discern between Hillary and Trump. Trump says horrible things all the time when it comes foreign policy. Meanwhile, Hillary has the good sense to stick with political euphemisms that sound less terrifying, like using “smart power”. But for all the bombast, Trump hasn’t killed anyone yet; the same thing cannot be said for the policies of Hillary Clinton. True, Trump hasn’t been in a position of sufficient power where he could readily order people to be killed, and maybe it’s a matter of time. But what does it tell us about Hillary Clinton that when she did have that power, she used it to start an aggressive war?

So it is on the question of women too. Here, like everywhere else, Trump says abhorrent, brutish things on the daily. But on the other hand, he hasn’t had multiple credible women come forward accusing him (or his spouse) of rape, nor, to my knowledge, has anyone alleged that he helped cover up any assaults by his spouse.

(Readers might recall a recent sensational story about Trump and another individual sexually assaulting a teenage girl. In that case, however, it was clear that the accuser had something to gain (suing for millions of dollars) and the story seems to have fallen flat quickly after it was published. Obviously, this is rather different from the multiple allegations that have followed Bill Clinton around for much of his political life.)

Also, standard disclaimer: I won’t be voting for Trump or Clinton. I hope they both lose.

If You Only Learn One (More) Thing
Make it this Dateline interview with Juanita Broaddrick (long version, short version), formerly known as Jane Doe #5, who is one of the alleged rape victims of Bill Clinton. Just listen to it and judge for yourself. It’s tough to see what she had to gain by making it up. Some people are desperate for fame, it’s true. But being known as a rape victim of a powerful politician, and inviting all the scrutiny that comes with that seems like a high price to pay for if it was just a hoax. Obviously, you can be the judge, but I believe her.

Daily Links: Protesters Shot in Baghdad and NPR Gives Saudis a Pass

The Worst New Thing in the World Today
The situation in Iraq somehow managed to get worse over the weekend. Protesters, led by Shiite cleric Muqtada Al-Sadr, once again rallied against the corrupt central government in Baghdad after another week of inaction. The protesters pushed their way into the fortified green zone, where the government offices are located. Unlike with past protests however, this one ended violently. Security forces reportedly responded with live ammunition, wounding dozens and possibly even killing some protesters according to some sources. This is one more scandal for a government that already has its share of problems, including struggling to confront ISIS, dealing with low oil prices, and the constant issue of corruption. Tough to say whether this will be a tipping point for the present regime, but things are likely to get worse before they get better.
Other Bad News
The US has rejected an apparently sincere proposal from Russia to collaborate on airstrikes against violent extremists in Syria. The primary excuse offered by the US is as predictable as it is misleading–that the Russians are focused on protecting Assad while the US is focused on attacking the Islamic State. Of course, the trouble here is that one of Assad’s primary opponents is the Islamic State, so there’s some natural overlap in the two objectives even if we take them at face value. Digging deeper, the unfortunate truth is that the other leading faction fighting Assad is allied with / led by Al Nusra Front, Al Qaeda’s Syria franchise. This fact has led the US to weigh the competing policy objectives of overthrowing a dictator we dislike and fighting the terrorist organization responsible for 9/11. To most Americans, this probably would not seem like a tough call. In practice, however, the US can be found pursuing both objectives, depending on the day–occasionally conducting airstrikes against Al Qaeda, while also providing arms and training to groups allied with them.
The Silver Lining
Today’s good news comes in the form of a gaffe by the Hillary Clinton campaign. Actually, perhaps calling it a gaffe is too generous; it wasn’t a spontaneous remark but rather a premeditated campaign graphic that happened to make no sense. The Clinton campaign created a Venn Diagram that was supposed to communicate that an overwhelming majority of gun owners and Americans, support universal background checks. All they really communicated was that they don’t know how Venn Diagrams work. Read Reason’s enjoyable attempt to decipher the message if you’re in the mood for a laugh.
If You Only Read One (More) Thing
Check out Daniel Larison’s recent analysis of Saudi crimes in Yemen. In particular, Larison focuses on a recent interview that NPR featured with a Saudi official on the subject. The Saudi spokesman overtly lies in the interview, which NPR eventually dismisses it as a difference of opinion instead of actually correcting it. Larison also notes the failure of NPR to ask any hard-hitting questions or follow-ups in the rest of its interview. While he seems overly critical in some ways, the overall point is certainly correct.
It’s worth reading alongside the original transcript, because it shows how ostensibly objective media organizations like NPR can subtly frame stories in ways that are favorable to the US and/or its allies.  This doesn’t mean NPR is evil or that there’s a conspiratorial effort by higher-ups at NPR to influence public opinion. Indeed, NPR tends to be better than most. That said, this piece is a helpful reminder that even “objective” journalism usually has a bias built-in. It’s also why we believe that writers and commentators should declare their biases openly instead of pretending they don’t exist.

Daily Links: May 20, 2016

The Worst New Thing in the World
NATO has invited the Eastern European country of Montenegro formally into the alliance. This change is unlikely to make much practical significance on the ground. But it is important in a symbolic way in terms of the already tense US / NATO relationship with Russia. Montenegro was previously apart of Yugoslavia, which was a member of the Warsaw Pact during the Cold War. Thus, Russia tends to view NATO expansion as a provocation. Whether they should be concerned by this is perhaps a fair question, of course, but the fact they are concerned is more important. And for good measure, it’s worth noting that the US would obviously be hostile if Russia or North Korea formed a military alliance with Mexico.

Other Bad News
The Federal Reserve released minutes from its last policy meeting on Wednesday, sending shockwaves through the market. Investors look to the minutes to gain hints about whether and when the Fed is likely to raise target interest rates again. And in this most recent release, the Fed members strongly indicated that it might be occur as soon as June. This position went against prevailing investor sentiments which generally believe market / economic conditions are too weak for the Fed to raise rates that soon. The end result was that the markets fell over the last two days relatively sharply. So far this year, investors have generally been more accurate predictors of actual Fed behavior than the Fed’s own public forecasts.

This also offers an important warning for the Fed, but they’re between a rock and a hard place. If they raise rates, it’s likely that market volatility to rise even more and stocks will decline further. Since this is a metric that’s closely monitored, this would constitute pretty bad PR that President Obama and Fed Chairwoman Yellen would prefer to avoid. On the other hand, if they do not raise rates after making strong threats of doing so, the Fed’s credibility would be diminished further.

Finally, in case it’s not obvious, we should emphasize that the reason raising interest rates tends to lower stock prices (at least in the short-run) is because it is expected to decrease the amount of borrowing and the amount of money in the economy. Given that the economy has already showed signs of faltering, this would be an added headwind that could be devastating. If the economy were widely believed to be on so sounder footing, the impact of rate increases could theoretically have moderate effects. In the present environment, however, rate increases seem likely to end poorly.

The Silver Lining
Paul Ryan and Congressional Republicans have agreed with the Obama Administration to handle to the Puerto Rico debt crisis. More surprising, early indications are that it’s actually relatively good. Effectively, Puerto Rico will be managed as if it went into a special kind of bankruptcy–with creditors bearing the brunt of the losses. It also does not appear to guarantee any general taxpayer money to help Puerto Rico. If it goes through, it may make investors wary of buying bonds for US states that are struggling, not just Puerto Rico. However, from a libertarian perspective of course, that’s something of a win-win. All things equal, a government that is unable to borrow money is likely to be a relatively limited one.

(For a more thorough treatment of the Puerto Rico topic, also check out our recent piece on the subject.)

If You Only Read One (More) Thing
Check out this new piece at The Intercept about the funding sources that are trying to stop the legalization of marijuana in California. In particular, it notes that groups representing prison guards and police have been fighting legalization. This makes sense because it’s certainly in their narrow interest to keep pot at least partially illegal. It helps ensure the needless incarceration of many extra people, offering more job security to prison guards, and the drug war often makes liberal use of civil forfeiture–allowing banks to confiscate drugs and property of people who have not been convicted. Naturally the practice tends to be rather lucrative.

Thus, the article is a helpful reminder that government officials and organizations have interests of their own that won’t necessary match well with the interests of the citizens. Government is sometimes described romantically as the thing we do together–and in this narrative, government officials and politicians (at least, your member) are serving the public good. But in reality, they are still self-interested, just like everyone else. This doesn’t make them bad people; it makes them merely people. And it recommends a higher dose of skepticism when confronting the actions or positions of individuals in government, regardless of whether they’re politicians or not.

May 19, 2016

The Worst New Thing in the World Today
The Obama Administration has announced new rules that would require overtime to be paid to any worker, subject to certain exemptions, who makes more than $47,476 a year. Naturally, the move is being hailed by many as a big move in favor of the little guy and the middle class, but the reality is likely to be somewhat different. We’ll elaborate on this theme in an upcoming piece, but the short synopsis runs something like this.

So the bill appears intended to affect many white-collar workers as well as blue-collar ones. If you’re currently making less than $47k a year, now you can no longer be just salaried. And in order to comply with the regulation, many more workers will need to track their time in order to calculate the overtime. As a result, if a business has an employee who makes $46k and works late at all, it appears it would be cost-effective to just boost their salary above the exemption threshold. No doubt, this will happen in at least some cases so businesses can avoid the hassle of tracking and the possible compliance issues associated with it.

But then we realize what this rule has effectively done. Like the minimum wage, it effectively raised the cost (both wages and compliance) associated with all employees in between the previous threshold ($23,660) and the new threshold ($47,476). And when you raise the price of something, you tend to get less of it. While it’s very likely that some individuals (and certainly, the makers of HR software solutions) will benefit from this law, there’s no reason to think that will be true in aggregate. Moreover, the law is apparently going to be applied uniformly across the states regardless of cost of living or median income–so San Francisco, CA and Fort Dodge, IA will have the same arbitrary salary threshold. Whatever one thinks of such a rule in general, this kind of one-size-fits-all is clearly indefensible because its impact will produce completely different results in high-income areas versus low-income ones.

Additionally, it’s worth considering how this changes the dynamic for people affected by the rule. Imagine an employee has a major deadline approaching and feels the need to work extra hours to ensure it gets done on time. Before they were subject to overtime requirements, the choice was clear. They would work a little extra to avoid the stress of looming stress of a close deadline, and hopefully, the boss will note and appreciate the extra work they put in when comes time for reviews. Once overtime rules are in effect, the employee now has three less attractive options. Work overtime and report it–they’d get more money, but it also could create tension with the boss, and they might have to defend why they’ve been delayed. That’s not a good experience to repeat regularly for long-term success. They could work more and lie about how much they worked, having a wink-wink understanding with their boss. This would basically put them back in the same position as before, but now they have to lie to do so. And the business is potentially subject to legal liability if the arrangement is discovered by someone who cares. Or last, they can just go home and risk missing the deadline–if and when they do, no doubt it will not be beneficial to their career. Once you consider this scenario, it’s easy to see how this could actually make the employees worse off in the long-run in spite of its intent. Having personally had jobs that would now qualify for overtime “protection”, I have no doubt that it would have made my work environment more stressful, and certainly would have had deleterious effects on my career. Why wouldn’t the same be true for others?

More Bad News
A passenger plane from Paris to Cairo went missing off the radar, and the wreckage was found near a Greek island. Given the plane’s destination in Egypt, the situation naturally draws some parallels to the Russian passenger plane that was destroyed last year due to a bomb that was planted on the plane. The ISIS affiliate in Sinai had credibly claimed responsibility in that case. The only plus side here, if any, is that early reports suggest the plane went down in the Mediterranean Sea and not over land–this would diminish the likelihood of terrorist factions shooting down the plane with any of the high-tech weaponry they likely have access to. Additionally, since the plane is coming from Paris, it would appear much less likely that Paris’s airport security was infiltrated to allow for a repeat of the earlier attack. However, speculation of terrorism as the cause is widespread. If it is determined that Paris’s airport security was penetrated, enabling this attack, we can expect another aggressive foreign policy reaction from Western nations. For now, we should hope this was simply a tragic accident.

The Silver Lining
Obama gave a reasonably good speech recently on the topic of free speech and political correctness. In practice, of course, his Administration’s record on the subject isn’t great, including very aggressive campaigns against whistleblowers. But still, it’s a win when someone generally in the left-leaning camp praises free speech to college students. When it’s a popular political figure like Obama (at least among such circles), there’s at least a chance it could have a positive impact. Credit where it’s due.

You’re off the hook for an additional reading recommendation today. This was already on the long side as it is…

Daily Links

The Worst New Thing In The World
The US is deciding to send new arms to one of the Libyan governments. I say “one of” here, because the country actually has at least two (arguably three) in the wake of the sterling success of Hillary Clinton’s and Barack Obama’s intervention in Libya. The two governments, based in Tobruk (east) and Tripoli (west), have been unable to come together or maintain much control over the country in the power vacuum that followed regime change. This has allowed an ISIS affiliate to gain a foothold in the area, which is now the justification for more intervention. However, in spite of the clear complications on the ground, the US has partnered with what it’s referring to as the Libyan government (an altogether new group that is backed by Tripoli but not Tobruk) in order to send more weapons, and when that fails, presumably, troops as well. To all outside appearances, it looks like this new “government” secured US support on account of its willingness to have (another) intervention to stabilize the situation. What could go wrong?

Dishonorable Mention

Use Proper Pronouns or Else…Really?
The Washington Post is reporting on a new determination by the New York Human Commission on Human Rights Law, which will require people to refer to others using the pronoun they desire. At first blush, this may not seem to be a problem. However, the problem is that failure to use a person’s preferred pronoun is punishable by a fine of up to $125,000, even if it is not willful. This new determination comes in the context of the transgender bathroom debate, and the piece notes that the preferred gender pronoun for transgender people may be “ze” or “hir”, which are explicitly gender neutral.

Here, it’s key to note that this ruling is intended to apply to private people, like employers and those who serve the public, and it’s entirely irrelevant what you think about the transgender issue or gender-neutral pronouns. As for me, I happen to like gender-neutral pronouns. Indeed, when I had to draft a student government constitution a few years back, I actually used such pronouns both because they were inclusive and avoided the decidedly awkward “he or she” syntax occurring throughout the document. But since I was at a public university, I was essentially in a governmental role. And, if we imagine calling someone by the wrong pronoun is tantamount to discrimination as New York is suggesting, there’s a major difference between government discrimination and private party discrimination. The former should basically never be allowed, because government is a monopoly and it’s difficult to avoid interacting with it in some way. On the other hand, private discrimination is a different matter entirely–because there is a choice. If you dislike how a business / employer is treating you, you can and should leave for an alternative. However, we shouldn’t be allowed to compel a private person to do what I want them to against their will, even if they’re being bigoted. Government discrimination is a major problem; private prejudicial discrimination is a problem that must be tolerated because freedom of speech and association, necessarily implies the freedom to be an asshole, provided it is a nonviolent one.

The Silver Lining
The Senate has voted in favor of allowing Saudi Arabia to be sued by 9/11 victims. There’s still more work to be done on this issue since Obama is almost certain to veto the legislation. But for now, this is significant positive news.

If You Only Read One (More) New Thing
Make it this more detailed write-up on the news from Libya. It places the latest story in context and also gives you a sense of how likely this is to work (that is, not likely at all).