Israel: The Flotilla Crisis

AP:  Nine Israeli commandos stormed a Turkish aid flotilla bound for Gaza.  Bound sides are claiming the other started the violence.  A few quick thoughts:

• While I understand the Israeli logic that they couldn't allow the ships to reach Gaza because it would set a precedent for other runs and bolster Hamas, I can't help but think in the long run, they're going to lose the international PR battle on this. This can very well be a tipping point where international opinion, already against Israel, significantly hardens.  STRATFOR is pointing out this may cause a political crisis within the Israeli government, and will probably cause a break in Turkish-Israeli relations, which were already deteriorating for some time. Turkey is Israel's only ally in the region.
• This is a major assertion of a rising Turkish power in the region. They deliberately provoked Israel with the aid run. This also positions them as one of the leading voices for the Palestinians. Question: This aid flotilla was enroute to Israel since May 22nd. Were there any US concerns expressed to either Turkey or Israel on a potential confrontation? Or did the administration adopt a wait and see approach?
• The WH's initial response was designed to buy time to sort out the implications before committing themselves definitively. The WH and Israel have been quietly trying to mend relations after recent public spats over Israeli settlements in Jerusalem.  Netanyahu probably calculated this incident would not cause lasting damage to the US-Israeli relationship in the long run, although it may be rocky in the short term.  Once the WH national security staff sorts it out, the official response will be a pivotal on the direction of future US-Israeli relations under this administration, and potentially, on Israel's international standing.
• While this incident complicates the WH strategy for the region, I think this gives the administration some leverage over Netanyahu, and they may very well use it. Turkey is a major US ally in the region and NATO partner, and the administration will want Turkish cooperation on Iran. 
• Foreign Policy mag has a good round up on this:

It already has the makings of a huge international fracas that will make the Goldstone Report look like small potatoes by comparison. But to what end? Israelis on the right end of the political spectrum -- and that is most of them these days -- are convinced there is a "propaganda war" against their country, that most if not all of the criticism is unfair, and that the real issue is the radicalism of groups like Hamas and Hezbollah, which openly call for Israel's destruction. That's certainly the perspective of hard-line government officials like Deputy Foreign Minister Daniel Ayalon, who has already called the ships an "armada of hate and violence" and accused the activists of links to al Qaeda.

In other words, there's a huge unwillingness on the Israeli right to face reality -- that Israel is fast losing friends and allies in the world, and that this government in Jerusalem has only accelerated the shift. It's not hard to imagine boycott campaigns gaining momentum, damaging the Israeli economy and isolating the country diplomatically, especially in Europe.

The one thing that might extrictate Israel from this mess is a violent response from the Palestinian side -- which never misses an opportunity to miss an opportunity. Stay tuned.

Sunday Reflections

Andromeda Galaxy

2,500,000 light yrs away

Closest spiral galaxy to the Milky Way

By John Lanoue, WikiCommons

Muslims on Why No Mosque Should be Built Near Ground Zero

From the founder and President of the American Islamic Forum for Democracy, M. Zuhdi Jasser, M.D. Dr Jasser served in the US Navy for 11 years as a doctor, and became a Lt CMDR. As a devout Muslim dedicated to contesting the ideas of political Islam and organizations like the Muslim Brotherhood, he explains why the huge mosque the Cordoba initiative run by Iman Rauf wants to build near ground zero is wrong in the NY Post today:

I am an American Muslim dedicated to defeating the ideology that fuels global Islamist terror -- political Islam. And I don't see such a "center" actually fighting terrorism or being a very "positive" addition near Ground Zero, no matter how well intentioned.

To put it bluntly, Ground Zero is the one place in America where Muslims should think less about teaching Islam and "our good side" and more about being American and fulfilling our responsibilities to confront the ideology of our enemies.

Khan and Rauf avoid discourse on reform and political Islam. Instead, they simply give us the familiar, too vague condemnation of "extremism and violence." They seem to conveniently view 9/11, al Qaeda and every manifestation of militant Islamism as simply a public-relations problem for "Muslims in the West." Imam Rauf has even gone so far as to bizarrely say that the 9/11 terrorists were "not Muslims."

As controversy over the project has become heated, Rauf's Web site has scrubbed the term "mosque" in exchange for "center" -- again missing the boat of why so many Americans are offended. (Meanwhile, the plans of another local Islamic group to rebuild near Ground Zero only added to the quandary.)

This is not about the building of a mosque or a religious facility. It is not about religious freedom. This is about a deep, soulful understanding of what happened to our country on 9/11.

When Americans are attacked, they come together as one, under one flag, under one law against a common enemy that we are not afraid to identify. Religious freedom is central to our nation - and that is why the location of this project is so misguided. Ground Zero is purely about being American. It can never be about being Muslim.

The World Trade Center site represents Ground Zero in America's war against radical Islamists who seek to destroy the American way of life. It is not ground zero of a cultural exchange.

He's not the only Muslim speaking out against this.  Here's former terrorist Walid Shoebat, who had fought for the PLO in his youth. He has since converted to Christianity, and reveals disturbing contradictions between Ground Zero mosque founder Imam Faisal Abdul Rauf’s English statements and his Arabic comments. At about 5:30 minutes in the video, Shoebat tells us establishing a mosque on any property is viewed to Muslims as being a Muslim embassy, and non-believers are not permitted to dismantle it.





Or as Robert Spencer of Jihad Watch points out:

The placement of mosques throughout Islamic history has been an expression of conquest and superiority over non-Muslims. Muslims built the Al-Aqsa Mosque and the Dome of the Rock on the site of the Jewish Temple in Jerusalem in order to proclaim Islam’s superiority to Judaism. The Umayyad Mosque in Damascus was built over the Church of St. John the Baptist, and the Hagia Sophia Cathedral in Constantinople was converted into a mosque, to express the superiority of Islam over Christianity. Historian Sita Ram Goel has estimated that over 2,000 mosques in India were built on the sites of Hindu temples for the same reason...

The possibility of deception cannot here be ruled out, given that Abdul Rauf has a history of making smooth statements that appear to endorse American principles and values, when on closer examination he is upholding Sharia law, denigrating freedom of speech, and advocating against anti-terror measures.

At minimum, Imam Rauf is duplicitous. At worst, he seeks to undermine our ideals by using our open society and democratic process to impose a type of sharia law for Muslims in America.

Note to White House: Dump your Counterterroism Advisor

In an exercise of post-modernist self-denial, Fox News reported that John Brennan, the WH counterterrorism advisor, claims Al Qaeda is not Islamic and that we shouldn't refer to terrorists as jihadists because "jihad is a legitimate tenet of Islam." He believes associating them with Islam is counterproductive:

"Moreover, describing our enemy in religious terms would lend credence to the lie propagated by Al Qaeda and its affiliates to justify terrorism -- that the United States is somehow at war against Islam," he said. 

While most Americans do not wish to go to war with all Muslims, and we know that these jihadist groups do not represent all Muslims, pointing out there is a connection between political Islam and terrorism is not anti-Muslim.  It's an objective observation of some of the dynamics in the Middle East that the sooner we recognize and speak honestly about, the more effectively we're able to formulate a foreign policy that de-legitimizes these ideologies, just as we waged and won an ideological war over Communism. We need to take care not to conflate it with all of Islam, but we must identify the major threads to spark an honest discussion of it.  It'll be tough to do given Arab societies operate mostly as an honor society, not prone to self-refection or constructive criticism.  

John Brennan may think by cleverly disassociating Islam with Al Qaeda or any terrorist organization, he is in fact sapping those groups of their Islamic credentials. But his incorrect diagnosis of the problem disarms counterterrorist analysts of the tools they need to identify potential threats to the US.  Where does one focus their analytical efforts if there is no connection between Islam, jihad, and terrorism? Brennan names Al Qadea and their affiliates as our enemy, and that's a start, but should we not be proactive in identifying other potential jihadist threats rather than be solely reactive to an unquestionably important, but known variable? What about examining certain mosques not affiliated with Al Qaeda that may be the hotbed of Islamic extremism?

Moreover, what's dangerous about this view is that it reinforces in many Muslims that there is no need to scrutinize how commonly held interpretations of Islamic law can lead the terrorists to commit such acts. Jihad Watch refutes the myth there is no connection with jihad does not connate warfare:

It doesn't just "connote" warfare. It juridically means warfare, according to Islamic texts and teachings. There is not a single traditional school of Islamic jurisprudence that does not teach, as part of the obligation of the Muslim community, warfare against and the subjugation of unbelievers.

Jihad Watch goes on to list the major schools of Islamic jurisprudence and summarizes their interpretation of jihad.

But according to Brennan, there is no association with Islam and you see, the 9-11 highjackers, most of who were well-educated and came from middle class families, since violent extremists are really victims of forces outside their control:

During a speech at the Center for Strategic and International Studies, John Brennan described violent extremists as victims of "political, economic and social forces," but said that those plotting attacks on the United States should not be described in "religious terms." 

While Brennan is trying to tamp down on the perception in many Muslim countries that the west is engaged in a war against Islam, he ends up completely inverting moral logic by calling extremists "victims." Additionally, by denying any connection with political Islam and terrorism, he ignores the dynamics that will enable many more Arabs to be brought up believing jihad is warfare against non-Muslims. Ignoring these dynamics will not simply make them go away. It's an exercise in avoidance; denial has a way of eventually coming home to roost.

Another observation: Brennan has gone native, and has drank the multi-cultural propaganda kool-aid.  He started out his career as a political officer in Saudi Arabia, and his spent much of his CIA time in southwest Asia, becoming the Middle East station chief in 1996.  He's asserted that American Muslims are "100% behind US anti-terrorism efforts" (what about the shooter at Ft Hood? The Times square bomber? The underwear bomber?).  He even called Jerusalem "Al Quds" at a WH sponsored event at the Islamic Center at New York University. While he was undoubtedly trying to ingratiate himself with his Muslim audience, by calling Jerusalem "Al Quds," he associates Jerusalem with Muslim ownership of it.

While all of the above is more than enough to question his objectivity as the chief counterterroism advisor to the President, perhaps what's more problematic is his penchant for making dubious statements for the purposes of political damage control such as his assertion that Gitmo recidivism rates at "twenty percent is not that bad," when he compared terrorism with rank and file crimes and the recidivism rate in American judicial system.  He also tried to disingenuously smear Congressional Republicans over their criticism of why the underwear bomber last Christmas was read his Miranda rights, and leaked information that the suspect was cooperating just after FBI Director Robert Muller told Sen Kit Bond (R) that it was essential to keep his cooperation secret so they could carry out other counter-terrorist actions.  When Brennan steps out in public and speaks of terrorism, he owes the American people straight-talk about the threat this country faces.  Yet he seems only interested in putting out political spin. 

Brennan has a long and distinguished career within the intelligence community, but as we've seen, he's very much a politically motivated animal. This, combined with his unwillingness to see any connection between Islam and Al Qadea or any other jihadi-inspired terrorist groups, calls into his question his competence.  The President must get an objective analysis of our adversaries, even if it's in contradiction to his world view. He requires this in order to ably defend this nation. John Brennan has shown himself to be a political hack.  The sooner the Obama administration gets rid of him, the better. If they keep him on, I can only assume it's because he's a sycophant reflective of the administration's own views.

The Multiculturalist View: Why not a Mosque by Ground Zero?

The NYC community board voted 29-1 in support of the a huge Muslim cultural center and mosque being built within 3 blocks of Ground Zero, with 9 members abstaining. Hotair has the background information on this developing story. Michelle Malkin's site shows a video of Debra Burlingame at the meeting with the community board, who claims the leader behind the Cordoba Initiative who wants to build this mosque, Iman Feisal Abdul Rauf, is a supporter of sharia law. Rauf denies this center will be a mosque in a NY Daily News opinion piece, saying it will be open to all, although it will have a separate Muslim prayer room.

Burlingham disputes Imam Raul's assertion that the cultural center is not a mosque:

Debra met with the Soho Properties partners, Sharif and Sammy El-Gamal, owners of the corporation that bought the property with $4.85 million in cash. They refused to disclose their investors “on the advice of our attorneys.” According to Debra: “They showed us a professional rendering of the plans. It’s not a 13-story building. It’s a 15-story building and the mosque, accommodating 2,000 congregants, will be on the TOP FLOOR, with a commanding view of the entire Ground Zero site. On the ground floor, clearly printed, were these words: “Elevator to mosque.”  

Just who is Imam Raul? Hannity examines his views more in depth with Burlingame:

Rauf also writes a blog on Faith for the Washington Post.  In a post dated April 29, 2009, in a piece titled, "How Islamic Law Can Work," he dubiously compares Islamic law to the Declaration of Independence and insists all that is wrong with Sharia is the penal code which is a cultural holdover that should be updated. Tellingly, he writes:

What Muslims want is to ensure that their secular laws are not in conflict with the Quran or the Hadith, the sayings of Muhammad.

Read it for yourself. He's also been critical of the west, seemingly blaming us for 9-11:

Rauf has often directly contradicted his seemingly tolerant and peace-loving pronouncements with harsh, antagonistic assessments of the U.S. In his May 7 Khutbah (Muslim sabbath sermon), delivered at 1:00 p.m. at 45 Park Place in Manhattan, Rauf implied that Muslims did not perpetrate 9/11 at all, according to writer Madeline Brooks, who attended (26): “Some people say it was Muslims who attacked on 9/11 … ” he stated, before trailing off into another topic.

He also expressed this view in an interview with 60 Minutes aired on Sept. 30, 2001 as well (27):

The attacks were “a reaction against the U.S. government politically, where we espouse principles of democracy and human rights, [yet] … ally ourselves with oppressive regimes in many of these countries. … [U.S.] policies were an accessory to the crime that happened.

Not the crimes Muslims committed: “the crime that happened.” He continued:

In … the most direct sense, Osama bin Laden was made in the USA (28).

Here are his criticisms of the west from an overview of one of his books on the American Society for Muslim Advancement website, an organization he founded. Read his interview in the Sydney Morning Herald, where he claims the US must apologize to Muslims for our misdeeds, and said it was Christians who first started mass casualty attacks with WWII.  Interestingly, in another WaPo blog piece, he cheers on the Dutch government's decision to encourage media companies not to air Geert Wilder's film that is critical of Islam.  But as Bret Stephens in today's WSJ points, out, tolerance can't be a one-way street. Or as Salah Uddin Shoaib Choudhury over at Blitz puts it:

To my personal opinion, this mosque is an insult to the memory of 9/11, comparing the idea to building a German cultural centre at Auschwitz. I really fail to understand as to why those Manhattan politicians and Community Board 1 are supporting this ridiculous idea of constructing the mosque on the Ground Zero site.

New Yorkers seem overwhelmingly opposed to the plan, comparing its insensitivity to the German government opening, say, a Bach appreciation museum right outside the Auschwitz death camp, or Toyota opening a car factory by the Arizona Memorial on the island of Oahu.

On radio shows, families of 9/11 victims called in to condemn the plans as 'a slap in the face,' 'highly insensitive,' and 'a despicable attempt to claim victory at the site where so many innocent Americans died.'

Debra Burlingame, the sister of the American Airlines pilot whose jet was hijacked and flown into the Pentagon, is the founder of 9/11 Families for a Safe and Strong America. In a recent Fox News interview she said:

"The idea that you would establish a religious institution that embraces the very Shariah Law that terrorists point to as their justification for what they did … to build that where almost 3,000 people died, that is an obscenity to me."

Eminent writer Pamela Geller wrote, "recent history has shown that if you draw a picture of the Prophet of Islam or otherwise "insult" Islam, you'll have no shortage of offended Muslims lining up for an opportunity to stab you in the heart, behead you, rape your daughter or burn your house… so you'll have to forgive my tongue-in-cheek "confusion" that sensitive Muslims everywhere don't realize how offensive it is to build a huge mosque on the holy ground surrounding what was the World Trade Centre.

"The joke is, of course, that the people planning to build the 9/11 Mosque at Ground Zero knows exactly how offensive it will be.

"That's the idea. That's why they want to hold the grand opening on the tenth anniversary of the slaughter of 9/11.

"The proponents know that the building won't be seen by the Islamist fascists as a mere mosque: it will be a victory monument. A symbol of American submission. A vision of the progress of the worldwide Muslim Caliphate that is the Jihadist goal.

Perhaps what's most idiotic about this is how the multiculturalists' concern over diversity and tolerance doesn't extend to the 9-11 families' sensitivities:

Manhattan Borough President Scott Stringer said in a statement that by supporting the multi-faith community and cultural center, the board "sent a clear message that our city is one that promotes diversity and tolerance."

Stringer has been the target of disparaging remarks by Williams for supporting the plans and has defended his position and denounced offensive speech directed at him or at Muslims.

He said before the vote that he understood the sensitivities of the families of 9/11 victims.

"I don't think anybody wants to do anything to disrespect those families. They made the ultimate sacrifice," he said. "At the same time, we have to balance diversity and look for opportunities to bring different groups together." 

The mushy-mindedness of multiculturalism revealed--"tolerance" must be extended to those who are intolerant of having their Prophet insulted, and are unable to grasp why this may be offensive to the 9-11 families.  The uproar should at least give Mr Stringer pause that no, this will not heal wounds in anyway, but cause a lingering resentment among many New Yorkers, which can precipitate even more of backlash against Muslims.  Alarm News puts it this way:

Are there Muslims who don’t support this jihad? OF COURSE. And it is a travesty that these terrorists act in their name. But that does not mean that these terrorists acts are not tied to Islam. Ultimately they are, they are, they are, and saying so doesn’t mean that I hate Muslims who live peacefully and don’t want to see me dead. It is a fact that Islam is inextricably tied to the murder of 3000 people in this one attack, and to many more dead in others.

And that is why a mosque at Ground Zero is just unacceptable. It is one thing to celebrate and worship Islam 20 blocks away in either direction. It’s another to have it at the site where the slaughter of innocents took place in the name of Islam. It isn’t a sign of openness and understanding to put a mosque in this location. It is a prize to those who hate us, it is a monument to the side that won the battle that day.

The peaceful Muslims who have no quarrel with us? They should understand that this mosque should not be built on or very near this space. Choose another location, and let’s move on.

North Korea: Nothing to Lose

Kim Jong-un, the youngest son of North Korean leader Kim Jong-il, reported to be his heir.

I've been waiting for events to develop in NK before blogging about it. It seems North Korea has upped the ante by cutting off all ties with Seoul. This came on the heels of the administration announcing joint US-S. Korean military exercises to be held on the peninsula, and telling the NYT that Kim Jong-il ordered the attack on S. Korean ship.  There's a bit of diplomatic wiggle room in NYT piece if needed, as administration officials are quoted as saying:

We can’t say it is established fact,” said one senior American official who was involved in the highly classified assessment, based on information collected by many of the country’s 16 intelligence agencies. “But there is very little doubt, based on what we know about the current state of the North Korean leadership and the military.”

Nonetheless, both the conclusion and the timing of the assessment could be useful to the United States as it seeks to rally support against North Korea. [emphasis added]

Another NTY op-ed today from Ian Bremer, president of the Eurasia group, points out that not only may North Korea be facing a leadership succession issue, but it's iron clad grip on society may be slipping. When the regime allowed some small scale capitalist experiments to begin in 2002, a black market for cell phones, radios, and other communication devices quickly burgeoned.  When North Korea tried to clamp down on these reforms last year, here's what happened:

South Koreans with connections inside North Korea reported black market hyperinflation, severe food shortages and pockets of serious civil unrest. The government quickly suppressed the protests and tried to appease public anger with emergency supplies of rice in the hardest-hit areas.

Then something extraordinary happened: The North Korean government backed down. It reopened private markets and again allowed transactions in foreign currencies. The prime minister issued a stunning and nearly unprecedented public apology. State planners were publicly humiliated. A few weeks ago, North Korea’s finance minister was executed by firing squad.

In other words, succession is only one of the problems facing the North Korean elite. The larger fear is that the state can’t isolate North Korea’s people forever, that only access to products from outside the country can ease chronic shortages, and that all this new market activity is raising public expectations the North Korean leadership can’t meet.

In April, the regime reportedly provided senior military officials with foreign cars to ensure their loyalty. That sounds a lot like the late East German leader Erich Honecker’s bid to reward his generals with weekend shopping trips to the West — a move that only whetted their appetite for more and hastened the country’s demise.

Did North Korean torpedo the Cheonan to manufacture a military crisis that might rally angry North Koreans to their government? Maybe. Would the attack create unity within the military ranks that might help smooth the succession process when Kim Jong-il finally dies? Perhaps. China and South Korea are right to worry that a North Korean collapse would flood both countries with sick and starving refugees.

But beyond the speculation, it’s starting to look like North Korea’s insecurity might be approaching a tipping point — raising the risk of another hostile act that might send North and South Koreans forces stumbling toward a shooting war that can only end in disaster for both.

There are few good options for the administration in this situation.  North Korea is already heavily sanctioned, has nuclear weapons, and its artillery ranged on Seoul, a city with a population over 10 million. Still, it looks like with this info deliberately given to the Times, the announcement of war games, and Hillary Clinton putting the yuan issue on the backburner in her meeting with China, the administration feels compelled to act since what North Korea did constitutes an act of war.   When the Bush administration hit the regime financially where it really hurt, North Korea came to the table and specifically tied its nuclear deal to the release of its funds held at Banco Delta in Macau.  I expect that if there is any new information on regime financial sources, the administration will try to find a way to sanction it.

China is key to this issue since they have direct ties to the regime. But it's unlikely they want to disturb the status quo since they share a border with North Korea. They don't want their refugees should North Korean society collapse, nor are they keen on seeing the peninsula unified under a capitalist-led South Korea. Plus, it's an issue where they are the primary facilitators that Washington has to go through. As such, they've been playing the issue down.  The Obama administration's bandwidth on foreign policy is full; human rights haven't been a pressing concern for it. After some angry exchanges and obligatory UNSC denouncement of North Korea, with such little information we have on North Korea, the administration may very well desire a return to the status quo as well.

In a Bloomberg interview with Henry Kissinger yesterday, the interviewer switches from the topic of the yuan over to North Korea about half way thru the interview. Here Kissinger remarks that North Korea "is one of the weirdest little regimes." He points out they do not produce anything, nor do they have an real trade.  The North Korean government cares only for regime preservation; everything it does should be viewed through this prism. It other words, if it helps strengthen the regime, North Korea has nothing to lose in stirring up another crisis short of war.

The Obama Doctrine: Wishful Jeffersonian Minus the Exceptionalism

I watched Obama's West Point speech which was a little over 1/2 hr long.  The first half was boilerplate in lauding the institution of West Point, and sacrifices of the US military. The latter half was where Obama defined his foreign policy vision. The speech struck me heavily as Jeffersonian, with a focus on rebuilding ourselves internally, urging the utmost restraint on the use of force, and promoting our values through leading by example.  However, his foreign policy words and actions to date have revealed a progressive adaption of this traditionally Jeffersonian view.  It's the view that America is not exceptional, and is badly flawed. Only through the progressive project can America be truly great. Until then, she has no business imparting any wisdom of democracy onto other nations. And this, in the progressive mind, provides the rationale for American restraint.

When reminding the cadets of why our domestic challenges were directly correlated with our ability to project power overseas, here I thought Obama was as his best even as I dissent from his domestic policies.  His words accurately reflect the current national mood, are traditional themes in American foreign policy, and are mindful of the realities on the limits of force:

Simply put, American innovation must be the foundation of American power -- because at no time in human history has a nation of diminished economic vitality maintained its military and political primacy [emphasis added].  And so that means that the civilians among us, as parents and community leaders, elected officials, business leaders, we have a role to play. We cannot leave it to those in uniform to defend this country -- we have to make sure that America is building on its strengths. (Applause.)

As we build these economic sources of our strength, the second thing we must do is build and integrate the capabilities that can advance our interests, and the common interests of human beings around the world. America's armed forces are adapting to changing times, but your efforts have to be complemented. We will need the renewed engagement of our diplomats, from grand capitals to dangerous outposts. We need development experts who can support Afghan agriculture and help Africans build the capacity to feed themselves. We need intelligence agencies that work seamlessly with their counterparts to unravel plots that run from the mountains of Pakistan to the streets of our cities. We need law enforcement that can strengthen judicial systems abroad, and protect us here at home. And we need first responders who can act swiftly in the event of earthquakes and storms and disease.

The burdens of this century cannot fall on our soldiers alone. It also cannot fall on American shoulders alone. Our adversaries would like to see America sap its strength by overextending our power. And in the past, we've always had the foresight to avoid acting alone. We were part of the most powerful wartime coalition in human history through World War II. We stitched together a community of free nations and institutions to endure and ultimately prevail during a Cold War.

This latter paragraph is a direct repudiation of what many critics viewed as Bush's unilateralism.  From here, the speech takes a twist in how Obama views Islamic terrorism:

So the threat will not go away soon, but let's be clear: Al Qaeda and its affiliates are small men on the wrong side of history. They lead no nation. They lead no religion. We need not give in to fear every time a terrorist tries to scare us. We should not discard our freedoms because extremists try to exploit them. We cannot succumb to division because others try to drive us apart. We are the United States of America. (Applause.) We are the United States of America, and we have repaired our union, and faced down fascism, and outlasted communism. We've gone through turmoil, we've gone through Civil War, and we have come out stronger -- and we will do so once more. (Applause.)

And I know this to be true because I see the strength and resilience of the American people. Terrorists want to scare us. New Yorkers just go about their lives unafraid. (Applause.) [emphasis added]. Extremists want a war between America and Islam, but Muslims are part of our national life, including those who serve in our United States Army. (Applause.) Adversaries want to divide us, but we are united by our support for you -- soldiers who send a clear message that this country is both the land of the free and the home of the brave. (Applause.)

Here, in the bold portion, the applause was at its most tepid, because Obama attempts to impart his our version of reality that is at odds with most Americans.  First, he tries to disassociate Al Qaeda from Islam as a way to curry favor with the Muslim world, instead of starting a dialogue with them to speak honestly of these challenges within their culture. Second, New Yorkers DO care about and are quite sensitive to to terrorist attacks.  Playing down Al Qaeda or Taliban attacks will not sap them of their zeal to attack Americans, as shown in numerous Al Qaeda attacks in the lead-up to 9-11. This is where I think Obama fundamentally gets America wrong, and ignores the historical impact of Pearl Harbor and the Cold War on the American psyche. While most Americans do not want the US engaged in perpetual or long-term wars, they expect justice when Americans are killed by terrorists, and not the kind of justice Obama and Holder would bring in a NYC trial of KSM.  They view these attacks as acts of war, and want a strong display of American power in response.

The other problems with the Jeffersonian view as discussed by Walter Russell Mead, is that America during that time, was a free rider in a somewhat stable order due to Great Britain's hegemony. Additionally, Jeffersonians are often criticized as being too passive in the face of gathering threats.  Moreover, the desire to recede and instead rely on continual cooperation can backfire:

A Jeffersonian policy of restraint and withdrawal requires cooperation from many other countries, but the prospect of a lower American profile may make others less, rather than more, willing to help the United States.

We see precisely this phenomenon happening now. Nations like Iran are exploiting this opportunity by becoming bolder in their defiance of the international community. In Obama's shoddy treatment of our allies and willingness to repeatedly extend open hands to our adversaries, many countries are concluding US leadership is weak, and are acting accordingly in their own interests without the US, as shown in the recent example of Brazil and Turkey overseeing a nuclear deal with Iran.  While Obama acknowledges the shortcomings of the international community, nowhere in his speech does he state when it may be appropriate to unilaterally defend America's interests with force (Jefferson did act unilaterally in US interests, particularly during the Barbary raids).  North Korea has calculated the US will probably do nothing, as it sank a South Korean ship. Although the options on the Korean peninsula are not particularly good for any US president, one wonders if they would have escalated their modus operandi of fomenting crises with a deliberate act of war during the Bush presidency.

Where Obama parts from Jefferson is what I've described in past blogs as the moral equivalence with which Obama treats America compared to other nations, or his belief in America's unexceptional nature.  This reveling in our flaws undercuts our own rationale for international leadership. This was not evident in his speech; after all, he's addressing West Point cadets.  But we see this again and again in his actions, as in his embrace of the Mexican President when he remarkably ignored the reality of the situation on our borders, pretending they did not exist, in a cheap political rebuke to the Arizona immigration enforcement law.  Amazingly, his own State Department discussed the Arizona immigration law in the context of human right violations with China of all nations.  While Obama's policy is realistic in its assessment of the need to rebuild the American economy, regular weaknesses of a Jeffersonian foreign policy are accentuated by his beliefs in moral equivalence and naturally, multiculturalism. This undermines traditional Jeffersonian views further by leading to unrealistic assessments on the nature of threats that surround us, as evidenced by Holder's refusal to answer whether Islamic fundamentalism is even a factor in any recent terrorist attacks.  This denial of cultural greatness is the biggest weakness in Obama's foreign policy.  Other nations get a vote--sooner or later, a nation or terrorist group, sensing this weakness in his continued narrative of America's flaws, is going to throw down the gauntlet, and it remains to be seen what Obama will do when that moment arrives. North Korean, Iranian, and Pakistani Taliban actions to date are just a start--the challenges will grow bolder.  One wonders if stronger action beforehand, or a policy predicated on preserving and promoting America's greatness, could have prevented those challenges from arising in the first place.

Sunday Reflections

The Twelve Apostles, Victoria, Australia 

By: Richard Mikalsen

Will the Euro Survive?

It looks like  Germany has approved its share of a trillion dollar rescue package for the Euro. Additionally, the EU has announced it will look at enforcing stiffer fines against countries that break its Stability and Growth Pact's deficit limits.

The Euro project was built with collectivist dreams from elitists who ignored voter concerns,  despite numerous countries rejecting the EU by referendum.  The EU dreamers thought they could ignore the geopolitics and residual nationalism in Europe and graft a superstate structure over it, binding everyone together for a more peaceful union.  Now we see the fault lines that arise in the Euro's project: the inevitable dilution of state sovereignty and widening democracy deficit between Brussels and individual voters.  Clive Crook from The Atlantic gets to the heart of the problem in his post, "Europe's Missing Foundations":

History and ordinary prudence dictated that the union might be broad and shallow (a free-trade area, with embellishments, capable of taking in all-comers) or else narrow and deep (an evolving political union, confined to countries willing to be led there). Of the two, I always believed that the first was better. But the architects did not even have the brains to choose the second. They recognized no limits to their ambitions. They set about creating a union that was both broad and deep. A federal constitution, a parliament, a powerful central executive, one central bank, one currency - all with no binding sense of European identity.  As for scale, well, the bigger the better. Today Greece, tomorrow Turkey. And why stop there? Madness.

Today's Telegraph predicts failure:

This is why the euro, in its current form, is finished. The game is up for a monetary union that was meant to bolt together work-and-save citizens in northern Europe with the party animals of Club Med. No amount of pit props from Berlin can save the euro Mk I from collapsing under the weight of its structural dysfunctionality. You cannot run indefinitely a single currency with one interest rate for 16 economies, when there are such huge fiscal disparities.

What was once deemed unthinkable is now, I believe, inevitable: withdrawal from the eurozone of one or more of its member countries. At the bottom end, Greece and Portugal are favourites to be forced out through weakness. At the top end, proposals are already being floated in the Frankfurt press for a new "hard currency" zone, led by Germany, Austria and the Benelux countries. Either way, rich and poor are heading in opposite directions.

It seems Germany and the EU elites are doubling down to save it. From the WSJ:

Berlin is now determined to push through a package of reforms both in Brussels and at the Group of 20 summit next month. These would cover stricter regulation of financial markets, a tax on financial institutions, and greater budgetary discipline.

But the German moves this week are already unsettling some. Says Struan Stevenson, a member of the European Parliament from the U.K.: "Clearly, the Germans were expecting other EU nations to dance to their tune and are no doubt enraged that others, including France, have chosen to ignore them.

"It's make-or-break time for the euro zone, with the tensions exposed by this crisis threatening to tear the single currency apart.

"My hunch is European leaders will not risk a market meltdown and bow to German pressure for full fiscal union—with Brussels and the European Central Bank in Frankfurt having the final say on state tax and spending plans across the euro zone."

Berlin would thus have achieved in months what has eluded the champions of the single currency since its inception.

As the WSJ notes, there is bound to be resistance from other member states to this.  The Euro will be unstable for the foreseeable future.

Charts of the Day: Mortgage Delinquencies Up, Slack Still Present in the Economy

Via Calculated Risk:

About 14% of mortgages are delinquent or in foreclosure. Rates by state:

As CR notes:

This highlights a couple more points that Brinkmann made this morning: 1) the largest category of delinquent loans are fixed rate prime loans, and 2) this is not just a "sand state" problem. Brinkmann argued the foreclosure crisis is now being driven by economic problems as opposed to the bursting of the housing price bubble - and this is showing up in prime loans and all states. Although Florida and Nevada are very high, notice that the blue bar (new delinquencies) are higher in many other states.

Brinkmann is MBA's Chief Economist. He explains factors that are dragging down economic growth. Currently, US growth has been revised downward due to the Euro crisis. As the dollar has appreciated against the Euro, it has made our exports more expensive and less competitive.  Additionally, while unemployment has leveled off, it still remains high. Strategic defaults are a clear trend:

Recent research, mainly from the credit bureaus, has also documented the increased incidence of "strategic defaults," where borrowers who could make their mortgage payments decide to pay other bills ahead of their mortgage loan, said Michael Fratantoni, MBA's vice president of research and economics. Typically, these are borrowers who owe more on their mortgage than the current market value of their home. 

"If you look back three, four years ago, it was always the case where a borrower would pay the mortgage first before the second mortgage or credit card debt," Fratantoni said during a conference call with reporters. Today, for some groups of borrowers, that's no longer true. "It runs counter to what anyone would typically expect and the historical experience," he said.

Last week, Business Week reported that strategic defaults made up at least 12% of the defaults in February. Commercial real estate is also hurting. Bloomberg notes commercial property values have dropped in the biggest metropolitan areas, and are down 42% compared to their peak in Oct 2007.  Bloomberg also reports that the Fed is in no hurry to sell off its mortgage backed securities.  This last article is a good summary of the US's overall economic picture.  Bottom line is the Fed expects:

“Even though the recovery appeared to be continuing and was expected to strengthen gradually over time, most members projected that economic slack would continue to be quite elevated for some time,” according to the Federal Open Market Committee report, which doesn’t identify the specific governors or regional-bank presidents making comments.

Iranian versus US Diplomacy: Chess versus Checkers

Dan Drezner sums up the latest US-Iranian developments, with Iran announcing it reached a nuclear fuel swap deal brokered by Turkey and Brazil, followed by the US rejecting the deal, and Secretary of State Hillary Clinton announcing today that Russia and China has agreed on a new round of UNSC sanctions against Iran.  Drezner asks why Russia would agree to sanctions and comes up these possibilities:

I'd suggest three possibilities, which are not mutually exclusive:

1)  Russia is genuinely unpersuaded that Monday's deal is anything more than marginally useful;

2)  Russia is just as annoyed as the United States at the young whipperrsnapper countries rising powers of the world going rogue in their diplomacy.  Russia is, in many ways, more sensitive to questions about prestige than the United States;

3)  Cynically, there's little cost to going along with the United States on sanctions that will have very little impact on the Russian-Iranian economic relationship.

While #1 and #2 are potential factors, I'm more persuaded by #3 from Russia's perspective. I commented on Drezner's post, and will elaborate here.  This is an embarrassment for the Obama WH, and Hillary Clinton was clearly trying to strengthen a weakened negotiating position with this announcement. The US is thirsty for some sort of Russian cooperation; if the Russians can sprinkle some water here and there over the administration, it keeps them invested in the UNSC process where Russia can act like the great power it believes it should be. Moreover, it allows them to keep an eye on US-Iranian developments. With the US bogged down in endless rounds of UNSC diplomacy, Russia can buy time to reassert itself in its near periphery, or link its cooperation on Iranian sanctions for a tacit agreement on its sphere of influence.

If the administration concluded it would never get Russian and Chinese cooperation for meaningful sanctions, it may have looked at hard-hitting unilateral petroleum refining sanctions, the sort that Russia clearly warned the administration about a few days ago.  In this scenario, while Russia would most likely play the spoiler by investing in Iran's energy sector, in the long run, it's simply not smart for the Russians to up the ante with the US who despite the economic downturn, is still the #1 economic and military power, and can still reinvigorate its BMD deal with Poland or the Czech Republic. The last thing Russia wants is for the US to have more bargaining leverage with Iran which unilateral sanctions may very well bring, and for the 2 powers to come to some sort of regional bargain without Russia.

Unsurprisingly, the WSJ is critical of the administration's diplomacy in today's opinion:

The double embarrassment is that the U.S. had encouraged Lula's diplomacy as a step toward winning his support for U.N. sanctions. Brazil is currently one of the nonpermanent, rotating members of the Security Council, and the U.S. has wanted a unanimous U.N. vote. Instead, Lula used the opening to triangulate his own diplomatic solution. In her first game of high-stakes diplomatic poker, Secretary of State Hillary Clinton is leaving the table dressed only in a barrel.

STRATFOR, which is mostly apolitical, is pointing out that Iran has a stronger negotiating position vis a vis the US with this announced deal in a short video:

I'm hoping the administration has a secret Door #2 to prove me wrong, but I'm doubtful. Using strong muscular sticks, particularly if peeves other major powers, just doesn't seem to be in their DNA.

An Opportunity Society or a Welfare State?

Rep Paul Ryan pretty much nails it. Do we want to be an opportunity society with a safety net, or a welfare state?

Our social contract with the government is on the verge of being changed again. It was transformed with FDR's New Deal during the Great Depression, when government engaged in income redistribution. While marginal tax rates have decreased significantly from FDR's time (marginal tax rates exceed 90% during his Presidency), his legacy of a safety net remains.  Conservatives should support a safety net as a type of altruistic redistribution.

Julian Sanchez clarified the different types of income redistribution by their purpose when the issue arose during the election in 2008. There's incidental redistribution, which provides for public goods that benefit most everybody, or at least do not exclude anybody. Items that fall in this category include national defense, infrastructure, and public education. On the other hand, Sanchez describes altruistic redistribution as:

What I’m talking about here is transfer programs aimed at helping the badly off, where the justification for the program is specifically the benefit to the worse-off, and not centrally any benefit to the people footing the bill. 

Like most conservatives, I support some forms of altruistic redistribution. I believe that Americans who play by the rules can suffer major income shocks through no fault of their own. You get laid off and can't find a job while you have a family to support, or you suffer a major illness and are on the verge of declaring bankruptcy due to medical costs that your insurer will no longer pay. In scenarios like these, I do believe we're morally a better society for helping people in need. While I believe capitalism provides the most opportunities for all, as a reflection of human nature, it's a flawed system. Not as flawed as some of the social democratic type of mixed economies in my opinion, but I have no desire to go back to the era of the Great Depression when many of the unemployed ended up homeless, setting up make-shift shanty towns. 


My qualifiers to altruistic redistribution is to think of it what's sometimes described as a help up, versus a hand-out. A help up is often means-tested and temporary. We have many safety net programs like this, to include unemployment benefits, or COBRA health insurance. I also accept that there are some vulnerable groups that cannot fully participate in a free market society, to include children and the elderly. I just want these programs like Medicaid, Medicare, and Social Security, to be reformed so they are fiscally sustainable.

Altruistic redistribution is distinguished from egalitarian redistribution. This type of redistribution is what Obama's "share the wealth" refers to, as a way to level the playing field. It's an attempt to equalize outcomes. Most conservatives including myself do not support this. In previous posts, I outlined the trade-offs between egalitarianism and freedom, and I fall more on the side of freedom than income equality.

A egalitarian society will have generous entitlement programs, but an expansive government that grows bigger and bigger to regulate the most trivial aspects of our lives since, for example, in the case of health care, we have to start policing what people eat because the increased costs of obesity have become socialized. This type of society grows government at the individual's expense, and nibbles away at that American dream slowly via taxation, in a death by a thousand paper cuts fashion. But a free society with a safety net promotes opportunity. It acknowledges unfairness, but believes the individual in most cases is best equipped to deal with those circumstances. And when misfortune is particularly severe, it provides a help up, not a hand out. This is the type of society I support.

Sunday Reflections

Daffodils

More on those GSEs

Russ Roberts takes on Barry Riholtz on the notion that Fannie and Freddie had nothing to do with the economic meltdown:

But Ritholtz ignores why subprime was so profitable. And part of the answer is that Fannie and Freddie had been buying up a lot of mortgages made to low-income buyers pushing up the demand for low-income housing. That in turn pushed up the price of houses in low-income areas.

He provides this chart and explanation that shows how aggressive the GSEs came in purchasing low-income loans:

He maintains that as the GSEs pushed into this market, creditors expected to be bailed out as subprime became more profitable.

Multiculturalism and the Rejection of Modernity

As the Feds arrest 3 men while investigating the Times Square bombing,  Fouad Ajami's opinion piece in the WSJ this week opens with a quote from Sayyidd Qutb: "A Muslim has no nationality except his belief." The article is titled: Islam's Nowhere Men, and outlines the dangers of Islamic fundamentalism we face within our own borders that will only be exacerbated by multiculturalism:

In an earlier age—I speak here autobiographically, and not of some vanished world long ago but of the 1960s when I made my way to the United States—the world was altogether different. Mass migration from the Islamic world had not begun. The immigrants who turned up in Western lands were few, and they were keen to put the old lands, and their feuds and attachments, behind them. Islam was then a religion of Afro-Asia; it had not yet put down roots in Western Europe and the New World. Air travel was costly and infrequent.

The new lands, too, made their own claims, and the dominant ideology was one of assimilation. The national borders were real, and reflected deep civilizational differences. It was easy to tell where "the East" ended and Western lands began. Postmodernist ideas had not made their appearance. Western guilt had not become an article of faith in the West itself.

Nowadays the Islamic faith is portable. It is carried by itinerant preachers and imams who transmit its teachings to all corners of the world, and from the safety and plenty of the West they often agitate against the very economic and moral order that sustains them. Satellite television plays its part in this new agitation, and the Islam of the tele-preachers is invariably one of damnation and fire. From tranquil, banal places (Dubai and Qatar), satellite television offers an incendiary version of the faith to younger immigrants unsettled by a modern civilization they can neither master nor reject.

Yet many of our elites do not want to acknowledge the fact that many Muslims view Islam as their ultimate identity; they would rather turn to ridiculous moral equivocating by pointing out that Shahzad, after all, was under much stress because he had to foreclose on his home.  Or they dismiss him as a lone extremist, refusing to examine any pattern of homegrown attacks, despite the successful attack of Maj Hassan on a US army base, or Umar Farouk Abdulmutallab, the unsuccessful underwear bomber.  The media seems utterly incapable of harnessing our technological advantages to examine and thoughtfully debate Islamist ideology out in the open, for it undermines their cherished narrative of multiculturalism:  that all cultural values are equal and worthy in their own right, and no values need to be promoted over each other, certainly not the white man's values. The result of such thinking is ultimately destructive to the goal of tolerance; for the determined ideologues will fill the vacuum with their own ideology, dominating the apologists who no longer have a philosophical basis for defending their own values. Freedom of speech is muzzled--after all, why provoke an aggrieved minority with your racist outbursts?

Multiculturalism is a step backwards from the values of individual freedom and modernity; it provides a deterministic context to society based on a person’s ethnic or religious origins, or gender.  It excuses tribalistic loyalties under the guise of tolerance. The idea that no absolute values should dominate in any one society flies in the face of reason.

A rejection of multiculturalism is not a rejection of cultural diversity or tolerance.  On the contrary, recognizing the contributions of different cultures can enrich society and serve as a barrier to racism and xenophobia. Immigrants and different cultural groups in democratic societies are often changed by, and change society for the better.  However, it must be done in the context of individual freedom as a cornerstone for the person's relationship to their government and to each other;  this individual freedom allows us to chose our own cultural context within the values of our society. These open debates with a strong defense of our values are the only antidote to marginalizing the lure of extremist ideology.

But in the Left's view of multiculturalism, we are a flawed nation no more special than any other; our values are specific to white Anglo-Saxen Protestants and are racist towards other cultures.  Christian expression of any sort must be banned from the public square.  Our national identity is fragmented, leaving us with an empty quasi-capitialist materialism. And young men like Shahzad will continue to turn to fill that void with a radicalized belief system we dare not critique.

Charts of the Day: Negative Home Equity

Calculated Risk's chart below (H/T: Marginal Revolution).  Wondering how your house fares? Punch in your address at Zillow.

So how soft is the housing sector? Zillow's chief economist has the report. The bottom line: it's still soft.  The tax credit for home buyers is helping lift sales but inventory supply is increasing. As CR notes:

Research has shown that once negative equity exceeds 25 percent "owners begin to default with the same propensity as investors", and it is these 4.9 million borrowers - with $656 billion in debt - that are most at risk for foreclosure.

This chart on their blog sums it up; more than 10% of homeowners nationwide have negative equity at or exceeding the 25% level:

 On a brighter note, the Fed's Lacker sees we're heading into a sustained recovery, although one should note that over half the uptick in April's unemployment numbers are due to the hiring of Census workers (see NYT). MaxedoutMama concurs on the economic recovery.  NOFP has links to economists' opinions and charts that show the stimulus had nothing to do with the recovery.

Update:  The HuffPo has an article where the nation's 2nd largest bank, JPMorgan Chase, is warning investors that underwater homeowners may walk away.

New Atheism: A Noisy Fad That Will Soon Pass?

David Hart over at First Things takes on well known atheists (Dawkins, Hitchens, etc) and their literature, lamenting the lack of intellectual vigor applied to any of their arguments on the existence of God:

A truly profound atheist is someone who has taken the trouble to understand, in its most sophisticated forms, the belief he or she rejects, and to understand the consequences of that rejection. Among the New Atheists, there is no one of whom this can be said, and the movement as a whole has yet to produce a single book or essay that is anything more than an insipidly doctrinaire and appallingly ignorant diatribe.

If that seems a harsh judgment, I can only say that I have arrived at it honestly. In the course of writing a book published just this last year, I dutifully acquainted myself not only with all the recent New Atheist bestsellers, but also with a whole constellation of other texts in the same line, and I did so, I believe, without prejudice. No matter how patiently I read, though, and no matter how Herculean the efforts I made at sympathy, I simply could not find many intellectually serious arguments in their pages, and I came finally to believe that their authors were not much concerned to make any.

What I did take away from the experience was a fairly good sense of the real scope and ambition of the New Atheist project. I came to realize that the whole enterprise, when purged of its hugely preponderant alloy of sanctimonious bombast, is reducible to only a handful of arguments, most of which consist in simple category mistakes or the kind of historical oversimplifications that are either demonstrably false or irrelevantly true. And arguments of that sort are easily dismissed, if one is hardy enough to go on pointing out the obvious with sufficient indefatigability.

Read it all for his specific metaphysical and logical takedowns of atheism.  The demographic trends on religion point to an uncertain future for western civilization. I do not think atheism is a passing fad as there is some evidence it is growing in America, however, atheist cultures in Europe and Russia are in a demographic crisis and dying.  On the flip side, Christianity worldwide is the fastest growing religion, followed closely by Islam.  We can't afford to simply shrug our shoulders about Europe: it's the other half of Western civilization.  The question will be what will replace western cultures, or will these cultures do an about face and begin assimilating immigrants as they had in they had in the past, or continue down the path of morally relativistic policies like multiculturalism. If current demographic trends hold, it points to an increasing Islamization of Europe, and/or balkanization of European society.


Here's a bonus video of two intellectuals going at it on the utility of religion vs secularism.  Dinesh D'Souza, author of "What's So Great About Christianity," debating Christopher Hitchens, one of the more charismatic atheists, and author of "God is Not Great." While the video is from 2007, they continue to cover the same ground in current debates across college campuses.

Sunday Reflections

Happy Mother's Day!

Portrait of a Lady and her Child

Arthur Dampier May (19th century, expositions 1866–1875 in Suffolk Street Gallery, London)

Source: WikiMediaCommons

The Politics of a Welfare State

In one of my recent blogs on "Lessons From Greece," I note the window for action for true federal spending reform is rapidly narrowing in the US. While I pointed out we are not like Greece, we do have much more in common culturally with Great Britain, whose recent election shows how difficult fundamental reform is when the state creates an entitlement mindset among voters, destroying civic society that underlies successful representative democracies.  This WSJ article, "Not Britain's Finest Hour", highlights the depressing reality of British politics:

"Given that this fiscal repair job is likely to be the major domestic policy challenge for the next government, it is striking how reticent all three main U.K. parties have been in explaining how they would confront the task. Their public spending plans are particularly vague," said the Institute for Fiscal Studies, a nonpartisan think tank, this week.

In fact, even as they paid lip service to the scale of the fiscal dangers, the British political leaders' promises to voters seem to involve more spending increases.

On Wednesday, the day before the election, British televisions were in split-screen mode; on one side Messrs. Brown, Cameron and Clegg roamed the country competing to offer more money for health spending, education or the environment. On the other side, Greece, member of the euro zone, was burning as the political consequences of years of failing to address mounting debt problems were laid bare. 

To be sure, Britain's public finances are much more manageable than Greece's. Its debt is less than half that of Greece's in relation to its national income.

But the direction of the U.K.'s economics and politics are clear—and run directly counter to the nation's pressing needs.

The reality is that the state has—in economic terms—become so dominant in Britain, the public largesse so pervasive, that the political costs of reining it back are seen as dangerously high for any party that wants to get elected."  [emphasis added]

There are tradeoffs between having a more economically egalitarian society and freedom. To achieve egalitarianism, the state must rely on income redistribution, usually via higher taxation.  But you ultimately pay in freedom.  I remember having a conversation with a liberal concerning income redistribution for welfare payments. When I pointed out this out tradeoff, he said, so what? So you go to one less restaurant a week or don't buy that IPod.  Never mind that I think it's none of his business on how I should spend my money.  What if I want to save my money to reach my American dream, or to send my son to a better school?


Some liberals will undoubtedly see this as a bit selfish.  I'm not against all forms of income redistribution--I'll outline my philosophy on redistribution in a separate follow-up post.  However, while they may acknowledge the first order costs of egalitarianism on economic freedom, they don't acknowledge the indirect costs which when cumulative, cost us much more than that IPod.  
Here is where the difference between conservatives and liberals sharpen. Conservatives are more comfortable with inequality if they believe there are few barriers to someone born of any class, to have the freedom to achieve success. Liberals seen injustice in great inequality, and feel it's in society's interest to help those they feel are worse off--otherwise, they reason, they have little opportunity to achieve the American dream if they're too worried living hand-to-mouth. Additionally, they point out these people do not feel part of society and there is a greater likelihood of societal conflict with great inequality. The conservative rejoinder is that by giving government assurances of meeting all one's basic needs, the incentive for individual responsibility is reduced; security is traded for freedom over time.  And thus, the importance of freedom is diminished.  After all, what's the point of freedom without individual responsibility?

Britain is a prime example of this--the voters don't want to give up their entitlements, but somehow expect the government to return their nation to some semblance of fiscal order.  The conservative candidate, Dave Cameron, has claimed the Tories are the party of the NHS, and has pledged more government spending on it.  Since the costs of egalitarian programs like health care are socialized, economic freedom isn't the only freedom that suffers--even individual freedom to eat what you want starts coming under scrutiny since the rationale goes, society is paying the costs for your obese behind.  


Suffice it to say, philosophers of these positions articulate them much more elegantly than I can do on a blog.  The liberal economic tradition is often articulated by John Rawls and Ronald Dworkin while the conservative position is take by John Kekes.


My simple point as with Britain, our nation is not immune to these types of policies and politics which will irreversibly change our national character. For once, I actually hope Britain proves me wrong on this.

#5 How Obamacare will Transform America: Medical Innovation to Include Life Saving Technologies will be Stifled

Here's a recap from previous posts #1-2, 3, 4 explaining some of the effects of Obamacare on America. This post focuses on how Obamacare will hamper medical innovation to produce the latest live-saving technologies.

The health care legislation that was passed will hit medical device makers with a 2.3% excise tax on all medical devices, from bedpans to surgical instruments. Fox News reports that drug makers are also hit with fees estimated to yield $27 billion through 2019, according to the Joint Committee on Taxation. While these taxes and fees may very well raise revenue, it will seriously hurt medical innovation, an area where the US continually outperforms Europe. As Tyler Cowen points out in a NYT oped:

When it comes to medical innovation, the United States is the world leader. In the last 10 years, for instance, 12 Nobel Prizes in medicine have gone to American-born scientists working in the United States, 3 have gone to foreign-born scientists working in the United States, and just 7 have gone to researchers outside the country.

The six most important medical innovations of the last 25 years, according to a 2001 poll of physicians, were magnetic resonance imaging and computed tomography (CT scan); ACE inhibitors, used in the treatment of hypertension and congestive heart failure; balloon angioplasty; statins to lower cholesterol levels; mammography; and coronary artery bypass grafts. Balloon angioplasty came from Europe, four innovations on the list were developed in American hospitals or by American companies (although statins were based on earlier Japanese research), and mammography was first developed in Germany and then improved in the United States. Even when the initial research is done overseas, the American system leads in converting new ideas into workable commercial technologies.

In real terms, spending on American biomedical research has doubled since 1994. By 2003, spending was up to $94.3 billion (there is no comparable number for Europe), with 57 percent of that coming from private industry. The National Institutes of Health’s current annual research budget is $28 billion, All European Union governments, in contrast, spent $3.7 billion in 2000, and since that time, Europe has not narrowed the research and development gap. America spends more on research and development over all and on drugs in particular, even though the United States has a smaller population than the core European Union countries. From 1989 to 2002, four times as much money was invested in private biotechnology companies in America than in Europe.

Dr. Thomas Boehm of Jerini, a biomedical research company in Berlin, titled his article in The Journal of Medical Marketing in 2005 “How Can We Explain the American Dominance in Biomedical Research and Development?” (ostina.org/downloads/pdfs/bridgesvol7_BoehmArticle.pdf) Dr. Boehm argues that the research environment in the United States, compared with Europe, is wealthier, more competitive, more meritocratic and more tolerant of waste and chaos. He argues that these features lead to more medical discoveries. About 400,000 European researchers are living in the United States, usually for superior financial compensation and research facilities.

This innovation-rich environment stems from the money spent on American health care and also from the richer and more competitive American universities. The American government could use its size, or use the law, to bargain down health care prices, as many European governments have done. In the short run, this would save money but in the longer run it would cost lives. [emphasis added]

Dr Paul Hsieh at Pajamas Media blogs about the economic consequences of this tax. Here's CEO Richard Packer of Zoll Medical, makers of devices designed to stop cardiac arrests like defibrillators, explaining on Fox News to Neil Cavuto the consequences of what this tax means for his company:

PACKER: So, for our company, it will be somewhere between $5 and $10 million. What's in the current bill from the House should put it at 2.3 percent, which will be about $7.5 million dollars. Our total profit last year was $9.5 million dollars.

CAVUTO: So, it almost wipes out your profits?

PACKER: So, it almost wipes out our profits.

CAVUTO: So, you have a couple of choices here. You cut jobs or send them overseas, or you increase the price of your product, not easy to do.

PACKER: Yes, or cut back on research and development. And our business is built around new science, new clinical trials.

CAVUTO: Or a lot more people die as a result. They don't get your....

(CROSSTALK)

PACKER: That's right. [emphasis added]

Just this week, the Boston Herald highlighted that medical-device makers in the Bay State will have to cut back on operating costs due to the tax: (H/T: Hotair)

Massachusetts medical-device companies say they’ll cut back on operational costs - and jobs - after a planned 2.3 percent tax on their products is implemented in 2013, according to a new survey.

The Massachusetts Medical Device Industry Council, which held its annual meeting yesterday in Boston, said about 90 percent of the 100 medical-device firms said they would reduce costs due to the new tax tucked into the recently passed health-care reform bill.

The tax - imposed to help pay for the massive health-care industry overhaul and expansion - is “of the greatest concern” to a majority of its members, the survey found. 

Now it is true that medical technology is one of the major causes of the rise in health care costs. Keith Hennessy uses this chart from the CBO that summed up 2 key studies on this very topic:

As he points out, technology accounts for half to 2/3 of long term growth in per capita spending. But he also notes how the preferential tax treatment of employer provided health care distorts the incentive for Americans to consume more care.  Here he sums up the conundrum:

Any solution that addresses the technology source of health care cost growth will mean that new medical technologies will be developed less rapidly.

Nobody in Washington wants to tell you that last point.  We argue about administrative costs, about medical liability costs, about insurance company profits, and about waste, fraud, and abuse.  All of those are important contributing factors to high levels of health spending, and we should definitely make reforms that try to lower those levels.  But our long-term problem is principally about the growth rate, and addressing the growth rate involves a real tradeoff.  New medical technologies and drugs will still be developed, but not quite at the breakneck rate that we’re used to.  This is grasping the rose by the thorn.

The only question left then becomes who will make those determinations.  Should determinations of “high value health care” and “high value technology improvements” be made by the government, or as the result of the decisions of millions of Americans acting independently based on their own preferences? 

It's ironic that "progressives" do not want to acknowledge that government centralization of health care does indeed squash innovation.  Some will argue that the government can fund innovation just as well as the private sector, pointing out the successful example of the NIH, but Megan McArdle and Tyler Cowen do quite well in disputing their arguments not by denigrating the NIH, but pointing out the importance of the commercial sector alongside the NIH.  Keith's questions outlines one of the stark contrasts between liberals and conservatives: who do you trust more on price discovery and delivery of the most innovative of medical technologies? The market or the government? This leads well into my next blog on health care, where cutting costs will ultimately lead to rationed care.