Tuesday, July 29, 2003

At issue are defined-benefit pensions, the type in which employers set aside money years in advance to pay workers a predetermined monthly stipend from retirement until death. Today, about 44 million private-sector workers and retirees are covered by such plans. Three years of negative market forces have wiped away billions of dollars from the funds, triggering the defaults of some pension plans and leaving the rest an estimated $350 billion short of what they need to fulfill their promises.

And later in the same New York Times article:

The measures they have put forward bear little resemblance to those considered earlier this month in a rancorous House Ways and Means Committee session. The House pension bill is more generous to business. If enacted, it would lop tens of billions of dollars off the amounts companies would pay into their pension funds in each of the next three years. Businesses favor the bill's approach, but hoped to make its changes permanent.

So some businesses want to put less into pension plans just as they are at their weakest. At first this seems rather odd, unless perhaps as a hard line negotiating ploy. Actually though, it makes perfect sense. When the economy is doing well, the stock market booms. Huge numbers of people believed that the new economy meant there would be no bust to follow, and pension fund investors were no exception. When the economy is stagnant, both businesses and pension funds must struggle.

Much of our economy is linked together, creating the business cycle. John Maynard Keynes wanted government to act countercyclically, spending more when the economy is bad and less when it is good, smoothing out the booms and busts of the oscillation. Unfortunately, government and voters are both part of the cycle. When the economy is good, or at least when it has been excellent for a long time, politicians and voters believe that capitalism has brought endless prosperity and there will be no bust - and resent and government interference with the market. When times are bad both are apt to fear hyperinflation - and the bond markets are most likely to charge higher interest rates if the government borrows money that would require prosperity to increase tax revenues to make repayable.

Both overborrowing and hyperinflation are real dangers - but people tend to fear them most at the wrong times. Perhaps an independent organization like the federal reserve could have a voice in roughly how much was to be spent - while congress decided how it was spent. Perhaps a change in how we all think would be required to make any system workable.

Sunday, July 27, 2003

I've been thinking about an article by Steven Johnson in Discover magazine.

Recent research shows that when something bad happens to you, part of your brain begins thinking independently, storing its own memories so it can save you next time. That worked fine a million years ago.

The article is about how fear effects memory and more broadly about how fear effects the brain - and more generally yet about how certain behavior patterns that were useful during most of the period when we evolved can be counterproductive now.

This is especially interesting if you're thinking about how people make group decisions. If we think with our emotions, we may be twice removed from reality. In a sense, identifying with your country is patriotism - yet it makes it easy to fall into the trap of thinking about international relations as we do individual relations. Worse yet, our individual emotions are restrained by the experience and knowledge of a lifetime, where our gut reactions to individual relations are not.

Suppose you get really angry at your boss, and you want to hit him. You might be bigger and stronger than him, and pretty much convinced you could beat him up. The anger urging you on might have made sense a million years ago - displaying your physical dominance should persuade him to yield to you in competition for food or mates. If the rest of the group sided against you with him it might not be a good idea, but it was a serious possibility, and the adrenaline surge preparing you for that course of action was favored by natural selection. In the modern world, a lifetime of knowledge reminds you that the almost certain result is that he will call the police.

When our nation is tormented by terrorists who seem impossible to root out, who seem to enjoy irrational popular support among certain groups, the anger, the urge to lash out, is still there. Of course, if your boss had actually tried to kill you and you could prove it you could call the police. In the international arena the solution is much less easy to see - if it weren't, perhaps reason would overcome emotion and we would do the obvious thing, but there is no obvious thing.

I have read many arguments favoring the invasion of Iraq - both before and after the fact. I still believe that fear and anger were a key to the decision, as was the desire for a simple and viscereal triumph. I hope the cost of these is not too high.

Tuesday, July 22, 2003

We've been hearing a good deal about some of the proffered reasons for the invasion of Iraq, both pro and con. Many heatedly claim the assertions that Iraq was developing WMD are now shown to have been unjustified, while others deny it. Many claim that the suffering Saddam imposed upon his own people and the potential for a democratic Iraq to set a good example for the whole Middle East always were the primary justification for the invasion of Iraq, while others deny it as ardently.

There is one reason we don't now hear much about from either side - although I seem to recall it being discussed before the war. We had already issued ultimatums and started putting the troops in place. There were many who said that for the United States to back down at that point would be considered as a sign of weakness by our enemies, so short of the sort of proof Iraq had repeatedly failed to furnish of disarmament we had no choice but to invade. I don't recall and of the proponents of this idea saying specifically that the troop buildup or the threats preceeding it had been a mistake but we now had no choice except to proceed - they seem to have had positive expectations for the aftermath of the war. Nevertheless, they also implied that whether the initial moves had been right or wrong, going ahead was at that point the only option.

They now make me think of the article from the Washington Times in a different light.

CRAWFORD, Texas — President Bush yesterday accused Iran and Syria of aiding and abetting terrorists seeking to undermine the Middle East peace process, warning the two nations that he will hold them accountable.
"Today, Syria and Iran continue to harbor and assist terrorists. This behavior is completely unacceptable, and states that support terror will be held accountable," the president said in a news conference at his Texas ranch with Italian Prime Minister Silvio Berlusconi.

Maybe the decision has already been made. Since Iran and Syria underlie the problems in Iraq, casualties cannot totally be eliminated until those two countries are pacified. Iraqi's must be trained to replace as many American occupation troops as possible, which will somewhat reduce troop exposure, but the problem won't be resolved until we deal with those two countries as well. This idea about the administration's intentions is by now rather commonplace, but most people seem to feel the worsening situation with Iraqi casualties will put a hitch in the administrations plans. I now suspect they intend to go ahead with them, partly due to the new crash training program for Iraqi forces.. Perhaps they will do as Great Britain did, and try and keep one third of the force American, to protect against the every present danger of mutiny by their 'own' Iraqi troops. This should still free up a great number of troops.

The time has come to ask, I think, who will interfere with the rebuilding of Syria and Iran - and what will we do to them?

Wednesday, July 16, 2003

I think it's pretty official. Robert Wright was right in his March 2003 predictions about dubious and valid fears for Iraq.

Dubious fear No. 1: The war will be long and messy. Once the inevitability of the war's outcome becomes clear—within the first week or two—Saddam Hussein will have trouble preserving loyalty and may have trouble preserving his life. Sustained and widespread street fighting in Baghdad is unlikely. Streetside crowds of Iraqis cheering American and British soldiers are virtually guaranteed.

Valid fear No. 1: The postwar occupation will be very long and increasingly messy. The crowds who cheer us this spring will want us out by next spring. But we won't leave because, regardless of whether Iraqis are ready for democracy, President Bush won't be. If there's one thing that will scare this administration as much as Iraq being run by a ruthless dictator, it's Iraq being run by millions of Iraqis.

Iraq isn't Vietnam, but it sure as heck isn't Germany or Japan either. In fact of course it's Iraq, but unstudied history repeats itself often enough that some good historians are looking for a basis of comparison.

Peter Bales is assistant professor of history and political science at Queensborough Community College. He wrote an interesting article in Newsday recently, looking at American history in the Phillipines for some clues to bumps in the road ahead. Here's a sample.

As a history teacher, I am the first to admit that many of America's young people are horribly confused about the past. Many adults aren't much better, otherwise they would not be so befuddled by the events unfolding in Iraq. The chaos, the anger the Iraqis feel toward their American "liberators" and, most of all, the deadly guerrilla-style resistance. Anyone who knows our nation's history could have predicted it. It has all happened before.

Following the Spanish-American War in 1898, which Secretary of State John Hay called a "splendid little war," the United States replaced Spain as the colonial master of the Philippines. Voices that dared to inquire what occupying the Philippines had to do with the stated purpose of the war - liberating Cuba - were drowned out by victory cheers when formal hostilities lasted only a matter of months. Native Filipinos fighting the Spaniards had been grateful for American help, but they soon realized they were still wearing a Western yoke - this one colored red, white and blue.

President William McKinley was in a quandary. The Filipino people, having no experience with democracy, wouldn't be able to create a stable government on their own. Worse, he thought, they might fall under the domination of some conniving foreign power like Germany or Russia. Besides, there were economic incentives to stay - the sugar trade. So America stayed. And the millions of dollars spent to improve sanitation, infrastructure and education did little to salve wounded Filipinos' pride. They had long craved freedom and no amount of American humanitarian aid could satiate them. Filipino freedom fighters waged a vicious guerrilla uprising that lasted far longer and caused many more casualties on both sides than had resulted from the original war. Ten thousand miles away, Americans were aghast at the lack of appreciation for all the new schools and hospitals that were built.

The United States occupied the Philippines for nearly 50 years. That does not mean Uncle Sam will be running Iraq in 2053, but substitute Iraq for the Philippines, Syria and Iran for Germany and Russia, and oil for sugar, and then maybe this historical flashback should give us pause.

Of course Iraq isn't the Phillipines, but this is not necessarily good news. If there had been an Iran or Syria to blame the problem on, and they had been easily invadable in turn, it would have been harder to draw back from the brink of empire. Fear and anger may well lead us in precisely the wrong direction, down the road every empire since Rome has travelled.