Remora
The unwinding
LI recommends a Schopenhauerian article in the Economist today. War, depression, and a moronic leader -- it sounds like Austria in 1935, but no, my good buds, no. It is our own beloved superpower, or hyperpower, or mononucleus macronuclear power, the US of A, which seems destined for a bad period. Although we aren�t totally convinced by this kind of talk � after all, during the last bad period, 1991, there was talk of the collapse of US banking. The better bet is that we will eke out this time. But odds wouldn�t be odds if there wasn�t a chance of the losing end:
"The unwinding of America's economic and financial imbalances has barely begun. Share prices are still overvalued by many measures. Companies still need to prune much more excess capacity. Most worryingly, debts still loom dangerously large. Although much of the increase in reported profits in the late 1990s was illusory, the increase in corporate debt to finance that unprofitable investment was horribly real. Dresdner Kleinwort Wasserstein, an investment bank, estimates that American corporate balance sheets are more stretched than at any time during the past half-century.
"American households' net worth is likely to shrink again this year, for the third year running, after a long, uninterrupted rise since the second world war. If lower share prices cause households to increase their saving sharply, America could be pushed back into recession. Even if saving rises more gradually, the economy is headed for several years of below-trend growth. A weaker dollar would help to cushion the economy, but only by squeezing growth in other countries. The rest of the world, which benefited so handsomely from America's speculative binge, will now have to share its hangover."
Isn't that a lovely word, "unwinding"? It has the crisp techno-beauty of one of those words so cleverly collected by Don Delillo � an artificial flower of rhetoric. All those snappy terms that derive distantly from the impression managers, the think tank, the game theorists. Unwinding should remind us of yarn, and homemakers, and cats; oddly enough, it evokes none of those things. My guess is that unwinding comes from a more clockwork world, one in which the key can go in the slot and uncoil the mechanism. We don�t know when "unwinding a position" became a wall street phrase of art, although we�ve looked around. Where are the lexicographers of tomorrow? Here�s a puzzle for you.
Swift uses a prototype of the phrase in "The tale of a tub;"
"However, that neither the world nor our selves, may any longer suffer by such misunderstandings, I have been prevailed on, after much importunity from my friends, to travel in a complete and laborious dissertation upon the prime productions of our society, which, beside their beautiful externals, for the gratification of superficial readers, have darkly and deeply couched under them the most finished and refined systems of all sciences and arts; as I do not doubt to lay open by untwisting or unwinding, and either to draw up by exantlation, or display by incision."
LI knows that Wall Street does have its litterateurs. However, we doubt that the term came from Swift, however nicely this would fit our sense of the, uh, impostures of high finance
Monday, September 30, 2002
Friday, September 27, 2002
Remora
Kurds and ways
Christopher Hitchens has, since 9/11, rather fancied himself the Don Quixote of the Left, jousting with the anti-war contingent, rallying the troops around feminism, secularism, and democracy. Well, beyond the posturing natural to Hitchens, there is something to his perception of the anti-war left -- you don't have to look far before you find rather stupid analogies between, say, Saddam Hussein's use of nerve gas and lynchings in the U.S. South. The stupidity resides in the fact that there were mechanisms in the state to operate against the lynching spree -- and eventually, creakily, did. Genocide past neither justifies genocide present nor, necessarily, bars a nation from acting militarily. One can take a stand against any nation acting militarily at all, or one can take a stand against particular military actions, but the dumbest of all stands, LI thinks, is that which requires complete purity of nationhood (perhaps for a thousand years) before a nation is allowed to engage another. Until then, one supposes, the military force has to be content with sharpening knives and shining its buttons. Hitchens, criticizing such politics, is in good company. Marx saw how necessary the Napoleonic wars were in carrying the ideals of the French revolution across Europe, and lamented that Germany was never really conquered by the French. However, the modified lefty point seems to me quite plausible: if the actions of a nation have been morally stained in the recent past (say, the moral stain of selling the ingredients for chemical weapons, or condoning their use - that's pretty staining) in regard to a particular other nation, then it is quite right to doubt whether the former nation is morally qualified to proclaim itself justified in intervening in the affairs of the latter nation. Or, to speak with less cotton in my mouth, Iraqis have pretty good reasons to think that they are going to be manipulated, killed, and otherwise displaced for no good end, except, perhaps, the enrichment of some oil companies and the pleasure their deaths will bring to Ariel (or is it Caliban?) Sharon.
LI has been on the side of using military force against Al Qaeda. But count LI in the peace camp as far as Iraq goes. Hitchens has two columns in the nation in which he goes into the Kurdish side of the upcoming war. We want to comment at length about one of those columns -- Appointment in Samarra -- so we aren't going to quote it, as is usually our custom. To make sense of the three points that follow, probably you should go to the Hitchens column first. And now, without further ado:
Questions for Hitchens!
1. The 'devolved" Kurdish state. Devolution might work with Scotland, a region that has existed for three hundred years within the greater framework of British law and statehood, but it is hard to understand what it would mean for the Kurds.
If, indeed, we accept that the Kurds, like the Palestinians, deserve some kind of state, we have to be careful not to surrender to romantic illusions either about the means that might make this possible or the state that might result. Hitchens ignores the real political maneuvering in Northern Iraq during the last ten years. If he were more honest, he would at least allude to such evidences of Kurdish war-lordism as Masoud Barzani
's KDP Alliance with Saddam Hussein in 1996, which was aimed at destroying his Kurdish opponent, the PUK. We also know that Kurdish militias, far from buttressing the liberal dream of a secular, democratic state, have shown, in the past ten years, a mix of tendencies. One pattern is to revert to ideologies of Islamic extremism, or to act in ways that are pure banditry. Against this one can set the current governance of Northern Iraq, which by all accounts is generally one of tolerance. Hitchens can wish away recent history by selectively attending to liberal Kurdish groups, but such a move is fatal to the intelligent analysis of the Kurdish situation. Does Hitchens really think that those Islamicist factions in Northern Iraq are somehow going to vanish if Hussein is attacked? Remember, these factions are basically aligned with the kind of state the Taliban inaugurated - the kind of state Hitchens has attacked as fascist.
2. This brings up our second question. As liberal Americans, we of course would like to see a strong secular state in Northern Iraq, one that would possess structures for the peaceful transfer of power among different factions; one that would respect the human rights of minorities; and one that would contrive barriers to the wholesale looting of national wealth, which is as endemic to warlord prone areas of the world as it is to CEO-centric corporations. Now, by an accident, a safe haven has been carved out in Northern Iraq where these institutions, although often battered, seem to be growing. Would a war that deposed Saddam Hussein really be to the advantage of the growth of this type of state? I would suggest that the best course is to continue to keep the pressure on Hussein, to disarm him, to inspect him, to encourage popular revolt against him - but not to crush him through military force. Hitchens might say that retaining Saddam Hussein means, every day, imprisoning the people of Iraq. But all means of liberation aren't equal. Given the weakness of Hussein's forces, Northern Iraq is in no immediate danger of falling once again to the Republican Guard. It acts as a strong attractor, a model, for Iraqi discontent. Outside intelligence has been noticeably poor at predicting the downfall of dictators. I'd think the internal collapse of Hussein's regime is a much better goal to aim for. Frankly, there is no reason to think that the Americans won't prop up a military man to rule as a satrap in conquered Iraq. They've not only done this before: in Pakistan, they are colluding at it right now.
3. Finally, I find the implied dismissal of Turkish interest both unfair and historically misplaced. The safe haven in North Iraq exists by courtesy of the use of Turkish air strips, and was suggested by the Turkish government itself, in 1993, in response to the wave of Kurdish refugees. While it is true that the Turkish government's war against the PKK, the Kurdish guerilla group, was waged with maximum brutality, it is also true that the PKK responded in kind. It is also true that the PKK's ideology, a mixture of Mao and Mohammed, was a charlatan politics; that it evolved into a typical mix of twentieth century crime and brute political force, accruing money through trading drugs and arms, and wiping out any sign of Kurdish opposition; and that it never received the support of even a substantial minority of Turkish Kurds. It is a mistake to think that the situation in Turkey is anything like the situation in Iraq. There are billionaire Turkish Kurds; there are Kurdish presses in Istanbul; there is a high mix of Kurds in the Turkish military. The question of discrimination, which is a valid issue in Turkey, shouldn't be confused with the issue of separation. Like the Mayan farmers in Chiapas, Kurds might be oppressed by discriminations in the power structure in existence right now, but their grievances are peacefully resolvable, with no injury to the state of Turkey as a whole.
Naturally, Turkey can't countenance a hostile Kurdish state in Northern Iraq. Whether Kurdish factions can resist the dubious romantic satisfaction of encouraging violence in Turkey should definitely be a condition for further steps towards Kurdish autonomy (of whatever kind) in Northern Iraq. Far better to preserve the present, fragile situation, in which non-violent organizations can form, than to hope that peace arise out of the chaos of war.
Kurds and ways
Christopher Hitchens has, since 9/11, rather fancied himself the Don Quixote of the Left, jousting with the anti-war contingent, rallying the troops around feminism, secularism, and democracy. Well, beyond the posturing natural to Hitchens, there is something to his perception of the anti-war left -- you don't have to look far before you find rather stupid analogies between, say, Saddam Hussein's use of nerve gas and lynchings in the U.S. South. The stupidity resides in the fact that there were mechanisms in the state to operate against the lynching spree -- and eventually, creakily, did. Genocide past neither justifies genocide present nor, necessarily, bars a nation from acting militarily. One can take a stand against any nation acting militarily at all, or one can take a stand against particular military actions, but the dumbest of all stands, LI thinks, is that which requires complete purity of nationhood (perhaps for a thousand years) before a nation is allowed to engage another. Until then, one supposes, the military force has to be content with sharpening knives and shining its buttons. Hitchens, criticizing such politics, is in good company. Marx saw how necessary the Napoleonic wars were in carrying the ideals of the French revolution across Europe, and lamented that Germany was never really conquered by the French. However, the modified lefty point seems to me quite plausible: if the actions of a nation have been morally stained in the recent past (say, the moral stain of selling the ingredients for chemical weapons, or condoning their use - that's pretty staining) in regard to a particular other nation, then it is quite right to doubt whether the former nation is morally qualified to proclaim itself justified in intervening in the affairs of the latter nation. Or, to speak with less cotton in my mouth, Iraqis have pretty good reasons to think that they are going to be manipulated, killed, and otherwise displaced for no good end, except, perhaps, the enrichment of some oil companies and the pleasure their deaths will bring to Ariel (or is it Caliban?) Sharon.
LI has been on the side of using military force against Al Qaeda. But count LI in the peace camp as far as Iraq goes. Hitchens has two columns in the nation in which he goes into the Kurdish side of the upcoming war. We want to comment at length about one of those columns -- Appointment in Samarra -- so we aren't going to quote it, as is usually our custom. To make sense of the three points that follow, probably you should go to the Hitchens column first. And now, without further ado:
Questions for Hitchens!
1. The 'devolved" Kurdish state. Devolution might work with Scotland, a region that has existed for three hundred years within the greater framework of British law and statehood, but it is hard to understand what it would mean for the Kurds.
If, indeed, we accept that the Kurds, like the Palestinians, deserve some kind of state, we have to be careful not to surrender to romantic illusions either about the means that might make this possible or the state that might result. Hitchens ignores the real political maneuvering in Northern Iraq during the last ten years. If he were more honest, he would at least allude to such evidences of Kurdish war-lordism as Masoud Barzani
's KDP Alliance with Saddam Hussein in 1996, which was aimed at destroying his Kurdish opponent, the PUK. We also know that Kurdish militias, far from buttressing the liberal dream of a secular, democratic state, have shown, in the past ten years, a mix of tendencies. One pattern is to revert to ideologies of Islamic extremism, or to act in ways that are pure banditry. Against this one can set the current governance of Northern Iraq, which by all accounts is generally one of tolerance. Hitchens can wish away recent history by selectively attending to liberal Kurdish groups, but such a move is fatal to the intelligent analysis of the Kurdish situation. Does Hitchens really think that those Islamicist factions in Northern Iraq are somehow going to vanish if Hussein is attacked? Remember, these factions are basically aligned with the kind of state the Taliban inaugurated - the kind of state Hitchens has attacked as fascist.
2. This brings up our second question. As liberal Americans, we of course would like to see a strong secular state in Northern Iraq, one that would possess structures for the peaceful transfer of power among different factions; one that would respect the human rights of minorities; and one that would contrive barriers to the wholesale looting of national wealth, which is as endemic to warlord prone areas of the world as it is to CEO-centric corporations. Now, by an accident, a safe haven has been carved out in Northern Iraq where these institutions, although often battered, seem to be growing. Would a war that deposed Saddam Hussein really be to the advantage of the growth of this type of state? I would suggest that the best course is to continue to keep the pressure on Hussein, to disarm him, to inspect him, to encourage popular revolt against him - but not to crush him through military force. Hitchens might say that retaining Saddam Hussein means, every day, imprisoning the people of Iraq. But all means of liberation aren't equal. Given the weakness of Hussein's forces, Northern Iraq is in no immediate danger of falling once again to the Republican Guard. It acts as a strong attractor, a model, for Iraqi discontent. Outside intelligence has been noticeably poor at predicting the downfall of dictators. I'd think the internal collapse of Hussein's regime is a much better goal to aim for. Frankly, there is no reason to think that the Americans won't prop up a military man to rule as a satrap in conquered Iraq. They've not only done this before: in Pakistan, they are colluding at it right now.
3. Finally, I find the implied dismissal of Turkish interest both unfair and historically misplaced. The safe haven in North Iraq exists by courtesy of the use of Turkish air strips, and was suggested by the Turkish government itself, in 1993, in response to the wave of Kurdish refugees. While it is true that the Turkish government's war against the PKK, the Kurdish guerilla group, was waged with maximum brutality, it is also true that the PKK responded in kind. It is also true that the PKK's ideology, a mixture of Mao and Mohammed, was a charlatan politics; that it evolved into a typical mix of twentieth century crime and brute political force, accruing money through trading drugs and arms, and wiping out any sign of Kurdish opposition; and that it never received the support of even a substantial minority of Turkish Kurds. It is a mistake to think that the situation in Turkey is anything like the situation in Iraq. There are billionaire Turkish Kurds; there are Kurdish presses in Istanbul; there is a high mix of Kurds in the Turkish military. The question of discrimination, which is a valid issue in Turkey, shouldn't be confused with the issue of separation. Like the Mayan farmers in Chiapas, Kurds might be oppressed by discriminations in the power structure in existence right now, but their grievances are peacefully resolvable, with no injury to the state of Turkey as a whole.
Naturally, Turkey can't countenance a hostile Kurdish state in Northern Iraq. Whether Kurdish factions can resist the dubious romantic satisfaction of encouraging violence in Turkey should definitely be a condition for further steps towards Kurdish autonomy (of whatever kind) in Northern Iraq. Far better to preserve the present, fragile situation, in which non-violent organizations can form, than to hope that peace arise out of the chaos of war.
Thursday, September 26, 2002
Remora
The flame is on under CFO magazine's 99 CFO of the year --- everybody's favorite, Andrew Fastow! Yes, Enron's man with the plan -- the plan to loot the company's resources for his own benefit -- is edging close to the bonfire of the Vanities currently being lit in a court in Houston. This WP article is clearly a prosecutor's ploy,
but it does include one interesting detail for the Enron-maniac: the focus on Braveheart, the deal whereby Enron sold its potential profits to a Canadian bank in order to realize a sum in its books for 2001, coming up with a 100 million dollar profit. This deal is so incredible that it certainly needs to be examined -- and the heads of the execs at the Canadian company that made it need to be examined twice as hard. Only Enron would make a deal selling its potential profit to a third party, in order to mark down an immediate profit. In '99, CFO caught the great man himself explaining his tricks:
"When Andrew S. Fastow, the 37-year-old CFO of Enron Corp., boasts that "our story is one of a kind," he's not kidding. In just 14 years, Enron has grown from a heavily regulated domestic natural-gas pipeline business to a fully integrated global energy company with thriving activities in natural gas, electricity, infrastructure development, marketing and trading, energy financing, and risk management. And much of that growth has been fueled by unique financing techniques pioneered by Fastow.
"When I came here in 1990, Enron was a company with a $3.5 billion market capitalization," says Fastow. "Today, we're around $35 billion, and that's without issuing a whole lot of equity. We've increased shareholder value, grown the balance sheet, maintained a stable outlook from the rating agencies, and achieved a low cost of capital."
In fact, when energy stock analysts look for paradigm companies to vaunt, they point resolutely in the direction of Houston-based Enron, with $31 billion in revenues last year. And when they seek to explain how Enron has remade itself so completely, they point to "remarkably innovative financing." Says Ted A. Izatt, senior vice president at Lehman Brothers Inc. in New York: "Thanks to Andy Fastow, Enron has been able to develop all these different businesses, which require huge amounts of capital, without diluting the stock price or deteriorating its credit quality-- both of which actually have gone up. He has invented a groundbreaking strategy."
As Raymond Chandler might say, that's cute as a pair of tarantula pyjamas. Inventing those groundbreaking strategies for hiding huge amounts of capital -- hey, a round of applause right here!
If the prosecutors have any sense, they have sharpened their knives for the head of Enron's Broadband division, Ken Rice. The royal road to the conviction of Jeff Skilling might well lie through Mr. Rice, an amiable lout, by all accounts, who made off with 76 million dollars in cashed out stock options. A man who never, at any time, understood fiber optic cable, which is what his division was supposedly about. Luckily, he was only involved in it as its president - most of his billable time, at least according to Robert Bryce's book on Enron, he spent racing motorcycles.
Although you might think the piggy bank is broken, the new CEO of Chapter 11 Enron is still poking around for loot. Maybe it is something about the name, or maybe it is something about Houston business culture, but according to the Houston Chronicle,
"Stephen Cooper wants to hire 15 more managers from Zolfo Cooper, in a move that could earn him a rich reward. In a request filed with the bankruptcy court Tuesday, Enron asked to pay the restructuring firm founded by Stephen Cooper $864,000 a year per manager, the same rate as 15 Zolfo directors already with Enron." Cooper has apparently decided that his firm should staff Enron's skeletal crew, where they rub shoulders with highly compensated lawyers and such. And that, incidentally, he will receive money both from the company which he is running, Enron, and the firm he was running, Zolfo. Sweet, a deal like that. I mean, how do you squeeze more juice out of a dead carcass? See, Enron is pioneering entrepeneurial bankruptcy -- are we happy now?
This brings us round to yesterday's post. If you will remember, fair reader, we were discussing John Cassidy's New Yorker article, The Greed Cycle. One thing especially impressed LI about that article: the place of Michael Jensen in it. Jensen, Cassidy claims, was the academic godfather of the amazing inflation in top executive compensation packages. Jensen is currently hatching an academic paper to explain the collapse of Enron that blames it on -- get this -- the Wall Street bubble mentality. Why -- the universal solvent of explanations, now, that bubble. Once upon a time, the conservative view was that there are no bubbles -- this was, after all, the orthodoxy of efficient markets theory. Time moves on, however, and as it has become apparent that something has to be to blame for the crash -- and as it becomes apparent that the clash laid bare the irrationality of radical free market doctrine -- there's been a noticeable shift in that plank of the doctrine. Suddenly, there are bubbles -- and they are all the fault of Clinton! How convenient.
According to Cassidy, Jensen's idea is that Enron had to do what it did to maintain its stock prices because of pressure from Wall Street jockeys. It is the familiar story of trying to meet higher and higher expectations, and at some point going to the shadow side in order to do so.
Well, that is, to put not too fine a word upon it, bull shit.
Enron had to maintain its stock at a high level because much of its dealing depended on the stock being at that price. That guaranteed credit. Why was the need for credit so pressing? Because cash flow was so radically out of synch with claimed earnings. This occured because Enron made a systematic attempt, under Jeff Skilling, to institute mark to market accounting, a financial instrument by which it could aggregate future earnings as present earnings. Why did it do this? Well, among other things, such an accounting system could justify huge bonuses for execs. These bonuses were not postponed until the real profit was realized -- since in the vast majority of the deals Enron pursued, profit either never appeared, or was eaten up by costs. In fact, in the vast majority of those deals, including those being made by the thousands at Enron's famous energy trader's desk, Enron was losing money. So it was not Wall Street expectations that caused Enron to engage in the massive distortion of its financial position, but the need to justify grossly inflated compensations -- which of course brings the ball home into Jensen's court, doesn't it?
Jensen, who is working for something called Monitor, has posted a version of his version on the site. Here's the first three grafs -- and a word to the wise: notice that the "problem", as Jensen carefully designs it, is "fixed" by a courageous CEO. Jensen is the type of guy any CEO would be proud to have in his court -- a natural born syncophant:
Once, companies gave whispers and informal advisories to favoured analysts of what to expect in coming earnings announcements. Then the conversations became more elaborate, engendering a kind of twisted logic. No longer were analysts only trying to understand a company so as to predict what it might earn. The analysts' forecasts themselves became the centre of discussions. The forecasts no longer represented a financial by-product of the company's strategy but came to drive that strategy.
Yet as the case of Enron suggests, when companies scramble too hard to meet unrealistic forecasts by analysts they often take highly risky value-destroying bets. The process - euphemistically referred to as "earnings guidance" - is a high-stakes game, with management seeking to hit the targets set by analysts and being punished severely if they miss.
But a few courageous chief executive officers have wisely decided to put an end to the game by saying "no". Managing Wall Street's expectations may be a decades-old game but Barry Diller of USA Networks and Jim Kilts, Gillette's CEO, have decided to end it."
Jensen is a typical Chicago economist. He uses mathematical models to achieve results that he wants -- such as the model that shows why executives, as agents of the shareholders, must be compensated in such a way that their "interests are aligned with the company." Unlike, say, secretaries and technicians, I guess. When this model, in the real world, produces bad results -- when it is tested, that is, and found wanting, because of an insufficient attention to other, structural variables -- he reaches immediately for psychological terms. In other words: cue the mind when the going gets tough. That's always a good strategy to detract from your pisspoor mathematical models. Thus, his suggestion that Enron executives, hitting their targets, are driven by "egotism:" "High share prices stoked already amply endowed managerial egos.." Psychology intrudes when, embarrassingly, rational self-interest is really the parameter at stake. If compensation is set up to award performance without any index for performance -- if, that is, compensation is set up in the absense of those constraints that come with a competitive job market -- then guess what? performance will be skewed to justify compensation. This happens over and over again -- merger and acquisition is substituted for entrepeneurship, accounting shenanigans for true cost cutting, and pensions are looted in place of products being innovated. You would have to be a fool -- or an economist -- not to see that something in the system must be causing this systematic effect.
Discussion of corporate performance and its relation to compensation is on a truly childish level in the business press. Take General Electric. LI has seen, compulsively repeated, justifications of Welch's swollen compensation package by reference to how vastly GE grew under his leadership. No attention is paid, in this analysis, to the growth of other, similarly structured companies during the same period, or the patterns of organizational adjustment common to all of them. In other words, no argument is made that Welch added some unique value that, in the boom that began in 1982, distinguished his operations in some special way. As an instance of Welch's genius, measured by capitalization, take GE Credit, which contributed significantly to GE's profit in the last ten years. Was this some unique contribution of Welch's? By no means. Disintermediating from orthodox financial institutions -- ie banks -- is a common pattern in American industry. If I truly wanted to bore my readers, I would allude to Alfred Steinherr's exhaustive treatment of this in Derivatives: the Wild Beast of Finance. GM, Ford and Sears have all done it, and it wasn't due to the genius of CEOs. It was due to the opportunity presented, accidentally, by the confluence of two events: pools of capital that came into these companies from various sources (like pensions) that could more profitably be used as a financing instrument, and the peculiarities of the American financial structure due to regulations deriving from the Glass-Steagall act. Does anybody really want me to go into this? No. But the fact is, a pattern is found in various similarly capitalized companies that strongly implies no one CEO was the innovator in this area. So when the market soared, in the long boom from 82-2000, guess what? Those companies started overflowing with apparent money, as they "managed" financial assets. Of course, the flow depended, to a large extent, on two things: the equity bubble, and the enlargement of financial services, like loans to customers. Well, the equities bubble collapses, and the loans begin to bite back as interest rates lowered, customers defaulted, and returns in other areas of company activity slowed. Welch hopped off before the full bust hit, but his final days, riding the Honeywell fiasco, might well tell us what his CEO-ship would look like now if he had stayed on.
So, Welch is paid genius bonuses for non-genius work. Competent, even excellent some years, but not great -- and certainly not something to give him compensation equivalent to one of the founding capitalist fathers, like Carnegie. Yet I have never seen an article in the financial press make this simple comparative point. The point needs to be made because the question should be: could GE have acquired its financial position cheaper -- ie, with a cheaper leadership? This is, of course, taboo for the CEO apologist, and the multitudes that labor to create the uber-management myth.
The flame is on under CFO magazine's 99 CFO of the year --- everybody's favorite, Andrew Fastow! Yes, Enron's man with the plan -- the plan to loot the company's resources for his own benefit -- is edging close to the bonfire of the Vanities currently being lit in a court in Houston. This WP article is clearly a prosecutor's ploy,
but it does include one interesting detail for the Enron-maniac: the focus on Braveheart, the deal whereby Enron sold its potential profits to a Canadian bank in order to realize a sum in its books for 2001, coming up with a 100 million dollar profit. This deal is so incredible that it certainly needs to be examined -- and the heads of the execs at the Canadian company that made it need to be examined twice as hard. Only Enron would make a deal selling its potential profit to a third party, in order to mark down an immediate profit. In '99, CFO caught the great man himself explaining his tricks:
"When Andrew S. Fastow, the 37-year-old CFO of Enron Corp., boasts that "our story is one of a kind," he's not kidding. In just 14 years, Enron has grown from a heavily regulated domestic natural-gas pipeline business to a fully integrated global energy company with thriving activities in natural gas, electricity, infrastructure development, marketing and trading, energy financing, and risk management. And much of that growth has been fueled by unique financing techniques pioneered by Fastow.
"When I came here in 1990, Enron was a company with a $3.5 billion market capitalization," says Fastow. "Today, we're around $35 billion, and that's without issuing a whole lot of equity. We've increased shareholder value, grown the balance sheet, maintained a stable outlook from the rating agencies, and achieved a low cost of capital."
In fact, when energy stock analysts look for paradigm companies to vaunt, they point resolutely in the direction of Houston-based Enron, with $31 billion in revenues last year. And when they seek to explain how Enron has remade itself so completely, they point to "remarkably innovative financing." Says Ted A. Izatt, senior vice president at Lehman Brothers Inc. in New York: "Thanks to Andy Fastow, Enron has been able to develop all these different businesses, which require huge amounts of capital, without diluting the stock price or deteriorating its credit quality-- both of which actually have gone up. He has invented a groundbreaking strategy."
As Raymond Chandler might say, that's cute as a pair of tarantula pyjamas. Inventing those groundbreaking strategies for hiding huge amounts of capital -- hey, a round of applause right here!
If the prosecutors have any sense, they have sharpened their knives for the head of Enron's Broadband division, Ken Rice. The royal road to the conviction of Jeff Skilling might well lie through Mr. Rice, an amiable lout, by all accounts, who made off with 76 million dollars in cashed out stock options. A man who never, at any time, understood fiber optic cable, which is what his division was supposedly about. Luckily, he was only involved in it as its president - most of his billable time, at least according to Robert Bryce's book on Enron, he spent racing motorcycles.
Although you might think the piggy bank is broken, the new CEO of Chapter 11 Enron is still poking around for loot. Maybe it is something about the name, or maybe it is something about Houston business culture, but according to the Houston Chronicle,
"Stephen Cooper wants to hire 15 more managers from Zolfo Cooper, in a move that could earn him a rich reward. In a request filed with the bankruptcy court Tuesday, Enron asked to pay the restructuring firm founded by Stephen Cooper $864,000 a year per manager, the same rate as 15 Zolfo directors already with Enron." Cooper has apparently decided that his firm should staff Enron's skeletal crew, where they rub shoulders with highly compensated lawyers and such. And that, incidentally, he will receive money both from the company which he is running, Enron, and the firm he was running, Zolfo. Sweet, a deal like that. I mean, how do you squeeze more juice out of a dead carcass? See, Enron is pioneering entrepeneurial bankruptcy -- are we happy now?
This brings us round to yesterday's post. If you will remember, fair reader, we were discussing John Cassidy's New Yorker article, The Greed Cycle. One thing especially impressed LI about that article: the place of Michael Jensen in it. Jensen, Cassidy claims, was the academic godfather of the amazing inflation in top executive compensation packages. Jensen is currently hatching an academic paper to explain the collapse of Enron that blames it on -- get this -- the Wall Street bubble mentality. Why -- the universal solvent of explanations, now, that bubble. Once upon a time, the conservative view was that there are no bubbles -- this was, after all, the orthodoxy of efficient markets theory. Time moves on, however, and as it has become apparent that something has to be to blame for the crash -- and as it becomes apparent that the clash laid bare the irrationality of radical free market doctrine -- there's been a noticeable shift in that plank of the doctrine. Suddenly, there are bubbles -- and they are all the fault of Clinton! How convenient.
According to Cassidy, Jensen's idea is that Enron had to do what it did to maintain its stock prices because of pressure from Wall Street jockeys. It is the familiar story of trying to meet higher and higher expectations, and at some point going to the shadow side in order to do so.
Well, that is, to put not too fine a word upon it, bull shit.
Enron had to maintain its stock at a high level because much of its dealing depended on the stock being at that price. That guaranteed credit. Why was the need for credit so pressing? Because cash flow was so radically out of synch with claimed earnings. This occured because Enron made a systematic attempt, under Jeff Skilling, to institute mark to market accounting, a financial instrument by which it could aggregate future earnings as present earnings. Why did it do this? Well, among other things, such an accounting system could justify huge bonuses for execs. These bonuses were not postponed until the real profit was realized -- since in the vast majority of the deals Enron pursued, profit either never appeared, or was eaten up by costs. In fact, in the vast majority of those deals, including those being made by the thousands at Enron's famous energy trader's desk, Enron was losing money. So it was not Wall Street expectations that caused Enron to engage in the massive distortion of its financial position, but the need to justify grossly inflated compensations -- which of course brings the ball home into Jensen's court, doesn't it?
Jensen, who is working for something called Monitor, has posted a version of his version on the site. Here's the first three grafs -- and a word to the wise: notice that the "problem", as Jensen carefully designs it, is "fixed" by a courageous CEO. Jensen is the type of guy any CEO would be proud to have in his court -- a natural born syncophant:
Once, companies gave whispers and informal advisories to favoured analysts of what to expect in coming earnings announcements. Then the conversations became more elaborate, engendering a kind of twisted logic. No longer were analysts only trying to understand a company so as to predict what it might earn. The analysts' forecasts themselves became the centre of discussions. The forecasts no longer represented a financial by-product of the company's strategy but came to drive that strategy.
Yet as the case of Enron suggests, when companies scramble too hard to meet unrealistic forecasts by analysts they often take highly risky value-destroying bets. The process - euphemistically referred to as "earnings guidance" - is a high-stakes game, with management seeking to hit the targets set by analysts and being punished severely if they miss.
But a few courageous chief executive officers have wisely decided to put an end to the game by saying "no". Managing Wall Street's expectations may be a decades-old game but Barry Diller of USA Networks and Jim Kilts, Gillette's CEO, have decided to end it."
Jensen is a typical Chicago economist. He uses mathematical models to achieve results that he wants -- such as the model that shows why executives, as agents of the shareholders, must be compensated in such a way that their "interests are aligned with the company." Unlike, say, secretaries and technicians, I guess. When this model, in the real world, produces bad results -- when it is tested, that is, and found wanting, because of an insufficient attention to other, structural variables -- he reaches immediately for psychological terms. In other words: cue the mind when the going gets tough. That's always a good strategy to detract from your pisspoor mathematical models. Thus, his suggestion that Enron executives, hitting their targets, are driven by "egotism:" "High share prices stoked already amply endowed managerial egos.." Psychology intrudes when, embarrassingly, rational self-interest is really the parameter at stake. If compensation is set up to award performance without any index for performance -- if, that is, compensation is set up in the absense of those constraints that come with a competitive job market -- then guess what? performance will be skewed to justify compensation. This happens over and over again -- merger and acquisition is substituted for entrepeneurship, accounting shenanigans for true cost cutting, and pensions are looted in place of products being innovated. You would have to be a fool -- or an economist -- not to see that something in the system must be causing this systematic effect.
Discussion of corporate performance and its relation to compensation is on a truly childish level in the business press. Take General Electric. LI has seen, compulsively repeated, justifications of Welch's swollen compensation package by reference to how vastly GE grew under his leadership. No attention is paid, in this analysis, to the growth of other, similarly structured companies during the same period, or the patterns of organizational adjustment common to all of them. In other words, no argument is made that Welch added some unique value that, in the boom that began in 1982, distinguished his operations in some special way. As an instance of Welch's genius, measured by capitalization, take GE Credit, which contributed significantly to GE's profit in the last ten years. Was this some unique contribution of Welch's? By no means. Disintermediating from orthodox financial institutions -- ie banks -- is a common pattern in American industry. If I truly wanted to bore my readers, I would allude to Alfred Steinherr's exhaustive treatment of this in Derivatives: the Wild Beast of Finance. GM, Ford and Sears have all done it, and it wasn't due to the genius of CEOs. It was due to the opportunity presented, accidentally, by the confluence of two events: pools of capital that came into these companies from various sources (like pensions) that could more profitably be used as a financing instrument, and the peculiarities of the American financial structure due to regulations deriving from the Glass-Steagall act. Does anybody really want me to go into this? No. But the fact is, a pattern is found in various similarly capitalized companies that strongly implies no one CEO was the innovator in this area. So when the market soared, in the long boom from 82-2000, guess what? Those companies started overflowing with apparent money, as they "managed" financial assets. Of course, the flow depended, to a large extent, on two things: the equity bubble, and the enlargement of financial services, like loans to customers. Well, the equities bubble collapses, and the loans begin to bite back as interest rates lowered, customers defaulted, and returns in other areas of company activity slowed. Welch hopped off before the full bust hit, but his final days, riding the Honeywell fiasco, might well tell us what his CEO-ship would look like now if he had stayed on.
So, Welch is paid genius bonuses for non-genius work. Competent, even excellent some years, but not great -- and certainly not something to give him compensation equivalent to one of the founding capitalist fathers, like Carnegie. Yet I have never seen an article in the financial press make this simple comparative point. The point needs to be made because the question should be: could GE have acquired its financial position cheaper -- ie, with a cheaper leadership? This is, of course, taboo for the CEO apologist, and the multitudes that labor to create the uber-management myth.
Wednesday, September 25, 2002
Remora
Notes from all over
BW offers a "scourging" of the business press for its lickspittle attitude towards the New Economy boys during the bubble years. Readers of LI have already been here -- of course, they are all secretly sneaking glances at this weblog and ripping us off! The brutes! Isn't it stifling in this cabin? Where's my bundle of ivory... The snakes! The snakes!
Uh, forgive us, a touch of that old tropical fever, you know.
Anyway, Ciro Scotti winds into a denunciation of the biz press from the very odd angle of Pat Buchanan's rhetoric. Scotti borrows Buchanan's phrase about Bush -- that he is a corporation bellhop. While this is about as nice an image as you can expect on the hustings nowadays, I don't see it as being so insightful that Scotti needs to press it. And though Scotti wishes to come off as suitably tough and disgusted in the column, Mr. Take no prisoners, he actually --- takes no prisoners. That is, he names no names, but contents himself with generally derogating the young. Young guys, infatuated with young dot-commers, are to blame for everything. We advise you not to buy that story. The credulity of the business press derived from their general Reaganite faith in deregulation and the power of the markets, in themselves, to produce utopian outcomes. The business press suffered from a structural deficit of scepticism which was not confined to young tech enthusiasts. Blinded by rhetoric, and attached to a particularly insolent version of the managerial class -- the class indoctrinated, since the 80s, with the idea that their greediest impulses were synonymous with good business -- the business press has suffered a collapse in credibility that the managers of that press still don't understand. We recommend that Mr. Scotti read a few of our previous posts, instead of old Pat Buchanan speeches: our Glassman nominee of July 23 was Nelson Schwartz, and on August 2 we named James Glassman himself (although the latter is, we admit, a pretty obvious call -- it is like calling Bozo a clown). We've thought of pursuing some other journalists, notably Geoffrey Colvin, the Welch apologist at Fortune Magazine whose puff piece on Welch (with a heading that has the true, bullying ring of a General MacArthur explaining his Korean strategy: "VALUE DRIVEN Welch's Decision: The Inside Story. Most advisors told Jack Welch to shut up and tough out the news reports. He didn't. Here's why") is in the line of his general attitude towards Welch. Down on your knees about sums it up. Eventually we will do that. LI's motto is: what if they held an inquisition and nobody came? Because, of course, this is where we release our inner Torquemada.
Since we are going over old posts and new business articles, we read John Cassidy's New Yorker article, The Greed Cycle, yesterday, and we're impressed with it -- as apparently a lot of people have been. It is not, unfortunately, on line. Here's a preview of it at the Connection. The kicker at the end of it is Paul Volcker coming out for abolishing stock options. What attracted interest in the piece, however, was the seemingly rational explanation of how executive pay suffered the fortunate elephantiasis that now routinely produces Nicks tickets for the exec and wastepaper baskets from France for his mistress. Althought I have heard the statistic a thousand times, apparently Cassidy's discovery that that the Fortune 500 CEO earns 500 times more than the average employee he CEO-s has gotten spread about. I've heard the figure misquoted on NPR this morning (by an oddly cheerful commentator who defended Jack Welch) and seen it in editorials.
We have ambiguous feelings about Cassidy: his articles on Marx and Hayek were fascinating, but he, too, seemed to swallow much of the new economy propaganda during the bubble years. The core of the article is about the academic justification for changes in the compensation structure of the executive class from the seventies (when the corporation structure was pretty much as described in Galbraith's New Industrial State) to the nineties, and the part played in that by academic gun Michael Jensen. We want to read Jensen's '91 piece in the Harvard Business Review (which Cassidy quotes for its inspirational line about not compensating the CEO like a bureaucrat -- oh my no, you have to compensate him like an entrepeneur! like a movie star!) for an upcoming dissection of same. Suffice it to say that Cassidy takes up the issue of compensation by referring, ever so discretely, to the matter of competition in the executive labor market. Jensen, a Chicago alum, should, of course, have been a true fan of competition, but his work showed that the exec market was different, due to what the executive did. It was more like paying a contractor than paying an employee. We think that this is a fatally mistaken analogy. And we also think that the unspoken class bias in the Chicago school, which invariably lays the onus of competition in the labor markets on the poor or the middle class, and invariably sees the augmentation of the wealth of the wealthy as an automatic good, must be pointed to -- again and again.
Notes from all over
BW offers a "scourging" of the business press for its lickspittle attitude towards the New Economy boys during the bubble years. Readers of LI have already been here -- of course, they are all secretly sneaking glances at this weblog and ripping us off! The brutes! Isn't it stifling in this cabin? Where's my bundle of ivory... The snakes! The snakes!
Uh, forgive us, a touch of that old tropical fever, you know.
Anyway, Ciro Scotti winds into a denunciation of the biz press from the very odd angle of Pat Buchanan's rhetoric. Scotti borrows Buchanan's phrase about Bush -- that he is a corporation bellhop. While this is about as nice an image as you can expect on the hustings nowadays, I don't see it as being so insightful that Scotti needs to press it. And though Scotti wishes to come off as suitably tough and disgusted in the column, Mr. Take no prisoners, he actually --- takes no prisoners. That is, he names no names, but contents himself with generally derogating the young. Young guys, infatuated with young dot-commers, are to blame for everything. We advise you not to buy that story. The credulity of the business press derived from their general Reaganite faith in deregulation and the power of the markets, in themselves, to produce utopian outcomes. The business press suffered from a structural deficit of scepticism which was not confined to young tech enthusiasts. Blinded by rhetoric, and attached to a particularly insolent version of the managerial class -- the class indoctrinated, since the 80s, with the idea that their greediest impulses were synonymous with good business -- the business press has suffered a collapse in credibility that the managers of that press still don't understand. We recommend that Mr. Scotti read a few of our previous posts, instead of old Pat Buchanan speeches: our Glassman nominee of July 23 was Nelson Schwartz, and on August 2 we named James Glassman himself (although the latter is, we admit, a pretty obvious call -- it is like calling Bozo a clown). We've thought of pursuing some other journalists, notably Geoffrey Colvin, the Welch apologist at Fortune Magazine whose puff piece on Welch (with a heading that has the true, bullying ring of a General MacArthur explaining his Korean strategy: "VALUE DRIVEN Welch's Decision: The Inside Story. Most advisors told Jack Welch to shut up and tough out the news reports. He didn't. Here's why") is in the line of his general attitude towards Welch. Down on your knees about sums it up. Eventually we will do that. LI's motto is: what if they held an inquisition and nobody came? Because, of course, this is where we release our inner Torquemada.
Since we are going over old posts and new business articles, we read John Cassidy's New Yorker article, The Greed Cycle, yesterday, and we're impressed with it -- as apparently a lot of people have been. It is not, unfortunately, on line. Here's a preview of it at the Connection. The kicker at the end of it is Paul Volcker coming out for abolishing stock options. What attracted interest in the piece, however, was the seemingly rational explanation of how executive pay suffered the fortunate elephantiasis that now routinely produces Nicks tickets for the exec and wastepaper baskets from France for his mistress. Althought I have heard the statistic a thousand times, apparently Cassidy's discovery that that the Fortune 500 CEO earns 500 times more than the average employee he CEO-s has gotten spread about. I've heard the figure misquoted on NPR this morning (by an oddly cheerful commentator who defended Jack Welch) and seen it in editorials.
We have ambiguous feelings about Cassidy: his articles on Marx and Hayek were fascinating, but he, too, seemed to swallow much of the new economy propaganda during the bubble years. The core of the article is about the academic justification for changes in the compensation structure of the executive class from the seventies (when the corporation structure was pretty much as described in Galbraith's New Industrial State) to the nineties, and the part played in that by academic gun Michael Jensen. We want to read Jensen's '91 piece in the Harvard Business Review (which Cassidy quotes for its inspirational line about not compensating the CEO like a bureaucrat -- oh my no, you have to compensate him like an entrepeneur! like a movie star!) for an upcoming dissection of same. Suffice it to say that Cassidy takes up the issue of compensation by referring, ever so discretely, to the matter of competition in the executive labor market. Jensen, a Chicago alum, should, of course, have been a true fan of competition, but his work showed that the exec market was different, due to what the executive did. It was more like paying a contractor than paying an employee. We think that this is a fatally mistaken analogy. And we also think that the unspoken class bias in the Chicago school, which invariably lays the onus of competition in the labor markets on the poor or the middle class, and invariably sees the augmentation of the wealth of the wealthy as an automatic good, must be pointed to -- again and again.
Tuesday, September 24, 2002
Remora
Trickle Up
The conventional wisdom -- which is only shorthand for, the chatter among the governing class -- is that the upcoming election is going to be a Republican fest. The focus, now, is firmly on Iraq, and Bush is the maestro who has put this all together.
Well, the governing classes do govern, so one would think that they would know about such things. Elections, after all, are to be manipulated in such a way that there is no disturbance in the well ordered diffusion of power among the people who already have it, and no doubt feel they deserve it.
But isn't it possible, LI would like to know -- speaking out of turn, in his best Oliver Twist wants some more gruel tones -- isn't it slightly possible that the populace will look at the events of the past year in terms of their deteriorating economic situation? A story in the WP about the latest data on income and poverty brings up this point. The census bureau reports that income inequality is again on the rise, that median household incomes are declining, and that more people have officially become poor.
"This report signals a significant reversal of what had been a very positive trend in terms of income and poverty," said Jared Bernstein, senior economist at the union-backed Economic Policy Institute in Washington. "It also underscores the point that the recession was deeper than many had thought."
Other data indicates that the decline in household income came largely as a result of falling employment and loss of overtime hours, offsetting continued gains in hourly wages.
In terms of class breakdown, only households with incomes above $150,000 were able to post gains, with the greatest losses in percentage terms occurring at the bottom of the income ladder, the report showed."
Perhaps the G.C., living as it does mostly on the East Coast, is more sheltered than usual from these figures. Apparently the income lost has been heaviest in the Midwest and the West.
"Geographically, incomes also fell the most in the Midwest (3.7 percent) and the West (2.3 percent), reflecting the recession's heavy impact on manufacturing in the high tech sectors. Household incomes actually increased 1.7 percent in the Northeast."
This is obviously a stealth recession, but as the market falls, and as it becomes apparent that the Bush economic plan, like Enron's bonuses, is oriented solely towards lavishing perks on those who have already obtained, by various obscene tricks, lavish perks, there will be a backlash. Republicans are reportedly sitting pretty right now, thinking that Iraq will be rubbed in the faces of the Dems. The Dems are nervous, and have adopted a robotic attitude of yes-sir to the odious commander in chief and his henchmen. But maybe they will gain a little spine from the November results.
LI has to have a little hope, after all.
Trickle Up
The conventional wisdom -- which is only shorthand for, the chatter among the governing class -- is that the upcoming election is going to be a Republican fest. The focus, now, is firmly on Iraq, and Bush is the maestro who has put this all together.
Well, the governing classes do govern, so one would think that they would know about such things. Elections, after all, are to be manipulated in such a way that there is no disturbance in the well ordered diffusion of power among the people who already have it, and no doubt feel they deserve it.
But isn't it possible, LI would like to know -- speaking out of turn, in his best Oliver Twist wants some more gruel tones -- isn't it slightly possible that the populace will look at the events of the past year in terms of their deteriorating economic situation? A story in the WP about the latest data on income and poverty brings up this point. The census bureau reports that income inequality is again on the rise, that median household incomes are declining, and that more people have officially become poor.
"This report signals a significant reversal of what had been a very positive trend in terms of income and poverty," said Jared Bernstein, senior economist at the union-backed Economic Policy Institute in Washington. "It also underscores the point that the recession was deeper than many had thought."
Other data indicates that the decline in household income came largely as a result of falling employment and loss of overtime hours, offsetting continued gains in hourly wages.
In terms of class breakdown, only households with incomes above $150,000 were able to post gains, with the greatest losses in percentage terms occurring at the bottom of the income ladder, the report showed."
Perhaps the G.C., living as it does mostly on the East Coast, is more sheltered than usual from these figures. Apparently the income lost has been heaviest in the Midwest and the West.
"Geographically, incomes also fell the most in the Midwest (3.7 percent) and the West (2.3 percent), reflecting the recession's heavy impact on manufacturing in the high tech sectors. Household incomes actually increased 1.7 percent in the Northeast."
This is obviously a stealth recession, but as the market falls, and as it becomes apparent that the Bush economic plan, like Enron's bonuses, is oriented solely towards lavishing perks on those who have already obtained, by various obscene tricks, lavish perks, there will be a backlash. Republicans are reportedly sitting pretty right now, thinking that Iraq will be rubbed in the faces of the Dems. The Dems are nervous, and have adopted a robotic attitude of yes-sir to the odious commander in chief and his henchmen. But maybe they will gain a little spine from the November results.
LI has to have a little hope, after all.
Friday, September 20, 2002
Remora
LI has been desperately searching for something else to write about besides the upcoming war. The reason, of course, is that the war has become naturalized in American politics -- there are no parties that oppose it; like Winter, or the next storm, it is simply coming. This sense of onset -- of a thing that is impervious to human will, even as it is foreseeably disastrous to human beings -- is crucial to power as it is envisioned by dreamers of total authority. Total authority, after all, is a piece of nature. Death, flood, storm, lightning -- the bit players in mad Lear's dance on the heath -- these, once associated, as though by necessity, with the "leader', insinuate themselves into the mood of dissent, turning dissent from the expectation of persuasion to the easy desperation of emotional expression. So dissenters turn to invective and alienating names -- Bush as fascist, or the like. When the opposition indulges wholeheartedly in caricature, it loses its force as opposition. Better to play Lear's fool -- to make that narrow passage between outrageous and salient comments.
Robert Fiske, in the Independent, has some interesting comments on the weapons inspectors -- the supposed dupes of whose works the likes of Cheney (in his incarnation as V.P., not in his incarnation as the Iraq-friendly CEO of Haliburtan) is so scornful. The direction of their dupehood is given a spin by Fiske.
"But for now, the Americans have been sandbagged. It will take at least 25 days to put the UN inspection team together, another 60 for their preliminary assessment � always assuming they are given "unfettered" access to all Iraqi government facilities -- then another 60 days for further inspections. In other words, George Bush's latest war has been delayed by more than five months. Saddam, of course, must have his own worries. Back in 1996, the Iraqis were already accusing the UN inspectorate of working with the Israelis.
Major Scott Ritter, Iraq's nemesis-turned-saviour, was indeed � as an inspector � regularly travelling to Tel Aviv to consult Israeli intelligence. Then Saddam accused the UN inspectors of working for the CIA. And he was right. The United States, it emerged, was using the UN's Baghdad offices to bug Iraq's government communications. And once the inspectors were withdrawn in 1998 and the US and Britain launched "Operation Desert Fox", it turned out that virtually every one of the bombing targets had been visited by UN inspectors over the previous six months. Far from being an inspectorate, the UN lads � though they didn't all know it � had been acting as forward air controllers, drawing up an American hit list rather than monitoring compliance with UN resolutions."
Bush is going to get a fearful opposition to go on record supporting a war in spite of UN inspectors, with the really silly mantra that the UN goal is disarmament, and that the U.S. will be the instrument of that goal in spite of the U.N. The silliness resides in the fact that the two sides are certainly not separate. As the Bush people know, if S.H. did "disarm," the claim would have to be verified by -- arms inspection. In fact, we all know that. The beserk tilt against logic itself, and the demand for encouragement from the Democrats, is a sad spectacle quite in keeping with the beginnings of the Bush regime: from usurpation to tin star militarism. Haven't we seen this Western before?
LI has been desperately searching for something else to write about besides the upcoming war. The reason, of course, is that the war has become naturalized in American politics -- there are no parties that oppose it; like Winter, or the next storm, it is simply coming. This sense of onset -- of a thing that is impervious to human will, even as it is foreseeably disastrous to human beings -- is crucial to power as it is envisioned by dreamers of total authority. Total authority, after all, is a piece of nature. Death, flood, storm, lightning -- the bit players in mad Lear's dance on the heath -- these, once associated, as though by necessity, with the "leader', insinuate themselves into the mood of dissent, turning dissent from the expectation of persuasion to the easy desperation of emotional expression. So dissenters turn to invective and alienating names -- Bush as fascist, or the like. When the opposition indulges wholeheartedly in caricature, it loses its force as opposition. Better to play Lear's fool -- to make that narrow passage between outrageous and salient comments.
Robert Fiske, in the Independent, has some interesting comments on the weapons inspectors -- the supposed dupes of whose works the likes of Cheney (in his incarnation as V.P., not in his incarnation as the Iraq-friendly CEO of Haliburtan) is so scornful. The direction of their dupehood is given a spin by Fiske.
"But for now, the Americans have been sandbagged. It will take at least 25 days to put the UN inspection team together, another 60 for their preliminary assessment � always assuming they are given "unfettered" access to all Iraqi government facilities -- then another 60 days for further inspections. In other words, George Bush's latest war has been delayed by more than five months. Saddam, of course, must have his own worries. Back in 1996, the Iraqis were already accusing the UN inspectorate of working with the Israelis.
Major Scott Ritter, Iraq's nemesis-turned-saviour, was indeed � as an inspector � regularly travelling to Tel Aviv to consult Israeli intelligence. Then Saddam accused the UN inspectors of working for the CIA. And he was right. The United States, it emerged, was using the UN's Baghdad offices to bug Iraq's government communications. And once the inspectors were withdrawn in 1998 and the US and Britain launched "Operation Desert Fox", it turned out that virtually every one of the bombing targets had been visited by UN inspectors over the previous six months. Far from being an inspectorate, the UN lads � though they didn't all know it � had been acting as forward air controllers, drawing up an American hit list rather than monitoring compliance with UN resolutions."
Bush is going to get a fearful opposition to go on record supporting a war in spite of UN inspectors, with the really silly mantra that the UN goal is disarmament, and that the U.S. will be the instrument of that goal in spite of the U.N. The silliness resides in the fact that the two sides are certainly not separate. As the Bush people know, if S.H. did "disarm," the claim would have to be verified by -- arms inspection. In fact, we all know that. The beserk tilt against logic itself, and the demand for encouragement from the Democrats, is a sad spectacle quite in keeping with the beginnings of the Bush regime: from usurpation to tin star militarism. Haven't we seen this Western before?
Wednesday, September 18, 2002
Remora
Commoditizing exec compensation: a modest proposal
The news about Oracle comes, in LI's opinion, at just the right time. Larry Ellison should be a poster boy for bad corporate behavior. His total compensation package came in at number one in the Forbes CEO pay list. How did he win the greed sweepstakes? By taking home a cool 706 million dollars in stock options that he exercised. Ellison has a little gimmick he plays -- he paid himself, officially, a dollar in salary last year. Well, who needs a salary when your company dilutes its stock to the extent recorded by Mercury News
"Oracle CEO Ellison collected $706 million after exercising stock options and immediately selling the shares in January 2001. The gain meant Ellison set a record in business history for realized annual compensation -- which excludes the value of unexercised options. He received no salary, bonus or other pay last year. Oracle stock fell 61 percent to $15.30 during the fiscal year ended May 2001."
We just wrote a little review for the National Post about an Enron book. It hasn't been published yet. We excized a last paragraph considering extensively the underconsidered reason that executive total compensation has exploded: the insulated nature of the job market in upper management. It is a bit of a joke calling upper management a job market -- it seems more like the Big Fix.
Instead of seeking a market solution -- in other words, how do you make executive culture more competitive -- and letting that drive compensation downward, the idea that executives are something 'special' prevails among compensation reformers. The latest reform is reported this morning in the NYT
"A panel of business leaders proposed changes yesterday in the way corporations pay their top executives. Included in the changes are the prior disclosure of executive stock sales and the uniform treatment of stock options as expenses.
The panel, the Commission on Public Trust and Private Enterprise, was convened in June by the Conference Board, a research group based in New York. The group joined a long list of organizations offering recommendations on overhauling the way corporations govern themselves."
The panel's suggestions are good:
"Other proposals announced yesterday included a recommendation that companies seek shareholders' approval before stock options are repriced and that executives hold shares for a longer period before selling. In addition, the group recommended that compensation committees of corporate boards, not management, retain and direct the activities of outside consultants."
But they merely hint at what is needed to break the monopolistic practices that structure the interlocking interests of corporate boards, top executives, and 'consultants.' What is needed, with execs, was what was needed with electricity, natural gas, and metals: a way of commoditizing them, trading them, and hedging against exec compensation volatility. Is LI suggesting a futures market in executive compensation? Well, something like that. We need to make those compensation packages transparent; we need a way to index them; and we need to use that index to make executives compete among each other for positions, rather than having the holders of positions compete for the executives. It is as simple as that. The way in which corporations compete for executive talent makes sense if, indeed, the corporation is in a relatively new field -- such as PCs, in the late eighties. But as the field matures, prices for those executives should go down. Furthermore, those compensation packages shouldn't lift the compensation awarded to executives in more mature fields. Just that has been happening, however. One of the forces that drives Mergers and Acquisitions is the incentive, among the management class, to create something like a new field, and to then justify inflated compensation as the product of an unstable management situation. This is one of the reasons that M&As are a notoriously bad bet -- historically, they have a well known tendency to create underperforming companies.
However, don't expect LIs suggestion -- or any suggestion that we let the magic of the market-place intrude into the magic kingdoms of CEO-land -- to ever be taken seriously. That is, until boards of directors become real jobs, instead of part time honorariums, and those boards then begin to eye the incipient indexes that already exist -- the annual CEO salary list by Forbes, for instance -- and use it as an opportunity to cut exec cost.
Commoditizing exec compensation: a modest proposal
The news about Oracle comes, in LI's opinion, at just the right time. Larry Ellison should be a poster boy for bad corporate behavior. His total compensation package came in at number one in the Forbes CEO pay list. How did he win the greed sweepstakes? By taking home a cool 706 million dollars in stock options that he exercised. Ellison has a little gimmick he plays -- he paid himself, officially, a dollar in salary last year. Well, who needs a salary when your company dilutes its stock to the extent recorded by Mercury News
"Oracle CEO Ellison collected $706 million after exercising stock options and immediately selling the shares in January 2001. The gain meant Ellison set a record in business history for realized annual compensation -- which excludes the value of unexercised options. He received no salary, bonus or other pay last year. Oracle stock fell 61 percent to $15.30 during the fiscal year ended May 2001."
We just wrote a little review for the National Post about an Enron book. It hasn't been published yet. We excized a last paragraph considering extensively the underconsidered reason that executive total compensation has exploded: the insulated nature of the job market in upper management. It is a bit of a joke calling upper management a job market -- it seems more like the Big Fix.
Instead of seeking a market solution -- in other words, how do you make executive culture more competitive -- and letting that drive compensation downward, the idea that executives are something 'special' prevails among compensation reformers. The latest reform is reported this morning in the NYT
"A panel of business leaders proposed changes yesterday in the way corporations pay their top executives. Included in the changes are the prior disclosure of executive stock sales and the uniform treatment of stock options as expenses.
The panel, the Commission on Public Trust and Private Enterprise, was convened in June by the Conference Board, a research group based in New York. The group joined a long list of organizations offering recommendations on overhauling the way corporations govern themselves."
The panel's suggestions are good:
"Other proposals announced yesterday included a recommendation that companies seek shareholders' approval before stock options are repriced and that executives hold shares for a longer period before selling. In addition, the group recommended that compensation committees of corporate boards, not management, retain and direct the activities of outside consultants."
But they merely hint at what is needed to break the monopolistic practices that structure the interlocking interests of corporate boards, top executives, and 'consultants.' What is needed, with execs, was what was needed with electricity, natural gas, and metals: a way of commoditizing them, trading them, and hedging against exec compensation volatility. Is LI suggesting a futures market in executive compensation? Well, something like that. We need to make those compensation packages transparent; we need a way to index them; and we need to use that index to make executives compete among each other for positions, rather than having the holders of positions compete for the executives. It is as simple as that. The way in which corporations compete for executive talent makes sense if, indeed, the corporation is in a relatively new field -- such as PCs, in the late eighties. But as the field matures, prices for those executives should go down. Furthermore, those compensation packages shouldn't lift the compensation awarded to executives in more mature fields. Just that has been happening, however. One of the forces that drives Mergers and Acquisitions is the incentive, among the management class, to create something like a new field, and to then justify inflated compensation as the product of an unstable management situation. This is one of the reasons that M&As are a notoriously bad bet -- historically, they have a well known tendency to create underperforming companies.
However, don't expect LIs suggestion -- or any suggestion that we let the magic of the market-place intrude into the magic kingdoms of CEO-land -- to ever be taken seriously. That is, until boards of directors become real jobs, instead of part time honorariums, and those boards then begin to eye the incipient indexes that already exist -- the annual CEO salary list by Forbes, for instance -- and use it as an opportunity to cut exec cost.
Monday, September 16, 2002
Dope
The politics of war and popularity has been one of the great perils of democracy since Pitt the Younger played the patriot card in 1793. �We cannot arrange with our enemy in the present conjuncture, without abandoning the interest of mankind,� Burke wrote, in his �Letters �on the Proposals for Peace with the Regicide Directory of France,� which was Burke�s way of having it two ways: he simulated a moral interest such that the state could not refuse it, while pretending to decry any who would try to force the state to serve ideological interests. The latter was the letter of his indictment of the French revolutionaries � he claimed that they committed crimes in the name of an abstraction. Notice that the abstraction for which the French Revolutionaries were committing crimes was: the interest of mankind. Burke�s objections to the French Revolution became de facto state doctrine under Pitt - which is when the odd delusion was forged that the British empire was not simply a way of aggrandizing British interest, but was instead, mystically, in the interests of the subdued. This, of course, is the True Doctrine of the Neo-Con believers. The case Burke made carried the burden of legitimacy throughout the British-French conflict, up to 1815, and wrought havoc on the rights of Englishmen, as well as on their money.
This two-fold legitimation of war, which seeks to engraft its justification into the very tissue of the state�s legitimacy, is the path used to make any who oppose war unpatriotic, or enemies of the state. It�s a very fine maneuver, and it is being used now by the Bush regime to shift the boundaries of the war debate: it is no longer about the need for it, but the time we will have it. The social ostracism of the peace party is the practical correlate to the inevitability of war, the last few month�s media Muzak: a pervasive perversion of real reasons which operates much like Muzak, that pervasive perversion of real music, to obstruct thought. So those nations which might oppose our Iraqi action are discredited in sometimes laughable acts of propaganda. In the Sunday NYT, for instance, there was an article about the close ties between Iraq and France � ties that were, of course, cut during the Gulf war. There was even a graf showing the nations that traded with Iraq, and the arms they supplied, from Russia to France. Hey ho, however: there was no place there for the U.S. or the U.K. We�ve already published a partial inventory of products that went to Iraq from the U.S., taken from Jentleson�s book. Our sardonic laughter about the chart was increased by the fact that the Sunday NYT also published an article about businesses using misleading charts to disguise their true financial state.
:While other academic research over the last decade has established that financial charts are often designed to paint a rosier corporate picture than the numbers warrant, a study by Deanna Oxender Burgess, an accounting professor at Florida Gulf Coast University, goes a step further. It examined the effect of the chart design on readers of annual reports, who are mainly investors, stock analysts and shareholders.
"Dr. Burgess found that even slight distortions in a chart changed readers' perceptions of the information. "The danger is that people believe there's more growth than there really is or that performance isn't as poor, which could influence investment decisions," said Dr. Burgess, who conducted focus groups with 80 stockbrokers, bankers, accountants and business students."
Slight distortions in a chart � like the exclusion of two nations that, at one time, were making money on shipping those substances and technologies to Iraq that they now use to justify �regime change?� That's what I call a slight distortion.
Sometimes, coincidence really is the best artist.
The politics of war and popularity has been one of the great perils of democracy since Pitt the Younger played the patriot card in 1793. �We cannot arrange with our enemy in the present conjuncture, without abandoning the interest of mankind,� Burke wrote, in his �Letters �on the Proposals for Peace with the Regicide Directory of France,� which was Burke�s way of having it two ways: he simulated a moral interest such that the state could not refuse it, while pretending to decry any who would try to force the state to serve ideological interests. The latter was the letter of his indictment of the French revolutionaries � he claimed that they committed crimes in the name of an abstraction. Notice that the abstraction for which the French Revolutionaries were committing crimes was: the interest of mankind. Burke�s objections to the French Revolution became de facto state doctrine under Pitt - which is when the odd delusion was forged that the British empire was not simply a way of aggrandizing British interest, but was instead, mystically, in the interests of the subdued. This, of course, is the True Doctrine of the Neo-Con believers. The case Burke made carried the burden of legitimacy throughout the British-French conflict, up to 1815, and wrought havoc on the rights of Englishmen, as well as on their money.
This two-fold legitimation of war, which seeks to engraft its justification into the very tissue of the state�s legitimacy, is the path used to make any who oppose war unpatriotic, or enemies of the state. It�s a very fine maneuver, and it is being used now by the Bush regime to shift the boundaries of the war debate: it is no longer about the need for it, but the time we will have it. The social ostracism of the peace party is the practical correlate to the inevitability of war, the last few month�s media Muzak: a pervasive perversion of real reasons which operates much like Muzak, that pervasive perversion of real music, to obstruct thought. So those nations which might oppose our Iraqi action are discredited in sometimes laughable acts of propaganda. In the Sunday NYT, for instance, there was an article about the close ties between Iraq and France � ties that were, of course, cut during the Gulf war. There was even a graf showing the nations that traded with Iraq, and the arms they supplied, from Russia to France. Hey ho, however: there was no place there for the U.S. or the U.K. We�ve already published a partial inventory of products that went to Iraq from the U.S., taken from Jentleson�s book. Our sardonic laughter about the chart was increased by the fact that the Sunday NYT also published an article about businesses using misleading charts to disguise their true financial state.
:While other academic research over the last decade has established that financial charts are often designed to paint a rosier corporate picture than the numbers warrant, a study by Deanna Oxender Burgess, an accounting professor at Florida Gulf Coast University, goes a step further. It examined the effect of the chart design on readers of annual reports, who are mainly investors, stock analysts and shareholders.
"Dr. Burgess found that even slight distortions in a chart changed readers' perceptions of the information. "The danger is that people believe there's more growth than there really is or that performance isn't as poor, which could influence investment decisions," said Dr. Burgess, who conducted focus groups with 80 stockbrokers, bankers, accountants and business students."
Slight distortions in a chart � like the exclusion of two nations that, at one time, were making money on shipping those substances and technologies to Iraq that they now use to justify �regime change?� That's what I call a slight distortion.
Sometimes, coincidence really is the best artist.
Thursday, September 12, 2002
Dope
Words written in anger. LI finds this incredible: writers are treated so badly by the media that it either stupifies us, forces us to quit, or demoralizes us beyond repair. This is the second time in the last five days that LI has had to go without food for a day. The reason? No money in the bank. The reason: One company has deliberately floated me -- not paid me -- for work I turned in in June, and that was published in July. One company has "lost" my invoice -- this makes the second time in the last month. For that company, I have reviewed approximately ten to fifteen books in the last five weeks. Result: I am living by leeching on my friends. Leeching only goes so far, however. So, today, I didn't have the money to buy ten dollars worth of groceries from the clerk, who makes more than me, and who is paid biweekly. The time divide is the major divide in this country: a company can take its time about paying you, in spite of the contracts they have you sign in order to spin your work off without you gaining a penny by it, and they can do this repeatedly, and they can do this without penalty. This has happened with Lefty magazines; it has happened with national newspapers. You wouldn't think so, but this is true.The writer cannot make the same bargain with the grocer, the landlord, or the electric company. These are my expenses this week: 30.00 for groceries. 5.00 for a meal -- a big treat for me, going out and getting a sandwich! 4.00 for coffees. I would like to see anybody survive on what I am forced to, with chronic, unexplained shortfalls making me truly unable to say that I can eat tomorrow. In the literal sense, I can't. I will find some body, I hope, who can take me out. Hurray.
This is the life of a beast.
This is the system that makes life beastly. I am living in nineteenth century squalor. I am imprisoned in my conditions, and no amount of labor seems to help. I am being driven mad by this. Literally.
I can howl and scream, I can beat my skinny belly, but nothing, nothing changes.
What to do?
Words written in anger. LI finds this incredible: writers are treated so badly by the media that it either stupifies us, forces us to quit, or demoralizes us beyond repair. This is the second time in the last five days that LI has had to go without food for a day. The reason? No money in the bank. The reason: One company has deliberately floated me -- not paid me -- for work I turned in in June, and that was published in July. One company has "lost" my invoice -- this makes the second time in the last month. For that company, I have reviewed approximately ten to fifteen books in the last five weeks. Result: I am living by leeching on my friends. Leeching only goes so far, however. So, today, I didn't have the money to buy ten dollars worth of groceries from the clerk, who makes more than me, and who is paid biweekly. The time divide is the major divide in this country: a company can take its time about paying you, in spite of the contracts they have you sign in order to spin your work off without you gaining a penny by it, and they can do this repeatedly, and they can do this without penalty. This has happened with Lefty magazines; it has happened with national newspapers. You wouldn't think so, but this is true.The writer cannot make the same bargain with the grocer, the landlord, or the electric company. These are my expenses this week: 30.00 for groceries. 5.00 for a meal -- a big treat for me, going out and getting a sandwich! 4.00 for coffees. I would like to see anybody survive on what I am forced to, with chronic, unexplained shortfalls making me truly unable to say that I can eat tomorrow. In the literal sense, I can't. I will find some body, I hope, who can take me out. Hurray.
This is the life of a beast.
This is the system that makes life beastly. I am living in nineteenth century squalor. I am imprisoned in my conditions, and no amount of labor seems to help. I am being driven mad by this. Literally.
I can howl and scream, I can beat my skinny belly, but nothing, nothing changes.
What to do?
Wednesday, September 11, 2002
Remora
September 11. LI was not going to post today. But then we thought, reading the NYT, and various media, that it might be a good idea to post today. After all, this is the week that Bush has chosen to press forward with his war against Iraq, with his address to the United Nations. And we were surprised to see Bush's comments on the NYT op-ed page -- surprised because we didn't expect to see a Washington Times guy like Bush appearing in same space used by Susan Sontag Monday.
So we decided, one year later, to take a look at Sontag's much condemned response to 9/11. It was easy to find on the web. A NYU finance professor has even taken the trouble to combine Sontag's 9/10 piece in the Times and the New Yorker piece. Here's the first paragraph, the one that drew down the wrath of the heavens last year:
"The disconnect between last Tuesday's monstrous dose
of reality and the self-righteous drivel and outright deceptions being peddled by public figures and TV commentators is startling & depressing. The voices licensed to follow the event seem to have joined together in a campaign to infantilize the public. Where is the acknowledgment that this was not a "cowardly" attack on "civilization" or "liberty" or "humanity" or "the free world" but an attack on the world's self-proclaimed superpower; undertaken as a consequence of specific American alliances and actions? How many citizens are aware of the ongoing American bombing of Iraq? And if the word "cowardly" is to be used, it might be more aptly applied to those who kill from beyond the range of retaliation, high in the sky, than to those willing to die themselves in order to kill others. In the matter of courage (a morally neutral virtue): whatever may be said of the perpetrators of Tuesday's slaughter, they were not cowards. "
It was part of the disconnect from reality that much of the controversy about this graf had to do with whether or not the hijackers were or were not cowardly. The controversy seems, in retrospect, bizarre. On the one hand, to undertake to kill yourself in a cause can be construed as brave. On the other hand, to undertake to kill others without warning in a cause to which they are not clearly, if at all, connected can be construed as cowardly. It depends, obviously, on which end of the action you look at. In the end, I'd say that the story of war in this century is about the systematic displacement of all of the elements that were once engaged in the semantic field of "bravery." It is a field that fell to the technology of distance. Bombing Iraq is, indeed, another example in the endless story of 20th century fighting -- it is impervious to descriptions of cowardice and bravery. Once cowardice wins wars, and bravery loses them, the virtues begin to lose their luster.
That Bush would reach, instinctively, for the "coward" appelation had to do with forestalling criticism of his own regard for his skin, that day -- criticism that has been so reversed that we are now assured that the President nearly fought with his pilots to take Air Force one immediately to D.C., so brave a hero is he. This is blatantly untrue, and to the extent that Sontag takes on the press for "impression management," she is precisely right. That Sontag, a literary critic, fell for Bush's description of the act and the invitation to descriptions derived from an irrelevant system of virtues -- that in fact she doesn't make the elementary analysis of the coward trope that she, a good Barthesian, could easily have done -- gives us a measure of how confusing -- how stricken -- the period after 9/11 was. Criticism isn't simply opposition, and that, of course, was the whole problem with Sontag's piece.
The other thing to note, after a year, is that Sontag's numerous conservative critics -- who called her various names, like filthy, quisling, etc. -- now essentially agree with her that the whole thing was about Iraq. This would be funny, if it wasn't so not-funny. Of course, what we provisionally know, after a year of probing the Al Quaeda network, is that it wasn't at all about Iraq. It was about Saudi Arabia, first. It was about the perception that still lives, in the Arab world, among certain leaders, that the U.S. is a paper tiger -- a perception that arose from the bombing of the Marine Barracks in Lebanon in 83, and the subsequent American retreat from Lebanon. And if what has been reported about the preaching in the "radical" mosques in Hamburg is correct, it was about "Jewry" -- a soiled, disgusting theme that we are all too familiar with. The WP has an article, today, with the dime novel title, Hamburg's Cauldron of Terror, which quotes a typical sermon of the kind that, apparently, nourished Mohammed Atta's soul:
"The Al Quds mosque opened in 1993 and became a center for incendiary views. "The Jews and crusaders must have their throats slit," said Imam Mohammed bin Mohammed al Fizazi in a pre-Sept. 11 sermon, which was videotaped.
Such preaching has continued. The Post last month purchased a video at the Al Quds mosque in which an Islamic preacher, identified as Sheik Azid al Kirani, shouts out a call for mortal combat against "Jews, Israel and all unbelievers."
There is little common ground between the purveyors of this kind of Islamic ultramontanism and Iraq. There's good reason that none of the hijackers were Iraqi -- the issue between the U.S. and Iraq is definitely not at the center of the thinking of people like Atta, who detest the thought of secular Arabic power. "How many citizens are aware of the ongoing American bombing of Iraq?", Sontag justly asks. What she implies, however, is, distressingly, a view that has become very orthodox in right wing circles: the Middle East is one uniform mass, in which the differences between, say, Osama bin Laden and Saddam Hussein melt down to a feeble few. This view is just plain wrong: its falsity can be spelled out in body counts.
September 11. LI was not going to post today. But then we thought, reading the NYT, and various media, that it might be a good idea to post today. After all, this is the week that Bush has chosen to press forward with his war against Iraq, with his address to the United Nations. And we were surprised to see Bush's comments on the NYT op-ed page -- surprised because we didn't expect to see a Washington Times guy like Bush appearing in same space used by Susan Sontag Monday.
So we decided, one year later, to take a look at Sontag's much condemned response to 9/11. It was easy to find on the web. A NYU finance professor has even taken the trouble to combine Sontag's 9/10 piece in the Times and the New Yorker piece. Here's the first paragraph, the one that drew down the wrath of the heavens last year:
"The disconnect between last Tuesday's monstrous dose
of reality and the self-righteous drivel and outright deceptions being peddled by public figures and TV commentators is startling & depressing. The voices licensed to follow the event seem to have joined together in a campaign to infantilize the public. Where is the acknowledgment that this was not a "cowardly" attack on "civilization" or "liberty" or "humanity" or "the free world" but an attack on the world's self-proclaimed superpower; undertaken as a consequence of specific American alliances and actions? How many citizens are aware of the ongoing American bombing of Iraq? And if the word "cowardly" is to be used, it might be more aptly applied to those who kill from beyond the range of retaliation, high in the sky, than to those willing to die themselves in order to kill others. In the matter of courage (a morally neutral virtue): whatever may be said of the perpetrators of Tuesday's slaughter, they were not cowards. "
It was part of the disconnect from reality that much of the controversy about this graf had to do with whether or not the hijackers were or were not cowardly. The controversy seems, in retrospect, bizarre. On the one hand, to undertake to kill yourself in a cause can be construed as brave. On the other hand, to undertake to kill others without warning in a cause to which they are not clearly, if at all, connected can be construed as cowardly. It depends, obviously, on which end of the action you look at. In the end, I'd say that the story of war in this century is about the systematic displacement of all of the elements that were once engaged in the semantic field of "bravery." It is a field that fell to the technology of distance. Bombing Iraq is, indeed, another example in the endless story of 20th century fighting -- it is impervious to descriptions of cowardice and bravery. Once cowardice wins wars, and bravery loses them, the virtues begin to lose their luster.
That Bush would reach, instinctively, for the "coward" appelation had to do with forestalling criticism of his own regard for his skin, that day -- criticism that has been so reversed that we are now assured that the President nearly fought with his pilots to take Air Force one immediately to D.C., so brave a hero is he. This is blatantly untrue, and to the extent that Sontag takes on the press for "impression management," she is precisely right. That Sontag, a literary critic, fell for Bush's description of the act and the invitation to descriptions derived from an irrelevant system of virtues -- that in fact she doesn't make the elementary analysis of the coward trope that she, a good Barthesian, could easily have done -- gives us a measure of how confusing -- how stricken -- the period after 9/11 was. Criticism isn't simply opposition, and that, of course, was the whole problem with Sontag's piece.
The other thing to note, after a year, is that Sontag's numerous conservative critics -- who called her various names, like filthy, quisling, etc. -- now essentially agree with her that the whole thing was about Iraq. This would be funny, if it wasn't so not-funny. Of course, what we provisionally know, after a year of probing the Al Quaeda network, is that it wasn't at all about Iraq. It was about Saudi Arabia, first. It was about the perception that still lives, in the Arab world, among certain leaders, that the U.S. is a paper tiger -- a perception that arose from the bombing of the Marine Barracks in Lebanon in 83, and the subsequent American retreat from Lebanon. And if what has been reported about the preaching in the "radical" mosques in Hamburg is correct, it was about "Jewry" -- a soiled, disgusting theme that we are all too familiar with. The WP has an article, today, with the dime novel title, Hamburg's Cauldron of Terror, which quotes a typical sermon of the kind that, apparently, nourished Mohammed Atta's soul:
"The Al Quds mosque opened in 1993 and became a center for incendiary views. "The Jews and crusaders must have their throats slit," said Imam Mohammed bin Mohammed al Fizazi in a pre-Sept. 11 sermon, which was videotaped.
Such preaching has continued. The Post last month purchased a video at the Al Quds mosque in which an Islamic preacher, identified as Sheik Azid al Kirani, shouts out a call for mortal combat against "Jews, Israel and all unbelievers."
There is little common ground between the purveyors of this kind of Islamic ultramontanism and Iraq. There's good reason that none of the hijackers were Iraqi -- the issue between the U.S. and Iraq is definitely not at the center of the thinking of people like Atta, who detest the thought of secular Arabic power. "How many citizens are aware of the ongoing American bombing of Iraq?", Sontag justly asks. What she implies, however, is, distressingly, a view that has become very orthodox in right wing circles: the Middle East is one uniform mass, in which the differences between, say, Osama bin Laden and Saddam Hussein melt down to a feeble few. This view is just plain wrong: its falsity can be spelled out in body counts.
Tuesday, September 10, 2002
To continue from our last post� the Eyre affair. Governor James Eyre�s suppression of a �rebellion� in the Crown colony of Jamaica, and his subsequent trial by commission, is so much antiquarian dust today, but it shouldn't be. So we are grateful to two economists, David M. Levy and Sandra Peart, who have publicized this affair. In an interview with Reason magazine, these two sum up what they think they have discovered: the dark connection between opposition to laissez faire economics and racism. They are particularly focused on the chief disputants in England: Thomas Carlyle and John Stuart Mill. These men, for Levy and Peart, stand not only for themselves, but also for two different ideologies: one statist, paternalistic, ultimately socialist, and one laissez faire, individualistic, and liberal � in the classical sense.
Q: What were the connections between the contempt for markets and defense of slavery?
A: Markets bust hierarchy. Carlyle also coined the term "consumer sovereignty" in 1833. It was a sneering reference to political economist Richard Whately�s exchange theory of government, in which policy is viewed as a trade between something like equals. Carlyle�s view of the world was that it should be ruled by hierarchy and the worship of heroes. Obedience to the demands of your superiors was everything. The exchange inherent in markets -- rather than the command of hierarchy -- was anarchy.
That markets don't bust hierarchy is a claim that, of course, the two don't consider -- even though it certainly animates a large tradition in the left, which goes from the French Revolution to Galbraith. However, the tie between hierarchy and racism is the one that concerns us here. The Eyre affair seems to seal their case. After showing that the motives behind the defense of Eyre were demonstrably racist -- that is, the supposition that blacks were inferior, and thus not subject to the judicial conventions protecting whites, animates the protection of Eyre from the consequences of having misused black subjects -- Levy and Peart make a few bold leaps. One of them we will get back to in a further post: the claim that the Reactionary clique gave rise to eugenics. This, it seems to us, is a serious distortion of the historical record.
First, let's get back to what happened in Jamaica, in October of 1865. To get a broader view of the facts in the affair, we turned to an article in the Winter, 2000 Clio by Howard Fulweiler, a literature professor at UNC: The Strange Case of Governor Eyre: Race and the "Victorian Frame of Mind". Fulweiler begins, as Levy and Peart do, by claiming that the Eyre affair did reflect distinct cultural differences about race. Astonishingly, in our view, there are academics who claim that the affair was "undetermined' by attitudes towards race. Levy and Peart, who have given a paper on this topic, have made a disheartening discovery about race and racism. The view, currently, is that the past was simply a monologue of racism, from which we fortunate few have somehow emerged. Thus, Mill and Carlyle are lumped together, an indistinguishable duo: Carlyle with his pathological fixation on black bodies, Mill with his defense of the authoritarian rule that the imperial powers could extend to �barbarians.�
"Four months ago when we presented some of our research on the Dismal Science, we heard two criticisms. Two months ago at a conference where we presented different but related papers, we heard similar comments. The first was a rather simple but damning consideration�'Everyone in Victorian England was a racist, so why be particularly annoyed with Carlyle, Ruskin or anyone else's attitudes?'
Clich� liquidates history in the name of stupidity. The dispute between Mill and Carlyle on race was not the nitpicking of two blind lacemakers over the pattern of the drapes. It was a fundamental, and stirring, conflict. Mill�s letter to Carlyle, when Carlyle wrote a piece in the Fraser magazine with the disgusting title, �The N- Question� (I bowdlerize because I don�t want hits to this site based on searches for the word. It is depressing enough to get hit on for �cocksucker� and the like), is an all too little known piece of liberatory lit. Here�s the beginning of it:
�SIR,� Your last month�s number contains a speech against the �rights of Negroes,� the doctrines and spirit of which ought not to pass without remonstrance. The author issues his opinions, or rather ordinances, under imposing auspices no less than those of the �immortal gods.� �The Powers,� �the Destinies,� announce, through him, not only what will be, but what shall be done; what they �have decided upon, passed their eternal act of parliament for.� This is speaking �as one having authority;� but authority from whom l If by the quality of the message we may judge of those who sent it, not from any powers to whom just or good men acknowledge allegiance. This so-called �eternal act of parliament� is no new law, but the old law of the strongest � a law against which the great teachers of mankind have in all ages protested � it is the law of force and cunning; the law that whoever is more powerful than an other, is �born lord� of that other, the other being born his �servant,� who must be �compelled to work� for him by �beneficent whip,� if �other methods avail not.� I see nothing divine in this injunction. If �the gods� will this, it is the first duty of human beings to resist such gods. Omnipotent these �gods� are not, for powers which demand human tyranny and injustice cannot accomplish their purpose unless human beings co�perate. The history of human improvement is the record of a struggle by which inch after inch of ground has been wrung from these maleficent powers, and more and more of human life rescued from the iniquitous dominion of the law of might. Much, very much of this work still remains to do; but the progress made in it is the best and greatest achievement yet performed by mankind, and it was hardly to be expected at this period of the world that we should be enjoined, by way of a great reform in human affair, to begin undoing it.�
This clear account of the case makes even passages in Ruskin, one of the great Victorian rhetoricians, look as shabby as peeling gilt. It is, by the way, interesting how pieces of prose on this side were regarded at the time. Bagehot, one of the many sympathizers of the Confederacy in the British press, found Lincoln�s speeches and writings grotesque and ungrammatical.
Fulweiler makes a move, in his article, that would have made Levy and Peart�s essay stronger: he provides some background for the revolt. This is crucial stuff, since it seems to contravene Levy and Peart's thesis, or at least gives them something to explain. The "rebellion" occurred in the context of unemployment and the disinclination of the colonial government to protect small freeholders against the plantation party. The period succeeding emancipation saw a great increase in unemployment in Jamaica. The slave-owners, who were plantation owners, responded to the liberation of the slaves in two ways: they held onto their position in the Island as the chief generators of wealth -- they did not break out of the sugar dominated system, in other words; and they refused outlay to create infrastructure for the ex-slaves. There was no schooling, none of the supports, even of legality, that would make it possible for the ex-slaves to establish autonomous economic structures. The black and mulatto population petitioned Queen Victoria for redress. In other words, they requested the state's intervention in their economic plight. This goes unmentioned in Levy and Peart's account, but it tells us something about the kind of intellectual history they are pursuing: they are careless of the constituencies of the ideas represented by their champions. In many ways, the rebel movement is consonant with the Chartists, and the nascent union movements in England, both of which were criticized by Carlyle. The intervention petitioned for was not �free trade,� but for some security net. Of course, Levy and Peart could argue that the only way to achieve economic viability would have been through free trade � trade, for instance, with countries outside the British domain � but it is hard to see how small freeholders in Jamaica would have benefited from this.
Governor Eyre's suppression of the rebellion, which amounted to a riot in which 25 people were killed, including some white plantation owners, was to declare martial law, march militia (interestingly, composed of white, mulatto and black Maroon soldiers) into St. Thomas Parish, where the revolt was centered, and kill and whip. But what truly stirred up the intellectuals in London was what happened next:
"At the center of the ensuing storm was George William Gordon, a mulatto landowner, magistrate, member of the Assembly, and Baptist minister, who had championed the cause of the black poor, and had been an implacable enemy of Governor Eyre. Gordon had spoken several times at Bogle's church [Bogle, you will remember from the last post, was the rebel leader- LI] and had ordained him as a Deacon. Governor Eyre believed, as did many others, that Gordon was the mastermind behind the rebellion. Since Gordon was in Kingston during the disturbance, where there was no martial law, the Governor had him arrested, transported on The Wolverine to Morant Bay where he was quickly courtmartialed by junior officers and hanged on October 23 with the express approval of Governor Eyre. Although many deplored the general brutality exercised by the troops, it was the execution of Gordon which later would offer an opportunity to charge Eyre with murder."
Gordon's murder was at the heart of Mill's indignation, Carlyle's defense of Eyre, and the alliance of the evangelicals with the evolutionists. We'll discuss this in another post. Probably not the next one - indignation calls, we have other issues and tasks -- but soon.
Sunday, September 8, 2002
Dope
LI was on the horn with our friend, MB. MB mentions an article she's writing for a book on Philosophy and Race, which gets us onto the topic of philosophy and race. So LI mentioned that if the editor expanded his mandate, he ought to include the Eyre Incident. MB hadn't heard of the Eyre incident, and --- putting our cards on the table -- LI has gone many moons in complete Eyre ignorance too. We came across a reference to it in a biography of Mary Kingsley. So we explained what we knew -- that Governor Eyre, in Jamaica, brutally put down a revolt of agricultural workers there, mostly black, in the 1860s. And that he was put on trial for murder. And that the case became a sensation in England, where two different committees were formed, one pro-Eyre, one anti. The pro-Eyre committee was openly contemptuous of the idea that a white man should be prosecuted for murdering black men. Alas, Charles Dickens was on the pro-Eyre committee, as well as the ever racist Thomas Carlyle, and John Ruskin. On the side of the angels, though, was James Stuart Mills. As well as Charles Darwin.
Well, after we got off the horn, we decided to look up Governor Eyre, in order to expand our knowledge from the rather potted account we'd given MB. We were in luck. Two free market economists, David M. Levy and Sandra J. Peart, have written a marvelous, long article that centers around the affair. For Levy and Peart, the themes are clear: critics of classical economics, the prototypical descendents of Adam Smith (who are, presumably, statists and other unspeakable things) are, from the beginning, advancing a racist agenda. Racist in the modern sense of refusing to grant, to blacks, or to disfavored ethnic groups (the Irish, mainly) a status of judicial equality, and backgrounding that refusal with a theory of racial or ethnic inferiority.
Now, LI doesn't buy Levy and Peart's entire argument. For one thing, the two make the mistake of taking ideological positions of circumstance to the be equivalent of ideological positions that unfold from logical necessity. Let me explain the difference with a more modern example. Religious conservatives in this country have been in the forefront of the attack on the whole language movement. The whole language movement seeks to teach reading by memorization, and using contextual clues -- whatever that means. Religious conservatives favor phonics.
Now, does is phonics somehow logically inferred from core conservative positions? I think not. LI thinks the whole language movement is, mostly, a crock, and that writing should be learned musically -- by way of phonics. We think this partly because it has been the more successful way to teach reading. We think it provides a more reliable interface between the text as a material object and the body. We think this for any number of reasons. But none of those reasons lead us to other conservative Christian positions. We think that, given other circumstances, the conservative position could as easily be whole language learning, and the liberal position phonics.
In the same way, we think that the racist positions taken by Ruskin and Dickens -- which, in spite of Levy and Peart's efforts, seem marginal to the work of both of those writers -- aren't to be deduced from their criticism of classical economics. With Carlyle, however, it is a wholly other matter.
We'll defend this thesis, and modify it, later on.
However, Levy and Peart are right to use the Eyre dispute as a sort of litmus test to tell us a lot about the intellectual playing field in Victorian England.
Here is the pair's simple, forceful abridgement of the affair:
The Eyre Controversy
"The controversy was triggered by a seemingly trivial event in the British colony of Jamaica. A contemporary witness wrote:
On Saturday the 7th October, 1865, a court of petty sessions was held at Morant Bay. A man made a noise in the court, and was ordered to be brought before justices. He was captured by the police outside, but immediately rescued by one Paul Bogle and several other persons, who had large bludgeons in their hands, and taken into the market-square, where some one hundred and fifty more persons joined them also with sticks: the police were severely beaten. ... On Monday, the 9th, warrants were issued against Paul Bogle and twenty seven others for riot and assault on the Saturday.1 Paul Bogle lives in the lyrics to Bob Marley's"So Much Things To Say."
On Wednesday the police came to enforce the warrants. Stones were thrown at the police. Then the shooting began. The island's Governor, Edward James Eyre, took command. Eyre imposed martial law and called in the army to restore order. By the time the army was done, over 400 Jamaicans were dead, and thousands homeless. Britons were horrified by the methods of state terror, including flogging with wire whips and the use of military courts to deny civilians their rights."
To understand how history, especially if it involves English or American injustice, can be covered up, compare this account to the account in the 1911 Encyclopedia Britannica, in the entry under Eyre:
"1846 he was appointed lieutenant-governor of New Zealand, where he served under Sir George Grey. After successively governing St Vincent and Antigua, he was in 1862 appointed acting-governor of Jamaica and in 1864 governor. In Octobef~ ~865 a negro insurrection broke out and was repressed with laudable vigour, but the unquestionable severity and alleged illegality of Eyre�s subsequent proceedings raised a storm at home which induced the government to suspend him and to despatch a special commission of investigation, the effect of whose inquiries, declared by his successor, Sir John Peter Grant, to have been �admirably conducted,� was that he should not be reinstated in his office. The government, nevertheless, saw nothing in Eyre�s conduct to justify legal proceedings; indictments preferred by amateur prosecutors at home against him and military officers who had acted under his direction, resulted in failure, and he retired upon the pension of a colonial governor."
Laudable vigour -- unpack that phrase and what do you find? Flogging with wire whips and 400 deaths. Something to keep in mind as Bush uses America's "laudable vigour" as he sees fit.
The "amateur prosecutors" -- can't you hear the Tory sneer in that phrase? -- were stimulated by John Stuart Mill, in one of his greatest moments. To understand Levy and Peart's article, you have to understand the divide between Mill and Carlyle, and what it represented in England.
To be continued...
LI was on the horn with our friend, MB. MB mentions an article she's writing for a book on Philosophy and Race, which gets us onto the topic of philosophy and race. So LI mentioned that if the editor expanded his mandate, he ought to include the Eyre Incident. MB hadn't heard of the Eyre incident, and --- putting our cards on the table -- LI has gone many moons in complete Eyre ignorance too. We came across a reference to it in a biography of Mary Kingsley. So we explained what we knew -- that Governor Eyre, in Jamaica, brutally put down a revolt of agricultural workers there, mostly black, in the 1860s. And that he was put on trial for murder. And that the case became a sensation in England, where two different committees were formed, one pro-Eyre, one anti. The pro-Eyre committee was openly contemptuous of the idea that a white man should be prosecuted for murdering black men. Alas, Charles Dickens was on the pro-Eyre committee, as well as the ever racist Thomas Carlyle, and John Ruskin. On the side of the angels, though, was James Stuart Mills. As well as Charles Darwin.
Well, after we got off the horn, we decided to look up Governor Eyre, in order to expand our knowledge from the rather potted account we'd given MB. We were in luck. Two free market economists, David M. Levy and Sandra J. Peart, have written a marvelous, long article that centers around the affair. For Levy and Peart, the themes are clear: critics of classical economics, the prototypical descendents of Adam Smith (who are, presumably, statists and other unspeakable things) are, from the beginning, advancing a racist agenda. Racist in the modern sense of refusing to grant, to blacks, or to disfavored ethnic groups (the Irish, mainly) a status of judicial equality, and backgrounding that refusal with a theory of racial or ethnic inferiority.
Now, LI doesn't buy Levy and Peart's entire argument. For one thing, the two make the mistake of taking ideological positions of circumstance to the be equivalent of ideological positions that unfold from logical necessity. Let me explain the difference with a more modern example. Religious conservatives in this country have been in the forefront of the attack on the whole language movement. The whole language movement seeks to teach reading by memorization, and using contextual clues -- whatever that means. Religious conservatives favor phonics.
Now, does is phonics somehow logically inferred from core conservative positions? I think not. LI thinks the whole language movement is, mostly, a crock, and that writing should be learned musically -- by way of phonics. We think this partly because it has been the more successful way to teach reading. We think it provides a more reliable interface between the text as a material object and the body. We think this for any number of reasons. But none of those reasons lead us to other conservative Christian positions. We think that, given other circumstances, the conservative position could as easily be whole language learning, and the liberal position phonics.
In the same way, we think that the racist positions taken by Ruskin and Dickens -- which, in spite of Levy and Peart's efforts, seem marginal to the work of both of those writers -- aren't to be deduced from their criticism of classical economics. With Carlyle, however, it is a wholly other matter.
We'll defend this thesis, and modify it, later on.
However, Levy and Peart are right to use the Eyre dispute as a sort of litmus test to tell us a lot about the intellectual playing field in Victorian England.
Here is the pair's simple, forceful abridgement of the affair:
The Eyre Controversy
"The controversy was triggered by a seemingly trivial event in the British colony of Jamaica. A contemporary witness wrote:
On Saturday the 7th October, 1865, a court of petty sessions was held at Morant Bay. A man made a noise in the court, and was ordered to be brought before justices. He was captured by the police outside, but immediately rescued by one Paul Bogle and several other persons, who had large bludgeons in their hands, and taken into the market-square, where some one hundred and fifty more persons joined them also with sticks: the police were severely beaten. ... On Monday, the 9th, warrants were issued against Paul Bogle and twenty seven others for riot and assault on the Saturday.1 Paul Bogle lives in the lyrics to Bob Marley's"So Much Things To Say."
On Wednesday the police came to enforce the warrants. Stones were thrown at the police. Then the shooting began. The island's Governor, Edward James Eyre, took command. Eyre imposed martial law and called in the army to restore order. By the time the army was done, over 400 Jamaicans were dead, and thousands homeless. Britons were horrified by the methods of state terror, including flogging with wire whips and the use of military courts to deny civilians their rights."
To understand how history, especially if it involves English or American injustice, can be covered up, compare this account to the account in the 1911 Encyclopedia Britannica, in the entry under Eyre:
"1846 he was appointed lieutenant-governor of New Zealand, where he served under Sir George Grey. After successively governing St Vincent and Antigua, he was in 1862 appointed acting-governor of Jamaica and in 1864 governor. In Octobef~ ~865 a negro insurrection broke out and was repressed with laudable vigour, but the unquestionable severity and alleged illegality of Eyre�s subsequent proceedings raised a storm at home which induced the government to suspend him and to despatch a special commission of investigation, the effect of whose inquiries, declared by his successor, Sir John Peter Grant, to have been �admirably conducted,� was that he should not be reinstated in his office. The government, nevertheless, saw nothing in Eyre�s conduct to justify legal proceedings; indictments preferred by amateur prosecutors at home against him and military officers who had acted under his direction, resulted in failure, and he retired upon the pension of a colonial governor."
Laudable vigour -- unpack that phrase and what do you find? Flogging with wire whips and 400 deaths. Something to keep in mind as Bush uses America's "laudable vigour" as he sees fit.
The "amateur prosecutors" -- can't you hear the Tory sneer in that phrase? -- were stimulated by John Stuart Mill, in one of his greatest moments. To understand Levy and Peart's article, you have to understand the divide between Mill and Carlyle, and what it represented in England.
To be continued...
Thursday, September 5, 2002
Remora
The Times' David Sanger's article about Bush's first strike doctrine quotes the man on the reasons for changing, fundamentally, the principles of American foreign policy :
"Implicitly, Mr. Bush has agreed to engage the country in a discussion over a fundamental change in America's national security strategy: his doctrine that perilous times have forced the United States to assert a right to launch pre-emptive strikes against any state that could put weapons of mass destruction into the hands of terrorists.
"After Pearl Harbor and the invasion of Kuwait, presidents sought Congressional approval to strike back. Mr. Bush seeks approval to strike first, because Sept. 11 taught him that any other strategy may be too costly. "We're in a new era," he said, adding: "We spend a lot of time thinking about how best to secure our homeland even further. And this is the debate the American people must hear, must understand. And the world must understand as well that its credibility is at stake."
Ah, the credibility of the world is at stake, here. As opposed, one wonders, to the other planets? Perhaps Bush is hinting that, if he doesn't get his war, like that guy from N'Sync, he's going to apply to be a cosmonaut, and leave this world in a huff. Let Dick Cheney get it back in order. Let Laura deal with the reporters.
Well, of course, Bush's nonsense will be made into solemn sense by the commentariat, which exists to preform the invaluable service of making this brain-dead lightweight seem something more than the cartoon figure he, in actuality, is.
Meanwhile, let's talk about the suddenly grave problem of Iraq's weapons of mass destruction, LI has already posted a long, meandering account of Iraqi-US relations. While researching that post, we came across a reference to Bruce Jentleson's book, With Friends Like These: Reagan, Bush and Saddam, 1982-1990. The book is about an earlier phase of American Foreign Policy. In this phase, we definitely liked the idea of Iraq's weapons of mass destruction. We ought to have: we sold him the parts.
Jentleson provides two lists of "dual-use" items that Iraq (using credit supplied by the ever willing Export Import bank) purchased in the Reagan years, and in the Bush years -- before Saddam became the next Hitler. Here is the list from the Reagan years:
- Precision machine tools for 'general military use"
-a hybrid digital analog computer for 'materials research,' comparable to the one then in use at White Sands missile test range
-computers and other equipment for the 'Arab Company for Detergent Chemicals', a front for the production of chemical weapons
-numerous items for the Iraqi Atomic Energy Commission
-bacterial and fungus cultures for 'research purposes'
- quartz crystals and frequency synthesizers
-high speed oscilloscopes, used for missile guidance
-fuel air explosive technology.
Hmm, does this sound like the shopping list of a harmless old lady? Actually, it sounds like fattening up a man who is engaged in a war with the means of mass destruction -- which, in fact, it was.
The years roll by. Pastoral scenes, etc. The glorious Reagan years, remember how we all made money, broke the wicked unions, and defeated the Soviets? And those chemicals, which came not just from the U.S. but from all over the helpful West, and those bacterial cultures -- well, they got put to various brilliant uses. In 1988, the Kurds got a sound whacking with chemical weapons, as well as simple mass deportation and massacre. The U.S. senate voted, unanimously, to put sanctions on Iraq. An idea that was vetoed by our man Reagan, who was definitely seconded in this by his V.P., who saw economic opportunity on the horizon with Iraq.
(As in all things Cold War, there's an odd Alice in Wonderland aspect that keeps intruding into history: where once it was Reaganites who opposed sanctions, it is now Leftists who oppose them. It sometimes seems like a game of musical chairs).
Well, the Iraq-Iran war ground, like a meatgrinder all too full of flesh, to a halt.
One would think that now there's less toss the rabid dog meat chunks. But no! Remember, under Bush I the mission was originally to talk nice and make friends. So in the pre-Gulf War period, the White House was more than willing to see goods and services transferred to Iraq and, even, to the Sa'ad 16 weapons research complex. Here's the list from those years:
-- equipment for the inevitable Arab Company for Detergent Chemicals (it cleans! it makes whiter and brighter! it kills Kurds!)
-bacteria samples to the Iraqi Atomic Energy Commission and University of Baghdad
-nine high powered supply units for the steel industry that were diverted to the making of weapons grade uranium
-vacuum pump oil, later found by weapons inspectors to have been used to facilitate the corrosion preventing pumps used to keep uranium moving in the enrichment process
-communications and tracking equipment
-compasses, gyroscopes and accelerometers for the Iraqi air force
-helicopter guidance and fight equipment
-computers for the Iraqi navy
-command and control equipment for the Iraqi ministry of defense
Etc.
Now, there are readers who will say, what does this past history have to do with the current situation?
There are two answers to that.
One is, what is the moral background of the current US claim against Iraq? In other words, how has the US acted in that area before? If there is a pattern of promises and betrayals, if there is collaboration with military dictators followed by hostility to these same dictators followed by collaboration with succeeding dictators --well, that is a suspicious pattern. Patterns in the past are not to be discounted as predictors for patterns in the future. If an alcoholic swears off drinking on Monday, there's every reason to suspect you will find him drunk on Friday. If the U.S. has supported arming a nation that was visibly ruled by a military tyrant with regional ambitions on Monday, there's reason to suspect that it will be doing the same thing on Friday. Saddam Hussein or our current buddy, General Pervez Musharraf in Pakistan, are the same story. In Hussein's case, during the Reagan years the FPE (foreign policy establishment) was wont to produce canards like this one, one of Jentleson's more delicious quotes: "it is probably not just idle chatter when Iraqi officials express a hope that the end of the war [between Iraq and Iran] will bring more democracy affirming that Saddam Hussein is 'much concerned about democracy.'" As indeed he was -- he was concerned to torture to death anyone who suggested it. However, you have merely to transpose the word Iraq for Pakistan, or Afghanistan, to get similar stuff which floats around in the newspapers today. When the reality principle kicks in -- say, that Pervez' recent usurpation of power for the foreseeable future in Pakistan, regardless of elections -- and it becomes all too obvious what is happening, there is a switch in the American mind that simply turns to off. We forget what the struggle was all about. That switch, for instance, that makes Americans extremely incurious about the government of Kuwait, on whose rescue we expended 70 billion dollars a decade ago.
It is essentially the tabloid mindset. Does anyone remember Burt Reynolds divorce troubles? Does anyone remember Paula Jones? We pick up the dolls, we toss aside the dolls.
There is another reason, however, to look at the past. Bush's policy makers were intimately involved in crafting previous policy about Iraq, and the Middle East in general.
To be fair, this is also true of his Republican critics. But we should ask about the track records of people who are suddenly sensitive like the most liberal guys about the aches and pains of the oppressed Iraqi people. Why this sudden sensitivity?
Well, even if we grant LI's case weighing the moral reasons for a 'regime change' in Iraq against the suspicion that the structure of governance will not change by way of American intervention, if we maintain that we have every reason to believe that a post-Saddam Iraq will be ruled, with American connivance, by another bloody dictator -- even if we grant this, there still might be an American interest in going to war with Iraq. American interests aren't necessarily moral. Every war is not a crusade or a jihad, although of course, in talking up war, the powers that be have to make it seem like a crusade or a jihad. We'll discuss this at another time.
The Times' David Sanger's article about Bush's first strike doctrine quotes the man on the reasons for changing, fundamentally, the principles of American foreign policy :
"Implicitly, Mr. Bush has agreed to engage the country in a discussion over a fundamental change in America's national security strategy: his doctrine that perilous times have forced the United States to assert a right to launch pre-emptive strikes against any state that could put weapons of mass destruction into the hands of terrorists.
"After Pearl Harbor and the invasion of Kuwait, presidents sought Congressional approval to strike back. Mr. Bush seeks approval to strike first, because Sept. 11 taught him that any other strategy may be too costly. "We're in a new era," he said, adding: "We spend a lot of time thinking about how best to secure our homeland even further. And this is the debate the American people must hear, must understand. And the world must understand as well that its credibility is at stake."
Ah, the credibility of the world is at stake, here. As opposed, one wonders, to the other planets? Perhaps Bush is hinting that, if he doesn't get his war, like that guy from N'Sync, he's going to apply to be a cosmonaut, and leave this world in a huff. Let Dick Cheney get it back in order. Let Laura deal with the reporters.
Well, of course, Bush's nonsense will be made into solemn sense by the commentariat, which exists to preform the invaluable service of making this brain-dead lightweight seem something more than the cartoon figure he, in actuality, is.
Meanwhile, let's talk about the suddenly grave problem of Iraq's weapons of mass destruction, LI has already posted a long, meandering account of Iraqi-US relations. While researching that post, we came across a reference to Bruce Jentleson's book, With Friends Like These: Reagan, Bush and Saddam, 1982-1990. The book is about an earlier phase of American Foreign Policy. In this phase, we definitely liked the idea of Iraq's weapons of mass destruction. We ought to have: we sold him the parts.
Jentleson provides two lists of "dual-use" items that Iraq (using credit supplied by the ever willing Export Import bank) purchased in the Reagan years, and in the Bush years -- before Saddam became the next Hitler. Here is the list from the Reagan years:
- Precision machine tools for 'general military use"
-a hybrid digital analog computer for 'materials research,' comparable to the one then in use at White Sands missile test range
-computers and other equipment for the 'Arab Company for Detergent Chemicals', a front for the production of chemical weapons
-numerous items for the Iraqi Atomic Energy Commission
-bacterial and fungus cultures for 'research purposes'
- quartz crystals and frequency synthesizers
-high speed oscilloscopes, used for missile guidance
-fuel air explosive technology.
Hmm, does this sound like the shopping list of a harmless old lady? Actually, it sounds like fattening up a man who is engaged in a war with the means of mass destruction -- which, in fact, it was.
The years roll by. Pastoral scenes, etc. The glorious Reagan years, remember how we all made money, broke the wicked unions, and defeated the Soviets? And those chemicals, which came not just from the U.S. but from all over the helpful West, and those bacterial cultures -- well, they got put to various brilliant uses. In 1988, the Kurds got a sound whacking with chemical weapons, as well as simple mass deportation and massacre. The U.S. senate voted, unanimously, to put sanctions on Iraq. An idea that was vetoed by our man Reagan, who was definitely seconded in this by his V.P., who saw economic opportunity on the horizon with Iraq.
(As in all things Cold War, there's an odd Alice in Wonderland aspect that keeps intruding into history: where once it was Reaganites who opposed sanctions, it is now Leftists who oppose them. It sometimes seems like a game of musical chairs).
Well, the Iraq-Iran war ground, like a meatgrinder all too full of flesh, to a halt.
One would think that now there's less toss the rabid dog meat chunks. But no! Remember, under Bush I the mission was originally to talk nice and make friends. So in the pre-Gulf War period, the White House was more than willing to see goods and services transferred to Iraq and, even, to the Sa'ad 16 weapons research complex. Here's the list from those years:
-- equipment for the inevitable Arab Company for Detergent Chemicals (it cleans! it makes whiter and brighter! it kills Kurds!)
-bacteria samples to the Iraqi Atomic Energy Commission and University of Baghdad
-nine high powered supply units for the steel industry that were diverted to the making of weapons grade uranium
-vacuum pump oil, later found by weapons inspectors to have been used to facilitate the corrosion preventing pumps used to keep uranium moving in the enrichment process
-communications and tracking equipment
-compasses, gyroscopes and accelerometers for the Iraqi air force
-helicopter guidance and fight equipment
-computers for the Iraqi navy
-command and control equipment for the Iraqi ministry of defense
Etc.
Now, there are readers who will say, what does this past history have to do with the current situation?
There are two answers to that.
One is, what is the moral background of the current US claim against Iraq? In other words, how has the US acted in that area before? If there is a pattern of promises and betrayals, if there is collaboration with military dictators followed by hostility to these same dictators followed by collaboration with succeeding dictators --well, that is a suspicious pattern. Patterns in the past are not to be discounted as predictors for patterns in the future. If an alcoholic swears off drinking on Monday, there's every reason to suspect you will find him drunk on Friday. If the U.S. has supported arming a nation that was visibly ruled by a military tyrant with regional ambitions on Monday, there's reason to suspect that it will be doing the same thing on Friday. Saddam Hussein or our current buddy, General Pervez Musharraf in Pakistan, are the same story. In Hussein's case, during the Reagan years the FPE (foreign policy establishment) was wont to produce canards like this one, one of Jentleson's more delicious quotes: "it is probably not just idle chatter when Iraqi officials express a hope that the end of the war [between Iraq and Iran] will bring more democracy affirming that Saddam Hussein is 'much concerned about democracy.'" As indeed he was -- he was concerned to torture to death anyone who suggested it. However, you have merely to transpose the word Iraq for Pakistan, or Afghanistan, to get similar stuff which floats around in the newspapers today. When the reality principle kicks in -- say, that Pervez' recent usurpation of power for the foreseeable future in Pakistan, regardless of elections -- and it becomes all too obvious what is happening, there is a switch in the American mind that simply turns to off. We forget what the struggle was all about. That switch, for instance, that makes Americans extremely incurious about the government of Kuwait, on whose rescue we expended 70 billion dollars a decade ago.
It is essentially the tabloid mindset. Does anyone remember Burt Reynolds divorce troubles? Does anyone remember Paula Jones? We pick up the dolls, we toss aside the dolls.
There is another reason, however, to look at the past. Bush's policy makers were intimately involved in crafting previous policy about Iraq, and the Middle East in general.
To be fair, this is also true of his Republican critics. But we should ask about the track records of people who are suddenly sensitive like the most liberal guys about the aches and pains of the oppressed Iraqi people. Why this sudden sensitivity?
Well, even if we grant LI's case weighing the moral reasons for a 'regime change' in Iraq against the suspicion that the structure of governance will not change by way of American intervention, if we maintain that we have every reason to believe that a post-Saddam Iraq will be ruled, with American connivance, by another bloody dictator -- even if we grant this, there still might be an American interest in going to war with Iraq. American interests aren't necessarily moral. Every war is not a crusade or a jihad, although of course, in talking up war, the powers that be have to make it seem like a crusade or a jihad. We'll discuss this at another time.
Monday, September 2, 2002
Dope
LI was in a restaurant last night with two friends. Over the fajitas, we started talking about Iraq, and the coming war to ensure infinite freedom and Bush's re-election -- or should we say first election? Since the thing that got him into office was definitely something between an election and a judicial coup. In any case, this is not a good subject to spring on LI spontaneously, because we get all red in the face, and start splashing the margaritas and gesticulating wildly.
What got us red in the face this time, though, was that one of these friends said that she'd been told that Iraq was armed by the Soviets. This version of Hussein's armory would make invading Iraq a sort of delayed clean-up operation of one of the peripheral bits of the Evil Empire.
Of course, LI launched into a long monologue that hastily reviewed the history of Iraq, going back to the Iraqi launch of an offense against Iran, in 1980. Long monologues, by the way, are not rhetorically effective. By the listener, these are often called harangues, shooting off at the mouth, hogging the spotlight, or yak yak yak. Hitler, by all accounts, was a very boring dinner companion precisely because he would launch a long monologue, aka yak yak yak, at the drop of a hat. His dinner companions, however, never complained, on the principle that criticizing a murderous dictator is even worse for your health than smoking a pack of cigarrettes a day. LI hopes that, in almost all ways, we are a better person than Hitler; but we do concede, when pressed, a somehwat lesser world historical importance... Maybe this is why our friends, at this dinner table, made fun of us, called us gabby, used the zip phrase from Austin Powers, and in other ways signified a desire to change the subject. Another problem is our grasp of fact is, as is often the case in these kind of conversations, subject to our indignation -- which entails a fatal habit of fillng in, with our own imagination, those inconvenient facts and themes that aren't quite at our fingertips. It is the intellectual equivalent of an asthma attack -- we know we are right, but in the heat of the moment we gasp for the air of memory, searching for info in our brain that has been disconnected or is no longer in service.
So, as is the case with all good keepers of weblogs, we went home and looked things up manically on the web. Here, as a public service, is a cooler outline of the Iraqi arming. The BBC outline goes back to the twenties, and on this topic goes something like this:
1980 1 April - The pro-Iranian Da'wah Party claims responsibility for an attack on Deputy Prime Minister, Tariq Aziz, at Mustansiriyah University, Baghdad.
1980 4 September - Iran shells Iraqi border towns (Iraq considers this as the start of the Iran/Iraq war).
1980 17 September - Iraq abrogates the 1975 treaty with Iran.
1980 22 September - Iraq attacks Iranian air bases.
1980 23 September - Iran bombs Iraqi military and economic targets.
1981 7 June - Israel attacks an Iraqi nuclear research centre at Tuwaythah near Baghdad
While LI is not going to go too far back, we should mention one of those nagging problems that seem to crop up when the American and British press report on Iraq. There seems to be the damndest problem with completeness. Omissions seem to flower of themselves. For instance, the BBC outline completely skips the first "successful" bombing campaign in world history, surely one of the high water points of civilization. It was mounted by the British against rebellious Arab groups in Iraq in the twenties. Here's a quote from the Financial TImes review of Patrick and Andrew Cockburn's excellent book, Out of the Ashes:
"The Cockburns' sketch of the past finds eerie echoes in the present. The colonial power withdrew its ground troops and tried to bomb Iraqis into submission. The British used poison gas on the fractious Kurds and then unleashed Arthur "Bomber" Harris, the architect of the air offensiveagainst Germany two decades later. The Arabs and the Kurds, Harris averred in 1924, "now know what real bombing means . . . they know that within 45 min-utes a full-sized village can be practically wiped out anda third of its inhabitants killed or injured."
Recently, however, this kind of history has been verboten. Since 9/11, it is generally accepted that the West has done only good things in the world. We are the Welcome Wagon Lady of History. If the West has made a mistake, a little thing, you know -- starving a native people, bombing third world wogs, or the like -- well, there's no use DWELLING on it. As we know, the official line now is: the only crimes committed by the West in the past 100 years were committed by the demented Nazis.
Well, that's a diversion from the main topic, right? So, let's get into it.
1. In 1980, Iraq, led by the Soviet backed Ba'athist regime, under Saddam Hussein, invades Iran. Good time to stage that particular act of aggression, given that Iran is pretty isolated. Outside of Iraq, the question of who initiated the war is, by the way, beyond dispute. What was the international community's response to this war? It was a dance that extended over several years, and did not exactly fall into place the way Cold War dualism would seemingly dictate.
First, the Soviet Union stopped arms shipments to Iraq, according to Stephen Shalom. Shalom, who is writing for the lefty mag, Z, might be a suspect source, except that he is quoting from a Hoover Institute analyst -- and let's just say the Hoover Institute has Coulterish views about the left:
"When the war first broke out, the Soviet Union turned back its arms ships en route to Iraq, and for the next year and a half, while Iraq was on the offensive, Moscow did not provide weapons to Baghdad.<30> In March 1981, the Iraqi Communist Party, repressed by Saddam Hussein, beamed broadcasts from the Soviet Union calling for an end to the war and the withdrawal of Iraqi troops."
In the first step of the dance, Iraq mis-stepped, basically.
2. However, the Soviets soon grew disenchanted, for obvious reasons, with Iran -- which was rapidly proving, body by body, televised confession by televised confession, not to be a soviet friendly country. Khomeini hadn't heard of liberation theology, and wasn't about to let some khafir goody goody doctrine about crossing Marx and Jesus be some stupid model for liberation Islam. So the Soviets, beginning in 1981, did supply Saddam Hussein with a great deal of weaponry, including scud missiles.
3. But who knew that detente would grow in such far flung niches? When those scud missiles started raining down on Teheran in 1988, it was due to the synergy of German tech and old fashioned Soviet rocketry. Yes, a weapons system from one Bloc got hotwired by technicians and equipment from another Bloc. Who said we couldn't all just get along?
On the principle that the enemy of my enemy is, etc., the Reagan administration tried to covertly woo the Iranians -- as we all know, or at least those of us who were intellectually alert in the eighties. Iran-Contra, remember? The cake, the bible, the package brought by eager beaver Reagan-ite Bud McFarland to the Teheran airport. The carrot, in other words. But since carrots are best tasted when some whacking big stick is poised to hit you on the crown if you don't make like Bugs Bunny, the Reaganites decided, in 1982, to play the Iraq card. This was simple: it was a matter of removing Iraq from the list of Terrorist Nations. That greased the wheels for what became a huge arming effort, propping up a regime that was seen, at least by our Middle Eastern allies (Kuwait and Saudi Arabia, to name the usual suspects) as an essential bulwark against chaos.
4. This is where the year by year breaks down. What do we know? Well, we still don't know the exact figures, who sold what to who, and who leveraged the deals. 43 billion dollars were fed into the arms network worldwide by S. Hussein, as crazy as a a gold-digger with her deathbed sugar daddy's credit card. This included chemicals for "fertilizer" from the U.S. Ah, ironically, the chemicals were used to make fertilizer, insofar as the corpse, in form of dead Kurds and Iranians fertilized the streets of Birjinni and the battle fields of Halapja. This was old time religion, here. The same principle that applied to Injuns in the ha ha Wild West days (as in the only good one is a dead one) applied at that time to Iranians. That's what they get for being axis of Evil. For a little article about the consequences of the Iraq's systematic use of chemical weapons on the battlefield, click here. Or check out this recent Guardian piece by Dilip Hiro. Hiro is a Middle East veteran, and writes not only for the lefty Guardian, but for the right-wing Washington Report on Middle Eastern Affairs too.
"As Iraq's use of poison gases in war and in peace was public knowledge, the question arises: what did the United States administration do about it then [in 1988]? Absolutely nothing. Indeed, so powerful was the grip of the pro-Baghdad lobby on the administration of Republican President Ronald Reagan that it got the White House to foil the Senate's attempt to penalise Iraq for its violation of the Geneva Protocol on Chemical Weapons to which it was a signatory. This made Saddam believe that the US was his firm ally - a deduction that paved the way for his brutal invasion and occupation of Kuwait and the 1991 Gulf war, the outcomes of which have not yet fully played themselves out."
Two further grafs in the story definitely take us back to the bad old days of the eighties.
"Between October 1983 and the autumn of 1988, Baghdad deployed 100,000 munitions, containing mainly mustard gas, which produces blisters on the skin and inside the lungs, and nerve gas, which damages the nervous system, but also cyanide gas, which kills instantly. From initially using these lethal agents in extremis to repulse Iran's offensives, the Iraqis proceeded to use them as a key factor in their assaults in the spring and summer of 1988 to regain their lost territories, including the strategic Fao peninsula. That the Pentagon had first-hand knowledge of Iraq's use of chemical agents during these offensives was confirmed by the New York Times two weeks ago.
'After the Iraqi army, with American planning assistance, retook the Fao peninsula, a Defense Intelligence Agency officer, Lt Col Rick Francona, now retired, was sent to tour the battlefield with Iraqi officers,' wrote Patrick Tyler of the Times. 'Francona saw zones marked off for chemical contamination, and containers for the drug atropine scattered around, indicating that Iraqi soldiers had taken injections to protect themselves from the effects of gas that might blow back over their positions.'
Well, between knowledge of its use and collaboration in its use, there seems to be a gap. There really isn't. The arms bazaar is a nexus of state and private interests, and the interlock is pretty tight. When the US wants a country armed, you don't always have to go through Congress to get authorization -- especially if the country in question has beaucoup oil wealth, as Iraq did. So you lift restrictions on the transfer of certain chemicals. And the private sector obliges.
Ah, dinner table conversation -- it is the mother of posts! I could have gone on (and on...), but the main points we should take away from this history lesson are:
1. American interest in the Middle East has not been about good and evil -- it has been about American interest.
2. That interest is defined partly by the changing perspectives and constituencies in the Foreign Policy elite. That elite isn't monolithic, but it is not motivated, ultimately, by Wilsonian ideals of a democratic New World Order. Nor is it repulsed by the most barbaric slaughters, or uses of the 'weapons of mass destruction," as long as the body counts consist of the right people.
3. There's no evidence this has changed. If the US gets its war on Iraq, one good thing -- from the standpoint of the aforesaid Wilsonian ideals of democracy -- will result -- the downfall of Saddam Hussein. But one bad thing will almost inevitably happen too -- the collapse of the Kurdish semi-states in Northern Iraq. Furthermore, the U.S has depended on military strongmen to maintain states in the Middle East, except for Israel (and Sharon looks more and more like an Assad figure than a Jeffersonian democrat). Do they have any incentive not to do that in the future? No. For evidence, one merely has to cast a glance at Pakistan to see how the Bush doctrine works. It works by shutting its eyes quite firmly to coup d'etats mounted by our guys.
4. Iraq looks like it is at an end, as a state. Totalitarian methods will provoke state split ups -- see the former U.S.S.R. To prevent this, expect the US to promote, actively, a military regime that engages in low grade repression (nothing so messy as gassing Kurds). But look for that strategy to fail. At least, LI is optimistic that it will. And look for panic to ensue among the Arab states that are our allies.
LI was in a restaurant last night with two friends. Over the fajitas, we started talking about Iraq, and the coming war to ensure infinite freedom and Bush's re-election -- or should we say first election? Since the thing that got him into office was definitely something between an election and a judicial coup. In any case, this is not a good subject to spring on LI spontaneously, because we get all red in the face, and start splashing the margaritas and gesticulating wildly.
What got us red in the face this time, though, was that one of these friends said that she'd been told that Iraq was armed by the Soviets. This version of Hussein's armory would make invading Iraq a sort of delayed clean-up operation of one of the peripheral bits of the Evil Empire.
Of course, LI launched into a long monologue that hastily reviewed the history of Iraq, going back to the Iraqi launch of an offense against Iran, in 1980. Long monologues, by the way, are not rhetorically effective. By the listener, these are often called harangues, shooting off at the mouth, hogging the spotlight, or yak yak yak. Hitler, by all accounts, was a very boring dinner companion precisely because he would launch a long monologue, aka yak yak yak, at the drop of a hat. His dinner companions, however, never complained, on the principle that criticizing a murderous dictator is even worse for your health than smoking a pack of cigarrettes a day. LI hopes that, in almost all ways, we are a better person than Hitler; but we do concede, when pressed, a somehwat lesser world historical importance... Maybe this is why our friends, at this dinner table, made fun of us, called us gabby, used the zip phrase from Austin Powers, and in other ways signified a desire to change the subject. Another problem is our grasp of fact is, as is often the case in these kind of conversations, subject to our indignation -- which entails a fatal habit of fillng in, with our own imagination, those inconvenient facts and themes that aren't quite at our fingertips. It is the intellectual equivalent of an asthma attack -- we know we are right, but in the heat of the moment we gasp for the air of memory, searching for info in our brain that has been disconnected or is no longer in service.
So, as is the case with all good keepers of weblogs, we went home and looked things up manically on the web. Here, as a public service, is a cooler outline of the Iraqi arming. The BBC outline goes back to the twenties, and on this topic goes something like this:
1980 1 April - The pro-Iranian Da'wah Party claims responsibility for an attack on Deputy Prime Minister, Tariq Aziz, at Mustansiriyah University, Baghdad.
1980 4 September - Iran shells Iraqi border towns (Iraq considers this as the start of the Iran/Iraq war).
1980 17 September - Iraq abrogates the 1975 treaty with Iran.
1980 22 September - Iraq attacks Iranian air bases.
1980 23 September - Iran bombs Iraqi military and economic targets.
1981 7 June - Israel attacks an Iraqi nuclear research centre at Tuwaythah near Baghdad
While LI is not going to go too far back, we should mention one of those nagging problems that seem to crop up when the American and British press report on Iraq. There seems to be the damndest problem with completeness. Omissions seem to flower of themselves. For instance, the BBC outline completely skips the first "successful" bombing campaign in world history, surely one of the high water points of civilization. It was mounted by the British against rebellious Arab groups in Iraq in the twenties. Here's a quote from the Financial TImes review of Patrick and Andrew Cockburn's excellent book, Out of the Ashes:
"The Cockburns' sketch of the past finds eerie echoes in the present. The colonial power withdrew its ground troops and tried to bomb Iraqis into submission. The British used poison gas on the fractious Kurds and then unleashed Arthur "Bomber" Harris, the architect of the air offensiveagainst Germany two decades later. The Arabs and the Kurds, Harris averred in 1924, "now know what real bombing means . . . they know that within 45 min-utes a full-sized village can be practically wiped out anda third of its inhabitants killed or injured."
Recently, however, this kind of history has been verboten. Since 9/11, it is generally accepted that the West has done only good things in the world. We are the Welcome Wagon Lady of History. If the West has made a mistake, a little thing, you know -- starving a native people, bombing third world wogs, or the like -- well, there's no use DWELLING on it. As we know, the official line now is: the only crimes committed by the West in the past 100 years were committed by the demented Nazis.
Well, that's a diversion from the main topic, right? So, let's get into it.
1. In 1980, Iraq, led by the Soviet backed Ba'athist regime, under Saddam Hussein, invades Iran. Good time to stage that particular act of aggression, given that Iran is pretty isolated. Outside of Iraq, the question of who initiated the war is, by the way, beyond dispute. What was the international community's response to this war? It was a dance that extended over several years, and did not exactly fall into place the way Cold War dualism would seemingly dictate.
First, the Soviet Union stopped arms shipments to Iraq, according to Stephen Shalom. Shalom, who is writing for the lefty mag, Z, might be a suspect source, except that he is quoting from a Hoover Institute analyst -- and let's just say the Hoover Institute has Coulterish views about the left:
"When the war first broke out, the Soviet Union turned back its arms ships en route to Iraq, and for the next year and a half, while Iraq was on the offensive, Moscow did not provide weapons to Baghdad.<30> In March 1981, the Iraqi Communist Party, repressed by Saddam Hussein, beamed broadcasts from the Soviet Union calling for an end to the war and the withdrawal of Iraqi troops."
In the first step of the dance, Iraq mis-stepped, basically.
2. However, the Soviets soon grew disenchanted, for obvious reasons, with Iran -- which was rapidly proving, body by body, televised confession by televised confession, not to be a soviet friendly country. Khomeini hadn't heard of liberation theology, and wasn't about to let some khafir goody goody doctrine about crossing Marx and Jesus be some stupid model for liberation Islam. So the Soviets, beginning in 1981, did supply Saddam Hussein with a great deal of weaponry, including scud missiles.
3. But who knew that detente would grow in such far flung niches? When those scud missiles started raining down on Teheran in 1988, it was due to the synergy of German tech and old fashioned Soviet rocketry. Yes, a weapons system from one Bloc got hotwired by technicians and equipment from another Bloc. Who said we couldn't all just get along?
On the principle that the enemy of my enemy is, etc., the Reagan administration tried to covertly woo the Iranians -- as we all know, or at least those of us who were intellectually alert in the eighties. Iran-Contra, remember? The cake, the bible, the package brought by eager beaver Reagan-ite Bud McFarland to the Teheran airport. The carrot, in other words. But since carrots are best tasted when some whacking big stick is poised to hit you on the crown if you don't make like Bugs Bunny, the Reaganites decided, in 1982, to play the Iraq card. This was simple: it was a matter of removing Iraq from the list of Terrorist Nations. That greased the wheels for what became a huge arming effort, propping up a regime that was seen, at least by our Middle Eastern allies (Kuwait and Saudi Arabia, to name the usual suspects) as an essential bulwark against chaos.
4. This is where the year by year breaks down. What do we know? Well, we still don't know the exact figures, who sold what to who, and who leveraged the deals. 43 billion dollars were fed into the arms network worldwide by S. Hussein, as crazy as a a gold-digger with her deathbed sugar daddy's credit card. This included chemicals for "fertilizer" from the U.S. Ah, ironically, the chemicals were used to make fertilizer, insofar as the corpse, in form of dead Kurds and Iranians fertilized the streets of Birjinni and the battle fields of Halapja. This was old time religion, here. The same principle that applied to Injuns in the ha ha Wild West days (as in the only good one is a dead one) applied at that time to Iranians. That's what they get for being axis of Evil. For a little article about the consequences of the Iraq's systematic use of chemical weapons on the battlefield, click here. Or check out this recent Guardian piece by Dilip Hiro. Hiro is a Middle East veteran, and writes not only for the lefty Guardian, but for the right-wing Washington Report on Middle Eastern Affairs too.
"As Iraq's use of poison gases in war and in peace was public knowledge, the question arises: what did the United States administration do about it then [in 1988]? Absolutely nothing. Indeed, so powerful was the grip of the pro-Baghdad lobby on the administration of Republican President Ronald Reagan that it got the White House to foil the Senate's attempt to penalise Iraq for its violation of the Geneva Protocol on Chemical Weapons to which it was a signatory. This made Saddam believe that the US was his firm ally - a deduction that paved the way for his brutal invasion and occupation of Kuwait and the 1991 Gulf war, the outcomes of which have not yet fully played themselves out."
Two further grafs in the story definitely take us back to the bad old days of the eighties.
"Between October 1983 and the autumn of 1988, Baghdad deployed 100,000 munitions, containing mainly mustard gas, which produces blisters on the skin and inside the lungs, and nerve gas, which damages the nervous system, but also cyanide gas, which kills instantly. From initially using these lethal agents in extremis to repulse Iran's offensives, the Iraqis proceeded to use them as a key factor in their assaults in the spring and summer of 1988 to regain their lost territories, including the strategic Fao peninsula. That the Pentagon had first-hand knowledge of Iraq's use of chemical agents during these offensives was confirmed by the New York Times two weeks ago.
'After the Iraqi army, with American planning assistance, retook the Fao peninsula, a Defense Intelligence Agency officer, Lt Col Rick Francona, now retired, was sent to tour the battlefield with Iraqi officers,' wrote Patrick Tyler of the Times. 'Francona saw zones marked off for chemical contamination, and containers for the drug atropine scattered around, indicating that Iraqi soldiers had taken injections to protect themselves from the effects of gas that might blow back over their positions.'
Well, between knowledge of its use and collaboration in its use, there seems to be a gap. There really isn't. The arms bazaar is a nexus of state and private interests, and the interlock is pretty tight. When the US wants a country armed, you don't always have to go through Congress to get authorization -- especially if the country in question has beaucoup oil wealth, as Iraq did. So you lift restrictions on the transfer of certain chemicals. And the private sector obliges.
Ah, dinner table conversation -- it is the mother of posts! I could have gone on (and on...), but the main points we should take away from this history lesson are:
1. American interest in the Middle East has not been about good and evil -- it has been about American interest.
2. That interest is defined partly by the changing perspectives and constituencies in the Foreign Policy elite. That elite isn't monolithic, but it is not motivated, ultimately, by Wilsonian ideals of a democratic New World Order. Nor is it repulsed by the most barbaric slaughters, or uses of the 'weapons of mass destruction," as long as the body counts consist of the right people.
3. There's no evidence this has changed. If the US gets its war on Iraq, one good thing -- from the standpoint of the aforesaid Wilsonian ideals of democracy -- will result -- the downfall of Saddam Hussein. But one bad thing will almost inevitably happen too -- the collapse of the Kurdish semi-states in Northern Iraq. Furthermore, the U.S has depended on military strongmen to maintain states in the Middle East, except for Israel (and Sharon looks more and more like an Assad figure than a Jeffersonian democrat). Do they have any incentive not to do that in the future? No. For evidence, one merely has to cast a glance at Pakistan to see how the Bush doctrine works. It works by shutting its eyes quite firmly to coup d'etats mounted by our guys.
4. Iraq looks like it is at an end, as a state. Totalitarian methods will provoke state split ups -- see the former U.S.S.R. To prevent this, expect the US to promote, actively, a military regime that engages in low grade repression (nothing so messy as gassing Kurds). But look for that strategy to fail. At least, LI is optimistic that it will. And look for panic to ensue among the Arab states that are our allies.
Sunday, September 1, 2002
Remora
LI recommends this article in the Sunday Times:
A Guardian of Jobs or a "Reverse Robin Hood"? by Leslie Wayne
Since the question of bias in the press has been a hot button issue (which is one of those pundit phrases that make less and less sense as they are repeated more and more -- what, exactly, is a hot button? Rather, the issue has become a diacritical button issue -- like the period key, or the comma key, it has become a sustaining, semantic blank, functioning to convey an ideological payload hither and yon, to much yapping from the examiners of yap, aka media critics), it should be pointed out that bias, without which that title would make no sense, given its tilt towards the irresistable phrase, reverse Robin Hood, is inseparable from analysis, here.
Anyway, the analysis is on point. While much fuss and tossing of teathers went into forcing CEOs to sign off on their balance sheets, the Export-Import bank was quietly expanded. The article focuses on just what the Ex-Imlax Bank does. In the past, we dilated about another ridiculous tool of government finance: OPIC. The Ex-Lax is bigger, and more pernicious. Here's a graf:
"More fundamentally, there are questions about why the bank exists at all. Less than 1 percent of all American exports receive Export-Import financing, which comes in the form of direct loans, loan guarantees or export credit insurance. The bulk of Export-Import's benefits go to a small number of large companies that are sophisticated enough to get financing on their own: Boeing, Halliburton, General Electric, Northrop Grumman, Lucent Technologies, ChevronTexaco, Caterpillar and Dell Computer, among others."
More sickening stuff:
"Commercial banks, meanwhile, love Export-Import loan guarantees because they turn corporate loans for business in risky places into risk-free loans. If a corporate borrower halts payments on an Export-Import backed loan, the federal government must step in and pay it off. The bank claims a default rate of less than 2 percent.American exporters love it even more. With an Export-Import loan guarantee, they can borrow money from banks at lower rates and more favorable terms than usual. And if they get into a jam overseas, the Export-Import bank can be a powerful ally. "You've got the full weight of our U.S. embassy, our ambassador, the Treasury Department here and overseas, the State Department, all coming in," said Mr. Rice at the export coalition.
On the other hand, small businesses, which often need the help more than large companies, get short shrift from the bank, despite Congressional pressure to change that practice. Only 18 percent of the bank's financing last year went to small business, down from 21 percent in 1998."
LI recommends this article in the Sunday Times:
A Guardian of Jobs or a "Reverse Robin Hood"? by Leslie Wayne
Since the question of bias in the press has been a hot button issue (which is one of those pundit phrases that make less and less sense as they are repeated more and more -- what, exactly, is a hot button? Rather, the issue has become a diacritical button issue -- like the period key, or the comma key, it has become a sustaining, semantic blank, functioning to convey an ideological payload hither and yon, to much yapping from the examiners of yap, aka media critics), it should be pointed out that bias, without which that title would make no sense, given its tilt towards the irresistable phrase, reverse Robin Hood, is inseparable from analysis, here.
Anyway, the analysis is on point. While much fuss and tossing of teathers went into forcing CEOs to sign off on their balance sheets, the Export-Import bank was quietly expanded. The article focuses on just what the Ex-Imlax Bank does. In the past, we dilated about another ridiculous tool of government finance: OPIC. The Ex-Lax is bigger, and more pernicious. Here's a graf:
"More fundamentally, there are questions about why the bank exists at all. Less than 1 percent of all American exports receive Export-Import financing, which comes in the form of direct loans, loan guarantees or export credit insurance. The bulk of Export-Import's benefits go to a small number of large companies that are sophisticated enough to get financing on their own: Boeing, Halliburton, General Electric, Northrop Grumman, Lucent Technologies, ChevronTexaco, Caterpillar and Dell Computer, among others."
More sickening stuff:
"Commercial banks, meanwhile, love Export-Import loan guarantees because they turn corporate loans for business in risky places into risk-free loans. If a corporate borrower halts payments on an Export-Import backed loan, the federal government must step in and pay it off. The bank claims a default rate of less than 2 percent.American exporters love it even more. With an Export-Import loan guarantee, they can borrow money from banks at lower rates and more favorable terms than usual. And if they get into a jam overseas, the Export-Import bank can be a powerful ally. "You've got the full weight of our U.S. embassy, our ambassador, the Treasury Department here and overseas, the State Department, all coming in," said Mr. Rice at the export coalition.
On the other hand, small businesses, which often need the help more than large companies, get short shrift from the bank, despite Congressional pressure to change that practice. Only 18 percent of the bank's financing last year went to small business, down from 21 percent in 1998."
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