In seeking to prevent the continued spread of instability that breeds terrorism, the United States has, in the past three decades, promoted a strategy of military occupation and forceful alteration of markets and governments towards democratic capitalism. This kind of mentality is the crux of the problem. When the approach to finding a solution is: attack and change the perpetrator of discord, we will inevitably continue to find failure. As the saying goes "you cannot fight fire with fire". Technically, you can - see the US government in Iraq and Afghanistan. But it will never find lasting success. The heat of conflict will forever fuel dens of angry discontent to breed new conflict.
Islamic fundamentalist terrorism exists because a significant portion of the population of our planet strongly resents the status quo, led by the Americans, to the point where the logical solution for them becomes violent protest. In a civilization such as ours it is impractical and outrageous to believe that a group of people could act on the basis of irrationality. There must be a realization in Washington that terrorists act with logic. It is cold logic, bred from the frustrations of helplessness, and the anger of neglect. It is a brutal logic, tempered by a belief that violence is the only cry for help and the only means for a voice to be heard.
As long as there is subjugation of other cultures and disrespect promoting unfair play, as long as Western corporations exercise a power advantage by leveraging the Western judicial system and their financial and economic strength to muscle competition, there will be fear, hatred and, at times, violent protest. It is an unavoidable affect of the frustration built by broken promises and unaided poverty. It is a direct result of a careless and wanton approach to American foreign policy that features intense favoritism and domination of resources, often leaving large swathes of people completely unaccounted.
I have written before that an ideology is a hydra, you cannot kill an it by cutting off its heads. The ideology of anti-Americanism cannot be cured by further promotion of American imperialism by defending it using military force. In order to end terrorism we must address the ideology of the terrorists. This is not giving in! This is not giving them what they want. This is finding a cure to their hatred, frustration and anger to prevent further violence. This is addressing their needs to relieve helplessness and neglect.
What is needed is to bring countries harboring terrorists out of poverty and provide them with aide and assistance to foster strong markets and sound governments. This will remove the core reason for their cause, effectively end cash flows to terrorism from sympathetic donors and undermine the very reason that terrorists exist: as an outlet for oppression.
Until this new approach is practiced, there will forever be neglected peoples harboring hives of anger. And while this reality is allowed to persist there will continue to be instability on this planet.
Saturday, January 31, 2009
Sunday, January 25, 2009
The Roots of Crisis: Examining Financial Catastrophe
The financial crisis! It's all the news right now. You can hardly pick up a single newspaper or magazine, let alone turn on the TV, without mention of some form of fallout and the economic woes of the global economy. It is important to make the distinction however, between the poor financial footing on which many banks and governments find themselves and the economic woes that currently inflict states around the globe.
Perhaps most importantly, the culprits must be recognized.
First, Wall Street's culture of self-interest, greed and deceit must be recognized. Since the beginning of the latest boom, which included the technology, real estate and credit bubbles, the culture of the American financial sector has encouraged debt spending, overleveraging, negligence, greed, and excess. There is a vast conceptual and ideological differnece between greed and profit-making. Most pointedly, one caters to the extreme short term. There has been little attempt made in the firms that have become the biggest culprits for the failures of this generation to invest into sustainable business models for the long term. Instead, cases continue to arise where individuals in decision-making positions made poor short-term oriented decisions that inevitably led to disaster.
Second, a lack of regulation on the part of the SEC, the CFTC, and the United States government as a whole allowed Wall Street free rein of the financial markets, with little punishment for gross negligence and a legal system that was applied almost arbitrarily, depending often on personal connection and government preference. For instance Lehmen Brothers and Bear Sterns were allowed to fail, while Bank of America was allowed to buy Merrill Lynch, and Morgan Stanley and Goldman Sachs were permitted to become bank holding companies. But what does that mean? Certainly it does not mean that the investment banking business is dead, nor does it mean that these companies will in some way be hamstrung in their business models going forward. Sadly, the mass public fails to understand the implications of the health of the financial system on the rest of the economy as a whole.
Third, gross negligence by both the people of the United States of America and investors in failing to demand proper accountability by their elected representatives, by their elected corporate officials in the case of publically held companies, and by the very information they were depending on in order to determine the credibility of investments. Without the proper experience, information and knowledge, public investors were left at the mercy of information that was opinionated, misleading and often twisted by greed and ignorance.
Finally, I must mention the inherent nature of fractional-reserve banking coupled with a central banking system that relies upon active monetary policy to ensure economic stability. This is not a flaw so much as it is a function of an ideological choice accepted by this generation of economists and lawmakers. Markets operating under these institutions are prone to bubbles, booms and busts, and encourage contagion and stampeding in the markets. Coupled with a culture of increasing greed, negligence and self-interest, the recipe for a corruption of the roots of the financial system becomes complete. This debate alone is lengthly and complex, and will be examined in a later piece.
There is nothing wrong with free markets. A vast amount of empirical analysis conducted over the past half century, as markets have opened following World War II, shows that scaling back regulatory systems directly results in an increase in trade, investment and growth. However, what is missing in these analyses is the implementation of Westernized regulatory systems and the inherent nature of a Western market system. Although its democratic-capitalistic model involves lower amounts of regulation relative to the ex-Soviet states, it also requires a key aspect that an unregulated market lacks: the rule of law. This must be present in order to ensures a system of incentives and punishments, which in turn assure that market participants play fairly and by the rules, even if the rules are not actually enacted by exacting legislation.
A misdiagnosis must be avoided in order for this crisis to be put firmly behind us. This is not a case of a failure of globalization or a product of markets that are too free. The "credit crisis" of 2008 is the epitome of a culture of a greed and excess, poor regulation and accountability, informational opacity, and an overall lack of willingness to act responsibly and honorably. To assume or operate otherwise would be to cripple the very markets which have provided the vast majority of the world's population to enjoy a standard of living that is unheralded in history.
Perhaps most importantly, the culprits must be recognized.
First, Wall Street's culture of self-interest, greed and deceit must be recognized. Since the beginning of the latest boom, which included the technology, real estate and credit bubbles, the culture of the American financial sector has encouraged debt spending, overleveraging, negligence, greed, and excess. There is a vast conceptual and ideological differnece between greed and profit-making. Most pointedly, one caters to the extreme short term. There has been little attempt made in the firms that have become the biggest culprits for the failures of this generation to invest into sustainable business models for the long term. Instead, cases continue to arise where individuals in decision-making positions made poor short-term oriented decisions that inevitably led to disaster.
Second, a lack of regulation on the part of the SEC, the CFTC, and the United States government as a whole allowed Wall Street free rein of the financial markets, with little punishment for gross negligence and a legal system that was applied almost arbitrarily, depending often on personal connection and government preference. For instance Lehmen Brothers and Bear Sterns were allowed to fail, while Bank of America was allowed to buy Merrill Lynch, and Morgan Stanley and Goldman Sachs were permitted to become bank holding companies. But what does that mean? Certainly it does not mean that the investment banking business is dead, nor does it mean that these companies will in some way be hamstrung in their business models going forward. Sadly, the mass public fails to understand the implications of the health of the financial system on the rest of the economy as a whole.
Third, gross negligence by both the people of the United States of America and investors in failing to demand proper accountability by their elected representatives, by their elected corporate officials in the case of publically held companies, and by the very information they were depending on in order to determine the credibility of investments. Without the proper experience, information and knowledge, public investors were left at the mercy of information that was opinionated, misleading and often twisted by greed and ignorance.
Finally, I must mention the inherent nature of fractional-reserve banking coupled with a central banking system that relies upon active monetary policy to ensure economic stability. This is not a flaw so much as it is a function of an ideological choice accepted by this generation of economists and lawmakers. Markets operating under these institutions are prone to bubbles, booms and busts, and encourage contagion and stampeding in the markets. Coupled with a culture of increasing greed, negligence and self-interest, the recipe for a corruption of the roots of the financial system becomes complete. This debate alone is lengthly and complex, and will be examined in a later piece.
There is nothing wrong with free markets. A vast amount of empirical analysis conducted over the past half century, as markets have opened following World War II, shows that scaling back regulatory systems directly results in an increase in trade, investment and growth. However, what is missing in these analyses is the implementation of Westernized regulatory systems and the inherent nature of a Western market system. Although its democratic-capitalistic model involves lower amounts of regulation relative to the ex-Soviet states, it also requires a key aspect that an unregulated market lacks: the rule of law. This must be present in order to ensures a system of incentives and punishments, which in turn assure that market participants play fairly and by the rules, even if the rules are not actually enacted by exacting legislation.
A misdiagnosis must be avoided in order for this crisis to be put firmly behind us. This is not a case of a failure of globalization or a product of markets that are too free. The "credit crisis" of 2008 is the epitome of a culture of a greed and excess, poor regulation and accountability, informational opacity, and an overall lack of willingness to act responsibly and honorably. To assume or operate otherwise would be to cripple the very markets which have provided the vast majority of the world's population to enjoy a standard of living that is unheralded in history.
Sunday, January 18, 2009
Compassion: A Solution to the Hydras of Ideology
In Gaza we see the epitome of the faults in this era of global conflict. The solution heralded by the world’s leading state, the United States of America, and thus emulated by governments around the planet, is one of brute force and military superiority. Kill those who make the decisions and the ideologies they support will flounder and fail.
This reasoning could not be farther from the truth. Time and time again we have seen this logic utterly fail. In Somalia, a campaign was waged in the mid-90s in the capital, Mogadishu, to oust a Warlord in an attempt to democratize the country. The country is in worse condition today. In Afghanistan, we search ceaselessly for Osama bin Laden in an attempt to cut off the head of the serpent of al-Qaida and extremist Islam groups. Hamas and Hezbollah come to power in Palestine and Lebanon. In Iraq, the U.S. produces the head of Hussein to bring peace to a potentially nuclear state. The country becomes mired in civil war, a victim of widespread sectarian violence.
The answer is not war. An infinite amount of death and destruction will never kill an idea. Like a hydra regrowing its heads, other men can rise to fill an ideological power vacuum, spouting the same rhetoric. Most likely they will be even more incensed towards violence and willing to take further extremist measures to find justice for their followers, their predecessors and their ideas.
The answer is acceptance and respect.
One may not jump to this conclusion when faced with a terrorist with a bomb strapped to his chest. Should we respect this man? Let him into our house and home, give him bread and water? Maybe not. But the terrorist is a product of continued neglect and abuse of any ideology or people.
Al-Qaida would never have risen to power if several prerequisites had never been fulfilled. First, if Afghanistan had not been neglected by the West following its heroic stand against Soviet invasion late in the Cold War, it would not have emerged scarred and feeling utterly used as a tool for the supremacy of Westernized democratic capitalism over Soviet communism. Second, if Iran and Iraq had been given anywhere near the sort of financial assistance shown to Israel through the closing decades of the twenty-first century, the Islam world would not have felt the squeeze of poverty and neglect that turned it towards Islamic fundamentalism. Finally, if the United States had not incessantly favoured Israel on an agenda that directly so clearly screamed of preferential imperialism, it would not have been the beacon of hatred for the frustration of the impoverished Islamic community.
This all could have been solved by an equal distribution of well-intentioned aid, of respect and acceptance. In an increasingly crowded world, acceptance and compassion is becoming a crucial ingredient for global stability and, perhaps more importantly, humanity’s survival. A third global conflict could realistically set our civilization back millennia. If we can avoid that with simple compassion, it would be a shame if the ignorant and selfish agenda perpetuated by this generation of American leaders continued.
This reasoning could not be farther from the truth. Time and time again we have seen this logic utterly fail. In Somalia, a campaign was waged in the mid-90s in the capital, Mogadishu, to oust a Warlord in an attempt to democratize the country. The country is in worse condition today. In Afghanistan, we search ceaselessly for Osama bin Laden in an attempt to cut off the head of the serpent of al-Qaida and extremist Islam groups. Hamas and Hezbollah come to power in Palestine and Lebanon. In Iraq, the U.S. produces the head of Hussein to bring peace to a potentially nuclear state. The country becomes mired in civil war, a victim of widespread sectarian violence.
The answer is not war. An infinite amount of death and destruction will never kill an idea. Like a hydra regrowing its heads, other men can rise to fill an ideological power vacuum, spouting the same rhetoric. Most likely they will be even more incensed towards violence and willing to take further extremist measures to find justice for their followers, their predecessors and their ideas.
The answer is acceptance and respect.
One may not jump to this conclusion when faced with a terrorist with a bomb strapped to his chest. Should we respect this man? Let him into our house and home, give him bread and water? Maybe not. But the terrorist is a product of continued neglect and abuse of any ideology or people.
Al-Qaida would never have risen to power if several prerequisites had never been fulfilled. First, if Afghanistan had not been neglected by the West following its heroic stand against Soviet invasion late in the Cold War, it would not have emerged scarred and feeling utterly used as a tool for the supremacy of Westernized democratic capitalism over Soviet communism. Second, if Iran and Iraq had been given anywhere near the sort of financial assistance shown to Israel through the closing decades of the twenty-first century, the Islam world would not have felt the squeeze of poverty and neglect that turned it towards Islamic fundamentalism. Finally, if the United States had not incessantly favoured Israel on an agenda that directly so clearly screamed of preferential imperialism, it would not have been the beacon of hatred for the frustration of the impoverished Islamic community.
This all could have been solved by an equal distribution of well-intentioned aid, of respect and acceptance. In an increasingly crowded world, acceptance and compassion is becoming a crucial ingredient for global stability and, perhaps more importantly, humanity’s survival. A third global conflict could realistically set our civilization back millennia. If we can avoid that with simple compassion, it would be a shame if the ignorant and selfish agenda perpetuated by this generation of American leaders continued.
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