Monday, December 29, 2008

Teaching A Lesson (Appendix)

The indispensable Tom Segev, on teaching miltary lessons as a way to establish deterrence. 

And here are only the most important past examples of lessons taught and learned: Qibya, 1953,  Samu'a, 1966, "Security borders," 1967-73, Aerial bombing of Lebanon, 1974-5, Litani Operation, 1978, Lebanon War, 1982, "Iron Fist" suppression of the Intifada, 1988, Operations Grapes of Wrath, 1995, Defensive Shield, 2002, Second Lebanon War, 2006.  

ALL OF THESE operations have in common serious provocations from Palestinian and, after the extended occupation to South Lebanon, Hezbollah insurgents; provocations including the loss of Israeli lives. The response of Israeli military professionals, in all cases, was that Israel's response would have to be disproportionate; that the attack was coming because Israel was perceived as weak and needed to improve its deterrent power. 

But in no cases did the Israeli attack deter further attack and in many cases it unleashed unanticipated violence, prompting new alliances against Israel which then led to new, more complex attacks, along with increasing diplomatic isolation. 

This morning, another Israeli was killed, as 57 rockets were launched from Gaza. Hezbollah is threatening to be drawn in. Israeli radio is reporting that Israel's ambassador to Jordan is being asked to leave "for his safety," and four Israelis were stabbed in Modiin.  Meretz leader Haim Oron is arguing that Israel must immediately work to establish a new cease-fire, that if the shock of this attack leads to a firmer, better calm, Israel should accept this; that there is no military solution to Palestinian insurgency. 

But can Israel's military leaders accept a cease-fire, after all this carnage, when 57 missiles have just fallen? When you are a hammer, is not every problem a nail?

Sunday, December 28, 2008

Teaching A Lesson

Actually, we see what you see at times like this, images transformed into (momentary) icons, the continuous loop of 24-hour news: Gazan teens, shocked and fascinated, milling around smoking buildings; Gazan men, mobilized, pulling an unconscious man from the back seat of a car, too many frantic hands loading him onto a stretcher; grimy bodies in the rubble, a mourner kissing something. Then, the other side, our side, an apartment block where ambulances, lights flashing, had carried away a victim of a missile; the hole in the wall of a living room, the pictures above it strangely undisturbed.

But above the images, we hear commentators you probably do not hear: laconic former generals, mainly, speaking in measured, rationale sentences; not bullies or even mean men, not fanatics, war-weary, proud of their lives; the people we really do rely on to train our youth and keep us safe, now pundits with a special authority. They speak about the need to "fundamentally change the character of the south," to attack "terrorist infrastructure," to show that the "lives of Israelis are not cheap," and that the citizens of the south, who have suffered "for seven years," cannot expect their state to turn them into hefker, in effect, treat them like abandoned property. Hamas will "now think twice," they say, and that is the point. The attack will "lower their motivation."

There is no gloating, none, yet there is an obvious satisfaction that the air force and intelligence services are "back to normal"; that only enormous care has kept down the number of "non-combatants" killed; that the IDF seem to have planned this attack much more professionally than the impetuous Lebanon war in 2006; that the political leaders have learned to keep pronouncements modest, solemn--not set unreasonable expectations or tip the IDF's hand.

The IDF, the experts, say, "have acted with precision and tactical surprise." There was training, planning, and operational success. "The lessons of the Lebanon war have clearly been learned," one military correspondent said. As I write, 6500 reservists are being mustered. There is talk of a ground invasion. When will the operation be over? "In its time," a general said. Reticence is competence.

AND YET THIS time, other journalists, even one TV anchor, are asking quetions. What are the end goals, they ask, echoing the Winograd Report? What will change once the guns fall silent? Didn't politicians all rally to the government in 2006 only to see that getting into punitive raids is not as hard as getting out? There are other implied questions, tactless to raise just now on television, but there between the lines. Didn't the first two days of the Lebanon retaliation seem a tactical success, too? And yet if the missiles keep coming, who has won? Then again, how can the missiles stop coming without a ground invasion? And if there is a ground invasion, how can Gaza be held without recreating the deathtrap Israeli soldiers were in before 2005 ?

And if the missiles stop because of a cease-fire, which depends on a new negotiation and Hamas restraint, why was there not a negotiation in the first place? Did Hamas need to be taught a lesson, of all things, that Israel is powerful and ruthless, or is this the lesson Hamas is trying to teach everybody else? While we're on the subject, did Hamas, alone, break the last cease-fire or did Israel break it, too, by refusing to apply it to the West Bank, closing the border and trying to starve the regime? Is it necessary to isolate Hamas, if this is the price--would it not be better to isolate Hamas in a sea of hope generated by a peace deal with Fatah? Did not Fatah people, and Irgun people, for that matter, engage in terror? If terror means killing categories of people at random to make a political point, whose hands are clean?

What is Hamas infrastructure if not the ambient support of the population? Doesn't this attack make support stronger in the long run? Can any ground operation hope to topple the regime? What will stop the attack if not world opinion, that will not think about missiles on Shderot, but a "disproportionate response" to missiles on Shderot? Come to think of it, will they not think about Gaza under siege and what brought the place to desperate poverty? How will West Bankers react when they see Hamas standing up and dying while they feel the settlements growing around them?

And how will Egyptians react? And Jordanians? And Israeli Arabs, who are spontaneously demonstrating against the attack? And the Intel board, whose $4.5 billion dollar fab is in range? How do we build a future with Palestine when we are seen through a prism of vendetta? Will not the families and widening circles around the dead hate you forever? Do not terrorists come mainly from the ranks of youth who are ashamed to have survived? Was there not another way all along, which we cannot see now?

OUR GENERALS DO not address these questions. That is not their job. They speak instead about the need for hasbara, literally "explanation," public relations, those critical soft skills the people in the Foreign Ministry are supposed to have, but judging from the world's reaction seem not to have in abundance, at least, not to compare with the competence of generals, proven once again.

(Photo: Dudu Bachar, from today's Haaretz)

Thursday, December 25, 2008

What Every Child Knows

Over 8o Qassam missiles landed in areas bordering Gaza over the past 24 hours. Nobody should doubt how insufferable this is. But what should Israel do? Every child knows that you are attacked because the other person doesn't realize you can hit back, that your hurt can become his hurt. Reasonable people want action.

"We have no father, we have no mother," a resident of Shderot screamed at a radio journalist this past week, understandably in despair about his government's inability to protect him from explosions; in despair also, no doubt, about his children's growing realization that he cannot protect them. "Our response will be substantial and painful to Hamas," an Israeli government official said this morning.

Then again, children don't know everything

ONE CANNOT INFLICT pain on Hamas without magnifying pain on the residents of Gaza, whose support for Hamas was born out of just such violence and political stalemate. One cannot magnify pain on the residents of Gaza without further discrediting the Palestine Authority in the eyes of West Bankers, particularly the youth, whose relative affluence only makes them feel like traitors. Spreading violence means not only new and tragic deaths, but new pictures on al-Jazeera of ambulances pulling bodies from crumbled buildings; new reports on the BBC, or CNN, adding up the casualties, implicitly daring viewers to value the lives of Israeli children over those of Palestinian children. Still want to hit this tar-baby one more time, but harder?

The sad truth is that exercising sovereign power is a more complicated thing than getting your father to beat up his father. In his weekly newsletter, M.J. Rosenberg astutely quotes former Mossad chief, Ephraim Halevy: "'[Hamas] leaders entered into the arrangement . . . with the intention of making it the beginning of a process.' They sold the cease-fire to their followers as means to achieve certain 'deliverables': a prisoner release and an easing of border restrictions. But Hamas got neither, just as Israel did not achieve Gilad Shalit’s release."

Rosenberg continues: "Israel has no difficulty blaming Hamas for breaking the cease-fire. The logic sounds impeccable. If Hamas stops shooting, it will get quiet in return. From the Gazans’ point of view, however, the Israeli blockade is a form of violence. How can Hamas be expected to stop its attacks if Israel keeps a million people penned up in what they view as a vast prison camp?"

Indeed, if you were the leaders of Hamas--Islamist, rejectionist, housed in Damascus, supported by Iran, and so forth--and you saw Israeli peace talks with Syria taking shape, Obama hinting broadly about a moderate alliance of Arab states, a rekindling of the Saudi peace initiative, a tightening of cooperation between Israel and Egypt, and a desire by the current Israeli government to extend the status quo indefinitely, so that Gaza residents have nothing to think about but their poverty, well, what would you do? Older kids know about it. It's called a sucker punch.

Tuesday, December 23, 2008

No Preconditions, Redux

First time tragedy, second time farce, fifth (sixth, etc.,) time, repetition compulsion. This morning on the radio, Israel's wake-up: Benny Begin, the son of Menachem, now high on the Likud list, is warning about Olmert's negotiations with Syria:

"There must be [I am remembering this without notes] no preconditions for talks," he said; the Syrians must understand that if "they change their behavior," we will be prepared to negotiate; but they cannot expect us to negotiate with them and, in effect, agree in advance to show what our final position will be. But would Begin--the interviewer, Yaacov Achimeir, asked--be open to the evacuation of Israeli settlements from the Golan? Stupid question. How could Israel consider "descending from the Golan"?, he answered. How could we agree to such things, and certainly not as a condition for face-to-face talks? "No, our government will insist on talks with no preconditions."

THE SAME CADENCES as his father, the same grand phrases suggesting prideful unbendingness, the same mocking tone, the same faux-diplomatic grandeur--you know, the kind of rhetoric a nervous Jewish kid in pre-war Poland, imagining great-power diplomacy, thinks he has to default to. There is even the same adversion to liturgical nuance, just to show-off to the Orthodox how entrenched in the tradition he is: What then, Achimeir asked, about restoring the "quiet" with Hamas in Gaza? What kind of quiet?, Begin rolled on, his voice rising and falling, as if on stage, and not on the telephone: "Birzono sheket, birzono himum; birzono...," which translates roughly as "By his will, quiet, by his will escalation; by his will, etc...," ostensibly referring to Hamas's Ismail Haniyeh, but first meant to rehearse that lovely prayer from the Yom Kippur liturgy, about God's ability to make of us what He wills. Who does Haniya think he is! God? (One can almost hear the heavenly reverberations: "President Carter: don't you know Jews don't kneel!")

As if a peace treaty with Syria would not transform the region, pulling Assad from Iran's orbit, and opening the door for Obama; as if it would not begin to relax Israel's trip-wire confrontation with Hezbollah, and launch negotiations with Syria over ending the funneling of Iranian arms to jihadists; as if it would not mean Israeli diplomats on the road to Damascus, the heart of the Arab nation, the city now harboring Hamas's Khaled Meshal, opening the possibility of bringing water from Turkey, and eventually even bringing Hamas, too, to open recognition of Israel; as if it would not mean giving new momentum and bite to the Arab League's peace initiative. 

AND AS IF we don't already know the quid pro this quo, after a dozen years of contact and open secrets about failed negotiations; Christ, as if Cambodian peasants don't know by now that it means Israel will have to give up sovereignty on the Golan, yes, including a few meters of shoreline on the Sea of Galilee; as if the negotiations should not be about how to demilitarize the Golan, and turn it into a nature preserve, a tourist attraction; as if they should not be about providing a way for Israeli residents to vacate with dignity; as if the early warning stations on the Hermon have not been trumped by aerial intelligence, as if Israeli sovereign pride would really be wounded by getting all of these benefits at the cost of accepting the principle that every inch of Arab land won by force must be returned.

Oh, and as if Menachem Begin, for all of his tiresome posturing, did not return every inch of the Sinai to Sadat in return for peace, including dismantling the settlements of Yamit; as if he did not, through Moshe Dayan in Morocco, agree in advance to do so in principle before Sadat came to Jerusalem; and as if he did not, nevertheless, try following to the end the implications of the hard-line with Syria and Palestine, launching a bloody, needless war in Lebanon in 1982, and dying a broken, catatonically depressed man, reviewing his sovereign folly, adding up the many Israeli soldiers and others killed.

Funny, here they were, interviewer and interviewed, two sons of former leaders of the Yishuv's terrorist underground (Achimier's father was Abba Achimier), speaking about diplomatic signs as if they were the sons of Metternich, the latter telling the former how, if only the Syrians withdrew their preconditions, then it would be a sign for possible talks, for it would mean that they would not need Israelis to retreat from their preconditions. In other words, Jewish power has been recognized. Things can stay as they are. And all before coffee, for God's sake.

Monday, December 22, 2008

Hebron Agonistes: Too Much For Israel

The apartments of Kiryat Arba, as seen from the yard of the el-Hai family in the wadi below.

It has been common for educated Israelis to think, and Israeli diplomats and American Jewish leaders to present, the settler community of Hebron as a kind of radical nuisance. Presumably, the settlers are a side-show of a defensive strategic policy, a touch of hubris gone wrong, a little understandible selfishness after centuries of self-effacement—anyway, a line that can be moved when the time is right, certainly not a country within a country that has grown, SimCity-like, into something the size of the Jewish colony in Palestine in 1946.

In this view—not entirely wrong—the settlers were post-1967 Israelis only more so: people who took classical Zionist ideas about settling the Land of Israel a little too seriously, or took the Jews’ election a little too literally, or accepted cheap mortgages from the Jewish Agency a little too opportunistically; people who have randomly scattered themselves in the occupied territory in a now obviously failed effort to annex the holy land, or just to show that Jews can live everywhere in it.

The settlers, presumably, have settled under the nose of a forbearing, once vaguely sympathetic Israeli government, otherwise preoccupied by encirclement and terror. But they are people whom the Israeli government—if it ever had a real peace partner in the Palestinians, and not jihadist terrorists firing missiles, or sending in suicide bombers—would clear out in a great show of sovereign will. The recent clearing of the “House of Contention” by the Israeli Army is proof, so the argument goes, of the Israeli army’s residual power. The more recent breakdown of the cease fire with Hamas is proof of how Israel faces an existential threat, and dares not be distracted by the settlers.

Benjamin Netanyahu, who’s picked up the scent of power, is defining a new centrism by triangulating these poles. He knows that Israelis have lost patience with Judeans, or at least the disquieting ones. He’s made a show of purging one of the most fanatic of the settlers, Moshe Feiglin, from the 20th. position in the Likud list for the Knesset (though many more remain in 
the top 30); and he is simultaneously telling us that both the peace talks Olmert conducted with the Palestinian Authority, and the “time of retreat” in Gaza, are over. No two-state solution will compromise the existence of Kiryat Arba (no more than the unity of Jerusalem), he says. But neither settler zealots nor Palestinian terrorists, presumably, will be allowed to challenge the existence of the state. Each side—some now, some later—will be forced to change their behavior by Israeli state force.

I WENT TO Hebron a couple of weeks ago, as part of a delegation of Israelis hoping to show a measure of solidarity with an Arab family whose patriarch, Abed el-Hai, had been shot at point blank range defending his home from one Kiryat Arba settler as the House of Contention was being cleared. There is no need to sentimentalize this gruff, stolid man—whose many barefooted grandchildren, sticky from holiday candy and twittering over
 our cell phones, will be run over by global forces if peace should ever come. But let’s just say that a day in Hebron focuses the mind. 

You think out from Hebron, and the holes in the common wisdom become obvious, well, certainly less abstract. A different pattern takes shape, and virtually every premise of the common wisdom falls away.

1. Kiryat Arba, with surrounding settlements, is a solid town of about 10,000 people and growing. Many of its youth were born there, marinating in a peculiar and vicious righteousness. But there can be no Palestinian state if Kiryat Arba remains; to keep its residents under Israeli sovereignty, you would have to cut the southern West Bank in half, and keep checkpoints all along the route from Gush Etzion. Kiryat Arba’s residents would never accept Palestinian citizenship, even if this were offered. Imagine offering Klansmen rule by Stokely Carmichael, or Martin Luther King, for that matter. 

2. According to army intelligence, and demonstrated precedent, a substantial number of Kiryat Arba residents would be willing to violently resist the Israeli army. Reserve army units—young men from Herzliya or Netanya—will tell you the settlers are out of their minds. But this is not the only army. An increasing number of junior officers conducting the occupation come from the movements and homes of the settlers. The army is there, soldiers say, to keep the peace. But in any case, this means enforcing the status quo, in which settlements naturally expand. 

3. There is nothing random about what the settlers are doing. In Hebron, the idea is to create a land bridge from Kiryat Arab to the Tomb of the Patriarchs. It is Abed el-Hai’s bad luck that his home is in the way, in the wadi below Kiryat Arba, which the settlers want to turn “Jewish.” Most nights, Kiryat Arba residents throw rocks, garbage, and bags of urine into his yard. 
In the area known as H-2, where the settlers have rights under the Wye Agreement (you know, the agreement then-prime minster Netanyahu negotiated in 1998), the Arab population has declined from about 35,000 to 18,000.   

The road from Kiryat Arba to the Tomb has a yellow (that's right, yellow) line on it, indicating that no Arab is allowed to walk on it; the settlers push their baby-strollers freely, while army jeeps patrol up and down, and Arab kids watch from third floor windows, many of them with iron screens to protect them from rocks, etc. 

The settlers have set up a synagogue on the land of Jaabri family—another family in the way—which the Israeli High Court has declared illegal, and the army has taken down over 30 times, only to have the “minyan” rebuild it. During prayers, their children often throw rocks, etc., onto the homes of the Jaabris. A stone’s throw in the other direction is the grave of, and monument to, Baruch Goldstein

4. Multiply the Hebron problem by twenty, and you have the real, grotesque problem that occupation has engendered. Jerusalem is the radioactive core of it. Try to evacuate Kiryat Arba by force and tens of thousands will stream down from yeshivot in Jerusalem to stand with them. 

No Israeli leader wants to deal with facing down the new Judeans—or can, without destroying Israeli social solidarity. I have written here before about how all fanatics live within concentric circles of support. No matter who wins a majority in the next election, about half of Israeli Knesset members will be from circles which the settlers count on—National Orthodox, Shas, Leiberman’s Russians, Haredi—people concentrated in and around Jerusalem, whom the settlers will tell you would be in settlements themselves if they had the guts; people who will nevertheless apply the “values” the settlers stand for to Jerusalem. 

Again, Netanyahu has demoted Feiglin. But the government he will form will rest on this Judean coalition. And if Livni-Barak win, they will face an opposition nearly the size of their own bloc, with many sympathetic members, and a fear of resting their coalition (as they will have to) on the Arab parties. 

5. Hamas is growing in power—in the West Bank, too—directly as a result of this grotesquery. It is absurd to think of Gaza as a separate matter. Nor will the Hamas leadership be intimidated by shows of force. Actually, they thrive on it—precisely because eruptions of violence allow them to be seen as the steadfast opposition to the inertial expansion of Israeli occupation. An Israeli attack on Gaza, which must be bloody, will be play right into Hamas’s hands. 

6. True, Israelis on the coastal plain are increasingly appalled by the settlers, and will tell you so. Livni’s biggest applause line at the Globes business conference last week was her insistence that, under her leadership, peace talks with the Palestinians will continue. But taking on the settlers is another matter. It is more politic to talk about smashing Hamas, whose missile attacks on Shderot truly are insufferable.

7. Netanyahu speaks of "economic peace" as alternative to the peace process. This is also absurd. Palestinians cannot build businesses with 500 checkpoints across the West Bank. Those checkpoints are mainly to protect the settlers. 

WHERE DOES THIS leave us? The simple fact is, this problem is too big for Israel. We will need the world’s involvement; anyone who tells you different is either covering for the settlers, or afraid for electoral reasons to appear squishy about Israeli autonomy, or arrogant, or ignorant, or thick, or all of these at once. This post is not the place to describe what involvement means, though the contours of a two-state deal have been obvious for many years. The point is, what Hebron represents cannot be solved by this deal in a few decisive months, like the evacuation of the Sinai was. New changes to the landscape will take years. Or the landscape will look like Bosnia.

Perhaps the saddest part of all of this is that first patriarch of Hebron, Abraham, never turned promised land holy. When faced with contention, as his herdsmen quarreled with Lot, he said something unforgettable but forgotten: "Is not the whole land before you? Let's part company. If you go to the left, I'll go to the right; if you go to the right, I'll go to the left."

Thursday, December 18, 2008

A Season's Greetings

(This post, from last year, seems worth republishing in this season of dark hope.)

It is not a simple matter to be a Jew in America this time of year. Not in Jerusalem either, a few miles from Bethlehem. Christmas, as John Updike writes, is Christianity "at its sweetest." Many have written, some with an air of sweet resignation, about the yearning Jews feel as the days darken: to share in the melodies, the hearth, the love of the child.

It was only a matter of time—was it not?—that we would start finding ways to be absorbed into the spirit of the moment. So we exchange presents, greet the "season," tease out of the ancient Chanukah story our own celebration of light and grace—God bless, eight days, not just one! And we leave behind, in mildly embarrassed obscurity, the tale of Maccabean guerrilla war against Greek occupiers around 165 BC—a mythical victory that had been so much solace for medieval rabbis, forced into ghettos, and more recently, for outnumbered Zionists.

Read the rest of the post here...

Monday, December 8, 2008

Connect the Dots #8: Imagine

On Reshet Bet, Israel's dominant radio station, this morning between 9:30 and 10:00: 

1. A 10-15 minute report on today's Likud primary, in which the radio host interviewed a succession of Likud candidates and officials, all outdoing themselves to explain why Benjamin Netanyahu is headed for the prime minister's chair: how the "neighborhood" as he likes to call it needs a tough leader; how (responsible) settlers need a champion; how America needs to persist in the war on terror, and Netanyahu is the man to tell them; and so forth.

2. A short reminder that today's the anniversary of John Lennon's murder, followed by a sentimental tribute, and a play of "Imagine."

3. A 10-minute report about the relatively large number of young people coming back from India, after their stint in the army, and suffering from mental illnesses; the focus of the report was a young man who has been diagnosed as schizophrenic.  "He was fine in the army," his father said, "but after he returned he deteriorated fast; he had tried all manner of mushrooms there, apparently."

Extra credit: Listen to "Imagine" while reading the Likud platform. Then play "Fool on the Hill" and try not to think of that benighted young man.  

Friday, December 5, 2008

Congress to J-Street: "Where Have You Been!"

Members of Congress welcoming J-Street, some of whom are pictured above:  Jan Schakowsky, Steve Cohen, Keith Ellison, Bob Filner, Bill Delahunt, David Price, Tom Allen, and many others. 

The Advisory Council of J-Street, the new peace lobby, met in Washington in mid-September to plot (actually, to hear its staff articulate) the organization's strategy for the remainder of the election campaign and the year following. Among the various discussions Jeremy Ben-Ami, J-Street's immensely gifted Executive Director, had planned for the day was a lunchtime forum with eight of the congressional representatives who had accepted the lobby's endorsement.

We thought this would be a courtesy meeting, with gracious if not perfunctory remarks. J-Street had already signed up over 70,000 to its email network--the number is now over 90,000--but J-Street is a very new organization, with little of AIPAC's accumulated clout. What we got was a meeting of unexpected honesty, even poignancy. 

"Where have you been!" California's Rep. Bob Filner asked us, not entirely rhetorically. His challenge was repeated again and again by members of Congress from across the country. As Filner put it, progressive forces in this country used to count on Jewish groups, and nobody doubted the persistence of progressive sentiments among the vast majority of American Jews; a great number of representatives have seen advocacy of a Middle East peace along the lines of, say, the Clinton Parameters as the touchstone of their friendship for Israel, and their absorption by Israel's tragic conflict with, and in, Palestine. 

In a way, the Israel-Palestine conflict seemed to them a kind of litmus test for how American foreign policy would be conducted after Iraq: would there be a Western alliance, coordinating its many kinds of power to pursue peace and common interests, or, a Global War on Terror, with force the only language Moslems and Joe the Plumber are presumed to understand?

Curiously enough, AIPAC's approach has also been to turn the way Israel is supported into a test for managing foreign policy more generally, with a steady drumbeat favoring the use of force on Iran; and it seems that being the target of AIPAC's attention has not been an entirely enchanting experience. AIPAC began as a broad-based organization after the 1973 war, anxious to develop a counterweight to the State Department's traditional coziness with oil interests favoring the Arab version of Zionism. That was then. AIPAC has since become a kind of bastion for self-hating neocons: people who insist they are bipartisan, but who are really quite comfortable with the clash of civilizations, since it allows them to sell Israel as America's biggest Middle East based aircraft-carrier. Think of (though it is unpleasant) Joe Lieberman. 

IF THESE CONGRESSPEOPLE were to be believed--and the meeting was open--AIPAC had become one of the most feared, and secretly loathed, presences on Capital Hill. One got the feeling that a much larger number of congressional representatives were hungry for a broad-based, progressive, Jewish-led (but not exclusively Jewish) organization to (as one Congressman put it) "protect their back." Which brings me to the present.

Jeremy Ben-Ami has set the perfectly reasonable goal of signing up 100,000 people by the end of the year. You can hear his pitch, and explore the J-Street site, by clicking here.  I urge all of you, Jews and not, to get involved.  As the Hebron riots show, Israel and Palestine will blow unless the world forces the people here into a change in the conversation.

Tuesday, December 2, 2008

Terrorist Circles

As I considered Mumbai, living in Jerusalem, a few hundred yards from many such attacks, I came upon this paragraph during my bedtime reading, in Adam Gopnik's lovely book, Through The Children's Gate. Adam is recalling a conversation in New York, just after 9/11. Think of it as we judge what President-elect Obama means by wedding military power to other power:

Later that day, I bump into F.A., the Arabist, and we have a talk about What Is To Be Done. I ask him if there is anything we can do about madmen who worship psychopathic gods. And he says something obvious but interesting: that there's nothing to be done about the core, the real nuts, but they exist, as human beings must within concentric circles of culture: an immediate circle of murder-minded sympathizers and financiers; a circle just outside that of sympathizers who would not do such things themselves but will not stop them from happening; a circle beyond that of people who choose not to know what is being done but sympathize with the radical purpose; a circle beyond that one of the fearful and even sentimentally sympathetic--and on and on, each circle of culture outside the actual nucleus of evil a little larger and a little less regular in its orbit than the one before, and therefore able to be dried up, reduced, set loose. Attack and persuade the outer circles of culture to abandon the inner circles, and eventually, the core will be all alone, isolated and futile.

Sunday, November 30, 2008

"Plowing In Tears, Reaping In Joy"

Morning, November 29
"Usually Ta'ayush activities are well-planned, and much thought is given to various contingencies that might arise. But today's plowing is mostly a more or less private initiative of Ezra Nawi's; when the Samu'a people spoke to him of their troubles, he somehow cobbled together a disparate group of activists, arranged for two tractors, and headed south early this morning..."

Afternoon, November 29
"Such were today's gains and sorrows. By South Hebron standards, a huge area was safely plowed. Will our friends actually harvest what they have sown? I doubt it. The settlers will see to it that the crops are burnt or buried. But plowing a ready field is one of those things in life, like listening to music, like loving, that have their own innate perfection, that are not judged by results. We follow in the wake of the tractor, the settlers above and below us, still cursing; in the end they throw a few stones. The stones miss."

"So is there hope after all? I suddenly remember something Gandhi said: First they ignore you, then they laugh at you, then they fight you, then you win."

THE WORDS ARE those of my old friend David Shulman, Hebrew University India scholar, MacArthur Fellow, stubborn Zionist of the old school--you know, someone who came to Israel after the 1967 war, and stayed out of love of modern Hebrew poetry. David is a founder of Ta'ayush. He and a few others may be all that is left of it in this time of resignation. His widely admired book, Dark Hope, tells the tale. 

Anyway, when his friend Ezra Nawi says that there is an action in the South Hebron Hills, he musters himself; and when David says I should join him, I join. I wrote about one such action two years ago. Yesterday's witnessing was pretty much the same event, a kind of opera playing out, as David and I took turns listening to excerpts from "Turandot" on my iPod. Except that the sheer vulgarity of these settlers was curiously unoriginal, in the pathetic way Klan epithets were unoriginal; while the army (a reserve platoon of mainly young professionals from Kfar Saba, Netanya, etc.) behaved just about perfectly, keeping the peace, allowing the plowing to be completed with tact and humor, and making no bones about their doubts about the settlers' sanity. When people say that things cannot go on this way, eventually they can't.

David sent me his diary entry after the trip which is well worth the several minutes it will take to read it.

Friday, November 28, 2008

Hard Rains

This is Silwan, an East Jerusalem Arab neighborhood, directly facing the Dung Gate--the Southern access point to the Western Wall and the City of David excavations.  In any conceivable deal with the Palestinian Authority, this neighborhood would be part of the Palestinian capital, not Israel. Yet according to reliable sources, over half the land in this neighborhood, has already been purchased for Jewish settlement, or for expanding the City of David by the East Jerusalem Development Authority (read, Jewish tourism), or by Elad, a non-profit holding company committed to the Judaization of East Jerusalem. (The make-shift signs say: "For 300 settlers, they are destroying the lives of 50,000 residents," and "Some people have hearts of stone.") 

By reliable sources, I mean Hagit Ofran (pictured below), a leader of Peace Now's Settlement Watch project, who rallied a rag-tag group of perhaps a dozen people yesterday to stand vigil in Silwan, after it was discovered that the municipality had plans to begin new road paving, parking lots and "archaeological excavations" here--the city's well-worn pretext for new expropriations of local property. Hagit is (not coincidentally, I suppose) a grand-daughter of Yeshayahu Leibovitz, the crusty philosopher of science and of Halakha, who fought the occupation and the merging of religion and state until his death in 1994. She knows more about the sleight-of-hand cooperation between the municipality and the settlers organizations than just about anyone. She fears that Silwan's fate may be sealed. 

What, after all, can vigils of a couple of hours do against the determined activities of local goverment, non-profits fattened by ingenuous Western Jewish millionaires, and fanatic settlers prepared to live in the neighborhoods they are prepared to ruin? The settlers even provide their own security patrols; one of their SUVs brazenly set out as we stood there, knowing very well they simply had to wait us out.  (You can read an article Hagit co-authored about another lost cause, the Migron settlement, in today's Haaretz.)

The Silwan neighborhood's 200 heads of families elected a committee to fight the encroachment. I asked Jawad Siyam, one of the committee spokesmen, if he could see the point of expropriating property to expand the city's tourism. He said that if the municipality had talked to the house-holders about a plan, or had ever provided day-care, or new schools, or new sewage, or any other kind of municipal services, at least there might have been a conversation. 

But the city has only moved in with plans of its own.  Most recently, it made the street leading to the Dung Gate one-way uphill, so that neighborhood school buses can no longer drop off during the afternoon the children they pick up in the morning without adding a huge loop. "The children will walk.  For some, a ten-minute walk will become more like an hour.  It's not too bad now," Jawad said, "the weather is good. But what about the winter and the hard rains?"

Sunday, November 23, 2008

Obama's Middle East Team

This unusually trenchant article by Israeli diplomatic reporter Amir Oren (in this morning's Haaretz) explores the shape of the Obama administration's likely approach to the Arab-Israeli conflict, at least insofar as we can project from the appointment of Gen. James Jones as national security advisor. There is nothing new to this approach; the shape of a deal has been clear for years, which Ehud Olmert all but admitted in recent interviews. The "parameters" which first set out the deal bear the name of the future Secretary of State.

The real question is how to press the deal on two peoples, each so divided that there are really (at least) four peoples--about which more in future posts from Jerusalem. By the way, an elaborated version of last week's post on the auto industry can be read in today's Washington Post's Outlook section.

Thursday, November 20, 2008

Unpacking Liberalism

Flying from Jerusalem, I hankered to hear Hebrew poetry.  Back in Jerusalem, unpacking, I longed to hear liberal principles. This place is beautiful; that has always been its problem. It is the kind of place that engenders enigmatic words like birthright, which brothers kill each other over. And it makes the word brother a little dangerous, too. 

Anyway, the city just elected a new mayor who narrowly beat the ultra-orthodox candidate promising my brothers that Jerusalem is one birthright he would never share.  We hung up the clothes, and shelved the hair cream, listening to laconic Israeli reporters talking about what our enemies have been up to, and it suddenly occurred to me that I'd like to hear, of all things, Barack Obama's speech "on race" again.  I took out the laptop, and linked over to the site, and we began to listen.  After a while we just sat down on the bed; by the time we got to "Ashley," we were in tears.  

This is not a speech about race.  It is about enlightenment. As we pick apart what choosing Hillary means, or how much stimulus we need, it may be worth listening to this speech again: forty minutes, about the same as Dvořák's New World symphony and about as reliably moving. If nothing else, it will remind us how choking it was to live in Atwatermorrisroveland, the new new world, and how helpless most of our journalists were in defending us against its claims. It makes one grateful for a champion, particularly those of us headed into Bibiland.

Wednesday, November 12, 2008

The Rubber Hits The Road

It will be left to the Obama administration to sort out whether, or in what way, the government might advance new billions to GM and Ford. As Tom Friedman writes this morning, past failings of management at these companies are well known: they failed to support healthcare reform in the early 1990s, and they are now choking on health management costs; much more important, they decided to profit from SUVs, that is, from truck bodies and cheap oil, and foul the atmosphere. The smug attitudes of GM executives in particular--so I thought during my days editing at the Harvard Business Review--gave you some idea of why the Reds shot Kulaks. 

Nevertheless, a couple of million jobs are at stake, at least until other global auto makers can take over some of this plant capacity. Should new public money believe in, as Secretary Paulson put it this morning, the sustainability of American car companies? I can see the macroeconomic arguments in favor, and I don't need Michael Moore to imagine the misery of new shut-downs. But before we spend more on this management, we should see that their worst failure is actually recent, not in some fading past. I mean their failure to remain competitive on the most basic principles of design and manufacturing, using global, peer-to-peer information platforms; principles Volkswagen Group, Toyota, and Nissan-Renault, have exploited, and GM and Ford have half-exploited, even as profits mounted from SUVs and endogenous quality improved.

THE KEY TO making all manufacturing profitable these days is lowering transaction costs for any particular product development program. Look at Sony or Samsung or Apple or Honda. You want to have the capacity to experiment often, design for many niche customers, and hold on for the grand-slam. You don't want that much riding on each try: you want (if you'll pardon another sports metaphor) to transform your manufacturing processes from football into basketball, that is, create the capacity to go the basket many times a game, not work your way to the end-zone only a few times a game. 

This means fully exploiting peer-to-peer information and components sharing. You want to enable design and production managers in each brand unit to source components from every other brand unit (something like the way "open source" software designers source and integrate chunks of code). You want to decentralize vehicle design, to enable new vehicle introductions in shortened cycles (to be competitive, these days, you have to be under 36 months), and profit from production runs of, say, 50,000 vehicles rather than 200,000 vehicles, which is the American standard. 

Skoda, which I know particularly well, thrives today because Bohemian designers have learned to exploit access to all of VW Group components. They create cars especially for niche markets; their latest, the Roomster, breaks-even on about 60,000 units, using components from the whole of VW Group. And Skoda is over 20% of VW Group profits today. (No, their competitiveness is not just cheap labor, which is more expensive than Korea's.) 

Would Ford be dying if Ford designers, world-wide, had had access to Volvo and Mazda engineering and components years ago? (The flip: would Chrysler be dead if Daimler allowed it access to Mercedes components?) When designers use information technology to integrate components from federated sources, they have the capacity to introduce new vehicles more quickly, and make money on individual vehicles from comparatively few units sold. This has been true for consumer electronics for many years. 

ONE KEY TO making shrewd public policy, in other words, is understanding how products and services are actually assembled. Innovation--the driver of growth--is usually a matter of integrating in unique ways bits and snips of components, information, code, data, etc., from federated sources, much like a car (or a blog post, for that matter). The financial instruments that imploded were, after all, chunks of information--in the case of mortgage-backed assets, misinformation--derived and syndicated from federated lending institutions, integrated and bundled in novel ways, and distributed instantaneously over electronic networks--what Bill Gates called (too sunnily, obviously) "frictionless markets." 

There are obvious dangers here, but there is no going back: what we have here is a template for assembling pretty much every high-tech product or every high-tech manufacturing process that produces a low-tech product. The same template works for delivering professional services. Peer-to-peer networks are crucial; nobody is as smart as everybody. 

Too often, talk of "stimulus" is lazy, outdated, or vague. The government cannot save GM and Ford by giving them money and waiting for (or even mandating) advanced hybrids. Products don't succeed this way; the Chevy Volt will need to be a part of a family, its components quickly wrapped into a new Saab, or some new California sports-car wrapped around an I-Phone. And each of these models will face stiff competition from current global competitors. 

Government--more precisely, governments--will have to see these things, especially if they are going to help auto makers. There is a need for a tariff regime that would allow components to come from wherever they are designed and, or, competitively produced (the EU was crucial for Skoda getting components from Seat in Spain or Audi in Germany). There is a need to make R&D programs in crucial areas (batteries, fuel cells, etc.) more transparent and less burdened by potential IP battles, so that university labs and free-lance inventors can participate--programs no single company can afford any longer. There is a need to jumpstart a grid and social network for electric cars, as Israel is doing (or at least pretending to do). 

Most important, there is a need to stimulate innovation by entrepreneurial companies in the supplier base: by making patent protection harder to come by (therefore, less of an obstacle to start-ups), creating new ways for companies to share intellectual property (like IP exchanges), or creating incubators and tax breaks for new businesses. 

So. Can US companies use government funds to create things customers will actually want? If so, are there things all manufacturing companies need in common, like roads and bridges? If not, should rescue be forthcoming, or should Toyota (which is not exactly a Japanese company anymore) be allowed to take over GM's capacity in the hope it will reinvigorate its plants and suppliers? This would not be unprecedented, after all: during the generation before the year 2000, it took about 15 years for a third of the Fortune 500 to be selected out, that is, fail or be acquired; since 2000, it took about 4 years. 

THE MOST COMPELLING challenge remains the competitiveness of ordinary businesses--especially what we call, justifiably, knowledge-based entrepreneurial businesses. Perhaps 60,000 new businesses a year started up in the US during the 1960s; during the past decade, the annual number was closer to a million. We have to understand how and why barriers to entering businesses have fallen, how and why investors find new businesses (much more quickly than before), how companies survive using information platforms to design and market new things. Financial capital is not the only capital that flows or is regulated and managed. So is intellectual capital--and this is the more important kind. 

Correspondingly, engineering innovation is not only driven from the center, but from myriad peripheries: from product development teams in companies, and the entrepreneurial start-ups they tap into. And there is a role for government in managing up a national "network effect"--improving the quality and scale of knowledge sharing on the platform. Facilitating even marginal improvements in the exchange of knowledge will have an enormous impact on how we live. It will give a whole new meaning to the term "roads and bridges."

Monday, November 10, 2008

Next Week In Jerusalem

As we pack for the trip back to our Israeli home, I confess I found this remarkable film oddly reassuring--not for the crisis it depicts, of course, but for the spirit with which it was made. A fresh wind is blowing in Israel, too, quite different from the hamsin blowing from Judea during the past generation. I'll have much more to say about these cross-currents during the run-up to the Israeli election in February, which cannot but be shaped by America's changes. (Stick with the film at least until you get to Hebron, around minute 17.)

Wednesday, November 5, 2008

The Content Of His Character

I confess a certain impatience, on this poignant day, with all the earnest talk about how America achieved something remarkable yesterday by electing our first African-American president, as if the choice has been about race all along. I do not mean to diminish an historic first, like electing a Catholic in 1960; I, too, choked-up when John Lewis spoke. But relief today is not about Americans choosing an obviously black man over a white man, which proves we can come to terms with our past. It is about our choosing an obviously brilliant, reciprocal man over a thick, cynical one--a man who articulates a coherent vision of global commonwealth over someone advancing vague, military patriotism--which proves we can come to terms with our future.

Racism, it is true, did not confound the choice, as some predicted it would. But racism has not confounded mainstream admiration for The Cosby Show or Orprah or Tiger Woods--and hasn't for some time. Most of the 46% who voted for John McCain feel deeply anxious about a world in transition, where erudition, open-mindedness and intellectual discipline matter more and more, and their own sheer willingness to labor hard matters less and less. I bet they are more skittish about Obama's supremely elegant mind, his worldliness, than his dark skin; more drawn to the repudiation of "elitism" than to the rejection of "welfare."

Hillary (of all people) tried to unleash anti-intellectual, etc., demons and failed. It was she, remember, who tried to tell us that Obama's sincere compassion for people who, with their world collapsing, cling to God and guns, was a form of betrayal. Anyway, that McCain and his "strategists" failed, too, in spite of economic collapse, a failing war, and a sensational press, is a testament to Obama's steadiness and America's common sense.

Under similar circumstances, not so long ago, some European democracies turned to fascism--something Sarah Palin embodies, but doesn't begin to understand (though she can no doubt see the Wasilla library from her home). Her crypto-fascism is about all that's left to the Republican Party just now. It is also a relief that our kids--who get it, and get Obama, by a 2 to 1 margin--will slowly take command.

Tuesday, November 4, 2008

Community Organizer

Perhaps this says it all. 

Monday, November 3, 2008

The Closer

I do not pretend to have done nearly as much as I intended to, but this is New Hampshire--arguably, a battleground state, where McCain is still admired--and my Boston-based daughter and I have just come back from canvassing a couple of dozen of my neighbors for the Obama campaign. I think it is safe to say that one fear many of us have had is misplaced: that the lopsided polls would engender a kind of complacency, and people who might otherwise have turned out for the Obama ticket would stay home, expecting to take a free ride on others.

Even people in their 90s greeted us with the moral equivalent of a high-five. Nobody asked for help to the polls, or needed to know where they were voting. The last time I sensed anything like this level of enthusiasm for an election was when Pierre Trudeau swept into office in Canada in 1968.

There are some obvious reasons for this. Bush. The economy, or at least the television version of it, since the worst effects have not yet been felt. The war. The pundits (who shouldn't be the only ones to have some fun). But I think there is something else. The candidate.

John Kenneth Galbraith once said that political revolutions come when someone kicks through a rotting door. It has been a year since we've started hearing that Obama lacked kick, that he was "O'bambi," too likely to be swift-boated in a non-bean-bag world, too much Kumbaya. Who would have thought that so many people in New Hampshire, for God's sake, could get such a kick out of tact and integrity.

My daughter (who is 25) came home with me moved. "You can't imagine what this means to me," she said, "after thinking my generation was utterly without political passion." I answered: "You can't imagine what this means to me, someone who wept all night when Martin Luther King was shot, and then stayed up numb when Bobby Kennedy was shot." "You win," she said.

Friday, October 24, 2008

Hebrew Republic: A Lecture

Vanderbilt University troubled to record a recent lecture, which can be seen here.  Some may want to skip to the question period, which always produces newness.

Tuesday, October 21, 2008

Spreading The Wealth

In the early 1970s, when I was a young immigrant in Jerusalem, I found myself the head of my building's co-op committee. The job's main responsibility was collecting co-op fees (for heating oil, stair and entrance cleaning, etc.) from twenty-four immigrant families. Our mortgages had been heavily subsidized by the government; we came from all over the world. (One Iraqi family actually brought a lamb into the elevator at Passover, which never came down.) 

On the whole, it was a pleasant job. The problems started with my "Russian" neighbors, from the not-yet-former Soviet Union. I would knock on their door and invariably get a hug and a sweet and a coffee. What I wouldn't get was the 50 pounds they owed to the building. "We refuse," they would tell me, "we hate socialism."

Eventually, only one tenant from Kiev held out, and we all decided to let it go. He had lost his job; back "home," he had been imprisoned by the KGB. When you are young, and up against world-historical injury, you accommodate the odd obsession. Besides, the stupidity of his reason for refusal made a great story. It was also world-historical, in a way. What better way to show the perverted political culture you had in the Soviet Union? Show what happens, as it were, naturally, when the basic principles of democracy (social contract, commonwealth, etc.) are not taught and aggressively defended? 

I AM TELLING the story because I heard a debate Sunday on New Hampshire Public Radio between congressional candidates; and the Republican, Jeb Bradley said, among other things, that he was against new taxes of any kind because he was against "tax-payers bailing-out the government." The moderator did not contradict him, nor did his opponent. Nobody seemed to think this remark was just stupid. 

The problem, you see, is not simply that Joe the Plumber does not want to pay more taxes, and McCain says he's right. The problem is that Joe the Plumber doesn't want to reconcile two contradictory goods in his mind at the same time (the good of having a few hundred more dollars, the good of having roads, more paying customers, etc.) and the media on his lawn says he's a "demographic." Jeb Bradley and his party take for granted that government, "Washington," is something other than the things we do together. This has been a kind of infection on our democracy since Ronald Reagan started playing George Babbitt. The question is, what has become of our immune system?

Saturday, October 18, 2008

Things That We Know We Know

The post below, somewhat refined, was just published by Haaretz.  I might take this opportunity to say that the English-language version of the paper--book review, opinion, and web--now amounts to the most open-spirited English-speaking journal on Jewish affairs since Commentary of the early 1960s (before it, and its editor, became so narrow and weird).  Just check out the range and trenchancy of the Book Review

Haaretz's English edition editor, David B. Green, learned his craft at some of America's best magazines.  He is tireless, smart, erudite, and makes any writer better. He has also actively expanded the paper's reach through a daily and weekly update, which anybody who cares about Israel, and diaspora for that matter, should sign up for this very second by sending a note to David's email,

Sunday, October 12, 2008

Fast Forward

Anybody who's heard George Santayana's aphorism is condemned to repeat it, but what good do historical parallels really do us right now?

We know there are uncanny similarities to the onset of the Great Depression: as in the late 1920s, credit has locked up, for all the reasons we pretty much understand. We know that a pyramid scheme ran out of bottom, only homes, not stocks, were the bubbled assets. We know that some people made fortunes from the scheme, and inequalities in income are now a disgrace and macro-economic problem: in the short term, not enough buying power is stored up in the middle-class, whose incomes have eroded; whose net worth has taken a hit with the stock market plunge. In the long run, if unemployment rises, there will be a further spiraling down of the consumption that prompts growth.

BUT WE KNOW other things, too. Why forget them, of all times, now?

We know that the speed of moving information and capital today is unimaginably faster than in the early 1930s.

We know that the barriers to entering new business are unimaginably lower: that about 60,000 new business were created every year in the 1950s, and a million a year are created these days.

We know that product development cycles, once a decade long, are now, in an age of shared networks for prototyping and component sourcing, months.

We know (as former HBR editor Joel Kurtzman notes) US productivity--constant dollars per worker--has grown from about $71,000 in 1998 to about $85,000 today; so the "all-in-price" for manufacturing in the US is, given the weakened dollar, starting to look like China's in many cases. (IKEA, for example, recently announced it would manufacture for the US market in the US, not China.)

We know that trillions in capital has been accumulated by Asian and Middle Eastern sovereign wealth funds, and that they have no ways to earn acceptable rates of return unless they invest here.

We know that, if we can keep up more or less current levels of employment, we can retard a new cycle of mortgage defaults, and thus allow the government, and the financial institutions it will own, to eventually redeem much of the paper it is acquiring at fire-sale prices.

We know that, since governments have studied the Great Depression, they will act to shore up banks and new lending. We know that most Western governments will be prepared to provide stimulus and new levels of coordination.

We know, then, that growth will not be hampered by an absence of capital, skill, or will; that the key is quickly coordinating the match of capital to the enterprises that can use capital productively; that we can quickly prompt the next cycle of growth.

We know that an Obama administration would have broad support for investments in health care, energy infrastructure, education, and roads, trains and bridges--thus stimulating the economy, and sustaining reasonably high levels of employment.

We know, in short, that even if we have another "depression," its half-life can be months, not years; that the same (astonishing) information networks that allowed not-sufficiently-regulated financial services corporations to get us into this mess over months, not years, will allow new investments to fund innovations in months, not years; but that we urgently need the US government to signal that it will not only be the partner-insurer of last resort, but the partner-investor of first resort.

OH, THERE IS something we don't know. It is, as George Packer reminds us, how many people plausibly terrified by this crisis, barely educated people, and thus anxious not only about unemployment, but unemployability--people fattened by fast-food, narcotized by junk television, incited against talking heads, hungry for a loyal father, unsettled by sexual teasing, consoled by healthy-minded religion, inspired by do-or-die sacrifice, suspicious of retaliating others, raging at "New York": people who think like 1930s mobs, but who also think "history" is for elitists--will be bringing their panicked prejudices, not their cool-headed interests, into the polling booth.

Saturday, October 11, 2008

The Faith Of Sick Souls

This year, Harvard's veteran Worship and Study Congregation took over the Unitarian Church in Harvard Square for the High Holidays; the congregation's rabbi, Dr. Norman Janis, asked me to offer some thoughts during the Yom Kippur Torah service, which I was honored to do--especially in a space in which the memory of William James is strong. Consider this a sermon for (permanently) recovering souls. If you are what James called, with graceful irony, "healthy-minded," you may want to give this a miss.

Mostly, today, we stipulate our faults and plead for forgiveness. I want to revisit this morning some things we seem to know in our bones but don’t really discuss very much. Yom Kippur’s liturgical parts—I don’t just mean the Torah and Avodah services, but the prayers and piyutim themselves—are fascinating for many reasons, but most of all perhaps for their often morbid overtones, which produce, ironically, a kind of crescendo of meaning by the end of the day. How does this work?

It is obvious, I suppose, why the contemplation of death, and inevitably one’s own death, is so gripping. But why should the poetics of death—not afterlife, but oblivion–seem so consonant with, of all things, relief? Let me ask this another way—still in keeping with the metaphoric of the day. Why, if we are merely clay in the hands of a potter—and an apparently indifferent potter at that—do we feel more, not less, substantial? Why, if we are matter, do we matter?

Read the entire sermon here.

Tuesday, October 7, 2008

Bookslut: The Interview

My thanks to Paul Morton for putting this interview together.  The process was illuminating for me as well. 

Friday, October 3, 2008

Big-Digging Ourselves Out

Senator McCain says he'll lead us out of this crisis by freezing federal spending on everything but "defense" and entitlements. He will (and this now seems just a corollary) end earmarks as we know them: no new spending on schools and colleges, health insurance, hospitals and claims processing, bridges (to somewhere), bullet-trains, dikes, and green power--in short, on none of Senator Obama's promised investments in next generation infrastructure and intellectual capital.

On the surface, this seems a responsible, if unfortunate, plan. Jim Lehrer's relentless, smug debate question--"What are you prepared to give up?"--implicitly pointed to McCain's answer. But the question was simple-minded. And McCain's response shows that he understands how we got here about as well as he understands how Iraqis get to democracy.

MCCAIN, LIKE BUSH, thinks a surge of "shopping" will follow the bail-out--and it might. Obama's middle class tax cuts may, indeed, make sense if we want to mitigate an immediate recession. The problem is that, like Anbar warlords, American consumers will continue to be subsidized by more of the money we borrow from overseas lenders. We consume about two billion more a day than we produce. What can we do about that?

Put this another way. What would a competent bond-rating agency say about U.S. debt denominated in a steadily devalued currency? Would an auditor endorse a corporate strategy that shows no way of getting past a pattern of spending more than it earns? Worse, will sane venture capitalists invest in college graduates like, well, Sarah Palin?

Palin told Katie Couric--she was talking about climate change--that it doesn't matter how we got here, it matters that we act. But, no, if we don't know how we got here, we won't know how to act. So let's assume, with the House acting today, that our current crisis of short-term credit can be overcome. What will happen to long-term investment when it becomes clear how the worsening structural imbalances producing the current crisis persist. How did we get here?

One. Chinese companies, banks and funds have accumulated about one and a half trillion dollars in recent years, largely by manufacturing (though not mostly designing) our stuff, and they've invested much of this back in Western capital markets. The sovereign wealth funds of the petroGulf, with as much a three trillion in accumulated capital, have also pumped about sixty percent of their assets back into Western capital markets.

Here's the deal: by linking their currencies to the falling U.S. dollar they have deliberately kept their currencies undervalued (in effect, a subsidy by their emerging entrepreneurs of our consumption) in the forlorn hope of keeping our growing number of stagnant-wage-workers--people who cannot move from closing factories to knowledge businesses--buying at Walmart and putting gas in Chevy (or increasingly, Toyota) trucks.

Two. Since money was so plentiful, what financial services company would not try to cash in by collecting fees lending it in all kinds of new-fangled ways? With easy credit, easy mortgages, etc., housing prices rose--and looked like they'd never come down. Families took on more and more debt, that is, to buy what they needed and make up for the money they were not earning in wages.

Three. The debtors' bubble predictably burst.

Four. This also became the creditors' bubble.

THERE IS ONE way out: invest now, and heavily, in people and infrastructure.

"Wall Street's success in generating wealth beyond their expectations led to an overconfidence in their abilities to properly judge the riskiness of their own investments," says Steve Cucchiaro, the President and Chief Investment Officer of Boston's Windward Investment Management, "so they finally over-leveraged themselves, not just the struggling people they sold debt to.

"Bailing-out financial services companies is for now; we have to do it. But the long term problem remains. Who works, who earns what, what do we make, and what do we buy?" The picture, he suggests, has not been pretty: too few of our people making the things the world needs, too many of people borrowing to buy oil and junk. But there is another way to think about this:

"Boston has just seen the Big Dig," Steve continues, "nearly $15 billion invested in opening up Boston's harbor to ten times that sum in new investment. The Big Dig was ridiculed for marginal cost over-runs. But it created more efficient roads and tunnels, taught engineers, inspired architects, and created great jobs for a generation of logistics experts, builders and contractors, whose children had more stable homes.

"Would it have been better if the $15 billion had come into the economy as a stimulus program ultimately financed by borrowing from foreign sources, money that sent the very rich to buy yet more luxury goods and the middle class to the malls to buy things, and often frivolous things, made in China?"

NONE OF THIS is new, perhaps. But I'm flogging it because we have to keep the big picture in mind and not get distracted with purely psychological game theories. Labor productivity (that is, the ratio of smart machines to people) is rising in American companies that are surviving global markets. But if as Warren Buffet says, we get to 11% unemployment, that is a different crisis than 6%. And if the 89% that is working is earning (in real terms) 20% less than workers did a generation ago, what eventually becomes of demand at the malls?

There is obviously a crisis of confidence. But flocking behavior does not explain everything. If lenders are going to have confidence in our future, they will not be counting on old ways of getting us into stores: borrowed tax cuts, borrowed government give-backs, borrowed equity loans, etc. They want to see not just Main Street with the confidence to consume. They need to have confidence that Main Street has the education and infrastructure to produce.