Wednesday, February 27, 2013

Tribes With Flags. By Aaron David Miller.

Tribes With Flags. By Aaron David Miller. Foreign Policy, February 27, 2013.

How the Arab Spring has exposed the myth of Arab statehood.

Why Aaron David Miller is lame, cliché, and offensive. By Issandr El Amrani. The Arabist, March 1, 2013.

More on Egypt and Morsi here.


And even in ethnically homogenous Egypt, religious identity defines the fault lines of the country’s turbulent political life. President Mohamed Morsy’s first allegiance isn’t to the notion of an inclusive nation, but to the Muslim Brotherhood’s conception of Islamist governance. And let’s be clear, membership in the Brotherhood isn’t like joining a health club: It requires years to gain entry, and it’s a way of life that demands a comprehensive worldview. Like the Eagles’ Hotel California, you can check out but you can never leave.

Evolution of Liberal Dance: A Parody of Michelle Obama. By Michelle Malkin.

Parody video: Evolution of Liberal Dance. By Michelle Malkin., February 24, 2013. At YouTube.

Evolution of Mom Dancing (with Jimmy Fallon and Michelle Obama). Video. Late Night, February 22, 2013. YouTube.

Can Someone Please Explain How This Michelle Malkin Video Is Funny? By David A. Graham. The Atlantic, February 26, 2013.

What the Hagel Victory Means. By Stephen M. Walt.

What the Hagel victory means. By Stephen M Walt. Foreign Policy, February 27, 2013.

I’d like to thank the Senate Armed Services Committee. Foreign Policy, February 1, 2013.

Treachery at the Top in Afghanistan. By Ralph Peters.

Treachery at the top in Afghanistan. By Ralph Peters. New York Post, February 26, 2013.

Will the Muslim Brotherhood Heed Allah or Tom Friedman? By Barry Rubin.

Who Will the Muslim Brotherhood Heed: Allah or Tom Friedman (and such people)? No Contest. By Barry Rubin. Rubin Reports. PJ Media, February 26, 2013.

Are Republicans Going the Way of the Whigs? By Richard Reeves.

Are Republicans Going the Way of the Whigs? By Richard Reeves. Real Clear Politics, February 22, 2013.

1 Kitty, 2 Empires, 2,000 Years: World History Told Through a Brick. By Alex Madrigal.

1 Kitty, 2 Empires, 2,000 Years: World History Told Through a Brick. By Alex Madrigal. The Atlantic, February 21, 2013.

America’s Red State Growth Corridors. By Joel Kotkin.

America’s Red State Growth Corridors. By Joel Kotkin. Wall Street Journal, February 25, 2013. Also find it here.

Red States Leap Ahead. By Walter Russell Mead. Via Meadia, February 27, 2013.

America’s Growth Corridors: The Key to National Revival. By Joel Kotkin. Civic Report No. 75, February 2013. The Manhattan Institute. PDF.

Executive Summary:

Much of the discussion about American economic recovery and growth in 2012 focused on the usual suspects: regions on the Pacific and Atlantic coasts and on the shores of the Great Lakes. But the best recent economic record, as well as the best prospects for future prosperity, are to be found elsewhere in the United States.

We have identified four regions of the country that we call “growth corridors.” What they lack in media attention they make up for in past performance and likely future success. Over the past decade-and, in some cases, far longer-these regions have created more jobs and gained more population than their counterparts along the ocean coasts or along the Great Lakes.

The four growth corridors are:

1. The Great Plains region, made up of Montana, Wyoming, Colorado, New Mexico, Texas, Oklahoma, Kansas, Nebraska, and the Dakotas.

2. The “Third Coast” stretch of counties whose shores abut the Gulf of Mexico and which range through Texas, Louisiana, Mississippi, and Florida.

3. The “Intermountain West,” consisting of counties in the north of New Mexico and Arizona, parts of eastern California and western regions of Montana, Wyoming, and Colorado, as well as the non-coastal eastern regions of Oregon and Washington and all of Idaho, Utah, and Nevada.

4. The “Southeast Manufacturing Belt” of counties in eastern Arkansas, all of Tennessee, and large swaths of Kentucky, the Carolinas, Georgia, Alabama, Mississippi, and southwestern Virginia.

These regions have different histories and different trajectories into the future, but they share certain key drivers of economic growth: lower costs (particularly for housing); better business climates; and population growth. Some have benefited from the strong global market for commodities, particularly food, natural gas, and oil. Others are expanding because of a resurgence in manufacturing in the United States.

In this report, we describe the growth corridors in some detail and explore what their success means for the country as a whole. Part 1 describes what the corridors are, in terms of geography, population, and history. Part 2 explains why they are succeeding while America's traditional economic powerhouses are growing at relatively anemic rates. Part 3 explains how the growth corridors are advancing, noting the key industries in each. Part 4 considers the contrast between the growth corridors and the rest of the nation and explains why the growth-corridor mix of culture and policies is crucial to the future success of the United States.

To be sure, New York, Los Angeles, the San Francisco Bay Area, and Chicago will remain the country’s leading metropolitan agglomerations for the foreseeable future. But an important urban story of the coming decades will be the emergence of interior metropolitan areas such as Houston, Dallas–Fort Worth, Tampa, Oklahoma City, and Omaha. On a smaller scale, fast-growing Lafayette (Louisiana), Baton Rouge, Midland (Texas), Sioux Falls (South Dakota), Fargo, and a host of other smaller cities will continue to expand. We may also witness the resurgence of New Orleans as a leading cultural and business center for the south and the Gulf Coast.

This ascendancy of the growth corridors follows one of the great principles of American history. The “most important effect of the frontier,” as Frederick Jackson Turner noted, was how it promoted democracy by spreading opportunity. The expanding frontier-then rural, now metropolitan-reinforces the fundamental individualism at the core of American culture.

Equally important, the corridors reveal the most immediate way to propel a broad growth trajectory for the entire United States. By restoring a strong growth path, as well as the optimism that accompanies it, the corridors could help bring about a resurgence whose benefits will extend far beyond their boundaries to touch the entire nation.

The Self-Destruction of the 1 Percent. By Chrystia Freeland.

The Self-Destruction of the 1 Percent. By Chrystia Freeland. New York Times, October 13, 2012.


IN the early 14th century, Venice was one of the richest cities in Europe. At the heart of its economy was the colleganza, a basic form of joint-stock company created to finance a single trade expedition. The brilliance of the colleganza was that it opened the economy to new entrants, allowing risk-taking entrepreneurs to share in the financial upside with the established businessmen who financed their merchant voyages.

Venice’s elites were the chief beneficiaries. Like all open economies, theirs was turbulent. Today, we think of social mobility as a good thing. But if you are on top, mobility also means competition. In 1315, when the Venetian city-state was at the height of its economic powers, the upper class acted to lock in its privileges, putting a formal stop to social mobility with the publication of the Libro d’Oro, or Book of Gold, an official register of the nobility. If you weren’t on it, you couldn’t join the ruling oligarchy.

The political shift, which had begun nearly two decades earlier, was so striking a change that the Venetians gave it a name: La Serrata, or the closure. It wasn’t long before the political Serrata became an economic one, too. Under the control of the oligarchs, Venice gradually cut off commercial opportunities for new entrants. Eventually, the colleganza was banned. The reigning elites were acting in their immediate self-interest, but in the longer term, La Serrata was the beginning of the end for them, and for Venetian prosperity more generally. By 1500, Venice’s population was smaller than it had been in 1330. In the 17th and 18th centuries, as the rest of Europe grew, the city continued to shrink.

The story of Venice’s rise and fall is told by the scholars Daron Acemoglu and James A. Robinson, in their book “Why Nations Fail: The Origins of Power, Prosperity, and Poverty,” as an illustration of their thesis that what separates successful states from failed ones is whether their governing institutions are inclusive or extractive. Extractive states are controlled by ruling elites whose objective is to extract as much wealth as they can from the rest of society. Inclusive states give everyone access to economic opportunity; often, greater inclusiveness creates more prosperity, which creates an incentive for ever greater inclusiveness.

The history of the United States can be read as one such virtuous circle. But as the story of Venice shows, virtuous circles can be broken. Elites that have prospered from inclusive systems can be tempted to pull up the ladder they climbed to the top. Eventually, their societies become extractive and their economies languish.

That was the future predicted by Karl Marx, who wrote that capitalism contained the seeds of its own destruction. And it is the danger America faces today, as the 1 percent pulls away from everyone else and pursues an economic, political and social agenda that will increase that gap even further — ultimately destroying the open system that made America rich and allowed its 1 percent to thrive in the first place.

You can see America’s creeping Serrata in the growing social and, especially, educational chasm between those at the top and everyone else. At the bottom and in the middle, American society is fraying, and the children of these struggling families are lagging the rest of the world at school.

Economists point out that the woes of the middle class are in large part a consequence of globalization and technological change. Culture may also play a role. In his recent book on the white working class, the libertarian writer Charles Murray blames the hollowed-out middle for straying from the traditional family values and old-fashioned work ethic that he says prevail among the rich (whom he castigates, but only for allowing cultural relativism to prevail).

There is some truth in both arguments. But the 1 percent cannot evade its share of responsibility for the growing gulf in American society. Economic forces may be behind the rising inequality, but as Peter R. Orszag, President Obama’s former budget chief, told me, public policy has exacerbated rather than mitigated these trends.

Even as the winner-take-all economy has enriched those at the very top, their tax burden has lightened. Tolerance for high executive compensation has increased, even as the legal powers of unions have been weakened and an intellectual case against them has been relentlessly advanced by plutocrat-financed think tanks. In the 1950s, the marginal income tax rate for those at the top of the distribution soared above 90 percent, a figure that today makes even Democrats flinch. Meanwhile, of the 400 richest taxpayers in 2009, 6 paid no federal income tax at all, and 27 paid 10 percent or less. None paid more than 35 percent.

Historically, the United States has enjoyed higher social mobility than Europe, and both left and right have identified this economic openness as an essential source of the nation’s economic vigor. But several recent studies have shown that in America today it is harder to escape the social class of your birth than it is in Europe. The Canadian economist Miles Corak has found that as income inequality increases, social mobility falls — a phenomenon Alan B. Krueger, the chairman of the White House Council of Economic Advisers, has called the Great Gatsby Curve.

Educational attainment, which created the American middle class, is no longer rising. The super-elite lavishes unlimited resources on its children, while public schools are starved of funding. This is the new Serrata. An elite education is increasingly available only to those already at the top. Bill Clinton and Barack Obama enrolled their daughters in an exclusive private school; I’ve done the same with mine.

At the World Economic Forum in Davos, Switzerland, earlier this year, I interviewed Ruth Simmons, then the president of Brown. She was the first African-American to lead an Ivy League university and has served on the board of Goldman Sachs. Dr. Simmons, a Harvard-trained literature scholar, worked hard to make Brown more accessible to poor students, but when I asked whether it was time to abolish legacy admissions, the Ivy League’s own Book of Gold, she shrugged me off with a laugh: “No, I have a granddaughter. It’s not time yet.”

America’s Serrata also takes a more explicit form: the tilting of the economic rules in favor of those at the top. The crony capitalism of today’s oligarchs is far subtler than Venice’s. It works in two main ways.

The first is to channel the state’s scarce resources in their own direction. This is the absurdity of Mitt Romney’s comment about the “47 percent” who are “dependent upon government.” The reality is that it is those at the top, particularly the tippy-top, of the economic pyramid who have been most effective at capturing government support — and at getting others to pay for it.

Exhibit A is the bipartisan, $700 billion rescue of Wall Street in 2008. Exhibit B is the crony recovery. The economists Emmanuel Saez and Thomas Piketty found that 93 percent of the income gains from the 2009-10 recovery went to the top 1 percent of taxpayers. The top 0.01 percent captured 37 percent of these additional earnings, gaining an average of $4.2 million per household.

The second manifestation of crony capitalism is more direct: the tax perks, trade protections and government subsidies that companies and sectors secure for themselves. Corporate pork is a truly bipartisan dish: green energy companies and the health insurers have been winners in this administration, as oil and steel companies were under George W. Bush’s.

The impulse of the powerful to make themselves even more so should come as no surprise. Competition and a level playing field are good for us collectively, but they are a hardship for individual businesses. Warren E. Buffett knows this. “A truly great business must have an enduring ‘moat’ that protects excellent returns on invested capital,” he explained in his 2007 annual letter to investors. “Though capitalism’s ‘creative destruction’ is highly beneficial for society, it precludes investment certainty.” Microsoft attempted to dig its own moat by simply shutting out its competitors, until it was stopped by the courts. Even Apple, a huge beneficiary of the open-platform economy, couldn’t resist trying to impose its own inferior map app on buyers of the iPhone 5.

Businessmen like to style themselves as the defenders of the free market economy, but as Luigi Zingales, an economist at the University of Chicago Booth School of Business, argued, “Most lobbying is pro-business, in the sense that it promotes the interests of existing businesses, not pro-market in the sense of fostering truly free and open competition.”

IN the early 19th century, the United States was one of the most egalitarian societies on the planet. “We have no paupers,” Thomas Jefferson boasted in an 1814 letter. “The great mass of our population is of laborers; our rich, who can live without labor, either manual or professional, being few, and of moderate wealth. Most of the laboring class possess property, cultivate their own lands, have families, and from the demand for their labor are enabled to exact from the rich and the competent such prices as enable them to be fed abundantly, clothed above mere decency, to labor moderately and raise their families.”

For Jefferson, this equality was at the heart of American exceptionalism: “Can any condition of society be more desirable than this?”

That all changed with industrialization. As Franklin D. Roosevelt argued in a 1932 address to the Commonwealth Club, the industrial revolution was accomplished thanks to “a group of financial titans, whose methods were not scrutinized with too much care, and who were honored in proportion as they produced the results, irrespective of the means they used.” America may have needed its robber barons; Roosevelt said the United States was right to accept “the bitter with the sweet.”

But as these titans amassed wealth and power, and as America ran out of free land on its frontier, the country faced the threat of a Serrata. As Roosevelt put it, “equality of opportunity as we have known it no longer exists.” Instead, “we are steering a steady course toward economic oligarchy, if we are not there already.”

It is no accident that in America today the gap between the very rich and everyone else is wider than at any time since the Gilded Age. Now, as then, the titans are seeking an even greater political voice to match their economic power. Now, as then, the inevitable danger is that they will confuse their own self-interest with the common good. The irony of the political rise of the plutocrats is that, like Venice’s oligarchs, they threaten the system that created them.

America’s Middle Class Goes Global. By Chrystia Freeland.

America’s middle class goes global. By Chrystia Freeland. Reuters, October 15, 2012.


President Barack Obama did a miserable job of making his own case last week. But speak to his supporters and the pitch is clear: The American middle class is being hollowed out; Obama’s self-appointed mission is to try to save it.

That is what I heard from Jeffrey Liebman, one of the president’s economic advisers, at a debate about the election I moderated at Columbia University on Monday. Liebman said the central difference between his candidate and Mitt Romney was the president’s view that trickle-down economics doesn’t work. Instead, he believes policy needs to focus on the middle class. Economic growth, he said, should come from the middle and radiate out.

In a separate interview, Mark Gallogly, co-founder of the private equity and credit investment firm Centerbridge Partners and one of Obama’s earliest supporters on Wall Street, likewise emphasized the middle class. The president’s overriding concern, Gallogly told me, was with the workers who make $24,000 a year. Their lot is a pressing issue, Gallogly argued, because even before the recession there had been persistent downward pressure on middle-class wages. Yesterday’s middle-class job can land you among the working poor today.

You may be tempted to say that focusing on the middle class is about as distinctive as supporting motherhood. That is true enough. Two things stand apart in the Obama administration’s analysis of the problem.

One – and this is what has really riled the billionaire set – is Obama’s belief that making the world safe for American business doesn’t automatically translate into a rescue of the American middle class. The second, related idea is that the globalized, high-tech economy of the 21st century poses a particular challenge to the sorts of well-paid jobs that were the backbone of the U.S. middle class in the 20th.

These are two powerful assertions. What is missing is the connection between this domestic focus on the middle-class American worker and Obama’s foreign policy agenda.

At this stage in the campaign, it would probably be political malpractice to ask the president to venture into this esoteric land, appealingly dubbed “geo-economics” by its most wonkish explorers. So far only Tom Friedman of the New York Times has managed to explore this terrain and retain his popular following, and a lot of proper nouns and metaphors have been tortured in the process.

But if the president is serious about creating a 21st-century agenda for the American middle class, he needs to connect the dots between his domestic and foreign policy in a new way. (Judged on his own terms, this intellectual challenge is less pressing for Romney, who is sticking with the Reaganomics view that the way to aid the middle class is to support American job-creating businesses and individuals through lower taxes and less regulation.)

It isn’t hard to explain why a domestic middle-class jobs policy has to be part of Obama’s foreign policy. In a globalized economy, jobs no longer need a passport, but workers do. Creating jobs for your country’s workers is about much more than ensuring that the balance sheets of your country’s companies are strong, or stimulating domestic demand. It is about figuring out how your country’s workers fit into the global economy.

But while that problem has become obvious to a lot of us, the solutions are more elusive. In lieu of answers, here are a few starting points.

The first is to understand and accept that the old link between the prosperity of your nation’s companies and of your nation’s middle-class workers is much more fragile than it was in the past. The operative word is accept – the left scores political points but offers little substance when it berates chief executives or private equity investors for making profits even as they shrink their domestic workforce.

Corporations are not employment agencies, and judging them by that metric is a mistake. Likewise, while it can be fun for liberals to criticize business for going global, consider the alternative: Would America, or any other modern industrialized nation, really be better off if its companies failed to integrate themselves into the world economy?

A related idea is to understand that capital, and capitalists, really have become global. Here, again, the liberal temptation is to mock the billionaires who threaten to pull a John Galt and exit the national economy if they are mistreated. But as the example of Eduardo Saverin, the co-founder of Facebook who renounced his U.S. citizenship, shows, this threat has moved from Ayn Rand’s 1950s fantasy to real life.

Finally, to end on an encouraging note, champions of their own national middle class need to start seeing their problem as a global one. We are used to thinking about the traditional concerns of foreign policy – wars, disarmament, even energy and the environment – as international issues that require some degree of collective action. The hollowing out of the middle class is a problem common to all Western industrialized economies. Maybe we should work together to solve it.