Wednesday, January 30, 2013

Wrong Debate

With American Economy shrinking (as per the first reading, it will be revised later to reflect exact numbers) in the last quarter of 2012, shocks of 'austerity cuts' are vibrating through politics. Already few on Right are licking their lips that, finally Right is getting what they have been wanting so long - another recession during Obama Term so that they can blame Barack Obama. Too bad, it came a quarter late else Mitt Romney would have been the president! (No he would not; since Latinos, LGBTs and many other components of Obama vote bank would have still stuck with him; the 'hate' sprouted by GOP and Mitt was too much for large parts of American Society to swallow anyways.)

With 'sequester' about to happen; more Defense Cuts are in works and that much impact will be on Economy too. May be President Obama has to 'make the call' that it is much better to pay the price of  'economic impact of defense cuts' now, else we are never going to get an opportunity to reduce Defense spending orderly. Shocks to Economy when Defense Cuts happen, it is nothing new. It happened when Cold War ended, but then America reaped the 'peace dividend' too. In any case, even after sequester, America would be still spending more than average what it did during the Cold War.

The issue is other half of 'sequester' which falls on many relevant social and future investment programs. Paul Ryan and Gang is waiting for 'call uncle cry from Democrats' to get what they want - unrelated entitlement cuts.

That debate - entitlement cuts - is wrong because how GOP is positioning its arguments: to get our fiscal house in order, not to encourage culture of 'dependency' and variations on Romney's 47% takers argument. The real argument GOP needs to make is:
- Debt in itself is not bad. We do that all the time during Wars as well when we do investments for future.
- What is wrong with entitlement spending is we are loading on Fed Credit Card for reasons which are hardly going to help us in future. We are not loading our credit cards to do investments in our infrastructure or tomorrow's workers. We are doing that to take care of Grandma's health when her entire life time's contribution to Medicare has been around one third of what it costs.

It may be good politics to thunder in an inauguration speech that we do not have to make choices between 'investments for future' and 'taking care of our old people'. But it is wrong because the real question is 'how can we take care of our older people in fiscally responsible way' so that we do not crowd out 'what is needed to invest in future'.

Neither GOP talks about 'debt for future investments' nor ' they want to address moral obligation of taking care of old people in fiscally responsible way'. 

With Obama win and his fierce articulation of entitlement defense in recent days; Democrats almost feel that they can get away without any changes in Medicare and health care entitlements. But that is not a smart 'debt' to accumulate nor Paul Krugman is right to argue that we leave those programs unchanged until we face insolvency of Medicare in 2030. Solvency is besides the point. Point is to ask the question - every dollar which we borrow right now, we borrow it for what purposes - taking care of Grandma or future investments to grow our Economy?

Kamal Haasan Come to California!

This is a heartfelt confession by an accomplished artist Kamal Haasan that he may have to look for a secular place, possibly outside of India, if Supreme Court (and political class) does not come to senses. Yet another example of 'how misplaced intellect of Indian State Establishment is'. 

It is not the case that Kamal Haasan would not have transgraced acceptable levels of 'dos and don'ts'. (Have not seen the film so cannot comment.) But general norm in this case is:
- State to err on the side more liberal approach so that artist gets their freedom to express what they want;
- because what is transgracing by an artist today, on many occasions lays foundations for tomorrow's change.

This is especially crazy considering Kamal Haasan showed willingness to make necessary changes so that the film probably remains less provocative. 

Sad affair and yet another reminder that Indian Establishment continues to be unable to think through straight.

May be Motion Picture Academy while doling out Oscars on Feb 24, gives the call to invite Kamal Haasan to settle in California. That is will be a great addition to California's diverse film scene considering the  extraordinary repertoire of what Kamal Haasan has accomplished over years.

Update - The ban is gone, common sense has prevailed. That is great, eager to watch the movie.

Saturday, January 26, 2013

Aam Aadmi Party

As India celebrated its 64th Republic Day, it it is a good time to appraise how are things looking in this huge country which is undergoing dramatic and fast changes. One sense is India has lagged in economic development compared to China.

Despite experiments in liberalization for last two decades,  structurally Indian Economy still remains skewed. Supply side claptraps always make it impossible for India to contain 'inflation'. Pervasive corruption and lack of transparency are true reasons for structural flaws. Add to that residual influence of socialism where people want State to control prices as an answer to inflation and where many expect State to provide certain basic human needs like education and health 'free' (case in point - Hindi Vision of Aam Aadmi Party). Fear of Globalization as many negative impacts of globalization and modernization start to percolate through all layers of society, contribute to hesitancy by India's forces of change. 

Problem is despite Anna Hazare phenomenon, Indian Polity is simply not adopting Eradicating Corruption, Transparency and Rule of Law as most important issues to address. Nor competitive electoral pressure is forcing established Indian Political Parties to address this issue. True, from Left to Congress to BJP to Regional Parties; all are busy in 'looting the nation'; no wonder these Political Parties are working as a 'cartel' and avoiding the issue of Corruption altogether.

After starting the fight against Corruption, Anna simply lost in weeds by excessively focusing on certain arcane aspects of 'Lokpal'. True, India should have corruption free Union Cabinet. But neither Anna had basic 'read' of what is wrong in India nor any rudimentary political sense to realize that he needed to midwife a political party like Aam Aadmi Party rather than to quibble with them to sap energy of folks who can be India's solution. What we need is legal and justice system to work at district and state level, transparency all across governments and enforcement of laws. Instead to allow Congress Party make Politics of whether PM to be included in Lokpal or not is laughable. Politically Anna Hazare was totally mauled by Congress. It was not just the loss of credibility of an  individual like Hazare, but the cause of 'fighting corruption' suffered too.

All these are reasons why I see lot of hope in the political response like Aam Aadmi Party (AAP). That is the right response you expect in a working competitive democracy - that a party makes the issue of 'corruption fight' as the core of its brand and philosophy. Not only AAP has found the key of what ails India, it is an encouraging sign that Indian Democracy is still alive. In words of President Obama (when he responded to fiscal cliff and GOP threat of not honoring America's Sovereign Debt Servicing), 'India is not a dead beat nation'!

AAP is in infancy and there is a long way before any meaningful change can be achieved. India has seen many brand new political formations and many attaining even spectacular election victories.  It definitely happens at regional level (Telgu Desam party of late NT Ram Rao), but at national level as well. Founded by Kanshi Ram and nurtured by Mayawati, BSP is a classic tale of glorious politicking in contemporary modern India. But more or less none of these political parties started with the singular purpose of 'fighting corruption' and almost all of them fully immersed themselves in the same dirt of corrupt governance. Most of these electoral formations failed to translate those glorious election victories in lasting changes based on some substantive agenda.

Of course, worrying about pitfalls of implementing your agenda is very distant for AAP since before that they need to attain some noticeable election success. But World has changed over years, especially as Web and Social Media have invigorated democracy across the board. If Lapid's Yesh Atid movement can help bring change in Israel in shot period and many Arab Countries see their youths taking to streets to make core changes; then India can produce AAP to effect change too.

Though most of the established parties in India are deeply entrenched, they are equally incapable of what AAP promises to offer uniquely - fight corruption. Based on Rahul's Speech or Narendra Modi's heady victories emboldening him to forget what is truly needed by India; none of these established leaders show any urgency of making truly epochal alterations in Indian way of life. That is the opening for formations like AAP - that their competitors are simply incapable of coming to their turf.

As established political forces may turn out to be 'brittle in the end'; defeating them is not easy at all. Rather core challenge to AAP is what I call 'residues of socialistic' thinking. It is understandable that you do not go to hustings without making some 'exciting and dreamy' promises. If those smell 'socialistic', so be the case. But what a political start-up like AAP cannot forget is - the stage at which Indian Economy is;  dividends to be exploited by way of unleashing Market forces are simply too large to miss. Because AAP is all about 'corruption free transparent' ways of transacting business; its vision is unique to fully realize benefits and superiority of Capitalism practiced well. As others have noted, Indian Middle Class is one of the rarest in the world to depend most on Private Sector than State for its basic needs like Education, Health Care and Utilities. Opportunity is there to build upon this foundation to develop a society which is embodiment of 'self-help' and 'people solving their own problems' rather than (what GOP derides) 'developing the culture of free-riders'. With residue socialism, not only AAP would miss to understand advantageous offerings of Capitalism, it may not even fulfill what it promises even if Indian voters give her the precious chance of governance down many years. That is the real danger. Early ages of a political party is the perfect time to develop these appropriate moorings before calcification of collective memory happens.

Friday, January 25, 2013

Filibuster Reforms and Left

Left is uniformly upset that Senate Majority Leader Harry Reid dropped the ball and entered into a pale version agreement with Minority Leader McConnell.

I think it is time for Left to deal with it and move on. On political grounds, for Democrats to invoke the 'nuclear option' - use simple majority of 51 votes to change Senate rules - would have been very, very bad. For a starter, Republicans are already trying to set the 'meme' that President Obama is out to 'break GOP' rather than governance. Of course, it suits them to pick up on what few on Left dreamed after feisty President Inauguration to spur up their demoralized party as well as to be a step ahead in coming political battles about fiscal issues with Democrats. On this background, to have a headline like 'Senate Dems join President to push partisan agenda' would neither help Democrats in Congress nor White House.

President Obama very noticeably has been absent from this Senate Reform debate all along; for a reason - not only does he not want to portray the picture of a president meddling in affairs of Congress (in any case Congress is so unpopular), he wants to 'jump over dysfunctional Congress' to reach American Public to move his agenda. Then why bother getting involved in inane ways of Senate? 

With so many critical budget and fiscal 'balls in air'; what incentive is there for Senator Harry Reid to burn bridges with Republicans totally? There are nominations pilling up to be confirmed, there is a budget to be passed (I know, such a novelty for Senate!) and given totally collapsed relationship between House Republicans and White House, it will be the Senate which will have to midwife any workable resolutions to nations intractable problems (like Biden-McConnell fiscal cliff accord). One of the top priorities for Democrats will be to realize remaining part of 'revenue increase via tax reforms'. Yes, Sen. McConnell is not going to support tax reform revenue increase just because Democrats avoided the 'nuclear option' on filibuster; but he would certainly ratchet his 'nihilism' many levels up to screw up the entire place otherwise. (Agreed, it is part 'ransom' here, but Dems demanded too in past.)

The point of Democrats themselves having used 'filibuster technique' in past to stop Republican agenda is self-explanatory enough. Some on Left accuse Senator Reid that by enacting filibuster reforms he does not want to loose his 'importance' in Senate whether Dems are majority or become minority. Like any other typical politician, Senator Reid is no saint. But no one on Left can forget that in the darkest Democratic hour  in the last decade - just after emphatic re-election of Bush in 2004 with no Democratic leverage in Congress - it was freshly elected Senator Reid who single-handedly carried the Democratic fight as Senate Minority Leader and lone savior of Democrats (before Nancy broke the ceiling glass in 2006 to join him). The only punch that willy boxer had then was of 'filibuster'. 

True, as this old guard fades; younger generation of Senators may revisit this filibuster debate. In any case  certain provisions of Reid-McConnell 'understanding' (it cannot be even called any formal agreement or accord; it so thin) are only for 2 years and the debate will be continued in January of 2015 after mid-term elections. And that is the point, yes Senate is broken and our Congress has become dysfunctional. But changes must come from the political pressure of People. Let Senate make 'calls' whether it wants to remain 'relevant' to needs of Americans and if so, how. Legislatures are broken all over the world for one reason or the other. But to believe 'past legislatures' were some kind working version of idealized world, that is just naive. 

Today, pressure from American Public is for far more pressing needs of 'repairing our economy and immigration reforms'. Neither Public would be interested in 'by-laws of Senate Proceedings' nor it would find it useful that our politicians are spending precious political capital on issues which do not directly benefit American People.

As far as Left goes, they need to keep 'learning' in choosing battles; else nothing would be achievable and feisty Obama would simply remain a forgotten chapter in History.

Thursday, January 24, 2013

Whose Advice - Friedman or Sullivan?

As Sen. John Kerry starts his confirmation for the post of Sec. of State, there is bit of a debate in giving an advice to the incoming secretary of state. We have New York Times columnist Tom Friedman opening the inning as:

"On Israel-Palestine, the secretary of state should publicly offer President Mahmoud Abbas of the Palestinian Authority the following: the U.S. would recognize the Palestinian Authority in the West Bank as the independent State of Palestine on the provisional basis of the June 4, 1967, lines, support its full U.N. membership and send an ambassador to Ramallah, on the condition that Palestinians accept the principle of “two states for two peoples” — an Arab state and a Jewish state in line with U.N. General Assembly Resolution 181 — and agree that permanent borders, security and land swaps would be negotiated directly with Israel."


Not in specific to Arab-Israel conflict, but on a related note of Iran nuke issues; we have the rebuttal by the  renowned foreign policy expert Prof. Drezner:

"I write now, however, because in his latest column he has migrated from the merely foolish to the ill-considered and dangerous."


Now, no renowned blog post is complete without the rebuttal in comments section. So Prof. Drezner, has this profound comment:

"With all that said, I could make a case for Friedman's recommendation with respect to Iran. "


For all this, Andrew has his following sane advise:

"In my view, the president and next secretary of state should now lay out a detailed, mapped, two-state division that the US supports and present it to both Fatah and Jerusalem. If Jerusalem balks, the US should switch its vote at the UN to abstain on Palestinian statehood. If the PA balks, we'll discover something important about them: their willingness to sacrifice for a state alongside and at peace with a Jewish one. Hamas? Leave them out of it for a while, or open up a back-channel. But as Obama's power waxes and Netanyahu's wanes, it would be crazy not to seize the moment."


In all this cacophony, I am with Andrew Sullivan on this issue. So Senator Kerry, you got it where you need to keep your ears open and listen.

Best wishes Sec. nominee Kerry. 

Wednesday, January 23, 2013

Hillary Clinton Senate Hearing

Here are my few, unbaked and cursory observations based on what I watched in the morning:

- Hillary Clinton looked fresh, physically fit, very much engaged, capable and as usual on top of her briefs. Medical rest seems to have helped here. (If nothing else, it sure seems to have given here enough time to prepare thoroughly for this testimony and to avoid a charged time frame earlier.)

- Lady politicians in West get an unfair advantage - to choose color of their full attire! Hillary had liberty to skip staple diet of American colors of Red, White and Blue and select 'black and green'; more matching to the Islamic region she has been talking about. Male politicians either choose white or light blue shirts. All that freedom Male Politicians get is about the color of their neck ties! Talking about building persona and media image, remember Hillary is from New York where Market Savviness and Media Image expertise is top notch in the world. I suspect one of those experts might have given those 'eye glasses' she is wearing. Those are helping her to project the image of a very studious government officer.

- I expected friendly questions from Democratic Senators, but they were essentially doing bit of hagiography of possibly future Democratic President. On the other hand I did not find early on Republican Senators doing that much 'pushing' at Hillary's testimony. We need Republicans doing their job of Opposition Party with more gusto. Sen. Johnson from Wisconsin - he was tough on Hillary and to an extent made her to yell; but still more has been left on table by Republican Senators. May be that is what they call the Hillary Magic and her very high popularity.

- The high point we all were waiting was Sen. McCain's questioning of Hillary. McCain made a good political case, but bit less on specifics. As a result Hillary simply mentioned about the disagreement and argued about how Congress short changed State Department on funding. On the other hand Sen. Paul simply had Tea Party broadside repeating 'leadership failure' without any surgical precision for questions on hand.

- Democratic Sen. Durbin gave the necessary opening for Hillary Clinton to lay down her argument about her possible presidential run.

- Early in the testimony I got the impression that she did push Susan Rice under the bus and to an extent Obama Administration too; though subsequently she came to the defense of Rice.  It left more questions in mind and did not address doubts that Hillary essentially squeezed herself out of all this mess.

(Very rarely Senate Testimonies generate so much Media interest in today's broken Washington as most Americans have given up on all these spectacles going on in DC as a theater. All hearings are drama and that is good in some sense because that way Public gets involved. In Hillary's case, the drama is more captivating.)

Monday, January 21, 2013

Second Term Inauguration Speech

The most lasting and core impression I get from a strong Liberal - even campaign style - President Obama Inauguration speech is the admirable way in which he shook the burden of history and presented 'here and now' case of Liberalism. I like that an American President throws away the expectations of Punditry and pressure to produce something comparable and worthy of Lincoln's Second Inauguration Speech but instead goes straight in pulling 'kicking and screaming' America to the 21st century.

Around 3 presidential terms back 21st century started. But America is still stuck in G. W. Bush's 'Pax Americana' when rivaling Soviet Union was dismantled, united Germany was busy tending her own house, China was still Deng Xioping's work in progress, when American Air force alone would destroy Iraq size Armies in days and India did not even have enough Rupees in number compared to how many Dollars were in circulation in the mighty American Economy (leave aside Rupee to Dollar skewed ratio). That has been the 'indispensable nation' and 'shining city on hill' of Sarah Palin taste.

But then we Americans have paid the dear price of Greenspan hubris, DotCom Boom and Bust, avoidable Iraq War, unfunded Tax Cuts and collapse of our Economy in 2008. All of that, still has not brought USA in the realities of 21st Century where forget about 'our indispensability', it is the question of whether we are ready to pay our bills for what we already spent! Americans, and GOP especially, are still in some different world where they do not understand that America will have to go back to its root of collective hard work in partnership with State, collective sacrifices, be open to immigrants and heed to the message of equality to all to earn the respectable position back in the Parthenon of Nations.

That is what I believe President Obama's speech attempted. (Was that the only way to achieve? Could it have been any different form? Possibly, but this is what our President has delivered for now.) Which inauguration speech would mention words like Engineers, Research Labs and Climate Change? Agreed, words like Social Security and Medicare do not belong to an inauguration speech where the canvas is vast, vision is at least at minimum of 4 years and Presidents are essentially in dialogue with Past Masters and Almighty. Mundane words of entitlements are more easily found in State of Union Addresses. But then that is the whole point of President Obama's speech - let us not get burdened by our History, weight of literary flourishes about 'national unity expectations' or false songs of bi-partisan Kumbya moments; but without any pretense undertake what it takes to move us in the 21st Century. In a sense I found the speech lot more 'future looking' (in addition to solid elucidation of LGBT Movement's historic achievements) than worried about fitting into some 'orthodox formula'. False concerns about disintegration of families, or premature worries about debt load when it comes to investments for future, or empty bravado about projections of American power to corners of globe, or complete rejection of what Science is screaming about; none of this has any place in 21st Century. That is what President Obama's speech implied.

Politically the speech would not ease things with Republicans, though his Base will be warmed up and even ready for compromises so long as, as President himself repeated many times, the progress is achieved in some form if not perfectly. But by hitting the theme of 'partnering with citizenry', he made it very clear that Public Pressure will be continued on those political forces which are not ready for sensible changes. Now, that is Positive Politics of 21st Century - keep engaged all the time (needless to say digitally) with your subjects to keep driving changes we desperately need in this country.

Update - David Brooks wants our President to talk about Menlo Park and Silicon Valley, that is nice and it will be wonderful. But having lived all my American life in Silicon Valley over a decade, I get elated when our leaders talk about 'engineers'; I guess that is the difference between a Liberal and a traditional Conservative. 

Sunday, January 20, 2013

Rahul's Speech

Rahul Gandhi was elevated as Vice President of Congress Party to lead the political fight for Congress against Narendra Modi in 2014 general election. Given that, it makes sense for him to talk about how Indian youth is clamoring to get a say in Indian political decision making; simply to curry favor with youth vote bank. But just having youth in decision making process would not resolve India's issues if the process of decision making and management of wealth creation and distribution do not change. It is not as if a politician is young and hence would not resort to 'corruption'. There was some speculation that by involving women in Indian political system it would reduce corruption and violence against women. Neither corruption is gone nor rapes on Indian women stop in the capital city where you have three term woman chief minister. So, same will happen by involving Indian youth in absence of basic rule of law, transparency and administrative competence. Rahul's assertion almost smells as if he wants to "claim Youth's share of 'looting and corruption' happening in India"!

Way back in 1985 at Indian National Congress Centenary Celebration in Mumbai, Rahul's father - Rajiv Gandhi - talked about how corruption is eating away majority of wealth redistribution undertaken by the State and he talked about changing the system. On that context, Dr. Singh and Rahul Gandhi can rightly claim the credit for 'direct deposit' scheme where State wealth redistribution straight goes to the recipient based on her bio-metric identification. That is a smart answer to the problem of 'middlemen' Rajiv Gandhi talked about then. But as like in 1985 Rajiv Gandhi missed the critical importance of upholding and establishing 'rule of law and administrative transparency at local and regional level'; same failure seems to be with Rahul Gandhi too. Rajiv Gandhi did talk then about the 'vast scope and scale' of reforming local and regional level legal and justice system; but nothing came then whereas Rahul Gandhi simply does not seem to comprehend the importance of that. Rahul Gandhi and Congress are all wrapped in 'Lokpal bill' only whereas the real crying need of 'justice and law enforcement' is at Sate and Local level.

So to Rahul Gadnhi's call of 'making system to work for common Indians'; Narendra Modi can legitimately claim to have done precisely that in his 3 terms at Gujarat in demonstrable ways. True, at the start of his reign; Modi turned 'law and order' upside down by being complacent and even accomplice in Godhra Massacre and in that sense stain of illegitimacy on his reign still does not go away. But beyond that despicable act of political opportunism and religious bigotry of worst kind; Narendra Modi has devoted his terms to deliver changes to common Gujarati People 'here and now'; primarily based on administrative efficiency, managerial competence, relatively corruption free environment, transparency and overall accountability. When Rahul Gandhi talks about 'system'; he does not seem to talk about 'how to bring accountability' to the system. That would involve purging many Congress leaders and  satraps who he greeted at the start of his speech! There seems to be no willingness that he is ready to 'take on' all the corrupt leaders and forces within his own party and many corrupt and decadent state administrations run by his party. Unless that happens, all this talk about 'changing the system' is just a cheap talk. I even doubt common Indian would fall for it, youth or old. 

Friday, January 18, 2013

Ryan Plan Makes No Sense

"We’re discussing the possible virtue of a short-term debt limit extension so that we have a better chance of getting the Senate and the White House involved in discussions in March"


So what happens if House Republicans do not reach an agreement with Senate Democrats and White House in March? Does America 'default' then - as a punishment to American People because Democrats did not agree to Republican Demands? If so, what goal is served by that - 'to paint Dems bad', but what about the avoidable pain to Americans? Why are Republicans not accountable for that?

All that means, Paul Ryan will again increase the Debt Ceiling at that point too. Then why all this drama? Why can't we abolish Debt Ceiling so that Congress focuses on what spending it commits and Executive Branch focuses on paying bills - if needed by borrowing more money as required? 

OK let us say Paul Ryan wants this topic of abolishing Debt Limit Permanently to be debated in the election. Let 2016 election be about asking Presidential nominees (possibly Ryan among them):
- Do you support permanently abolishing Debt Ceiling?
- If not or otherwise also, what mechanism you want to propose so that Congress commits for spending which it thinks America can afford?
- How decisions of one Congress in this regard are to be interpreted by future Congresses - future elected members? Do you propose any longer term guidelines in that direction and what are the ramifications of those guidelines? (For example Ryan wants to propose Gov. revenue at 18 or 19% of GDP and spending to be aligned accordingly.)

What we need is - politicians not deceiving Americans: not to tell their real agenda and once in power then to hijacking that mandate for total ideological prescriptions. 

As House GOP members gather at a retreat to plot their come back after losses of 2012 election, one thing they can keep in mind is - how Americans were sure about 'what they will get when you would vote Obama' whereas Romeny and Republicans continued to give mixed message whereby doubts continued to raise in minds of People. Doubts that Republicans will use the power for totally different reasons than what they claim. That is what '47% remark of Romeny' revealed.

Ryan's short term debt plan or GOP introspection would not succeed, unless it addresses questions like - what does GOP propose 'here and now' to improve the lot of most Americans? Krugman has already made a case about how 'debt control' is essentially a distant problem. (If Global Warming is a distant problem to Republicans, then why Debt is the problem 'now'? We are not Greece as we print our own notes - if not platinum coins and the world is ready to lend us at much lower interest rates.)

Republicans can't expect Americans to vote or love them when for every damn economic problem, the only solution they have is Tax Cuts. GOP philosophy is 'you have economic growth - cut taxes, you have recession - cut taxes'; how in the world a political party is expected to be successful when elections after elections it refuses to look into the face of 'evidence' (that supply side Wall Street Journal Editorial recommendations about tax cuts are all bogus and full of ideology only) and when GOP is totally beholden to 'dogma'?

That is how neither Paul Ryan's short term Debt Ceiling Proposal nor longer term vision makes any sense.

By this weekend, Barack Obama's 'sunset countdown clock' will start. This whole obsession with Barack Obama - GOP needs to get over as quickly as possible. We Americans are so much in a ditch (and by the way Barack is not going to pull us completely out too) and we have so many problems to be solved. All that means GOP has ample opportunities to fight for our problems - provided it keeps aside its false theories of economic well-being of a modern nation. 

Monday, January 14, 2013

Audacious Plan of President Obama

This is where Liberal Blogsphere sees President Obama in the Debt Ceiling Drama:

"This kind of thing is too clever by at least half. It’s the sort of lawyerly hair-splitting that makes Republicans think the White House will, in the end, figure out some complicated rationale for negotiating with them. If the White House wants to solve their credibility problem on the debt ceiling, they need to cut it out. Negotiate, or do not negotiate. There is no clever way to split the difference. "
-- Ezra Klein, Wonkblog, Washington Post

"Meanwhile, I get calls. The White House insists that it is absolutely, positively not going to cave or indeed even negotiate over the debt ceiling — that it rejected the coin option as a gesture of strength, as a way to put the onus for avoiding default entirely on the GOP.

Truth or famous last words? I guess we’ll find out."
-- Paul Krugman, The Conscience of a Liberal, New York Times

"Why Nobody Believes Obama on the Debt Ceiling"
-- Matthew Yglesias, Moneybox, Slate

"Many of us have questioned whether Obama will actually follow through on his stated intention. In these games of chicken, he always seems ready to swerve at the last moment. What’s different here is that Obama seems so determined and explicit not to pay a ransom that he is leaving himself no room to backslide. If he pays the ransom, he’ll leave himself humiliated and exposed in a way he never has."
-- Jonathan Chait, Daily Intelligencer, New York 

Needless to say we are heading towards possibly the final showdown between Tea Party and Obama. Tea Party members of House clearly see it as their historic duty to force America into Default and even risk global economic turmoil rather than acquiescence to President Obama. So given that, we have possible two paths:

- House passes a bill to increase debt ceiling based on draconian spending cuts voted by GOP members only, the bill goes to Senate which strips 'spending part' and sends it back to the House. At that point House either opts for Default / Government Shutdown or Speaker Boehner opts for Dem backing while breaking the GOP caucus in response to Market and Public Pressure - the same why the final fiscal cliff bill was passed. 

- However, if House GOP Leadership fails to persuade rank and file Tea Party (or fails itself to see what they are doing) it will force Default / Government Shutdown; President Obama will have to walk the talk at that point: he would have to stop Social Security checks, Medicare disbursement and practically close more than half the government. There are reasoned voices who argue the impossibility of such a task from execution perspective even if President Obama intends to stick to his tall claim - 'no ransom to GOP for increasing Debt Ceiling'. But President Obama will have to plough through all such difficulties; that will be some 'jaw dropping feat' he is claiming to undertake. He did not opt for any such tough choices in the First Debt Ceiling Drama.

In the eventuality of stopping Social Security Checks, Tea Party is going to say "look this is how much we are living beyond our means and President refused to come clean all along!" and "we offered help to President Obama by negotiating a deal which would have allowed at least part of Social Security Checks to come; but he turned us down". Tea Party will try to spin the global economic shock as their kind of some new Turther Movement.

The only response President Obama could have at that point is:
- Tea Party cares for 'no further revenue increase' more than tanking of global economy (presuming President Obama continues his line of balanced budget plan through out this saga) and
- there is always a way to get through these deficits if only Tea Party had listened to what President has been saying all along (and that is the reason why President Obama wants to keep alive the negotiation track for 2014 Budget and Sequester Cuts). 

After all the chaos and ensuing recession, if President Obama is still able to retain some political upper-hand; resolution of Default / Government Shutdown will primarily happen for the same reasons as it happened during Clinton-Gingrich fight - Republicans find diminishing returns with increasing political cost in continuing the shutdown.

President Obama's current posture is - he is willing to drag this whole process up to that point and more important he has the confidence to prevail in the final inning. If GOP blinks and realizes the enormous political price which they have to pay, it may give up and President Obama will not have to use his political nuclear weapons.

Yes, an American President sure can do this 'whipping of the Congress' for the good of Americans; which is  definitely needed here. We will see if President Obama wants to be that 'life changing' chief executive or fears of Liberals as mentioned above turn out to be true.

Sunday, January 13, 2013

WTO - Reboot Needed

They say Agriculture is one reason why Doha round failed. That may be true. Farming lobby in diverse economies like France, Japan (rice cultivator), India, Argentina, USA, etc.; are all strong and vocal. In each of these countries Political System decides to pay the price of the Farming lobby and move on to other pressing and core political struggles. It is rare to find a political movement based on 'taming of Farming lobby' in today's world. Generally, it is much more cheaper to pay their price.

The other reason of WTO failure seems to be rapid changes in economies of the world and failure of WTO Mandarins to understand that. In the above referred Rueter article, Economist Bhagawati still talks of Developing Countries as if it is 80s or 90s. India or China may be still developing countries from point of view of per capita income; but needs of these economies are very different. Whatever similarities and common needs might have been there in past; that common context has diminished lot. Same with Brazil too. When one thinks about other emerging economies like Turkey and Indonesia; again what each country needs is very different. Point is clubbing all these economies as 'Developing Economies' hardly works and is hardly relevant. Given that, why would USA or Europe or China tolerate non-sense forwarded by insular countries like Cuba or likes of Cuba in any of these WTO agreements? Even communist Vietnam has different needs than Cuba in WTO as it embarks upon Economic Liberalization. To this mixture, we have Middle East economies with different needs - some with Oil whereas some like Egypt without Oil. (By far Egypt could be one of the few countries to which the older label of Developing Country in traditional sense could be still applicable; but there is no monolithic block of Developing Countries left anymore. It cannot be, all due to structure differences.) As far as issues of African countries go, it is a different and complex problem; definitely not something WTO can expect to handle alone.

WTO was never about energy supplies. OPEC for long had maximum influence there and it still retains some influence. But then we got entry of Russian energy supplies in last 2 decades after the collapse of Soviet Union and that changed the trade dynamics of energy supplies. And now with shell gas revolution and higher oil production in USA; it is about to change again. Those are all monumental changes in world trade and world economies. WTO was never a part of it and never likely to be. Next, when it comes to Telecommunications and Information Technology, another of UN initiative failed miserably. (I am completely with USA Government and American Companies here - avoid government involvement as much as possible in any regulation and management of Internet. Interests of USA, Western countries are dramatically different than suspecious governments like China, Russia and Middle East. India could be in between though I would like India align with USA and Western countries in these matters considering her own future in protection of intellectual property rights. Smaller countries like Chile, Poland are very much in the camp of Western Economies in these matters and India should be too.) 

All this means any involvement of UN and WTO in global trade has been much less useful. As intellectuals of WTO and UN mandated trade  - I believe Jagadish Bhagawati is one of them - fail to realize all this emerging diversity and still insist upon 'global kumbaya' approach; we are bound to fail.

As far as Obama Administration goes, its topmost priority should be get the Trans Pacific Free Trade Agreement (why would the first Pacific President of USA want to loose this historic opportunity to cement his legacy?) and USA-EU Free Trade Agreement (why not Canada and Mexico in that?) ratified. Democratic Senate is the friendly chamber to Obama Administration and Republicans are traditionally more favorable to Free Trade Agreements. John Kerry's Sec. of State term will be firmly evaluated on the basis of whether he gets these 2 agreements through the Senate or not; preferably even before 2014 elections. On the basis of his relations with Senators, Kerry should be able to steer and shepherd these agreements. 

Assuming that is where bulk of trade agreement energy is going to be dedicated in coming days, WTO in its next incarnation should focus on living - even thriving - with these multilateral agreements. Many countries have lined up many more regional trade agreements. As those agreements start coming on line, dispute resolution, that is where WTO can be still helpful and it should focus on that (assuming WTO recognizes multilateral agreements and participating members find already established infrastructure of WTO convenient and cheaper rather than keep sprouting new dispute resolution mechanisms for each multilateral agreement). Essentially instead of being in a driver's seat WTO should let member countries to do whatever is needed, suitable to their needs. WTO should be simply a facilitator here for organic, bottoms up global trade development.

My view - odds are that WTO will not rise to the occasion. The whole culture of UN, WTO and intellectuals behind those are simply reluctant to be bold, have a solid reading on how structurally things have changed or going to change and overall refusing to climb down from their cozy intellectual perch which might have served them in the past, but not now. For governments around the world who want to usher prosperity for their citizens - time to move on. It is not job of member countries to 'save WTO'; it is the job of WTO to show how useful it can be to these member states. Else one more 'UN mandated contraption' will join the dustbin of History.

Update - Technically WTO is not part of UN, but it is closely aligned with it and is part of UN System.

Saturday, January 12, 2013

Two Views

"a sense, fueled by the deep U.S. recession and China’s rise, that America is a declining and overextended power that can no longer afford to lead as it has in the past."
...
" it will give rise, as it did in 2001, to resolutions that, this time, we have learned our lesson — this time, we won’t come home before the job is done."

-- Fred Hiatt, Washington Post

"To the extent that it’s possible to define an “Obama Doctrine,” then, it’s basically the Hagel-Brennan two-step. Fewer boots on the ground, but lots of drones in the air. Assassination, yes; nation-building, no. An imperial presidency with a less-imperial global footprint.
...
This is a popular combination in a country that’s tired of war but still remembers 9/11 vividly. Indeed, Obama’s foreign policy has been an immense political success: he’s co-opted foreign policy realists, neutralized antiwar Democrats and isolated Republican hawks."

-- Ross Douthat, New York Times


Needless to say I am with Ross Douthat without his criticism that "But that’s a provisional judgment, contingent on events to come. ".

For my worth, I decidedly stand with President Obama's Foreign Policy here.

Monday, January 07, 2013

Hagel Nomination

There are many good reasons why President Obama wants to nominate a competent veteran and ex-senator Hagel for the position of Defense Secretary. However, what is bewildering and equally nauseating is hissy fit by neo-conservatives who want America to commit for anything what ultra-right Israelis want. These overzealous Israeli backers are putting unreasonable litmus tests and resorting to vicious character assassination. Good to see that President Obama is ignoring all this dirty politics, sticking with his choice and is not hesitant in picking up his team members which he feels most comfortable with.

Saturday, January 05, 2013

Tax Fights

In USA, we have political parties which wage political battles to the end in raising taxes; but generally there is not much 'political buy-in' for dodging taxes. (Mitt Romney may be from the rarefied strata where certain tax dodging via outside USA avenues may be a way of life; I guess that is a global phenomenon.) However, in countries like Greece and Pakistan, there is overall societal consensus that 'dodging tax' is very normal. Hardly 2% of Pakistani wage earners pay any kind of personal tax whereas in Greece folks continue to forget 'extremely poor tax collection' is one of the main reasons of that country's problems.  Unless lenders of Greece - IMF and EU - tie any further aid to more transparent tax collection; problem of Greece will not solve.

As far as Pakistan goes, there does not seem to be any clear way out of the problem since overall destruction of most state institutions is so complete and Pakistani Army has aggrandized most resources of the country so brazenly and tightly; there is much less hope there. 

I suppose along with corruption indices, we need more exposure and publicity for overall 'tax collection' picture for each country in the world and then international donor agencies like IMF, EU, Asia Development Bank, etc; can tie the aid to higher, better and wide spread tax collection along with reduction in corruption.

Tuesday, January 01, 2013

Happy New Year!

Wish you happy, peaceful and prosperous 2013.

Thanks for visiting this blog.