Fixing the Middle East

Ezra Klein has a really important post on the current situation in Gaza and more generally on the conflict.

One important disconnect in Israel/Palestine debate is that Israel's supporters tend to focus on what the Palestinians want while Palestine's supporters tend to focus on what the Israelis do. Israel's defenders, for instance, make a lot of Hamas's willingness to kill large numbers of civilians. Palestine's defenders make a lot of the fact that Israel actually kills large numbers of Palestinian civilians.

I think the observation is right on and underlines a key feature of Israeli (and neocon) negotiating tactics - and why they are doomed to fail. When you train to be a negotiator, one important rule you learn is to focus on resources, signals, and interests, not people and positions.

Over the years Israel has clearly signaled that it places a great deal of value on legitimacy, ie recognizing their "right to exist". In the Madrid and Oslo process this was one of the key concessions from the PLO. They dropped their rejection of a Jewish state and were in return given a seat at the table and the subsequent peace process. In other words they stopped saying things like "we will wipe Israel into the sea" and in return were given legitimacy by Israel (which allowed Arafat at the time to defeat his internal rivals). But backing up, it was because they said things like "we will crush the Zionist oppressor" that they could trade that chip.

Now fast forward to today. Where as in the old days the response to the rejection of Israel was "bring it on" (position) but when the opportunity was there leaders were willing to trade legitimacy for legitimacy (a recognition that Israel's interest is in a durable peace), today it is reversed with supporters of Israel run around whining about how Hamas refuses to "accept" them and demanding that they be granted legitimacy before they will sit down at the table.

But the thing is, Palestinians already played that game in the 1990's. It got them nowhere (while it is debatable if one side made a mistake in 2000, the Palestinian perception that it was a waste of time is undeniable). There is no such thing as a free lunch, and that goes double in international politics.

And this is where we get to the actions side of things. As the old saying goes, action speak louder than words. Since the Second Intifadah, which marked the real end of the Oslo and subsequent process, Israel has doubled the number of settlements, built the massive seperation barrier and a new gated highway in the West Bank, cut off Gaza, undercut in succession the PLA, post Arafat Fatah, and Hamas, conducted numerous assassinations, and launched several seiges of Palestinaian areas. And all of these actions have continued independent of whether another negotiating "round" was going on. On the other side, there has been more Palestinian on Palestinaian blood shed than killed Israelis. Maybe this is proof that there is not a partner on the other side of the table for Israel to sit with, but it certainly does not suggest that if only Hamas would accept Israel and stop lobbing rockets a final settlement would be inevitable (especially one that allows Hamas to continue to exist).

So is everyone just irrational? I doubt it. Israel has some of the world's best game theorists and I have met many excellent Palestinian negotiators. The evidence simple illuminates what all of this posturing is - domestic politics on both sides (takes on Israel, Hamas, and the other regional players).

The inescapable whiff of domestic politics in all this tells me that the US (whom many have called on to "fix" the problem through various options - from cut off aid to Israel to bomb Iran) is actually incapable of solving the problem. Unfortunately until "kill the Jews" and "kill the Arabs" are not winning campaign slogans expect everything to stay FUBAR.

The Lessons of Hong Kong

Tom Friedman got me excited with his start, singing the praises of Hong Kong. Having been there recently, I can completely confirm everything he says. The city and airport are beautiful, efficient, and modern - the antithesis of most American cities.

And I think he is spot on for knocking the auto bailout and the "trend of diverting and rewarding the best of our collective I.Q. to people doing financial engineering rather than real engineering". We do need a makeover.

But I think he misses the lessons of Hong Kong when he writes he would "like to see fewer government dollars shoveled out and more creative tax incentives to stimulate the private sector to catalyze new industries and new markets. If we allow this money to be spent on pork, it will be the end of us."

First, one of the keys to Hong Kong's success is that it has one of the simplest tax codes in the world (under 60 pages). The top rate is only 17%, but there are basically no write offs and loop holes. The result is that the government isn't perpetually favoring the current big industry over future major sectors, and lots of smart people are enlisted into the ranks of tax consultants and lobbyists. This of course is the exact opposite of his recommendation to create gimmicky tax breaks that substitute the judgement of those writing the bill in Congress over the collective market intelligence.

Second, the reason Hong Kong has all that great stuff he loves so much is BECAUSE OF big public investments, not inspite of them. Huge chunks of the most important land in Hong Kong was reclaimed from the harbor through giant public works programs over the past 150 years. The MTR was built up over the 1970's, 80's, and 90's through massive public investment before finally being taken private in 2000. While the construction is largely privately financed, the government plays a strong role in maintaining a broad strategy to avoid idiocy. There are a series of HUGE public reservoirs created in the 1960's (I think) after years of draught. And if you want to drive to the airport you go by the huge Lai Chi Kok Park on the new government funded freeway.

Of course, Hong Kong does have the advantage of not subjecting their public investments to stupid funding formula's that give people in Oklahoma and North Dakota100x more per person than New York City or Chicago. But that is an argument for strong Presidential direction and control, not avoiding direct investment. So if by pork he means "any Federal dollar spent in Alaska" then sure I agree, but if he means "money to build a next gen power grid or high speed rail", then no way!

Cutting the Real Pork

If the anti deficit crusaders are looking for some completely ridiculous fat to slice, I offer you Max Impact and the other six official Air Force music groups. Apparently we now spend a few million a year to ensure the troops have a supply of crappy live music. Isn't that what USO is for? I guess when an IED has just taken your leg nothing raises your spirit like "we're gonna rock your face off".

I was intrigued to hear about the Jack Lew selection, but will withhold my praise until I actually see a change. To really understand how broken things are I would point anyone interested to the debacle that has been the State Department's Office of the Coordinator for Reconstruction and Stabilization (S/CRS).

In 2004 everyone agreed that State should probably have some role in helping stabilize post conflict societies and preventing relapses, and so S/CRS was created. But then it proceeded to get NO MONEY from Congressional Appropriators, driving them into a bizarro existance where they were basically hired by DoD for $100m a year. I think they finally got some of their own money this year, but most of that is for the stupid Civilian Reconstruction Corp (or whatever they call it).

Fixing the State/Defense mix isn't about getting people to agree we should have more on the State side of the fence. It is about changing the culture in DC that says you can never say no to the uniformed services when they come asking for money (the truth is that while they all say they want State to "do more" they really want State to "do more of what we tell them to do"). And it is going to take a change in the culture that allows a single unhinged Senator - yes I am looking at the Oklahoma delgation - to undercut national priorities. I wish soon to be Deputy Secretary Lew all the best in that giant task.

The Rainbow Cabinet

I am amused by the growing chorus of stories about various interest groups complaining not enough of their members are in the president elects cabinet. By my count Southerners, women, union folk, and African Americans have all appeared in the media whining about not enough seats at the table.

The big question to me is whether there is actual discord among these groups or this is an orchestrated move to boost Obama's moderate bonafides by showing him pissing off a lot of the traditional democrat interest groups (the above plus the Warren flap with the gay community). Either way, I am pretty happy with all the picks this far and am excited for his assembled team.

Follow the Dollars

Hilzoy has a nice take on the AP story about how executives at the banks that took bailout money earned $1.6 billion this year in bonuses.

The super-rich seem to me, during the past few decades, to have wafted off into their own alternate universe, in which of course they are entitled to have their employers pay them not just large salaries, not just multi-million dollar bonuses every year, but the bills for everything that ordinary people pay for; in which flying on public airlines seems to them the way taking the public buses seems to much of the middle class; in which any possible contact with what the rest of us take to be reality has been airbrushed away by vast quantities of money.

But I think she misses one key reason for the rise of companies paying for everything from limos to home security systems - taxes. If your company gives you $10k for your financial planner, the government will tax you on that as earned income. But if the company is just putting that person on retainer and then asking them to go talk to you the company can count it as a business expense and lower their tax liability. The fundamental problem of multi million dollar executives hasn't been that we are creating more of them - if a company wants to pay its CEO $100 million that is their business - it is that we have been systematically shifting the tax code over the years so that their tax bills have been going down even as their income goes up.

Equity-based compensation goes up, we reduce capital gains taxes. Cash bonuses rise, we drop the marginal tax rates on the high end of the scale. Employee perks multiply (the gold plating republicans like to rail about), we give corporations even more room to write them off. And all the while, the resources to help out the employees you are screwing over dry up.

SHOE!

I want to see the President on American Gladiator! The post incident Q&A is priceless.

Beyond beyond unconscionable

http://www.google.com/gwt/n?u=http%3A%2F%2Ffeeds.feedburner.com%2F%7Er%2Fcrunchycon%2F%7E3%2F482327243%2Fbeyond-unconscionable-erin.html

I started following Crunchy Con about a month ago and have overall really enjoyed it. I disagree with lots but like hearing the family and religious values voter perspective without the usual hypocracy or whining.

This morning Erin has a post up on university health insurance. As is standard in most schools at this point USF requires all their students to have health insurance or else purchase the policy offered by the university. What she and others are up in arms about is that the school policy covers reproductive services, including abortion. This she argues is forcing those individuals who oppose abortion to subsidize the act.

First, I think this misses how insurance works. It isn't a case of some people know they are low health care users and some are high and the low are paying a high price part of which goes to another person to do as they please. Insurance is more of a betting game to help smooth out the shocks of life. You pay the insurance company a fixed amount for the rights to certain event-tied payouts (sort of like buying a bingo board except you win a broken leg or cancer). Obviously in the macro sense your helping keep the company financially strong 'supports' those who want to call in their abortion bet, but in no way are you directly supporting it.

But it is this macro perspective that illuminates the theocon objective. They fundamentally aren't about giving people choices, but are trying to use that argument as a dangerous gambit to sneak through their agenda.
Today it is that pharmacists should have the right to refuse to fill prescriptions (ps does this mean if I think all catholics are tools of an apostate church that will bring about the rise of Satan I can refuse to fill their heart medicine prescription?). Next it will be that if you do not give them access to health care plans that do not offer family planning services you are 'forcing' them to pay for abortions. One day it will be that they can only go to hospitals which do not perform abortions, and if you do not have one near by you are robbing them of their right to choose 'moral' health facilities.

The ultimate goal of all this choice talk is to make family planning health services economically unviable (or at least extremely expensive) for the large majority of people who want access to them and rob them of their choice.

I should also point out that her post includes one of their best rhetorical tricks - picking a fight that doesn't exist. I doubt anyone at USF - and there is no evidence of it happening - is going to force someone with a plan that does not cover abortions to buy one that does under the comparability requirement, it is just a provision to prevent someone from setting up a 10 dollar plan that covers nothing as a loop hole. But THEY COULD!

Which of these things is not like the other

The most striking piece of the amazing story coming out of Illinois is the broad and unequivocal demands for Blago to step down coming out of the Democrat party.

The local moves to impeach him and take away his power to appoint a successor to the Obama seat are standard fair opportunism from his rivals. But the Reid and Durbin letter? The President elects statement today? It is almost like they think corruption is a disqualifying factor for public service.

Kidding aside, the fact that David Vitter is leading the charge against the auto bailout is a nice reminder of how disguistingly the Republican party has behaved the past few years. While neither party has a monopoly on corruption and bad behavior, it is clear that one party thinks that kind of thing is ok. Blago is soon to forcibly join the ranks of Jefferson and Spitzer. As opposed to Stevens, Craig, the Delay gang, and Norm Coleman walking out unscathed by their party.

The Future of Hillary

A lot of people have been trying to wrap their heads around the question of why Obama would offer her State and why she would accept. He has plenty of other qualified folks, she undercut a lot of his ideas on foreign policy, and of course Bill. She has a plum Senate seat for life, could potentially be in line for a Supreme Court seat, and still wants to be President some day.

So here is my theory. First (and most important to the plausibility of this), Joe Biden will be 74 in 2016. This means that unlike Gore or Bush 1 he is not in line for the Party throne. Unlike Bush 2, obama is not just a narcissist trying to please daddy, and so I expect him to be aware of this. As a result I expect Biden to be a one term VP.

Based on the power of incumbency, being picked VP will make that person the far away front runner in 2016 on the democrat side. Obviously the risk for Clinton is getting tied to a failed president. But by early 2012 the structural outline of the race should be pretty clear and she can avoid a bruising fight if she wants to.

Realistically though, there is a good shot the economy will be turning around in late 2011 and (more importantly) be on track for strong growth through 2016 assuming the usual business cycle still persists.

The big upshot of this deal for obama is that he ties the fortunes of the Clintons to his success and transforms them from a potential headwind into a full force gale at his back. Ju jitsu at its best.