The Screaming Pen

Providing Global Insight, Context, and Perspective

Dude, Where’s My W-2?

Let me tell you how it will be;
There’s one for you, nineteen for me.
‘Cause I’m the taxman,
Yeah, I’m the taxman.

-The Beatles

 

A Possible Impetus For Change

Last fall, the international media focused much of its attention on European elections that promised to shake up the old European order. For those seeking real economic change in the form of market liberalization, those elections were partial letdowns. For instance, many analysts believe that a clear-cut Merkel victory in Germany could have provided the impetus necessary for much needed economic reform and market liberalization in other Western European countries. Following the formation of a grand coalition in Germany, it appears that constant compromise may prevent Angela Merkel, the new Chancellor of Germany, from carrying out her intended reforms. It is also uncertain what direction Poland’s newly elected center right coalition government will take the country. Before coming to the conclusion that all hope is lost regarding Western European change, one must consider an economic force that has been slowly moving westward, originating in the tiny nation of Estonia. The flat tax, which applies a constant rate of taxation, is exerting economic pressure in the form of tax competition on the high tax economies of Western Europe, slowly forcing economic change in those countries.

Reactionary Yet Opportunistic

From a historical perspective, it is interesting that many of the countries who have enacted constant rates are ex-communist nations who have voluntarily moved in the opposite direction of Soviet central planning, the failed communist system that attempted to control every aspect of economic activity. Much like the iron curtain before it, the flat tax movement and free market values are slowly moving westward, with Greece facing a crucial decision this year regarding the adoption of a 25% flat tax. In the recent Polish election, the pro flat tax Civic Platform Party came in a close second, and will now share power with the victorious Law and Justice party. In Germany, the early election campaign of Angela Merkel featured a proposed finance minister who was an outspoken supporter of a flat tax. Unlike the spread of communism, however, the flat tax movement is being voluntarily implemented.

Mail Order Brides are no Longer Estonia’s Chief Export

 

The flat tax system, which uses a single tax rate that is applied to wage earners and corporations that begins taxing after a certain income threshold is reached, has been successful in several nations beginning in 1994, when Estonia introduced a 24% tax rate. By attracting business from abroad, Estonia’s economy grew at double digits in 1997, and has averaged about 6% GDP growth per year since. Russia, a nation whose complicated tax code caused widespread evasion, instituted a flat tax in 2001. It is estimated that in the years leading up to the 2001 flat tax, Russia’s biggest corporations ignored 29% of their tax obligations, while 63% substituted goods or services instead of hard currency. This made Russia susceptible to debt defaults as their coffers reached record lows. In 1998 Russian government revenues were 12.4% of GDP. By implementing a simplified tax code, Russia eliminated loopholes and increased its revenues in real terms by 28% in 2001, 21% in 2002, and 31% in 2004.

Opponents of a flat tax, who believe that a flat tax is meant to line the pockets of the rich and will result in lower government revenues, fail to realize that flat tax systems do not tax earners below a certain threshold, allowing the poorest workers to be exempt from taxes. The revenue question is answered by looking at Russia, a nation who learned that the best way to get higher revenues is to give people more incentive to report their taxes by keeping tax rates low. Ideally, a low tax rate would result in more wealth creation, which could generate even greater revenue. Remember, the examples cited in this article are from countries that had an insanely restrictive, command style tax code. The flat tax is also making Western Europe increasingly uncompetitive, as businesses and investment dollars flow into Eastern Europe.

Implications

In response to widespread eastern European acceptance of a flat tax, Western Europe is beginning to consider tax reform. According to the Economist, Germany has already made plans to cut its corporate tax rate from 25% to 19%, and the in Britain, the Opposition Conservatives announced on September 7, that they would set up a panel to study a flat tax proposal. As investment dollars and businesses continue to flock to Eastern Europe from Western Europe, it will be increasingly apparent to Western Europe that in order to maintain its standard of living, it will need to make radical changes in its tax policy.

Conclusions

It will be interesting to see how the Western European nations deal with tax competition from the east. It is apparent that the increasingly uncompetitive Western European nations will need to modernize their economies in order to compete. It will also be interesting to see how the continued success of an Eastern European flat tax effects the current tax situation in America, where our own tax code has broken the nine million word mark.

-JPL

Links of Interest

http://www.washingtonpost.com/wp-dyn/content/article/2006/05/31/AR2006053102043.html

 

May 31, 2006 Posted by | Author: JPL, Emerging Markets, Europe, Flat Tax, Germany, Globalisation, Politics, Russia, Unemployment, World Markets | 16 Comments

Still the Shining City on a Hill?

Human Rights in the Pursuit of Terrorists

For twenty years after 1979, the U.S. Congress annually passed “Most Favored Nation status” with China. The legislation gave China access to the American market – and vice versa – under the same preferential tariff regime as many other counties. Chinese and U.S. business groups lobbied hard for its approval, and during the summer of 2000 they secured an even greater goal: passage of Permanent Normal Trade Relations (PNTR), which locks in MFN status for good and precludes the need for yearly review of U.S.-trade relations with China.

Because the PNTR debate was fought largely between two groups, its codification crystallized an important development in U.S.-China relations. Groups critical of China, many of which railed about human rights, used the MFN debate each year to shed light on China’s treatment of political prisoners, ethnic minorities, and Falun Gong members. PNTR’s passage, however, was a clear victory for business. Witness Chinese President Hu Jintao’s April visit to America that focused almost entirely on trade and security problems like Iran and North Korea. Business and war may disturb ties, but bickering over rights between the two powers will not: tellingly, mention of human rights is found reluctantly only after phrases like “also on the agenda.”


Doing America Few Favors

Indeed, advocates for human rights must be a grim lot these days. From a United Nations report calling for the closure of Guantanamo Bay, the Abu Ghraib scandal, rumors of secret detention facilities, handing terror suspects to other countries for torture, and extrajudicial renditions, the United States has seen its image as the international standard-bearer of human rights and justice slip away.

The “war on terror,” say America’s leaders, will last for many years, even decades. This is because an individual’s ability to attack the country will remain no matter what political developments occur. As such, it is worth asking whether – with no end in sight – the persistence of the conflict should cause the United States to turn its back on the ideals that won the support of people everywhere for decades, and therefore helped achieve foreign policy objectives that may have otherwise been unattainable.

True, the nature of terrorism poses new challenges that will require novel solutions. The catastrophic potential of terrorist attacks will sometimes require harsh preventative measures and there are certainly terrorists (among an unknown number of innocents, as evidenced by the fact that the Pentagon has released some of the detainees) in Gitmo. The way out of these challenges is not easy or obvious; yet it is vital that America’s leaders make a vigorous effort to stop terrorist attacks in a manner that is more consistent with the country’s professed values. A solid first step would be legal proceedings against those being held at Guantanamo and closure of the prison camp there. Fortunately, President Bush himself announced such sentiments in early May.

The Stakes are High

Like it or not, if America cannot better handle the balance other peoples will continue to find America morally indistinguishable from less savory characters like Chavez, Ahmadinejad and Putin. Therefore, leading by example – while immensely difficult – is thoroughly essential because U.S. behavior has implications not only for potential terrorists but everyone living under brutal regimes that benefit from a lax international human rights environment. Demonstrating proper behavior is in fact the only way to advance the cause, as aggressive promotion of rights in other countries can help justify misguided movements (see “neocon”) and cannot be allowed to engender conflict among major powers (i.e. U.S.-China relations). It’s time for the country to overcome the conservative-liberal divide and recognize that upholding human rights at home is in the U.S. interest; if it doesn’t, anti-Americanism will become endemic, American soft-power weakened, and U.S. influence in the world debilitated.

– DML

 2006. All rights reserved.

May 30, 2006 Posted by | Author: DML, China, Human Rights, International Relations, Politics, The War on Terror, United States | 5 Comments

Sin Padre, Thy Wither

How Venezuela, Iran, China, and Russia are Undermining Human Rights Everywhere

If you’re ever feeling overly happy and want to come down a bit, take a survey of the human condition around the world. Among a sea of rights violators in Africa, you’ll find the worst cases in Darfur, the D.R. Congo, Somalia, Eritrea, and Cote d’Ivoire. Robert Mugabe is systematically destroying Zimbabwe. The Middle East has long seen gross injustice and political repression in Syria, Iran, Palestine, Jordan, Egypt, and Saudi Arabia. Turkey has its Kurdish problem, which flares up from time to time when it feels Europe slipping away. To the north, Russia fights endlessly in the Caucuses and forces compulsory military service on its poor, dehumanizing a generation of young men with beatings and forced labor. Political opponents are jailed and attacked. Andijan and the “Stans” of Central Asia, Azerbaijan, Pakistan, Nepal, Burma, and North Korea. Colombia, Cuba, Venezuela, the favelas of Brazil and the poverty of Bolivia and Peru. The folks at Human Rights Watch are depressingly busy.

Depends on How You Look at It

Yet in spite of this dispiriting image and the gruesome confrontations between riot police and protesters caught on tape for everyone see, the news is not all disheartening. To be sure, most of these places were never free, open, or safe. It is only because of modern communication and the existence of vociferous groups like Human Rights Watch and Doctors Without Borders that one can list the egregious examples above. And there are also examples of places where life has improved: autocratic dictators are out in Indonesia, the Philippines, Chile, South Korea, Spain, parts of eastern Europe, and the states of the former Yugoslavia. Something may finally be done about Darfur. And perhaps most importantly, great power war has been avoided for sixty years.


Sportily Taking in a Soccer Match

So between the good news and the bad, what the world needs is a state or organization exerting pressure on countries to uphold human rights. Near-inherent anti-Americanism means that most of the world no longer views the United States as this model, with consequences for both equality and U.S. objectives of every stripe. The United Nations is a misunderstood body that is limited here because it is merely a collection of self-interested states. Europe espouses many of the right ideals but is mostly focused on itself, often has an uncomplicated view of the world, and has its own internal conflicts to settle.

What the world does not need is a provider of money and material through which outcast regimes can sustain themselves in the face of international pressure. During the Cold War the Soviet Union was this source and when it broke apart Syria, Cuba, and other former dependents found it far harder to resist outside pressure. Desiccation of patronage led to the signing of the Oslo peace accords between Israel and the Palestinians, largely because of a trickle down effect: without Soviet support Syria couldn’t continue to fund Palestinian resistance on par with American aid to Israel. Syria is weak now for this reason; without oil so too would be Iran and other former Soviet clients.

With Friends Like These

But today there is oil, and there are several antagonists capitalizing on anti-Americanism and spreading their largesse with debilitating effects for human rights. Hugo Chavez of Venezuela is using oil profits to destroy institutions within his own country, promote populist movements (see the election of Evo Morales), and reportedly to fund resistance in Colombia. Fidel Castro has found renewed sustenance through friendship with Chavez. Iran – crucially demonstrating that the Iranian issue encompasses more than just the nuclear dispute – is channeling aid to Hamas in Palestine and trying to build ties from Indonesia to Venezuela. In an effort to isolate Taiwan, China is active in Africa (Zimbabwe, Sudan), Asia (North Korea, Burma), and to a lesser degree Latin America. In unison with Russia through the Shanghai Cooperation Organization (SCO), China helps prop up Central Asian dictators.

Patronage from all of these states allows rights violators to defy international norms while finding support elsewhere and thus avoiding isolation. Minatory characters everywhere find it easy to become eloquent, usurp valid arguments, and draw more reasonable people to their side (see Ahmadinejad’s letter to George Bush). Without a paragon of virtue the debate becomes muddled, the message unconvincing, and gross human rights violations overshadowed.

– DML

 2006. All rights reserved.

May 30, 2006 Posted by | Africa, Author: DML, China, Darfur, Foreign Aid, Hamas, Human Rights, Iran, Israel, Korea, Middle East, Oil, Palestine, Politics, Russia, Saudi Arabia, Sudan, United States, Venezuela | 1 Comment

And I Didn’t Even Mention Sharon

Israel Gains while an Incumbent Hamas Calculates its Direction

President Bush’s conference today in Washington with Israeli Prime Minister Ehud Olmert was noticeable for more than just Bushisms like “suicider,” despite the bland analysis given initially by Wolf Blitzer et al. The chummy repoire between the leaders illustrated once again that Israel has the ear of the United States like almost no other nation. PM Olmert stated that the country would quit “most of the [West Bank] settlements” while annexing major “population centers,” a perhaps geographically logical maneuver but one that conflicts with the international Road Map to peace and is sure to upset Palestinians. Announced at the White House, the move clearly had the administration’s approval. Even more promisingly for Israel, Mr. Bush spoke passionately about the two nations’ shared views and goals, from Palestine to Iraq to Iran.

Mr. Bush put his feelings on display by venting frustration at Hamas’ lack of recognition for Israel’s right to exist. Indeed, Hamas has to recognize Israel along with renouncing the use of terrorism as a legitimate method of diplomacy. Without these steps – already agreed to by previous Palestinian leaders – the peace process cannot proceed. As Hamas has refused to do so thus far, Israel and America have been spearheading efforts to cut funding to the Palestinian Authority (PA), which helps pay salaries, secure fuel, and fund hospitals in the territories. The idea is that Hamas will be forced to capitulate. The reality, however, is much more nuanced.

That is because the Palestinian people voted Hamas into power in January. So despite the legitimacy of qualms about Hamas’ hostile rhetoric, America looks hypocritical: calling for democracy in the region but resisting it in practice when unfriendly parties are elected. Moreover, turning off aid is already showing signs of strangling the West Bank and Gaza Strip. Further starving and depriving the Palestinian people cannot be the result here.


Where to now?

What it Wants to Do

Hamas may put its mettle on display through vitriolic resistance to Israel, taking a martyr’s stand and feeding off of frustration. In this scenario, hardliners would find it easy to exploit the standoff, and the peace process would stall as Israel further solidifies the borders of a final state. Sporadic suicide bombings, Israeli air strikes, and inflammation of opinion throughout the region would continue. Palestine and peace would be the losers.

Resistance to Israel and death to America may make popular campaign slogans, but fanaticism is hardly a policy used to build a strong society be it in Palestine or anywhere else. So while martyrdom may allow Hamas to maintain support for a time, endless penury will cause Palestinians to rethink their allegiance to an unyielding cause. Just as voters cast aside the late Yasser Arafat’s faction Fatah for failing to provide adequate public services, they would do the same to an ineffective, exposed, and incumbent Hamas. Systems defined by opposition – but lacking in constitution – everywhere crumble for the same reason: because they fail to deliver sustainable development and the people living under them tire of stale ideologies. How long this takes depends on the propaganda and guns of the regime, but in the meantime lives suffer.

And What it Should Do

There is chance for a rosier outcome, however, if Hamas reads the runes shrewdly. When Hamas won power it grabbed 76 out of 132 seats in parliament with the support of a majority of electorate. Most Palestinians don’t cling to unrealistic visions of Israel’s total destruction or desire the rejection of the peace process, and it wasn’t for such views that they backed Hamas. Instead, it was a desire for change and a backlash against the corruption and mismanagement of Fatah – without Arafat – that led them to Hamas, which was offering security and basic services, particularly in the Gaza Strip.

Could Hamas begin to court this mainstream segment of its supporters? Hamas may find the realities of power more trying than obstreperously playing the spoiler from the sidelines. Accordingly, it could try to score points through fostering infrastructure and becoming more conciliatory toward Israel. It should reject extremists and move towards normalization. Crazy? Unlikely maybe, but it took Nixon to go to China and Sharon to withdraw from Gaza. Some think it possible because Hamas counts several American-educated operators among its number.

Lantos Lay Off my Jam Toast

Closer to home, Tom Lantos (D-CA) is of indubitable moral character, founding the Congressional Human Rights Caucus and expounding about rights transgressions around the world for decades. He made headlines for getting arrested outside the White House at the Darfur protest rally in April. But the bill he co-sponsored today – which passed 361 to 37 and imposes sweeping sanctions on the PA in response to Hamas’ victory – was pointless, and even the White House said so. As the administration ended funding last month, it was an unnecessary act that accomplishes nothing while portraying the United States as insensitive to the Palestinian people.

How much outsiders can influence the direction Hamas takes is uncertain. But if blocking funds contributes to humanitarian problems within Palestine it will not only enervate the people but arguments for America’s integrity. Despite misgivings about its past, the Quartet must preclude a humanitarian crisis and offer significant carrots to Hamas for recognition of Israel and renunciation of violence. However unsavory, the platform was elected and must be tolerated. If Hamas insists on belligerence, failure and stagnation are guaranteed; yet until the people’s candidates are allowed to govern they will fight to the death for the opportunity to find that out for themselves.

– DML

 2006. All rights reserved.

May 24, 2006 Posted by | Author: DML, Congress, Hamas, International Relations, Israel, Middle East, Palestine, Politics, United States | 1 Comment

The Stampede of the Global Herd

Yesterday marked the eleventh day in a row that the MSCI Emerging Markets Index fell, an event that has not occurred since August 13, 1998, the very same day that Russia defaulted on her foreign debt. Russia’s debt default marked the spread of the Asian Contagion, a financial crisis that swept across Asia after the devaluation of the Thai Baht. This time it appears that things are much different, as the fundamentals of many emerging market economies appear quite strong. And although Indian Brokers, who witnessed shares drop more than ten percent before the government intervened yesterday, will probably not find solace in solid fundamentals, it appears that the current drop in the emerging markets is due to investors fleeing risky assets in the face of a global tightening cycle, possible inflation, and cooling global growth. And although some investors are losing their shirts, it appears that this may be a price correction, not a crisis.

Seeing Red

Come On, Let Me See Ya Grill

Wait and See

While yesterday’s returns marked the end of an eleven day downturn in the emerging markets, it still did not end the doomsayers from predicting that today’s economic conditions are similar to either 1) the conditions preceding the October 19, 1987 crash or 2) the conditions that led to the Asian contagion. This could not be further from the truth, as there are crucial differences between now and 1987. In 1987, stocks were pricey, and treasuries were quite cheap. Today, equities are historically cheap, with investors paying a premium for treasuries. This is important because if investors flee equities all together, which would be required for a crash, they would have to pay a premium for treasuries as housing is showing signs of cooling, and the dollar is relatively weak. The spread of the EMBI+ to the Ten Year U.S. Treasury note still remains at close to record tights, signalling debt investor’s continued confidence in the fundamentals of the emerging markets. In 1998, the spread widened sharply, signalling falling confidence in the emerging market economies.

Conclusions

Although this is probably not a crisis, it could signal a change in investor sentiment, especially as monetary policy tightens worldwide. The managers of Large Cap mutual funds, some of whom have been predicting a return to their asset class for the past several years, may finally get their wish as investors may continue to flee assets that love loose liquidity such as emerging market stocks, commodities, housing, and small capitalization stocks. It will be important to keep an eye on the international markets, along with less risky asset classes that may benefit from the global herd fleeing risky assets in favor of traditionally safer bets. If there is not a change in sentiment, however, this may be a great buying opportunity.

-JPL
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May 23, 2006 Posted by | Asia, Author: JPL, Emerging Markets, Financial Markets, Investing, World Markets | Leave a comment

Tom the Truculent’s Time to Retire

Sleaze and the Slander of American Democracy

The unfortunate product of a sleazy triangle between government, special interests, and unscrupulous lobbyists, widespread corruption is neither new nor surprising. Yet media outlets are far more likely to cover eye-catching events such as the gruesome abduction of pretty young girls or a judge reducing a pedophile’s prison term. The web of shady relations is byzantine, and the public largely prefers easily defined events like former President Clinton’s lurid sexual escapades. Complex corruption simply isn’t a very good news story. As a result, public debate has been quite dispassionate considering the magnitude of the problem.

This is true even in the face of the disgraced and truculent Tom Delay, former House Majority Leader; the arrest of the depraved lobbyist Jack Abramoff; subsequent allegations against Illinois Congressman Bob Ney, which outrageously also involve the “gang-land style” murder of a Florida businessman; the potential indictment of Bush confidant Karl Rove, hugely influential GOP strategist; VP Cheney’s former Chief of Staff Scooter Libby’s indictment, and more. The litany is so comprehensive it’s almost unbelievable.

Yet politically, and despite the fact that these scandals and a myriad of other blights are explicitly associated with the GOP, the Democrats have thus far been impotently unable to turn it to any advantage. This is bad not just for supporters of the Democratic Party, but for the whole country. When the extended lack of effective opposition allows any party unfettered control of all three levers of government, intolerance, arrogance, and corruption are inevitable results. In a democracy, elections are the remedy: when voters become fed up with their leaders they can remove them.


No thank you, Massachusetts: beans and lager make better exports

The Legacy of Elbridge Gerry

In the United States, however, among several disturbing trends there is at least one deeply troubling circumstance that threatens to undermine the efficacy of the electoral method. Redistricting – a euphemism for its more harmful cousin, gerrymandering – is a stratagem used to institutionalize political dominance at the expense of competition. From the Economist:

“Imagine a state with five congressional seats and only 25 voters in each. That makes 125 voters. Sixty-five are Republicans, 60 are Democrats. You might think a fair election in such a state would produce, say, three Republican representatives and two Democrats.

Now imagine you can draw the district boundaries any way you like. The only condition is that you must keep 25 voters in each one. If you were a Republican, you could carve up the state so there were 13 Republicans and 12 Democrats per district. Your party would win every seat narrowly. Republicans, five-nil.

Now imagine you were a Democrat. If you put 15 Republicans in one district, you could then divide the rest of the state so that each district had 13 Democrats and 12 Republicans. Democrats, four-one. Same state, same number of districts, same party affiliation: completely different results. All you need is the power to draw district lines. And that is what America provides: a process, called redistricting, which, through back-room negotiations too boring for most voters to think about, can distort the democratic system itself.”

This is a real problem in America, from Texas to California and everywhere else. The Economist – no petty partisan critic – calls the process “how to rig an election” and a “travesty of democracy.” They are right: in this year’s Congressional elections approximately 30 of 435 House seats will see competitive races.

Less Tinkering, More Oversight, and a Novel Idea

Republicans should be wary of resorting to disdainful methods, which also include eliminating the Senate filibuster – a vital tool of the minority since 1789 – and the near total exclusion of Democrats from seats of consequence on important committees. These will undermine democracy and will return to haunt them should they lose control of the legislature either in this year’s elections or afterward. Moreover, independent committees should handle legitimate redistricting needs, instead of allowing state legislatures to police themselves. Closer monitoring and regulation of lobbyists and a reduction of pork barrel spending are also needed.

Due to refusal to examine these issues, flouting of democratic methods, extreme profligacy (which has enraged small-government conservatives), and seemingly never-ending corruption, the GOP should be dealt a defeat in November. Indeed, some inauspicious signs are materializing for the GOP’s fortunes. Yet the Democrats likewise have work to do in that they must prove themselves capable of addressing the nation’s challenges. Unless they come up with a galvanizing idea about an issue of importance to the American people these will not translate to an electoral sweep. Without these, headlines will be captured by extremist proposals with little chance of passing or of accomplishing anything besides aimless legislative drift until 2008.

– DML

 2006. All rights reserved.

May 20, 2006 Posted by | 2006 Elections, Author: DML, Congress, Corruption, Democrats, Politics, The GOP, United States | Leave a comment

When Words Matter

Darfur Genocide & Intervention

Until Raphael Lemkin invented the term, genocide was “a crime without a name.” A Jewish linguist from Poland who survived the Holocaust, Lemkin was determined to give name to this peerless atrocity in order to distinguish it from all other crimes; without classification its manifestations would be impossible to identify and prevent.

After years of tireless effort, Lemkin succeeded: in 1948 the United Nations passed the Convention on the Prevention and Punishment of the Crime of Genocide. The convention was the first of several developments that appeared to shift the debate from “the right to intervene” to “the responsibility to protect,” and thus transfer the balance of power from murderous regimes shielded by sovereignty to outside powers willing to rescue victims of mass slaughter.

The familiar mantra became “never again.” Never would Hitler’s rampage, which engulfed the entire European continent and led to 100 million deaths, be allowed to repeat itself. Yet hopes were dashed with unspeakable tragedy meted out to entire generations in Cambodia, Iraq, Bosnia, Rwanda, Kosovo, and (some argue) Biafra. For over 50 years the world averted its eyes and refused to use the word genocide, because doing so would under the Convention trigger “such action…as [U.N. members] consider appropriate for the prevention and suppression of acts of genocide.” Without significant “national interests” at stake, the entire world was unwilling to take tough measures, spinelessly betraying the intent if not the letter of the convention.


Don’t look Away

This Time Different?

When Colin Powell told the Senate Foreign Relations Committee in September 2004 that “genocide has been committed in Darfur,” it was clearly no mean statement. Powell’s calculated and deliberate statement intended to exert pressure on Sudan’s government. Many also saw it as progress in the world’s response to genocide. For the first time a government with power to act called the crime for it was, while it was going on, and one could be forgiven for thinking substantial action would follow.

Yet two years on, and more than three since the forced relocation, rape, and extermination of Darfuris – mainly black Africans – by Arab militias known as the janjaweed, much talk has been followed by only a small African Union force incapable of preventing the catastrophe. Somewhat promisingly though, May 5th saw the signing of a peace agreement between the Sudanese government and the largest rebel group, the Sudanese Liberation Army. In this, Sudan agreed to admit a U.N. force, and hopes are that even if the agreement doesn’t hold up – due to obstruction from smaller Darfuri rebel groups or incorrigible janjaweed militias difficult to rein in – peacekeepers can be inserted anyway.

While this is clearly a cheerful development, it is far from a panacea. Past U.N. peacekeeping operations have shown that their presence hardly guarantees an end to the slaughter. U.N. soldiers literally watched and then withdrew after the loss of ten of their own, leaving a million (mostly) Tutsis to be exterminated through Hutu rage in Rwanda in 1994. To be fair, the U.N. force failed to act because of a weak mandate from pusillanimous member countries. U.N. action is nothing more than the sum of its members’ will; the organization cannot independently solve the world’s most intractable problems and thus shouldn’t bear any blame alone.

Nor should any country be expected to respond to humanitarian crises unilaterally, as unseen dangers often arise and such costs must be distributed among nations. Political cover must also be shared to prevent engendering animosity toward the occupying force, which naturally becomes a catchall for complaints. Instead, cooperation is needed from all: America, the European Union, China, Russia, the Arab League, and the African Union. A robust mandate should be given to a U.N. force, and if this proves inadequate a NATO contingent should take the lead. Only then can the world justly proclaim “never again.”

– DML

 2006. All rights reserved.

Note: For a thorough examination of genocide in the 20th century see Samantha Power’s “A Problem from Hell: America and the Age of Genocide.” Information in the first half of this article was drawn from the book.

May 19, 2006 Posted by | Africa, Author: DML, Darfur, Human Rights, Intervention, Politics, Sudan, United States | 1 Comment

Cours, camarade, le vieux monde est derrière toi !

On the Anniversary of a Riot

On May 17, 1968, a general strike paralyzed France. Started by angry students at Paris’ Sorbonne, the powerful French Labor unions eventually joined, resulting in millions of French workers walking out of work demanding economic and social change. A week later, on May 24 1968, radical students raised a red flag over the Paris Stock Exchange and threatened to burn it to the ground. Eventually, Prime Minister Pompidou negotiated with prominent Union leaders and appeased the students by passing legislation that improved education funding and guaranteed minimum working conditions. French politicians, eager to please their constitutents and afraid of radical rabble rousers, passed increasingly socialist legislation in the following years that created an almost unpenetrable labor market for outsiders, strict hiring and firing laws, high costs for employers, and near ten percent unemployment. Although some good came out of changes brought on after the 1968 riots, the employment situation caused by socialist French employment policies has resulted in a nation in dire need of labor market liberalization. We will evidence this by adding context and perspective to two subsequent riots, those that took place in Fall of 2005, and the most recent riots related to Chirac’s CPE.

When thrown, stale baguettes make surprisingly effective projectiles
Fast Forward

Initially incited by the accidental death of a muslim youth, the riots that shook France in the Fall of 2005 lasted over twenty days, as disaffected muslim youth in the suburbs of Paris burnt cars and businesses. Seen as a threat to the French secular model, French muslims of North African descent face discrimination in an almost impenetrable workplace. Unemployment among native born French university graduates of North African origin is estimated by the BBC to be 26.5%, compared to white graduates’ 5%. According to BBC, “a French non-profit group said that after they sent identical curriculum vitaes (CVs) to French companies with European- and African or Muslim-sounding names attached, they found CVs with African or Muslim sounding names were systematically discarded. In addition, they have claimed widespread use of markings indicating ethnicity in employers’ databases and that discrimination is more widespread for those with college degrees than for those without.” It is evident that the riots that gripped France in the Fall of 2005 were the result of an unemployed, disenfranchised population who were fed up with their treatment at the hands of the society that has failed them.

When clowns cry

The CPE

In an attempt to liberalize the choked up French employment situation, Prime Minister Dominique De Villepin proposed the CPE, an amendment that attempted to tackle double digit unemployment. In France, after you are hired by a company, it is almost impossible to be let go, barring factors such as being violent on the job. This makes it extremely hard to fire incompetent workers or those not suited for the position, causing employers to be reluctant to hire. The CPE’s most controversial element was that it allowed workers under the age of 26, or who have been there less than two years, to be let go if the employer did not think they were right for the position for whatever reason. The proposal of the CPE was met by riots and protests as over three million demonstrated on April 4, 2006. The CPE was withdrawn on April 10, 2006.

Let them eat brie

Conclusions

It is apparent that employment has been a contentious issue among the French for the past few decades. The riots in 1968 helped bring about the socialist employment practices that have been partly responsible for the high unemployment rate today due to employer’s reluctance to hire new workers. It is also apparent that the French muslim underclass, who are discriminated against in the workplace, desperately need measures such as the CPE to be passed in order for their condition to be improved, as a loosening of hiring restrictions would allow them to prove themselves as equals in the workplace. The mostly white protesters that were protesting the CPE could have been doing so in an attempt to retain their status in a country that is increasingly threatened by the pressure of globalisation, something that will eventually cause the French to modernize or face serious economic and social consequences.

-JPL

May 18, 2006 Posted by | Author: JPL, Europe, France, Globalisation, Uncategorized, Unemployment | 1 Comment

Out of the Shadows

Cambodia’s Good Fortunes

When speaking of the Asian tigers, Cambodia isn’t one of the countries that come to mind. For most of the past 40 years this Southeast Asian nation has been plagued by civil war, foreign domination, and even genocide. The reprehensible, murderous Khmer Rouge was beaten back long ago but it continued to play spoiler in the west and northwest near the Thai border until just five years ago, emerging from jungle sanctuaries under cover of darkness to battle despairingly against government soldiers. Ordinary Cambodians hated them.

Despite Rouge devastation, the highest HIV infection rate in Asia, widespread corruption, and ineffective and unresponsive government, it is perhaps astonishing then that Cambodia saw 13% GDP growth in 2005 according to the IMF. For a Cambodian or any visitor to the country though this is unsurprising: having endured so much privation and devastation for longer than most can remember, Cambodians are ecstatic to know peace and ready to get on with things.


Angkor Wat: At least they didn’t destroy this one

Helped by tranquility and the friendly and sanguine attitudes of the Khmer people (as Cambodians are known), tourism has been a boon. Cambodia has possibly the world’s most awe-inspiring and fantastic attraction in the world: the temples of Angkor. Each year brings increasing numbers of visitors flooding north from the capital and east from more prosperous Thailand to visit Angkor Wat, bringing with them valuable cash to a region often ignored –political retribution, many suspect, for the Rouge’s former influence in the area – by the central government in distant Phnom Penh. Instead, informal patronage networks distribute cash to those who need it most. Tourist operators ferrying busloads of foreigners to their destination slow while passing cash to women on foot along the muddy roads. Less blithely, they are also required to make payment to government soldiers manning antiquated checkpoints.

While Cambodians won’t leave their future to the whim of outsiders, there is much that other nations can do to assist. Governments and aid agencies looking for a positive model of development aid should look to Japan’s grant that established the building of National Route 6. Ask any resident of Siem Reap – the busy town adjacent to the Angkor temples – what he is most proud of and he is likely to name the flat and evenly tarred road, a bustling artery that facilitates so much commerce and industry. Other laudable assistance include efforts to create sustainable aid by rebuilding temples destroyed by the Khmer Rouge, thus generating greater tourist revenue in future. A solid next step would be the paving of the 100-or-so-mile ruin that runs from the Thai border to Siem Reap, and which takes about 8 nerve-wracking hours to traverse. And after that, the replacement of Hun Sen, Cambodia’s long-serving, ruthless, inexorable, one-eyed Prime Minister.

– DML

 2006. All rights reserved.

May 17, 2006 Posted by | Asia, Author: DML, Business, Cambodia, Country Profiles, Emerging Markets, Foreign Aid | Leave a comment

Pull Up a Chair

Immigration at Home (2): Mr. Bush is Right in Theory

With an estimated 11 million illegal immigrants already living and working in the United States, calls for their arrest and deportation look extreme, impractical, and counterproductive. Finding them would be difficult enough, jails would overflow, and they are in America primarily because there’s a surfeit of jobs to go round. Crucially, appealing to the business wing of the GOP allows President Bush the political cover needed to defy his party’s archconservatives.

Indeed, in his address tonight Bush largely got it right, at least in theory. Complementing any naturalization proposals, the border needs to be tightened so that the problem doesn’t come full circle only to be dealt with again in a decade’s time. For those with shorter memories, this would not be the first time that a “path to citizenship” or “amnesty” is enacted: both the Reagan and Clinton presidencies pushed similar measures. Because of this history, Bush’s reluctance to use the term “amnesty” makes sense. Previous attempted fixes allowed naturalization while draining resources from the border control, thus allowing the current argument to metastasize. Legalization should only be done in conjunction with efficacious control of the border [ see Immigration: The Border (1)].

Yet giving illegals legitimacy is a crucial step. As already mentioned, the role they play in industry, agriculture, and construction is vital (although experts debate to what extent). Doing so would enable them to lobby for better working conditions (hours, benefits, safety) and pay more taxes, thus reducing the burden on public health care. Some evidence also suggests that – because they would be better placed to seek wage rises –the competitiveness and wages of other workers would be driven up as well. Moreover, the overwhelming majority of immigrants are hardworking, friendly, family-centered, and otherwise law-abiding.


No, not that kind of alien

Demands must be made of illegals too. Segregation, voluntary or otherwise, is unacceptable and can be overcome through time and learning. While first generation immigrants are often too busied by labor to fully integrate, the second generation – when entered in English -speaking schools (and the nation’s education system needs fixing here too) – become as American as anyone. Anglos shouldn’t feel threatened hearing Spanish in the subway or on television; with a little effort and patience, language barriers and the resulting distance can be minimized. Immigrant protesters, however, are wrong to wave Mexican flags while clamoring for citizenship. The image inherently conflicts with the pursuit, and Spanish national anthems are equally pig-headed.

But the Devil’s in the Details

Resolved: immigrants must learn English. Peer deeper into the issue though and unanswered questions begin to arise. First, how will English proficiency be measured? Must they become fluent or just functional? What is functional? Are those who fail sent home or given another try? What test will be used to determine ability? Designing any such test invites reliability problems, and test-takers eventually seek to pass the exam in place of actual learning. Bush also made a distinction between those illegals who have “roots in our country” and those that have arrived recently. This appears to make sense, but what is the cut-off between the two? Additionally, locating the unpopular newcomers will prove arduous.

And he might be in Congress too

The president’s address tonight stated that, “The House has passed an immigration bill. The Senate should act by the end of this month so we can work out the differences between the two bills and Congress can pass a comprehensive bill for me to sign into law.” This seems to say that the House bill will stand (instead of requiring a new one to be passed, as most had expected), and differences with a Senate bill will be adjudicated in conference (after different versions of a bill are passed separately in the House and Senate, legislators from both chambers meet in conference to resolve discrepancies before sending it to the President). The House bill was of the extreme sort and much will depend on which Congressmen are chosen by the (GOP) leadership to work on the compromise. The questions mentioned above have thus been left to legislators to resolve; a task in which they have so far failed to impress.

With most of his second term agenda (Social Security reform & health care) in tatters and approval ratings barely above 30%, immigration actually looks to be one area where Mr. Bush can affect an important issue. He – and more importantly, the public – will have to nudge Congress to come to a reasonable solution. And a mistakenly overlooked component, one that is arguably as important as illegal immigration: expediting and increasing visas for top-notch students and skilled foreign workers who are increasingly pursuing opportunities elsewhere.

– DML

 2006. All rights reserved.

May 16, 2006 Posted by | Author: DML, Democrats, Immigration, Latin America, Mexico, North America, Politics, The GOP, United States | 1 Comment