US politics

The /Other/ Russia Story

Published by Anonymous (not verified) on Mon, 21/05/2018 - 6:58am in

It may seem like an odd time to bring up the other Russia story, this being the first anniversary of Special Counsel Robert Mueller’s probe. But as it happens, there has been a break in this neglected case – or, rather, two of them.

It was slightly more than a year ago that President Trump fired FBI director James Comey and, the next day, told Russian officials visiting the Oval Office that Comey was “crazy, a real nut job.” He continued, “I faced great pressure because of Russia.  That’s taken off.”  Two weeks later Mueller was appointed, and his Russia investigation has only escalated since then, sprawling into several unexpected corners.

The New York Times offered readers a helpful graphic last winter: “Most of the stories under the ‘Russia’ umbrella generally fall into one of three categories: Russian cyber attacks; links to Russian officials and intermediaries; alleged obstruction.”

There is, however, another aspect of the Russia story, a category altogether missing in the Times’ classification scheme, an obviously thorny topic that almost no one wants to discuss: the proverbial elephant in the room.

It concerns the extensive background to the 2016 campaign – the relationship between the United States and Russia over the long arc of the twentieth century, and, especially, the years since the end of the Cold War.  This aspect is complicated, involving all five US  administrations since the Soviet Union dissolved itself at the end of 1991. It is a difficult story to tell.

I backed into it slowly, having followed for many years the Harvard-Russia scandal of the 1990s. In 1993, the US Agency for International Development, a semi-independent unit of the State Department, hired Harvard University’s Institute for International Development to provide technical economic assistance to the Russian government on its market reforms. Eight years later, the Justice Department sued Harvard for having let its team leaders go rogue.

Harvard economist Andrei Shleifer and his deputy, Jonathan Hay, were accused of investing in Russian securities, and of having established their wives at the head the line in the nascent Russian mutual fund industry. The suit was settled in 2005. The government recovered most of the money it had spent. The incident played a part in Harvard University president Lawrence Summers’s resignation the following winter. As Shleifer’s friend and mentor, Summers had distanced himself  via recusal.

After Boris Yeltsin had died, in 2007, I wrote a column about the failures of US policies in the 1990s. Thereafter I followed developments with increasing interest and alarm, particularly after the Ukraine crisis of 2014. And in the summer of 2016, when it seemed likely that Hillary Clinton would be elected president, I set out to collect some of the columns I had written and to add some additional narrative material in order to call attention to the entanglements she and her advisers would bring to the job. That project was supposed to take one year. It took two.

Because They Could: The Harvard Russia Scandal (and NATO Expansion) after Twenty-Five Years (CreateSpace) was finally published on Amazon last week – 300 pages and a relative bargain at $15. Alas, almost as quickly as the book went on sale, Amazon took it down, to make sure I actually owned the collected columns: their cloud computers had discovered these were also “freely available on the web” — in the archives of Economic Principals. Artificial intelligence at work: shoot first and ask questions afterwards.  As of May 24, Because They Could is back in print.The book consists of three main parts.

The first is a recap of the scandal as it appeared in the newspapers, from the front page of The Wall Street Journal, in August 1997; to Harvard’s decision, in March 2001, to try the case rather than settle the government suit; to September 2013, when Summers withdrew from the competition with Janet Yellen to head the Fed. These 29 columns, written as the story unfolded, introduce first-time readers to the scandal, and remind experts of what and when we knew and how we knew it.

The second part concerns the Portland, Maine, businessman whom the Harvard team leaders inveigled to start a mutual fund back-office firm in Russia, then forced out of its ownership. It turns out there was a second suit, overlooked for the most part because Harvard settled, paying an undisclosed sum in return for a non-disclosure agreement. This now-familiar tactic insured that John Keffer, whose Forum Financial at that point was one of the largest independently-owned mutual fund administrators in the world, and a significant presence in Poland, would be unable to tell his story. Only his filings and the massive documentation of the government case remained.

The third consists of six short essays on aspects of the US relationship with Russia since 1991. These relate a brief history of NATO expansion, which took place despite the administration of George H.W. Bush pledging in exchange for Russia agreeing to the reunification of Germany that the US would not further enlarge NATO; tell something of the US press corps in Moscow during those twenty-five years; identify a key issue in Russian historiography; express some sympathy for ordinary Russians and even for Vladimir Putin himself; and seek to separate the accidental presidency of Donald Trump from all the rest, the better to understand why he has so little standing in in the matter.

Also included is a short paean to the news values of The Wall Street Journal and two appendices. One is Shleifer’s letter to Harvard provost Albert Carnesale as the USAID investigation built to its climax. The other is the heavily-annotated business plan, drafted by Hay’s then-girlfriend, Elizabeth Hebert, later his wife, to make it appear to have been written by Hay, and backed financially by Shleifer’s wife, hedge-fund proprietor Nancy Zimmerman, offering control of Keffer’s company to Thomas Steyer, of Farallon Capital (who had been Ms. Zimmerman’s principal backer), and Peter Aldrich, of AEW Capital Management, a director of the National Bureau of Economic Research.

Preparing to espouse these unpopular views has made me snap to attention on the rare occasions when they are expressed in the mainstream press – not on the op-ed pages, where they mostly represent reflexive ballast-balancing, but in the news pages, where some deeper form of institutional judgment is at work. That was the case last Sunday, when an 8,600-words article in the Sunday New York Times Magazine presented the case that the United States shared the blame for the current disorder. “The Quiet Americans” startled me (though not the designer, who illustrated it with a standard what-makes-Russia-tick? design). The dispatch itself was a significant advance in the other Russia story.

Keith Gessen, 43, is a Russian-born American novelist (A Terrible Country: A Novel) and journalist, a translator of Nobel laureate Svetlana Alexievich (Voices from Chernobyl). He is coeditor of n+1, a magazine of literature, politics, and culture based in New York City, and an assistant professor at the Columbia University Graduate School of Journalism.  He is a younger brother of Masha Gessen, 51, author of The Future Is History: How Totalitarianism Reclaimed Russia (2017) and The Man without a Face: The Unlikely Rise of Vladimir Putin (2013); their parents emigrated, with four children, from the USSR to the US in 1981. (As an adult, Masha Gessen returned to Russia in 1991, leaving for a second time in 2013.)

In the article, Gessen writes that “behind the visible façade of changing presidents and changing policy statements and changing styles, [those who influenced US policy toward Russia] were actually a small core of officials who not only executed policy but effectively determined it.”  Getting out of the mess requires retracing the steps by which we got into it, he writes; that means starting with the small group of experts known as “the Russia hands.”

Gessen identifies and interviews many of the analysts who were in the vanguard of NATO expansion: Victoria Nuland, former NATO ambassador under Bush who became Assistant Secretary of State for Europe and Eurasia under President Obama; Daniel Fried, her predecessor under Bush; Stephen Sestanovich, ambassador to the Newly Independent Sates of the Former Soviet Union under President Clinton;  Richard Kuglar, a strategist who co-wrote an influential1994 RAND Corp. report advocating NATO expansion; and Strobe Talbott, Deputy Secretary of State for seven years  under President Clinton, “the first-high level Russia hand of the post-Cold War.”

Interleaved with their stories are those of their critics, analysts “deeply skeptical of the missionary impulse that has characterized Ameican policy  toward Russia for so long”:” Thomas Graham, of Kissinger Associates; Michael Kimmage, of the Catholic University of America; Olga Oliker, of the Institute for Strategic Studies; Michael Kofman, of the Wilson Center; Samuel Charap, of RAND Corp.;  Timothy Colton, of Harvard University; Angela Stent, of Georgetown University; and the former Brookings Institution duo of Clifford Gaddy, of Pennsylvania State University, and Fiona Hill, now serving as an advisor to President Trump.

Conspicuously missing from Gessen’s account are veterans of the first Bush administration, Jack Matlock,  ambassador to the USSR, in particular. Compensating for their absence are the anonymous quotations (in March) of a “senior official” of the Trump administration, “deeply knowledgeable and highly competent, which fits the description and the mindset of former Secretary of State Rex Tillerson. For something of Gessen’s take on Putin, see his long article last year in The Guardian: Killer, kleptocrat, genius, spy: the many myths of Vladimir Putin,

Many of these names also appear in the second half of  my book.  The story is broadly the same: that bedizened by its “victory” in the Cold War, the United States has consistently overreached. But there is an important difference.  Gessen concludes that the servants did it.  I ascribe the blame mostly to the American presidents who hired the hands, to Bill Clinton in particular, who with his Oxford roommate Talbott and friend Richard Holbrooke began the process of NATO expansion over experts’ objections; George W. Bush, who continued and ramped it up with his “Freedom Agenda”; and Barack Obama, who may have been more concerned with the limits of American power than his first Secretary of State, Hillary Clinton, but who continued the policies of his predecessors.

On the central point, however, Gessen and I completely agree. We both think the US debate is seriously out of kilter. He quotes the legendary George Kennan, from his “Long Telegram” of 1946, which framed the long-term strategy of containment: “Much depends on the health and vigor of our own society.”  Gessen then concludes:

[American] society now looks sick. The absence of nuance on the Russia question – the embrace of Russia as America’s new-old supervillain – is probably best understood as a symptom of that sickness. And even as both parties gnash their teeth over Russia, politicians and experts alike seem to be in denial about mistakes made in the past and the lessons to be learned from them.

He might also have mentioned the mainstream press: The Washington Post, the WSJ, the Times itself, at least until last week. That’s why I depend on Johnson’s Russia List for my coverage of the topics.  For instance, I admire Bloomberg News columnist Leonid Bershidsky. I might not otherwise have seen his account of the “Who Lost Russia” debate last week between historian Stephen Cohen and former Obama Ambassador to Russia Michael McFaul. Bershidsky is right when he states, “These days, Russia is merely a big football for Americans.” More revealing than the yardage between the opposing goalposts that are McFaul and Cohen is the scrimmage taking place somewhere in between, as, for instance, in the difference of opinion between Gessen and me.  This other Russia story is just getting started.

The post The /Other/ Russia Story appeared first on Economic Principals.

The Future of Reliable News

Published by Anonymous (not verified) on Mon, 14/05/2018 - 7:00am in

John Micklethwait is one of five top editors in American journalism, along with Dean Baquet of The New York Times, Gerard Baker of The Wall Street Journal, Martin Baron of The Washington Post, and Nicole Carroll of USA Today. In February 2015, after a decade as editor-in-chief of The Economist, Micklethwait took the top job at Bloomberg News and began a gradual shakeup of that giant, mostly digital, news service. Earlier this month, in the company’s magazine flagship, Bloomberg Businessweek, he ventured a spirited essay on The Future of News.  Quality journalism, he says, is coming back.

With becoming humility, Micklethwait reminds readers of how he had been editor of The Economist only a few months when, in August 2006, the magazine ran an obituary on its cover, in the form of a ransom note: Who Killed the Newspaper? Newspapers had traditionally set the agenda for the rest of the media, stated the editorial that accompanied a special report. “But in the rich world [of the Internet], newspapers are now an endangered species.  The business of selling words to readers and selling readers to advertisers, which has sustained their role in society, is falling apart.”  Readership had been declining for decades as new media proliferated, and now advertisers were finally following readers out the door.

And so it seemed. That Economist cover launched a thousand PowerPoint presentations, he noted.  Newcomers like Huffington Post, BuzzFeed and Business Insider were encroaching from one direction; giveaway newspapers like Metro from another. Honored newspapers like the Christian Science Monitor, The Guardian, and London’s The Independent were going strictly digital; others were cutting back sharply on their news staffs. Google and Facebook continued to soar, and a strange new application offering 240-character tidbits had made its appearance. Twitter would become, in effect, “the largest newspaper on the planet.”

Yet a dozen years later, Micklethwait says that “the quality press has staged a remarkable resurrection, thanks to the introduction of metered paywalls that charge subscribers who read regularly online, but which still leave their websites open to much larger audiences of non-paying readers for whose fleeting attention advertisers are willing to pay something.” The Times has 2 million digital subscribers; the company is aiming for eight million more.  The news business is changing with technology, becoming more digital, automated, personalized, and mobile, but “this is transition, not decline,” he says.  People are still willing to pay for content, especially since news remains a relative bargain. The main surprise, he writes, had been “the survival of so many established names.”

The funny thing is, Micklethwait doesn’t mention print. Perhaps this is not surprising. He is, after all, editor of a mostly, but not entirely, a digital product. The subject of the continuing influence of the print press may be too close to the bone. I am entirely digital myself, and have no influence to speak of, so I’m under no such constraint.  Besides, I have been right all along.

The biggest and best newspapers have survived and begun to prosper again, albeit in a low-key way, precisely because advertisers pay much more to reach readers of print than for fleeting digital impressions before online readers. I don’t see proprietary numbers, and newspapers shape and guard fairly carefully what information they release. But there is more reason than ever to think that healthy print circulation is the basis of a strong digital business.

I watch hardly any television, and listen to National Public Radio news only at breakfast. I subscribe to the print editions of the Times, the Journal, the Financial Times and to the digital version of the Post. I have been deeply interested in their differing coverage of the presidency of Donald J. Trump:  the Times in a more or less permanent state of outrage, the Post full of steely purpose, but a little more restrained; the Journal so determined to seem fair to some of its readers and supportive to others that many days the Beltway hubbub doesn’t make the front page.

How these strategies are going to play out over time it is impossible to know, except to say that, broadly speaking, they mirror the roles each paper played in the Watergate scandal forty-five years ago, with the Post’s and the Times’s parts reversed.  Paul Farhi of the Post wrote last week admiringly about how the Journal was “back in the game,” thanks to its revelations about payments by the Trump camp to adult film star Stormy Daniels. The Journal’s scoops have “gone a long way toward restoring some of the [paper’s] lost luster,” declared Farhi. Publisher Rupert Murdoch, a long-time Trump friend, bought the Journal in 2007 and in 2013 installed Baker, a conservative columnist for The Times of London as its editor.

The point is, while two papers are more aggressive than the third, all are viewed as producers of reliable news. (I omit the intersection of the Journal editorial page with television’s Fox News, which is also a Murdoch property, epitomized by a Friday night talk show, Journal Editorial Report.) Because of their reputations, and the resources they have committed, there is no doubt that the newspapers are dominating the story.  The Financial Times, as always, floats slightly above the fray, concentrating on how nations’ policies adjust to changing circumstances.

To put it slightly different, newspapers are businesses surrounded by moats. The term is a favorite of Berkshire Hathaway’s Warren Buffett. Moats are barriers to entry by would-be competitors – in this case, printing plants, distribution networks, brand recognition, superior revenues, and know-how. The expectation of higher standards of reliability attach to the businesses of those willing to put such investments at risk.

The larger point has to do with the role of newspapers as bulwarks against that which is truly “fake news,” of which there is plenty these days. Micklethwait makes the point tellingly when he says that bursts of fake news have often accompanied big changes in technology.  “After the steam-powered press increased productivity ten-fold in 1814, cheap newspapers, many scandalously inaccurate or racist, sprouted everywhere. In 1835, New York’s Sun, which sold for a penny, reported confidently that half bat, half-human mutants were living on the moon.” Hearst and Pulitzer precipitated the Spanish-American War.

And yet, he says, the industry soon got wise to the market. Publishers began to differentiate the products.  Many advertisers preferred to dissociate their brands from obvious rubbish; many readers preferred to pay more for a quality paper – the the Tribune, the Herald, and, in the 1890s, the Times in New York. Micklethwait thinks something similar is happening now.  The three-penny newspapers vs. the penny press of the nineteenth century have become this century’s $1,000- or $500-a-year newspapers and Bloomberg, with its $20,000-a-year terminals vs. the cable TV shows, the supermarket tabs, the blogs, and, of course, the Twitter accounts.

I think he’s right. But here’s the rub. Bloomberg is enormous, completely reliable, rich, but it is mostly private. Its news service was established only in 1990 as an adjunct to its wildly profitable data base of bond prices.  Even though the company is incomparably richer than the Times, it has incomparably less authority, partly because of its culture, but mostly because it doesn’t reach a mass audience.  Founder Michael Bloomberg could easily afford to build a national daily print newspaper from scratch, but it would take years to succeed, and, more likely, it would fail. So Bloomberg News is expanding a version of its Businessweek pay-wall approach instead, making much of its premium content available to a larger online audience on a limited basis in hopes of increasing its prominence. And of course the weekly magazine Bloomberg Businessweek helps, too.  I always look forward to reading it.

But this is the reason that Micklethwait didn’t mention newsprint in his broadside on the future of news. There are a great many sources of reliable news – the Times mentioned twenty representative names in an exemplary house ad earlier this month.  “Don’t just read The New York Times,” it said. “Read The Wall Street Journal. Read The Atlantic. Watch CNN. Read the BBC. Listen to NPR…” and so on down a list that included foreign websites and television networks – NBC and MSNBC, but not Fox.

Thereby they made their point.  It may not always be so, but for now, and for the foreseeable future, newspaper companies still set the agenda for the rest of the incredibly complicated system that we still call “the media.”

The post The Future of Reliable News appeared first on Economic Principals.

Peter Beinart Makes Good Points

Published by Anonymous (not verified) on Mon, 14/05/2018 - 2:26am in


US politics

This is good, from Peter Beinart.

This is malpractice. It’s malpractice because whether the Trump administration has given “serious thought” to “what comes next,” and whether its post–Iran deal strategy “can be successfully implemented” are questions Stephens, Dubowitz, and Gerecht have an obligation to factor into their analysis of whether Trump should withdraw at all. You can’t cordon off the practical consequences of leaving the deal from the theoretical virtue of doing so. In theory, I’d like my 10-year-old to cook our family a four-course meal. But unless I have good reason to believe she’s “capable of pulling this off,” it’s irresponsible for me to scrap our current dinner plans.

The point he made the other day – namely, if it’s the same damn people who lied last time, and they seem to be telling you the same damn thing, maybe it’s a lie – is also inductively reasonable. And draws down some doubt on the alleged theoretical virtue.

But the first point seems to me important, going forward. There are a lot of Joker-by-proxy Hawks out there. Some men wouldn’t dream of burning the world down. But they seem happy to watch someone else do it, so long as they don’t get the blame. That sort of thing should be called out.

After the Next Recession

Published by Anonymous (not verified) on Mon, 07/05/2018 - 7:42pm in


US politics

The biggest problem facing the United States today is the inevitability of the business cycle.  Unemployment Friday reached its lowest rate in seventeen years. “Wages not keeping pace,” warned The New York Times. The “historically long jobs expansion… shows little evidence of slowing,” said The Wall Street Journal.

That’s absurd, of course. Alarm bells may not be ringing. The 2017 tax cut stimulus is still working its way into the system. But with the jobless rate at 3.9 percent, wage growth will accelerate. Bottlenecks will form. Interest expenses will grow. Inflation rates will increase.

Sometime in the next two years or so, some combination of factors will force the Federal Reserve Board’s hand. Interest rates will rise more sharply than expected.  A recession will begin, with all the usual adverse consequences for Federal and state budgets. Then, as Warren Buffett likes to say, as the tide goes out, we will discover who’s been swimming naked – politically, that is, not financially.

Donald Trump is not a factor here. One can’t be certain, but, after the stupendous difficulties of his years in the White House, it seems unlikely that he will choose to run for a second term in 2020. (This view is not yet widely shared.)

Nor are the 2018 midterm elections the issue.  The economy won’t turn down before the autumn. Whatever happens to the leadership of the Congress, if the Democrats are smart, there will be no surge to impeach the president.  The institutions in place likely are sufficient to restrain Trump’s power and bring matters to their natural conclusion.

But at a certain point, before or perhaps just after the next presidential election, the economy will turn down. Then the failures of the last twenty years to come to terms with the imbalance of the federal budget will be sorely tested. Tax receipts will fall, expenditures increase: the budget deficit will swell. Even a mild contraction, such as that of March-December 2001, will test the stresses under which the US has been operating for years.

Over four-fifths of the growth in nominal government spending over the next decade will be driven by Social Security, federal health programs, and interest on the debt, according to the Congressional Budget Office. Revenue will fail to keep pace with growing spending, resulting in a deficit that will double in the next ten years from the anticipated $800 billion at the end of fiscal 2018, according to the CBO’s most recent forecast.

Pessimism is rife. Times columnist David Brooks wrote last week that Republicans have become “an aging minority party” while moderate Democrats are “no longer a force.”  There are “only two vibrant political tendencies in America right now,” wrote Brooks: “Trump-style populism and Bernie-Sanders/Elizabeth Warren-style progressivism.”

The leaders who exhibit these tendencies will turn out to have been the naked swimmers after the next recession.  I have no idea what course the presidential election will look like, but I expect the more consensus-oriented politician will be the winner.

The current crisis of US politics may turn out to resemble the angry mood of the late 1970s, when the tide finally turned against the New Deal consensus that had governed the country pretty much without interruption since 1932.  That was nearly forty years ago – about the length of time that such zig-zag reversals have taken historically. They have become a global phenomenon by now.

When things turn tough in the next recession, a center should form, much as it did in the early 1980s. Commissions will be empaneled, legislators will hold secret weekend negotiations, balanced reforms will be undertaken, some combination of benefit cuts and tax increases.  Even now balance is still relatively easy to achieve in the case of Social Security.  It is much more difficult to accomplish with respect to federal health programs.

Solvency is the biggest problem facing the United States today. And yet solvency is not just possible, it is likely, given the history of the last seventy-five years. The growth of interest on government debt will impose its own form of discipline. The alternative, the United States as Argentina or Venezuela, seems too remote for anything but column-fodder.

The post After the Next Recession appeared first on Economic Principals.

Mutiny on the Down-Low

Published by Anonymous (not verified) on Mon, 16/04/2018 - 5:08am in


US politics

You didn’t have to be a news junkie to recognize that the FBI was deeply involved in determining the outcome of the 2016 election, or a statistical whiz to believe the law enforcement agency’s influence was greater than the Russian cyber-mischief that undoubtedly occurred.

Only yesterday, though, when a thirty-five page report by FBI Inspector General Michael Horowitz revealed that former director James Comey and his former deputy, Andrew McCabe, contradicted each other about a critical Wall Street Journal background interview in October 2016 that McCabe had authorized, did the dimensions of the problem come clear.

McCabe was fired last month, a day before his planned retirement, for having confirmed the existence of an FBI investigation of the Clinton Foundation, and for having lied to investigators about his role in the affair. For all the detail it included, Horowitz’s report was completely unpersuasive – for all the background it left out. It seems clear that McCabe misled investigators. But then, the formal investigation of his role began the day President Trump fired FBI director James Comey, when incentives within the FBI began to shift.

In the closing days of the presidential campaign, FBI leadership was caught between opposing factions: the Obama administration’s Department of Justice, on the one hand, to whose senior officials and prosecutors it reported; and an unknown number of its own rebellious agents on the other, eager to pursue an investigation of the Clinton Foundation, and who were abetted by retired agents, Congressional Republicans and the editorial page of The Wall Street Journal.

WSJ reporter Devlin Barrett, citing campaign finance records, reported (subscription required) on September 23 that Virginia Gov. Terry McAuliffe, a strong Clinton ally, had donated nearly as much as $675,000, through the political organization he controlled, to the 2015 Virginia state Senate campaign of pediatrician Jill McCabe. As associate deputy director, her husband was uninvolved in Clinton investigations at the time, but months after his wife’s defeat was promoted to deputy director.

The same day the story appeared, Barrett wrote an FBI spokesman to ask whether, in August 2016 McCabe had ordered agents investigating the Clinton Foundation to avoid drawing attention to the probe, or even to “stand down.”  Barrett wrote, “[H]ow accurate are these descriptions?  Anything else I should know?”

By the end of the week, McCabe authorized two aides to undertake a background interview in which they disclosed a testy confrontation with an unnamed senior Justice Department official in which McCabe had refused to halt the investigation, and thereby confirmed the existence of the investigation. Citing “people familiar with the matter,” Barrett wrote, in FBI in Internal Feud over Hillary Clinton Probe (subscription required), that no fewer than four field offices – New York, Washington D.C., Little Rock, and Los Angeles, were investigating foundation practices.

Two days later, Barrett disclosed further details (subscription required). But by then a furor had developed over Director Comey’s disclosure, three days before, that some new Hillary Clinton emails had been discovered which could be relevant to a previously closed investigation. (They turned out not to be.)

There is abundant evidence in news accounts that a low-key but aggressive mutiny was underway in the summer and autumn of 2016 among FBI field agents.  It aimed at damaging Clinton’s candidacy and furthering that of Donald Trump.  Comey and McCabe sought to control it, together and in separate ways.  Implicit threats of further leaks probably played a role in forcing Comey to reveal the existence of the trove of recently discovered Clinton emails.

McCabe told the Inspector General that he had disclosed to his boss his decision to authorize the background session. Comey denied that he had.  Inspector General Horowitz sided with Comey.  His report took a narrow view of McCabe’s motivation, ascribing it to self- interest. The decision to respond to the leakers’ charges “served only to advance McCabe’s personal interest, and not the public interest, as required by FBI policy.”

I haven’t seen the Comey book, A Higher Loyalty: Truth, Lies, and Leadership, but, from the early accounts, it seems clear that he chose not to surface the incipient mutiny that forced his deputy’s hand and, perhaps, his own.  That’s understandable enough: Comey continues to seek to maintain discipline and preserve the apolitical reputation of the nation’s chief law-enforcement agency. Keep in mind the mutineers were a relative handful of highly-placed executives.  They may have enjoyed a certain amount of tacit support, but the vast majority of the FBI’s 13,400 agents and 20,000 supporting staff went about their jobs with professional disinterest.

That means that the outsider who knows most about what happened inside the FBI in those few months before the election is reporter Barrett. In February last year, he left the WSJ for The Washington Post. There he has kept up a steady stream of scoops, most recently yesterday, a joint byline with Philip Bump: Criminal investigation into Trump lawyer’s business dealings began months ago.  The Post has many other reporters working on the story; so do The New York Times and the WSJ: Barrett is no one-man Woodstein, a reincarnation of star reporters Bob Woodward and Carl Bernstein who took charge of the Watergate scandal nearly fifty years ago.

He is, however the author of the Rosetta Stone-like story through which the outcome of the 2016 election eventually will be deciphered.  Like many others in the news trade, I was dumbfounded by the election of Donald Trump.  Until this week I thought of it as essentially accidental – two bad candidates decided by the hangover from globalization.

Now I am more interested than before in the thumbs upon the scale.   Never mind however much is left of the Trump administration. Not until Barrett finally publishes his account will we be able to form a clear idea of how Trump’s victory came to be.

The post Mutiny on the Down-Low appeared first on Economic Principals.

Hackery or heresy

Published by Anonymous (not verified) on Mon, 09/04/2018 - 7:45pm in

Henry’s recent post on the irrelevance of conservative intellectuals reminded me of this one from 2013, which concluded

Conservative reform of the Republican party is a project that has already failed. The only question is whether the remaining participants will choose hackery or heresy.

Overwhelmingly, the choice has been hackery (or, a little more honorably, silence).

The case for hackery is put most clearly by Henry Olsen. Starting from the evident fact that most Republican voters are white nationalists who don’t care about small government, Olsen considers the options available to small government conservatives. He rapidly dismisses the ideas of challenging Trump or forming a third party, and concludes that the only option is to capitulate. Strikingly, the option of withdrawing from party politics, and arguing for small government positions as an independent critic isn’t even considered.

As Paul Krugman has observed recently, conservative economists (at least, those who comment publicly). are a striking example for the choice of hackery over heresy. Krugman, along with Brad DeLong, has been particularly critical of a group of economists (Robert Barro, Michael Boskin, John Cogan, Douglas Holtz-Eakin, Glenn Hubbard, Lawrence Lindsey, Harvey Rosen, George Shultz and John. Taylor) who’ve made dishonest arguments in favor of corporate tax cuts.

Recently, an overlapping group (Boskin, John Cochrane, Cogan, Shultz and Taylor) have taken the hackery a significant step further.

At first sight, it’s yet another piece of doom-mongering about the impending debt crisis. What’s striking is the extent to which the piece has been adjusted to fit the Republican party’s new found lack of concern about deficits, while supporting the party’s continued attack on “entitlements”. Perhaps unsurprisingly, they make excuses for the corporate tax cut they’ve been pushing all along, even though it’s now clearly unfunded.

Rather more startling is the claim that the US government to cut entitlements in order to “restore our depleted national defense budget”. These alleged deficit warriors don’t mention the big increase in defense spending that was just passed by the Congress, with overwhelming support from Republicans. Nor do they mention one of the notable outcomes of this largesse, namely that the Pentagon has abandoned any attempt to pursue the program of closing military bases it regards as unnecessary. That’s one of many examples of waste in the defense budget.

There was a time when free-market economists like Milton Friedman saw defense spending as the exemplar of the rent-seeking “iron triangle” (interest groups, bureaucrats and politicians) ensuring that public expenditure is always wasteful. I Don’t suppose that Boskin and the rest have looked at the evidence and concluded that Friedman was wrong. Rather they’ve correctly calculated that heresy on defense spending would see them cast into the outer darkness of irrelevance.

The problem is that there’s no room for heresy of any kind. Moreover, as the fate of Republicans foolish enough to oppose Trump in 2016 has shown, heresy can be retrospective. Boskin and the rest would have been better off using their 750 words to say “Trump is right*”, 250 times over.

The last decade or so has been pretty devastating for the idea of economics as a science or profession. As I argued in my book Zombie Economics, ideas that have been utterly refuted by the evidence of the Global Financial Crisis shamble on in an undead form. The hackery I’ve described here isn’t being produced by marginal figures like Larry Kudlow but by some of the leading lights of the “discipline”. In the end, all their expertise turns out to be nothing more than a fig-leaf for service to financial capitalism. As with evangelicals, libertarians and the Republican base as a whole, the last few years have shown that the most lurid leftwing caricatures of free-market economists have turned out to be understatements.

Cloak and… Megaphone

Published by Anonymous (not verified) on Mon, 02/04/2018 - 6:23am in

The soccer World Cup kicks off in seventy five-days, June 14, in Moscow. Anyone who remembers the timing of the Ukraine crisis and the 2014 Winter Olympics in Sochi Russia will be paying close attention to what happens next.

Global sporting events, with their enormous audiences around the world, can be used to deliver a political punch – or to obscure one. The elaborate propaganda campaigns that increasingly accompany them are much more powerful than paid advertising.

Like the demonstrations on the central square in Kiev that began in November 2013, last month’s poisoning of former Russian double-agent Sergei Skripal and its alarming aftermath occurred too close to the summer games to be considered a coincidence. This was something other than synchronicity.

To refresh your memory:  Viktor Yanukovych was elected president of Ukraine in February 2010. Vladimir Putin regained the Russian presidency in March 2012. For ten years, Putin had been trying to put together some sort of economic structure among Russia and the newly independent states on its eastern and southern borders – the Eurasian Economic Community, in what had become his parlance. He was determined that Ukraine be part of it. Many citizens in the western half of that nation, formerly a republic of the USSR, hoped to join the European Community instead.

Two months before the Sochi Olympics, EC headquarters in Brussels sought to force the issue. Yanukovych refused to sign on. Demonstrations in Kiev began in its central square, or maidan. In December Putin offered Ukraine $15 billion in foreign aid and promised to cut the price of gas by a third. The Olympics unwound with much hoopla over two weeks.

US politicians, including Sen. John McCain, showed up at the maidan on their way to the games to support the demonstrators. Victoria Nuland, Assistant Secretary for European and Eurasian Affairs under John Kerry, passed out cookies there. She was caught  on a cell phone call to the US ambassador, which was taped and leaked by the Russians, describing the leadership of the new Ukraine government the US sought. “F— the EU,” she famously said.

As the Olympics neared their climax, so did the Maiden demonstrations. Dozens of protesters and police were killed in spasms of violence between February 18-20; Even now, it is not clear how the shooting began. An agreement to schedule new elections was made, and broken one day later. On February 22, the eve of the closing ceremonies in Sochi, the kleptocratic Yanukovych fled Kiev for Moscow. Putin described the events as a US-sponsored coup.

A few days later, Russian forces began infiltrating Crimea, preparing to occupy it.  The peninsula had been part of Russia since war with Turkey in 1783; only in 1954 had Nikita Khrushchev transferred it to the Ukraine Soviet Socialist Republic, on a whim.

The Obama administration presented annexation as an outrage, and pressed for sanctions. Hillary Clinton did so even more vigorously. Nuland, who had previously been State Department spokesperson when Clinton was Secretary, told Congress in May,

At some point at the not-too-distant future, the nationalistic fever will break in Russia… when it does, it will give way to a sweaty and hard realization of the economic costs….  Russia’s citizens will ask: What have we really achieved? Instead of funding schools, hospitals, science, and prosperity at home in Russia, we have squandered our national wealth on adventurism, interventionism, and the ambitions of a leader who cares more about empire than his own citizens.

In Moscow, her remarks were considered tantamount to a declaration of political war. And so events accelerated on their downhill path. All this is to be found in Everyone Loses: The Ukraine Crisis and the Ru7inous Contest for Post-Soviet Eurasia (Routledge, 2017), by Samuel Charap and Timothy Colton, of, respectively, the International Institute for Strategic Studies, and Harvard University.

The Skripal affair is obviously different. The attempt on the lives of  a former Russian spy and his daughter, on British soil, using some variant of a nerve gas developed by the former Soviet Union in the 1970s, has been condemned around the world.  It seems to echo the 2006 assassination in London of Alexander Litvinenko, a Russian Secret Service specialist in organized crime who had defected.

But while the British prime minister Theresa May has accused the Russian government of “almost certainly” perpetrating the crime, details of her government’s investigation have been skimpy and, so far, unconvincing. Knowledgeable skeptics have been busy, especially the blogger Moon of Alabama.

Even less apparent has been a plausible motive. Why further sabotage relations with the West on the eve of the showcase soccer matches?  Are there no other powerful factions, in Moscow or elsewhere, who might benefit from the further rupture of relations that has ensued? The Russians, of course, have claimed they were framed.  But then they would say that, wouldn’t they?

Much of the best reporting from Moscow continues to be that of Fred Weir, of The Christian Science Monitor. Last week Weir sent back an especially somber dispatch. The latest round of recriminations may represent “a breaking point” in what had become an increasingly fragile US-Russian relationship. The mass expulsions of diplomats, he wrote, exceeded even the bitterest episodes of the old Cold War.

The mood of the Russian public, once quite pro-American, seems set to take another dark anti-Western turn. Analysts say average Russians would be horrified if it were proved their leaders had authorized a nerve gas attack, such as the attempted murder of Sergei Skripal, on foreign soil. But in the absence of such proof, or even clear evidence, they tend to believe the Kremlin’s denials and see Western claims as unprovoked insults and blind anti-Russian hostility.

So far there is no suspect, no clear picture of how the crime unfolded, and no motive being offered by the British government in the Skripal case, says Fyodor Lukyanov, editor of Russia in Global Affairs, a leading Moscow-based foreign policy journal. “Yet political blame came swiftly, and punishment followed shortly thereafter.

It almost doesn’t matter what evidence eventually emerges, the lines have already been drawn,” he says. “Everyone is already trapped by their own narrative. So, of course, Russians will consolidate behind the Kremlin more than ever.

So get ready for the next round of evangelism, as the World Cup takes center stage. With key issues of the state-sponsored doping scandal in Sochi still unresolved,  the Russian government will once again tread the edges of a chasm between public opinion at home and abroad.

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The War Within The FBI

Published by Anonymous (not verified) on Mon, 26/03/2018 - 7:09am in


US politics

What’s going to turn out to be the ultimate story of the Trump presidency? The respective philosophic stances of the four major English-language dailies could be glimpsed on Saturday’s front pages.

The New York Times: “Trump Seethes, But Signs Bipartisan Spending Pact”; “President Unbound, Aides Bewildered, Capital Reeling”; “A 1.3 Trillion Deal Flies in the Face of His Agenda”; “Icy Maneuvering by US and China in Tech Cold War”

The Wall Street Journal: “Trump Relishes Off-Script Approach”; “Stocks Sink to the Worst Week in Years”

Financial Times: “Bolton’s rise signals eclipse of moderates under Trump”; “China ready to hit back with tariffs”

The Washington Post:  “Budget is signed, with a dose of drama”; “Trump aide [George Papadopoulos] got campaign guidance on foreign efforts”; “In Bolton, President gains an old hand at bureaucracy game”

There was nothing that day about the porn star or the Playboy model. But a couple of days earlier, The Post had tucked inside its front section a story about the FBI. “McCabe was asked about media contacts on the day [FBI Director James] Comey was fired” shone a narrow beam of bright light on a dark corner of what I believe will in the end become the dominating story of Trump’s time as president.

Deputy director Andrew McCabe was fired earlier this month by Attorney General Jeff Sessions, on the advice of the FBI’s Office of Professional Responsibility, which relied on information developed by FBI Inspector General Michael Horowitz.  Cited was a “lack of candor” in various interviews with FBI investigators working for Horowitz – a cardinal sin among FBI agents.

The Post article, written by Matt Zapatosky and Karoun Demirjian, presented several new facts. The IG’s team questioned McCabe that day President Trump fired Director Comey. They asked him about the role he played in sourcing of a story that appeared the autumn before in the WSJ, ten days before the election.  His alleged lack of candor that day, May 9, may have been the first of several examples ultimately cited in his firing, a day before he was slated to retire with fully vested pension benefits.

That WSJ article, “FBI in Internal Feud over Hillary Clinton Probe,” by Devlin Barrett, revealed a series of disputes, both between Justice Department prosecutors and the FBI, and among factions within the Bureau itself, about whether and how to pursue investigations of the Clinton Foundation. Reporter Barrett disclosed that according to “people familiar with the matter,”

Early this year, four FBI field offices – New York, Los Angeles, Washington, and Little Rock – were collecting information about the Clinton Foundation “to see if there was evidence of financial crimes or influence peddling.”

The previously unreported investigation had been a matter of internal debate within both agencies throughout the campaign year, Barrett wrote, before describing the sequence of arguments in unusual detail.  The Post hired Barrett away from the Journal in February last year.

Where did Barrett get his information? One vector became clear last week.  Zapatosky and Demirjian, similarly citing “people familiar with the matter,” wrote that McCabe, acting in his capacity as deputy director, had

authorized two FBI officials, the FBI’s top spokesman and FBI lawyer Lisa Page, to talk to a Wall Street Journal reporter [Barrett[ in  October 2016, for a story the reporter was preparing on the Clinton email case and a separate investigation of the Clinton Foundation…. McCabe has said publicly that he felt he was “being accused of closing down investigations under political pressure,” and he wanted to push back.

Similar pressures may have led Director Comey to notify Congressional leaders on October 28 of the existence of a small trove of previously unexamined emails from Hillary Clinton’s private email server – a headline-provoking move that may have influenced the election results more powerfully than Russian interference.

The Inspector General’s report has not yet been released.  Horowitz, a political appointee in the Bush and Obama administrations, has as good a reputation for integrity and independence as does Comey, but the concerns of the two men are not identical. (Trump supporters and some others routinely disparage Comey’s reputation.)

Conspicuous in the announcement of the scope of the IG’s review were “allegations that Department and FBI employees improperly disclosed non-public information.”  How even-hand and thorough Horowitz’s investigation has been of leaks during the campaign year is, for now, anybody’s guess. Senate Judiciary Committee Chairman Charles Grassley (R-Iowa) has promised hearings once the report becomes public.

The story of a presidency inevitably settles on a narrative. The Watergate inquiries that ended Richard Nixon’s presidency were furthered by a little-noticed battle over who would replace long-time director J. Edgar Hoover after is untimely death. The public understanding of what had happened was greatly shaped by the legend of “Deep Throat.”  Internecine strife of a different sort seems likely to ultimately determine the way the Trump administration is remembered.

A daring mutiny by disgruntled FBI agents as the election neared? Political favoritism by those serving in the Obama administration? As with the Watergate proceedings, the questions go to the heart of what it means to serve with honor and to tell the truth. All they lack so far is a relatively dispassionate public forum in which to be examined. My guess is that they’ll find one next year. In that case, unless military conflagration supersedes it, Trump’s war on the FBI will gradually become the dominating story of his administration.

The post The War Within The FBI appeared first on Economic Principals.

Posters for your March For Our Lives event

Published by Anonymous (not verified) on Wed, 21/03/2018 - 9:30am in


US politics

Are you participating in a March For Our Lives event this coming Saturday, March 24th? There are hundreds of events taking place across the world. And now you don’t even have to worry about what sign to carry. Members of Action Together Zurich have created March For Our Lives posters, 89 of them (plus two to carry up front for some context). Each one is unique, with the front listing a common-sense gun bill that Congress has failed to act on, and the back listing the names of gun violence victims. The idea is for folks to print out the posters for marchers to carry at their local March For Our Lives event. Please spread the word. is the link to share.

The Persistence of Mummery?

Published by Anonymous (not verified) on Tue, 20/03/2018 - 1:33pm in


US politics

Our Corey has a good piece in Harpers, “Forget About It”. He concludes by reflecting on how and why his ‘continuity-of-Trump-with-conservative-tradition’ thesis rubs people wrong:

My wife explained it to me recently: in making the case for continuity between past and present, I sound complacent about the now. I sound like I’m saying that nothing is wrong with Trump, that everything will work out.

It seems rhetorically effective – even obligatory – to treat an urgent problem as exceptional. But:

The truth is that we’re captives, not captains, of this strategy. We think the contrast of a burnished past allows us to see the burning present, but all it does is keep the fire going, and growing. Confronting the indecent Nixon, Roth imagines a better McCarthy. Confronting the indecent Trump, he imagines a better Nixon. At no point does he recognize that he’s been fighting the same monster all along — and losing. Overwhelmed by the monster he’s currently facing, sure that it is different from the monster no longer in view, Roth loses sight of the surrounding terrain. He doesn’t see how the rehabilitation of the last monster allows the front line to move rightward, the new monster to get closer to the territory being defended.

Speaking of monsters, this is a great line, regarding the famous Welch/McCarthy confrontation:

Welch’s broadside was less an announcement of McCarthy’s indecency, about which nobody had any doubt, than a signal of his diminished utility, a report of his weakness and isolation. Declarations of indecency are like that: they don’t slay monsters; they’re an all-clear signal, a statement that the monster is dying or dead.

Let me note: there are two theses here, one about what is effective; one about the truth. Is it rhetorically more effective to frame Trump as exceptional, or does this mean a short-term gain in focus but a long-term drain in overall awareness? Two, is it true that Trump is exceptional?

I’m of two minds about both. On the one hand, Corey demonstrates an amnesiac absurdity to some presentist alarmism. That’s most definitely a thing. But it’s possible that a-mnemonic mummery accompanies exceptional developments. People may be surprised, wrongly, when they ought to be surprised, rightly. As to the purely rhetorical point, it’s a real rock-and-hard-place problem, to which I’m not sure there is any steady solution. But it’s a really good piece, very well-written, too.