So Much to Do . . .

And now I will be keeping an eye on Greece and posting if something new comes up.  But if it turns out to be just a matter of holding our breaths until Sunday, I really need to say something about the Confederate flag, and Supreme Court decisions on Obamacare and same sex marriage.

The Grexit: The Politics

Well, the expected has happened.  Greece has defaulted on its payments.  And the unexpected -- Syriza may be ready to cave if only the Europeans will allow it.  This may be an early harbinger that the Greek people will also cave and vote to accept the bailout.  I do not have a sense of it.  Nor do I have a sense of whether events will force  everyone's hand and the Grexit take place even before the referendum.  My guess is no, the freeze on bank accounts can hold that long.  And if the vote is no and the Grexit follows, I do not have a sense whether Greece will bounce back or not, although given the record of other countries, there is grounds for hope.

Here is what I am reasonably confident of.

First, I don't think there is much doubt that the people understand very well what is at stake.  Yes, granted, Syriza leaders say the alternative is not Grexit but a better deal.  I don't think most people believe them.  Opposition leaders and European leaders have been shouting themselves hoarse that no means Grexit.  I think the message has gotten across.  It also helps clear up a potential bit of confusion.  Referendums can be confusing when yes means no and no means yes.  In this case, yes means to continue the status quo and no means a radical break.  That is a bit counter-intuitive.  But the Greeks are well aware of the implications of saying "No" to a foreign ultimatum.  And accounts of demonstrators and counter-demonstrators make clear that everyone understands what this is about.

Second, I am confident that regardless of the outcome, the Syriza government won't be around much longer.  If the vote is yes, then the government will fall.  No parliamentary government can survive such a humiliating defeat.  (What will follow is anyone's guess).

If the vote is no, the Grexit will follow.  The immediate impact will be traumatic -- skyrocketing import prices and foreign debts, widespread bankruptcy, a burst of inflation (around 80% if Russia and Argentina are any guide), plunging values of savings, etc.  If Greece is lucky (like Russia, Argentina, or Iceland) the crash will be followed by a rapid recovery.  But it will take time for most people to feel the benefits.  And in the meantime, the people held responsible for the crash will face the people's anger.  In the U.S., election tables are rigid and allow no exceptions.  If it ever came to that, a President might hope to engineer such a measure at the beginning of his term and have a strong enough recovery underway four years later to be reelected.  But most countries do not work that way.

In Russia, the economy declined and declined until the 1998 financial crisis.  The crisis forced a devaluation which was traumatic, but began a rapid recovery.  That recovery was underway two years later when the next election was held, but the Russian people (justifiably) blamed Boris Yeltsin for their misfortunes and elected Putin instead.

In Argentina it gets complicated.  Suffice it to say that Argentina under President Carlos Menem had finally curbed hyperinflation by pegging the peso to the dollar.  This made him popular throughout two terms, but shortly afterward, the peg became increasingly unsustainable and crisis began to build. Bank runs erupted everywhere as it became clear that the peg was unsupportable and devaluation was imminent.  The new president was forced to freeze everyone's bank account.  (Sound familiar?)  Mass riots broke out, and the president was forced to flee in a helicopter, and to resign.  A caretaker president took over who did the inevitable -- defaulted and devalued.  Huge economic trauma ensued, but conditions had stabilized and a recovery was beginning when he called elections a year later. Numerous candidates entered and splintered the vote.  Menem came in first (presumably on name recognition), but with only about a quarter of the vote.  A runoff was called for.  It became clear that voters still blamed Menem (correctly) for the crisis and that his share of the vote would not increase in the runoff, with everyone who had not voted for him converging in favor of the other candidate. That other candidate was Nestor Kirchner, who presided over the growing recovery and got credit for it.  How much credit he deserves is controversial.  But the caretaker who took the necessary but painful measures in defaulting, devaluing, and stabilizing the aftermath has not yet gotten the credit for it.

In Iceland things were simpler partly because the financial crisis was so extreme that default and devaluation were immediate, and in part because everyone knew the incumbent government was to blame.  Even in that tranquil and orderly Nordic country, riots broke out, forced the incumbent government out, and brought about new elections which (unsurprisingly) the opposition won.  The opposition oversaw a remarkably strong recovery, in the aftermath of the worst financial crisis of all time (relative to the size of the economy).  The people of Iceland nonetheless restored the old ruling party to power in the next election of 2013 when the new rulers sought to join the euro.  (To understand why that would be a really bad idea, imagine Greece on steroids, which is what Iceland would have been if it had belonged to the euro during the crisis -- the alternatives of devaluation or default cut off).

In short, in case of Grexit, Syriza will not last long.  How long will depend on how bad the riots are and how rigid Greece's electoral timetable is, and how long Syriza is able to rally nationalist fervor on their side.  (Hence my recommendation of a top-notch demagogue).  Years from now, Tsipras and Syriza may be seen as visionary statesmen who did what had to be done, but in the short run it won't be pretty.  Whether Syriza will be succeeded by the traditional parties, trying put the toothpaste back in the tube, or by Golden Dawn I could not say.

The Grexit: The Psychology

Back in the bad old days, wars were fought with armies and guns and bombs and killing people.  Warfare of this type has not ended, but fortunately it has become less common than in the past, especially among advanced countries.  Modern war is fought with sanctions and debt and conditional loans and devaluations.  Or so it seems sometimes, especially in the latest showdown over austerity and the Grexit.

In the psychology of old-fashioned warfare, countries were prone to war fevers.  Some insult would inflame people's national pride and get everyone worked up into a state of patriotic rage absolutely demanding a war.  No doubt they would go in with illusions, expecting a quick and easy victory and seriously underestimating the hardships involved.  Yet those hardships, at least initially, would not undermine people's resolve, but stiffen it, as people became enraged at the hostile power that was hurting them.  Only when war grinds on and on, with no end in sight and no seeming prospect of victory do people get tired of it.

So I am very curious to see if the same psychology applies to modern "warfare." Certainly we have many of the same ingredients here -- an intolerable threat to a nation's sovereignty, a humiliating ultimatum, a stronger power determined to dictate terms to a weaker one and on terms that seem to rub the weaker power's nose in its weakness.  Prime Minister Alexis Tsipras has framed the referendum as saying yes or  no to the latest austerity package. Like today's Republican Party speaking of negotiations with Iran, he insists that the alternative to the present deal is not war (or Grexit), but a better deal.*  Does he believe it?  Do the people of Greece believe it?  Some may, but given the extent to while the Europeans have been shouting at the tops of their lungs that rejection means Grexit, I have to think that, while some may have illusions, most know what is at stake.  So the real question is, does war fever psychology apply here?  Will a week of frozen bank accounts and the prospect of surging import prices and external debts, shrinking savings, and an at least temporary and severe economic crash have the power to intimidate far beyond the mere prospect of bombs falling, cities shelled and people killed?  I don't know.

I do know that my own, unknown and unheeded, advice to Tsipras was to be a demagogue, to give a shameless, chest-thumping reassertion of national sovereignty, and to invoke the memory of WWII.  And lo and behold, he appears to be doing just that.  Syriza is framing the upcoming referendum as voting yes or no to a humiliating ultimatum and is holding rallies calling on the people to vote "Ohi," or No.**  And this, it turns out, has strong resonance
for anyone seeking to stir up patriotic fervor.  Greece entered WWII after Italy made a deliberately humiliating and unacceptable ultimatum, demanding that Axis forces be allowed to enter Greece to occupy certain unspecified "strategic locations."  Greece's leader responded, in French, "Alors, c'est la guerre."  (Then this is war).  But Greeks preferred to believe that he answers, in Greek, simply "Ohi!" or No!

Greeks across the political spectrum poured out into the streets shouting Ohi!  Great patriotic fervor ensued and a rush to war. And, in fact, the Greeks gave the Italians the Axis' first defeat, at least in a land war before being utterly crushed and suffering to a degree far beyond the worst that could possibly follow in the wake of any Grexit.  That day (October 28) has been celebrated as a patriotic holiday in Greece ever since, despite the horrors that followed.  So the whole "Vote No" referendum may be an attempt to stir up a sort of "war fever" in a way not immediately apparent to outsiders.

*Actually, to be fair to many Republicans, it may be that they genuinely don't want war, but just want to continue sanctions (modern warfare) as statement, however futile, of disapproval.  Certainly no one is proposing that we invade Cuba any time soon or attempt the violent overthrow of the Castros, but Republicans are dead set against lifting sanctions on Cuba because they make a statement, long after they have been proven futile.
**Greek is apparently an exception to the usual Indo-European rule that words of negation begin with "n."  In Greek, they begin with "o."  I have been trying to leave allusions to Classical Greece out of my posts on modern Greece, but this one is hard to resist.  In the famous cyclops story from the Odyssey, Odysseus tells the cyclops that his name is "No one" so that when he is putting out the cyclops' eye and the cyclops screams in pain, the neighbors ask who is hurting him and the cyclops says "No one!"  Well, it appears that the Greek word for no one is "outis," which sounds a little like "Odysseus."

Grexit: The Economics

So, Greece will default on its foreign loans tomorrow and hold a referendum on Sunday.  (They are even calling it the Greferendum).  Meanwhile, the banks will be closed and people's accounts frozen. The referendum is formally a vote up or down for the austerity package offered by Europe. Informally, it is almost certainly a vote on whether to continue the status quo or state the Grexit.  It is possible that the pressure will become unbearable over this coming week and force the Grexit ahead of the referendum, in which case the vote will be moot.  But the government has frozen bank accounts until the referendum is held.  How long can such a freeze be sustained?  Well, FDR did it for four days, although many states had anticipated him.  Argentina sustained a corralito (little corral, partial freezing of bank accounts for a year, although it was forced to abandon its currency peg after a month or a little more.  So it may be possible to stave off a devaluation until the referendum, but not much beyond it if the vote is no.

So, I wanted to do separate posts on the economics, the psychology, and the politics of it.  The economics is both the easiest and the hardest because I have said it all before and don't have much to add.

To recap, if you want to ruin your economy in one easy step, just over-value your currency.  It can be a remarkably powerful tool.  An over-valued currency ruins your exports by making them too expensive.  It floods the country with cheap imports, undercutting domestic industry.  It lowers the cost of foreign borrowing and encouraged a country to run up foreign debt.  It creates deflationary pressure and thus introduces all manner of distortions as prices are being pressed downward but resist falling.  (Unemployment is one such example.  Large numbers of people working without pay are an extreme one).  And maintaining an overpriced currency requires raising interest rates to keep money in the country and thereby choking off investment.  

But devaluation is painful.  Import prices shoot up.  Foreign debts skyrocket in value, as do foreign debt service costs.  Living standards fall precipitously.  People's savings are suddenly worth much less than they were.  But the deflationary pressure is relieved.  Exports surge.  Domestic industry starts to revive when not artificially undercut.  Rapid recovery is possible.  Paul Krugman has plenty of examples to offer -- Britain, Sweden, South Korea, Argentina.  To which I would add Russia and Iceland.  The most common points of comparison given are Russia (1998), Argentina (2001) and Iceland (2008) because all of those involved huge foreign debt and a default as well as the devaluation.

And here is the thing about Russia, Argentina, and Iceland.  In all cases, the immediate impact was traumatic in the extreme, but recovery was rapid.  Russia and Argentina each saw a sudden burst of inflation with prices rising about 80% in one year (with no equivalent increase in wages) -- and then saw prices stabilize.  No one doubts that the immediate aftermath of a devaluation in Greece will be comparably traumatic.  The real question is whether recovery will follow.

It has been argued, for instance, that default and devaluation worked for Iceland, but will not work for Greece.  Iceland is a tiny country that can get away with floating on the rest of the world.  Greece, although not large, is still too big to scale up.  And besides, although Iceland had the world's most irresponsible banks, its non-financial economy was essentially sound, while Greece has major structural problems.

My main reasons for finding this argument unconvincing are Argentina and Russia.  Both are considerably larger economies than Iceland, and larger than Greece.  And both had serious structural problems, in the case of Russia, almost certainly worse that Greece at its worst.  Default and devaluation worked for them.  And over-valued currency will undermine even a structurally sound economy. And structural reforms are most easily undertaken if any loss of domestic consumption while they are ongoing can be offset by increased exports.

Countering this argument is that that if a country devalues and experiences an export boom, the pressure to undertake structural reforms will be relieved and they can continue old bad habits, as Russia and Argentina have done.  To which I can only say, so what?  Keeping another country's economy deliberately depressed in order to force structural reforms you favor is simply the economic equivalent of exporting democracy at gunpoint.  If a country wished to have economic structures the neoliberal neolibertarians disapprove of and finance them by letting its currency fall, whose business is it, really?  Structural problems will catch up with a country in the end, and it will deal with them in its own way.

Comparisons with Russia and Argentina are probably more to the point, because both are reasonable sized economies and both had serious structural problems that, in fact, they did not address.  Yet both experienced rapid recovery and robust growth after default-and-devaluation.  Once again, it is argued that both had considerable natural wealth to export, while Greece is just a pile of rocks, and that both benefited from high commodity prices at the time, an advantage Greece will not share even if it had commodities to export.  And my honest answer here has to be that I don't know.  Grexit will be very much a leap into the unknown.  But sometimes you just have to go with the devil you don't know.

Greece: We've Seen This Before

One thing cannot be emphasized strongly about the Greek economic crisis.  It is nothing new.  We have been there, done that many times before.  Paul Krugman likes talking about how Europe went through the same thing in the 1930's, Asia in the 1990's, Latin America at the turn of the millennium, and now we are back full circle to Europe again.  He always seems to leave out Latin America in the 1980's.

I remember that well, and it looks remarkably like what is happening now.  Debt-strapped countries asked to re-finance their loans.  The IMF agreed to fund them, on condition that the countries impose harsh austerity and squeeze their domestic populations.  The problems were blamed on the country living beyond its means.  As food subsidies were cut off, hardship multiplied, unemployment surged, and economies shrank, the IMF insisted that the only problem was that countries hadn't suffered enough, that they were continuing to live beyond their means, and that they needed to give higher priority to foreign creditors and less to their domestic populations.  And Conventional Wisdom all solemnly nodded along and agreed.  One Peruvian politician complained that if they cut consumption by strangling one person out of ten, the IMF would probably applaud.  Stories abounded about how austerity was about to turn Latin American economies around any day now.  A country in severe recession, suffering mass unemployment, shredding its meager safety net and seeing its public health system dismantled would be told that its efforts were finally paying off because borrowing costs were down.  Any suggest of putting the interest of the domestic population ahead of foreign creditors was denounced as irresponsible populism which could only be assuaged by harsher measures against the domestic population to assure foreign creditors of the country's sincerity.

I am honestly not clear how conditions finally improved.  But in the 1990's attention turned to Eastern Europe.  There, countries were urged to shut down as much of their economies as possible as quickly as possible on the theory that the more of their economies they destroyed, the sooner something better would take its place.  Any suggestion of employing less drastic methods were dismissed as mere wishful thinking.

But the most extreme version of this I recall was an article in the Christian Science Monitor (very much the voice of Conventional Wisdom).  In Russia, the currency had broken down to the point that people were operating on a barter system.  Coal miners were working twelve months a year and only being paid for two.  Boot factories were paying their workers in boots instead of in cash.  And so forth.  The Monitor tut-tutted and wrung its hands, saying that all this payment in kind was really a form of disguised unemployment and explained that Russia was using it to avoid necessary pain.  What was really needed was to cut off the painkillers and lay off everyone who was working without pay.  And even then, the article filled me with incoherent rage. If Russian coal miners were working twelve months a year and only getting paid for two, apparently they were only being paid for a sixth of the time.  Did Russia need to lay off five-sixths of its coal miners?  Presumably coal production would fall to a sixth of its former levels.  Imaging the consequences to the economy as a whole!  Or consider the boot factory.  Granted, Russian industry produced a lot of worthless products that no one needed.  But if there is one thing that Russia needs, it is heavy winter boots.  But what measure could Russia possibly be better off closing down its boot factory?  The the Christian Science Monitor have any idea how much of the population it was proposing to throw into unemployment?  Or what the economic and social consequences could be?  I suppose I should at least be glad that the Monitor did not address the instance of agriculture.  How many Russian farmers were producing for subsistence or bartering rather than selling their surplus crop.  Would the logic of the Monitor article be that Russia should cut back its agricultural produce to what could sell for cash?  And, if so, would the result be starvation on a scale that would make Stalin look humane by comparison?

In any event, what was actually happening in Russia was actually extreme deflation, to the point that the ruble had collapsed and largely stopped circulating.  Because prices and especially wages are "sticky" and resist falling, deflationary pressure introduces distortions into the economy, like coal miners working twelve months out of the year and only getting paid for two.  Indeed it can be argued (and has been argued) that depression/recession is simply a form of distortion caused by deflationary pressure.  What Russia needed was not to shrink its economy even further, but to release the deflationary pressure.  Yet everyone was doing their utmost to avoid such an outcome, bailing out Russia again and again in exchange for promises of yet more painful "reforms."  Finally in 1998, the rest of the world said enough was enough and allowed the crisis to happen.  Russia defaulted and devalued.  Import prices surged.  Inflation hit 84% in the first year.  Banks failed.  The pain was real, severe -- and short-lived.  The inflationary pressure was relieved, and Russia finally began to recover.  Devaluation and default, however, painful turned out to be what the economy needed -- as well as being a whole lot less painful than what the Christian Science Monitor etc had proposed.

And Greece is showing many of the same symptoms.  In the tourist industry (the strongest), people have gone months with out pay.  Barter networks are going up because money is so short.  All these are signs of deflationary pressure.  How will we know when Greece has suffered enough?  The conventional answer is, when the economy starts to improve.  Furthermore, conventional wisdom has it, Greece was actually beginning to improve when the people committed the ultimate sin, like Latin American countries in the 1980's, and elected a government that put the well-being of its domestic population ahead of foreign creditors.  This must be atoned for by yet more suffering to assure those creditors that they didn't really mean it.

The most popular metaphor in many of these cases has been "major surgery without an anesthetic." And who would doubt that sometimes major surgery is necessary, and that even when done with an anesthetic it is painful (post-surgery).  But the general attitude of the IMF crowd has always been that the more traumatic and painful the measure, the better, even if it achieves nothing but to show the country's "sincerity" in putting foreign creditors ahead of its domestic population.

Reflections on the Greek Referendum

The Supreme Court's decision in favor of Obamacare was a disaster averted.  As such, posting on it can wait until I have the chance to read the decision over.

Taking down Confederate flags and the Supreme Court approval of same sex marriage are culturally significant and deserve some comment, but there is no crisis or urgency to them.

And I continue to make progress with Thucydides and hope to be back to Classical Greece when things quiet down.

Greece is experiencing bank runs

But all of these can wait.  In the meantime, the crisis in modern Greece is coming to a head very fast. Apparently negotiations have (predictably) broken down, the the IMF-European Central Bank (ECB), European Commission (EC) troika insisting on continued, stringent austerity and the Syriza government unwilling to accept it after promising a relaxation of terms.  The Troika has announce an ultimatum and told the Greeks to take it or leave it.  Prime Minister Alexis Tsipras has instead called for a referendum on whether to accept the terms.  Parliament has approved the referendum, with the far-left and far-right parties voting yes and the centrist parties voting no.*

My initial reaction was to applaud.  There is no escaping the fact that Greece has no good options here.  In effect, it has two.  One is to stay the course, continue the ruinous austerity that has been crushing the economy for the past five year and hope for a different result.  The other is to default on its debts and leave the euro.  This will be extremely traumatic in the short run and may be ruinous in the long run, or may be followed by rapid recovery.  No one knows.  Unsurprisingly, the Greeks do not much like either option.  Thus far they have grudgingly followed the first option, with the hope that it would lead to improvement.  When the improvement failed to show up, their patience started wearing thin.  They elected Syriza when it promised a third option -- a reduction in austerity leading to recovery.  It has now become apparent, as it was to many even before, that that option was an illusion.  So now it is time to bite the bullet and make the hard choice -- an indefinite commitment to grinding austerity and long-term suffering, or an immediate, much worse suffering with the hope but by no means the certainty of rapid recovery.

So my first thought was good.  My own advice if forced into the Grexit was to demagogue.  Get the people all riled up against the EU, proclaim a reassertion of national sovereignty, and hope that the hardship would be brief, and the anger would be enough to get people through it.  But a referendum is better than a demagogue.  It has several advantages.  It confronts the people, painfully and honestly, with what the options are and forces them to make the choice.  It legitimizes the decision because it has been made by the people in referendum.  And it causes the people who made it to be to some degree invested in the outcome, more willing to accept the associated hardships, and more determined to make it work.  Besides, my mother will assure you that whenever you are a public forum trying to plan something, whoever, is the most obnoxious and critical is the one it is most important to assign responsibility in making policy.  Doing so has several advantage.  It confronts your trouble maker with reality and forces him (or her) to deal with it.  It forces your trouble maker to shut up or put up -- if you don't like our plan, don't just grumble, come up with something better.  And a lot of what your trouble maker is typically complaining about is the sense of powerlessness, that other people are doing something to him (or her) and that he/she has no say so in it.  Being brought into the process relieves this complaint.  Obviously you can't do that with the entire national public, but forcing them to make a painful choice and be invested in seeing it through is the best you can hope for.

But now I am having second thoughts.  The problem is that the default deadline is June 30.  The date for the referendum is July 5.  And the Troika is making clear that it has no intention of granting an extension until after the referendum.  Which means that by the time the referendum is held, Greece may be facing a fait accompli.  The default will already have taken place.  Bank runs are taking place all over the country.  The ECB has been loaning money to keep the Greek banks running but might cut it off any time.  In that case, the government will have no choice but to freeze everyone's bank account.  And while it is hard to say, it is entirely possible that Greece may already have been forced to leave the euro during those five days.  In which case the referendum would be meaningless and simply a way of forcing the crisis without admitting to it.

___________________________________________
*Reminds me of some of our own votes, especially on government surveillance powers.

Whew!

Well, the Supreme Court has apparently made a liar of me.  It decided on Thursday.  The ruling was 6-3 in favor of the subsidies.  Not entirely surprising.  And in terms that rather strongly hinted to opponents to quit bringing these lawsuits, they don't want to hear anymore.  That is surprising. Further comment postponed until I have had the chance to read the decision.

PS:  Our side is all saying whew!  Opponents are incoherent with rage.  But I am betting that a lot of Republican members of Congress and state governors are relieved too.

As the Suspense Continues to Build

Another day, no Supreme Court decision.  Less than a week to go.  Maybe they will decide tomorrow.  Or maybe they will wait till next Monday or Tuesday.  But I am betting that they will announce their decision Friday, on the general theory that controversial actions should be saved for the Friday New Dump.

Also significant:  When I look at Facebook, a whole lot more of my friends are watching for a decision on same sex marriage than whether seven million people will lose their health insurance.  Guys, if you don't get a better sense of priority, you fully deserve to be dismissed as elitists.

The Suspense is Killing Me

So, the end of June is the deadline for:

1. Negotiations with Iran to reach their final resolution
2. The Supreme Court to reach its decision on Obamacare (and same sex marriage, for that matter)
3. Loans to Greece to expire and either a new agreement to be reached or no agreement to be reached and the Grexit.

June is running out fast.  Each day I keep looking at the latest headlines, waiting for one of those things to happen, but none of them have so far.  Well probably next week and if not, definitely the three days after.  The tension only rises as the deadline draws near.

And now it appears my father-in-law has had a massive stroke and is not expected to recover, so personal matters may be distracting my attention for these last nerve-racking days of June.

Note to All Bernie Sanders Fans

Note to all Bernie Sanders fans:  We are electing a President.  We are not electing a king, or a dictator, let alone a god.  That means the new President will still have to deal with a Republican House, possibly a Republican Senate, and definitely not a Democratic super-majority.  Powerful interest groups will still be exactly the same as before and quite capable of protecting their own.

In short, we have seen this play out before.  At that time, the President in question was Obama, and you know how that turned out.

Insanity is doing the same thing and expecting a different result.

Update

Reading and watching interviews with the man's grief-stricken parents.

• The man was clearly mentally ill and was angry at the police for taking his son from him.
• He was white.  
• His father is moderately right-wing, blaming "liberal people" for allowing his son to be taken from him and saying that there is no help available for white males.
• His mother says he was obsessed with the news, but not in any ideological way.  Every time a bad thing happened, he would say that he had a precognitive warning of it and tried to warn people but no one listened.  She was also emphatic that he did not have any advance knowledge of any of these bad things.  And she had no doubt that he was mentally ill.
• It was, in fact, his mother who took custody of his son, presumably because of his mental illness.  She feared that he would violently retaliate against her.
• There is some suggestion that his parents are divorced.  They have different last names, and apparently the father was not involved in the custody dispute.  (Interestingly enough, at least in the part we saw, he neither defends nor criticizes her actions).
• Naturally, both parents are devastated.

So, all in all, this looks like a personal feud without political motive.  At least so far, there is nothing to link the shooter to any political movement whatever.

Initial Hunch on Another Shooting

Wow!  I note that so far the Dallas police have not disclosed the man's picture or given any real details on him.  That means, among other things, that we don't know the man's race, religion, or political background.  (Although we can be sure that he is mentally unstable).

My gut reaction, though, is that this doesn't look like a guy from the black community angry over some police shooting or lesser incident.  Those usually just aren't this premeditated.  Nor does it look like Islamic terrorists.  The motives are just too personal.

To me, this has very much the look and feel of someone close to the "Patriot" movement.  Who else would own a semi-military van or be so eager to attack the core symbols of the state?

I guess we will find out soon enough if my hunch is right.

A Quick Note on John Kasich, Obamacare, and the Christian Coalition

My latest post is inspired by this column on John Kasich.  Kasich is a Republican politician of moderate prominence.  He served in the U.S. House of Representatives in the 1980's and '90's and was noted for his integrity and for taking the deficit seriously.  In 2010 he was elected Governor of Ohio as a Tea Party candidate and attempted to bust the unions (make Ohio a right-to-work state) but failed.  After that he turned moderate and accepted the Medicaid expansion in Obamacare.  Naturally, that makes him radioactive with the Republican base.  He is nonetheless making an utterly futile bid for the Republican nomination.

But, the column points out, what makes him doubly toxic is that he not only accepted the Medicaid expansion but his reason for doing so.  He saw providing healthcare to poor people as a moral issue. Even a religious issue.  As he put it:

Now, when you die and get to the, get to the, uh, to the meeting with St. Peter, he’s probably not gonna ask you much about what you did about keeping government small, but he’s going to ask you what you did for the poor. Better have a good answer.

Pardon my saying, but in this Kasich reveals himself to be a Catholic.*   No Evangelical Protestant would ever fall for such a line.

First of all, every Evangelical Christian knows that when you knock on the Pearly Gates, St. Peter won't ask what you did at all.  He will ask just one question -- have you taken Jesus Christ as your personal savior.  Whether you get in depends on how you answer.  What you have done is completely irrelevant.

Nonetheless, you have to do something between taking Jesus Christ as your personal savior and going to heaven, so you might as well put the time to good use.  And doing something for the poor is definitely putting your time to good use.  In fact, Evangelical Christians are generous in their donations to charity and proud of it.  But here is the thing.  They regard what you have done for the poor only as a matter of what you have personally done out of your own pocket.  Supporting government programs for the poor counts for nothing at all and is most likely seen as downright evil.

The reason is best explained, as I have before by a comment by a rabbi I recall reading.  The rabbi said that charity has two purposes, to provide for the poor, and to teach us to be generous.  The Jewish approach focuses more on providing for the poor and the Christian approach more on teaching us to be generous.  Or put differently, balancing the rights of the giver and the needs of the recipient is a difficult and delicate task.  The Jewish approach, perhaps, leans too far to the needs of the recipient and ends up with the schnorrer -- the beggar with an obnoxious sense of entitlement.  Too much focus on the rights of the giver can lead to some godawful condescension and a lot of unmet needs.  Drawing the right balance is difficult.

But Evangelical Christians aren't interested in drawing the balance at all.  They see charitable giving as exclusively about the rights of the giver and about teaching us to be generous.  The needs of the recipient simply do not enter the moral equation.

Or perhaps I am being overly harsh.  The matter is one of priority.  The top priority is ending any sort of government programs for the poor and ensuring that charity is strictly private.  If the goal is to teach us to be generous, then only voluntary giving counts.  Using taxpayer money defeats the whole purpose.  That is primary.

How much people give is secondary.  Clearly if the purpose of charitable giving is to teach us to be generous, then it isn't much good unless people are actually learning to be generous.  Evangelical Christians are, indeed, generous and proud of it.  I have no doubt that if there were too communities which we will call Community A and Community B, and if both had no taxpayer-supported service for the poor, Evangelical Christians would have no hesitation in preferring the community that gave more generously.

The needs of the recipient could fit in next, after first ensuring that all giving is voluntary and second teaching people to be generous.  Suppose that Community A and Community B both have ended taxpayer financed aid to the poor and are both equally generous in their voluntary donations.  But in Community A the voluntary programs are poorly administered and the recipients benefit very little from them, while in Community B voluntary programs are well administered an really know how to get the most bang for the buck.  Presumably Evangelical Christians would agree with most people that Community B is preferable.  But that is at best a tertiary concern.

And that it presumably the honest answer that you would get if you really pressed on the issue of accepting the Medicaid expansion.


*According to Wikipedia, although Kasich was born and raised Catholic, he has since become an Anglican.  Close enough.

Tax Cuts and Fiscal Crisis: A Feature, Not a Bug

I assume that this article was what has inspired a whole spate of blog posts on the subject.  My response to all this is the same as it was before.  Republicans and their tax breaks have an elaborate shell game of "heads I win, tails you lose" going.  Tax cuts are always good for one of two reasons:

1. Supply side economics. Tax cuts will spur such growth that revenue will increase and on spending cuts will be necessary.
2. Starve the beast. Tax cuts will choke off revenue, precipitate a fiscal crisis, and finally force spending cuts.

Now obviously, tax cuts cannot simultaneous increase and decrease revenue, avoid the need for spending cuts and force them.  But ultimately for Republicans either option is acceptable.  If tax cuts increase revenue and avoid the need for spending cuts, then you can avoid having to make hard decisions, with the same amount of services for less.  If tax cuts reduce revenue, then you have to cut spending, which is the real goal anyhow.

Starve the beast did not work on the federal level because the federal government has an essentially unlimited capacity to borrow and, if worst comes to worst (which it hasn't so far) can inflate its way out of debt.  But states and municipalities can't print their own money, so their borrowing capacity is limited and most are required by law to run balanced budgets.  And in a number of them, the beast is beginning to starve.  It is pointless being shocked or complaining.  This was the goal from the start.  Fiscal crises were always a feature, not a bug in this system.  

The real problem was that fiscal crises were supposed to take some time to materialize. They were supposed to happen when the authors of the tax cuts were safely out of office so someone else could take the blame.

The Politics of Ending Bulk Record Collection

So what can we learn from Congress' first real attempt since 9-11 to reign in our intelligence agencies?  One obvious place to start is by comparison with the Church Committee, the Senate Committee that investigated abuses by intelligence agencies in the 1970's and exposed extensive abuses.

First and foremost, the Church Committee clearly had only limited success.  It exposed serious past abuses and imposed some restraints to reign in out of control intelligence agencies (internal and external).  Forty years later, surveillance capacity has grown beyond what anyone in the 1970's could have imagined and intelligence agencies continue to be out-of-control rogues.  But there does not appear to have been the sort of corrupt use this time as before.  At least so far as we know, this massive surveillance has not been abused to suppress dissent or to advance personal or partisan goals. So to that extent, the Church Committee has had lasting achievements.  But an immense, impersonal agency swallowing up all your information and doing who-knows-what with it is scary enough even if not abused to advance private goals.

This time around, Congress has not shown any interest in the sort of serious investigation that the Church Committee undertook.  Only when Edward Snowden forced their hand did Congress act.  But they did act some, however inadequately.  Maybe they will act again sometime.

But looking at the Church Committee and the actions taken by Congress today, I can reach at least three conclusions as to what political conditions will facilitate reigning in the intelligence agencies.

Divided government encourages oversight.  This is not exactly a new concept.  When the same party controls the Presidency and Congress, it tends to defer to the President.  When opposing parties control opposing branches, they clash.  And yes, these clashes have been destructive lately, sometimes to the point of bringing about complete paralysis.  But when it comes to reigning in an out-of-control executive and out-of-control agencies, it is really helpful if Congress does not trust the President.  A healthy measure of distrust is entirely in order here.

A change in who holds the White House can trigger oversight.  The Church Committee only started really investigating after the Republican Nixon took over and especially after Watergate. Many Republicans accused them of partisan motives and said that Nixon was not doing anything difference than what his Democratic predecessors had done.  And in fact, there was ample evidence of serious abuses going all the way back to Roosevelt and the New Deal.  So, yes, partisan motives were probably present and the fact that a Republican had taken over no doubt had a lot to do with triggering the investigation.  But in the end, so what?  There really was a serious and escalating pattern of abuses that needed addressing.*  If it took a certain amount of hypocritical partisanship to make Congress act to reign in the abuses, then so be it.

The same applies today.  Yes, Republicans were all for giving the President unlimited power so long as he said "War on Terror" so long he was a Republican.  And yes, they are a bunch of fools and hypocrites to make such an about-face on executive power based on which party holds the White House.  But if it reigns in our out-of-control intelligence agencies, it is a small price to pay.

At present, a Democratic President and Republican Congress are the best bet to protect privacy.  I am well aware that it was the opposite combination at the time of the Church Committee, but times have changed.  In particular, the Church Committee operated during a relative thaw in the Cold War, so Democrats did not have to fear looking soft on Communism as much as they would either before or after the 1970's.  Right now, I see no hope of any Congress reigning in a Republican President.  Democrats are all deathly afraid of looking soft on terrorism and Republicans will all fall in line.  Nor do I see much hope of a Democratic Congress reigning in a Democratic President.  Fear of looking soft on terrorism and the tendency to line up behind the President are simply too strong. But Republicans have a strong faction that tends to panic at the sight of a Democrat in the White House and see all federal power as dangerous.  They are not likely to accept reassurances that really, these powers are intended to protect us from terrorists.  Some even think that a Democratic President is in cahoots with the terrorists.  On the Democratic side there are some strong civil libertarians who want to reign in surveillance regardless of who controls the White House.  These two groups amount to the left wing of the Democratic Party and the right wing of the Republican Party.  They are an odd set of bedfellows, but if they get the job done, who cares?  And the minute a Republican takes the White House, they will part ways.

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*On the subject of escalating abuses, I am not an expert on the subject and do not know if that meant that Truman was worse than Roosevelt or Eisenhower worse than Truman.  But certainly Kennedy was worse than Eisenhower, Johnson was worse than Kennedy, and Nixon was the worst of all.

Bulk Phone Records Collection

The Foreign Intelligence Surveillance Act (FISA) was passed in the 1970's in response to revelations of serious abuses by the Nation Security Agency (NSA).  FISA required the NSA to get a warrant to gather electronic information and established a secret court to issue such warrants in foreign intelligence and international terrorism cases.  To obtain a warrant the NSA had to prove probable cause that the target was the agent of a foreign power.  From the very start, international terrorists as well as foreign spies were permitted as targets.  FISA as originally written required individual suspicion for a warrant and limited the duration of the warrant to 90 days.  In some cases, presumably including specific plots by spies or terrorists, the investigation could be finished in that amount of time.  Other targets, such as foreign embassies, had continually renewed warrants issued.

Following 9-11, George Bush requested and received increased surveillance -- the PATRIOT Act, passed in 2002.  When Bush found the PATRIOT Act was not giving him all he wanted, he did some intelligence gathering illegally.  In 2008, Congress passed yet another modification to FISA expanding its powers still further, but denying the President a blank check.  Among the members voting for was a freshman Senator by the name of Barrack Obama.  It was not clear at the time and is still not clear what they were approving.  Did the new law require individual suspicion as in the past, or did it allow "basket" warrants to wiretap a general group?  What degree of surveillance did it allow over international calls?  And what of e-mails, texts, and tweets?

So far as I can tell, many if not most of those questions remain unanswered.  But one thing did become clear from Edward Snowden's revelations.  The NSA was using these provisions to gather metadata (numbers, dates, times, lengths of call, etc) every call made in the country.  Over 90 day increments only, because that was still the limit in duration of a FISA warrant.  But each such warrant was automatically rolled over into a new one 90 days later.  This may not have been exactly breaking the law, since the court was issuing warrants, after all.  But it was definitely stretching the law beyond all possible recognition.  And because the FISA Court operates in complete secrecy, no one outside of certain inside circles knew that it had placed such an expansive interpretation on the law. It had been known for a long time that the FISA Court almost never refused requests for a warrant, but no one really knew whether that was because the court was a rubber stamp or because requests were so cautiously made.  Snowden's revelations answered the question -- the court was a rubber stamp.

How long this state of affairs would have continued is anyone's guess but two things conspired to place at least some limits on it.  First, all these provisions have an automatic sunset provision, although Congress has always renewed it as purely a matter of form.  The other is that Second Circuit Court of Appeals issued an opinion an opinion that not even the new version of FISA authorized such extensive record keeping.

As a lawyer, I will give a brief rundown of the opinion.  It first addressed the issue of standing, since no one who is not personally affected by a law has standing to challenge it.  This was easily addressed.  When it was first revealed that the Bush Administration was listening to international phone calls without a warrant, it was extremely difficult to establish who had standing because no one knew who as being listened to.  In this case, nothing could be easier.  Since the government was collecting all telephone metadata, anyone with a telephone (at least a land line) has standing.  The ACLU did not even need a front party; it could sue in its own name.  Somewhat more delicate was the issue of whether FISA warrants (or any warrants, really) can be challenged, since a warrant is supposed to be secret and the target is not supposed to know about it.  But the court held that nothing in the statute expressly disallowed review, even if the opportunity was not anticipated.

The ACLU challenged the metadata program on both constitutional and statutory grounds.  It is a court rule not to address a constitutional challenge if a practice is forbidden by statute.  The court therefore begins with the statute, which authorizes collection of "tangible things" that are "relevant to an authorized investigation."  The government likened "relevance" under FISA to relevance in issuing a grand jury subpoena.  "Relevant" records may, indeed, be broad and include a considerable volume from which ones directly related to the investigation may be gleaned.  But no grand jury has ever subpoenaed anything so sweeping as all phone record in the entire US!  At least records subpoenaed by a grand jury are constrained by the subject of the investigation.  In other words, give us all your haystacks; we think there may be some needles in them simply does not cut it. Furthermore, the court points out, subpoenas are normally limited not only by the subject of the investigation, but by some particular target at some particular time.  The government, in offering very broad subpoenas that had been approved, mentioned one for all Western Union money order applications for over $1,000 in Kansas City for two years; and all of a particular doctor's records on Medicare and Medicaid patients for at least seven years.  But neither approached the breadth of all telephone records in the country, indefinitely.  Furthermore, the court says, the information cannot just be "relevant" to fighting the war on terror or to anything the government might want to know.  It must be relevant to an authorized investigation.  This means a particular investigation, not to all possible investigations of terrorism, present and future.  An "investigation" is contrasted to a "threat assessment," which does not allow for FISA orders.  Nor would the court accept the fact that Congress reauthorized the act after such sweeping data collections were underway, given that most of Congress was not aware of them.

In short, the court held that the statute did not authorize such sweeping data collection.  It then declined to rule on the constitutional issue on the grounds that it had already struck down the data collection on statutory grounds.  It further declined to enjoin the data collection on the grounds that the statute would expire soon and Congress would have the opportunity to address the issue.

And now Congress has acted.  It passed the USA FREEDOM Act (some sort of acronym, probably better not to ask) and Obama has signed.  So what do I think of it?

Well, Obama endorsed it from the start.  As if to prove that not everything he endorses is automatically poison to Republicans, it passed the House 388-88.  It passed the Senate 67-32. Even the intelligence community has said it can live with it.  All of which makes me deeply distrustful and suspect that if it is getting that much mainstream support, it must be a purely cosmetic reform that doesn't change the real meat of what is going on.

But that is a dangerously cynical attitude.  It amounts to a belief that anything that is politically feasible to do must therefore not be worth doing.  Talk about defeatism!

A better way to assess the Act is to see that it does and does not change.  This summary says that it goes somewhat beyond just limiting bulk collection of phone records.

What it does:

• Bans bulk collection of telephone or e-mail metadata
• Requires something more specific that bulk collection of an area, time, or provider
• Allows government to subpoena phone companies for information up to two degrees of separation from a suspect
• Allows private companies to report how many FISA requests they receive
• Requires FISA to disclose legally significant opinions (such as the opinion that "relevant to an ongoing investigation" included all phone records in the country!)
• Allows someone to argue against the warrant in legally significant cases
• Extends other PATRIOT Act provisions, such as roving wiretap and "lone wolf" surveillance

Others emphasize the power that the new law still allows:

• It continues bulk collection, but by the phone companies instead of by the NSA
• It allows search of the metadata by a "specific selection term," which can sweep in immense amounts of information
• It continues to allow mass subpoena of other types of records
• It does not interfere with mass records collection by other agencies (mostly international calls by the DEA)
• It does not interfere with massive collections of foreign data which (probably deliberately) sweeps in many US persons
• It does not strengthen minimization requirements

So I suppose this should not be surprising.  It does some but not enough.  It could be better and it could be worse.  But this is (so far as I can tell) the first real attempt since 9-11 to scale back surveillance.  The real question is, will this be some minor changes to put a better face on the old system?  Or will it be the first of many measures to reign in a rogue agency?

Time alone will tell.

Back to the Present

Now it is definitely time to give Ancient Greece a break!  A lot will be happening this coming month. Modern Greece will be back in the headlines soon as its few months of negotiating room expire.  The Supreme Court will reach its decision on Obamacare.  The deadline for negotiations with Iran is coming up fast.  Not to mention other, less predictable things that can happen.  ISIS is on the march!  Prime riot season is coming up!  More Presidential candidates are throwing their hats into the ring!  That should keep me quite busy for a while.

When I return to Greece, Athens will experience a coup and a narrow and tight, but short-lived, oligarchy.

But in the meantime, the Second Circuit has struck down the telephone metadata gathering program and Congress is struggling to respond.  That will be my next post.