Category: History

Can the US economy afford a Keynesian stimulus?

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Willem Buiter:

Economic policy is based on a collection of half-truths. The nature of these half-truths changes occasionally. Economics as a scholarly discipline consists in the periodic rediscovery and refinement of old half-truths. Little progress has been made in the past century or so towards understanding how economic policy, rules, legislation and regulation influence economic fluctuations, financial stability, growth, poverty or inequality. We know that a few extreme approaches that have been tried yield lousy results – central planning, self-regulating financial markets – but we don’t know much that is constructive beyond that.

The main uses of economics as a scholarly discipline are therefore negative or destructive – pointing out that certain things don’t make sense and won’t deliver the promised results. This blog post falls into that category.

Much bad policy advice derives from a misunderstanding of the short-run and long-run impacts of events and policies. Too often for comfort I hear variations on the following statements: “The long run is just a sequence of short runs, so if we make sure things always make sense in the short run, the long run will take care of itself.” This fallacy, which I shall, unfairly, label the Keynesian fallacy, compounds three errors.

Via Yves Smith.

Samuel Huntington Obituary

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The Economist:

IN THE early 1990s America’s opinion-makers competed to outdo each other in triumphalism. Economists argued that the “Washington consensus” would spread peace and prosperity around the world. Politicians debated whether the “peace dividend” should be used to create universal health care or be allowed to fructify in the pockets of the people or quite possibly both. Francis Fukuyama took the optimists’ garland by declaring, in 1992, “the end of history” and the universal triumph of Western liberalism.


Samuel Huntington thought that all this was bunk. In “The Clash of Civilisations?” he presented a darker view. He argued that the old ideological divisions of the Cold War would be replaced not by universal harmony but by even older cultural divisions. The world was deeply divided between different civilisations. And far from being drawn together by globalisation, these different cultures were being drawn into conflict.



Huntington added another barb to his argument by suggesting that Western civilisation was in relative decline: the American power-mongers who thought that they were the architects of a new world order were more likely to find themselves the victims of cultural forces that they did not even know existed. The future was being forged in the mosques of Tehran and the planning commissions of Beijing rather than the cafés of Harvard Square. His original 1993 article, in Foreign Affairs, was translated into 26 languages and expanded into a best-selling book.

Protesters Force Bangkok’s Airport to Suspend Takeoffs

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AP:

Anti-government demonstrators swarmed Bangkok’s international airport late Tuesday — halting departing flights — as opponents and supporters of Thailand’s government fought running battles in the streets of the city.


Minutes after outbound flights at Suvarnabhumi International Airport were suspended, hundreds of demonstrators — some masked and armed with metal rods — broke through police lines and spilled into the passenger terminal.


The road to Suvarnabhumi.

Thomas Fuller has more.

Veteran’s Day: The Allied Advance, 1916

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The Economist:

WHEN the Germans launched, five months ago, that terrific onslaught on Verdun, which has been sustained by the French with such incomparable heroism, the enemy’s offensive was welcomed by our Press, as certain to cost him sacrifices in men greater than his gain in territory. Nevertheless, the same newspapers which have called for, and now enthusiastically welcome, the Franco-British offensive, seem hardly to have realised what that advance has already meant to thousands of their readers and to many more thousands of stricken heroes in terms of human suffering. Let us neither minimise nor exaggerate the success so far gained. Everyone is discussing it, now that a halt is called. Intense pride we must all feel in the superb courage shown by our officers and men under this ordeal; but that pride should not blind us to the cost. We do not know what are the casualties incurred in the week’s fighting that started last Saturday morning; but we do know that heavy sacrifices of life and limb must be made at every “push,” and that a town must be depopulated of its young men for every village gained. That is the experience of this war; for every previous attempt at an advance, whether on our own part or on that of the Germans, during the general deadlock of the last 18 months, has only served to prove, the truth of the contention of M. de Bloch, set out in the Economist of January 1st. The Polish writer foretold what trench warfare would mean between conscript armies. “Battles,” he says, “will last for days, and at the end it is very doubtful whether any decisive victory can be gained.” The decision, he predicted, supposing diplomacy to be excluded, would come through famine, not through fighting.

The Crisis Last Time

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Richard Parker:

For writers who seek to influence public affairs, timing plays a paramount role. And few writers have had better timing than Adolf Augustus Berle.


In the summer of 1932, with America trapped in the greatest financial crisis in its history, Berle published “The Modern Corporation and Private Property,” a scholarly yet readable analysis of America’s largest companies and their managers. Berle is largely forgotten today, yet with that book he succeeded in persuading Americans to see their economic system in a new way — and helped set the stage for the most fundamental realignment of power since abolition.



The stock market had plunged vertiginously three years earlier, and by 1932 Americans were desperate to reverse the much wider collapse that had ensued — and to make sure it wouldn’t happen again. The New Republic was soon hailing “The Modern Corporation” as the book of the year, while The New York Herald Tribune pronounced it “the most important work bearing on American statecraft” since the Federalist Papers. Louis Brandeis would cite its arguments in a major Supreme Court ruling on corporate power. Running for president, Franklin Delano Roosevelt recruited Berle — a Republican Wall Street lawyer who had supported Hoover — to join his “brain trust,” and that fall entrusted him with drafting what became the most important speech of the campaign. After the election, Berle remained in New York, yet his connection to the president he audaciously addressed as “Dear Caesar” was such that Time would characterize “The Modern Corporation” as “the economic bible of the Roosevelt administration.”

Fascinating.

Destroying Oil as a Strategic Commodity

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Joe Francica:

A Summary of Remarks by Former CIA Director Jim Woolsey at the GEOINT Symposium

At the GEOINT Symposium in Nashville, Tennessee, former director of the Central Intelligence Agency (CIA) Jim Woolsey gave a chilling account of the implications for national security related to the United States’ dependence on foreign oil. He described the vulnerabilities of a resource located far from our shores, highlighting how consumer habits could have dramatic geopolitical consequences. He then offered a solution to the crisis by suggesting a way to remove oil as a strategic commodity.

Woolsey’s assessment of the problem is similar to what we have heard from T. Boone Pickens, the oil businessman-turned wind power advocate. We spend in the range of $350 – $700 billion per year for oil, depending on the price per barrel. The reality is that the U.S. and other oil importers like China and India are engaging in the biggest transfer of wealth in history. The result is that the U.S. is either directly or indirectly providing funds to support countries that may not have our best interests at heart. “Oil tends to be produced by countries that are either run by autocrats or dictators. (One exception: Norway). So, one of the things we are doing with this money is contributing to the support of dictators. Putin [Russia] and Chavez [Venezuela] are a bit quieter with oil at $65 per barrel,” said Woolsey. “[However], a national energy policy that depends on oil is probably one of the stupider policies ever done. Even at $65 per barrel, we still have one of the biggest transfers of wealth the world has ever seen.”

Flughafen Tempelhof Closes: VR Scene

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Tempelhof Central Airport (52.482088 13.389716), home of the Cold War era Berlin Airlift closed recently. I had an opportunity to visit in August, 2007 and shot this VR scene.


Flight Global posted a useful link roundup.




A few more photos: Tempelhof entrance, nearby Berlin Airlift Memorial and a closer look (photo from the Memorial’s 1951 unveiling).

Berlin Airports: Tempelhof – from the beginning till today. “An important chapter in the history of German aviation draws to a close“:

Tempelhof is justifiably regarded as the cradle of aviation. The name Tempelhof is closely connected to the beginning of engine-powered aviation. On 4 September 1909, an engine-powered flight took off for a few minutes for the first time in Germany. With his plane, American Orville Wright ushered in the age of engine-powered aviation in Germany on the Tempelhof airfield. Aeronautical engineering continued to develop at a rapid pace: on 8 October 1923, Tempelhof was granted the status of “Berlin Airport”. The central airport Tempelhof developed into the biggest hub in Europe. Tempelhof became the home of Deutsche Lufthansa AG, which was founded on 6 January 1926 in Berlin. 1936 saw the start of construction of a completely new airport of epic proportions. The construction of the largest airport building in the world catered for both Hitler’s penchant for monumental constructions and the expected 6 million passengers. During World War II, civilian air traffic increasingly dwindled. After a brief occupation by the Soviet army, the Americans took over the airport in July 1945.

A Fascinating Look At Iraq

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Dexter Filkins:

At first, I didn’t recognize the place.
On Karada Mariam, a street that runs over the Tigris River toward the Green Zone, the Serwan and the Zamboor, two kebab places blown up by suicide bombers in 2006, were crammed with customers. Farther up the street was Pizza Napoli, the Italian place shut down in 2006; it, too, was open for business. And I’d forgotten altogether about Abu Nashwan’s Wine Shop, boarded up when the black-suited militiamen of the Mahdi Army had threatened to kill its owners. There it was, flung open to the world.
Two years ago, when I last stayed in Baghdad, Karada Mariam was like the whole of the city: shuttered, shattered, broken and dead.
Abu Nawas Park — I didn’t recognize that, either. By the time I had left the country in August 2006, the two-mile stretch of riverside park was a grim, spooky, deserted place, a symbol for the dying city that Baghdad had become.

Filkins is the author of: “The Forever War”.