Archive for the ‘Friedmans’ Category

Laura Rozen reports that the US government is talking about Pakistan’s “existential crisis”. (They do not mean, apparently, brooding about lobsters and smoking too much.) It’s currently being manifested by the Pakistani army fighting its way back into the Malakand Division; basic details here. Fans of Winston Churchill’s My Early Life will of course remember that he took part in a similar operation in exactly the same place as a young man. Some words of his are probably appropriate here:

The Political Officers who accompanied the force, with white tabs on their collars, parleyed all the time with the chiefs, the priests and other local notables. These political officers were very unpopular with the army officers. They were regarded as marplots. It was alleged that they always patched things up and put many a slur upon the prestige of the Empire without ever letting anyone know about it. They were accused of the grievous crime of “Shilly
shallying,” which being interpreted means doing everything you possibly can before you shoot.

We had with us a very brilliant political officer, a Major Deane, who was much disliked because he always stopped military operations. Just when we were looking forward to having a splendid fight and all the guns were loaded and everyone keyed up, this Major Deane – and why was he a Major anyhow? so we said, being in truth nothing better than an ordinary politician – would come along and put a stop to it all. Apparently all these savage chiefs were his old friends and almost his blood relations. Nothing disturbed their friendship. In between the fights, they talked as man to man and as pal to pal, just as they talked to our General as robber to robber.

We knew nothing about the police vs. the crook gangs in Chicago, but this must have been in the same order of ideas. Undoubtedly they all understood each other very well and greatly despised things like democracy, commercialism, money-getting, business, honesty and vulgar people of all kinds. We on the other hand wanted to let off our guns. We
had not come all this way and endured all these heats and discomforts which really were trying – you could lift the heat with your hands, it sat on your shoulders like a knapsack, it rested on your head like a nightmare – in order to participate in an interminable interchange of confidences upon unmentionable matters between the political officers and these sulky and murderous tribesmen.

And on the other side we had the very strong spirit of the ‘die-hards’ and the ‘young bloods’ of the enemy. They wanted to shoot at us and we wanted to shoot at them. But we were both baffled by what they called the elders, or as one might now put it ‘the old gang,’ and by what we could see quite plainly, the white tabs or white feathers on the lapels of the political officers.

As it turned out, the traditional authorities who Major Deane knew so well couldn’t hold back the young bloods on this occasion, or it didn’t suit their aims to do so, and Lieutenant Churchill and friends got the fight they were looking for.

However, nobody ever seriously imagined they would sweep out of the mountains into the Punjab. The only people who did imagine that were in distant London and almost as distant Delhi, where they insisted on imagining Russians everywhere. Otherwise, the question was always one of compromise. Today, we insist on projecting visions of the armies of Al-Qa’ida sweeping into the Punjab; as is well pointed out here, this is just as unlikely as it was in the days of Sir Bindon Blood as it is in the era of David Kilcullen.

As Arif Rafiq warns, the theatre of violence and the bureaucratic glamour of Richard Holbrooke is having much the same effect on the US government and the thinktank industry as the announcement of Bindon Blood mobilising for the Frontier had on the British Indian army of young Winston’s day. Every ambitious young fool is suddenly a Pakistan expert, much as Churchill called in all his political contacts and travelled two thousand miles overland whilst theoretically on leave in order to get shot at in Malakand. You have to show willing, after all.

Hysteria has been a constant in Western thought about Pakistan ever since it was created. However, as I’ve said before, somehow the worst-case scenarios have a way of not happening. Either we’re all incredibly lucky, or else the forces in Pakistani society that make for stability are stronger than outsiders imagine. It is worth repeating to yourself that 85 per cent of the population lives in Punjab or Sindh and that of the remaining 15 per cent, only 15 per cent of the fraction that lives in the NWFP votes Islamist.

Of course, hysteria has its uses; hence Robert Kaplan musing on just getting rid of Pakistan.

Especially in the west, the only border that lives up to the name is the Hindu Kush, making me think that in our own lifetimes the whole semblance of order in Pakistan and southeastern Afghanistan could unravel, and return, in effect, to vague elements of greater India

Can anyone imagine how this sounds to, say, a Pakistani Army officer? It’s the business-class version of hoo-yah fuckwit Ralph Peters’ irresponsible furblings. An exercise; substitute “Rio Grande” for Hindu Kush, Mexico for Pakistan, Texas for Afghanistan, and Spain for India, and you’ve got a classic American Apocalypse/Immigrant Panic rant. Although, Tom Ricks does Kaplan a disservice by confusing the Indus and the Tigris. It isn’t quite that insane, but I think the slip is telling.

But the important point is that permanent crisis fuels the crisis industry. It helps to legitimate your ideas and staff your organisation. At the other end of the pipe, the permanent crisis helps the Pakistani government’s Pakistan desk manipulate the US government’s Pakistan desk. And their top priority is, of course, India; Robert Kaplan’s geopolitics quoted above is all about looking north from the sea, towards Afghanistan, over Pakistan’s shoulder as it were.

Want a policy prescription? Well, if everyone else is an expert, at least I serve only my own interests, and I have run this by the only Musharraf supporter I’ve ever met. I recommend a combination of this:

so if the people feel they don’t have a say in their own fate, “Washington” should come up with a new plan they don’t have any say in? I don’t get it. The one thing we haven’t tried doing yet is persuading the Pakistani people we’re on their side, rather than telling them we are and dumping millions of unaccountable dollars into their country.

and this:

But cliche seems to drive policy here. Pakistan doesn’t need gap shrinkers, assault ships, setting up the precinct or any other Thomas Barnett bollocks. What it needs is respect, and specifically respect for civilian government.

Just stop pressing those buttons.

Just one more Friedman

Chatter builds around the suggestion that security control of Basra might be handed over in early 2007. We’ve had quite a lot of this stuff before, tales that significant reductions in force might occur in six months’ time (one Friedman) and more recently announcements that such-and-such a province has been “handed over”.

What we haven’t had is beef. “Handing over security control” of a province appears to entail a flag-swap outside some prominent building and a new job title for the local Sadrist, Fadhila or SCIRI boss. But so far, none of the handovers have involved the withdrawal of even one single soldier. This time, Des Browne has suggested that troop numbers might be lower “by thousands” at the end of 2007.

There may be some evidence that this has a slightly higher reality content than past promises. I hear that the Shaibah logistic base outside Basra is going to close “early in 2007” with the services and installations being transferred to the RAF’s Basra Air Station. That, to me, sounds like clearing the decks – reducing the number of bases and perhaps the number of logistics personnel, whilst concentrating around the APOD (Aerial Point of Departure).

Why, asks Chris Dillow, do we consider Milton Friedman a man of the Right? Dillow was thinking of such things as the earned-income tax credit and his opposition to conscription, but the question requires some unpacking. I don’t believe, for example, that his concern with liberty is incompatible with the Left. Neither is it impossible to imagine a leftwing critique based on ownership and control, rather than markets versus planning. I certainly agree with him on floating exchange rates, and on the legalisation of drugs.

But all these things – which so many people chose to pick up on when commemorating his death – were sideshows at best to his main achievement, monetarism. Like few other economic doctrines, monetarism was actually tested and met with shattering empirical refutation. The US Federal Reserve lasted three years before kicking the habit. In the UK, the experiment went on until 1986, by which time the government and the Bank had successively failed to control all the main monetary aggregates. Inflation had been forced down, but at the cost of high unemployment – not only is this what the Phillips curve suggested would happen, it arguably happened for the reasons a Keynesian would have predicted it would happen.

The British government applied fiscal and monetary tightening, raised the rate of interest, and permitted sterling to appreciate – and guess what, aggregate demand tanked, unemployment soared and prices eventually fell. Eventually, Alan Walters and Charles Goodhart convinced the government to ditch monetarism. Instead it chose an exchange-rate targeting regime, learnt the hard way just as it had with monetarism, and finally arrived at final-goal symmetrical inflation targeting. We live not in a monetarist world, but a New Keynesian one, where although the preferred policy tools are monetary, the thinking is demand-driven (something that has become much more important with the growth of customer credit).

There is part of your answer, then. In practice, Friedman’s doctrine put hordes of workers out of work, and we are still struggling with the social impact. Now the North Sea oil years are behind us, we shall miss the export industries that went to the wall in the combined sterling hike and credit squeeze. But what about the other side? Well, it’s very notable that none of the politicians he hawked his ideas to ever wanted to them put into practice, beyond simply squeezing the poor until the pips squeaked. Certainly, he thought it would be better to provide public services as cash or quasicash (vouchers) and let the market sort out how they are organised. But who ever saw any of the money? As with so many self-described libertarians, this was left as an exercise for the creative imagination. Rather than the NHS, let’s have fully-funded healthcare vouchers for all…and a pony.

There is, however, a seriously inspiring lesson ex Friedman, now we need new ideas. We urgently need some new ones – how, for example, to shape a politics against managerialism and elite consensus? How to assault inequality without Polly Toynbee-esque control bureaucracy? He was never elected to anything, and never owned much capital himself. He commanded only his pen, but changed the world. Ideas still count.

Why, asks Chris Dillow, do we consider Milton Friedman a man of the Right? Dillow was thinking of such things as the earned-income tax credit and his opposition to conscription, but the question requires some unpacking. I don’t believe, for example, that his concern with liberty is incompatible with the Left. Neither is it impossible to imagine a leftwing critique based on ownership and control, rather than markets versus planning. I certainly agree with him on floating exchange rates, and on the legalisation of drugs.

But all these things – which so many people chose to pick up on when commemorating his death – were sideshows at best to his main achievement, monetarism. Like few other economic doctrines, monetarism was actually tested and met with shattering empirical refutation. The US Federal Reserve lasted three years before kicking the habit. In the UK, the experiment went on until 1986, by which time the government and the Bank had successively failed to control all the main monetary aggregates. Inflation had been forced down, but at the cost of high unemployment – not only is this what the Phillips curve suggested would happen, it arguably happened for the reasons a Keynesian would have predicted it would happen.

The British government applied fiscal and monetary tightening, raised the rate of interest, and permitted sterling to appreciate – and guess what, aggregate demand tanked, unemployment soared and prices eventually fell. Eventually, Alan Walters and Charles Goodhart convinced the government to ditch monetarism. Instead it chose an exchange-rate targeting regime, learnt the hard way just as it had with monetarism, and finally arrived at final-goal symmetrical inflation targeting. We live not in a monetarist world, but a New Keynesian one, where although the preferred policy tools are monetary, the thinking is demand-driven (something that has become much more important with the growth of customer credit).

There is part of your answer, then. In practice, Friedman’s doctrine put hordes of workers out of work, and we are still struggling with the social impact. Now the North Sea oil years are behind us, we shall miss the export industries that went to the wall in the combined sterling hike and credit squeeze. But what about the other side? Well, it’s very notable that none of the politicians he hawked his ideas to ever wanted to them put into practice, beyond simply squeezing the poor until the pips squeaked. Certainly, he thought it would be better to provide public services as cash or quasicash (vouchers) and let the market sort out how they are organised. But who ever saw any of the money? As with so many self-described libertarians, this was left as an exercise for the creative imagination. Rather than the NHS, let’s have fully-funded healthcare vouchers for all…and a pony.

There is, however, a seriously inspiring lesson ex Friedman, now we need new ideas. We urgently need some new ones – how, for example, to shape a politics against managerialism and elite consensus? How to assault inequality without Polly Toynbee-esque control bureaucracy? He was never elected to anything, and never owned much capital himself. He commanded only his pen, but changed the world. Ideas still count.