Can Tillerson still be Secretary of State after Trading with the Enemy?

After the American Century

The Newsletter 538 noted the following about an article that appeared in USA Today.

"Between 2003 and 2005, the oil and gas company Infineum reported $53.2 million in sales to Iran. During that time, Exxon Mobil had a 50 percent stake in Infineum. Also during that time, the U.S. had sanctions on Iran as a state sponsor of terrorism. Rex Tillerson, a top Exxon executive at the time of the deal and later its CEO, is now President-elect Donald Trump’s nominee to run the State Department."

So the nominee for Secretary of State broke the US sanction on Iran during George Bush's presidency. (Exxon Mobile also did business with Sudan through the same proxy company, but it was a much smaller transaction.) Iran was then well-known to sponsor terrorist and dissident groups in various parts of the Middle East, hence the sanctions, so there it is not possible for Tillerson to claim he didn't know. 

After this revelation, here are the problems with making Rex Tillerson Secretary of State:

1. He has broken the law in order to make a profit. The claim made in defense is that Infineum is based in Europe, and that no Americans were employed in making these transactions. To avoid violating US law, under this Secretary of State it would seem, it is just fine so long as you do it through a proxy. 
2. He has taken sides in the Middle East, trading with Iran during the time of sanctions.
3. He will not be trusted by an important American ally, Israel, which fears the Iranian atomic program.
4. He will not be trusted by Saudi Arabia, a second important ally, who is constantly in conflict with Iran over a great many issues.
5. He will be regarded with suspicion by a third ally, Turkey.
6. The worst suspicions of US critics, that its foreign policy is concerned not with principles but profits, specfically oil profits, will be confirmed.

That is rather a large amount of baggage to be carrying into confirmation hearings. Can his fellow Republicans stomach all that?

It seems the Republicans cannot stay away from making deals with the Iranians. That was their problem during the Reagan years, too. The original Irangate was also about trading with the enemy.  Is that the credential needed to be Trump's Secretary of State?

5 murders annually go unsolved in Denmark, compared to 25 in Minnesota

After the American Century

One interesting way to compare nations is in terms of their rates of criminality and to what degree these crimes are solved. The US and Denmark are a study in contrasts when it comes to the homicide rate. In Denmark, between 2007 and 2015, there was an average of 49 murders each year, and 90% of these were solved. 51% of the killers were either partners or family members. 26% were killed by someone they knew slightly, and 11% by a friend. Only 8% died at the hands of a person unknown.

To put these statistics in perspective, consider an American state of similar size. Denmark has a population of 5.7 million, slightly more than the 5.5. million in Minnesota, which was settled in part by Scandinavians in the late nineteenth and early twentieth centuries.  The Minnesota annual murder rate during the same time period was twice as high, just over 100. Looking at 2011, a good year with less than 90 homicides, 66% of the victims knew the murderer, while in just 6 cases the killer was a stranger. These percentages are similar to Denmark. However, in one quarter of the Minnesota cases the relationship of killer and victim remains unknown. Minnesota has twice as many murders as Denmark, and about a quarter of the murderers are not caught.   Put another way, 5 murders annually go unsolved in Denmark, compared to 25 in Minnesota.

What might one conclude from this comparison? Denmark may well have half the number of murders in part because the chance of being caught is significantly higher. But the matter is more complicated than that, because Denmark also has strict gun laws. One cannot carry a pistol, and all rifles must be registered with the authorities. There are far fewer guns ready to hand when a couple or a family gets into a nasty argument. The murder rate in Minnesota might well drop a bit if guns were not so easy to come by, and it probably would rise if Danish families had as many guns.  For in both places most of the murders are committed by close friends or family. 

But this only suggests a possible explanation for the higher murder rate, not for the considerably worse police results. Again, this is a complex matter, but it seems that detectives benefit greatly from information provided by the general public. The more crime there is in a community, the more likely witnesses may feel intimidated and remain silent. Such intimidation surely occurs in both Denmark and Minnesota, but where is it likely to be more common? A place where 25 murderers are not caught every year, or one where only 5 escape detection?

Of course, Minnesota is not representative of the entire United States. According to Federal records, it is among the five states with the lowest homicide rate, along with New Hampshire, North Dakota, Vermont and Massachusetts. Climate is surely not the explanation for why these five are all in the North, but it is interesting to note that the states with the highest murder rate are in the South. Louisiana and Mississippi have ten murders for every one in Minnesota. Indeed, all by itself Louisiana had more than 500 murders in 2014, more than the combined total for the states with the fewest homicides.

Statistics from

Minnesota

http://www.disastercenter.com/crime/mncrime.htm

https://dps.mn.gov/divisions/bca/bca-divisions/mnjis/Documents/2011%20State%20Crime%20Book.pdf

Denmark

https://www.dst.dk/en/Statistik/emner/befolkning-og-befolkningsfremskrivning

http://www.dkr.dk/drab

"Dimensioning" a Danish word for cutbacks at universities

After the American Century

Austerity has taken a new form in Denmark, where the Socialist government has betrayed its campaign platform. When running for election, it promised to support education, because Denmark's future lay in having a highly educated population. The worst thing in the future, they said, would be to be a worker without skills. But after four years in power, the government has failed to create jobs. Fewer people are working today than when they came into power.

To "explain" this failure the government has blamed the universities for training too many people! Never mind that in 2008, when today's new graduates began their studies, economists assured the government that soon there would not be enough workers to fill the jobs. Never mind that unemployment today is considerably lower than it was when the last socialist government was in office during most of the 1990s. The whole problem, obviously!, is that the universities trained people in the Humanities, rather than in Engineering and Science and Law. 

Solution! Cut 3,500 places out of admissions to the Humanities, every year. Some of these people might choose to study law or economics. Perhaps a few will have aptitude for physics or chemistry or engineering. Very few of them will have the grades or the prerequisites to enter medical school. In all, perhaps 500, certainly no more than 1000, will take some non-humanities course of study, if they can get in, of course. Many of these students will drop out, however. After this policy has been in place for ten years,  at best 5,000 people will have degrees in fields they did not want to study, while there may well be 30,000 young people with no advanced education!  To put this in perspective, in 2014 about 70,000 people receive unemployment benefits in Denmark.  Under this government plan, as many as 30,000 people may go directly to the unemployment line right after gymnasium. [Update: in 2017 alone, more than 20,000 people were denied admission to higher education, and the cutbacks continue.]

Look past the rhetorical nonsense, and this plan is simply a foolish cutback. Danish education is entirely tax supported, but the Danish unemployed get 2 full years of support. So the government's idea is that they would rather pay 30,000 people to be unemployed than spend roughly the same amount to give them an education. 

And even if this really were a savings program, Denmark is not exactly a poor nation. In 2014 it will have one of the smallest deficits and one of the lowest unemployment rates of any EU country.   

The Failed Economics of Austerity in Europe, and its consequences in Denmark.

After the American Century

The way governments responded to the financial crisis of 2008 differed. In Europe, they pursued austerity. They held down deficit spending and cut government jobs. In the US this response was common at the state level, but the Federal Government pursued a different policy. It loaned money to the faltering automobile industry, which has now recovered. It sped up spending on infrastructure, and was not afraid to stimulate the economy. 

Now we can see the results. The US economy has recovered considerably, with unemployment falling almost continuously during the last five years. The economy has grown every year since 2009 when Obama took office.

Contrast almost any country in Europe, where economies are barely holding even or shrinking. The headlines years ago focused on Greece, Italy, Spain, Portugal and Ireland.  But now the austerity policy has begun to hurt the larger, stronger economies. Germany is struggling to keep growing. France is in recession. This is now much in the news.

But Denmark is also having economic problems. Its economy has essentially stopped growing, and even shrank during some recent quarters. According to the World Bank, the Danish economy shrank in 2009 by -5.7 %. Five years later it has not gotten back to where it was before the crisis. With growth of -0.4% in 2012 and + 0.4% in 2013, the Danish economy is flat. This failure of economic policy ought to be the focus of attention. 

But the ruling Danish politicians have mounted a massive campaign of distraction. They have managed to convince many journalists and much of the public that unemployment is high and that this is the fault of the universities. Both statements are false. The Danish unemployment rate is historically lower than for most of the last twenty-five years (see chart below.) 

The idea that the universities are somehow responsible for this non-existent unemployment problem is nonsense. The real problem is that the economy as a whole is stagnant and that few new jobs are being created. Moreover, the age of retirement is rising, so that replacement of the old by the young has slowed down. But no politician wants to admit that the economy is stalled. 

Instead, the "solution," the Ministry of Research claims, is to eliminate thousands of admissions to universities, especially in the humanities. But this is all nonsense. The number of unemployed in Denmark was much higher between 1990 and 2005 than between 2010 and the present.

Historically speaking, the number of unemployed is low, if one's point of comparison is any time except 2006-2008. The real problem is that the percentage of people working is falling, both because the economy is weak and because the population is aging.  Starting in 2009, the percentage of the total population that is working has fallen from 75% to 70%. That is a big drop, and that drop has little or nothing to do with the universities.

More generally, the European-wide crisis that began in 2008 was not caused by universities. Regardless of what students majored in, there just are not as many jobs available as there were in 2009. Eliminating thousands of university admissions in the humanities will not create any jobs, but it will create a cohort of uneducated, unemployed people. If 3,000 fewer people enter the universities every year, after a decade there will be 30,000 more Danes who never attended university. As a result, they will earn less, pay less in taxes, and be more often among the unemployed.

Why is the Danish press unable to see through this government PR campaign? The government's analysis of the problem is wrong, and the "solution" to the problem is wrong. Austerity will make matters worse, creating a stagnant pool of unemployable people.  

The total number of Danish jobs has declined, because the government has pursued an austerity policy. It should have listened to Nobel-winning economist Paul Krugman. He has written about this often, for example in 2012, when he said, "in Europe, as in America, far too many Very Serious People have been taken in by the cult of austerity, by the belief that budget deficits, not mass unemployment, are the clear and present danger, and that deficit reduction will somehow solve a problem brought on by private sector excess." He noted that "research by the International Monetary Fund suggests that spending cuts in deeply depressed economies may actually reduce investor confidence because they accelerate the pace of economic decline."

President Obama's administration listened to such advice, though I should note that Krugman suggested an even higher level of pump-priming than Obama practiced. As a result, the US economy has turned around. In contrast, the Danish politicians obediently marched in lockstep with the Germans, believing against common sense, as well as against the economic analysis of Krugman and others, that if all the European countries reduced spending  their economy would magically improve. 

The Danish government is incompetent in economics, but it is good at creating a distraction, and it has managed to blame the universities for its own mistakes.  As Professor Krugman remarked, with regard to widespread failure of austerity policies to produce the results they had predicted, this is  "a case in which rival theories made different predictions, the predictions of one theory proved completely wrong while those of the other were totally vindicated — but in which adherents of the failed theory, for political and ideological reasons, refuse to accept the facts."

When prophecy fails, a famous psychological study found, its adherents circle the wagons more tightly and re-embrace their mistaken ideas, convinced that someone or something else is responsible for the failure. Today, as Krugman notes, "the prophets of fiscal disaster, no matter how respectable they may seem, are at this point effectively members of a doomsday cult. They are emotionally and professionally committed to the belief that fiscal crisis lurks just around the corner."

The Danish government and its economic advisers are in this situation, and therefore they need to blame someone else for the failure of austerity. And so they blame the universities. The failed logic is that, if only the universities had trained 3,000 more scientists and engineers every year since 2008 rather than humanities students, then these 15,000 people would now be working. But the statistics clearly show that workforce participation has fallen 5% and that there are fewer jobs now than there were five years ago. Even so, the unemployment rate is lower than it has been for most of the  25 years since 1990, because there are more old people and fewer young people. 

Reducing the number getting a university education will not change these facts, but the Danish media seem unable to read statistics, to make elementary calculations, or to read alternative views. Instead of seeing whether there is any logic or statistical basis for the new government policy of austerity for the universities, the Danes have engaged in a heartfelt discussion of the value of the humanities and their place in the development of civilization. An interesting discussion, but it just adds to the confusion artfully created by the government, and it gets in the way of understanding the real situation, which is that the government's German-inspired economic policy has been a fiasco.

America from the Air, a fascinating book

After the American Century

Somehow until this year I never heard of Wolfgang Langewiesche or his three books dealing with various aspects of aviation. One of these, Stick and Rudder, is still unknown to me, though it has gone through more than 70 editions since it was published in 1944. What I have read, with great pleasure, is America from the Air, a reissued work from Johns Hopkins University Press, 2004, that combines portions of two other books, I'll Take the High Road (Harcourt, Brace, 1939) and A Flier's World (McGraw-Hill, 1951). The first of these two was praised  by the New York Times as "a stirring and revealing story, told with sensitiveness and lucidity and with the warmth of a modest personal charm." These words still ring true 75 years later.

America from the Air is so clearly written that the text jumps off the page. Langewiesche came from Germany to the United States to study in Chicago, but he developed a passionate interest in flying, particularly in small planes. During the early 1930s he spent every dollar he could get his hands on paying for flying lessons and renting planes by the hour. He sold his car to get more air time, paying 25 cents a minute. He considered the airplane "of all the works of man" to be "the nearest to a living being." (1) And he loved to fly low over the American landscape, developing an understanding of the country from its physical and man-made formations. His prose is so good, he makes you see it too.

This book also explains how exciting aviation seemed in the 1930s. Reading it recaptures that time of open skies and free exploration, before traffic increased and security concerns clamped down. It also explains lucidly the stages an apprentice pilot must pass through before being ready to solo. It should be read alongside Mark Twain's account of what it took to become a Mississippi river pilot in the 1850s. Langewiesche and his generation had no radar and only the simplest of controls. They flew planes far less reliable than those of today, whose engines needed more frequent service. Langewieschetook practiced parachute jumping, just in case.

But America from the Air is not merely of historical interest. The experience of seeing the American landscape from a small plane at 3,000 feet, rather than from 35,000 feet, remains exhilerating and fascinating, not least because the pilot in a small plane has a much wider and unobstructed view than an airline passenger, who can only gaze out a small window in one direction, with the view of the  distant ground often blocked by a wing.  

This is a classic.

Might Japan Be the Broker to Negotiate Peace Between Israel and Palestine?

After the American Century

The Middle East has been the burying ground for American diplomatic missions for decades. Each new president and each new Secretary of State thinks peace is finally going to be attainable. Each is disappointed in different ways. Sometimes peace seems to have been achieved, with treaties signed and handshakes all around. That was Jimmy Carter's experience. Relations were better for a while, particularly between Egypt and Israel, but real peace did not emerge. It is too tedious to go through all the other administrations before or since then, but no one who has followed it all can help but be a bit depressed.

Not only is Israel seemingly no closer to peace with its neighbors than in the 1960s, but the entire neighborhood is in a worse uproar that usual. Syria is in a civil war, with millions of refugees, and none of the three (or is it four or five?) sides is a particularly attractive option.  Iraq is falling apart, along religious and ethnic lines, even in the face of the rise of ISIS, a new factor in teh region, which seeks to create an Islamic state. The Egyptians have gone back to military rule, after a brief experiment with democracy brought the conservative Muslim Brotherhood to power. Lebanon is struggling to remain out of the violence in Syria. The Palestinians are split into two factions. The one in Gaza continues to launch largely ineffective rockets at Israel, to show that they can do it. In return they are pulverized, and gain some sympathy outside the region. But the Hamas is bankrupt, economically speaking, part of the fallout from the Syrian civil war.  For decades Hamas has built complex systems of tunnels underground, which have now been destroyed. The other Palestinians are a bit less militant, but also unable to come to an agreement with Israel.

But perhaps because things are so bad, a negotiated settlement might be attainable. However, this requires a neutral broker to do the job. Who could that be?  When American diplomats attempt to negotiate peace, they are usually perceived to be Israel's allies, and it is hard to convince Arabs that Washington can be an honest broker. Yet Americans are even-handed, the Israeli government typically becomes upset and stirs up problems in the US, through its conservative allies. In short, the Americans are in many respects not well-positioned to broker a deal. Perhaps it is time for the US to step back from its direct diplomatic efforts and instead to encourage another nation to take the lead.

But if not the Americans, who? The EU would seem the obvious choice, but the EU does not have a shared foreign policy. Each member state has a somewhat different policy, and it cannot function effectively in such a negotiating situation. (Indeed, the EU is not good at handling international crises.)  Russia has strongly sided with Syria, where it has a major base, which makes it unacceptable to Israelis. What has long been needed is an honest broker whom both sides have no reason to distrust. The lone superpower manifestly cannot impose a settlement, or it would done so by now. Instead, a country like Japan, Brazil or South Africa might be able to do broker successful negotiations, though none of these three seems to have any inclination to do so. 

My own preference would be Japan, precisely because they are so far from the Middle East and have no obvious axe to grind. The Japanese are also patient negotiators, who take for granted that before a meaningful agreement is possible it is necessary to spend some time face to face. Wouldn't it be worth a try? Imagine Palestinian and Israeli representatives in a pleasant, remote Japanese hotel, with a view of the sea. Taken away from their familiar surroundings, immersed in the fascincating cultural world of Japan, they might gradually find some common ground.

What might be in it for the Japanese? Three things. (1) International praise for succeeding where all others have failed, with a very real chance to receive the Nobel Peace Prize. (2) National pride as Japan shows its importance on the world stage, pushing its economic stagnation and nuclear woes into the background. (3) Recognition as a force for peaceful coexistence, in contrast to Chinese muscle flexing in their own region.

As the US heads into another presidential election, it seems particularly unlikely that it can negotiate peace between Israel and Palestine. It is time to admit the obvious facts. The US is too entangled with its ally Israel to do the job, and it has so many complex and often conflicting interests in the Middle East that it will have trouble focusing on this single problem.  But will any other nation take up the challenge?

Government web pages

After the American Century

I often have the same experience with web sites set up by governments and monopolistic organizations supported by government:  dysfunctional pages, where the services are hard to use. It requires many clicks to find the information or perform a simple task. For example, when one tries to use the website of the Danish post office system, to tell them when one is on vacation and does not want mail delivered. This proved an impossible  task in over half an hour of trying.  The site kept crashing on me and sending incomprehensible error messages.

In contrast, I had no trouble buying a plane ticket, making hotel reservations, or finding lots of useful information, all provided by people who need to survive in the marketplace.  I realize that this might make me sound like a Republican who wants to reduce government to national defense and farm subsidies, but that is not at all the case.

Some government websites do work well, notably those that provide weather information, which is often of life-and.death importance.  But all too often public services are digitized in order to save money, and to become "more effective," which is often means firing staff and forcing the public to deal with whatever website is substituted.

The solution might be to compare services in different countries and use those that work best as models for others to adapt to their own cultures and circumstances. Most of the needed innovations are probably out there, waiting to be emulated.

So, an example. The Danish tax system, which successfully collects the highest taxes in the world, at least is user-friendly. The citizen can see his tax situation on-line, where most of the needed information is automatically gathered from banks, pension plans, employers, and other institutions. Not only this year's tax is there, but several years previous as well. This particular Big Brother is watching, but they are also communicating what they see, and the taxpayer has a chance to correct or modify it. The taxes may be high, but at least they are extracted with little pain,  and there is a dialogue between citizen and government institution. It is not always the happiest dialogue, of course!

In contrast, another advanced industrial economy, I will not name names, which lies somewhere between Niagara Falls and the Baja California, estimates that a citizen filling out its standard tax form needs a total of 15 hours, or two entire days, to read and understand the basic forms and advice, and then do the calculations needed. The form is blank at the start, and the citizen has to try to remember everything and make no mistakes. (The Danish form is filled in by the tax authorities, and the citizen only has to check the facts, and then make additions or changes.) I know a few people from the other nation, and they tell me that it is often not possible to complete the form in 15 hours without assistance. There is an enormous amount of information on-line, and there are numbers to call for more information, too. But it is a much harder process to negotiate, and once the forms are filled in and delivered, I have it on good authority, one often never hears anything back.  

In Denmark, feedback on all tax returns is made available on a particular date, and the whole country tries to find out at the same time. Now that can cause a cyber traffic jam.