Hong Kong Rising

As a population grows in affluence, it tends naturally toward democracy. This has been true the world over, and China is no exception. That’s why China’s ruling Communist Party suspended economic reforms in the wake of 1989’s Tiananmen Square Massacre, which communist hardliners considered to be the consequence of increasing wealth, which was in turn attributed to Deng Xiaoping’s market reforms. China’s oligarchs saw a wealthier population as a threat to their hold on power – and it took several years for Deng to get his pro-market movement back on track, facilitating China’s extraordinary economic development over the past twenty years.

Not two months ago, the Field Guide observed that

…liberalism begets wealth, and a wealthy populace comes naturally to demand a political voice commensurate with its material well-being. This is the dynamic that brought democracy to much of Europe, and to countries all along the Pacific Rim – and, of course, to the US as well. One hopes the same will happen in China, where an increasingly wealthy class of industrialists should – if history teaches us – also come to demand a role in their own governance.

It took no great prescience to grasp that the time is ripe for democracy in Hong Kong. If indeed the forces that move a polity toward democracy become more and more acute as a population grows wealthier, then in no place in the world is democracy more overdue than Hong Kong, by far the richest undemocratic place in the world.* By comparison, Beijing in 1989 was a poor backwater. Though Beijing’s per capita GDP has since increased by a factor of 10, it remains a relatively poor city, with incomes comparable to those of Rio. Meanwhile Hong Kong today is similar in size, population and per capita income to New York City – seven times wealthier than Beijing.

In recent years, American neo-cons learned (painfully) that democracy cant be installed on a whim like a dishwasher. As the Field Guide noted back in August, “it seems constructive for liberalism to precede democracy – for a population to first learn respect for procedural fairness, before taking on self-governance.” It takes decades for many other institutions, public and private, to mature; and, above all, for liberal principles to become embedded in courts and property rights regimes. Once this foundation is laid, the transition to democracy occurs far more readily, and the government that results is far more stable. And by this measure, also, is Hong Kong’s democratic movement long overdue.

While one would be foolish to underestimate the brutality of China’s ruling party, especially on what they would be willing to do to hold onto power, now is a time for optimism. Protestors in Hong Kong have a real chance to succeed in wringing pro-democratic concessions from Beijing; and the scenes we see there today may unfold one day soon in Macao or Shanghai – and in coming years, in Beijing as well.







* While Qatar and Brunei have higher per capita income than Hong Kong, and are even less democratic, their wealth is derived from oil – neither have anything like the diverse, modern economy of Hong Kong. As has been previously observed, dictatorships with mineral wealth can persist far longer before democratic pressures build.

AG Holder

A departure from recent Attorneys General who mindlessly signed on to ever-increasing executive power – whether under the auspices of the Patriot Act, FISA or otherwise – Eric Holder took a stand for civil liberties: voting rights, gay rights, limits on police aggression, and human rights for undocumented immigrants. While previous AGs often sought to increase the power and reach of their office, Holder provided a well-needed retreat from the illiberal policies of his predecessors.

The contrast with Bush Duh’s first two AGs, John Ashcroft and Alvaro Gonzalez, is striking. The former was a renowned cipher who only became AG after losing a Senate election to a dead man – a feat never accomplished before or since. As AG, Ashcroft infamously defended the Patriot Act against all comers, championing, among other things, the government’s new power to search library records to discover the reading habits of individual Americans. (In fairness, Ashcroft took a stand against Stellar Wind, another surveillance program.)

Next came Alvaro Gonzalez, who only lasted two and a half years, and seemed out of his depth from day one. He spent his time in office defending expanded police search and seizure powers, and looking for legal justifications for torture. His prodigious talents prepared him for his current position, the dean of Belmont College of Law. If you’ve never heard of Belmont Law, that may be because it was only founded three years ago.

Comparisons with Clinton’s AG and Holder’s one-time boss, Janet Reno, are no less interesting. Reno was an aggressive, efficient cop in the Rudolph Giuliani and Elliot Ness style. The longest serving US AG in 185 years, Reno gets credit for the capture and conviction of five 1993 World Trade Center bombers, two Oklahoma City bombers, and the Unabomber; and for taking on Microsoft when it was the most valuable corporation in world history. But she is fairly criticized for using excessive force in the Elian Gonzalez matter and the siege at Waco.

Holder, by comparison, has shown leniency – for good and for bad. His “too big to jail” policy with respect to bankers led to zero prosecutions in the wake of the subprime mortgage market collapse. Under him, the DOJ’s prosecution of large financial services firms has fallen to its lowest level in 20 years. However his “Smart on Crime” program seeks to avoid harsh sentencing when the facts of a case do not merit such. He’s also backed off on enforcing federal marijuana laws in states where the drug was decriminalized under state law.

Serving as AG during the so-called war on terror, Holder has been faced with the constant temptation to expand the police power at the expense of personal liberty. Waging that war abroad, he’s been aggressive, penning the legal defense for the operation that assassinated Osama bin Laden, and for the use of drones to assassinate other terrorist leaders abroad, including US citizens. But domestically Holder has been reserved, criticizing Bush Duh’s implementation of the Patriot Act and use of electronic surveillance, and condemning torture. His Justice Department has nonetheless prosecuted six government employees for leaks (compared to just three prosecutions in all of US history before), and has electronically surveilled members of the press, denying the right of journalists to protect the identity of their sources.

Holder’s respect for civil rights and limits on the police power are a major upgrade over Bush Duh’s AGs. His aggressiveness in pursuing politically unpopular liberal causes – fighting Arizona’s ill-considered immigration law, and taking on voter ID laws and redistricting in the deep south – has been laudable. Overall, Holder has been a very good AG, and as his tenure draws to a close, it’s worth pausing to reflect on how fortunate the country has been to have someone with talent, tenacity and conscience in that office – for a change.


Conservatives for Pele

Many cultures throughout human history, baffled by the origins and causes of natural phenomena, have come to devise bizarre and exotic explanations for them. Lacking a thoroughgoing understanding of planetary formation, plate tectonics and fluid dynamics, even cultures as advanced as the Romans had Vulcan, god of fire, from which the English word volcano is derived. And while tossing virgins into craters is largely a Hollywood invention, many cultures have practiced low-impact sacrifices, including Hawaiians to Pele and Indonesians to Mount Bromo.

In the West, several centuries of scientific tradition have eliminated most such practices. A few persist, however – among the most remarkable is conservatives’ belief that, during recessions, natives should sacrifice government services and jobs to appease mighty Inflation, a modern-day analog to Pele.

Science progresses in a similar fashion across most disciplines. Data are collected; theories are offered to explain the data. Those theories are then used to generate new predictions. New data are collected, and if it squares with prediction, then the theory is said to have been substantiated, and is strengthened. But if the it goes off in some other direction, the theory must be retooled, if not discarded.

The problem with conservative macroeconomists is that, as their models have been contradicted again and again by newly arriving data, they hold fast to their theories – a practice more akin to religion than science; as their theories become more and more like religious beliefs. Philadelphia Fed President Charles Plosser is the poster child for scientists-turned-theologians. He began worrying publicly about “imminent” inflation back in April 2008. Six and a half years later, while US inflation has averaged 2% annually, Plosser is still worrying, unfazed that his one-time theories – now, more aptly described as dogmas – have fallen and cannot get up.

Martin Feldstein, Reagan’s first chief economic adviser, has a similar record. Feldstein, who left the Reagan Administration because they werent sufficiently conservative, started worrying about inflation in 2009, and is still beating the drum. The repeated failure of his economic models to predict the low inflation that the US has seen over that period has not motivated him to find a model that actually works.

Theories exist to explain the data we have, and to predict the data we hope to gather. That’s it. A theory that fails in both respects should not be kept around to stink up the house like some beloved-but-incontinent family dog. Bad theories need to be euthanized to let the discipline move forward. Clinging to old, failed theories can have terrible consequences. The practice literally killed George Washington, whose doctors bled him to death to “treat” his cold. Doctors bled patients for centuries, until sound scientific methods demonstrated the procedure’s destructiveness.

Some commentators have mockingly dubbed the policies of inflation-phobic economists as “sado-monterism.” It’s expressed as a preference for high interest rates and budget cuts in the face of a weak economy, in the absence of inflation or even its threat. It is in fact very much like bleeding a sick patient, in that it strikes at the economy’s very ability to correct itself, by making capital scarce and spending weak when both are needed most.

Belief in gods of volcanoes and inflation survive via the same process: shoddy reasoning. Economists like Plosser and Feldstein, and the entire governing council of the European Central Bank, are probably no more or less dishonest or well-intentioned than the people who worshiped Pele. Like 18th century Hawaiians, they’re just exceptionally poor scientists.



Plosser 2008: http://blogs.wsj.com/economics/2008/04/18/fedspeak-highlights-plosser-on-inflation-and-fed-actions/

Plosser 2013: http://www.marketwatch.com/story/plosser-inflation-risks-unless-fed-tightens-2013-01-11

Plosser 2014: http://www.cnbc.com/id/101938255

Feldstein 2009: http://www.ft.com/cms/s/ae436dbc-2d09-11de-8710-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fae436dbc-2d09-11de-8710-00144feabdc0.html%3Fsiteedition%3Duk&siteedition=uk&_i_referer=#axzz3DyoytYZ9

Feldstein 2014: http://online.wsj.com/news/articles/SB10001424052702303978304579471472849459860





This post’s title is a tribute to Boys for Pele, among the greatest pop albums ever recorded.

The Blockade is Hamas’ Best Friend

Hamas, it would appear, has little to offer young people. And yet it has only grown in popularity since its founding during the 1st intifada in 1987, beating its rival Fatah in Gaza’s 2006 elections. Observers fail to appreciate that young Gazans rationally join Hamas because they lack better options. Hamas affiliation promises power, money and status, which, because of the Israeli blockade, are not readily had through education and employment.

The blockade is Hamas’ best friend. It all but destroys Gaza’s economy, making it impossible for people to support themselves through ordinary work. Gazans used to be able to cross into Israel to get better paying jobs. They used to be able to work in Gaza and export goods to foreign markets. The blockade destroys both of those options. If you are a Gazan and want to get ahead, work and school wont help much. Acquiring better job skills is only useful if you can sell those skills. Joining Hamas simply pays better.

Perversely, the more the blockade constricts the supply of everyday items – food, fuel, water, medicine – the more it enriches Hamas, because they control the little that gets in. Imagine if, in the US, organized crime didnt just control the supply of illegal drugs – imagine they imported and distributed everything from Pepsi to Tylenol to gasoline. That’s what the blockade does for Hamas – it turns Gaza’s Islamist ruling party into Gaza’s wholesaler for everything. And the worse things get for ordinary Gazans – the pricier that drinking water, wheat flour and medicine become – the more money goes to Hamas, and the more reason people have to join them. This is on top of the aid funneled through Hamas by the UN and other international organizations, to keep Hamas awash in cash, and thus more attractive to join – not to mention better armed. (Foreign aid, despite its good intentions, often serves to sustain bad governments, by giving them a ready source of income, and making them less answerable to their beleaguered population.)

Take away the blockade and let goods and people move unfettered into and out of Gaza, and Hamas loses big. Yes, thousands of rockets will enter Gaza and be fired into Israel. Newsflash: they already are! In the last year of Israel’s physical occupation of Gaza, Hamas (and others) fired more than 1000 rockets and RPGs into Israel. After the blockade in 2007, the total number of attacks continued to climb: more than 2800 in 2007, and more than 3700 in 2008. Attacks dropped off after Israel (and Egypt) tightened the borders even more – but they rebounded soon after, exceeding 2200 in 2012. The first 8 months of 2014 have already seen more than 4000 such attacks.

To gain some perspective on these numbers, consider that since 2001, Israel has been subject to about 19,000 rocket and mortar attacks – but only 28 Israelis have been killed. Gazans who have died in Israeli retaliation number in the thousands – most of whom are innocent, and many of whom are children.

Keeping weapons out by occupation or blockade has been tried and failed. The blockade actually makes things worse because it gives Hamas that much more cash to buy weapons. This is why ending the blockade is Israel’s best long-term bet for peace and political change.

Not only should Israel end the blockade, it should also rebuild Gaza’s airport and seaport, allow an unlimited number of workers in and out to work in Israel, and invest in rebuilding schools and hospitals. Doing this will make it profitable for Gazans to live their lives in the ordinary way: acquire skills, and sell one’s labor, or the fruit thereof, to the highest bidder. Present Israeli policy only guarantees a future of yet more violence.





N.b. While Hamas is a serious nuisance for Israel, it poses an existential threat to Egypt’s government, which only recently deposed the Islamist Muslim Brotherhood, a natural ally of Hamas. Most of the above arguments apply equally to Egypt, whose long-term security would be enhanced by open borders and free trade with Gaza. However the blockade of Gaza is entirely the work of Israel. Any country can, legally, close its borders to another country. Egypt and Israel have both done so with respect to Gaza. Israel however goes the extra mile by blockading Gaza’s Mediterranean coast, and keeping Gaza’s airport inoperative. While the border closures are legal (if poorly considered), the air and sea blockade is not.





The Pox on Both Your Houses of Congress

Congress is dysfunctional because a significant fraction of Congressmen lack the requisite education, training, judgment and-or intelligence to acquit themselves of the task of modern governance. Their inadequacies are attributable to an electorate that lacks the wherewithal to choose good representatives. Ultimately, the fault lies not in our reps, but in our voters.

Taking the time to learn about current events; forming cogent, coherent opinions on disparate subjects; and, finally, evaluating candidates for office in light of that information – according to their positions, their acumen, their character, and other factors – is extremely time-consuming. Given the miniscule consequence of a single vote, one’s time is more profitably spent advancing one’s own private affairs. An individual vote, well or poorly cast, has so vanishingly tiny an effect, that it is quite rational to not be troubled over it – to leave educated voting to those with the time and inclination.

The good news is that this is not a problem for democracy. An enormous proportion of the electorate can rationally choose to remain ignorant to the issues, free riding on other citizens’ educated decisions at the ballot box, and better candidates should nonetheless prevail. That’s because, all things being equal, ignorant voters cancel each other out by casting votes randomly for one candidate or another – their votes split nearly equally. And thus a very tiny fraction of educated voters, whose voting is not random, should tip the balance in favor of the better candidate. Indeed we’re fortunate that democracy can function in environments with exceptionally low signal-to-noise ratios: even if just 1% of all voters are informed, elections should still produce good results.

But the wheels come off the bus if ignorant voters are biased. If they, as a group, err in a particular direction, their errors will not cancel out – and the number of educated voters required to tip the balance in favor of better candidates increases dramatically. With 99% of all voters ignorant and splitting 50-50, a 1% informed minority is mathematically sufficient to choose superior candidates. However if ignorant voters are ever so slightly biased, such that their votes dont randomly split 50-50, but shake out at 51-49, e.g., the proportion of informed voters required to obtain the desired result triples from 1% to 3%. And as you ratchet up bias and ignorance by tiny degrees, the proportion of informed voters required for a healthy democracy escalates dramatically – bias can readily become insurmountable, and elections will be determined not by the knowledge and insight of the few, but by the direction of the bias of the many.

And that is the nature of the pox on both houses of congress. Its name, of course, is conservatism. A decades-long bombardment via nauseatingly familiar outlets has rendered many electoral districts across a vast swatch of country so thoroughly biased, that the knowledge of the few can longer be heard above the biased din of the ignorant – and those districts are sending increasingly poor representatives to Washington. It is no coincidence that this phenomenon is concentrated in the US south, which for two centuries has lagged behind the north in development, education, and most other socio-economic measures. Likewise it’s no coincidence that liberalism, education, wealth and better Congressional representation occur together on the coasts and across much of the midwest.

American democracy, by the most rudimentary observation, still functions well enough on the national scale. Since 1992, liberal Democrats have received the most votes in every presidential election except 2004 – when an incumbent Republican narrowly won while the US was fighting two wars. But on the district level, gerrymandering now guarantees a voice to the biased ignorant. The US Congress, by any measure, is more dysfunctional today than it’s been in 150 years. The cure will only come when the thrall of conservatism holding not quite half the country is broken.



These themes are thoroughly explored in “The Myth of the Rational Voter: Why Democracies Choose Bad Policies” by Bryan Caplan – a maddening but worthwhile read. 









In Scotland, Process is King

Whether Scots choose to go it alone or remain in the UK, Thursday’s vote will serve as an exemplar of liberalism and civility. Never mind what voters actually choose – the process here is what matters most: this is the right way to do things. Irish independence, by comparison, was won through war, and fighting over Northern Ireland persisted for decades. Scotland seems poised to stay or go without a shot fired or a life lost – and that is spectacular progress. The outcome – yea or nay – will be no big deal.

Europe used to be a dangerous place. Just looking at the two most populous countries in Western Europe, Germany invaded France 3 times in 70 years. Areas with distinct languages, cultures and-or histories used to band together for their collective security. This logic factored into England and Scotland’s 1707 union, and has since produced such amalgams as Czechoslovakia, Yugoslavia, Austria-Hungary, and indeed even the European Coal and Steel Community (predecessor to the EU).

But the facts on the ground have changed, and it would be surprising if the lines on the map did not shift to reflect that change. Europe is now a far safer place than it has been in centuries. Tiny countries are no longer threatened by larger ones. Policy is no longer set by inbred land-grabbing hereditary dictators, but by middle class voters, who have a far greater affinity for peace and freedom.

One must also acknowledge the omnipresence of NATO, and fairly wonder whether this trend would hold in the absence of a massive military force safeguarding security, backed by the world’s sole superpower. The US, ranked first in military spending worldwide, presently outspends the countries ranked second through tenth combined.

The expansion of the European Union and the concomitant rise of smaller states is no contradiction – the two movements are driven by the same forces. There is more comity among states and peoples in Europe than ever before, and this bonhomie allows states to split amicably, but also facilitates their banding together on the supra-national level. Common defense is simply not an EU priority.

Impressive hay bales are being made over the potential repercussions of Scottish independence. They should be politely ignored. Scotland comprises barely 8% of the UK’s total population; and Scots pay a bit more into London’s treasury than they receive back in expenditures. Scotland and England’s economies are deeply integrated – and will continue to be. The UK will find another place to park its nuclear submarines, or will simply lease a harbor, as the US does all around the world.

That this referendum may fuel independence movements elsewhere should only be of concern to the illiberal. If the Catalan desire their own independent state, they should have it – as should Corsicans, Flemish, and any other group within a discrete, identifiable geographic space, that wants to go it alone. The existence of San Marino, Andorra, Monaco, the Vatican, Liechtenstein and Luxembourg is hardly troublesome to their larger neighbors.

The notion that India will take the diminution of the UK – from 0.83% of world population to 0.76% – as a pretext to more forcefully demand a permanent seat on the UN Security Council is, frankly, silly. India, home to 17% of the world’s population, should have a permanent seat, whether Scotland and England are united or not. The anachronistic fictions that secure to the UK and France (0.9%) their permanent seats can be discussed at any time.

There are several wealthy, successful countries of comparable size to Scotland: Finland, Denmark, Ireland and Norway – the latter of which is ranked first in the world in living standards. There is every reason to believe that an independent Scotland would be as prosperous as these countries. The issue of greatest importance facing an independent Scotland will be its choice of currency. While Scots favor sticking with the British Pound, creating its own currency would be a better bet. (The Euro, under the hegemony of Germany, is not a good option.) But even this is an issue upon which rational minds can differ – it will not be a disaster in any case.

And so we wait – not holding our collective breath, nor ready to gasp at the result – but rather, marveling that western civilization has come so far, that two nations could so painlessly dissolve their centuries-old political union, via a process so eminently reasonable and liberal, that, no matter what the Scots choose to do, we will all be better off for their example.



The Fight for Liberalism in Syria

The US may have been tempted to support Bashar al-Assad, Syria’s nominal head of state, in his fight against Islamic State (IS). His army remains the best trained and best equipped of the many belligerents fighting for control of Syria. If the US had the single goal of wiping out IS, then backing Assad would be a good strategy. But the US, prudently, is not fighting militant Islam at any cost – surely not at the cost of aiding a secular authoritarian who has himself demonstrated exceptional brutality. The Obama administration and a majority in Congress are wise to eschew that unsavory liaison, and to support the Free Syria Army (FSA) instead.

There are many factions competing for control of Syria. But the Syrian National Coalition (SNC) stands out as by far the best bet for the cause of liberalism and democracy. Not coincidentally, a growing number of countries have recognized the SNC as Syria’s government, and have been arming their fighting force, the FSA. By denying aid to Assad, and instead favoring the weaker SNC/FSA as part of its newly elaborated campaign against IS, the US affirms that the era of convenient dictators is over.

While grappling with the USSR during the Cold War, the US faced the threat of total annihilation: of civilization, the species, the planet’s ability to support life. And so from Batista to Somoza to Trujillo to Pinochet to the Shah to Hussein to Mubarek, no dictator was too brutal – so long as a regime opposed the USSR and opened its markets to US firms, it could count on unfettered US support. Thus it was that US foreign policy during the Cold War frequently served to subvert democracy and liberalism abroad, as winning the Cold War took precedence. Liberalism within the US took a beating too, with the McCarthy era’s war on free speech and assembly, and the lingering scar that is the phrase “under god” inserted into the Pledge of Allegiance in 1954 – ostensibly to distinguish the US from “godless communists.”

Today the stakes are different. While the rise of theocracy in the Middle East – and the ability of terrorists to project power out of that region – are real and serious threats, they are not existential threats; and they therefore cannot justify the abandonment of what must be the US’s long-term interest in the worldwide proliferation of liberalism and democracy.

It’s for this reason that the Obama administration’s newly devised policy – aiding the FSA in its ground war against IS, Assad, and others (such as the Islamic Front, another nasty Islamist faction fighting in Syria); while itself prosecuting an air campaign against IS across Syria and Iraq – is a good one, and deserving of support.

Like the Cold War, the “War on Terror” has also taken a toll on American liberty, with Americans, under the auspices of the Patriot Act, subject to an outrageous degree of electronic surveillance. One hopes that that ill-considered law will be allowed to lapse next year. As for the Pledge of Allegiance, Americans may have to endure its bastardized form for another 60 years, albeit while (cynically) savoring the irony that religious zealots have replaced godless communists as America’s enemy du jour.

Militant Islam, like communism, shall also pass – as will the next affront to liberalism, whatever form it takes. But our commitment to liberalism must not be compromised along the way.