Saturday, June 04, 2005
Spin exposed: Lawsuits didn't drive up malpractice insurance
Re-igniting the medical malpractice overhaul debate, a new study by Dartmouth College researchers suggests that huge jury awards and financial settlements for injured patients have not caused the explosive increase in doctors' insurance premiums. The researchers said a more likely explanation for the escalation is that malpractice insurance companies have raised doctors' premiums to compensate for falling investment returns.
The Dartmouth economists studied actual payments made to patients between 1991 and 2003, the results of which were published yesterday in the journal Health Affairs. Some previous studies have examined jury awards, which often are reduced after trial to comply with doctors' insurance coverage maximums or because the plaintiff settles for less money to avoid an appeal. Researchers found that payments grew an average of 4 percent annually during the years covered by the study, or 52 percent overall since 1991, but only 1.6 percent a year since 2000. The increases are roughly equivalent to the overall rise in healthcare costs, said Amitabh Chandra, lead author and an assistant professor of economics at the New Hampshire college.
"One of the things we know about medical malpractice payments is that they're usually made when an injury occurred," he said. "The injury has to be treated. And if it's more and more expensive to treat injuries, then that will be reflected in payments."
Meanwhile, malpractice insurance premiums for internists, general surgeons, and obstetricians have skyrocketed since 2000, jumping 20 to 25 percent in 2002 alone. In Massachusetts, ProMutual Group, which covers about one-third of the state's doctors, raised rates an average of 11 percent last year, 20 percent in 2003, and 12.5 percent in 2002. Some specialists, such as obstetricians, now pay almost $100,000 annually for their malpractice insurance. Pro Mutual executives said they will not raise premiums this July, primarily because increases in the number of claims have slowed. (Link)
A man has been arrested for allegedly targeting Iraqi security forces with poisoned watermelons, US military officials in northern Iraq say. The attacker was said to have been driving around with a lorry full of fruit injected with a toxic substance. Posing as a farmer, he had apparently been stopping at checkpoints south of Mosul, presenting the watermelons as gifts to thirsty soldiers. (Link)
That sums it up.
A few well said words.
Donald Rumsfeld, whose Steely Resolve more and more resembles aluminum siding, is a man unafraid of confronting the full spectrum of America's enemies from Al Qaeda to Amnesty International. Some say he is too zealous in defending our freedom. Too candid. Too cocksure. Too unwilling to accept counsel and criticism. Too wedded to his overriding vision of military transformation.
Those some sayers are right.
His retirement as Secretary of Defence will leave a trail of ruination as its legacy that will stretch forward into the indeterminate future.
William Lind takes sneak-preview inventory.
"When Rumsfeld leaves office, what will his successor inherit?
"A volunteer military without volunteers. The Army missed its active-duty recruiting goal in April by almost half. Guard and Reserve recruiting are collapsing. Retention will do the same as "stop loss" orders are lifted. The reason, obviously, is the war in Iraq. Parents don't want to be the first one on their block to have their kid come home in a box.
"The world's largest pile of wrecked and worn-out military equipment (maybe second-largest if we remember the old Soviet Navy). I'm talking about basic stuff here: trucks, Humvees, personnel carriers, crew-served weapons, etc. This is gear the Rumsfeld Pentagon hates to spend money on, because it does not represent 'transformation' to the hi-tech, video-game warfare it wrongly sees as the future. So far, deploying units have made up their deficiencies by robbing units that are not deploying, often National Guard outfits. But that stock has about run out, and some of the stripped units are now facing deployment themselves, minus their gear.
"A military tied down in a strategically meaningless backwater, Iraq, to the point where it can't do much else..."
"Commitments to hundreds of billions of dollars' worth of future weapons programs that are militarily as useful as Zeppelins but less fun to watch..."
"A world wary of U.S. intentions and skeptical of any American claims about anything. In business, good will is considered a tangible asset. In true 'wreck it and run' fashion, Rumsfeld & Co. have reduced the value of that asset to near zero. A recent survey of the German public found Russia was considered a better friend than the United States.
"Finally, the equivalent of an unfavorable ruling by a bankruptcy judge in the form of a lost war. We will be lucky if we can get out of Iraq with anything less than a total loss."
Yeah, I'd say that about covers it. (Link)
Friday, June 03, 2005
Where I have problem with espionage is it moves from intelligence gathering to assassion, rigging elections, and gun-running. But spying... that is to be expected.
A CIA scheme to sponsor trainee spies secretly through US university courses has caused anger among UK academics.
The Pat Roberts Intelligence Scholars Program pays anthropology students, whose names are not disclosed, up to $50,000 (£27,500) a year.
They are expected to use the techniques of "fieldwork" to gather political and cultural details on other countries.
Britain's Association of Social Anthropologists called the scholarships ethically "dangerous" and divisive.
The ASA's president, John Gledhill, told the BBC News website the scholarships could foster suspicion within universities worldwide and cause problems in the field.
He said: "Anthropologists go all over the world for long periods and gain detailed knowledge of places, such as Iraq or South America.
"This is information which would be useful in security circles, which is not what anthropology is for."
Undergraduates taking part in the scholarship programme must not reveal their funding source and are expected to attend military intelligence summer camps.
Dr Gledhill said: "If we are writing about sensitive areas, we anonymise place names and, often, people. If research enables people to identify human beings, there is no guarantee that nothing harmful is going to happen.
"There is also the suspicion factor. If people on the ground in foreign countries get the idea that some anthropologists work for the CIA, then they are not going to feel like being very friendly."
The $4m (£2.2m) Pat Roberts scholarships were launched in the wake of the 11 September 2001 attacks to improve US intelligence gathering.
The CIA's website says that a "number of scholarships are awarded to highly qualified students specialising in critical subject areas".
Scholars are expected to go on to work for its directorate of intelligence.
The website also says: "While the CIA does not make foreign policy, our analysis of intelligence on overseas developments feeds into the informed decisions by policymakers and other senior decision makers in the national security and defence arenas."
Dr Gledhill said the ASA would review its code of ethics to cover the initiative.
However, Felix Moos, an anthropology professor at the University of Kansas, defended the scholarships.
He wrote in the journal Anthropology Today: "The United States is at war. Thus, to put it simply, the existing divide between academe and the intelligence community has become a dangerous and very real detriment to our national security at home and abroad." (Link)
U.S. Representative Pete Sessions of Dallas has just introduced federal legislation to ban municipal broadband networks nationally. HR 2726 (ironically named "Preserving Innovation in Telecom Act of 2005") would give the local phone company veto power over any municipal projects they don't like.
View the proposed legislation here. We all knew this was going to happen. The telcos are not going to sit back and let the recent deaths of anti-muni bills stop their campaign to deprive people of choice. They'll do anything to stifle competition. I guess when the markets just don't work for you, run to the legislature and get your lobbying machine in gear.
I checked Representative Session's bio and it reads in part:
 Congressman Sessions joined Southwestern Bell Telephone Company after graduating from Southwestern University. Over the next 16 years, he served at the internationally renowned Bell Labs in New Jersey and as District Manager for Marketing in Dallas. Thanks to this private sector experience, Congressman Sessions understands the need to fight bureaucracy and to utilize market-driven solutions to effectively solve problems in our communities and in government.  (Link)
Wednesday, June 01, 2005
Bank of Canada Warns the U.S. on Debt
Bank of Canada governor David Dodge offered a bankerly rebuke to the United States on Monday for its borrow-and-spendthrift ways, which he suggested are a threat to world economic stability. . . In the text of a speech to be given at a Montreal conference, the central bank chief warned of "large, global economic imbalances that have become the subject of increasing concern" to policy-makers. "I am referring, of course, to the persistent and growing current account deficit in the United States that is mirrored by large current account surpluses elsewhere, especially in Asia."
His comments echo those of many economists who have watched the United States evolve from the world's greatest creditor nation to the greatest debtor as Americans saved less, consumed more and imported more. China, meanwhile, took over much of the world's consumer-goods manufacturing and used its export earnings to soak up vast amounts of U.S. debt.
Supporters of the Bush administration have tended to argue that the three U.S. deficits â€” in international trade, current account and federal budget â€” do not matter to a superpower that prints the world's most widely used money.
Dodge said the imbalances won't go on forever. "At some point, they will have to be resolved. Why? For one thing, a country's external indebtedness cannot keep growing indefinitely as a share of its GDP. Eventually, investors will begin to balk at increasing their exposure to that country, even if it is a reserve-currency country, such as the United States.
"For another thing, the buildup of foreign exchange reserves by Asian countries will, eventually, feed into domestic monetary expansion and lead to higher inflation. These imbalances will ultimately be resolved, either in an orderly, or in an abrupt, disorderly way." (Link)
It's not every day that a U.S. senator gives a lecture and slide show about risky sexual activities -- complete with gross pictures of the naughty bits. This was Sen. Tom Coburn's lecture on sexually transmitted diseases, held for the young congressional staff in the place where such things are talked about: the basement -- in this case, of the Capitol. It is no small thing to ask an intern who is trying his best to mimic a working adult to come to a lecture like this in the middle of a workday, considering the danger of being transported back to the blushing days of high school sex ed.
This was Sen. Tom Coburn's seventh lecture on the subject for young congressional staff. Coburn, a conservative, Bible-quoting Republican from Oklahoma, tried his best to put the newbies at ease; his staffers called the lecture "Revenge of the STDs" after the "Star Wars" movie, gave out fliers featuring Yoda and C-3PO saying "Oh, how dreadful!" and played campy horror music from "The Phantom Menace" as people filed in. In the back they served pizza and sodas. . .
"You keep mentioning the word 'monogamy'," a staffer named Roland Foster recalls one young woman asking after a lecture. "What is that?"
"That's when you have sex with only one partner," Coburn responded.
"You mean at a time?" (Link)
All of this goes to show that Conservatives spend way too much time thinking about sex (and not enough time having it).
"For Amnesty International to suggest that somehow the United States is a violator of human rights, I frankly just don't take them seriously." - - Vice President Dick Cheney
For course, Cheney's comments might have something to do with the fact that Amnesty International has called for the arrest of the senior leadership of the Bush Administration.
High School Student Scoops All on Deep Throat
In 1999, a high-schooler named Chase Culeman-Beckman wrote a paper for his history class, the title of which was (roughly) Deep Throat is Mark Felt. The paper, naturally, had people wetting themselves on every corner — at which point, Culeman-Beckman revealed a very important childhood friend from his time at a Bridgehampton summer camp:
I was in the “Herons” group along with about fifteen other 8, 9, and 10 year olds … One Friday in July we went on a trip to Long Beach, Sag Harbor, and Jacob [Bernstein], Max and I ended up sitting in the sand precociously talking about politics. It was an election year and I was in favor of George Bush because he had gone to the Greenwich Country Day School where I was attending, while Jacob and Max were for Michael Dukakis, although I do not remember why. At some point, the conversation turned to Nixon and Watergate … which I knew little, if nothing, about. During the conversation Jacob told me: “Deep Throat was Mark Felt, he’s someone in the FBI. I’m 100% sure.”
That’s Jacob Bernstein, as in the son of Washington Post reporter Carl Bernstein, one of only three people who actually knew Deep Throat’s identity (until today). It might be, then, fair to say that Vanity Fair was sorta scooped by an 8-year-old kid at daycamp. And even if it’s not fair, we’re still saying it — out of respect for the Bridgehampton Herons, if nothing else. (Link)
And I would like the Merlot form Uttar Pradesh
Indian wines could be one of the next big things among UK drinkers, according to a London-based wine merchant.
Novum Wines has started to import a range of bottles from India's biggest selling premium wine producer Sula.
Based in the Nasik region, 120 miles from Mumbai (Bombay), Sula makes red, white, rose, sweet and sparkling wines.
It was founded in 1997 by Rajeev Samant who gave up his well-paid computer job in the US to return to his homeland.
Sula imported its original vines from France and Australia, and uses traditional grape varieties such as cabernet sauvignon and shiraz.
Indian wine is not yet well known outside of its native country. But the industry is growing at 20% a year at home, with 3.5 million bottles drunk in 2003 - albeit in a population of more than a billion people.
Now producers such as Sula are targeting export markets such as the UK and the US, where it is already stocked.
"We are aiming at the restaurant trade at present," said Novum Wines sales account manager Rob Couling.
"But do we intend to look at developing some retail lines with the producer in due course."
Mr Couling believes that Indian wines could become a big success among the UK's wine lovers.
"The UK wine market is very cosmopolitan and people are prepared to try different things," he said.
"At their price point, Sula's wines compare very favourably with similar offerings from Chile, Australia and France." (Link)
Message in a Bottle Saves 86 Lives
Costa Rican officials say 86 shipwrecked migrants have been rescued after fishermen found a message in a bottle they had thrown overboard.
The migrants, mainly teenagers from Ecuador and Peru, had been adrift in their packed boat for three days.
The vessel had been floating near Cocos Island, a nature reserve 600km (372 miles) off the Costa Rican coast.
It is believed that the group were abandoned by people smugglers when the vessel got into trouble.
The smugglers stripped the boat of radio and communication equipment when they left it.
"Incredibly [...] these people, who are quite young, wrote a message saying: 'Please Help Us' and put it in a bottle," said Francisco Estrada of marine protection group MarViva.
The bottle, and the SOS message it contained, was found by local fishermen who alerted the park wardens, the only inhabitants of the island, a world heritage site.
The wardens then told MarViva who were able to rescue the group, which included women and children.
The group was hoping to reach Guatemala, from where they wanted to cross the border to Mexico, according to a spokesperson for Costa Rica's public security ministry.
The migrants are now on the island and awaiting the arrival of a ship with food and medical supplies.
Many of them are suffering from dehydration and sea-sickness.
A doctor and an immigration official are also being sent to the island. (Link)
Bird Flu Goes Human to Human
We're all gonna die!!!
Well, maybe not. But, this is very worrying. The last major flu pandemic in 1919 killed ~40 million people and infected up to a fifth of humanity. The bird flu is about as lethal but there are more of us and we are more densely packed then ever before.
This is bad news for everyone, but really bad for the squalid slums of the developing world. THe number of dead there could reach the hundreds of millions.
We don't yet know. But read this collection of links. Here is the most worrying excerpt:
Reports coming out of Qinghai suggest H5N1 infections in humans and birds are out of control, with birds distributing H5N1 to the north and west, while people are being cremated and told to keep quiet.
Reports from Chinese language papers detail over 200 suspected infections in over two dozen locations in Qinghai Province. In the most affected 18 regions, there are 121 deaths, generating a case fatality rate above 60%.
Even if only a small fraction of the deaths are H5N1 linked, the cases would move the bird flu pandemic stage from 5 to the final stage 6, representing sustained human-to-human transmission of H5N1.
The high case fatality rate suggests the H5N1 in Qinghai has achieved efficient human transmission while retaining a high case fatality rate. If confirmed, these data would have major pandemic preparedness implications. These cases began almost a month ago and are now spreading via people who have previously entered the high risk area.
The official media comments coming out of China appear to be carefully worded, describing "new cases" being brought under control, inability to "see" human cases, or lack of "pneumonia" cases.
Several reports from Qinghai have cited limitations on discussing or reporting details. All nature reserves in China have been closed.
When your tactics fail: Iraq-Iran and the U.S.
When won the second gulf war? Iran.
When you're a powerful country, it's hard not to play with fire. But
the Bush regime has been particularly reckless. Take for example the
triangle Iran, Iraq, the United States. The history is well-known. The
first famous CIA intervention anywhere was in Iran, way back in 1953. At
that time, Iran had a prime minister named Mohamed Mossadegh, a secular
middle-class politician who had the audacity to nationalize Iranian oil.
The shah went into exile. Great Britain and the U.S. were quite unhappy
about this and they backed, indeed inspired, a military coup to arrest
Mossadegh and restore the shah to his throne. From then on, the shah's
Iran became a close ally of the United States. Shah Reza Pahlevi's
regime was authoritarian and very repressive but this didn't bother the
U.S. since he was a pillar of pro-U.S. forces in the Middle East.
Finally, the shah's regime was overthrown by a popular uprising in 1979
and the shah went into exile once again. This time the dominant forces
turned out to be not secular nationalists but Islamic militants led by
the Ayatollah Ruhollah Khomeini. An Islamic republic was proclaimed.
And within a year, Iranian militants seized the U.S. embassy and kept
those they found there prisoners for 444 days. The U.S., needless to say,
was quite unhappy once again. Iran proclaimed the U.S. the Great Satan,
and the U.S. in turn now considered Iran a total enemy. President
Carter's attempt to liberate the U.S. embassy prisoners by force turned out
to be a fiasco. And President Reagan got them out only by making a
secret deal, returning frozen Iranian assets for their release.
The U.S. decided the best way to handle the Iranians was to encourage
the president of Iraq, one Saddam Hussein, to invade Iran, which he did
in 1980. Iran is of course a largely Shia Muslim country. And Iraq has
a very large number of Shia Muslims who however have been kept from
participation in power by Sunni Arab politicians since Iraq's creation as
a modern sovereign state. In 1983, Pres. Reagan sent one Donald
Rumsfeld as a special envoy to meet Saddam Hussein, to encourage him in his
war efforts, to offer him direct and indirect forms of assistance
(including some elements of biological warfare), to remove Iraq from the U.S.
list of states aiding terrorist groups, and in general to coddle
Saddam. The Iran-Iraq war lasted eight years, was extremely costly to both
sides in both casualties and money, and finally ended in exhaustion, with
the troops back at the starting-point. It was a military truce, but of
course the political enmity persisted.
Saddam Hussein, as we know, found it difficult to repay the debts he
had contracted in order to conduct this war, especially Iraq's large
debts to Kuwait and Saudi Arabia. He decided to cancel the debts and
satisfy long-standing nationalist claims in one fell swoop by invading Kuwait
in 1990. Now at last the U.S. turned against Saddam Hussein, leading a
U.N.-sanctioned coalition to oust Iraq from Kuwait with, among other
things, the tacit support of Iran. The war ended with various kinds of
double crosses. Saddam had sent much of his air force to Iran to keep it
safe from U.S. bombing. After the war ended, Iran refused to return the
planes. The Shia in Iraq rose up in rebellion against Saddam Hussein
during the Gulf War, but the U.S. refused to help them after the truce
with Saddam, although the U.S. eventually did enforce a no-fly zone over
Shia areas - too late, however, to prevent Saddam from his revenge on
the Shia rebels.
Everyone was a bit unhappy with the de facto truce betwen 1991 and
2001. The neo-cons in the U.S. felt that the U.S. had been humiliated by
the fact that Saddam remained in power. Saddam was unhappy because of a
U.S.-led economic boycott and U.N.-decreed limitations on Iraq's
sovereignty concerning the sale of oil. Iraqi Shia (and Kurds) were unhappy
because Saddam was still in power, and the U.S. had let them down. And
Iran was unhappy because Saddam was still in power, because the Iraqi
Shia were still suffering, and because the U.S. was still too much a force
in the region.
When September 11 occurred, the neo-cons seized the opportunity to get
Bush to focus on a war on Iraq. As we know, the invasion would finally
occur in 2003, resulting in the overthrow of Saddam. At the time,
George W. Bush denounced the "axis of evil" - a trio of Iraq, Iran, and
North Korea. The U.S. had now decided to be against both the Iraqi and the
Iranian regimes simultaneously, but to take on Iraq militarily first.
It is quite clear that in 2003 the Bush regime considered it only a
matter of time before the U.S. took on Iran.
What President Bush seemed to expect in 2003 is that the U.S. would be
able to install, rather rapidly, a friendly regime in Iraq, and then
proceed to force a showdown with Iran. What they did not expect was a
quite powerful resistance movement in Iraq, one which they now seem unable
to contain seriously. What they did not expect was effective political
pressure from the Shia to hold early elections that would give the Shia
a majority in the government. What they did not expect was that the
U.S. military would be so overstretched that there is now no way the U.S.
can seriously consider undertaking any kind of military action to
change the regime in Iran.
And least of all did they expect that it would be Iran that would be in
a position to be the great diplomatic victor of the U.S. invasion. Take
what happened on May, 15, 2005. The U.S. Secretary of State, Condoleeza
Rice, made an unannounced visit to Baghdad, during which she spent her
brief time half scolding, half pleading with the new Iraqi government,
and all this is public. She said that the Iraqis should try to be more
"inclusive," the code word for making more space for Sunni Arabs in the
government. She cautioned against "severe" de-Baathification, meaning
the inclusion in power of at least some of those who supported Saddam
Hussein. Presumably, Rice thinks this might undermine the resistance to
U.S. occupation and make it possible to reduce U.S. troop commitment to
Iraq (the better to use them against Iran?). Curious turnaround where
the U.S. Secretary of State is pleading on behalf of at least some
ex-Baathists. And, as far as one can tell, to half-deaf ears. The a
nalyses of the present Iraqi government, or rather its priorities, seem
to be different.
Two days later, the Foreign Minister of Iran, Kamal Khazzeri, arrived
for a far more successful four-day visit. He was greeted at the airport
by Iraq's Foreign Minister, Hoshyar Zebari, himself a Sunni and a Kurd,
who broke into fluent Farsi. After three days, Iraq and Iran signed an
agreement to end hostilities between them, in which the new Iraqi
government agreed with Iran that the Iraq-Iran war was initiated by Saddam
Hussein. The two countries renewed criticisms of Israel. If Bush thinks
the new Iraqi government is going to join the U.S. in a crusade against
Iran, that other member of the "axis of evil," he clearly has another
Relations between Iraq and Iran have now become normal, en route to
becoming friendly. This is not what the neo-cons had envisaged when they
launched the drive for a U.S.-led "democratization" of the Middle East.
When the U.S. forces leave Iraq (probably sooner rather than later),
Iran will still be around, and (thanks to the U.S.) stronger than ever. (Link)
Tuesday, May 31, 2005
Deep Throat Exposed
For years the better class of Deep Throat sleuth—discriminating, Campari-sipping sophisticates like James Mann, Nora Ephron, Richard Nixon, Washingtonian magazine, Chase Culeman-Beckman, Ronald Kessler, and yours truly—have been fingering W. Mark Felt, former deputy associate director of the Federal Bureau of Investigation, as the likely anonymous source described by Bob Woodward and Carl Bernstein in All the President's Men. What the theory lacked in originality it more than made up for in plausibility. One month before the Watergate break-in, FBI Director J. Edgar Hoover had died. Hoover loyalists at the bureau were frantic that President Richard Nixon would get his mitts on the FBI, which Hoover had kept independent of political control through a variety of nasty methods, including blackmail. The Hooverites' bureaucratic anxieties were well-founded: After the Watergate break-in, Hoover's acting successor, a Nixon loyalist named L. Patrick Gray, routinely passed FBI files about Watergate directly to White House counsel John Dean, who was a party to (but eventually would expose) the White House's illegal coverup. In effect, the White House ended up knowing everything the FBI knew. (That's why it seemed so plausible that, if not Felt, Deep Throat might be Deputy White House Counsel Fred Fielding, a theory that, I regret to say, undermined in recent years my previous rock-solid conviction that it was Felt, or at least some other high-ranking G-man—case closed.) Felt pushed back by helping Woodward and Bernstein discover that high-level White House aides were in up to their necks in Watergate, up to and including Nixon.
The July 2005 Vanity Fair piece fingering Felt as Deep Throat has now been confirmed by Bob Woodward. Why did Felt maintain his silence for so long? Part of the reason, I imagine, is that Felt knew his prosaic, bureaucratic-infighting motive was at least as strong as any moralistic desire to expose the truth about the crooks in the White House. That tarnishes Deep Throat's luster a little. Also, Felt's previous brush with national publicity involved his criminal conviction for bypassing warrants in his investigation of the Weather Underground. Ronald Reagan pardoned him, but it was a deeply painful experience, and Felt thinks the stress contributed to his wife's early death. It would only be logical that he'd avoid the spotlight after that. Possibly, too, he could imagine that the press would note that Deep Throat shared with Nixon an enthusiasm for illegal break-ins.
But the main reason, I think, was that Felt saw his leaks as a betrayal of the FBI. Six years ago, I asked Felt (who at that point was still denying he was Deep Throat) whether, if he were Deep Throat, that would be so terrible. His reply:
It would be terrible. This would completely undermine the reputation that you might have as a loyal, logical employee of the FBI. It just wouldn't fit at all.
But wasn't Deep Throat a hero?
That's not my view at all. It would be contrary to my responsibility as a loyal employee of the FBI to leak information.
Now that we know Felt was Deep Throat, I have a few bones to pick with Woodward and Bernstein. One is that, in All the President's Men, Deep Throat is described as a heavy smoker. But Felt quit smoking in 1943. I suppose Woodstein would call this necessary misdirection. I call it conscious fabrication, however trivial. Also, a November 1973 Woodward and Bernstein Post story sourced anonymously to "White House sources" is described in All the President's Men as being sourced to Deep Throat. Yet Felt was not a "White House source." It's conceivable that Deep Throat was an additional, unacknowledged source on the story, but it's also possible that Woodward and Bernstein were misleading readers about where they got their information. Which was it, gentlemen? Finally, why did Woodward, in a 1979 Playboy interview with J. Anthony Lukas, flatly deny that Deep Throat was anyone inside the "intelligence community"? The FBI, where Felt worked, is most definitely part of the intelligence community. But take a look at this exchange:
Lukas: Do you resent the implication by some critics that your sources on Watergate—among them the fabled Deep Throat—may have been people in the intelligence community?
Woodward: I resent it because it's untrue. As you know, I'm not going to discuss the identity of Deep Throat or any other of my confidential sources who are still alive. But let me just say that this suggestion that we were being used by the intelligence community was of concern to us at the time and afterward. When somebody first wrote the article saying about me, "Wait a minute; this is somebody in an intelligence agency who doesn't like Nixon and is trying to get him out," I took that seriously.
The CIA is an agency with professional covert manipulators who try to alter events by deceiving people and directing them, running them like an intelligence agent. I have revisited this question of disinformation—I'd rather not go into how it was done—but I've satisfied myself and others that that was not the case.
When I first looked at this, I concluded that Woodward was probably thinking of the FBI not as an "intelligence" agency but as a "crime-fighting" agency. On further reflection, though, that didn't seem plausible--the Vietnam-era controversies about the FBI's domestic spying were still fresh in everybody's mind. This made me, for a time, conclude that I'd been wrong to thihk that Mark Felt was Deep Throat. It never occurred to me that Woodward would actually lie. Why did you lie to Tony Lukas, Bob?
Bush and Rumsfeld: Please Arrest
It is very difficult to stop war crimes while they are happening, because there is rarely the political will to shoulder the expense of such a conflict. However, there is a second approach that can be made systematic: The hunting of war criminals after the fact. In Darfur, investigators are already trying to build up a case against the instigators of that ongoing atrocity, because then those who have committed the terror can be hunted anywhere in the world.
This is not to say we shouldn't try to stop this terror, but that a second, cheaper, and more reliable line of deterant should be constructed.
This article is an example of movement in that direction, targetting the biggest name war criminal in the world: George W Bush.
When Lieutenant General Ricardo Sanchez testified before the Senate Armed Services Committee last year, he was asked whether he "ordered or approved the use of sleep deprivation, intimidation by guard dogs, excessive noise, and inducing fear as an interrogation method for a prisoner in Abu Ghraib prison."
Sanchez, who was head of the Pentagon's Combined Joint Task Force-7 in Iraq, swore the answer was no. Under oath, he told the Senators he "never approved any of those measures to be used."
But a document the American Civil Liberties Union (ACLU) obtained from the Pentagon flat out contradicts Sanchez's testimony. It's a memorandum entitled "CJTF-7 Interrogation and Counter-Resistance Policy," dated September 14, 2003. In it, Sanchez approved several methods designed for "significantly increasing the fear level in a detainee." These included "sleep management"; "yelling, loud music, and light control: used to create fear, disorient detainee, and prolong capture shock"; and "presence of military working dogs: exploits Arab fear of dogs."
On March 30, the ACLU wrote a letter to Attorney General Alberto Gonzales, urging him "to open an investigation into whether General Ricardo A. Sanchez committed perjury in his sworn testimony."
The problem is, Gonzales may himself have committed perjury in his Congressional testimony this January.
According to a March 6 article in The New York Times, Gonzales submitted written testimony that said: "The policy of the United States is not to transfer individuals to countries where we believe they likely will be tortured, whether those individuals are being transferred from inside or outside the United States." He added that he was "not aware of anyone in the executive branch authorizing any transfer of a detainee in violation of that policy."
"That's a clear, absolute lie," says Michael Ratner, executive director of the Center for Constitutional Rights, who is suing Administration officials for their involvement in the torture scandal. "The Administration has a policy of sending people to countries where there is a likelihood that they will be tortured."
The New York Times article backs up Ratner's claim. It says "a still-classified directive signed by President Bush within days of the September 11 attacks" gave the CIA broad authority to transfer suspected terrorists to foreign countries for interrogations. Human Rights Watch and Amnesty International estimate that the United States has transferred between 100 and 150 detainees to countries notorious for torture.
So Gonzales may not be the best person to evaluate the allegation of perjury against Sanchez.
But going after Sanchez or Gonzales for perjury is the least of it. Sanchez may be personally culpable for war crimes and torture, according to Human Rights Watch. And Gonzales himself was one of the legal architects of the torture policies. As such, he may have been involved in "a conspiracy to immunize U.S. agents from criminal liability for torture and war crimes under U.S. law," according to Amnesty International's recent report: "Guantánamo and Beyond: The Continuing Pursuit of Unchecked Executive Power."
As White House Counsel, Gonzales advised President Bush to not apply Geneva Convention protections to detainees captured in Afghanistan, in part because this "substantially reduces the threat of domestic criminal prosecution under the War Crimes Act," Gonzales wrote in his January 25, 2002, memo to the President.
Gonzales's press office refused to provide comment after several requests from The Progressive. In his Senate confirmation testimony, Gonzales said, "I want to make very clear that I am deeply committed to the rule of law. I have a deep and abiding commitment to the fundamental American principle that we are a nation of laws, and not of men."
Pentagon spokesperson Lieutenant Colonel John Skinner says the ACLU's suggestion that Sanchez committed perjury is "absolutely ridiculous." In addition, Skinner pointed to a recent Army inspector general report that looked into Sanchez's role. "Every senior-officer allegation was formally investigated," the Army said in a May 5 summary. Sanchez was investigated, it said, for "dereliction in the performance of duties pertaining to detention and interrogation operations" and for "improperly communicating interrogation policies." The inspector general "found each of the allegations unsubstantiated."
The Bush Administration's legal troubles don't end with Sanchez or Gonzales. They go right to the top: to Secretary of Defense Donald Rumsfeld and President Bush himself. Both Human Rights Watch and Amnesty International USA say there is "prima facie" evidence against Rumsfeld for war crimes and torture. And Amnesty International USA says there is also "prima facie" evidence against Bush for war crimes and torture. (According to Random House Webster's Unabridged Dictionary, "prima facie evidence" is "evidence sufficient to establish a fact or to raise a presumption of fact unless rebutted.")
Amnesty International USA has even taken the extraordinary step of calling on officials in other countries to apprehend Bush and Rumsfeld and other high-ranking members of the Administration who have played a part in the torture scandal.
Foreign governments should "uphold their obligations under international law by investigating U.S. officials implicated in the development or implementation of interrogation techniques that constitute torture or cruel, inhuman, or degrading treatment," the group said in a May 25 statement. William Schulz, executive director of Amnesty International USA, added, "If the United States permits the architects of torture policy to get off scot-free, then other nations will be compelled" to take action.
The Geneva Conventions and the torture treaty "place a legally binding obligation on states that have ratified them to exercise universal jurisdiction over persons accused of grave breaches of the Geneva Conventions," Amnesty International USA said. "If anyone suspected of involvement in the U.S. torture scandal visits or transits through foreign territories, governments could take legal steps to ensure that such individuals are investigated and charged with applicable crimes."
When these two leading human rights organizations make such bold claims about the President and the Secretary of Defense, we need to take the question of executive criminality seriously.
And we have to ask ourselves, where is the accountability? Who has the authority to ascertain whether these high officials committed war crimes and torture, and if they did, to bring them to justice?
The independent counsel law is no longer on the books, so that can't be relied on. Attorney General Gonzales is not about to investigate himself, Rumsfeld, or his boss. And Republicans who control Congress have shown no interest in pursuing the torture scandal, much less drawing up bills of impeachment.
Amnesty International USA, Human Rights Watch, the Center for Constitutional Rights, the ACLU, the American Bar Association, and Human Rights First (formerly known as the Lawyers Committee for Human Rights) have joined in a call for a special prosecutor. But that decision is up to Gonzales and ultimately Bush.
"It's a complete joke" to expect Gonzales to appoint a special prosecutor, concedes Ratner of the Center for Constitutional Rights.
John Sifton, Afghanistan specialist and military affairs researcher for Human Rights Watch, is not so sure. "Do I think this would happen right now? No," he says. "But in the middle of the Watergate scandal, very few people thought the President would resign." If more information comes out, and if the American public demands an investigation, and if there is a change in the control of the Senate, Sifton believes Gonzales may end up with little choice.
Human Rights Watch and other groups are also calling for Congress to appoint an independent commission, similar to the 9/11 one, to investigate the torture scandal.
"Unless a special counsel or an independent commission are named, and those who designed or authorized the illegal policies are held to account, all the protestations of 'disgust' at the Abu Ghraib photos by President George W. Bush and others will be meaningless," concludes Human Rights Watch's April report "Getting Away with Torture? Command Responsibility for the U.S. Abuse of Detainees."
But even as it denounces the "substantial impunity that has prevailed until now," Human Rights Watch is not sanguine about the likelihood of such inquiries. "There are obviously steep political obstacles in the way of investigating a sitting Defense Secretary," it notes in its report.
By not pursuing senior officials who may have been involved in ordering war crimes or torture, the United States may be further violating international law, according to Human Rights Watch. "Each State Party shall ensure that its competent authorities proceed to a prompt and impartial investigation, whenever there is reasonable ground to believe that an act of torture has been committed in any territory under its jurisdiction," says the Convention Against Torture and Other Cruel, Inhuman, or Degrading Treatment or Punishment. The Geneva Conventions have a similar requirement.
Stymied by the obstacles along the customary routes of accountability, the ACLU and Human Rights First are suing Rumsfeld in civil court on behalf of plaintiffs who have been victims of torture. The Center for Constitutional Rights is suing on behalf of a separate group of clients. The center also filed a criminal complaint in Germany against Rumsfeld and Gonzales, along with nine others. The center argued that Germany was "a court of last resort," since "the U.S. government is not willing to open an investigation into these allegations against these officials." The case was dismissed.
Amnesty International's call for foreign countries to nab Rumsfeld and Bush also seems unlikely to be heeded any time soon. How, physically, could another country arrest Bush, for instance? And which country would want to face the wrath of Washington for doing so?
But that we have come this far--where the only option for justice available seems to be to rely on officials of other governments to apprehend our own--is a damning indictment in and of itself.
The case against Rumsfeld may be the most substantial of all. While "expressing no opinion about the ultimate guilt or innocence" of Rumsfeld, Human Rights Watch is urging his prosecution under the War Crimes Act of 1996 and the Anti-Torture Act of 1996. Under these statutes, a "war crime" is any "grave breach" of common Article 3 of the Geneva Conventions, which prohibits "outrages upon personal dignity, in particular, humiliating and degrading treatment," as well as torture and murder. A "grave breach," according to U.S. law, includes "willful killing, torture, or inhuman treatment of prisoners of war and of other 'protected persons,' " Human Rights Watch explains in "Getting Away with Torture?"
Rumsfeld faces jeopardy for being head of the Defense Department when those directly under him committed grave offenses. And he may be liable for actions he himself undertook.
"Secretary Rumsfeld may bear legal liability for war crimes and torture by U.S. troops in Afghanistan, Iraq, and Guantánamo under the doctrine of 'command responsibility'--the legal principle that holds a superior responsible for crimes committed by his subordinates when he knew or should have known that they were being committed but fails to take reasonable measures to stop them," Human Rights Watch says in its report.
But Rumsfeld's potential liability may be more direct than simply being the guy in charge who didn't stop the torture and mistreatment once he learned about it.
First of all, when the initial reports of prisoner mistreatment came in, he mocked the concerns of human rights groups as "isolated pockets of international hyperventilation." He also asserted that "unlawful combatants do not have any rights under the Geneva Convention," even though, as Human Rights Watch argues, "the Geneva Conventions provide explicit protections to all persons captured in an international armed conflict, even if they are not entitled to POW status."
Secondly, he himself issued a list of permissible interrogation techniques in a December 2, 2002, directive that likely violated the Geneva Conventions, according to Human Rights Watch. Among those techniques: "The use of stress positions (like standing) for a maximum of four hours." On the directive, Rumsfeld, incidentally, added in his own handwriting next to this technique: "However, I stand for 8-10 hours a day. Why is standing limited to 4 hours?" He also included the following techniques: "removal of all comfort items (including religious items)," "deprivation of light and auditory stimuli," "isolation up to 30 days," and "using detainees' individual phobias (such as fear of dogs) to induce stress."
On January 15, 2003, Rumsfeld rescinded this directive after the Navy registered its adamant objections. If, during the six weeks that Rumsfeld's techniques were official Pentagon policy at Guantánamo, soldiers mistreated or tortured prisoners using his approved techniques, then "Rumsfeld could potentially bear direct criminal responsibility, as opposed to command responsibility," says Human Rights Watch.
Rumsfeld may also bear direct responsibility for the torture or abuse of two other prisoners, says Human Rights Watch, citing the Church Report. (This report, one of Rumsfeld's many internal investigations, was conducted by the Navy Inspector General Vice Admiral Albert Church.) "The Secretary of Defense approved specific interrogation plans for two 'high-value detainees' " at Guantánamo, the Church Report noted. Those plans, it added, "employed several of the counter resistance techniques found in the December 2, 2002, [policy]. . . . These interrogations were sufficiently aggressive that they highlighted the difficult question of precisely defining the boundaries of humane treatment of detainees."
And Rumsfeld may be in legal trouble for hiding detainees from the Red Cross. "Secretary Rumsfeld has publicly admitted that . . . he ordered an Iraqi national held in Camp Cropper, a high security detention center in Iraq, to be kept off the prison's rolls and not presented to the International Committee of the Red Cross," Human Rights Watch notes. This prisoner, according to The New York Times, was kept off the books for at least seven months.
The Geneva Conventions require countries to grant access to the Red Cross to all detainees, wherever they are being held. As Human Rights Watch explains, "Visits may only be prohibited for'reasons of imperative military necessity' and then only as'an exceptional and temporary measure.'"
The last potential legal problem for Rumsfeld is his alleged involvement in creating a "secret access program," or SAP. According to reporter Seymour Hersh, Rumsfeld "authorized the establishment of a highly secret program that was given blanket advance approval to kill or capture and, if possible, interrogate 'high value' targets in the war on terror." Human Rights Watch says that "if Secretary Rumsfeld did, in fact, approve such a program, he would bear direct liability, as opposed to command responsibility, for war crimes and torture committed by the SAP."
The Pentagon vehemently denies the allegation that Rumsfeld may have committed war crimes. "It's absurd," says Pentagon spokesperson Lieutenant Colonel Skinner. "The facts speak for themselves. We have aggressively investigated all allegations of detainee mistreatment. We have had ten major investigations on everything from A to Z. We've also had more than 350 criminal investigations looking into detainee abuse. More than 103 individuals have been held accountable for actions related to detainee mistreatment. Our policy has always been, and will always remain, the humane treatment of detainees."
What about Bush? If Donald Rumsfeld can be charged for war crimes because of his command responsibility and his personal involvement in giving orders, why can't the commander in chief? Hina Shansi, senior counsel at Human Rights First, believes the case against Bush is much more difficult to document. And Sifton of Human Rights Watch says that since Bush is known as "a major delegator," it may be hard to pin down "what he's briefed on and what role he plays in the decision-making process."
Amnesty International USA, however, believes that Bush, by his own involvement in formulating policy on torture, may have committed war crimes. "It's the memos, the meetings, the public statements," says Alistair Hodgett, media director of Amnesty International USA.
There is "prima facie evidence that senior members of the U.S. Administration, including President Bush and Secretary of Defense Rumsfeld, have authorized human rights violations, including 'disappearances and torture or other cruel, inhuman, or degrading treatment,' " Amnesty states in "Guantánamo and Beyond."
The first solid piece of evidence against Bush is his September 17, 2001, "Memorandum of Notification" that unleashed the CIA. According to Bob Woodward's book Bush at War, that memo "authorized the CIA to operate freely and fully in Afghanistan with its own paramilitary teams" and to go after Al Qaeda "on a worldwide scale, using lethal covert action to keep the role of the United States hidden."
Two days before at Camp David, then-CIA Director George Tenet had outlined some of the additional powers he wanted, Woodward writes. These included the power to " 'buy' key intelligence services. . . . Several intelligence services were listed: Egypt, Jordan, Algeria. Acting as surrogates for the United States, these services could triple or quadruple the CIA's resources." According to Woodward, Tenet was upfront with Bush about the risks entailed: "It would put the United States in league with questionable intelligence services, some of them with dreadful human rights records. Some had reputations for ruthlessness and using torture to obtain confessions. Tenet acknowledged that these were not people you were likely to be sitting next to in church on Sunday. Look, I don't control these guys all the time, he said. Bush said he understood the risks."
That this was Administration policy is clear from comments Vice President Dick Cheney made on Meet the Press the very next day.
"We also have to work, though, sort of the dark side, if you will," Cheney told Tim Russert. "We've got to spend time in the shadows in the intelligence world. A lot of what needs to be done here will have to be done quietly, without any discussion, using sources and methods that are available to our intelligence agencies, if we're going to be successful. That's the world these folks operate in, and so it's going to be vital for us to use any means at our disposal, basically, to achieve our objective."
If, as The New York Times reported, Bush authorized the transfer of detainees to countries where torture is routine, he appears to be in grave breach of international law.
Article 3 of the Convention Against Torture explicitly prohibits this: "No State Party shall expel, return, or extradite a person to another State where there are substantial grounds for believing that he would be in danger of being subjected to torture." Article 49 of the Geneva Conventions is also clear: "Individual or mass forcible transfers, as well as deportations of protected persons from occupied territory to the territory of the Occupying Power or to that of any other country, occupied or not, are prohibited, regardless of their motive."
On February 7, 2002, Bush issued another self-incriminating memorandum. This one was to the Vice President, the Secretary of State, the Secretary of Defense, the Attorney General, the Director of the CIA, the National Security Adviser, and the Chairman of the Joint Chiefs of Staff. It was entitled "Humane Treatment of Al Qaeda and Taliban Detainees." In it, Bush asserted that "none of the provisions of Geneva apply to our conflict with Al Qaeda in Afghanistan or elsewhere throughout the world." He also declared, "I have the authority under the Constitution to suspend Geneva as between the United States and Afghanistan," though he declined to do so. And he said that "common Article 3 of Geneva does not apply to either Al Qaeda or Taliban."
This memo "set the stage for the tragic abuse of detainees," says William Schulz, executive director of Amnesty International USA.
Bush failed to recognize that the Geneva Conventions provide universal protections. "The Conventions and customary law still provide explicit protections to all persons held in an armed conflict," Human Rights Watch says in its report, citing the "fundamental guarantees" in Article 75 of Protocol I of 1977 to the Geneva Conventions. That article prohibits "torture of all kinds, whether physical or mental," "corporal punishment," and "outrages upon personal dignity, in particular, humiliating and degrading treatment."
In the February 7, 2002, memo, Bush tried to give himself cover by stating that "our values as a Nation, values that we share with many nations in the world, call for us to treat detainees humanely, including those who are not entitled to such treatment." He added that the United States, "to the extent appropriate and consistent with military necessity," would abide by the principles of the Geneva Conventions.
But this only made matters worse. His assertion that there are some detainees who are not entitled to be treated humanely is an affront to international law, as is his claim that the Geneva Conventions can be made subordinate to military necessity.
The Geneva Conventions, the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, and the Convention Against Torture all prohibit the torture and abuse that the United States has been inflicting on detainees. Article 2 of the Convention Against Torture states that "no exceptional circumstances whatsoever, whether a state of war or a threat of war, internal political instability or any other public emergency, may be invoked as a justification of torture."
Article VI of the Constitution makes treaties "the supreme law of the land," and the President swears an oath to see that the laws are faithfully executed.
As more information comes out, the case against Bush could get even stronger, says Sifton of Human Rights Watch. If, for instance, Bush said at Camp David on September 15, 2001, or at another meeting, "Take the gloves off," or something to that effect, he would be even more implicated. "Obviously, if he did make such an explicit order, his complicity would be shown," says Sifton. Somehow, that message was conveyed down the line. "There was a before-9/11 and an after-9/11," Cofer Black, who was director of the CIA's counterterrorist unit, told Congress in 2002. "After 9/11, the gloves came off."
The White House press office refused to return five phone calls from The Progressive seeking comment about the allegations against Bush. At his daily press briefing on May 25, the President's Press Secretary Scott McClellan was not asked specifically about Bush's culpability but about Amnesty International's general charge that the United States is a chief offender of human rights.
"The allegations are ridiculous and unsupported by the facts," McClellan said. "The United States is leading the way when it comes to protecting human rights and promoting human dignity. We have liberated fifty million people in Iraq and Afghanistan. . . . We're also leading the way when it comes to spreading compassion."
Amnesty International USA does not intend to back off. "Our call is for the United States to step up to its responsibilities and investigate these matters first," Executive Director Schulz says. "And if that doesn't happen, then indeed, we are calling upon foreign governments to take on their responsibility and to investigate the apparent architects of torture."
Inquiries to the embassies of Belgium, Chile, France, Germany, South Africa, and Venezuela, as well as to the government of Canada, while met with some amusement, did not reveal any inclination to heed Amnesty's call.
Schulz is not deterred. Acknowledging that the possibility of a foreign government seizing Rumsfeld or Bush might not be "an immediate reality," Schulz takes the long view: "Let's keep in mind, there are no statutes of limitations here." (Link)
The Attraction of Talent
When Richard Florida published his upbeat Rise of the Creative Class in 2002, he became the instant darling of progressives everywhere. What's not to like about a man who says diversity, tolerance, and a vibrant cultural life are required ingredients for economic success? And for hip, well-educated professionals, comfortably ensconced in liberal meccas like San Francisco and New York, it bestowed a brand new label, "cultural creatives," that confirmed their privileged position in the new post-'90s economy.
Florida's latest offering, however, is neither as cheery nor as reassuring. While the emphasis on human creativity -- and the concomitant need for tolerance -- remains unchanged, The Flight of the Creative Class: The New Global Competition for Talent offers a grimmer and more nuanced vision of both America and the world.
This Richard Florida is worried. For one, he fears that the nation's turn to the right -- hostility to foreigners, widening income divide, social conservatism -- endangers the single most important source of U.S. power: its ability to attract global talent. But even when he looks beyond the borders, Florida finds other reasons to worry. Unlike Thomas Friedman, he see the dark side of the global creative economy, whose tendency to concentrate economic wealth must be recognized and controlled for the greater good. The same thriving cities, brimming with talent and ingenuity can easily turn into creative ghettoes that increasingly exclude greater parts of humanity.
Richard Florida spoke to AlterNet from his home in Washington D.C.
In your book, you describe a world where, for the first time, the mobility of capital is being matched by the mobility of labor, at least a certain kind of high-skilled labor. So what are the implications for the way we redefine economic power?
There are two things. For a long time, economists thought in terms of comparative advantage and raw materials. Then in the more recent period, two theories emerged. One was a theory associated with Robert Solo -- it's a really good theory -- that says economic growth is really dependent on how much technology you have.
The second theory that came up in the more recent years is that if you want to grow an economy you have to invest in human capital or talent. And there's increasing proof, in fact, that this is true. But because most economists tend to view either technology or talent as "stocks" that countries are endowed with. All my theory really says is that these are not "stocks" but "flows."
The main thing affecting the flow [of talent and technology] is not, in fact, your education system. A perfect example of that is California. California has for decades under-invested in its primary and secondary education system, and yet has these spectacular universities and a vibrant labor market. It's a great open place to live, and attracts people from all over the world.
What I say in my work is that there's this third T -- apart from Technology and Talent -- called Tolerance. The reason this third T is an important part of economic growth and economic advantage is because it attracts talented creative people from all races, ethnicities, income ranges, -- whether they're white, black, Hispanic, Latino, Asia, Indian, women, men, single, married, or gay. So places that are the most tolerant, the most diverse, the most, in words of the new book, "proactively inclusive" have an addition economical advantage.
And, in fact, that's what I believe has really been the core of America's economic advantage for over the course of at least a century, more likely two centuries. It's not been a lot of raw materials, a big market, or just been our American Yankee ingenuity or even our stock of technology. We, in fact, imported most of our technology in the early days from England and Germany. It's really been our emphasis on being open -- providing economic opportunity, for sure, but being open to people, culturally and politically.
My message is that this is really the core axis of economic competition. And my fear is -- I'll just be quite candid -- that there's absolutely no awareness of this in Washington D.C. It's so terrifying.
Or even if there is an awareness of the economic consequences of intolerance, it doesn't seem to change the outcome. In Ohio, for example, they successfully passed this sweeping anti-gay proposition in 2004 despite warnings from the business community that it would force many of them to relocate -- and this in a state that has its share of economic woes. How do you explain that?
What we typically see in America -- in the media -- as political polarization or culture war is really fundamental class divide. It's as big as the class divide that haunted during the birth of the Industrial Revolution, when the rise of the great working class was stifled by a booming, wealth-creating industrial capitalism. What Roosevelt said -- like him or not -- was that we could only keep this industrial engine moving by including the regular blue-collar working person who heretofore had toiled in heinous conditions at substandard wages in "satanic mills."
What's happened with the rise of the creative economy is the benefits of that economy have been very concentrated in about 30 percent of the workforce -- those of us who work in the creative economy (scientists, engineers, people who work in arts, culture, entertainment, writers) and those of us in the professions. There's certainly a great wage range within that, but on average, people who work in the creative sector of the economy make double people in the manufacturing, triple people in the service sector.
So there are many, many people who are not part of the creative economy, who are toiling away in the service economy, which employs about 45 percent of the people. And in the manufacturing sector of the economy, where jobs are still being competed away and going abroad, people are just terrified. They're scared and anxious, and don't know how they connect to this larger economy. What socially conservative forces and the religious right have done very effectively is latch on to that fear and anxiety and say: What's really holding you down is this liberal elite of Silicon Valley, San Francisco Bay Area, New York City, Boston.
What I say in the book is that those of us who consider ourselves progressives -- whether we're Democrats or moderate Republicans -- can't blame George Bush and Karl Rove anymore. They're doing their job. What I say in the book, with great humility, is that a lot of the blame lies on the progressive forces of society who believe that somehow this creative economy could enact itself and pull up many people along with it. That somehow the working class and people being left behind in the creative economy will see this thing and say we're going to attach ourselves to it.
In fact, Bill Clinton failed to do what FDR did. He failed to position the creative economy in a way that could be seen as being inclusive and the Democrats, in a way, allowed this line to be drawn -- and now people being left behind are voting against their economic interests.
So when you write that the "jobs go to the people," you really are talking about certain kinds of people, i.e. the global creative class.
There's one thing I've been thinking about more and more and it's important to articulate it in the context of our conversation. Tom Friedman's book, The World is Flat, has received a lot of attention in Washington and other political centers. But I actually think it's a misnomer to say that if some little kid anywhere in the world can plug into this global economy, he'd be fine.
The point that I want to make is that the world is not flat. The world is even more concentrated, uneven, and unequal than it has ever been. The world, in fact, is really "spiky." What Friedman is doing is looking out from the top of the Empire State Building and seeing only Silicon Valley, Bangalore, Shanghai-- all these outposts of the creative age right now. That's what the world looks like if one looked at it in terms of decentralizing and disaggregating forces.
But if one looks at the very powerful concentrating forces, the forces of unevenness and inequality, one sees the world where only 25 to 50 places really matter. And if you're outside those 25 to 50 places, if you're a kid in India, who's not in Bangalore, if you're growing up in Arkansas or Alabama, things are very different. What's happening is that those creative centers are sucking up all the talent from the hinterland.
Friedman never stepped out of Bangalore, or any of these places that are the creative centers. He only went to the creative hot spots.
Only the 25 cities that matter. What happens to Manchester? What happens to rural India? What happens to rural China? In this world if we let the creative economy just go with its own flow, what we will get is even higher and higher peaks, and the valleys will get flatter and flatter, and they'll turn into these huge ghettos, where people are trying to climb as best they can to the top of the hill.
So the level of uneven development in the world, I think, is arguably worse. Everyone believes that technology is flattening and leveling the world. In fact, it's decentralizing and disaggregating, but it's also concentrating economic assets within two dozen or four dozen of these humongous city regions.
So, in fact, we're creating creative ghettos that are linked by capital, creating almost an alternative universe.
Absolutely, the world of globally connected nomads is made up of my 150 million members of the creative class -- that's only in 45 countries that we looked at. Okay, how many people are there in the world? How many billion? So the people participating at the forefront of this are maybe less than 10 percent of the world's population. That's where the real issue is.
Of course, we have to build our creative class but just enabling a talented tenth to participate isn't going to do it. Yes, it's morally unjust and terrible, but the point is that it's also economically inefficient. If we reach down and harness that creative capability, we would be able to produce far greater things than we ever dreamed.
My theory says there is this connection between human development and economic development. We need to have the most diverse and inclusive economy we can because not only will it make people better off, it will make the whole economic system better off.
You argue that the post-9/11 turn to the right -- the lack of tolerance and hostility toward foreigners in the United States -- is a serious threat to the United States' economic dominance of the world. But it's not going to be India or China, according to you, right?
I don't think the economic threats are China and India. I think that's been way overblown by people who run the United States' international and security policy, who see the world in terms of big countries.
The global competition for talent actually pushes competitive advantage down to the regional level. Not to say that Canada is going to overtake the United States, but Toronto, Vancouver, Montreal are major immigrant gateways where people can live their lifestyle and build economic opportunity. Australia has the largest percentage share of immigrants in the world and the largest share of foreign students in its major cities, Sydney and Melbourne, and even in its smaller cities like Perth and Brisbane. I think of what's happening in places like Amsterdam, Stockholm, and certainly what's happening under the leadership of the new prime minister in Spain.
What is likely to happen is that the society that can do the three Ts is going to figure this out. And that place will become just like the United States [in the early 20th century]. Britain had a much stronger science and Germany had much stronger technology, but as the United States, under the leadership of Roosevelt, overcame its class divide and built an industrial society, it created a tremendous level of social cohesion.
I hope the United States could regain this advantage, but I'm nervous that this division is so deeply ingrained in our country now. It's in that sense -- not the economic sense -- that I fear that we may be a declining power. What I fear is that we may not have the social cohesion anymore and we'll end up fighting one another instead of building a stronger more creative economy and society.
But isn't that precisely the reason why so many people, especially in the media, are so complacent? When you look ahead to, say, 2020, the United States will still be number one in economic growth. Our attitude is that as long as we are number one, we'll be fine.
I think that that's the box we're in. Anyone who travels around the world sees very quickly that the United States is no longer the sole number one as it was when my parents were young. Other countries -- Belgium, Switzerland, Sweden, Japan, Korea, certainly Australia and Canada, and now the great emerging countries, like India and China -- have caught up. There's no longer this extraordinary gap between Americans and the rest of the world.
We believe, at the highest level, that our military power will save us, but it won't and it can't. I think that this world, like you said, is a much more multi-centered, multi-polar world where people no longer have this one choice, America, in terms of where to live. And the other thing is that because we're a big and somewhat isolated and insulated country, they tend to say: Well, if some Indian people, Asian people, Europeans don't come here, that's fine; we're a big country. No one understands that creative talent is now spread completely around the world. And what's given us our advantage and our lifestyle is the fact that we've attracted the best of the best of the best from everywhere.
Now from the perspective of a global citizen it may be better for the world to become a much more multi-polar, much more multi-centered place. But I think from the point of view of America, if we fail to attract those kinds of folks in the future, our standard of living will doubtless decline. I think the handwriting is on the wall when 50 percent of America's computer scientists, engineering talent at the graduate level, of people who work in cellular biology hail from foreign countries.
You can talk all you want about a budget deficit and a trade deficit, but the biggest deficit facing America in the future is its "talent deficit."
Yeah, the skilled labor gap. But that sounds counter-intuitive to the many Americans who see high-skill jobs being sent abroad.
We have a horrendous talent gap. We cannot run our economy without importing foreign talent. Because most Americans see bodies, and they say we have a lot of people here, we can just fit the bodies into the jobs.
This talent shortage facing our country means that we have to do two things. One, we have to make sure we remain an open country in the short run, to make sure that talented people from around the world can help us grow. And secondly, we've got to fix our education system, but that's a much longer term problem.
So what does it mean to create a genuinely inclusive creative economy?
What I have to say is that we have to think about this as moving from a creative, or technology- or knowledge-based economy to a creative or technology- or knowledge-based society. The reorienting axis of that is this fundamental idea that each and every human being is creative and has to be valued as such.
We're, at best, harnessing the creative capacities of 30 to 40 percent of our workforce, and I think no more than maybe 20 to 30 percent of those people's creative faculties -- because most of us are bored. The real nexus of competition in the future will be those communities that engage much more of that creative energy.
That's where the book kind of shifts gears. It says that it's not enough to compete for high-end talent, to keep your doors open to the best of the brightest kids from China, India, Europe, or North America. The real economic power, if you will, in our time is going to come to those cities, regions, countries that can dig down very deeply and include many, many, many of their own people and other people from around the world in this creative economy.
To achieve this, we've got to do three or four things, We have to massively increase our investments and creativity, massively invest in science, technology, engineering, culture. But we need to do so in a way that's not only oriented at the best and the brightest, but harnesses the energy of everyone. We need a creativity GI Bill. And the way we get kids involved in these sports programs, like soccer and tennis camps, we have to do that for their creativity.
The third thing we need to do is we have to remain an open society. We cannot externally and internally be viewed as a closed society -- it will be disastrous to us and disastrous to the world.
The fourth thing we need to do is a challenge that virtually no one in America is talking about. We have to understand that there are two unsung and neglected areas of economic competition, of economic growth. One I mentioned was tolerance and diversity; the second is cities and urban policy. We need an urban policy that not only improves our cities, not only makes them stronger, but makes them denser -- an urban policy that really focuses on building dense, thriving, vibrant cities. Not because it's a good or ethical thing to do, but because we know that urbanization economies and density are fundamental drivers of economic growth.
But you also point out that these creative centers -- these cities -- themselves are becoming unsustainable, right?
You're in San Francisco, right? I'm in Washington D.C. We are connected in two of the epicenters of creative America. Look at the housing affordability problem that I talk about. Look at the income inequality. What is happening is that we're creating these tremendous peaks of economic innovation, creativity, success; and those are excluding more and more people.
I talk in the book about young people. How are we going to reproduce this creative economy? When I was young, my college friends who worked in the restaurant industry can buy a little condo apartment somewhere in the San Francisco Bay Area. When people were coming out of graduate school in the 60s -- moving to Berkeley, moving to the UC, San Diego, moving to MIT -- they could buy a house. Now a young person has to live out in the hinterlands. How can a young person now be a professor at the University of California, MIT, UCSD? They can't afford to buy in.
So what this does is create an economy where the already-rich colonize these places and entrepreneurial instinct and input and creativity has to move to elsewhere. We've created these very concentrated economic centers, which not only create all kinds of uneven development, but also hold within them conditions that threaten their own success.
Right, because they can't even sustain the talent that they attract, then they risk losing that talent?
What I fear is that this creative impetus can migrate globally. It's not likely to migrate back to communities in Cleveland, Pittsburgh, Oklahoma City, or Tulsa. These places are no longer are competing against San Francisco and Boston, and Austin and Seattle. They're competing with Sydney, and Melbourne, Vancouver, Toronto, Dublin, Amsterdam, Stockholm. We keep looking at our great creative advantages as invincible when we have rates of housing affordability and income, inequality we haven't seen since the Great Depression.
People like my grandparents or like you came to the United States -- even 20 years ago -- saying this is the place where I want to be. Now the United States is no longer that place. That's the important thing.
When we were in Finland, every Finnish person we met in their 30s and 40s had been a high school exchange student in the United States. None of them were planning to send their kids to the United States through the high school exchange. That really struck me because they were saying that the United States is not a very friendly place to foreigners. It's no longer the center of the universe -- there are lots of other places.
I guess what my book is saying is that it's not so much the trade and investment and capital flows that are the critical determinant of our time, it's the globalization of people.
You seem to end the book with a call for a Global New Deal. Is that what it's going to take in the end to build this creative society?
We don't need any national New Deals anymore. We have to have a global conversation about the mobility of people, mobility of talent, and what it will take to overcome the situation of which only 25-50 places matter. You can't build a stable world economy without it. All these problems -- from terrorism to income inequality, disenfranchised youth to the rise of religious fundamentalism -- are all fundamentally linked to this terrible situation.
It's not simply just globalization. It's the rise of this incredibly potent new economic force called the creative economic revolution, where people become means of production. That means that the people whose minds are ready to become the means of production or have the intellectual capital to do that do relatively fine, people who don't will get left terribly behind. (Link)
Excuses, Excuses: Why Arab Leaders Play Up the Arab-Israeli Conflict.
Another question, "What is the fastest way to achieve development in the Arab world?", had 67 percent choosing "Ensuring the rule of law through justice and law enforcement", 23 percent chose "Enhancing freedom of speech", and 10 percent chose "Resolving the Arab-Israeli conflict".
Fly C.I.A. Airlines... Travel is Free, but We Control the Destination
Measuring value with a floating currency
Which leads to a question that I have not the skill to answer: What if we moved to an energy standard for currency? For example, 10 cents per kilowatt hour. I know the problems with a gold standard but an energy standard would function differently, in that it is a currency that is consumed when used. The government must have a large energy production infrastruture to pull this off, but I am curious to know the effects.
The United States abandoned its policy of stabilizing gold prices back in 1971. Since then the price of gold has increased about 1,000%, while consumer prices have increased only about 250% or, roughly, a quarter of the increase in the gold price. If we had tried to keep the price of gold from rising, this would have required a massive decline in the prices of practically everything else - deflation on a scale not seen since the Depression. This does not sound like a particularly good idea.
What the United States did in 1971 was default on its gold obligations to foreign creditors, the biggest act of bad faith in history theretofore. This default, and the making of the dishonored debt money, was the cause of the destabilization of interest rates, as well as the explosive growth price volatility that has been plaguing the world ever since, causing ever greater economic distress. Paul Krugman's euphemism in calling the greatest default ever "the abandoning of the stabilization policy of the gold price", and calling the promotion of the dishonored paper as money "a measure designed to prevent deflation and the decline of prices" is doublespeak, the hallmark of dismal monetary science. Krugman suggests that an equilibrium now obtains that didn't before. What we have is not an equilibrium; rather, it is a burgeoning disequilibrium, one that will continue its devastating course. We must remember that the financial annals do not record a single case in which a default has not been followed by a progressive increase in the discount on the paper of the defaulting banker, until it reached 100% - possibly several years or even decades later. Obviously, the defaulting banker would try to slow down the process by hook or crook. However, ultimately economic law was to prevail and the remaining value of the dishonored paper would be wiped out. There is no reason to believe that the dollar default will end differently.
Suppose that the current price of gold is $420. Let us calculate the discount on the dollar. At the time the US defaulted on its gold obligation to foreign creditors in 1971, $35 was the price of 1 ounce of gold . Therefore the gold value of the dollar was 1/35 oz. If the gold price is $420 per oz, then the current gold value of the dollar is 1/420 oz. So in terms of gold, dollar has lost: 1/35 - 1/420
1/420 = 1/(35 times 12) = (1/35)(1/12). Therefore the loss is
1/35 - 1/420 = 1/35 - (1/35)(1/12) = (1/35)(1 - 1/12) = (1/35)(12/12 - 1/12) = (1/35)(11/12) = (1/35)(0.9166)
In percentage terms, the loss, also known as discount, is 91.66%. Not yet 100, but close enough. Small comfort, as the last 8.33% of the loss, coincident with the death-throes of the dollar, is likely to be most violent and painful, revealing the full extent of the devastation. Remember, the loss affects not only cash holdings, but all dollar-denominated assets, including bonds, annuities, pensions, insurances, endowments, etc. As the discount on the dollar approaches 100%, the dollar price of gold will approach infinity. To assert that the dollar is going to escape this fate is tantamount to asserting that the laws of economics and logic have been turned upside down, and the penalty for default has been replaced by reward in perpetuity.
The discount as calculated above in terms of the price of gold is the leading indicator of the depreciation of the dollar. It is pretty accurate in registering the loss of purchasing power in terms of a wide array of other goods as well. However, it is important to note that the discount on an irredeemable currency, although obviously approaching 100%, never does so along a straight line. It goes through fits and starts, sprinkled with ever more violent reversals.
Therein lies a great danger. Reversal confuses people and lulls them into believing that the currency has reached the end of skid row, and is now entering a respectable neighborhood. The explosive growth in the volatility of interest rates and prices is finally over. More astute observers will, however, realize that low interest rates and subsiding volatility won't cure the malady, the cause of which, default, has not been acknowledged, still less removed. Nor will asset bubbles cure it. Volatility is bound to return with a vengeance. Like the wrecker's ball, it will keep swinging until the whole financial structure is reduced to rubble.
A reliable measure of destruction is the so-called "notional" size of the derivatives market trading interest-rate futures, options, and swaps. It now stands at a quarter of a quadrillion dollars and is increasing at an accelerating pace. The word "notional" is a euphemism suggesting that there is nothing to fear about it. As if it were a kind of financial mirage. Well, there is plenty to fear about. It is real enough as it measures the commitments of bond speculators, most of whom are betting that the rate of interest will keep falling in the US, too, as it has been in Japan. The bets are well grounded. They reflect expectation that interest rates will be driven by the Fed into the bargain basement. This is what the Fed did in the 1930s, causing the First Great Depression. This is what it is doing now, causing the second. The Fed buys bonds in the open market when it wants to combat deflation and falling prices, and also buys them when it wants to combat inflation and rising interest rates. If the Fed ever sells bonds, the occasion is few and far in between and it is for window-dressing purposes only. Speculators know this and think that they can't go wrong if they try to preempt or emulate the Fed in buying bonds.
This raises the question: if the deflationary danger caused by the Fed's open market operations is so great because it makes bull speculation in bonds risk free, then why don't economists warn us about it? The answer is that dismal monetary science blocks the free flow of information and an impartial scientific debate of the threat (which is caused by the regime of irredeemable currency alternating, as it does, between inflationary followed by deflationary excesses). During the inflationary excess, commodity speculation, and during the deflationary excess, bond speculation is bleeding the economy white, but you are not supposed to know.
It is true that a freely floating national money can create uncertainties for international traders and investors. Over a period of five years between 1991 and 1996, the dollar has been worth as much as 120 yen and as little as 80. The costs of this volatility are hard to measure but they must be significant.
It is disingenuous to say that in 1971 the US made the dollar "freely floating". What the US did was nothing less than throwing away the yardstick measuring value. It is truly unbelievable that in our scientific day and age when the material and therapeutic well-being of billions of people depends on the increasing accuracy of measurement in physics and chemistry, dismal monetary science has been allowed to push the world into the Dark Ages by abolishing the possibility of accurate measurement of value. We no longer have a reliable yardstick to measure value. There was no open debate of the wisdom, or the lack of it, to run the economy without such a yardstick.
To throw away gold, a rigid yardstick, and to replace it with a shrinking and elastic yardstick, the dollar, idiotic as though it is, does nevertheless have a rationale as well as a precedent. In less enlightened times the length of the "foot", as the name of this particular yardstick suggests, was adjusted every time the king died. If the new king's foot was smaller, then the new official unit of length was made shorter. This allowed rope-makers, spinners, and weavers to sell a smaller amount of merchandise for the same amount of money. In this way inefficient producers were favored at the expense of the consumers who were legally short-changed. The floating dollar does exactly the same. It shelters the inefficient producer who is enabled to sell the same quantity of products at progressively higher prices, to the detriment of the consumer at large.
During the course of his travels to many strange lands, Gulliver also visited the Country of the Mad Scientists. A government spokesman took him on a guided tour in order to acquaint him with the marvelous achievements and great projects of that land. Among others Gulliver was shown a new procedure under development whereby the erection of buildings would start with the construction of the roof rather than the foundations and proceed from top down. In this way shelter was provided for construction workers in inclement weather.
In another part of Science City, the capital, Gulliver visited an experimental farm where research scientists were simultaneously breeding woolless sheep and milkless cows. They were motivated by the idea that the output of sheep milk could be increased greatly through the elimination of wool growing, thus making cow's milk redundant. Wool for clothing could then be replaced by the sturdier cows' hair, that could also be shorn more efficiently.
There was one invention in particular that fascinated Gulliver more than any other. They called it "floating time". At the Institute of Horology, the director explained that the idea of fixity of time is old-fashioned, even reactionary. In this respect, musicians have been more progressive than scientists. They had long ago overthrown constant time, leaving its variation to the discretion of the conductor. Now he could set free the emotive energy implicitly present in the music, the release of which was forbidden by an earlier narrow-minded and reactionary age.
Floating time was implemented by connecting Big Ben in one tower of Parliament Building to Big Barb, the weather vane, in the other. Every time the direction of the wind changed, turning Big Barb one way or another, so did time, as indicated by a slow or a fast Big Ben. The director proudly pointed out that in this way their timepiece was imbued with cosmic power present in the universe, including sun spots and sun flares that have so far been foolishly ignored by clockmakers, but not by the wind.
The director was going to let Gulliver inspect the ingenious mechanism that made floating time possible. It would allow the Chairman of the Board of Time Reserve to overrule the prevailing wind whenever justified. At the Parliament Building they ran into the picket line of workers demanding higher wages. At that moment the town clerk announced that the direction of the wind had just turned Westerly, meaning that Big Ben would run fast, cutting the hour down from 60 minutes to 50. The workers burst into joyous cheering. They understood that the working day has been instantaneously shortened 16% by the change of the wind, without reduction in pay. The strike was called off. The director turned to Gulliver and winked: "See what I mean? Floating time is helpful even in settling labor disputes!"
The great 20th century economist Ludwig von Mises famously predicted, shortly after the consolidation of Bolshevik power, that unless private ownership of the means of production was re-established, the economy of Russia would collapse. Without valid market prices for the means of production, businessmen could not do the necessary economic calculations as to what, when, and where to produce, and how much to invest in production facilities, so rational allocation of scarce resources was no longer possible. For a while the economy could limp along but, eventually, the compounding of bad economic decisions would lead to so great an economic distortion that sudden death would become inevitable. Well, it took three and a half score of years to reach the threshold beyond which economic abuse caused by bad decisions could no longer be tolerated, and the prophecy was duly fulfilled.
Mises made another famous prediction. If the United States left the gold standard, and failed to stabilize the dollar in terms of gold soon thereafter, a "crack-up boom" would follow and the dollar would lose all its purchasing power, first internationally, then domestically. This prophecy has not yet been fulfilled but, as the Soviet example shows, sometimes you have to be patient when waiting for Mises's predictions to come true.
Unfortunately, Mises justified his prophecy about the dollar in terms of the Quantity Theory of Money, which is a linear model and is not applicable in a non-linear world such as ours. He should have argued in exactly the same way as he did in predicting the demise of the Soviet Union. If the US threw away the yardstick measuring value, namely the gold dollar, then businessmen could not do the necessary economic calculations as to what, when, and where to produce, and how much to invest in production facilities. So rational allocation of scarce resources would no longer be possible. For a while the economy could limp along but, eventually, the compounding of bad decisions would lead to so great an economic distortion that sudden death would, in the fullness of time, become inevitable. We don't know where the threshold is, beyond which the economic abuse caused by bad decisions can no longer be tolerated. What we do know, however, is that economic abuse cannot continue indefinitely, as the Soviet example so convincingly demonstrates. (Link)