Friday, May 31, 2019

Letter: DeDollarization


A new word has appeared in international news lately – dedollarization. It refers to the process whereby foreign countries, especially Russia and China, stop using US dollars in their trade. Dedollarization may seem like a bad thing to those in the ‘Make America Great Again’ crowd, but I will argue that it isn’t. Rather, I see dedollarization – not tariffs or a trade war – as the only way to get rid of the trade deficit and bring more jobs back to America.

America has the world’s largest trade deficit because it consumes more than it produces. Under the old system of the gold standard, trade deficits were impossible – exports had to balance imports, or else a country would run out of gold. But then, the Federal Reserve gained the ability to print an unlimited amount of dollars and export its paper currency in lieu of actual goods. Thus, exports no longer had to balance imports, and there could be a net loss of jobs overseas.

In effect, what happened was that the Federal Reserve replaced the American worker. Foreign laborers now do America’s work, in exchange for dollars that the Fed has created out of thin air and lent to the government or to monied elites. Ordinary Americans are left out in the cold.

But America will lose its ability to consume more than it produces when other countries dedollarize. And I will not be lamenting the end of American hegemony. If being an ordinary country means that America must rely on its own workers to make its own goods again, I see that as a good thing.

Tuesday, May 28, 2019

America Would Lose A War With Iran

The recent wars of the United States have all been fought against weak countries, and even so, results have been mixed. If the Americans lose their calm and take on a tougher foe like Iran, the results would be catastrophic.
The US government has recently started another round of its usual sabre-rattling towards Iran, this time going so far as to announce a troop buildup in the Middle East. The war hawks in the administration haven’t gotten their way yet, but that won’t stop the President from bragging about how he could win a war, if he needed to; see, for instance, his recent tweet:

“If Iran wants to fight, that will be the official end of Iran. Never threaten the United States again!”

All of this raises the question: is this just bluster, or does Mr. Trump think he could actually put an end to Iran?

My own belief is that America would lose a war with Iran.

Just to be clear, I am not talking about a nuclear war, in which the United States could turn any country, Iran included, into glass – the only trouble is that, while Iran itself may or may not have a nuclear deterrent, Russia and China certainly do, and they would not tolerate an American first strike against their neighbor.

So that leaves two options for what America could do to Iran: Either bomb Iran with conventional weapons from a safe distance, or else invade on the ground.

The trouble with bombing is that, unlike the Taliban or ISIS, Iran has effective anti-aircraft weapons, especially the Russian S300 surface-to-air missile system. Missile for missile, it is not as good as America’s Patriot SAMs, but the Russian missiles are cheaper (hence more abundant) and fully up to the job of area denial.

The United States is no longer capable of the sort of logistics seen in World War II, where tens of thousands of combat aircraft were produced and shot down every year. Instead, the current arsenal, which is the result of decades of production and no significant combat losses, consists of about 900 F-16s, 300 A-10s, 200 each of F-15s and F-22s, 100 F-35s, and smaller numbers of other planes.

When fighting the Taliban and ISIS, more aircraft were lost to mechanical failure than to enemy action. That won’t be the case with Iran. America is no longer capable, either psychologically or economically, of losing aircraft every day.

And any plan to invade Iran with ground troops would be dead in the water. Ever since the German offensive was turned back at the Ardennes, the US military has been operating under the Jupiter Complex – every operation involves raining fire on the enemy out of the sky. Without air superiority, US ground forces can do nothing.

Add to that the fact that Iran has twice the population of Afghanistan or Iraq, a large and mountainous country to defend, and better equipment and training than the weak enemies which America is accustomed to fighting, and you can see how much worse this would turn out than any of the previous middle eastern wars.

Granted, American technological superiority is still great enough that Iran would lose more men in every battle. But the Iranians can afford this – they would, after all, be defending their families, homeland, and religion, while for America, Iran would be just one of the many far-away places which the average citizen can’t find on a map, but in which the military must spread itself in order to defend America’s global hegemony.

And then we need to look at Iran’s offensive capabilities. The Iranian navy has purchased Klub missiles from Russia; these high-tech cruise missiles can evade radar and most other defenses by flying just 20 meters above the water. They can strike both land and sea targets, and can be launched from any military vessel – or out of a shipping container on a civilian ship – or from a truck, or a warehouse, or a hole in the ground – you get the idea.

One hit from a Klub missile would be enough to sink an American carrier, which is how you can know that tensions are hottest when America’s aircraft carriers sail out of a 500 km range from Iran.

But even if the Americans manage to keep their carriers afloat (at the cost of keeping them too far from the land battles to offer much support) the entire gulf coast of Saudi Arabia would be open to attack. The infrastructure necessary for shipping oil to the US would be demolished, and the bottom would fall out of the American economy.

And even though the Iranians wouldn’t be able to get their own vessels anywhere near American shores, there is no way to know that they don’t already have a few klub missiles sitting in automated containers at the bottom of the Potomac estuary, waiting for the command to empty the ballast tanks, pop up to the surface like corks, and pull off a quick decapitation strike against Washington DC, just as the politicians are settling in for another day of business-as-usual.

In conclusion, going to war with Iran is a very bad idea. And it’s also completely unnecessary. The Iranians do not want a war – they aren’t suicidal, and as I said before, they stand to take a lot more casualties than we would.

And while they hate us, it isn’t like we haven’t given them reasons to. The CIA meddled in Iranian politics for decades before the Revolution of 1979. And while Americans frequently talk about the time when the Soviet Union downed KAL-007 with the loss of all passengers and crew, they rarely hear that in 1988, the Americans did the same thing to Iran Air flight 655 in 1988, when a missile cruiser shot down an Airbus A300 that had ignored orders to identify itself, even though it was in Iranian territory at the time.

Americans will almost never hear about this, but every Iranian schoolchild knows the story – and the anniversary of the event, July 3, is a traditional day for chanting “Death To America!”

So America isn’t that innocent. And Iran isn’t that guilty. Their human rights record looks poor by European standards, but it doesn’t hold a candle to what Saudi Arabia, America’s favourite middle eastern country, manages to get away with. The Iranians will execute people for drug trafficking and various sex crimes, but they don’t behead teenagers for showing up to protests. And they don’t hide bodies in their embassies. And they didn’t wait until 2017 to let women drive.

My conclusion? America should stop demonizing Iran. And stop showing favouritism to Saudi Arabia. And stop rattling sabres at Iran – because if that particular rivalry escalates into a shooting war, the Americans will lose..

Friday, May 10, 2019

Betting on the Election - Part II

The real differences between the two dozen or so Democrats seeking the presidential nomination in 2020 are trivial. But it’s still a lot of fun to speculate on the outcome. For the benefit of anyone betting on the election, I’ll share my odds.
So far, 22 Democrats have announced their bids for the Presidency. In my last post, I described the probabilities I had assigned to the Democratic long-shots. This time, I’ll talk about the heavyweights, starting with the Senator Kamela Harris.

Kamala Harris – 1 in 12

Harris has a strong fundraising operation and is doing well in the polls – as of my writing this post, she stands at fourth place in the RealClearPolitics national average, and I’m giving her the fourth spot among potential nominees.

Harris’ advantages are fairly straightforward: She already holds an important office – Senator from California – with more constituents than anyone else except the President and Vice President. She is also young, energetic, and female, which is exactly what a big fraction of the Democratic base wants in a champion to take on President Trump.

One of the few criticisms against Harris to come from the Left is that, in her earlier career as an attorney general, she has done things some things that anger the criminal justice reform movement. I do not think this will be a big deal; for instance, it was Hillary Clinton who came up with the concept of a ‘super-predator’ back in the ‘90s, and she still got the nomination last time around.

But even though Harris looks strong and popular at present, it’s still too far out to say whether her day in the sun will last. Overall, I rate her chances at one in twelve.

Elizabeth Warren – 1 in 10

Warren, like Harris, is a female senator from a liberal state with solid Democratic credentials and a burning desire to take on the Donald. She offers a somewhat different flavour of leftism than Harris does, as Warren is older older and more willing to promise economic upheaval, but for the most part, her advantage lies in her better name recognition.

RealClearPolitics puts Warren at third place in their polling average, and I put her at third place in my odds chart, with one chance in ten of getting the nomination.

(And just in case you’re wondering, actual Democrats don’t care about the Pocahantas fiasco, just like actual Republicans don’t care how many times Trump puts his foot in his mouth.)

Bernie Sanders – 1 in 5

Bernie Sanders is in a strong position going into this primary. People know who he is and what he stands for. There is a strong suspicion among the Democratic base that if Sanders had been nominated last time, Donald Trump would never have become president. Most of the voters want a firebrand this time around, and Bernie Sanders is willing to be their man.

But Sanders also has some liabilities. Although he got a big head start with his 2016 popularity, there is also a huge number of rivals competing for the role of firebrand. Sanders doesn’t appeal to the intersectionality-mongers – apparently, ‘Jew’ doesn’t qualify as an underprivileged minority anymore – and the ‘Socialist’ label also scares some people away. It shouldn’t – it’s a meaningless label, since all Democrats want to expand the government – but it still does. With all that in mind, I estimate Sanders’ chances at one in five.

Joe Biden – 1 in 4

Imagine the following scenario: A man from one party wins the presidency, and he is hated by the other party’s base. The new president is accused of running the country dictatorially and wrecking American democracy at every turn. His unpopularity drives a surge in political participation by his enemies, huge rallies and protests, and record voter turnout in the midterms. All sorts of interesting characters cycle through the national stage as the opposition party’s reenergized base seeks leaders who can channel its outrage.

Then, the party nominates the most boring and conventional of the candidates on offer.

It doesn’t seem likely, from an intuitive standpoint, but it’s what happened with the Republicans in 2012, when they nominated Romney, and it’s what Biden is hoping will happen with the Democrats in 2020.

Despite all his baggage and his inability to elicit enthusiasm from his base, Biden is still leading in the polls. He has plenty of support from the monied interests and business-as-usual Democrats who just want the country to continue its march to the left with a minimum of drama.

If the Democratic voters who want someone younger and more energetic can coalesce around another candidate, then Biden will be easily beatable; if they can’t, he will likely be the nominee. With this in mind, I’m saying that Biden’s chances are one in four.

Wednesday, May 8, 2019

Betting on the Election - Part I

The real differences between the two dozen or so Democrats seeking the presidential nomination in 2020 are trivial. But it’s still a lot of fun to speculate on the outcome. For the benefit of anyone betting on the election, I’ll share my odds.
So far, 22 Democrats have announced their bids for the Presidency. Back in 2016, the Republicans ran 17 people and got what seemed like the wildest ride ever – but now, the Democrats have one-upped them with their own Hunger Games Primary. This shouldn’t really surprise anybody; the Democrats have been in a state of hysterical overdrive since 9 Nov. 2016, and the change to take on President Trump is the most coveted thing in the world for a Democrat.

Without further ado, here are my odds for eleven of the more serious Democratic contenders. I’ll handicap the smaller contenders in this post, and the larger ones in Part II.

Andrew Yang – Zero

Andrew Yang is a businessman who has never before held public office, but who has lapped up some media attention with his promise of a ‘Freedom Dividend’ - $12,000 per year of guaranteed income to every American over the age of 18. Despite his success as an internet meme, Yang is only polling at 1% - it seems that even most Democrats shy away from the Freedom Dividend once they realize that Yang has also called for a $2½ billion/year VAT tax to fund it. And then there is the fact that Yang never says you have to live in America to claim the money, which raises the question of whether an 18-year-old could simply move to some tropical country where the cost of living is half what it is in America and spend the rest of his life doing nothing but surf.

Also, keep in mind that when Yang first announced his candidacy, one of the issues he decided to take a stand on was… circumcision. People with a carefully reasoned policy on circumcision do not become president – they never have and never will.

My conclusion? ‘No on Andrew Yang’ is the surest bet in the history of betting.

Pete Buttigieg – 1 in 20

Peter Buttigieg, the popular young mayor of South Bend, Indiana, has had a bit of a media bubble over the past few months. Some people think that his charisma and résume (he is a Rhodes Scholar and took a leave from his mayorship to fight in Afghanistan) will give him the edge, but I doubt it. Mayor of South Bend is too small of a post from which to make the jump into the presidency.

Also, Buttigieg’s homosexuality may not go over as well as most pundits are inclined to think. Acceptance of LGBT rights seems to me to be more a matter of age than of party. Obviously, the vast majority of Democrats are supportive, as are most young Republicans. But I think that there are still enough old Democrats who dislike homosexuals to scupper Buttigieg’s chances at becoming the nominee. But he isn’t a complete nonfactor like Yang, so I’ll say his chances are one in 20.

Beto O’Rourke – 1 in 20

I have also placed Beto O’Rourke at one in 20. Like Buttigieg, Beto is charismatic, but his current position is too minor to propel him to the presidency under normal circumstances. He was a congressman from Texas until he ran for Senate against Ted Cruz and lost. Running in such a big state, against such and unpopular Republican, and coming so close got him a lot of attention, but to most people, he’s still just a media sensation. Nevertheless, it left him without enough money and name recognition to help in a presidential campaign, which is why I rate him at a one in 20 chance of becoming the nominee.

Booker, Klobuchar, Gillibrand, and Gabbard – 1 in 15 each

Senators Corey Booker, Amy Klobuchar, and Kirsten Gillibrand, and representative Tulsi Gabbard all have a better foothold in high office than any of the candidates I mentioned before. They also appeal to the intersectionality crowd and have solidly liberal politics. Although none has yet stood out as an individual, I think it highly likely that at least one of these four will make it into the primary’s final denouement next spring, appealing to the faction of the party that wants neither an old, white man nor inexperienced oddball. Hence, I’m giving each one a one in 15 chance in the primary.

And that will be all for Part I. Next time, I’ll discuss what I think are the major players: Harris, Warren, Sanders, and Biden.