28 September 2007
Packer, Gelb, Havel and Greenspan
In his article “Planning for Defeat,” in The New Yorker of September 17, 2007, George Packer shows how important it is to distinguish between Sunni Muslim Al Qaeda terrorists in Iraq and the traditional faction that has displayed the “Sunni Awakening” there. The tribal leaders of the latter sect now have adopted the occupying U.S. as their guarantee of political and economic rights in the Iraq it leaves behind. Now that Saddam is gone, they have no other choice.
Al Qaeda was attracted to Iraq in response to the American invasion. The terrorists dispute that the U.S. has a right to go where it likes in order to impose its will. Resentment of the effects of that attitude on Saudi Arabia was one of the rationales of the 9/11 attackers. As Les Gelb reminded us in his review of the book on the Israel lobby by Mearsheimer and Walt in the September 23, 2007, New York Times, it was Iranian resentment of the U.S. overthrow of Mossadegh and continued propping up of the Shah that led terrorists to seize the American Embassy in Tehran.
It is not surprising that a humanist like Vaclav Havel would agree in his new book, To the Castle and Back, that removing Saddam from the scene was justified, even necessary. But, as Alan Greenspan perceived in his book, The Age of Turbulence, the invasion of Iraq had more to do with oil than with human rights. Not the sort of concern that troubles Mr. Havel.
In his article “Planning for Defeat,” in The New Yorker of September 17, 2007, George Packer shows how important it is to distinguish between Sunni Muslim Al Qaeda terrorists in Iraq and the traditional faction that has displayed the “Sunni Awakening” there. The tribal leaders of the latter sect now have adopted the occupying U.S. as their guarantee of political and economic rights in the Iraq it leaves behind. Now that Saddam is gone, they have no other choice.
Al Qaeda was attracted to Iraq in response to the American invasion. The terrorists dispute that the U.S. has a right to go where it likes in order to impose its will. Resentment of the effects of that attitude on Saudi Arabia was one of the rationales of the 9/11 attackers. As Les Gelb reminded us in his review of the book on the Israel lobby by Mearsheimer and Walt in the September 23, 2007, New York Times, it was Iranian resentment of the U.S. overthrow of Mossadegh and continued propping up of the Shah that led terrorists to seize the American Embassy in Tehran.
It is not surprising that a humanist like Vaclav Havel would agree in his new book, To the Castle and Back, that removing Saddam from the scene was justified, even necessary. But, as Alan Greenspan perceived in his book, The Age of Turbulence, the invasion of Iraq had more to do with oil than with human rights. Not the sort of concern that troubles Mr. Havel.
27 September 2007
Democratic Corporations
There is more to the controversy over shareholder rights than the rivalry between management-selected boards of directors and activist hedge fund shareholders regarding control over long-term investment decisions. The 19th and 20th Century corporations that Lynn Stout limns in the Wall Street Journal of September 27, 2007, undertook huge sunk-cost investment projects mainly because of the vision of their founders, the controlling shareholders. Their shares became broadly owned through the market only because of the success of their decisions, and the desire of public shareholders to invest in their furtherance.
On the other hand, shareholders have always had and continue to have the right to sell their shares on the stock market if they lose that desire or their belief in the vision of the leaders of the corporations in which they have invested. The true determinant of the success of U.S. corporations compared to those of other countries, and in particular the U.K., is not the method of corporate governance but the serendipity of America’s endowment in natural and human resources. Moreover, the aggrandizement of corporate power is precisely not the objective of the shareholder democracy movement, but its opposite.
Advocates of the SEC’s “proxy access” rule are mistaken, nevertheless, because they ignore the much more effective mechanism that exists for protecting the value of shares traded publicly. If a board of directors refuses to compel corporate management to adhere to the vision that gave value to the corporation’s shares in the first place, then the public should sell their shares. Even activist hedge fund shareholders have to rely on the market for the ultimate value of the assets they trade.
There is more to the controversy over shareholder rights than the rivalry between management-selected boards of directors and activist hedge fund shareholders regarding control over long-term investment decisions. The 19th and 20th Century corporations that Lynn Stout limns in the Wall Street Journal of September 27, 2007, undertook huge sunk-cost investment projects mainly because of the vision of their founders, the controlling shareholders. Their shares became broadly owned through the market only because of the success of their decisions, and the desire of public shareholders to invest in their furtherance.
On the other hand, shareholders have always had and continue to have the right to sell their shares on the stock market if they lose that desire or their belief in the vision of the leaders of the corporations in which they have invested. The true determinant of the success of U.S. corporations compared to those of other countries, and in particular the U.K., is not the method of corporate governance but the serendipity of America’s endowment in natural and human resources. Moreover, the aggrandizement of corporate power is precisely not the objective of the shareholder democracy movement, but its opposite.
Advocates of the SEC’s “proxy access” rule are mistaken, nevertheless, because they ignore the much more effective mechanism that exists for protecting the value of shares traded publicly. If a board of directors refuses to compel corporate management to adhere to the vision that gave value to the corporation’s shares in the first place, then the public should sell their shares. Even activist hedge fund shareholders have to rely on the market for the ultimate value of the assets they trade.
24 September 2007
Greenspan’s Reticence and Nuremberg
Appointment to even as prestigious a position as Federal Reserve Chairman does not carry with it the obligation to lead public opinion in one direction or another according to one’s conscience. That is carrying Nuremberg Principles too far, although the press sometimes acts as if its own obligation to tell the public the truth applies to everyone else.
In his new book, The Age of Turbulence: Adventures in a New World, Alan Greenspan admits to having disagreed with certain policies of the Bush Administration that he did not publicly rebuke. One of them, Bush’s veto-less acceptance of Congress’s budgetary profligacy, directly impacted on Greenspan’s primary responsibility—defending the international value of the dollar. Were it not for America’s real estate boom, private equity and hedge fund frenzy, and the improved productivity overhang from the Internet bubble, the budget deficits caused by the federal fiscal policies of the Bush era could have crippled the economy.
I suspect that the former Federal Reserve Chairman is unwilling to admit that he was lucky to have been able to behave unobtrusively, speak obscurely and still successfully manage the financial markets. Peggy Noonan’s criticism of Greenspan’s official reticence on that and other issues in the Wall Street Journal on September 22, 2007, therefore, is misplaced. A public official is not obligated to resign, or even to protest publicly, when he or she disagrees with an administration policy. If he judges that he can still fulfill the duty the public has entrusted him with, he can justifiably remain in office until removed by the public or by the administration.
Let us presume that Mr. Greenspan expressed his views to the President confidentially on the deficit, the Iraq War, and other contentious issues; he may also have dissented from the administration’s policies as a private citizen at the ballot box. It is not dishonest to curry the favor of one’s boss, by refraining from public disagreement, in order to be renominated for a position in which one believes he is making a difference, sometimes in spite of the boss’s other decisions.
Appointment to even as prestigious a position as Federal Reserve Chairman does not carry with it the obligation to lead public opinion in one direction or another according to one’s conscience. That is carrying Nuremberg Principles too far, although the press sometimes acts as if its own obligation to tell the public the truth applies to everyone else.
In his new book, The Age of Turbulence: Adventures in a New World, Alan Greenspan admits to having disagreed with certain policies of the Bush Administration that he did not publicly rebuke. One of them, Bush’s veto-less acceptance of Congress’s budgetary profligacy, directly impacted on Greenspan’s primary responsibility—defending the international value of the dollar. Were it not for America’s real estate boom, private equity and hedge fund frenzy, and the improved productivity overhang from the Internet bubble, the budget deficits caused by the federal fiscal policies of the Bush era could have crippled the economy.
I suspect that the former Federal Reserve Chairman is unwilling to admit that he was lucky to have been able to behave unobtrusively, speak obscurely and still successfully manage the financial markets. Peggy Noonan’s criticism of Greenspan’s official reticence on that and other issues in the Wall Street Journal on September 22, 2007, therefore, is misplaced. A public official is not obligated to resign, or even to protest publicly, when he or she disagrees with an administration policy. If he judges that he can still fulfill the duty the public has entrusted him with, he can justifiably remain in office until removed by the public or by the administration.
Let us presume that Mr. Greenspan expressed his views to the President confidentially on the deficit, the Iraq War, and other contentious issues; he may also have dissented from the administration’s policies as a private citizen at the ballot box. It is not dishonest to curry the favor of one’s boss, by refraining from public disagreement, in order to be renominated for a position in which one believes he is making a difference, sometimes in spite of the boss’s other decisions.
04 September 2007
Turning the Tide in Iraq
It is deeply suspicious that the defense of the U.S. military’s surge strategy in Iraq in the September 4, 2007, Wall Street Journal should be written by the President of the Institute for the Study of War. Without such adventures as the U.S. invasion of Iraq, what would Ms. Kagan’s institute have to study?
She calls on us to continue to fight Al Qaeda in Iraq, but it turns out that the definition of that foe is, really, Sunni resisters to American occupation. She also calls on us to continue fighting Iranian partisans in Iraq, but it turns out that her definition of that foe is, really, Shiite resisters to American occupation. What remains is sectarian strife, i.e. those factions in Iraq who fight each other.
Turning the Tide in Iraq will only happen when the U.S. pulls out. Sadly, liberating the Iraqi people from the geopolitical straitjacket imposed by the British following WWI was the only benefit of the Bush invasion of that country. It will have painful consequences that neither the U.S., U.K., nor U.N. can forestall. Better to get it over with. Maybe then the benefit that conspiracy-theorists have claimed as being behind the invasion—securing clear access to Iraq’s oil wealth—will actually be achievable.
