Incredible lecture given to the freshmen class at Westpoint. Talks about the need for introspection and solitude to be a good leader.
Solitude and Leadership
2010-05-06
2009-12-18
Saudi Arabia: current challenges
Saudi Arabia is an important political, economic, and military ally of the US in the Middle East. Their vast oil reserves, their assistance in Global War on Terrorism, their relatively moderate political standing (compared to Iran), and their location as the spiritual home of Islam make Saudi Arabia extremely important for the long term stability of the region. The domestic situation in Saudi Arabia is dynamic and dangerous with many different groups attempting to influence and change the political situation. This paper’s thesis is that the current Saudi responses will actually destabilize the regime. This paper will look at the sources of conflict and the current Saudi responses to each. Following that discussion this paper will look at possible alternate responses.
Saudi Arabian politics is a complex system. “Complexity deals with systems composed of many interacting agents.” (Axelrod, 2000, xv) Agents are the various actors pursuing various strategies within a system (Axelrod, 2000, 4). As a framework to begin the analysis of the agents within Saudi Arabia, Misagh Parsa, in his book, States Ideologies, and Social Revolutions, offers a good categorization of the various internal groups that can exert revolutionary pressure on the existing regime: capitalists, students, clergy, and workers (Parsa, 2000, 93). For Saudi Arabia those grouping, while illustrative do not capture the dynamics of the situation. For example, within the clergy there are member who support the ruling class (the capitalists), who desire liberal reforms (the students), and who desire a return to a more ‘pure’ form of Islam (the clergy). This paper will re-label Parsa’s groups according to the aims of the group as opposed to the demographics of the group: those who prefer the status-quo, reformers, Islamists, and workers.
Those elements of Saudi Arabian society that prefer the status quo include the royal family and clergy that support the royal family. The current regime in Saudi Arabia is a monarchy under the Al-Saud royal family. The Qur’an is the constitution of Saudi Arabia and thus the country is governed under Shari’ah law. (Zuhur, 2005, 8) Saudi Arabia is rated as the seventh most authoritarian regime of 167 countries by the Economist Democracy Index. The capitalist group wants to maintain their control over the political and economic future of the country at all costs.
The next grouping is of those who prefer liberal reforms. This includes portions of the youth, liberal clergy, and the West. Although the West is not an internal actor, the pressures (intended and unintended) exerted by the West upon Saudi Arabian society are massive. This pressure causes feedback from other groups within Saudi Arabian society. Huntington captures this feedback as the “Clash of Civilizations” between the Western and Islamic civilizations. (Huntington, 1996, 110). He sees this clash as inevitable since both religions are monotheistic, universalistic, missionary focused, and see the world in dualistic ’us vs. them’ terms (Huntington, 1996, 210). The West wants Saudi Arabia to modernize and become more Western.
Similar to the Western desires, the internal elements want a consultative assembly, municipal councils, independent judiciary, equality of citizenry, freedom of media, encouraging women’s participation in society, and reform of the educational system (Zuhur, 2005, 26). These elements have repeatedly petitioned the royal family for reforms through the Letter of Demands in 1991 (Zuhur, 2005, 26) and the Strategic Vision for the Present and Future in 2003 (Zuhur, 2005, 32).
The Saudi responses to these demands have been slow. They have enacted several reforms such as the Basic Law of Government in 1992 and the creation of the majlis alshura in 1993. However, these actions are reforms in name only. The royal family still rules absolutely. If the royal family continues these pseudo-reforms Saudi Arabia will not transition into a modern Western democracy but instead into a semi-authoritarian state which is a “regime determined to maintain the appearance of democracy without exposing themselves to the political risks that free competition entails.” (Ottaway, 2003, 3).
The next grouping is those who prefer a return to a more ‘pure’ form of Islam (Islamists). This includes al-Qaeda on the Peninsula (AQP), the ‘ulama (religious leadership), and portions of the youth. Wahhabism is an integral part of Saudi Arabian Islam. It basic tenant is a desire to “purify [his] belief from degrading innovations” (Zuhur, 2005, 15) The new salafi movement adds to this purification, a concept of takfir (labeling a Muslim as being insufficiently devout). Despite the governance of the country being exclusively in accordance with the Qur’an, these groups perceive the royal family as corrupt and peddling “American Islam” (Zuhur, 2005, 8). They desire stricter observance of Shari’ah, and end to corruption, and a cessation of relations with the West and non-Muslim entities. The Islamists, like the reformers, have petitioned the government with the Memorandum of Advice in 1992 (Zuhur, 2005, 26). The Saudi government’s response to the Islamists is to dismiss those members of the ‘ulama, attack, arrest, and freeze assets of those associated with the Islamists.
The final grouping is the workers. The Shia living in the Eastern Province make up 40% of its population (Zuhur, 2005, 15). In addition, non-Saudi’s make up a large percentage of the population of the state. Both these groups do “labor that Saudi’s disdain” (Zuhur, 2005, 9) but are subject to intense discrimination and are not afforded the same rights as Saudis. These groups desire tolerance, end to discrimination, human rights, freedom, and equality of the citizenry (Zuhur, 2005, 32). The Saudi government has not responded to these demands and through a policy of ‘Saudization’ of the workforce (Zuhur, 2005, 10) has increased tensions between the Saudi and non-Saudis.
The above sections discuss the sources of conflict and the Saudi responses. The current Saudi responses will actually destabilize the regime. By enacting pseudo-democratic reforms to appease the reformers while maintaining the royal grip on power, the government is actually feeding the Islamist’s labeling of takfir. By attacking the Islamists, the government is feeding the reformers grievances related to human rights and lack of freedoms.
The basic problem is that Saudi Arabia is a non-differentiated society as defined by Binder. (Binder, 1971, 21). Any changes made to a sub-system within Saudi Arabian society will destabilize the other sub-systems due to non-differentiation. For example, giving women voting rights (a political change) will destabilize the social structure due to the Islamic interpretation of the place of women in society. Therefore, Saudi Arabia is left with an all or nothing proposition: They must either completely modernize with democratic freedoms (end to Shari’ah) and elected officials (end to the royal family) or maintain the current non-differentiated society by ruling with an iron fist (in accordance with Shari’ah) and crushing all dissent. The first option is clearly not feasible; any middle alternative brings the instability of semi-authoritarian regimes as discussed by Ottaway; leaving the final, if distasteful, option of the continuance of authoritarian rule by the al-Saud family. Bar-Yam supports this proposal with an analysis of the “trend of central control in the Islamic world” (Bar-yam, 2004, 250). Islam is total solution: government, law, and religion all in one. In an Islamic society any trend to modernization will be in direct opposition to Islam itself.
In conclusion, the Saudi Arabian government response to the current conflict within the country will actually destabilize the regime and the entire region. Saudi Arabia should maintain its authoritarian rule and crush all dissent.
Saudi Arabian politics is a complex system. “Complexity deals with systems composed of many interacting agents.” (Axelrod, 2000, xv) Agents are the various actors pursuing various strategies within a system (Axelrod, 2000, 4). As a framework to begin the analysis of the agents within Saudi Arabia, Misagh Parsa, in his book, States Ideologies, and Social Revolutions, offers a good categorization of the various internal groups that can exert revolutionary pressure on the existing regime: capitalists, students, clergy, and workers (Parsa, 2000, 93). For Saudi Arabia those grouping, while illustrative do not capture the dynamics of the situation. For example, within the clergy there are member who support the ruling class (the capitalists), who desire liberal reforms (the students), and who desire a return to a more ‘pure’ form of Islam (the clergy). This paper will re-label Parsa’s groups according to the aims of the group as opposed to the demographics of the group: those who prefer the status-quo, reformers, Islamists, and workers.
Those elements of Saudi Arabian society that prefer the status quo include the royal family and clergy that support the royal family. The current regime in Saudi Arabia is a monarchy under the Al-Saud royal family. The Qur’an is the constitution of Saudi Arabia and thus the country is governed under Shari’ah law. (Zuhur, 2005, 8) Saudi Arabia is rated as the seventh most authoritarian regime of 167 countries by the Economist Democracy Index. The capitalist group wants to maintain their control over the political and economic future of the country at all costs.
The next grouping is of those who prefer liberal reforms. This includes portions of the youth, liberal clergy, and the West. Although the West is not an internal actor, the pressures (intended and unintended) exerted by the West upon Saudi Arabian society are massive. This pressure causes feedback from other groups within Saudi Arabian society. Huntington captures this feedback as the “Clash of Civilizations” between the Western and Islamic civilizations. (Huntington, 1996, 110). He sees this clash as inevitable since both religions are monotheistic, universalistic, missionary focused, and see the world in dualistic ’us vs. them’ terms (Huntington, 1996, 210). The West wants Saudi Arabia to modernize and become more Western.
Similar to the Western desires, the internal elements want a consultative assembly, municipal councils, independent judiciary, equality of citizenry, freedom of media, encouraging women’s participation in society, and reform of the educational system (Zuhur, 2005, 26). These elements have repeatedly petitioned the royal family for reforms through the Letter of Demands in 1991 (Zuhur, 2005, 26) and the Strategic Vision for the Present and Future in 2003 (Zuhur, 2005, 32).
The Saudi responses to these demands have been slow. They have enacted several reforms such as the Basic Law of Government in 1992 and the creation of the majlis alshura in 1993. However, these actions are reforms in name only. The royal family still rules absolutely. If the royal family continues these pseudo-reforms Saudi Arabia will not transition into a modern Western democracy but instead into a semi-authoritarian state which is a “regime determined to maintain the appearance of democracy without exposing themselves to the political risks that free competition entails.” (Ottaway, 2003, 3).
The next grouping is those who prefer a return to a more ‘pure’ form of Islam (Islamists). This includes al-Qaeda on the Peninsula (AQP), the ‘ulama (religious leadership), and portions of the youth. Wahhabism is an integral part of Saudi Arabian Islam. It basic tenant is a desire to “purify [his] belief from degrading innovations” (Zuhur, 2005, 15) The new salafi movement adds to this purification, a concept of takfir (labeling a Muslim as being insufficiently devout). Despite the governance of the country being exclusively in accordance with the Qur’an, these groups perceive the royal family as corrupt and peddling “American Islam” (Zuhur, 2005, 8). They desire stricter observance of Shari’ah, and end to corruption, and a cessation of relations with the West and non-Muslim entities. The Islamists, like the reformers, have petitioned the government with the Memorandum of Advice in 1992 (Zuhur, 2005, 26). The Saudi government’s response to the Islamists is to dismiss those members of the ‘ulama, attack, arrest, and freeze assets of those associated with the Islamists.
The final grouping is the workers. The Shia living in the Eastern Province make up 40% of its population (Zuhur, 2005, 15). In addition, non-Saudi’s make up a large percentage of the population of the state. Both these groups do “labor that Saudi’s disdain” (Zuhur, 2005, 9) but are subject to intense discrimination and are not afforded the same rights as Saudis. These groups desire tolerance, end to discrimination, human rights, freedom, and equality of the citizenry (Zuhur, 2005, 32). The Saudi government has not responded to these demands and through a policy of ‘Saudization’ of the workforce (Zuhur, 2005, 10) has increased tensions between the Saudi and non-Saudis.
The above sections discuss the sources of conflict and the Saudi responses. The current Saudi responses will actually destabilize the regime. By enacting pseudo-democratic reforms to appease the reformers while maintaining the royal grip on power, the government is actually feeding the Islamist’s labeling of takfir. By attacking the Islamists, the government is feeding the reformers grievances related to human rights and lack of freedoms.
The basic problem is that Saudi Arabia is a non-differentiated society as defined by Binder. (Binder, 1971, 21). Any changes made to a sub-system within Saudi Arabian society will destabilize the other sub-systems due to non-differentiation. For example, giving women voting rights (a political change) will destabilize the social structure due to the Islamic interpretation of the place of women in society. Therefore, Saudi Arabia is left with an all or nothing proposition: They must either completely modernize with democratic freedoms (end to Shari’ah) and elected officials (end to the royal family) or maintain the current non-differentiated society by ruling with an iron fist (in accordance with Shari’ah) and crushing all dissent. The first option is clearly not feasible; any middle alternative brings the instability of semi-authoritarian regimes as discussed by Ottaway; leaving the final, if distasteful, option of the continuance of authoritarian rule by the al-Saud family. Bar-Yam supports this proposal with an analysis of the “trend of central control in the Islamic world” (Bar-yam, 2004, 250). Islam is total solution: government, law, and religion all in one. In an Islamic society any trend to modernization will be in direct opposition to Islam itself.
In conclusion, the Saudi Arabian government response to the current conflict within the country will actually destabilize the regime and the entire region. Saudi Arabia should maintain its authoritarian rule and crush all dissent.
2009-12-15
Political correctness is losing the War on Terror
The true weakness in our application of the informational aspect of national power is our societal inability to voice contrasting opinions about the War on Terror due to a climate of political correctness. The current conventional wisdom reference the relationship of Islam to Al-Qaeda and the terrorist attacks on the World Trade Center is that Islam is a religion of peace and that Al-Qaeda is an ‘extremist’ group hijacking an otherwise peaceful religion. This is the politically correct talking point. If a public figure were to propose a contrary view, that Islam is not a peaceful religion, he would be vilified for being a bigot. By not allowing our scholars and public officials have an honest and candid conversation about the true nature of the ongoing conflict we are handicapping our ability as a nation to understand, fight, and win the conflict.
Despite the massive scope of our military operations in Iraq and Afghanistan, there is a great deal of evidence that the War on Terror as waged by the ‘extremists’ is predominantly an informational war. Due to our political correctness we are losing that war without even attempting to fight. A great example of this informational war is the reaction from the Islamic world to the 2005 Danish political cartoons. The unified voice coming out of the Islamic world was that our free speech should be curbed in reference to Islam and Muslims. Essentially that one of our core Western values should be subordinated to the demands of Islamic law. The only limitation to free speech that our courts recognize is speech that violations the harm principal proposed by John Stuart Mill. He stated that "the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.” The demand from the Muslim community to subordinate one of our most cherished rights is one example of the ongoing war of information that our political correctness will not let us acknowledge or fight.
Another example of the ongoing informational war is the purchasing of influential media and educational institutions by members of the Saudi royal family. Prince Alwaleed bin Talal has given over $20 million to Harvard and Georgetown University for their Islamic studies institutes. The two institutions do not hide the donation as shown with his name prominently displayed across their websites:
Islamic Studies Program at Harvard
Center for Muslim-Christian Understanding at Georgetown
The stated purpose for Harvard is to “bridge gaps in understanding between East and West and ensure that Harvard's capacity in Islamic Studies matches more fully the depth of Islam's rich historical and geographically diverse cultures.” For Georgetown, the purpose is to build “bridges of understanding between the Muslim world and the West, addressing stereotypes of Islam and Muslims and issues and questions such as the clash of civilizations, and the compatibility of Islam and modern life - from democratization and pluralism to the status of women, minorities and human rights - and American foreign policy in the Muslim world.” Both remarkably similar and both very idealistic and in-line with the politically correct notion that Islam is a religion of peace.
However, Prince Alwaleed bin Talal’s purchased a large share of Rupert Murdoch’s News Corporation. The following link shows the magnitude of his purchase and the influence it gives him with Rupert Murdoch.
NY Times article disclosing Talal's stake in News Corp.
This purchase in itself is not a problem; just a smart businessman making a smart investment. However, his use of the influence gained from his purchase may shed light on his intentions with the Harvard and Georgetown donations. During the 2005 French riots (‘civil unrest’ for the politically correct), Prince Alwaleed bin Talal used his influence to change the title of Fox News’ coverage of the event from “Muslim riots” to “civil riots”. Below is a transcript of the conversation between Prince Alwaleed bin Talal and Rupert Murdoch purportedly in his own words:
"I picked up the phone and called Murdoch.. . . . (and told him) these are not Muslim riots, these are riots out of poverty." "Within 30 minutes, the title was changed from Muslim riots to civil riots."
Middle East Online article on Talal's influence on Fox News
Based on his actions during the 2005 French riots, it is likely that he is using the influence purchased by his large donation to Harvard and Georgetown to shape academic research and scholarly opinions on Islam and the Middle East to his liking. He is successfully waging an informational war; a war that due to our political correctness we cannot or will not even recognize.
The bottom line with respect to our foreign policy and national strategy is that political correctness restricts our ability to have an honest and candid conversation about the true nature of the ongoing conflict. We have ceded the informational war to our enemies without even a fight.
Despite the massive scope of our military operations in Iraq and Afghanistan, there is a great deal of evidence that the War on Terror as waged by the ‘extremists’ is predominantly an informational war. Due to our political correctness we are losing that war without even attempting to fight. A great example of this informational war is the reaction from the Islamic world to the 2005 Danish political cartoons. The unified voice coming out of the Islamic world was that our free speech should be curbed in reference to Islam and Muslims. Essentially that one of our core Western values should be subordinated to the demands of Islamic law. The only limitation to free speech that our courts recognize is speech that violations the harm principal proposed by John Stuart Mill. He stated that "the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.” The demand from the Muslim community to subordinate one of our most cherished rights is one example of the ongoing war of information that our political correctness will not let us acknowledge or fight.
Another example of the ongoing informational war is the purchasing of influential media and educational institutions by members of the Saudi royal family. Prince Alwaleed bin Talal has given over $20 million to Harvard and Georgetown University for their Islamic studies institutes. The two institutions do not hide the donation as shown with his name prominently displayed across their websites:
Islamic Studies Program at Harvard
Center for Muslim-Christian Understanding at Georgetown
The stated purpose for Harvard is to “bridge gaps in understanding between East and West and ensure that Harvard's capacity in Islamic Studies matches more fully the depth of Islam's rich historical and geographically diverse cultures.” For Georgetown, the purpose is to build “bridges of understanding between the Muslim world and the West, addressing stereotypes of Islam and Muslims and issues and questions such as the clash of civilizations, and the compatibility of Islam and modern life - from democratization and pluralism to the status of women, minorities and human rights - and American foreign policy in the Muslim world.” Both remarkably similar and both very idealistic and in-line with the politically correct notion that Islam is a religion of peace.
However, Prince Alwaleed bin Talal’s purchased a large share of Rupert Murdoch’s News Corporation. The following link shows the magnitude of his purchase and the influence it gives him with Rupert Murdoch.
NY Times article disclosing Talal's stake in News Corp.
This purchase in itself is not a problem; just a smart businessman making a smart investment. However, his use of the influence gained from his purchase may shed light on his intentions with the Harvard and Georgetown donations. During the 2005 French riots (‘civil unrest’ for the politically correct), Prince Alwaleed bin Talal used his influence to change the title of Fox News’ coverage of the event from “Muslim riots” to “civil riots”. Below is a transcript of the conversation between Prince Alwaleed bin Talal and Rupert Murdoch purportedly in his own words:
"I picked up the phone and called Murdoch.. . . . (and told him) these are not Muslim riots, these are riots out of poverty." "Within 30 minutes, the title was changed from Muslim riots to civil riots."
Middle East Online article on Talal's influence on Fox News
Based on his actions during the 2005 French riots, it is likely that he is using the influence purchased by his large donation to Harvard and Georgetown to shape academic research and scholarly opinions on Islam and the Middle East to his liking. He is successfully waging an informational war; a war that due to our political correctness we cannot or will not even recognize.
The bottom line with respect to our foreign policy and national strategy is that political correctness restricts our ability to have an honest and candid conversation about the true nature of the ongoing conflict. We have ceded the informational war to our enemies without even a fight.
2009-11-06
Thinking skills
Today Dr. Richard King helped our group with some techniques to assist in problem solving. He had two incredibly relevant and insightful points that I would like to share.
1 - Instead of writing a problem as "How do we ____?" instead write it as "In what ways might we ____?"
The difference being that "How do we" implies one action whereas "what ways" implies many actions.
Also "might" implies actions that may not be feasible right now but may be feasible in the future.
An example of this is when discussing balance in the Middle East (Iraq and Iran in particular) one possible change to the system might be that Najaf is once again the center of Shia Islam instead of Qom. Under a "How do we" construct this idea may never be explored as an option since there are no foreseeable actions we (the US) can take to affect this move. But under a "In what ways might we" construct this idea may be explored. Thus encouraging more creativity in the planning process.
2. The second idea posed by Dr King was ensuring to distinguish between the ends and means. Means are not important when trying to determine the gist of the problem.
Example - The fact that Iran wants a nuclear capability is a mean. To explore the issue further look for the end. What is Iran's end with a nuclear capability? If their end is energy self-sufficiency or independence then a possible way to help them achieve their end while ensuring that their acquisition of nuclear power does not initiate a middle east nuclear arms race would be to offer them solar, geothermal, wind, hydro, and other alternative energy sources. If those options are still not acceptable to Iran - then the assumed endstate of energy self-sufficiency may be false. Regardless, you have gained more information from the situation than you previously had.
1 - Instead of writing a problem as "How do we ____?" instead write it as "In what ways might we ____?"
The difference being that "How do we" implies one action whereas "what ways" implies many actions.
Also "might" implies actions that may not be feasible right now but may be feasible in the future.
An example of this is when discussing balance in the Middle East (Iraq and Iran in particular) one possible change to the system might be that Najaf is once again the center of Shia Islam instead of Qom. Under a "How do we" construct this idea may never be explored as an option since there are no foreseeable actions we (the US) can take to affect this move. But under a "In what ways might we" construct this idea may be explored. Thus encouraging more creativity in the planning process.
2. The second idea posed by Dr King was ensuring to distinguish between the ends and means. Means are not important when trying to determine the gist of the problem.
Example - The fact that Iran wants a nuclear capability is a mean. To explore the issue further look for the end. What is Iran's end with a nuclear capability? If their end is energy self-sufficiency or independence then a possible way to help them achieve their end while ensuring that their acquisition of nuclear power does not initiate a middle east nuclear arms race would be to offer them solar, geothermal, wind, hydro, and other alternative energy sources. If those options are still not acceptable to Iran - then the assumed endstate of energy self-sufficiency may be false. Regardless, you have gained more information from the situation than you previously had.
2008-11-06
Combatives skills in Iraq
The link below is a great story by a great reporter about 1/25 IN in Mosul, Iraq. They were the unit that relieved my unit in Nov '04. I've highlighted a short section of the text below to give you a flavor.
Michael Yon - Gates of Fire
EXCERPT:
When the bullet hit that canister, Prosser—who I thought might be dead because of all the blood on his leg—was actually fighting hand-to-hand on the ground. Wrapped in a ground fight, Prosser could not pull out his service pistol strapped on his right leg, or get to his knife on his left, because the terrorist—who turned out to be a serious terrorist—had grabbed Prosser’s helmet and pulled it over his eyes and twisted it.
Prosser had beaten the terrorist in the head three times with his fist and was gripping his throat, choking him. But Prosser’s gloves were slippery with blood so he couldn’t hold on well. At the same time, the terrorist was trying to bite Prosser’s wrist, but instead he bit onto the face of Prosser’s watch. (Prosser wears his watch with the face turned inward.) The terrorist had a mouthful of watch but he somehow also managed to punch Prosser in the face. When I shot the propane canister, Prosser had nearly strangled the guy, but my shots made Prosser think bad guys were coming, so he released the terrorist’s throat and snatched out the pistol from his holster, just as SSG Konkol, Lewis, Devereaux and Muse swarmed the shop. But the shots and the propane fiasco also had brought the terrorist back to life, so Prosser quickly reholstered his pistol and subdued him by smashing his face into the concrete.
The combat drama was ended, so I started snapping photos again.
Michael Yon - Gates of Fire
EXCERPT:
When the bullet hit that canister, Prosser—who I thought might be dead because of all the blood on his leg—was actually fighting hand-to-hand on the ground. Wrapped in a ground fight, Prosser could not pull out his service pistol strapped on his right leg, or get to his knife on his left, because the terrorist—who turned out to be a serious terrorist—had grabbed Prosser’s helmet and pulled it over his eyes and twisted it.
Prosser had beaten the terrorist in the head three times with his fist and was gripping his throat, choking him. But Prosser’s gloves were slippery with blood so he couldn’t hold on well. At the same time, the terrorist was trying to bite Prosser’s wrist, but instead he bit onto the face of Prosser’s watch. (Prosser wears his watch with the face turned inward.) The terrorist had a mouthful of watch but he somehow also managed to punch Prosser in the face. When I shot the propane canister, Prosser had nearly strangled the guy, but my shots made Prosser think bad guys were coming, so he released the terrorist’s throat and snatched out the pistol from his holster, just as SSG Konkol, Lewis, Devereaux and Muse swarmed the shop. But the shots and the propane fiasco also had brought the terrorist back to life, so Prosser quickly reholstered his pistol and subdued him by smashing his face into the concrete.
The combat drama was ended, so I started snapping photos again.
2008-11-04
How politics affects the economy
Interesting political video on the current economic crisis and politics.
Analysis from a collegue, Aron Meadows, Penn State MBA grad:
The economics in the video are fundamentally accurate. Some of their conclusions are a stretch I think.
Yes. Government secured loans created a somewhat artificial market for housing. Any time you reward risk-taking, people are going to do it. Yes it contributed, but no, it is not the sole cause of the collapse of the housing market. First, the vast majority of loans are not sub-prime and so the argument kind of disintigrate right there..
But here is a more intuitive argument for you logic minded engineer types:
1. Did the presence of sub-prime loans (pushed by democrats) in the equities market create the housing bust? Or
2. Did the overstatement of the sub-prime loans value (or understatement of their risk [same thing]) that resulted from vast under-regulation of the banking and financial industries cause the housing bust?
My answer: if the sub-prime loans were sold at a fair expected value based on the actual riskiness of the loan, the number of sub-prime loans would not matter. De-regulation of the lenders allowed an underestimate of risk. This resulted in overstating the value of loans and the subsequent equities made up by them. (SO LENDERS ARE TO BLAME TOO)
Since de-regulation was a conservative agenda lead by economist Volker and President Ronald Reagan (post Carter)...and continued to this day by the most Darwinian capitalists among us, Republicans must share blame.
Also, because the financial institution CEOs, CFOs and COOs are rewarded by stock options, and their stock values are tied directly to the companies asset values, and company asset values are tied directly to the value of THESE RETARDED SECURITIES, THERE WAS NO INCENTIVE TO ACCURATELY REPORT THEIR TRUE VALUE. So de-regulators (republicans) take another hit on the chin and corporate leaders need to face the firing squad with them.
But wait, you may say that because these same CEOs, CFOs, and COOs could get government backing (a democratic program) to carry high risk loans the democrats are to blame. Remember, very few of the equities are sub-prime. Also, only a few of the collapsed giants had government backing...what about Bear Stearns and the others???
Bottom line: The entire industry was CREATING MONEY out of thin air. There was no incentive to change. Not until a very smart financial journalist (cant remember her name) noticed that a few financial giants carried huge ACCOUNTS RECEIVABLE (An asset) balances and yet couldn't seem to turn them into cash, did investors catch on. People got nervous and boom...Aron loses very nice sports car (if not two) in investments.
Last: Blame us. Year over year the materialistic Americans increased their respective standard for success. As a result, we demanded new home construction, 2700 no 3000 no 3200 no 3700 square foot, marble twin vanity bathrooms, slate floors, four bedrooms, an office, monster kitchens (who needs a pizza oven and a $27K stove) and on and on and on... As a result, we not only build too many homes, but abandon old subdivisions. We also simultaneously expect to earn 10% year over year return on the value of our home which is mathematically not sustainable. Never the less, the American idiot (Green day Song) continued to buy and speculate and buy and speculate blah. So we over built AND over extended ourselves to fit in with the over extended Jones' next door. So RETARDED AMERICAN CONSUMERS are to blame to.
To what extent were the dems or republicans in the bank with these processes and unduly influenced by Lobies? I don't know. I do know this, I have not heard a politician yet that I thought new a thing about economics. So I'm not sure why Americans expect them them to fix it. They will just sit it out, pass blame and collect monster retirement.
Analysis from a collegue, Aron Meadows, Penn State MBA grad:
The economics in the video are fundamentally accurate. Some of their conclusions are a stretch I think.
Yes. Government secured loans created a somewhat artificial market for housing. Any time you reward risk-taking, people are going to do it. Yes it contributed, but no, it is not the sole cause of the collapse of the housing market. First, the vast majority of loans are not sub-prime and so the argument kind of disintigrate right there..
But here is a more intuitive argument for you logic minded engineer types:
1. Did the presence of sub-prime loans (pushed by democrats) in the equities market create the housing bust? Or
2. Did the overstatement of the sub-prime loans value (or understatement of their risk [same thing]) that resulted from vast under-regulation of the banking and financial industries cause the housing bust?
My answer: if the sub-prime loans were sold at a fair expected value based on the actual riskiness of the loan, the number of sub-prime loans would not matter. De-regulation of the lenders allowed an underestimate of risk. This resulted in overstating the value of loans and the subsequent equities made up by them. (SO LENDERS ARE TO BLAME TOO)
Since de-regulation was a conservative agenda lead by economist Volker and President Ronald Reagan (post Carter)...and continued to this day by the most Darwinian capitalists among us, Republicans must share blame.
Also, because the financial institution CEOs, CFOs and COOs are rewarded by stock options, and their stock values are tied directly to the companies asset values, and company asset values are tied directly to the value of THESE RETARDED SECURITIES, THERE WAS NO INCENTIVE TO ACCURATELY REPORT THEIR TRUE VALUE. So de-regulators (republicans) take another hit on the chin and corporate leaders need to face the firing squad with them.
But wait, you may say that because these same CEOs, CFOs, and COOs could get government backing (a democratic program) to carry high risk loans the democrats are to blame. Remember, very few of the equities are sub-prime. Also, only a few of the collapsed giants had government backing...what about Bear Stearns and the others???
Bottom line: The entire industry was CREATING MONEY out of thin air. There was no incentive to change. Not until a very smart financial journalist (cant remember her name) noticed that a few financial giants carried huge ACCOUNTS RECEIVABLE (An asset) balances and yet couldn't seem to turn them into cash, did investors catch on. People got nervous and boom...Aron loses very nice sports car (if not two) in investments.
Last: Blame us. Year over year the materialistic Americans increased their respective standard for success. As a result, we demanded new home construction, 2700 no 3000 no 3200 no 3700 square foot, marble twin vanity bathrooms, slate floors, four bedrooms, an office, monster kitchens (who needs a pizza oven and a $27K stove) and on and on and on... As a result, we not only build too many homes, but abandon old subdivisions. We also simultaneously expect to earn 10% year over year return on the value of our home which is mathematically not sustainable. Never the less, the American idiot (Green day Song) continued to buy and speculate and buy and speculate blah. So we over built AND over extended ourselves to fit in with the over extended Jones' next door. So RETARDED AMERICAN CONSUMERS are to blame to.
To what extent were the dems or republicans in the bank with these processes and unduly influenced by Lobies? I don't know. I do know this, I have not heard a politician yet that I thought new a thing about economics. So I'm not sure why Americans expect them them to fix it. They will just sit it out, pass blame and collect monster retirement.
FCS vs fog and friction
Good article debating the future of the armed forces. More technology to dissapate the fog of war. Or the fog will always be there and we need boots on the ground. I personally agree with the latter.
Article on FCS and fog and friction in war
Article on FCS and fog and friction in war
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