Sunday, November 25, 2007

And Life Goes On

In the November 14th edition of The New York Times, Kurt Campbell -- a former official in Bill Clinton's Pentagon -- asked the question, "What has become of the Iraqictects?" Campbell pointed out that, unlike the last generation of war planners -- whose saga the late David Halberstam chronicled in his book, The Best and the Brightest -- the advisers who planned the War in Iraq seem not to have experienced any adverse consequences.

Campbell, an alumnus of Harvard, recalled seeing, "the lonely ghostlike figure of Robert MacNamara, striding around Cambridge making presentations to a new generation of would-be strategists about how to learn from his mistakes of the past." MacNamara and his brethren had to "endure booing on college campuses, shunning from old friends and colleagues, brutal treatment from the communitariat at the time, and the kind of bitter despair that generally accompanies a thorough going battlefield defeat." Unlike the Kennedy generation of cold warriors, this group of hawks have simply left government to pursue "challenging new directions in the private sector." In fact, concluded Campbell, what is truly puzzling is how "normal" all this seems to be.

What has changed? Naomi Klein's book, The Shock Doctrine, recounts the assault on western democracies since the end of the Vietnam War. She contends that governments, from Chile to Argentina to Russia to Washington -- where the trend began -- have been, in her phrase, "hollowed out" by the evolving military industrial complex. Klein labels the next generation of this corporatist marriage the "disaster capitalism complex."

Taking a cue from Ronald Reagan, who declared that, "government isn't part of the problem, it is the problem," modern neo-conservatism has sought to dismantle government by contracting out to the private sector most of its functions. As a result, many former civil servants have left government service to found their own companies, which in turn have been awarded contracts to do what government used to do. Hence, Joe Allbaugh, the former director of FEMA founded New Bridge Strategies, whose mission is "to be the 'bridge' between business and the lucrative world of government contracts and investment opportunities in Iraq." His replacement at FEMA, the hapless Michael D. Brown -- after he was fired from that job -- set up his own company "specializing in disaster preparedness." And, of course, Erik Prince -- the CEO of Blackwater, a private mercenary army -- has been in the news a lot of late. In fact, there are more private contractors fighting the war in Iraq than there are American soldiers.

By privatizing the war, the Bush administration has dampened public criticism. Most citizens -- unless they have a family member in the armed services -- have no direct stake in what happens in Iraq. And, while the private contractors do have a direct stake, most contracts have been awarded on a no bid, cost plus basis. If they are lucky enough to have cultivated the right people, they have a guaranteed money making operation -- and there is lots of money to be made, despite all kinds of evidence that what they have been paid for has not been done.

This phenomenon is particularly striking in the case of Mr. Rumsfeld, who has recently "returned to the private sector." When he entered government, he was supposed to place his holdings in a blind trust. And certain investments, like his shares in Lockheed and Boeing, were placed in that kind of vehicle. But Rumsfeld refused to divest himself of his shares in Gilead Sciences, the company which he used to chair (the company which holds the patent on Tamiflu, the vaccine which the American government has chosen to stockpile in case of a flu epidemic.) When discussions were held about purchasing a vaccine, we are told that Rumsfeld left the room. But, even in his absence, things turned out swimmingly for Gilead. According to Klein, "In July 2005 the Pentagon purchased $58 million worth of Tamiflu, and the Department of Health and Human Services announced that it would order up to $1 billion worth of the drug a few months later." If Rumsfeld had sold his shares in Gilead in January, 2001, when he entered office, he would have received $7.45 for each share. By refusing to sell those shares "through all the avian flu scares, all the bio terror hysteria and through his own administration's decisions to invest heavily in the company [writes Klein] Rumsfeld ended up with stocks worth $67.60 each when he left office."

The Vice Preisdent's fortunes have followed a similar path. While Mr. Cheney did sell some of his Haliburton shares when he entered office -- netting a profit of some $18.5 million -- Klein reports that he didn't cash out entirely. "According to The Wall Street Journal, Cheney hung onto 189,000 Haliburton shares and 500,000 unvested options even as he entered the vice presidency." Haliburton, as one of the chief beneficiaries of the new no bid cost plus contracting process, has done remarkably well during the war. Klein notes that, "the company's stock price rose from $10 before the war in Iraq to $41 three years later -- a 300 per cent jump -- thanks to a combination of soaring energy prices and Iraq contracts both of which flow directly from Cheney's steering the country into war with Iraq."

Through it all, these gentlemen have operated on the principle that self interest is in the public interest. In fact, what they have done is merge the private and public spheres, while reaping huge profits along the way. George Bush likes to compare the reconstruction of Iraq to the Marshall Plan. In fact, written into the Marshall Plan was a specific prohibition against American contractors participating in the rebuilding of Europe. The American government bankrolled the reconstruction; but Europeans actually did the work. The history of reconstruction in Iraq has been a history of American contractors reaping profits, even when work, in the vast number of cases, wasn't done. The Iraqis have simply stood by as spectators. And for the architects of the war, the profits have continued to roll in -- just as they did before this generation of The Best and the Brightest entered office. Life has gone on with astonishing normality. And they tell us that this is a war without end.

Sunday, November 18, 2007

Mr. Mulroney, Mr. Schreiber and Mr. Harper

The Canadian chattering class was abuzz last week after Prime Minister Harper appointed David Johnston, the president of the University of Waterloo, to determine the parameters of a public inquiry into what is being labelled the Mulroney-Schreiber Affair. We have been here before. When the Liberal government, which succeeded Mulroney, charged that Mulroney had received cash for steering Air Canada's purchase of new jets to Europe's Airbus Industries, Mulroney launched a lawsuit, claiming that the government had besmirched his good name. The government eventually settled with Mulroney out of court for $2.1 million.

But, in the last four years, certain facts have come to light. First, Mulroney did receive $300,000 from Karlheinz Schreiber -- in cash, in three installments, in envelopes, in hotel rooms. Second, Mulroney was delinquent in paying taxes on that income, something he has since rectified. And, third, as the CBC program The Fifth Estate has verified, that money was Airbus money, which had been deposited in a Swiss account in Schreiber's name. Whether Mulroney knew about the source of the money is not known.

After initially stonewalling opposition calls for an inquiry, Harper decided to reverse himself -- after Mulroney called for an inquiry, and after Schreiber claimed that he had sent a letter to Harper's office, charging that he and Mulroney had discussed the payments two days before Mulroney left office -- a letter which Harper says he never saw.

Mr. Schreiber is quite a piece of work. An acknowledged arms dealer as well as passenger plane salesman, he has had ties to other politicians, most notably Marc Lalonde, Pierre Trudeau's political lieutenant. He would appear to have a talent for ingratiating himself with the powers that be -- whatever their political stripe. He has been ordered to return to Germany, where he faces charges of fraud and tax evasion. It is in his self interest -- something he has promoted quite successfully -- to drag Mulroney into the mess in which he now finds himself.

The problem is that Mulroney, who claimed in his libel suit that "he had never had any dealings" with Schreiber, clearly misrepresented the situation -- which reminds Canadians that, before he left office, they regularly referred to Mr. Mulroney as "Lyin' Brian." More than that, the whole affair puts Mr. Harper in an awkward position. In his Reform Party days, he referred to Mr. Mulroney as the enemy. But since being elected prime minister, Harper has arranged a rapprochement with Mulroney and his supporters in the party. Some observers see Mulroney's influence in the appointment of Michel Fortier to Harper's cabinet. The fact is, as Andrew Coyne observed in Macleans last week, " . . . Harper is tied to Mulroney, as Mulroney is tied to Schreiber, not by any opposition insinuations or press vendettas, but by their own appalling lapses of judgment."

An inquiry may find that Mr. Mulroney did nothing illegal. He is, first and foremost, a very smart lawyer; and one assumes that he would do nothing to put himself in legal jeopardy. However, with the mounting evidence of income inequality in this country, one can understand why Canadians might be more than miffed to discover that another one of their leaders was particularly adept at feathering his nest. At the very least, the inquiry should follow the money -- as difficult, and as embarrassing as that might be.

Monday, November 12, 2007

Another Remembrance Day

Yesterday was Remembrance Day. And in every city, town and hamlet across this land, Canadians gathered at their local cenotaphs to remember those men and women who are buried in Europe or at home -- and to pay homage to those soldiers, sailors and airmen who are still with us.

Those who are still with us are dwindling. The number of former soldiers who walk down the Main Streets of Canada each November 11th grows fewer and feebler with each passing year. But we still feel compelled to drop what we are doing at eleven o'clock, and think about the young men and women who will never grow old.

And what do we, the living, owe them? I wish I could say that we owe them the gift of universal peace. The two Great Wars of the last century were supposed to be the Wars to end all Wars. If only. But the years which followed each of those conflicts should have taught us that such noble aspirations are short lived.

So, where does that leave us? For awhile Canadians found military purpose in peacekeeping. But, in fulfilling our NATO commitment, we have discovered that we no longer perform that role. If Afghanistan teaches us anything, it is that it is much easier to get into a war than it is to get out. Therefore, when our leaders beat the drum, telling us that it is our duty to defend our country, they should always be met with a healthy dose of skepticism. Those who give the orders rarely lead from the front. And the young almost always bear the burden of the battle.

It has been a long while since we fought the good fight. But, every Remembrance Day, we recall that there was once such a fight; and we recall that we enjoy the blessings of this country because those who joined the Canadian armed forces did what was necessary. In the end, the best way to honour the dead is to distinguish between the necessary and the nihilistic. Those whose names are on headstones in Europe and the war monuments across Canada know that difference.

Saturday, November 03, 2007

Friedman's Faustian Bargain

It has been almost a year since Milton Friedman's death. At the time, memorialists everywhere sang his praises. The New York Times called him "one of the 20th century's leading economic scholars;" and not one of the obituary writers failed to mention his firm conviction that human freedom and free markets were inextricably linked. He was not always so feted. The first thirty-five years of his career were spent in the wilderness -- although life in the economics department at the University of Chicago was far from shabby.

But the Keynesian Revolution had marginalized a man who felt that his country had gone off track with the New Deal. He steadfastly clung to his belief that classical economics was the equivalent of Keats' Grecian Urn, where both truth and beauty coexisted.

Then came the Cold War; and Latin American politics took a distinctly leftward turn. John Foster Dulles became Secretary of State; and he vowed to stamp out the heresy of Communism with the same zeal with which his own parents had set off for China to convert the locals to Christianity. With support from the State Department, the University of Chicago established the Center for Latin American Economic Studies; and, under the leadership of Friedman and Arnold Harberger, it took up the task of placing its economics graduates in positions of influence throughout South America.

The problem was, however, that -- as Naomi Klein tells the story in her book, The Shock Doctrine -- all attempts to implement Chicago's take on economics met with defeat at the ballot box. The reason was not hard to understand. South America had a vibrant union movement; and it had its own economic advisers -- who understood that one of the essential outcomes of Friedman's free markets was concentration of wealth at the top of society. Why should the masses vote themselves into poverty?

So Friedman advised his charges that crisis meant opportunity. When their societies were in crisis, what was required (wrote Friedman) was "shock treatment" -- an economic version of what the American military has called "Shock and Awe." The first such opportunity came when the Chilean army -- with the help of the C.I.A. -- overthrew the democratically elected government of Salvadore Allende. Before the revolt, a group of Chicago graduates had drawn up a program for a new economic order to be established after the coup.

The plotters knew, however, that there would be stiff resistance. As Orlando Letalier -- a member of Allende's inner circle -- wrote in The Nation in 1976, "The economic plan has had to be enforced, and in the Chilean context that could be done only by the killing of thousands, the establishment of concentration camps all over the country, the jailing of more than 100,000 persons in three years . . . . Regression for the majorities and 'economic freedom' for small privileged groups are in Chile two sides of the same coin." Needless to say, Letalier's opinions were not popular with the new Chilean dictator, Augusto Pinochet; and, a month after his critique of the new order appeared, Letalier was murdered in Washington, where a bomb tore apart the car he was in.

Despite the repression which accompanied the new order, Friedman flew to Santiago to act as a "technical adviser" to Pinochet. When asked about his work with Pinochet, Friedman claimed that his role was that of a physician giving "technical medical advice to the Chilean Government to help end a medical plague -- the plague of inflation." And, for awhile, the cure worked. In fact, it inspired similar coups throughout the Southern Cone of South America -- in Brazil, Argentina and Uruguay. But eventually, after all of these countries had instituted the three pronged program which Friedman recommended -- privatization of state owned enterprises, government deregulation and slashing of social spending -- all four countries collapsed under mountains of debt. The same thing happened when Friedman's formula was applied in Mexico, Russia and China. In each case, what saved the economies of all these countries was coordinated international government intervention -- something Friedman claimed was unadulterated heresy.

The story keeps repeating itself. In North America, as recent statistics have indicated (see my post for October 22nd) we are reading from the same textbook. Augusto Pinochet died -- a little less than a month after Friedman's death -- just as he was going to be tried for crimes he had committed while in power. Friedman received the Nobel Prize in 1976, just as successive coups were ensuring that hundreds of thousands of people disappeared or were forced to lie down on bed springs attached to car batteries. Another form of shock treatment was being administered during South America's long, dark night.

In Christopher Marlowe's play, Dr. Faustus, a scholar achieves fame and gains the respect of his colleagues. But he does so at the cost of his soul. Somewhere, Milton -- like the rest of us -- must be asking for mercy.