House of War

Ever get the feeling that you’ve been here before?

“The division of labour is limited by the extent of the market.”

Adam Smith, The Wealth of Nations

1. As Tim Worstall notes, there is one major industrial country that didn’t ratify the Kyoto Protocoll, and one major industrial country that has actually reduced its total emissions. The country is the same in both cases:

Total U.S. greenhouse gas (GHG) emissions were 7,075.6 million metric tons carbon dioxide equivalent (MMTCO2e) in 2006, a decrease of 1.5 percent from the 2005 level according to ‘Emissions of Greenhouse Gases in the United States 2006’, a report released today by the Energy Information Administration (EIA).

U.S. GHG emissions per unit of Gross Domestic Product (GDP), or ‘U.S. GHG-intensity,’ fell from 653 metric tons per million 2000 constant dollars of GDP (MTCO2e/$Million GDP) in 2005 to 625 MTCO2e/$Million GDP in 2006, a decline of 4.2 percent. Since 1990, the annual average decline in GHG-intensity has been 2.0 percent.

2. Staying with the US, the eminent “Masonomist”, Don Bourdreaux of Cafe Hayek, has been examining the most recent iteration of Paul Krugman’s frequent accusation that the average American is not “sharing in the country’s prosperity” and that “whatever good economic news there is hasn’t translated into gains for most working Americans”. In response, Bourdreaux links to a Thomas Sowell piece summarising recent IRS data, stating that,

“People in the bottom fifth of income-tax filers in 1996 saw their incomes rise 91 percent by 2005. The top 1 percent … saw their incomes decline a whopping 26 percent. Meanwhile, the average taxpayers’ real income rose 24 percent between 1996 and 2005.”

Bourdreaux also has a chart, drawn from the IRS data, showing income mobility statistics:

Can’t get any clearer than that, what? I wonder if Krugman will take note…

Howard Bloom gets it:

Capital is stored imagination. Capital is stored stress, stored vision, stored diligence to persist, and stored ability to inspire others to complete a task that seems impossible or frivolous. Capital is stored passion!

Poverty already exists. It wasn’t created by globalised capitalism. Capitalism doesn’t perpetuate it by preventing the fair distribution of wealth. It isn’t the necessary opposite of wealth, which powers capitalism (that function is given to relative inequality), or an ontological unformed twin, birthed by capitalism’s inherent and deadly contradictions. It predates the current round of globalisation by some time. In fact, it predates history. It is the natural state of man, our default setting: empty-handed, empty-bellied and limited to local familial networks.

* * * * * *

Has the modern world left poor people behind? Yes, by definition.

And what does that prove? Nothing, beyond the obvious, like poor choices and bad governance. (1)

Can poverty (realistically defined) be defeated? Yes, in the developing world, by continued integration into the global economy and by developing strong contract law and independent judiciaries: in short, by well thought out policies implemented by responsible governments and international institutions.

And in the developed world? No, because the developed world doesn’t suffer from (realistically defined) poverty on a significant scale: poor people in the west live comfortable lives in historical or world terms. Our problems are different, the results of ineptness at life in general.

* * * * * *

Notes:

1. (Capitalism doesn’t make the developing world poor. Capitalism isn’t evil – it’s not that human, knowing nether good nor bad. It doesn’t have a programme. It doesn’t give a shit at all. Capitalism means letting go of the reigns, and ultimately, whatever emergent social, political and technological entities rise from the chaos of spontaneous, molecular-level decision making in the far (or perhaps not so far) future will be similarly beyond, unimaginable precisely because of the wide dispersal and dense granularity of their progress. Who knows what a globalised capitalist society will look like in two hundred years? It does not matter.)

Paul Berman has written a long, almost book-length article on Tariq Ramadan, the French Islamist and Muslim intellectual, examining what he represents within his own current of so-called “salafi reformism” and what his widespread feting by liberal European intellectuals tells us about society today. It’s very much in the spirit of Terror and Liberalism and, as such, is not so much recommended reading as required. The article was published in The New Republic and is called The Islamist, the Journalist, and the defence of Liberalism.

The Observer, not normally a newspaper I rate very highly, published a brilliant and very brave article by Hassan Butt recently, My plea to fellow Muslims: you must renounce terror. Butt was, at one time, the spokesman for a proscribed British Islamist organisation, Al-Muhajiroun, an involved feature of what he terms the “British Jihadi Network”, and even, following his arrest under the Terrorism Act, a minor celebrity of Muslim extremism. Hassan has renounced his past positions and is using his platform to now call for an Islamic response to Islamist terror, specifically, one grounded in Islamic law.

In the July edition of Reason Magazine, Brink Lindsey has a new article, The Aquarians and the Evangelicals, which discusses the split in what he calls the “postwar liberal consensus” in American society. The split, which gave birth to the oppositional yet curiously complementary left/right political spectrum of today, severed the American polity into the socially liberal anti-capitalists, who enjoyed modern freedoms yet hated the engine of capital that generated them, and the fiscally conservative religious right, who protected the market economy yet despaired of the freedoms it created. Lindsey notes that,

On the left gathered those who were most alive to the new possibilities created by the unprecedented mass affluence of the postwar years but at the same time were hostile to the social institutions—namely, the market and the middle-class work ethic—that created those possibilities. On the right rallied those who staunchly supported the institutions that created prosperity but who shrank from the social dynamism they were unleashing. One side denounced capitalism but gobbled its fruits; the other cursed the fruits while defending the system that bore them.

Senior Counterinsurgency Adviser in the Multi-National Force - Iraq, Dave Kilcullen, has a very revealing and timely post at the Small Wars Journal Blog, Understanding Current Operations in Iraq. Kilcullen explains the rational behind the surge and the MNF’s strategy for defeating the insurgency. The strategy will not focus on chasing clandestine cells of jihadists around the desert, but will instead look to protect the Iraqi population and cutting off support (be it moral or logistical) for the terrorists. Despite the ever more shrill shouts of “failure” in the press, Kilcullen advises his readers to wait and see, because in fact the surge proper is only just starting. The activity of the previous months was merely the prepapration of forces. “This is the end of the beginning,” he writes. If you want to understand what the MNF is doing in Iraq at present, you really need to read this. Links to related commentary (Kilcullen is always worth discussing) here.

In its latest issue, Reason Magazine has an great article by Kerry Howley on Ghetto Capitalists. Howley reviews a new publication by Sudhir Alladi Venkatesh, a sociologist at Columbia University, called Off the Books. Venkatesh’s work explores the illicit (or we might say, “extra legal”) economy in an American, down-town urban sprawl: Marquis Park in Chicago.

Marquis Park’s residents, reports Howley, are

unlicensed hairstylists, ad hoc caterers, tailors, psychics, and accountants, and typically ply more than one trade at a time. They sell clothes, pirated movies, and used kitchen supplies they call “ghettoware.” Others are gypsy cab drivers, janitors, and mechanics. Some make a quick buck taking over abandoned buildings and offering the space for shelter; others make money with promises to keep police patrols away from the same space.

The picture he describes demonstrates that far from the stereotype of lazy delinquents, languishing in poverty due to their own inability or lack of interest in finding gainful employment, the members of America’s lower classes are engaged in ceaseless economic activity to earn a living. And not only that, they are innovating in original ways to increase their yields, such as renting out spaces after dark to protect them from vandalism or hiring employees off the books.

Of course, Marquis Park’s economic life, although “frenetic and buoyant”, is not without its downsides. Police protection is shunned due to the illegality or extra-legality of business, so that residents have little to no help when they fall victim to crime. The informal nature of illicit networks breeds a particular type of insularity, with entrepreneurs and business owners having to rely on familial and communal links for services and supplies. Paranoia rules, as those in the underground economy suppose that all transactions take place along similar lines. And everyone is a potential victim of the drug gangs, operating like a “shadow government”, extorting money from their constituents for security.

So paradoxically, the underground economy is both help and hindrance. It represents authentic economic activity and wealth generation among some of society’s poorest, but at the same time, with every step it removes the participants from the legal economic sector and further ensures their marginalisation. The lack of police protection exemplifies this fact. Residents of Marquis Park cannot call on the police to protect them from crime or from business malpractice because they are outside of the law and many social norms themselves, but equally they cannot step inside the law and society without first pulling themselves from poverty and achieving some kind of personal financial stability, all of which has to be done through extra or non legal means, because they are the only markets within reach.

Hernando De Soto explored the very same situation in the Third World in his famous book, The Mystery of Capital. According to De Soto the legal and institutional frameworks which surround property in the West allow the mobilisation of capital, and without them the poor in the Third World are effectively outside the “bell jar” of western capitalist wealth creation. He notes that vast and vibrant markets exist in all these countries, but that due to the breakdown of the social contract, legal and actual practice rarely meet, meaning that the poor (and even the not-so-poor) are unable to properly exploit their assets in ways which we take for granted.

In these cases, poverty is a self-reinforcing process: the harder one struggles to extricate one’s life from it, the further one is plunged into its depths.