Power and Oil

In the NY Times they had an article on the possible partition of Middle Eastern countries in the wake of the Syrian uprising. It long has been taught that the borders of the Middle East are a “mistake” made by the Western powers when they carved the region up amongst themselves. The unspoken message is that all the “troubles” in the area would have been avoided had the Western powers split the countries up according to tribal, religious or other lines that could have resulted in more cohesive states. Much of this may be true – many of the borders appear arbitrary – and yet lands and territories changed hands many times across the historical record.

An area of interest to me is Eastern Saudi Arabia, which the NY Times listed (as conjecture) as possibly a separate country. On many dimensions that is logical; the population of that province has a large Shiite composition and this makes it distinct from the rest of Saudi Arabia (which is supposedly 95% Sunni, although figures are not necessarily to be trusted). Historically these Shiites faced heavy discrimination, (data is sketchy and incomplete) as summarized in this wikipedia article:

They have usually been denounced as heretics, traitors, and non-Muslims. Shias were accused of sabotage, most notably for bombing oil pipelines in 1988. A number of Shias were even executed. In response to Iran’s militancy, the Saudi government collectively punished the Shia community in Saudi Arabia by placing restrictions on their freedoms and marginalizing them economically.Wahabi ulama were given the green light to sanction violence against the Shia. What followed were fatwas passed by the country’s leading cleric, Abdul-Aziz ibn Baz which denounced the Shias as apostates. Another by Adul-Rahman al-Jibrin, a member of the Higher Council of Ulama even sanctioned the killing of Shias. This call was reiterated in Wahabi religious literature as late as 2002.

While these sorts of oppressive behaviors on the parts of the majority are generally tied to rebellion and are logical for the NY Times to think of as possible separate states, this neglects the key fact that the world’s largest oil field, the Ghawar Field, is located in that province. The idea that the Sunnis in Saudi Arabia would give up their oil, which accounts for 80% of revenues, is incredibly naive. The Saudis would never give up their oil, for it is the sole engine of their economy and standard of living. It isn’t known what they’d do if there was a serious rebellion in the area, but I would have to assume that they would take whatever steps were necessary to curtail it and keep the oil flowing. It should be relatively easy for the Saudi government to accomplish this due to their wealth and strength in numbers.

One way to do this would be just to hire mercenaries, which is a tool that the (minority) government in Bahrain is using to hold onto power. Bahrain’s situation is trickier since the Sunni government is a minority in this oil-rich country, but the use of force and violence has been enough to keep the rebellion at bay. One tool for the Bahrain government has been to hire Sunni mercenaries:

For decades, the Bahraini authorities have been recruiting Sunni foreign nationals in the security forces from different countries, including Egypt, Jordan, Syria, Iraq (Ba’athists), Yemen and Pakistan (Baluch) in order to confront any popular movement that usually comes from the Shia majority.

The idea that governments will give up valuable resources in the name of minority rights is a laughable Western idea. The NY Times map is a non-starter. The wealthy and powerful will not give up the (sole) source of their wealth without a tremendous fight from a determined and powerful enemy.

Cross posted at LITGM

Robert Reich Movie “Inequality for All”

I saw the movie “Inequality for All” starring Robert Reich, the former labor secretary for Bill Clinton and a very short guy (he’s 4′ 11″) who is pretty personable and funny. Reich uses his day job as a university professor while teaching a class to illustrate his thoughts on inequality from the movie.

In the movie he attempts to link:
– decline in average wages, in “real” terms (adjusted for inflation)
– growth in the highest wages (the top 1%)
– with various factors, including globalization, automation, declines in unions, and the financial bubble
– income inequality with lower marginal tax rates on the rich

There are certainly some concepts in here than anyone can agree with. It would be good if more people in the USA earned a higher salary, had better educations, and were more productive.

In the movie he mentions Warren Buffett, who famously pays a lower marginal tax rate than everyone else in his office, which is due to the fact that he receives long term capital gains and dividend income which are taxed at a lower rate. This is grist for the “raise taxes on the wealthy” discussion, as Buffett plays the likable old man. However, what he fails to mention is that Warren Buffett is the very candidate that the ESTATE TAX is designed to catch… rather than nickel and dime him every year on his assets as they rise in value (and cause friction and force him to sell them off to meet the tax bill), the estate tax would be levied on the super rich and it would effectively make up for the lower marginal rate during his lifetime by taxing increases on his wealth at a rate of 40%, for all amounts greater than about $5M. However, Warren Buffett is choosing to “evade” these taxes by setting up trusts and / or giving it away to his favorite causes; if Warren couldn’t avoid his estate tax through these loopholes (the same way you or I can’t avoid the payroll or sales taxes) then 40% of his $60B estate ($24B) would go to the Federal government, to fund the “investments in people” that Robert Reich is so passionate about. Funny that Reich didn’t call that out (didn’t follow his narrative, apparently).

Another element he fails to mention is the growth in illegal immigration in the USA, and the havoc that this causes with unskilled labor (as they are willing to work for far less). It is funny because two professions he specifically mentions, meat packing and short order cooks, are magnets for immigrants and their arrival is a direct cause for falling wages in these fields. Not surprisingly, Reich didn’t want to alienate a core Democratic group.

There is a rich “pillow manufacturer” who makes $10M+ / year who also describes how ridiculous it is in his opinion that his marginal rate isn’t higher. That same entrepreneur says that he invests in “funds of funds” and due to this he makes money without creating any jobs. That is quite a statement – what do you think those hedge funds invest in? They invest in commodities, stocks, real estate and debt (I’m assuming). When you are an investor and you provide money for stock and debt you are supporting companies that, in turn, hire staff. I can’t believe that Reich let this comment slide, but since it was what Reich wanted to hear, why interject?

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Review of America 3.0 by David Swindle

David Swindle of PJ Media wrote a long, discursive, and strongly favorable review of America 3.0, entitled “On 9/11 and Benghazi’s Anniversary, We End Conservative Pessimism and Right-Wing Apocalypticism”. David focuses on our hopeful message as an antidote to the defeatism which saturates so much thinking on the political right.

The gradually intensified fever-pitch fear-mongering on the Right is both unnecessary and emotionally destructive. People get burnt out by staying in a constant state of crisis. Concrete solutions and practical ways to overcome America’s problems over the course of the next 30 years – not just thinking in four-year election cycles – are needed instead. And it turns out they’re now available.
 
I’ve been waiting for a book like Bennett and Lotus’s America 3.0: Rebooting American Prosperity In the 21st Century—Why America’s Greatest Days Are Yet to Come for years. We’ve needed a book that proclaims with confidence and literary elegance both how we got here and how to move forward to bring about unimaginable levels of prosperity.

David concludes with his own stirring message, inspired by the book:

We must stop dwelling in a scared paralysis when confronted with the world’s most evil ideologies – both those in the White House and their allies running wild in the Middle East. Faced forward with eyes open, America 3.0 and the amazing technology we create to enable its birth will overcome both our economic and totalitarian threats. The sun will continue to shine on our nation and again we will prove by our military might and capitalist ingenuity the superiority of our value system, the resilience of our nation, and the Truth of our Creator’s watchful providence over our quest to stand as the City on the Hill, proclaiming the triumph of the Enlightenment through American word and deed.

I can only offer a heartfelt “amen” to these sentiments.

Thanks very much to David for his review. Please RTWT.

Jhumpa Lahiri talks about the Assimilative Power of American Culture Based on the Absolute Nuclear Family (But She Doesn’t Call it That)

In recent interview in the Wall Street Journal the novelist Jhumpa Lahiri discussed growing up in Rhode Island, with Indian parents, and the experience of feeling neither Indian nor American, and about moving to Italy.

She also made these telling comments — without of course using our terminology! — about the assimilative power of a culture based on the Absolute Nuclear Family, as we describe in America 3.0:

“I think the thing I admire about America, and admire even more now that I don’t live here, is that it is a country that absorbs other nations, and one can become an American over time—maybe not my generation, but my kids, yes.” She has found Italy to be more homogenous and less equipped to understand “the phenomenon of otherness.”
 
Ms. Lahiri still remains skeptical of America’s ability to fully understand the idea, too. Looking back at her childhood, she marvels at how difficult it was for her parents to keep their Bengali identities. The U.S. “just absorbs everything,” she says, sighing. “It accommodates differences but always extinguishes them in some way.”

Ms. Lahiri is absolutely right that it is a multi-generational process to become American. But in the end, people really do become American. She is also right that other cultures that lack the individualistic culture of America have a tougher time incorporating others. As Emmanuel Todd wrote, the ANF culture expects siblings to be different, and has comparatively less difficulty accepting differences between individuals. As a result, Americans see little of interest in the “phenomenon of otherness.” It simply does not matter. Diversity is naturally occurring and expected. Further, the voluntaristic nature of American culture, where individuals form a web of personal, voluntary bonds, without relying on group solidarity, makes it easier to incorporate people from other cultures who are able to play by the American “rules of the game.” Ms. Lahiri is also correct that America “just absorbs everything” and this process “extinguishes” differences. The melting pot analogy has a basis in fact, though some groups have proven less “meltable” than others. And to be melted and be absorbed is not a wholly costless or painless process.

In our book we make this reference to the process of assimilation:

The story of immigrants coming to America for opportunity and freedom, but feeling they are losing their children to a culture they do not always like or understand, is an old one that has been repeated many times. There is an element of sadness to this. This process of loss of the old way of life may be felt as tragic by the parents, but it has been a triumph for Americans over the centuries. We have peacefully, though not painlessly, assimilated millions of people, one marriage and one family at a time, into a shared culture. It is part of the price, often unrecognized, that many people paid to come to America and be part of it. Assimilation to our culture is not costless, but it has hopefully been worth the price over time, to most people who came here and to their children and grandchildren.

Ms. Lahiri mentions being raised by Indian parents who remained Indian, and that she is neither Indian nor American. I have not read any of her books, but they are apparently about the struggle of immigrants to the USA to fit in here while maintaining ties to the old country, and the process of later generations losing those ties and becoming focused on their personal and family concerns.

This is a process that has been going on for centuries, and likely will go on for centuries to come.

(I got a copy of her first book, a short story collection, called Interpreter of Maladies. There is no saying if or when I will get to it!)