Tuesday, August 9, 2016

Paris Is Surrendering Its Streets To Terror

By Nicole Gelinas
The New York Post
August 9, 2016

This weekend, New Yorkers enjoyed their first of three Summer Streets weekends. Saturday, the city closed Park Avenue to cars, letting walkers and bikers take over. Paris, though, canceled its own summer streets on the Champs-Elysées Sunday.

The retreat is a victory for the thugs who have terrorized France for a year and a half — and it shows other potential murderers that they, too, can change the world with a knife or a truck.

In February, Paris officials said they would close the famed avenue to motor traffic once a month during the summer. “I wanted . . . to re-appropriate an avenue like this one so that people could walk around, stroll with their families and ride bikes,” said Mayor Anne Hidalgo in May.

Tens of thousands of people enjoyed a once-in-a-lifetime view of the Arc de Triomphe from the middle of the cobblestoned thoroughfare. Business owners, too, said the strolling would help sales.

Such a boost is badly needed: Tourist numbers and spending have fallen sharply after terrorists killed 130 people last November.

But after an ISIS sympathizer with a truck killed 85 people on a pedestrian waterfront in Nice on July 14, Paris canceled the August event.

Paris and other cities and towns, on the French government’s advice, have canceled other festivals, including concerts, sports, open-air movies and star-gazing. In northern France, the city of Lille canceled a massive September flea market that it has hosted since the Middle Ages — and that it hasn’t canceled since 1944.

Paris might cancel its “techno parade,” too, in September — a nearly two-decade-old event that fills the streets with music freaks from around the world.

Why such an extreme reaction? First, manpower. Officials note the “fatigue of the police” as they’ve fortified targets like the Eiffel Tower, the Louvre and train stations with more officers with long guns.

“We are in a situation of war,” said the defense minister about the cancellations. “We must forbid activities” if they can’t be secured.

The government has to pick what it most wants to protect — the big tourist sites, but also its Paris Plages, artificial beaches along the Seine where locals who can’t get out of the city can sunbathe.

And, two weeks after two 19-year-olds, also claiming solidarity with ISIS, killed a priest as he held Mass at a Normandy church, more guards have been stationed at churches, too.

In a narrow sense, France’s government may be right. Responsibility for public safety is a heavy burden. And defying killers would backfire if they did mow down dozens on the Champs-Elysées — sending visitor numbers plummeting even further.

But we shouldn’t pretend that the closing of the avenue is a minor concession to the times. Events like this are fun — but fun that serves a purpose.

For more than a decade, Paris has been changing its approach to the streets — taking space for walkers and bicycles and away from cars and trucks. These changes have often started with temporary events — closing a road along the Seine as an experiment, and then keeping it closed after people can see that it has cut pollution and noise.

Paris’ re-engineering of the streets has saved dozens of people from dying in car crashes over the years. In fact, Paris’ pioneering work has helped save hundreds of lives worldwide.

New York took many of its own “traffic-calming” ideas, like pedestrian plazas and bike lanes, from Paris, sharply cutting crash deaths. (Paris also had bikeshare nearly a decade before New York did.)

London, too, now has summer-streets closures. A “free cycle” bike ride two weeks ago attracted so many people that bicyclists caused congestion for each other.

Control of the streets is also symbolic. Hitler made a show of marching down the Champs-Elysées — as, later, did Charles de Gaulle.

Ceding the streets now because Paris needs fast-moving cars and trucks as a buffer between walkers and killers, then, is an ominous development, not just for Paris, but for the world.

And, in the long term, it won’t work: Cities depend on crowds of people on foot. Lose crowds, whether by decree or because more attacks keep even more people away, and the terrorists really have won.

So, whether you like summer-streets festivals or you sit in traffic stewing about them, you should feel dismay at this summer’s Champs-Elysées surrender.


Article Link To The New York Post:

Obama’s Nuclear Fantasy Would Make The World More Dangerous

By Rich Lowry
The New York Post
August 9, 2016

The Obama administration is entering its final months, but it’s never too late to further diminish US influence and discomfit our allies.

President Obama is considering adopting a policy of No First Use, i.e. declaring that the United States would never use nuclear weapons except after a nuclear attack on itself or its allies. From Obama’s perspective, this change would have the dual advantage of being something the president can legitimately do on his own while also representing a radical departure in the country’s nuclear doctrine.

For 70 years, presidents of both parties have maintained a posture of nuclear ambiguity. We wanted enemies to have to contemplate the possibility of a US nuclear response to acts of aggression. This added an extra element of uncertainty and risk to potential attacks on us or our friends, in the hopes of deterring them in the first place.

For the advocates of No First Use, the very fact that ambiguity has been our policy for so long is a reason to abandon it. They urge that we get beyond “Cold War thinking,” a favorite line of President Obama’s as well.

The end of the Cold War indeed changed the strategic environment. But it didn’t make nuclear weapons obsolete, or render age-old concepts like deterrence inoperative, or eliminate international conflict.

The paradox of nukes is that they are weapons of cataclysmic destructive force at the same time that they have proven a guarantee of peace. As the strategist Bernard Brodie wrote at the dawn of the nuclear age, “Thus far the chief purpose of our military establishment has been to win wars. From now on its chief purpose must be to avert them.”

It is thanks in part to the advent of nuclear weapons that we have averted the total wars between great powers that made the first half the 20th century a vast killing field.

Declaring No First Use would kick away an element of our nuclear deterrent.

Yes, we no longer have to worry about deterring a massive Soviet army facing West. But Vladimir Putin has already changed the borders of Europe through force, and there’s no reason to think he’s necessarily done. A Rand Corporation study says that Russian forces could reach the capitals of the Baltic states in less than 60 hours.

Why would we make Putin’s calculation any easier in considering such move, or ease the minds of other potential aggressors like China and North Korea?

We might never use nuclear weapons in response to a conventional attack, no matter how brazen. Obviously the risks in resorting to nuclear weapons would be mind-boggling, but taking the possibility off the table serves no purpose.

If we are going to have nuclear weapons, we should take advantage of their deterrent effect.

Relying entirely on conventional forces for deterrence would require more military spending and more forward-deployed assets by us and our allies. Of course, the same analysts and activists who argue for No First Use tend to be the same ones who think we spend too much on defense. One of these things does not go along with the other.

Our allies are freaked out about the prospect of No First Use. They have long relied on our nuclear umbrella, and if it is being pulled back, countries like South Korea and Japan will need to reconsider their decisions to forswear nuclear weapons.

This is why No First Use would contradict President Obama’s opposition to nuclear proliferation, and make Global Zero — the disarmament movement’s goal of a world free of nuclear weapons — even more of a pipe dream.
In short, there is nothing to recommend No First Use unless you are a lame-duck president heedless of strategic reality and looking to make a gesture of anti-nuclear righteousness.

No First Use would make the world, at the margins, a more dangerous place — and be a perfect parting shot for President Obama.


Article Link To The New York Post:

Donald J. Trump? Never.

Does he have any real ideas about international security other than those he reads from his teleprompter?


By Dov S. Zakheim
The National Interest
August 9, 2016

There was a brief moment when I thought I might hold my nose yet vote for Donald Trump in the presidential election. I found myself in agreement with several elements of the late April 2016 foreign-policy speech that he delivered hosted by the National Interest. He appeared to extend an olive branch to Israel and the Arabs, and even to the NATO allies, although he insisted that they fulfill their commitments to increase their level of defense spending to 2 percent of GDP. He also outlined in more detail than previously his vision of what America’s defense posture should look like. He supported strategic nuclear modernization, a robust missile-defense posture, and an increase in Army end-strength, in the size of the fleet and in that of the Air Force. Even Trump’s posture toward Russia seemed a bit more balanced than was previously the case. He made it clear that he would only engage that country from a position of strength.

Trump did not convince me, though I am a lifelong Republican who intends to vote for all the other of my party’s candidates whose names will appear on the ballot in November. His staunchly negative attitude toward free trade worried me; I felt that his stance was the canary in the neo-isolationist coal mine. I was concerned that he seemed cavalier about the possibility that his insouciance toward both trade and alliances would lead Japan and South Korea down the road of developing an independent nuclear capability. I did not see how his self-vaunted negotiating skills would bring about peace between Israel and the Palestinians; to the contrary, his meddling was likely to drive them further apart. I could not abide by his proposals to deport eleven million illegal immigrants, many of them Hispanic, and to build a wall on the Mexican border. He mistakenly characterized those illegal immigrants as Mexican rapists and criminals when the majority of these people actually hailed from elsewhere in Latin America and were less likely to commit violent crimes than were American citizens. Finally, I remained deeply troubled by his attitude toward Muslims, which not only threatened America’s relationships with Sunni states already uneasy about American reliability, but smacked of racism that hearkened back to the 1930s, when the Klan hounded Blacks, Jews and Catholics, and “America First” was the watchword of bigots.

For all that, I felt Trump had turned a corner with his National Interest speech, that perhaps he had begun to listen to those advisors who were encouraging him to moderate his tone. I was wrong. His subsequent behavior has demonstrated time and again that the only voice he really seems to hear is his own, and that without a teleprompter, he remains the quintessential rabble rouser, who pays little if any attention to the consequences of what he offers to cheering crowds. Trump has doubled down on his critique of NATO, to the point where he has created the impression among the members of that alliance that it is of no value to him, and, by extension, neither are they. He has not modified his opposition to the Trans-Pacific Partnership (TPP), which is meant to be a major symbol of America’s role as a Pacific power. Nor has he altered the impression that he has few if any qualms about Japan and South Korea going nuclear, or, for that matter, going it alone. While his hostility to China remains undiminished, his mildness toward Russia has persisted as well. Moreover, his astounding ignorance of, and seeming indifference to, current events—notably that Russia invaded Ukraine—calls into question whether he has any real ideas about international security other than those he reads from his teleprompter.

Yet none of the foregoing has led me to conclude that I could under no circumstances vote for Donald Trump. Rather, it is his behavior, his thin-skinned narcissism and particularly his acting out of the many incendiary statements he seems to enjoy tossing out, that have rendered him completely unfit for the highest office in the land. His attack on the Hispanic heritage of an American-born federal judge overseeing a lawsuit against Trump University smacked of a degree of racism that could not even be termed “thinly veiled.” His clashes with the Khan family, American Muslims who lost their son in Iraq, were completely out of the bounds of common decency. And his mimicking of a disabled reporter, now widely televised in a Clinton campaign ad, was nothing short of a disgrace.

I am fortunate to have been blessed with many grandchildren. Five of them are either teens, or are preteens. Their parents have brought them up to be upstanding young citizens, respectful of both the men and women who wear our country’s uniform as well as of persons who may not look or pray as they do. I cannot abide by the prospect that Donald Trump would be their president, and thereby offer them a role model that runs totally counter to the values that have been instilled in them. Every candidate has faults—Hillary Clinton certainly has no shortage—but Donald Trump is beyond the pale. He is a disgrace to the Republican party, and, far more important, to the United States and all it stands for.


Article Link to The National Interest:

Hillary Clinton? Never.

Stale ideas, with a whiff of scandal.


By Robert W. Merry
The National Interest
August 9, 2016

When Bill and Hillary Clinton arrived in Washington as president and first lady in 1993, the Wall Street Journal editorial page went on the attack, suggesting they brought with them from Arkansas a brand of politics that was inherently corrupt, with personal gain routinely and consistently factored into official decision making. The paper took a lot of heat for this line of editorial criticism in the absence of definitive proof of mendacity on the part of the new president and his wife.

Then came the cattle-futures scandal, in which Hillary hauled down a $98,540 profit in cattle futures in less than a year of trading on a $1,000 investment, without maintaining the normally required fund reserve to diminish the risk of leverage. Further, she was advised on the matter by an outside lawyer for Tyson Foods, a giant Arkansas company with big interests before the state government, where Bill Clinton served as attorney general and then governor.

Thus began a pattern that has led us to Hillary Clinton now as the Democratic presidential nominee even as multiple polls indicate that fully two thirds of Americans consider her dishonest and untrustworthy. During the Clinton White House years, following the cattle-futures scandal, came "travelgate," "filegate," and the Whitewater land investment scandal, in which a box of missing papers, under subpoena for two years, miraculously appeared in the White House living quarters—but only in copy form; the originals were never recovered. It seemed that the Clintons were constantly mired in scandal or hints of scandal, always struggling to stay ahead of nettlesome little revelations that raised persistent questions about their ethical rectitude.

There can be no doubt that these episodes from the distant past, combined with Hillary Clinton’s more recent ethical lapses related to her doing public business on a private email server, have contributed to her reputation as a person who can’t be trusted to tell the truth or conduct herself strictly on the up and up.

Does it matter? That’s for the voters to decide. But every voting booth decision requires a multidimensional analysis that includes an assessment of the favorable and unfavorable attributes of each candidate. Herewith an assessment of Hillary Clinton’s unfavorable attributes, constituting a case against her. This isn’t designed to be definitive for any voting decision but rather a warning that all candidates have downsides, and Clinton’s are significant.

One could argue, in fact, that the Democratic Party was reckless in granting her the nomination, given her past embroilment in scandal and prospects that new revelations could catch up with her during the campaign or through her presidency. Although FBI Director James Comey didn’t recommend an indictment against her related to her email server, he said she was "extremely careless" in her handling of "very sensitive, highly classified information." Thus, he declined to take actions to destroy her candidacy and left it to voters to assess the magnitude of her lapses.

But the recklessness of her behavior is reflected in questions now being raised about whether damaging new revelations about her could be forthcoming from hackers, foreign or domestic, who gained knowledge of her activity via her unprotected server. Security experts have suggested there is a strong likelihood that China, Russia and other hackers gained access to all 63,000 emails on Clinton’s private, unprotected server—including the 33,000 she destroyed under the contention that they were merely personal and had nothing to do with her official actions and decisions.

But if those emails contain evidence of questionable actions, as the Wall Street Journal’s L. Gordon Crovitz has argued, Russian President Vladimir Putin "will have the capacity to blackmail her at will" should she become president.

What kind of evidence of questionable actions could be found there? We don’t know, but it would be imprudent to dismiss the possibility that it could be related to the Clinton Foundation, that international good-works institution created by Bill Clinton that doubles as a repository of political/financial power for the Clintons. It has served as a lucrative way station for Clinton cronies waiting for Hillary Clinton’s next campaign. It has positioned Bill Clinton to collect huge speaking fees from major overseas and American corporations and from foreign governments—some $105 million for 542 speeches between the time he left the White House and the time Hillary left her job as secretary of state, according to the Washington Post. It has rewarded Clinton friends and political allies within a Clinton network that constitutes a potent political force.

The foundation, we learn (through not from the Clintons), continued to receive money from foreign governments even during Hillary’s tenure as secretary of state, although she had promised that no such money would be accepted during her public service. The money flowed in from such countries as Algeria, Kuwait, Qatar and Saudi Arabia. Swiss bank UBS contributed some $500,000 after Secretary Clinton helped settle an IRS problem dogging the bank. The Associated Press reported that Hillary Clinton excised from her official State Department calendar some seventy-five meetings she held with "longtime political donors, Clinton Foundation contributors, and corporate and other outside interests."

Was there actual corruption going on here in the form of quid pro quos, or merely the appearance of corruption? We don’t know, though those 33,000 emails may hold the key to that question. But, in any event, we see a pattern that first came to light with the cattle futures scandal—big sums of money flowing to the Clintons as they conducted official business to the benefit of the individuals and organizations providing the money.

Leaving aside the corruption question, the Clinton Foundation represents a giant stride toward American oligarchy—the flow of power from the people at large to clever and connected elites who know how to game the system to their political and financial advantage. It is noteworthy that, in this year of seething political anger directed against the country’s elites, Hillary Clinton is emerging as the likely next president even as she projects herself as the embodiment of what is stirring all that national anger.

Which brings us to another major element in the case against Hillary Clinton. She will give us, as many have suggested, Barack Obama’s third term. The country is deeply divided on the Obama presidency, and it’s appropriate that Americans should debate his legacy as his departure nears after White House eight years. But, whatever one may say about him, it can’t be denied that he failed to solve the country’s crisis of deadlock. When the country needed a new paradigm of governmental thinking to break the deadlock and move the country in a new direction, he doubled down on the stale old politics perpetuating the political stalemate of our time.

There is no reason to believe Hillary Clinton would break the deadlock. She represents the politics of old when the country desperately seeks something fresh, capable of scrambling up the old political fault lines and forging new political coalitions that can give propulsion to a struggling America. Hence, under her leadership, we likely will see the continuation of the current deadlock crisis for another four years. That’s a long time for that kind of crisis to fester, generating ever greater anger, frustration and civic tension.


Article Link To The National Interest:

Erdoğan And Putin Reignite The Bromance

In St. Petersburg, the Turkish and Russian leaders will find common ground in their defiance of the West.


Politico EU
August 9, 2016

The long-standing friendship between Russia’s Vladimir Putin and Turkey’s Recep Tayyip Erdoğan is due to resume after a 10-month interruption as the two strongmen meet for a summit in St. Petersburg Tuesday.

Relations between the presidents of Russia and Turkey have been frayed since last November when Turkish F-16s downed a Russian bomber that strayed over the Syrian-Turkish border. But now, after a period of mutual hostility that included a ban on Russian tourists visiting Turkey, both combative leaders realize that more unites them than divides them — and that it’s time to rekindle an alliance based on defiance of the West.

The chief driver of this Russo-Turkish re-set is last month’s failed military coup against Erdoğan. In the aftermath of the attempted putsch by discontented elements in the army, Erdoğan has gone on the rhetorical warpath against alleged backers of the coup in the West.

“The script of outrageous assault on our democracy was written abroad,” Erdoğan told Turkish television last month. He also blasted the U.S. for refusing to extradite rogue Turkish cleric Fetullah Gülen, who has been in exile in Pennsylvania since 1999. Erdoğan accuses Gülen — a former ally-turned sworn-enemy — of being behind the July 15 coup. “Those who aid the enemies of Turkey cannot be called our friends,” Erdoğan said in remarks clearly aimed at Washington.

Erdoğan has also turned on European leaders who criticized his post-coup crackdown that has seen 60,000 government employees and university professors suspended from their jobs and over 15,000 suspected coup plotters jailed and, according to Human Rights Watch, tortured. European Union foreign policy chief Federica Mogherini threatened to axe Turkey’s bid to join the EU if Erdoğan went ahead with plans to reintroduce capital punishment for “a clear crime of treason.”

Russia, by contrast, rushed to support Erdoğan in the jittery hours after he narrowly escaped a team of commandos sent to capture him in a holiday villa in Marmaris. Foreign Minister Mevlüt Çavuşoğlu said this week that Russia had offered “unconditional support” over the coup attempt, and that Putin sent a personal letter of condolence to the families of Turkey’s soldiers and civilians killed in the fighting.

Turkey’s deepening anger at the West creates an ideal opportunity for Putin to pull Erdoğan into his own fiercely anti-U.S. orbit.

Ever since massive anti-Putin protests in 2011, Kremlin-controlled media have claimed that Washington is plotting regime change in Russia by funding opposition groups and waging an “information war” against Putin. When the Panama Papers revealed massive money laundering by members of Putin’s inner circle earlier this year, the Kremlin dismissed the leak as American-inspired propaganda. Similarly, when Erdoğan, his son and other close members of the ruling AK Party leadership were linked to insider deals and corrupt sanctions-busting financial ties with Iran, Turkey’s leader invoked a Western plot.

Over recent years, Erdoğan has also grown more like Putin as he imprisons critical journalists, prosecutes independent media proprietors on trumped-up tax evasion charges and nurtures a stridently nationalistic, xenophobic brand of personal rule. As Turkey moves away from the West, Putin and Erdoğan are ready to form an alliance based on “an ideology of sovereign values as a union of the deceived against the West,” argues Alexander Baunov, a senior associate at the Carnegie Moscow Center.

The main bone of contention between the two leaders is Syria. Moscow backs the Assad regime, and since September Russian bombers and helicopter gunships flying out of a temporary Russian airbase near Latakia has turned the tide of the war in the regime’s favor.

Turkey, by contrast, has backed various Syrian opposition groups and turned a blind eye — at the very least — to Saudi-funded arms supplies to Sunni rebels that include radical jihadists. But Russia’s intervention has put those rebels on the back foot and assured the regime’s survival — meaning that Ankara has had to seriously re-think its strategy of backing a rebel victory and accept that both Assad and Russia will be players in the region for some time to come.

Another reason why Erdoğan needs to make his peace with Putin is Russia’s support for the Syrian Kurds, who are closely allied to Kurdish separatists in Turkey. Even though the Syrian Kurds are anti-Assad, Russia reached out to them at the height of the jet crisis in order to undermine Turkey and even allowed them to open their first overseas “embassy” in Moscow. That’s anathema to Turkey, which is fiercely resisting the Kurds’ attempts to carve out an independent state in Northern Syria lest its own Kurdish population follow suit.

Both sides have a strong financial incentive to patch up relations. Ever since the Ukraine crisis in 2014, Russia has been looking for an alternative route to export natural gas to southern Europe that avoids Ukrainian-controlled pipelines. An ambitious scheme known as South Stream to build a massive gas pipeline under the Black Sea and on through Turkey to the Balkans and Central Europe was put on hold in December. Now the South Stream talks are being revived — as well as a deal on a Russian-built nuclear reactor in Turkey.

Back in November, Putin called the downing of the Russian bomber “a stab in the back carried out by terrorists.” Kremlin-controlled TV launched a bitter campaign against Erdoğan and the “criminal band” who ran Turkey. Today, the relationship has made a U-turn.

Russia “isn’t just our close and friendly neighbor, but also a strategic partner,” said Turkish Deputy Prime Minister Mehmet Şimşek during a preparatory visit to Moscow last week.

For the time being, Turkey remains a candidate for EU membership and a key member of NATO. But at their meeting tomorrow in St. Petersburg Putin will surely do his best to encourage Erdoğan in his accelerating drift away from the West.


Article Link to Politico EU:

China Isn't A Threat To World Order

By Zhu Feng
The Bloomberg View
August 9, 2016

A bit of China-bashing is inevitable in any U.S. election year. Over the past month, though, after China roundly dismissed an arbitration ruling that rejected its claims in the South China Sea, a chorus of voices has angrily denounced the country as an international outlaw. Western pundits have likened China’s reaction to imperial Japan’s decision to quit the League of Nations, which eventually led to war in Asia, or even to Hitler’s trampling of the global order.

This is pure, unwarranted hyperbole. And it’s no more helpful than eruptions from Chinese right-wingers, who see the ruling as part of a conspiracy to hem in their country’s rise. If the West wants to change China’s attitude, it also needs to reexamine its own.

In reality, China’s objections to the tribunal established at the Permanent Court of Arbitration in The Hague hardly constitute an earth-shattering rejection of the global order. The tribunal judges may have rebuffed China’s argument that the case brought by the Philippines involved sovereignty issues, and hence fell outside their jurisdiction. But it’s not crazy to think that at least part of the Philippines’ motivation was to improve its sovereignty claims over parts of the South China Sea.

Nor is China’s rejection of the tribunal’s final ruling unprecedented. Both the U.K. and Russia have ignored similar awards that they didn’t like. And the U.S. doesn’t exactly boast a strong record of adhering to international rules. It still hasn’t ratified UNCLOS, and it simply rejected the jurisdiction of the International Court of Justice when it ruled against the U.S. in a case brought by Nicaragua in the 1980s. More recently, of course, the U.S. launched its 2003 invasion of Iraq without any international authorization, then proceeded to abuse prisoners of war at Abu Ghraib against commonly accepted rules of war. Rather than branding the U.S. a rogue nation, China has actively participated in reconstructing Iraq and done what it could to help stabilize the country.

China’s critics are right about one thing: The country has benefited greatly from the rules-based order in place since the end of World War II -- and indeed, from the U.S. security presence in the Pacific, which has given China the space to concentrate on its economic development. Why would it want to overturn that order wholesale? Its respect for other global rules and institutions -- since joining the World Trade Organization in 2001, China’s won 21 of the 36 WTO arbitration cases it’s brought -- should be obvious by now.

At the same time, China is clearly groping for a way to integrate into the current global order while also being accorded the respect and influence it feels it deserves. Frictions are inevitable. That doesn’t mean each is an attack on the preexisting system, or part of some master plan to overturn it and place China at the head of a new one. It does mean that the system itself needs to be open to evolving, instead of being treated as an inviolate structure that can’t possibly be questioned.

Judging China by whether it implements the award 100 percent, immediately, is therefore neither fair nor wise. The tribunal’s ruling is a genuine setback, both legally and diplomatically, and China can’t be expected to give up all its claims overnight. Instead the goal should be to create space so that China can gradually and gracefully conform to the ruling over time, through a process of developing new norms in maritime Asia.

The priority for now should be to ease tensions and find a set of rules upon which everyone in the region can agree. Fortunately, this realization seems to be sinking in, with the U.S. encouraging talks between the Philippines and China and refraining from conducting more provocative naval operations near islands controlled by China. Such talks should proceed without preconditions on either side: China can’t be expected to accept the ruling first, nor the Philippines to abandon it. Instead, the two sides should concentrate on less-controversial issues such as fishing rights and infrastructure development, just so they can start talking again.

The tribunal ruling is certainly a lesson for China: It needs to be smarter and more skillful about mastering international rules and norms if it wants to continue its steady rise. But the process of integrating China fully into the rules-based global order is going to be a slow one and depends as well on halting progress toward establishing rule of law on the mainland itself. Meanwhile, the world should pay less attention to caricatures of China and more to its actual behavior -- and work patiently to keep the country heading in the right direction.


Article Link To The Bloomberg View:

Why ISIS Fears Israel

A strategy of patient, vigilant deterrence works—and America should take note.


By Graham Allison
The National Interest
August 9, 2016

In the wake of the Orlando and Istanbul attacks, President Obama reiterated his determination to “destroy” ISIS by executing a strategy that combines air strikes, American special-operations units and support for local ground forces. Both of the candidates campaigning to succeed him insist that the United States must do more: Donald Trump advocates that Washington “bomb the hell out of” the group, while Hillary Clinton promises to “smash the would-be caliphate.” All three, however, are in violent agreement on one point: the overriding objective must be to destroy ISIS.

The insistence on the “destruction” of ISIS has become such a reflexive linchpin of America’s counterterrorism project that few pause to consider its strategic merit. But the nation with arguably the most experience and success combatting terrorism has considered it—and found it wanting.

Israelis live much closer to ISIS than do Americans. ISIS has pledged to conquer the Jewish state and incorporate it into its core caliphate. Yet surprisingly, the Israel Defense Forces (IDF) has rejected the option of taking the fight directly to ISIS. Instead, faced with an operational threat that could mean the death of hundreds of Israelis at any moment, it has embraced a strategy that has not even been on the U.S. policy menu. Adopting a page from the playbook the United States used to defeat revolutionary Soviet-led communism in the Cold War, Israel is preventing ISIS attacks through a strategy of patient, vigilant deterrence. Obviously, the United States cannot simply adopt the Israeli approach whole cloth. It operates in a different security environment than the Jewish state, which faces a multiplicity of terrorist threats on its borders. But there are important lessons that America can learn to enhance its national security.

Israel’s approach to ISIS is straightforward. Israel seeks to persuade ISIS not to attack it by credibly threatening to retaliate. If you attack us, the thinking goes, we will respond in ways that will impose pain that exceeds any gain you can hope to achieve. As Cold War strategists learned, making this work in practice is demanding. To be effective, deterrence requires three Cs: clarity, capability and credibility. Specifically, this means clarity about the red line that cannot be crossed, communicated in language the adversary understands; capability to impose costs that greatly exceed the benefits; and credibility about the willingness to do so. Failures occur when the deterrer falls short on any one of the three Cs. So, if I draw a red line, you cross it, and I respond with words rather than the decisive punishment threatened, I fail the third C. Whatever excuse I give for not executing my threat, and however earnest my claim that next time will be different, the blunt fact is that adversaries will find my threats less credible.

If that were not enough, as the great nuclear strategist Thomas Schelling taught us, successful deterrence requires more than just a threat. The flip side of the deterrence coin is an equivalent promise: if you refrain from the prohibited action, I will withhold the threatened punishment. If, for whatever reason, I decide to administer the specified punishment even though you have complied with my demands, I spend that coin—and can no longer use that threat to deter you. As the saying goes, if you’re damned if you do and damned if you don’t—you might as well do.

The suggestion that terrorists as vicious as ISIS could be deterred is routinely dismissed by most members of the U.S. policy community as silly or dangerously naïve. Some assert that terrorists just want to kill. Others argue that they are irrational and that, when facing adversaries who are prepared to die for their cause, threatening to kill them will have no effect. American strategists have also been traumatized by Al Qaeda’s attack on the World Trade Center and Pentagon. Imagine a responsible government knew that it was facing hostile terrorists who had the capability to conduct an attack that could kill hundreds. If it chose to counter that threat by attempting to deter, rather than preemptively attack, the adversary, how would that government justify itself to its citizens in the aftermath of another Paris-scale assault?

ISRAELI STRATEGISTS ask all of these questions—and struggle with uncomfortable solutions. They have concluded that, however imperfect, deterrence is the best option. Indeed, the IDF believes that it is successfully deterring adversaries along all azimuths: states (Iran, Lebanon and Syria), substates (Hezbollah and Hamas) and even terrorist organizations (ISIS, Palestinian Islamic Jihad and Al Qaeda–linked groups). Israeli strategists reject the consensus view in Washington that ISIS is an ominous threat to “the entire civilized world.” In contrast to President Obama’s argument that ISIS should be the “top priority” for the IDF, it is just one more terrorist group—one that does not even make the top half of Israel’s threat matrix. As former chief of military intelligence Amos Yadlin provocatively put it, “At the end of the day, we are talking about several thousand unrestrained terrorists riding pickup trucks and firing with Kalashnikovs and machine guns.”

The American counterterrorism debate has largely ignored Israeli calculus. Washington is generally averse to learning from others, and Israel’s security establishment, until recently, was reticent about revealing its thinking. That changed last August when, for the first time in the IDF’s history, Chief of General Staff Lt. Gen. Gadi Eizenkot published an unclassified version of the IDF defense doctrine. But because the document appeared only in Hebrew, it has remained largely unknown in the American strategic community. To make it accessible, Harvard Kennedy School’s Belfer Center for Science and International Affairs recently posted an English translation of the document.

The “IDF Strategy” document discusses in detail how to deter terrorist groups, specifically Hezbollah and Hamas. In the U.S. policy lexicon, Hezbollah and Hamas are labeled “terrorists.” The IDF calls them “substate organizations.” Substate actors have headquarters, hold territory and govern populations. Thus they present targets of value, making them vulnerable, like states, to a combination of “general deterrence” and “specific deterrence.” General deterrence is achieved by maintaining overwhelming military superiority and earning a reputation like that of the Godfather. The Godfather “takes everything personal.” As his consigliere observed, “If a bolt of lightning hit a friend of his the old man would take it personal...Accidents don’t happen to people who take accidents as a personal insult.” In Eizenkot’s words, Israel must be seen as “an unpredictable enemy that can react in a very severe way.”

Specific deterrence is tailored to each enemy and focuses on particular actions. It requires “an ongoing analysis of the enemy’s characteristics, considerations, capabilities, identity, and decision making processes.” Israel seeks to influence the “calculations” of its enemies directly by persuading them of “the futility of continuing to fight” and reminding them of the “outcome of previous confrontations.”

The IDF constantly worries about whether its deterrent is sufficiently strong. It works daily to ensure that it meets each and every condition required for success. Red lines are clearly, publicly and repeatedly announced by top Israeli officials not only in Hebrew, but also in Arabic. Israel’s capability to enforce these red lines is demonstrated by “building a force that is partially visible to the enemy.” Credibility is enhanced by taking “limited offensive actions to signal that the ‘rules of the game’ have been broken.” And it is careful to withhold punishment otherwise. (Indeed, Israeli policymakers have occasionally chosen not only to avoid punishment but to reward good behavior, for example, in supporting the reconstruction of Gaza even though Hamas uses some of the material Israel supplies to build tunnels and rockets.)

Israel sees Hezbollah as the “most severe threat.” A proxy of Iran, it has assembled an arsenal of more than one hundred thousand missiles and rockets aimed at Israel—many of them precision-guided with the ability to hit strategic targets, including the equivalent of the Pentagon in Tel Aviv. Hamas, whose charter pledges to “raise the banner of Allah over every inch of Palestine” occupied by “warmongering Jews,” stands second among substates whose attacks must be deterred. It has fought three wars against Israel in the past decade. During the Second Intifada, Hamas perfected the suicide bomb and used it to kill hundreds of Israeli civilians. Today, the group has thousands of rockets and is burrowing tunnels into Israeli territory for future attacks. (Israel has discovered a number of tunnels in recent months, each buried one hundred feet underground.)

How does the IDF meet threats posed by these groups? Not by direct attacks to degrade them; not by all-out war to destroy them. Instead, it attempts to deter them. As Yadlin explained,

“Vis-a-vis Hamas and Hezbollah, we haven’t destroyed their capabilities, but we were able to establish deterrence. And this is basically because we hit them hard, and because the terrorists became . . . half-state entities. . . . The terrorists have discovered that when they are responsible for their economy, for education, for the life of their people, suddenly they are not that daring to use terror all day.”

Of course, deterrence is not the only strand in Israel’s strategy to counter its enemies. Full-spectrum prevention of terrorist attacks includes detection (deep penetration to identify threats), defense (such as the Iron Dome missile-defense system and secure walls or fences on all borders) and decisive defeat (when, despite best efforts, attackers succeed). While many states, including the United States, invest heavily in similar efforts, Israel is unique in its placing deterrence at the core of its counterterrorism strategy.

The IDF accepts the fact that this strategy sometimes fails. When it does, Israeli citizens die. But Israel’s national-security community still considers deterrence better than any feasible alternative for meeting threats posed by its sub-state adversaries. And after each conflict, the IDF has redoubled efforts to establish a new level of deterrence.

Israeli security professionals readily admit that they cannot successfully deter all terrorists. In particular, lone wolves who conduct terrorist attacks with little preparation remain a persistent, unsolved problem. Only days before the Orlando attack, Israel experienced its own lone-wolf attack in which two Palestinian cousins using homemade guns killed four civilians at an upscale shopping mall in Tel Aviv. Israel’s security establishment has tried to deter future lone-wolf terrorists by demolishing the attackers’ homes and taking other punitive actions against their families and communities. Nonetheless, Eizenkot noted recently, “I have to stress the fact that there is virtually no way to stop every terrorist planning a stabbing attack.”

TO MEET the threat of ISIS today, the IDF is following essentially the same script. Officials have been reticent about discussing details of the strategy in public, but its outlines are clear in the IDF doctrine, and senior Israeli military officials confirmed this reading of the strategy in recent off-the-record meetings.

In stark contrast with the United States, Israel sees ISIS as just one more armed group fighting in Syria alongside Al Qaeda and other terrorist affiliates. For each of these adversaries, as well as for state actors including Iran and Assad, Israel has conveyed three “red lines”: no attacks on Israel; no transfer of advanced conventional weapons (namely precision-guided missiles and rockets) to terrorist groups that threaten Israel; and no transfer of chemical weapons to terrorist groups. The “dozens” of Israeli airstrikes in Syria that Prime Minister Netanyahu recently acknowledged are calculated components of a strategy that reminds all adversaries of the cost of even minor violations of its rules. It was no accident that Israel reportedly killed a prominent Iranian general last year on the Syrian Golan Heights as he surveilled the Israeli border, planning strikes on Israel. Nor was it coincidental that Israel reportedly killed Hezbollah operations officer Samir Kuntar in December—after Israel discovered him plotting attacks on Israelis.

On its immediate border, Israel faces two ISIS affiliates: Wilayat Sinai (Sinai Province) on the Egyptian peninsula, and the Yarmouk Martyrs Brigade on the Syrian side of the Golan Heights. While both are small, their proximity and firepower concern Israeli military leaders. Despite their capability to attack at a moment’s notice, both have exercised restraint. Since declaring allegiance to ISIS in November 2014, Wilayat Sinai has focused primarily on fighting the Egyptian security forces, not Israel. Its most noteworthy success was the downing of a Russian airliner in the Sinai in October 2015, which did not kill or injure any Israelis. On the Golan, the Yarmouk Brigade controls a ten-square-kilometer area where some forty thousand civilians live. Despite the fact that the group stands, as one Israeli newspaper put it, “several hundred meters away from reaching Israeli school buses,” it has not conducted a single attack against Israel.

Israeli strategists emphasize relevant similarities between ISIS, Hamas and Hezbollah: each controls territory, attempts to govern a population and, therefore, has something to lose. Even though ISIS propaganda recently declared in flawless Hebrew that “soon there will not be one Jew left in Jerusalem,” the groups have largely refrained from attacking Israel. The reason, according to Eizenkot’s predecessor, Benny Gantz, is that “they would lose,” and in doing so risk their population and assets. ISIS leaders appear to have heard this message. As a German journalist who was embedded with ISIS in 2014 explained, “The only country ISIS fears is Israel. They told me they know the Israeli army is too strong for them.”

Could the United States deter ISIS? At least one of President Obama’s speechwriters thought so. At the National Counterterrorism Center in December, the president directed his remarks to ISIS leaders: “We’re sending a message: If you target Americans, you will have no safe haven.” If I were teaching Strategy 101 next semester, this statement would lead my weekly quiz. The assignment would simply reproduce the quote and say: “Assess.” Any student unable to explain why the president’s threat fails to satisfy the elementary requirements for successful deterrence would not receive a passing grade.

Obama made this threat just days after ISIS’s attack in Paris, which killed 130 people. His objective was to dissuade ISIS leaders from ordering a similar attack on the United States. If you attack us, the president warned, America will respond by attacking you. Students of deterrence would remind Obama that he is already conducting a campaign of air strikes and special-operations raids that he says aims to kill ISIS’s leaders and destroy the organization—before they attack the homeland. Moreover, he has argued at length why, he believes, the current campaign includes everything the United States can productively do to destroy ISIS. Thus, his attempt to deter ISIS by threatening more rings hollow.

A few months from now, a newly elected president will be thinking about how he—or she—will deal with ISIS. One can be sure that the president-elect will ask her/his national-security team to conduct a fundamental reassessment of the war against ISIS, Al Qaeda and the dozen related strains of Islamic jihadi terrorism. A serious review would begin with recognition of a brute fact: a decade and a half beyond the 9/11 attacks and President Bush’s declaration of a “War on Terrorism,” the United States undoubtedly faces more terrorists determined to do harm than when this effort began.

In anticipation of that review, the analytic community should be studying Israel’s playbook now. The United States is not Israel. Deterrence is not the only strand in Israel’s defense strategy. Not every strategy that works for Israel is appropriate for America. At this point in the fight against ISIS, it is hard to imagine a path back to a posture of containment and deterrence. But as America confronts the next ISIS, or indeed, the next dozen strains or mutations of this cancer, the United States is unlikely to have the resources and will to send even American drones and special-operations forces to every ungoverned space or valley ruled by a hostile terrorist group. Standing as they do on the front line confronting deadly threats 24/7, Israel offers what Eizenkot has called a “laboratory” of security. It is not too late to begin a debate about how lessons learned by Israel’s security community can enrich America’s conceptual arsenal for countering terrorism in what promises to be a very long war.


Article Link To The National Interest:

Brace Yourself For An Even Uglier Campaign

By Eugene Robinson
The Washington Post
August 9, 2016

It may be hard to imagine, but I fear this election campaign is going to get worse – maybe a lot worse – before it gets better. By the time it’s done, the whole nation may feel like it needs a shower.

I base this depressing prediction on three assumptions: Polls showing the Obama coalition coming together behind Hillary Clinton are correct; Donald Trump does not want to be embarrassed as a massive loser; and the Republican Party cares more about keeping its majority in the House than about Trump’s tender feelings. Any of these premises can be wrong, but I think they’re sound.

The logical result is not pretty. Those who believed this campaign hit rock-bottom long ago should keep in mind one of Sen. John McCain’s favorite sayings: “It’s always darkest before it’s totally black.”

First the polls: Following the two conventions, Clinton has taken a clear lead over Trump. The Real Clear Politics average of recent national polls has her at 47.5 percent with Trump at 40.5 percent, by any measure a healthy advantage. Moreover, in the swing states that will decide the election, Clinton leads Trump by decisive margins in Pennsylvania, Michigan, Virginia and New Hampshire; and by a smaller but significant margin in Florida.

Ohio and North Carolina are seen as essentially tied. But a recent Atlanta Journal-Constitution poll had Clinton leading Trump by 4 points in Georgia, a red state that Democrats haven’t won since 1992. And a recent CBS/YouGov poll showed Clinton within two points of Trump in Arizona, which has voted for a Democrat only once since 1948.

In other words, if the election were held today it would be what is technically called a butt-kicking. Closer examination of the polls suggests the coalition that twice elected Barack Obama as president – led by women and minorities – is reassembling for Clinton; and that college-educated whites, who narrowly favored Mitt Romney, are moving into Clinton’s column as well.

The Trump campaign may be hoping for some sort of deus ex machina game-changer – more embarrassments from the Clinton emails, say, courtesy of Russian hackers or WikiLeaks. But that’s not a plan.

It seems to me that there are two things Trump can do. One is to raise questions in voters’ minds about Clinton. Having already called her “Crooked Hillary” and questioned her mental competence, it’s hard to imagine how the attacks could get much nastier. But I’m afraid they will.

Trump can also try to bring non-college-educated whites – his strongest demographic – out to vote in unprecedented numbers. Theoretically this might allow him to pick off a Rust Belt state or two, although it’s a long shot. “I love the poorly educated,” he said in February. He needs even more of them to love him back.

So I expect Trump to double down not just on his attacks against Clinton but on the two issues that won him his white working-class following: immigration and trade. That means more bigotry, more xenophobia and more totally unrealistic promises about the miracles that he and his team of rich-guy economic advisers will magically perform.

It doesn’t help him that the Clinton campaign has bought time during the Olympics broadcasts for an ad in which Trump acknowledges that his Trump-branded shirts are made in Bangladesh and his neckties in China. Does it even occur to Trump that anyone might ever expect him to practice what he preaches? Sorry, that was a rhetorical question.

Meanwhile, the implications of the recent polls are not lost on the GOP leadership. If Clinton defeats Trump soundly, Republicans probably will lose their majority in the Senate. But if she wins in a landslide, the party could lose control of the House as well.

“If we fail to protect our majority in Congress, we could be handing President Hillary Clinton a blank check,” House Speaker Paul Ryan wrote in an urgent fundraising appeal Thursday. Coming after a disastrous week in which Trump had attacked the Gold Star parents of a Muslim-American Army captain killed in Iraq, Ryan’s words were seen by many who follow politics as a recognition that the time may have arrived for damage control.

Some Republicans will be under increasing pressure, either from their constituents or their consciences, to distance themselves from Trump and perhaps even rescind their endorsements. How will Trump react to such betrayal? Surely by lashing out, which is how he deals with any perceived slight.

This ought to be a debate about the nation’s future. Thanks to Trump, it promises instead to be an unedifying brawl with kicking, biting and gouging allowed.


Article Link to The Washington Post:

Trump Has A Posture, Not A Plan, On Economics

By Editorial Board
The Bloomberg View
August 9, 2016

Donald Trump said he'd use his speech to the Detroit Economic Club on Monday to unveil a new plan for revitalizing the American economy. Sadly, what he offered wasn't new, and it wasn't a coherent plan. The specifics Trump did put on the table would cripple rather than revitalize the U.S. economy.

His ideas fall under four main headings: taxes, regulation, energy and trade. In each case, current U.S. policy could certainly stand some improvement. When Trump says taxes should be simplified, he's right; when he says the burden of regulation is greater than it should be, he's right. Trump's correct, too, in saying that this slow recovery has left many people hurting. But his ill-considered promises fail to address the real issues.

He proposes simplifying the tax system by reducing the number of income-tax bands to three (from seven), as well as cutting personal rates, lowering the business tax rate to 15 percent, and repealing the estate tax. His proposed personal tax rates of 12 percent, 25 percent and 33 percent are higher than he previously suggested, but even with some narrowing of tax deductions and the closing of the carried-interest loophole (both good ideas, by the way), the loss of revenue would be substantial.

Lower taxes are great: They encourage effort and investment. But permanent tax reductions require permanent spending reductions, and on that subject Trump has almost nothing to say. A tax proposal that cuts revenue deeply without considering the implications for spending solves nothing.

When it comes to regulation, Trump is similarly unconcerned with results. Minimizing the burden of regulation on business requires careful justification and good design. Trump says he's going to cut regulations "massively," starting with a moratorium on new ones. Such sweeping declarations are worthless. Smart regulatory reform has to move case by case, and demands close attention to detail -- not the candidate's style.

But Trump's pronouncements on taxes and regulation are temperate compared with his position on energy. He proposes to roll back the Obama administration's "anti-energy" policies, without regard to how this might increase emissions of carbon and other pollutants. Again, Trump's plan acknowledges no trade-offs, no complications.

To cap it all, there's trade. Here, Trump's proposals are specific -- but they would be patently destructive of U.S. productive potential and living standards. He threatens to scrap the North American Free Trade Agreement if it cannot be renegotiated to his liking; he promises to ditch the Trans-Pacific Partnership; and he says he'll apply punitive tariffs to countries such as China, which he regards as cheats. These measures would disrupt the global supply chains that U.S. businesses rely on, raise prices for American consumers, and stifle competition and innovation. That's assuming the U.S. can embark on a one-sided trade war without provoking retaliation against its own exports.

Policies have consequences, and presidential candidates ought to show they understand this. So far, Trump hasn't -- and until he does, his ideas don't deserve to be called a plan.


Article Link to The Bloomberg View:

Donald Trump's Tax Hike On Investors: Terrible Idea

Trump doesn’t understand how our economy works.


By Kevin D. Williamson 
The National Review
August 9, 2016

Donald Trump is proposing a couple of big tax hikes.

The first one is trivial: It’s the tax hike in Trump Tax Plan 2.0 over the original version. Earlier, Trump had talked about cutting the tax code down to three brackets, at 10 percent, 20 percent, and 25 percent. The new version is 12 percent, 25 percent, and 33 percent: That’s a 20 percent marginal rate hike on the bottom third, another 20 percent hike on the middle, and 32 percent increase on the fat cats at the top. It’s also more realistic for the long term, meaning that somebody or something must have gotten to Trump — maybe the Illuminati, maybe math.

The big, ugly, stupid tax hike he’s planning is on Silicon Valley and its imitators around the country, the economic ecosystem of startup companies and the venture capitalists who put up the cash to turn their big ideas into viable products, dopey computer games, social-media annoyances, and companies that employ hundreds of thousands of people at very high wages. Which is to say, he wants to punish the part of the U.S. economy that works, for the crime of working.

The so-called carried-interest loophole, which isn’t a loophole, drives progressives batty — Donald Trump, Hillary Rodham Clinton, and Elizabeth Warren all get their Underoos over their heads about it. You’ll hear a lot from Trump and others about “hedge-fund guys” who exploit this so-called loophole to beat Uncle Stupid out of a few gazillion dollars in taxes, but it in fact has very little to do with hedge funds.

Here’s how it works: Because the U.S. government wants to encourage investment and because corporations (and, hence, their shareholders) already pay the corporate-income tax, profits from certain long-term investments are taxed at a lower rate than is a salary. This is called the long-term capital-gains tax rate, and for a long time, it was 15 percent for most everybody; a provision of the grievously misnamed American Taxpayer Relief Act of 2012 made it 20 percent for households with incomes in the middle six figures and up, but that’s still about half of what you’d pay if it were taxed the way a salary is taxed — but a salary is guaranteed, whereas investments involve higher levels of risk. To pay the long-term rate, you generally have to hold an investment for a year or more, and that is why it doesn’t much matter to hedge funds, which rarely hold anything that long.

It matters a great deal to two related kinds of investors: private-equity investors (that’s what Mitt Romney used to do at Bain) and venture-capital investors (that’s what the guys who put up the money to develop Facebook do). If you’re a startup that needs money, you can’t really borrow it, or much of it: The failure rate of new businesses is high, meaning that interest rates on such loans would be high, too; Mom and Dad might kick in, but the banks aren’t going to. And they aren’t going to do that if you’re an established but struggling company that needs to restructure itself or a small business with a big idea looking to become a very big business. If you’re the cash-strapped startup, you go to venture capitalists; if you’re the established business, you go to a private-equity group. In both cases, the deal looks pretty similar: You get cash to do what you need to do, and the investor, rather than lending you money at a high interest rate, takes a piece of your company as recompense (for distressed companies being reorganized by private-equity firms, that’s usually 100 percent of the firm) on the theory that this will be worth more — preferably much more – than the money they put into your business. Eventually, the investor sells its stake in the company and pays the capital-gains tax on its capital gain.

The success stories are famous. When retired supermarket executive Thomas Stemberg couldn’t find a printer ribbon one day, he decided that there was an opening in the market for an office-supplies supermarket. Nobody thought this was a very good idea except for Mitt Romney and Bain Capital, which not only put up the money to open the first Staples store but also — here’s the critical part — lent the fledging business their management and financial expertise to help ensure its long-term success. (Federal antitrust regulators currently are doing their best to ensure Staples’s failure.) It isn’t just about writing a check. Similarly, when PayPal cofounder Peter Thiel put $500,000 into Facebook, his investment came with a great deal more than a jolt of liquidity. The same thing happens at a smaller scale when workers ranging from secretaries to programmers come to startup companies that cannot afford to pay them very much in cash but reward them with equity instead. That process is sometimes called “sweat equity.” Redmond, Calif., and Austin, Texas, are full of people who had unglamorous jobs in the early days of Microsoft and Dell and were rewarded — sometimes spectacularly — for the risk they took and the cash-money pay they forwent.

As Bobby Franklin of the National Venture Capital Association puts it, “Far from being a so-called ‘loophole,’ the carried interest venture investors receive is similar to stock awards received by the founders of a startup in that both the venture investors and founders commit the time, energy, and creativity against huge risks to build new startups into successful companies.”

The lower capital-gains tax rate is not what drives venture-capital investing in the main. Thiel is said to have made something like $400 million on his $500,000 initial Facebook investment, which is a good deal at a 15 percent, 20 percent, or 40 percent tax rate. It is the promise of outsized returns that drives the venture-capital model, along with, in many cases, a nerdy sense of adventure. Elon Musk knows he’s not going to make money on every big idea he has. That being said, tax rates on investment do matter, at least at the margins — and they will matter much more in the relatively near future. As the technology sector matures, it becomes more like any other established industry, including in its attitude toward startups. Not every investment is going to make 1,000 percent returns or 10,000 percent returns — not in the long run. In the long run, the margins are going to be smaller, which means that doubling taxes on sweat-equity investments will have a relatively larger effect.

Donald Trump does not understand this, because he isn’t a real businessman — he’s a Potemkin businessman, a New York City real-estate heir with his name on a lot of buildings he doesn’t own and didn’t build and whose real business is peddling celebrity and its by-products. He’s a lot more like Paris Hilton than he is like Henry Ford or Steve Jobs. Miss Hilton sells perfumes and the promise of glamour, Trump sells ugly neckties and the promise of glamour. By Trump’s own reckoning, his brand — meaning the cloud of celebrity that hangs around him — is worth more than his actual assets, which ought to tell you something about the nature of his business model, i.e., that it’s show business. Not that there’s anything wrong with show business, but unless you’re talking about ten square miles in Southern California, it’s not much of a foundation for an economy.

Technology leaders from Steve Wozniak to Jimmy Wales have predicted in a group statement that a Trump presidency would constitute “a disaster for innovation.”

There are aspects of the U.S. tax code that are in need of reform, to be sure, but the nation is not struggling for want of sufficiently rapacious taxation of long-term investments. And even though changes are warranted, having every election result in radical changes to the tax code imposes costs of its own that are far from obvious: There is real economic value in continuity and predictability. Continuity and predictability are especially valuable in sectors that are already working pretty well, which our venture-capital and private-equity industries are. The old wisdom is: “If it ain’t broke, don’t fix it.” The new wisdom is, “If it ain’t broke, we’ll see what we can do about that.”

There’s a lot that doesn’t work well in these United States: the schools, the State Department, the immigration system, Baltimore, Detroit, Philadelphia...Silicon Valley works just fine. Let’s don’t mess that up.


Article Link to The National Review:

America’s Looming Debt Decision

By Kenneth Rogoff
Project Syndicate
August 9, 2016

BOGOTÁ – Should the US government lock in today’s ultra-low borrowing costs by issuing longer-term debt? It’s a tough call, but with overall debt levels already high (not to mention unfunded pension and medical insurance liabilities, which are both likely to rise), perhaps the time has come.

Until now, the US Treasury and the Federal Reserve Board, acting in combination, have worked to keep down long-term government debt, in order to reduce interest rates for the private sector. Indeed, at this point, the average duration of US debt (integrating the Fed’s balance sheet) is now under three years, well below that of most European countries, even taking into account their own central banks’ massive quantitative-easing (QE) programs.

The tilt toward short-term borrowing as a way to try to stimulate the economy has made sense until now. Given that the interest rate on 30-year US debt is roughly 200 basis points higher than on one-year debt, short-term borrowing has saved the government money as well.

But the government should not operate like a bank or a hedge fund, loading up on short-term debt to fund long-term projects. It is too risky. With net US government debt already running at 82% of national income, the potential fiscal costs of a fast upward shift in interest rates could be massive.

No one is saying that such a shift is likely or imminent, but the odds aren’t as trivial as some might like to believe. For starters, interest rates could spike in the event of a war or some other catastrophic event. Less dramatic but more likely is that the Fed will someday find a way to push up inflation expectations, which, as in most advanced economies, have been drifting inexorably downward. If inflation expectations do start rising, this will push up rates.

A rise in borrowing rates could also come from self-inflicted damage. Suppose, for example, that US voters elect as their president an unpredictable and incompetent businessman, who views bankruptcy as just business as usual. Alternatively, it is not difficult to imagine a sequence of highly populist leaders who embrace the quack idea that the level of government debt is basically irrelevant and should never be an obstacle to maximizing public spending.

Unfortunately, if the US ever did face an abrupt normalization of interest rates, it could require significant tax and spending adjustments. And the overall burden, including unemployment, would almost surely fall disproportionately on the poor, a fact that populists who believe that debt is a free lunch conveniently ignore.

Mind you, lengthening borrowing maturities does not have to imply borrowing less. Most economists agree that larger deficits make sense if used to pay for necessary infrastructure and education improvements, not to mention enhancing domestic physical and cyber security. There is a significant backlog of worthy projects, and real (inflation-adjusted) interest rates are low (though, properly measured, real rates may be significantly higher than official measures suggest, mainly because the government’s inability to account properly for the benefits of new goods causes it to overstate inflation). One hopes that the next president will create an infrastructure task force with substantial independence and technocratic expertise to help curate project proposals, as the United Kingdom’s pre-Brexit government did.

With control of the global reserve currency, the US has room to borrow; nonetheless, it should structure its borrowing wisely. Several years ago, it still made sense for the Fed to do cartwheels to bring down long-term borrowing costs. Today, with the economy normalizing, the case for creative policies like QE, which effectively shortens government debt by sucking long-term bonds out of the market, seems much weaker.

That is why the time has come for the US Treasury to consider borrowing at longer horizons than it has in recent years. Today, the longest maturity debt issued by the US government is the 30-year bond. Yet Spain has successfully issued 50-year debt at a very low rate, while Ireland, Belgium, and even Mexico have issued 100-year debt. Sure, there is no guarantee that rates won’t drop even more in the future, but the point is to have a less risky stream of future interest obligations.

Many left-leaning polemicists point to Japan, where net debt is about 140% of GDP, as proof that much higher debt is a great idea, despite the country’s anemic growth record. The implication is that there is little need to worry about debt at all, much less its maturity structure. In fact, Japanese policymakers and economists are plenty worried and do not recommend that other countries emulate their country’s debt position.

Europe is admittedly in a very different place, with much higher unemployment, and a much stronger argument for continuing to pursue stimulus at the risk of higher debt-service costs in the future. But with the US economy now enjoying a solid recovery, the best approach may be to move faster toward normalizing debt policy, and not to assume that foreign lenders will be patient, regardless of the direction of US politics.


Article Link to Project Syndicate:

Erdogan Allies Accuse Leading Washington Think Tank Of Orchestrating Coup

By John Hudson
Foreign Policy
August 9, 2016

The Turkish government has arrested or detained tens of thousands of soldiers, police officers, academics, and journalists in the wake of last month’s failed coup attempt. Some supporters of President Recep Tayyip Erdogan have a new target: a prominent Washington think tank.

The Woodrow Wilson Center, a nonpartisan organization founded in 1968, is facing a wave of criticisms over its alleged — and wholly unproven — role in orchestrating last month’s failed putsch, which killed more than 200 people and injured more than 1,000. Erdogan retained power and has spent the past weeks carrying out purges of institutions across Turkish society.

The accusations against the Wilson Center, appearing on the front page of mainstream newspapers linked to Erdogan, prompted the think tank to take the unusual step of issuing a statement of concern about “possible reprisals” to researchers and scholars that attended a July conference in Turkey organized by the think tank. The conspiracy theories against the Wilson Center were sparked, in part, by the fact that its July 15-17 event occurred on the exact same weekend as the coup attempt.

“The meeting, which took place on the island of Buyukada in Istanbul, was very much removed from the center of the crisis and had no connection to it,” the Wilson Center said in an unsigned statement Friday. “The discussion was an open exchange of views among seasoned foreign policy experts” about Iran and its relations with its neighbors, said the group.

But the think tank’s remarks do not appear to have lessened the proliferation of reports in Turkey blaming Henri Barkey, the director of the Wilson Center’s Middle East program, for the botched coup. On Saturday, a front-page story in the pro-government newspaper Aksam featured photographs of Barkey and other academics who attended the Wilson Center event. It accused them of being CIA agents who helped orchestrate the coup.

“Henri Barkey has been mercilessly hounded by the pro-Erdogan press,” Steven Cook, a Turkey expert at the Council on Foreign Relations, told Foreign Policy. “Turkish officials definitely need to do a better job [rebutting conspiracy theories], but they won’t. They are enabling these kinds of allegations and have no real interest in pushing back.”

The Turkish Embassy in Washington did not respond to a request for comment. The Wilson Center did not respond to a request for comment. Barkey declined to comment.

Participants of the workshop are said to be facing a barrage of scrutiny from the media and Turkish authorities. Mensur Akgun, a director at the Global Political Trends Center which joined the Wilson Center in organizing the event, was interrogated by Turkish authorities in recent days. A female academic who attended the event was relieved of her job as a professor, according to one attendee.

The story also purports to show a photograph of Scott Peterson, a journalist invited to attend the event who is affiliated with the Christian Science Monitor.But instead of displaying his photograph, it shows the image of a different Scott Peterson, the man convicted of murdering his pregnant wife Laci Peterson in 2002 and currently serving time in a California prison.

“The only comedic part is they screwed up Scott Peterson, mistaking the CSM reporter for the murderer of Laci Peterson,” said Aaron Stein, a Turkey scholar at the Atlantic Council.

Officially, the Turkish government blames Fethullah Gulen, a Muslim cleric living in self-imposed exile in a compound in rural Pennsylvania, for carrying out the coup. But ever since the failed July 15 putsch, a range of U.S. actors have become the target of lurid conspiracy theories from Turkish news outlets like the pro-government Yeni Safak newspaper, which also accused the CIA and Gen. John Campbell, a former NATO commander in Afghanistan, of trying to overthrow Erdogan.

In its statement on Friday, the center warned that accusations against its scholars could hurt Turkey’s international reputation.

“Turkey has long been an attractive location for scholarly meetings, in part because of the quality and caliber of Turkey’s academic and civil society institutions, and in part because of its natural beauty and convenient location,” said the think tank. “It would be a great loss to Turkey’s international reputation and to its contribution to global democratic civil society were Turkey’s own fine scholars to be excluded or at risk for participating in such valuable exchanges.”


Article Link to Foreign Policy:

With Evan McMullin, #NeverTrump Has Nowhere To Go But Down

By rallying behind an obscure establishment cog for president, anti-Trump Republicans show they don't understand their own party.


By Jeet Heer
The New Republic
August 9, 2016

They said it couldn’t be done, but the hapless folks behind the #NeverTrump movement have actually pulled it off: They’ve managed to find an even more obscure and unlikely standard-bearer for their cause—defending Republican orthodoxy against the party’s embarrassing nominee—than their previous champion. Back in late May, #NeverTrump stalwart Bill Kristol floated National Review writer David French as an independent presidential candidate who could rally conservatives who find Trump to be too obnoxious, too gaudy, too overtly racist, or just too plain Trumpian, to tolerate. It seemed like a bizarre choice, since French had no political experience and no national profile aside from his writing for the conservative magazine. Even at National Review, French was a second-stringer compared to some of the magazine’s star writers.

Ever since French politely declined to take this flying leap into national politics, the search for a third-party alternative has continued. And now the increasingly desperate anti-Trump forces, led by Republican consultant Rick Wilson, have settled on Evan McMullin, whose singular virtue is that he makes David French look like a rock star by comparison. Before his candidacy was reported this morning by ABC News and other outlets, McMullin had a grand total of 135 twitter followers, as against 43,700 followers for French.

The sheer obscurity of both French and McMullin points out perhaps the major flaw of the #NeverTrump cohort: This is a political movement without any politicians of note behind it, or any mass appeal to speak of. #NeverTrump is a rallying cry for pundits and consultants, but it has nearly zero resonance for the Republican base. What’s most important about the McMullin candidacy is that it proves how deeply its proponents misunderstand the very party they want to defend.

McMullin, who’s 40, does have an intriguing resume—one that shows the ideal #NeverTrump candidate is, apparently, an establishment functionary. He’s worked as a policy director for House Republicans (where, according to colleagues, he had a low profile), as a CIA operations officer, and as an investment banking associate at Goldman Sachs. His CIA credentials give weight to his major reason for opposing Trump: Like many people versed in foreign policy, McMullin believes that Trump’s anti-Muslim bigotry is not just morally objectionable but also harms America’s interest by making it harder to win allies in the Islamic world. He’s been an extensive critic of Trump on Facebook and Twitter, writing, for example, that “Trump’s exploitation of Americans’ security fears is cowardly.”

"McMullin candidacy proves how deeply the #NeverTrumpers misunderstand the very party they are trying to change."  


But while such stirring sentiments seems to have attracted Rick Wilson along with some disaffected Republican donors, they don’t distinguish McMullin from tens of millions of other Americans—including Hillary Clinton. McMullin’s other major credential is also biographical: He’s Mormon, a member of the religious group that Trump has struggled to win over. In theory, if McMullin is on the ballot (and ballot access is a whole ‘nother problem at this late date), he could cost Trump six electoral votes in the Mormon heartland of Utah, where polls are showing an unusually tight race in a state where Republicans usually win by a landslide.

In the grand scheme of things, what does McMullin have to offer, aside from representing the small slice of Republicans who can’t come around to Trump? If mainstream Republicans knew how to defeat Trump, they would already have done so in the primaries, with far more viable characters like Jeb Bush or Marco Rubio. Now it’s up to Clinton. And given her polling lead not just in traditional swing states like Florida and Pennsylvania but also in Republican-dominated states like Georgia, a Trump loss in Utah—probably the zenith of what McMullin’s candidacy could hope to achieve—would only be icing on the cake. It’s virtually impossible to imagine this election coming down to Utah.

Even more than the David French misadventure, the Evan McMullin gambit shows that the #NeverTrump faction is little more than a desperate flailing rump within the Republican Party, one with little or no change of influencing the party’s future. It’s notable that #NeverTrump was utterly unable to convince anybody with actual political experience to mount a campaign. (Both Mitt Romney and Senator Ben Sasse rejected entreaties from Kristol to run against Trump). With the exception of Ted Cruz, virtually everyone in the Republican orbit with future national ambitions has either endorsed Trump or kept quiet. And even Cruz, who’s betting his future on a disastrous Trump defeat, didn’t take up the chance to become the #NeverTrump candidate.

It’s not just the lack of support from actual politicians that’s problematic. Consider the almost inconceivable: What would happen if #NeverTrump’s gambit actually succeeds, and McMullin somehow gained enough traction, in Utah or some other closely contested state, to cost Republicans the White House in a narrow election? Wouldn’t Trump supporters (who now make up the majority of Republicans) then have good cause to see McMullin and his compatriots as spoilers who stabbed the party in the back? If you wanted to promulgate a Dolchstoßlegende (or stabbed-in-the-back-myth) among the Trumpkins, wouldn’t McMullin make the perfect villain? As a CIA spook and Goldman Sachs man, McMullin would confirm the Trumpian idea that the establishment rigged the system so he couldn’t win. The likely outcome would be a party base much more committed to Trump, who’d be able to wear a martyr’s mantle with genuine plausibility.

It’s easy to admire the political courage of #NeverTrump. In standing up to Trump’s bigotry, these Republican dissidents are doing a service not just to their party but to America. Or, at least, they’re trying to. But however admirable they might be ethically, the #NeverTrump faction has shown little evidence of political intelligence. If you’ve lost battle after battle to Trump, it just might be because you’re not very smart.


Article Link to The New Republic: