Hi. I mainly scan this mailing list on the web archive. I was at the house of some relatives, and I read their copy of Forbes. Steve Forbes has this essay affixed below in which he criticizes the IMF. That creates a bit of cognitive dissonance for me, because if Forbes magazine is criticizing the IMF/WB, then who exactly is propping it up. Most of the rest of his essay is pretty dumb. I got in an argument over the definition of 'neoliberal' with my relatives who claim that it means 'new left', and it was hard to say that Bush simultaneously supports neoconservative and neoliberal policies. Is this anything new, that Steve Forbes would criticize the IMF's approach, or is he unique among conservatives, or have there always been a minority of conservatives who don't like it. Christine
Fact and Comment Steve Forbes, Forbes Magazine, 01.07.02, 12:00 AM ET
SO FAR--PHONY STIMULUS The American economy should have been roaring back by now. Inventories have been slashed, the war on terrorism is proceeding successfully in Afghanistan and soon, elsewhere. Technology breakthroughs continue to proliferate despite the dot.com/telecom shakeout. Even some of the regulatory roadblocks are beginning to be removed, most noticeably by the Federal Communications Commission, which is finally raising and ultimately eliminating bad-service-inducing spectrum caps on wireless providers.
But the economy is anemic, and the recovery--which should come by spring--won't be vigorous until two anti-growth villains are slain. Villain One: The Federal Reserve. Greenspan & Co. has made the same mistake as the Bank of Japan: lowering the price of money without providing adequate credit to the marketplace. Small and medium-size businesses in particular are suffering the credit version of dehydration. Moreover, bank regulators have been forcing banks to tighten lending standards. Deflation (pressure on prices) is now more of a threat than inflation. Those who can manage it are building up cash balances. When an item is scarce, you tend to hoard it.
Villain Two: Last summer's tax cut. It was a mouse posturing as an elephant. The income tax rate reductions were inadequate and were diluted by being phased in over several years. We also need to take a vigorous whack at the capital gains levy, but even that remains unlikely. The final insult: The moratorium on Internet taxes was allowed to lapse last October.
The International Monetary Fund remains the scourge of the developing world, mindlessly forcing countries to raise taxes (thereby deepening their slumps) and to depreciate currencies (which unleashes inflation, raising the cost of capital and motivating people to send their money abroad). Argentina is writhing from IMF-administered medicine, as is critically ill Turkey, a crucially situated, secular Muslim state.
If the Fed, the White House and Congress could get their economic acts together, growth would quickly return (even in the face of new terrorist outrages) and stocks would once again strike sourpusses like Alan Greenspan as "irrationally exuberant." Until then, we'll be batting the economic equivalent of .250, instead of .375.
DON'T CASTRATE NATO Why in the world would the U.S. stand by and watch NATO be neutered? This extraordinary organization has proven its post-Cold War effectiveness. Extending membership to the Czech Republic, Hungary and Poland has given these countries a sense of military and political security, enabling them to make impressive progress from the rubble of the Communist era. (Admitting the Baltic states, Bulgaria and Romania would help these countries to also realize such gains.) In spite of the foot-dragging French, NATO demonstrated in the Balkans that with firm U.S. leadership it could act constructively and decisively. NATO's post-Sept. 11 declaration--its first ever--that the terrorist attacks on the U.S. were attacks on all gave timely credibility to President Bush's charge that we root out the forces of evil responsible for such attacks.
NATO now faces two mortal threats: the European Union's rapid reaction force and Russia's machinations.
Prodded by the French, the European Union is moving to create a military entity made up of troops and equipment from various European nations, ostensibly to intervene, NATO-like, in hot spots. Why duplicate what NATO already does? Because subverting NATO would reduce American influence in Europe. Ultimately the French and other EU enthusiasts see the EU as a separate political and military power rivaling the U.S.
One obstacle to Paris' scheme has been Turkey, which has NATO's largest standing army in Europe and doesn't want anything done that will weaken NATO. But having received no firm direction from the U.S., Ankara finally caved in and agreed to the French initiative. Any attempt to derail this misbegotten move now would be exceedingly difficult. Where were the Bush diplomatic and defense teams when Turkey's arms were being twisted?
Russia? President Putin recently scored a coup when, at Britain's behest, Moscow was given a de facto veto over NATO initiatives. Members agreed to let Russia sit in on critical meetings, just as if it were a member. Despite fig-leaf language to the contrary, Moscow can now stop future NATO moves in the Balkans and elsewhere before the regular membership has reached a consensus.
This is destructively idiotic and will ultimately make NATO a nullity, a gabfest incapable of timely action to enhance the cause of democracy.
MAKE THE CIA FEARSOMELY EFFECTIVE AGAIN Promptly after Pearl Harbor, President Roosevelt created a high-powered commission, headed by Supreme Court Justice Owen Roberts, to investigate how such a catastrophic surprise attack could have occurred. Among other things, the inquiry led to the creation of a behind-the-lines intelligence-gathering organizer of anti-Nazi operations, the Office of Strategic Services, which was the precursor to the Central Intelligence Agency.
Last May President Bush appointed a commission to examine how our intelligence efforts should be restructured, but it has been no substitute for a Roberts-like inquiry. It is rumored to be recommending that the Pentagon's three largest intelligence-gathering organizations be transferred to the CIA. What were these commissioners smoking--and inhaling?
Once upon a time in industry and government, bigness was synonymous with effectiveness and efficiency. This is not true today. The commission's retrograde recommendation would guarantee more bureaucracy and sluggishness. Thanks to Clintonian indifference and mismanagement, the CIA seems to have morphed into a timid, deskbound organization too reliant on gadgetry at the expense of on-the-ground agents. What makes these commissioners conclude that the CIA is now capable of running all of our critical information-gathering efforts? Post-Sept. 11, the CIA is trying to convey the image of a spry, on-top-of-things entity. But this image makeover is not fully convincing. At the beginning of the fighting in Afghanistan, for instance, the CIA inexcusably bungled the handling of the charismatic anti-Taliban leader Abdul Haq, who was captured and executed by the Taliban when he returned to Afghanistan in October.
The Pentagon's intelligence organizations--The National Security Agency, handling code-breaking and electronic intercepts; the National Reconnaissance Office, in charge of our spy satellites; and the National Imagery and Mapping Agency, responsible for imagery intelligence and mapping--have not covered themselves in glory either. But setting off ferocious turf wars by reshuffling organizational boxes will not correct our intelligence-gathering flaws. Why would it be better to have military intelligence go through the CIA bureaucracy before being sent back for use by the military? More and more we need reliable, real-time information.
U.S. intelligence needs the kind of risk-taking and creativity characteristic of William "Wild Bill" Donovan, boss/creator of the Office of Strategic Services, that William Casey briefly and innovatively revived during the early years of the Reagan Administration-qualities that helped us win the Cold War. If the White House won't call for a Roberts-like investigation of how our intelligence was caught off guard prior to and following Sept. 11, Congress should. Immediately.
HOW NOT TO FIGHT A WAR Isonzo: The Forgotten Sacrifice of the Great War--by John R. Schindler (Praeger, $45). The first definitive English-language account of WWI's just-about-forgotten epic clash between Italy and Austria-Hungary. The dozen battles fought in the Isonzo valley stand out for the scale of their slaughter, cruelty, courage and ghastly military-command pigheadedness in the face of failure. After 29 months and 11 major offensives, the Italian Army had advanced only a few miles, at a cost of more than 1.1 million casualties. The Austrians, with the aid of several German divisions, finally launched their own offensive, known as "Caporetto." The Italians crumbled, and soon the Austrians were threatening Venice.
It's remarkable how long Italian troops fought and endured in the face of indescribable hardship. The Italian commander, Luigi Cadorna, had no concern for the state of his men. Trench conditions were appalling; medical facilities, dreadful (countless thousands of Italian soldiers died from cholera and malaria); leave, nonexistent; and infantry army pay, the worst in Europe, which meant incredible hardships for soldiers' families and contributed to plummeting morale. Discipline was barbaric.
Austrian army leadership was vastly superior. The Habsburg Empire's economy, however, cracked under the strain of war. Increasing shortages of both food and armaments sapped the army so that it was unable to follow through after its impressive breakthroughs at Caporetto.
The multinational Austro-Hungarian Army, in which ten official languages were recognized (officers were expected to know three or four), was cohesive and effective. Perhaps in the age of nationalism the Habsburg Empire was doomed, but its ability to keep so many disparate, conflicting groups effectively together is enormously impressive.
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