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Ephemerides (May 2002)
May 31, 2002
Now here is such a surprise. Last Februrary the CEO of U.S. Steel told a Senate committee that the steel tariffs that he was advocating (and that President Bush imposed a few weeks later) "will only result in modest and reasonable price increases" - and he turned out to be wrong, just as dogmatic free marketeers had predicted.
Today's Wall Street Journal, from which the accompanying graph comes, carries details of how the levies announced on March 5th are turning into an economic - and even a political - problem. (Neil King Jr. & Robert Guy Matthews, "U.S. Feels the Pain of Steel Tariffs As Prices Rise, Supply Is Reduced" [link for Online WSJ subscribers only]) Companies that use steel employ more people and are more important to the economy than those that make it. The steel users now find prices rising, middlemen repudiating supply contracts and their own profits squeezed by the difficulties of raising their own prices in the face of foreign competition. Ironically, the new trade barriers don't appear likely to advance the protectionists' dream of autarky, only to give a different group of foreign producers a government-created advantage over domestic companies.
In Minnesota, Erick Ajax runs a company that makes freezer hinges that sell for about 30 cents each, with steel costs well over half that. Since May 1, his steel costs have jumped 20% and suppliers have warned him of bigger increases to come. But "manufacturers are making it clear that they have other possibilities for suppliers," says Mr. Ajax. "There is Canada, Mexico, and of course China. This could be the start of a real rush to China."
For an economic recovery that is still having trouble getting firm footing, these effects are not a trivial matter. The strong first quarter trend in GDP appears to be have weakened over the past couple of months, and the Dow has fallen back below its January 1st level. These disappointing omens, by a curious coincidence, followed quite closely on the President's turn toward protectionism. What, one wonders, will a few happy steel unions in Pennsylvania matter if in November the economy is again on the skids?
Politicians inescapably grow many lemons. The successful ones turn a reasonable proportion of them into lemonade. Here President Bush has a clear and present opportunity. Our wobbly European allies are (quite rightly) annoyed at the U.S. tariffs. We are annoyed at their foot dragging and second guessing in the war. It seems to me that each side has something to offer, something that it can, in fact, give up to its own benefit. Our economy will be better off without protectionism. European security will improve if its nations will accept U.S. leadership in the war effort. Mutual accommodation might be a way to sidestep domestic political obstacles on both sides of the Atlantic and attain one of those "win-win" outcomes to which MBA"s like President Bush are taught to aspire.
May 28, 2002
There's something about politics and the name "Al": Al Gore (père et fils), Al Sharpton, Al Hunt - and today brings an example of preposterous analysis from Alan Murray [link for Online WSJ subscribers only], like Hunt a regular columnist for The Wall Street Journal.
Mr. Murray is aghast at the prospect that the Senate may vote in favor of repealing the estate tax (currently slated to decline very slightly through 2009, go out of existence for the single year 2010, then snap back to 2001 rates - an absurd adaptation to Congress' absurd budgetary "rules"). All Republicans support repeal, as do enough Democrats to make a successful filibuster iffy.
We are presented with three reasons why repeal is a bad idea. Two are unvarnished "down with the filthy rich" arguments: the claim, supported by a dubiously pertinent statistic from faux-populist Kevin Phillips, that wealth is more concentrated now than it was in the Gilded Age, followed by a tirade against overpaid, incompetent CEO's. The third argument is the most fascinating and curious, another instance of the sagacity of Dr. Johnson's apothegm concerning patriotism and scoundrels:
The nation is at war. And in this country, wars always have been times of sacrifice, particularly among the affluent. The inheritance tax was created to finance the wars of the 19th century. The notion of singling it out for elimination in the midst of the current effort goes against more than 150 years of American history [sic - the first federal death tax was enacted in 1862, 140 years ago].
In his peroration, he urges Senator Daschle on to a filibuster, so as to keep the members of the Senate from "putting themselves squarely on the wrong side of history".
Wow! History is taking sides on tax policy, and those who want to stop taxing property at death display their lack of sacrificial patriotism.
Now, it is true that the Union levied an inheritance tax as one of a plethora of Civil War tax measures, though its first recourse was to higher tariffs (not my idea of "sacrifice . . . among the affluent"). Repealed quickly after the war ended, the tax was revived during the Spanish-American War and repealed again in 1902. It did not exist during the War of 1812, the Mexican War or any of our country's lesser 19th century conflicts. The present estate tax (technically a different kind of levy from the inheritance tax, though the distinction is beloved only of trusts and estates lawyers) dates from 1916 and had nothing to do with wartime finance. Months after its enactment, President Wilson ran for reelection on the slogan, "He kept us out of war".
"History" doesn't tell us that any particular tax is singularly appropriate for paying for a war. Even if there were some mystical connection between wartime and estate taxes, Mr. Murray overlooks the fact that the proposed permanent repeal would not affect this year or next. The tax would be eliminated from 2010 onward. If we are still at war then, Mr. Murray will have ample time to agitate for his concept of fiscal patriotism.
That a seasoned liberal resorts to patriotic appeals on behalf of the estate tax shows how rickety the case for it has grown. In return for a comparatively small quantity of revenue, it violates the principle that income should be taxed only once, leads to the enormous economic distortions of the estate planning industry and, ironically, concentrates rather than dissipates giant fortunes by encouraging their transfer to private foundations. If ever a levy was inspired purely and simply by envy and malice, it is this one. I think that I am willing to compromise my patriotism for the sake of getting rid of its inequitable burdens.
* * * *
Eric Alterman, left-wing agitator and inveterate critic of the State of Israel, today lambastes Jews who move to the West Bank for entirely nonpolitical reasons: fresh air, abundant greenery, safe playgrounds for children, good schools, low taxes, affordable housing. To Alterman, they are part of an "illegal occupation" and "have chosen to make themselves targets on land to which Israel has no legal or moral right".
Let us suppose arguendo that Israeli occupation of the territory gained in the 1967 war (instigated by the surrounding Arab nations) really were illegal. These settlers are not an invading army. They are peaceful immigrants. What is the objection to their living in this part of the world rather than any other?
The answer, of course, is that the Palestinian Authority wishes to ban all Jews from "its" territory. Its moral position is identical to that of a lily white suburb that tries to keep out blacks, except that it enforces its prejudices with bombs (and by summarily executing Arabs who sell land to Jews) rather than zoning ordinances.
If Mr. Alterman's response to Palestinian bigotry is to berate its victims, one wonders whether and why he objects to U.S. segregationists or, for that matter, what his case is against the Nuremberg Laws. Is it only non-Moslems who are expected to be civilized and tolerant?
May 25, 2002
As we enter Memorial Day weekend, newspapers report a de facto mutiny by the Joint Chiefs of Staff, public officials fill the air waves with terrorism warnings, and nuclear-armed India and Pakistan stand on the brink of war. So the hot topic in the blogosphere is, naturally, teenage sex.
The debate illustrates several points about the libertinarian tendency that is so fashionable among right-wing intellectuals and so easily confused with libertarianism (a creed that, as I have remarked elsewhere, has slipped to the margins of American political discourse). Especially conspicuous are the libertinarians' shallow rationalism, ahistorical perspective and naive opinions about human nature.
Instapundit (scroll down for links to blogbits pro and con) threw out the first fatuity. To summarize Professor Reynolds' line of argument baldly (but not, I hope, unfairly), he doesn't see why anyone should be upset by teenagers' sexual activity, because (i) throughout most of history, people became sexually active as adolescents, (ii) all of the unfortunate consequences of youthful sex can be prevented by the use of condoms, (iii) Professor Reynolds himself had sex as a teenager and is no worse off for it, and (iv) it is ridiculous to treat adolescents as adults when they commit murder but children when they go to bed together.
What is most striking about these points is how little attention they pay to the qualities of the activity under consideration. We might be talking mutatis mutandis about drinking beer or playing videogames or reading comic books. Laissez passer is a fine abstract principle, but it is not the only principle, and one shouldn't wave travelers on without regard to the direction in which the road is going.
Ever since men began thinking about such matters, they have regarded sex as a powerful force. The earliest representations of divinities have pronounced sexual features, and the earliest forms of human conflict (if one believes the plausible theories of sociobiologists) centered on sexual competition. The first literary account of a war ascribed it to a man's desire for a woman. With the rarest of exceptions, all known human societies, at least down to our own, have strictly regulated sexual conduct. The regulations have varied in content and, like all other regulations, were frequently evaded or ignored, but they shared the premise that sex is not merely a form of recreation. For that reason, legitimate sexual access was linked to permanent (in intention, if not always in practice) relationships.
For Professor Reynolds and his fellow libertinarians, sex is basically recreation, with pregnancy as a strange but controllable side effect. Kids play soccer; kids make whoopee; what's the big difference? If a pair of 13-year-olds feel mutually attracted, don't have any sexually transmitted diseases and use contraception, why shouldn't they tumble in the hay? True to their philosophe roots, libertinarians airily discard the prejudices of our barbarous ancestors.
Oddly, though, as grounds for rejecting those prejudices, they invoke the same ancestors' practice. Marriage and parenthood at very early ages used to be widespread, which means, Professor Reynolds assures us, that teen sex is the ordinary course of things. Marriage and parenthood are, however, the polar opposites of casual, promiscuous sex (which is what "teen sex" refers to in this context). Previous societies expected everyone who played at sex to follow the adult rules. Contemporary amoralism has devised a set of children's rules. Unsurprisingly, it is now appalled by the results.
Libertinarians are not appalled, because, again like true philosophes, they don't examine those results very closely. First, they ignore the most important result of early promiscuity, namely, the formation of bad sexual habits that will blight their victims' lives or necessitate considerable exercise of will power to overcome. Parents worry about how the habits that their children form in areas like studying and socializing and drinking will affect their later lives. Habits concerning sex have consequences, too.
Professor Reynolds, according to his autobiographical snippet, didn't suffer any harm from early sexual experimentation, but anybody who has observed enough people has seen plenty of less fortunate outcomes. On a broader scale, the rising acceptance of casual teen sex has led to adults who have more trouble than ever before getting married, staying married, caring for children and avoiding obvious misconduct in their dealings with the opposite sex. As Aristotle and Aquinas taught, we are creatures of our habits, which govern our conduct more forcefully than our reasoning faculties.
If one limits the potential unwanted outcomes of teen sex to those that Professor Reynolds mentions, i. e. pregnancy and disease, the picture is also not so good. Increases in pregnancy and venereal diseases among teenagers have coincided with increased dissemination of information about how to avoid both. To the rationalist mindset, it is inconceivable that youngsters who know about, and can readily obtain, condoms won't use them. Our barbarous ancestors would have understood.
Lastly, a word about that fine old cliché, "If someone is old enough to do X, he's old enough to do Y." Old enough to fight, old enough to vote. Old enough to be tried for murder, old enough to have sex. How about, old enough to go to the potty, old enough to drink beer? Childhood is not a chrysalis from which an adult butterfly one day leaps forth. Children learn to do different things at different ages. One is disappointed if a four-year-old wets his pants but not if he can't read. We expect a 14-year-old to have enough self-control to forgo intentional homicide but not enough to act responsibly if he is introduced to recreational sex.
There is, of course, a gap between identifying "teen sex" as a bad thing and devising effective counter-measures. Contemporary society oozes titillation. Lads and lasses are naturally titillated and want to do something about it. Since stopping titillation by social pressure is unlikely to work and by government edict is likely to have worse consequences, we may just have to live with a steadily worsening social environment. But we don't have to rejoice in it or proclaim that Gomorrah is Paradise.
May 23, 2002
A friend coined the term "legislative fact" for beliefs that are not true but are accepted unquestioningly by those responsible for making laws. Over a long period of time, legislative facts may slowly yield to real-world data, as seems to be happening, for instance, to the "fact" that restrictions on gun ownership save lives, but many are incredibly resilient. Laws are still passed to lower prices by fiat or to improve medical care by requiring doctors and hospitals to improve their expertise in filling out paperwork.
Areas that legislators know little about are a fertile field for this form of fact-making. Since my own little field of professional interest - employee benefits law - is one that few people in government even want to know about, fervent belief in non-truths flourishes there, the current leading instance being the widespread certainty that cash balance pension plans represent a sinister plot against American workers. There may be plotting going on, but the plotters are the workers' supposed protectors, not their employers.
The media have given much attention to a new report from the Office of the Inspector-General of the Department of Labor, prosaically titled "PWBA Needs to Improve Oversight of Cash Balance Plan Lump Sum Distributions" [PDF format, 1000K], that supposedly proves that many companies that have adopted cash balance pension plans are paying departing employees less than their accrued benefits. The report has given the House of Representatives' only declared socialist, Bernie Sanders of Vermont, a pretext for castigating the sins of capitalism while claiming to look out for the interests of a sizeable group of constituents. (IBM, a major Vermont employer, converted its pension plan to a cash balance formula a few years ago and did a mediocre job of explaining how the new plan works. Since then, the belief has taken hold among the company's workers that they were deprived of some entitlement, though no one seems quite sure of what it was or how it was taken away.)
The OIG report, summarized baldly, found that, out of a nonrandom selection of 60 cash balance plans, 13 calculated lump sum distributions in a manner that resulted in smaller payments than required by the OIG's interpretation of the law. Media accounts have universally repeated that conclusion without explaining where the plans' error lay. Looking at the situation a bit more closely reveals an interesting fact. In the majority of cases (8 of the 13 covered in the report), the "underpayment" resulted from the employer's attempt to make its plan more generous than the government wants it to be. (The other five involve practices that may or may not be legally defensible but are, in my experience, very rare; they showed up in such quantity due to the OIG's "judgmental" method of choosing plans for audit.)
In a cash balance plan, participants have hypothetical accounts that are given a lump sum credit each year (typically a percentage of pay, usually larger for older workers). The account is also credited annually with interest at a rate specified in the plan. Laymen intuitively suppose that, if a participant elects a lump sum distribution, he should simply receive his accumulated account balance. They also suppose that crediting balances with higher interest rates is good for participants and usually think that it ought not to be discouraged by the federal government.
Those intuitions are not quite correct. The Internal Revenue Service takes the position, outlined in Notice 96-8, that a lump sum distribution amount must be computed by projecting the participant's current balance to the "normal retirement age" specified in the plan and then discounting that figure back to the present using a statutorily prescribed interest rate and mortality table. As readers will remember from their high school math, if the rate used for projection is higher than the discount rate, this calculation will result in a higher value than the original amount.
The legally prescribed discount rate is the yield on 30-year Treasury bonds, an ultra-safe investment with a correspondingly low yield (now made lower by rarity value, as the Treasury has stopped issuing them). The practical impact on cash balance plan distributions is this: If the plan's interest crediting rate exceeds the 30-year Treasury bond rate, the lump sum distribution required by the principles of Notice 96-8 is greater than the amount credited to the participant's cash balance account. Most of the plans with which the OIG found fault had disregarded Notice 96-8 and simply distributed the credited amounts, rather than the higher sum produced by projection and discounting.
To take one example, a plan criticized by the OIG credited participants' balances with interest rates ranging from 9.01 to 16.5 percent, far above the 30-year Treasury rate (which has recently been close to five percent). Assuming that the plan's normal retirement age was 65, the lump sum distribution owing to a participant who separated from service at age 45 with a $50,000 balance, after receiving the benefit of a 16.5 percent interest rate, should have been calculated, according to Notice 96-8, by projecting 20 years of additional interest credits at 16.5 percent, producing a future value of just over a million dollars, then discounted at a trifle over five percent. The resulting lump sum is about $350,000, seven times what his employer intended to provide. (Yes, this is an extreme case but not at all an impossible one.)
The employer would have done the "right" thing, in the government's view, if it had credited interest at five percent or thereabouts. That would have meant a smaller account balance, but projection and discount would not have increased the required distribution. As a convenience for plan sponsors, Notice 96-8 sets forth a set of eight approved indexes that are considered low enough to make it unnecessary to do any projection; a plan that uses one of them can distribute participants' credited balances without further ado.
A slightly different slant on the OIG's investigation, then, is that 52 out of 60 plans were found to be stingy with interest credits, while eight were generous - and it was the eight that were pilloried for wrongdoing. (Rep. Sanders has thoughtfully furnished their names to the press, so that they can spend time responding to questions from reporters whose math never reached the high school level.)
The IRS's (and OIG's) position on interest credits, odd as it may sound, is not without legal merit and has prevailed in litigation so far (though not quite unanimously, as indicated by the latest developments in the leading case, Lyons v. Georgia-Pacific Corp.). One would think, however, that soi disant friends of the working man would be eager to see the government change its mind and drop its hostility toward higher plan interest rates. Surely that is more of a "scandal" than attempts by employers to evade IRS rules in order to give higher pensions.
May 16, 2002
So much data passes through the hands of the U.S. government that it was predictable that diligent searching would eventually uncover premonitions of the September 11th attacks. Several have now appeared and are receiving wide reportage: a flight school instructor's suspicions of Arab students, an FBI agent's warnings, information passed to the White House about al-Qaeda's intention of hijacking airplanes. Already, I am sure, many Stupid Left Men of the Michael Moore variety have formulated an hypothesis that is rapidly solidifying into unshakable conviction: George W. Bush knew about Osama bin-Laden's plans all along but didn't thwart them, because he wanted the attack to take place; it would give him a convenient pretext for invading foreign countries and suppressing domestic consent.
In the same way, many isolationists were convinced for years that Franklin D. Roosevelt had advance notice of the attack on Pearl Harbor but did nothing about it, because he wanted to take the United States into World War II.
The paranoid fantasy of deliberate nonfeasance will probably remain confined in both cases to fringe ideologues, but less irresponsible people will mutter about incompetence. Instapundit, I note, has already pointed out that the idea of crashing an airplane into a landmark building was not unimaginable before September 11th. It had occurred to Tom Clancy and to the Columbine killers. So why didn't the CIA or the FBI or somebody take the danger seriously?
The answer is that they did, to the same extent that they have taken seriously the equally credible dangers that terrorists will poison municipal water supplies, smash open nuclear reactor cores, unleash plague bacteria and set mammoth fires during California's dry season. Precautions against hijacking proved inadequate against a determined, well-executed conspiracy. Precautions against other threats may fail as well. If the suburbs of Los Angeles are burning to cinders this August, will that be further proof of incompetence?
No, it will be proof that passive defense doesn't defend. The number of ways in which our enemies can take the offensive against us is huge, if not infinite. To guard against every possibility would require a police state. How, for instance, without knowing which 19 Arabs were going to hijack which four flights on which particular day could the FBI have averted 9/11? By arresting all suspicious young Moslems? When, after the attacks, Attorney General Ashcroft merely had the FBI question suspicious young Moslems, he was branded an enemy of freedom by libertarians as well as liberals. Imagine what the reaction to prophylactic measures, taken before any attack had occurred, would have been. Mr. Ashcroft would have been the first AG to be impeached, if not hanged.
I don't wish to argue in favor of bone-headedness, but we can't tell whether the FBI's performance has been dismal or brilliant without knowing about the attacks that it foiled or deterred. Even the most brilliant security measures will fail on occasion, and a single failure can be deadly. That is why taking the offensive against the enemies of Western civilization is not merely the best defense; in the long run, it is the only defense.
May 14, 2002
Spinning out of the Left like a distant thundercloud comes a new liberal attack line, getting its first big-time exposure today in Paul Krugman's New York Times column. Mr. Krugman, who was an economist before he gave up that profession to devote himself to conspiracy theories, avers that the Bush Administration is repealing the corporate income tax through covert executive action, an idea that he has picked up from a Capitol Hill newsletter. The newsletter story, titled "Treasury Circumventing Hill on Tax Breaks", repeatedly calls the Administration "lawless" for supposedly giving corporations "billions of dollars of tax relief without the consent of Congress".
As a partisan thrust, this one has many strengths: It fits easily into a short op-ed paragraph or a 15-second TV spot, sounds ominous and corrupt, and is founded on a tiny nugget of truth. Best of all, explaining why it is not merely wrong but silly takes many paragraphs of text or several minutes of air time. I suspect that we'll be hearing many indignant variations on this theme in the near future.
The nugget of truth is that many tax lawyers, including me, would agree that the executive branch often acts in tax matters without much regard for the statutes enacted by Congress. Here, however, "executive branch" and "President" are synonymous in only the most formal sense. All but the very largest decisions concerning tax policy and practice are made by the Internal Revenue Service, overseen by a handful of Treasury officials. At the present time, not a single IRS employee, from the Commissioner (a Clinton appointee serving a fixed term of office) on down, has been appointed by President Bush. Among the pertinent Treasury officials, one, the Assistant Secretary for Tax Policy, is a full-blown political selection. Until very recently, almost all of the Assistant Secretary's underlings were Clinton holdovers.
Many key IRS positions have been held by the same incumbents for decades. Looking just at my own speciality, employee benefits, a large proportion of the people who were IRS policymakers in that area when I was in government 15 years ago have kept their roles to this day. There is nothing inherently wrong with that stability, but it renders implausible any assertion that the agency's policies have altered very much merely because the American people have elected a different Chief Executive.
Those of us who have to slog through Tax Notes every business day see much more continuity than change in what the IRS does. Under President Bush, as under President Clinton, it has, for instance, pushed anti-tax-shelter theories that seem to rest on the principle that the law should be ignored if it is too unfavorable to the government. In the employee benefits area, which I follow most diligently, there are many more examples. Just today the IRS held hearings on its proposal to impose Social Security taxes on nontaxable exercises of incentive stock options. That was a Clinton-IRS litigating posture; the Bush-IRS now wants to write it into law.
Both the newsletter article and the Krugman column have some difficulty identifying outrageous Bush giveaways to corporations. The newsletter complains about actions that are mostly uncontroversial, though it tries to make them sound sinister. For example, Revenue Procedure 2002-9 "greatly expands the number of items or transactions for which companies can change their accounting methods without notifying the IRS". Well, yes, but the automatic approvals are for changes that the IRS has been routinely approving for years. There comes a point where individual examination of whether a particular change is legally proper becomes a misuse of time and money, the government's as well as the private sector's.
What about Revenue Procedure 2002-28, which, we are told, "allows businesses with receipts under $10 million per year to use an accounting method that Congress had reserved for businesses half that size"? What the law says is that certain corporations with less than $5 million in annual gross receipts must be allowed to use cash basis, rather than accrual, accounting. It does not constrain the IRS's authority to give the same privilege to larger entities. The IRS has always had the authority to determine what method of acceptable under what circumstances. Expanding eligibility for cash basis accounting is part of an effort, begun during the Clinton years, to reduce the IRS resources absorbed by petty disputes over accounting issues.
Similarly, proposed regulations concerning when the cost of acquiring intangible assets can by deducted in the current year rather than spread over the assets' useful life are designed to simplify tax administration. Like the other items just mentioned, this step has drawn opposition only from a small circle of left-wing tax theoreticians.
At least one can say that these IRS initiatives are favorable to taxpayers. Rather boggling is the statement that Notice 2002-8 "allows executives to receive tax-free compensation in the form of life insurance . . ., a perk most notably enjoyed by Enron’s former Chairman Ken Lay". When a writer drags in Ken Lay, one's prevarication detector should emit loud warning pings. Far from being favorable to executives, the Notice announces the IRS's intention to propose regulations eliminating the longstanding tax benefits of split-dollar life insurance. It replaces Notice 2001-10, a last-minute Clinton pronouncement that tried to reach the same result but did so in an ineffective manner.
Mr. Krugman, perhaps bright enough to realize that the newsletter's parade of horribles isn't very horrifying, adds his own: The Bush Administration has failed to do anything about corporations that move their domiciles to foreign countries in order to lower the taxes that they pay to Washington. This neglect must be the product of a wish to foster "tax evasion".
Mr. Krugman is candid enough to note that the "loophole" allowing corporate expatriation has been around for a long time and that no previous administration has done anything about it either. What he doesn't note - he has previously shown himself surprisingly ignorant of tax law (Enron Mythos, 2/23/02 and 2/26/02), so I will charitably assume that he doesn't know - is that, first, expatriation is beneficial only to companies that either have a great deal of investment income or do much profitable business in low-tax foreign jurisdictions (the U.S. tax on profits derived from high-tax countries is offset by foreign tax credits); second, whatever the long-term savings, expatriation results in immediate tax liability for the corporation or its shareholders, which is a major reason why everybody hasn't taken advantage of it already; and, third, the ability to transfer corporate assets to a foreign entity is not a tax loophole - it is an inescapable consequence of allowing the free flow of capital across national borders. Back when Mr. Krugman was an economist, he professed to oppose restrictions on capital movements. In sum, corporate expatriation isn't much of a problem and can't be "solved" anyway. That is why President Bush hasn't taken up Mr. Krugman's plea to denounce it as "unpatriotic". (Hoystory, which makes a semi-speciality out of exposing Krugmanian absurdities, has more on this topic.)
The IRS's way of doing business is open to plenty of justifiable criticism, regardless of who the President of the moment happens to be. Once upon a time, one of those justifiable criticisms was excessive servility to political ends. That time ended after Watergate in the storm of indignation over President Nixon's use of IRS audits to harass political opponents (a practice begun, and used most devastatingly, by Franklin Roosevelt). The picture of the contemporary IRS as a Bush cabal may be useful to liberals as a shibboleth. Its relationship to reality is on a par with tabloid reports of alien abductions or, well, Paul Krugman columns in the Times.
May 13, 2002
The Likud central committee has voted to oppose the creation of a Palestinian state, a position that would have needed no proclamation a decade ago, when it was the mainstream opinion in both Israel and the United States, but now strikes many editorialists as troglodytic. Everybody is supposed to be agreed on the virtues of Palestinian statehood. The conventional wisdom is that Israel conceded that point in the 1993 Oslo Accords and that all that is left now is the negotiation of details, for the delay of which Israel is held to be primarily at fault.
There is little point in rehashing whether the Palestine Authority has, like the Israeli government, an obligation to negotiate in good faith and keep it pledged word. The more fundamental question is whether the Palestinians deserve an independent nation of their own. Would creating one be an act of justice, or would it deliver several million more or less innocent people into the hands of tyranny?
Unless one believes the fantasy that the modern Palestinians are the direct ethnic descendants of the ancient Philistines and Canaanites, the existence of a Palestinian "people" on which to found a nation is more than a bit dubious. The concept of nationhood has never had much traction in the Arab world, where, since the rise of Islam, political divisions within the "House of Submission" have been regarded as fundamentally illegitimate. A century ago, "Palestine" was a geographical expression, and the Moslems who lived there did not think of themselves as a separate people from other Arabs. They were ruled by the Ottoman Sultan. To the extent that they opposed his rule, it was not because they wished to set up a separate Palestine but out of dislike of non-Arab domination. After World War I, when the Sultan was no more, they were governed by a British administration drawing its authority from the League of Nations. After 1948 a portion of the former British mandate became the State of Israel, within which many Moslem Arabs continued to reside. The Hashemite Kingdom of Jordan occupied the rest of the mandate's territory and took charge of the Arabs living there. In 1967, Jordan lost a war against Israel, and geographical Palestine was reunited.
Looking back in time in the other direction, the last independent states in Palestine were, ironically, the Crusader principalities that eventually succumbed to a multinational Moslem counterattack. There has never been an autonomous Moslem Palestine, nor was there ever a demand for one until the last years of the British mandate, when Palestinian independence was promoted explicitly as a tactical measure to halt the immigration of Jews. The whole idea of Palestinian "peoplehood" is the product of a single generation, dating from the 1960's at the earliest.
An historical people cannot come into being quite that abruptly. America had one of the shortest incubation periods ever, and the formation of a distinctive "American character", from the first English settlements in the New World through the eve of the War for Independence, took nearly 200 years. The emergence of "Palestine" is especially suspicious, because the dominant impulse behind it was nothing but refusal to co-exist with Jews. A "people" defined by its antipathies is not good "nation" material.
By historical standards, Palestine has far less claim to separate existence than Scotland or the Basque country or Brittany or dozens of others. The Palestinians lack distinctive traditions, language, religion, culture and everything else that can be considered a marker of nationality. All that they possess is an ideology, and that is limited to the debased ideas of anti-Westernism and anti-semitism. Giving this agglomeration its own state makes as much sense as setting up a "nation" for skinheads.
Aggravating this absence of natural eligibility for nationhood is the Palestinians' conduct since they first put forward their claim. Throughout the Cold War, their self-appointed leaders took the side of communism and anti-Americanism. During the Gulf War, Palestine was the only place in the world where mass demonstrations turned out in support of Saddam Hussein. On September 11th, it was the only place where tens of thousands cheered the collapse of the World Trade Towers.
Within Palestinian territory, self-government has evolved into a system of despotism, corruption and injustice, where alleged collaborators with Israel are hanged without trial and a professed goal of the authorities is to make their territory judenrein. The primary victims of this thug regime are, naturally, the Palestinians themselves, but elevating the thugs to notional equality with legitimate governments will not alleviate the sufferings of the innocent part of the population.
Strangely, there is only one good argument for Palestinian statehood: Years of spiritual poisoning have made its "citizens" too dangerous to be absorbed by any other country. Returning them to Jordan or scattering them throughout the Arab world would spread their demonic ideology and destabilize any land foolish enough to take them in.
That picture must, however, be too dark. It attributes to the Palestinian despots propaganda successes that have not been achieved by bigger, more coherent, better policed tyrannies. The Soviet Union never convinced its subjects that America was their enemy, though it drummed anti-American slanders into their minds for over 70 years. In Palestine today, it is dangerous to express sympathy for Western values. If that fear were removed, we should probably discover that popular feelings are far more diverse and complicated than the limited range that can currently be expressed.
What Palestine needs - for its own sake, not for Israel's - is the equivalent of German denazification. Those who have fostered terrorism and tyranny should be removed from public life, so as to clear a space for rational leaders. Until that is done, Palestinian statehood should be dismissed as an evil dream.
May 9, 2002
Writing in today's Wall Street Journal, Roger Kimball ("The Intifada Curriculum") takes note of a course description in the University of California Berkeley catalogue:
English R1A. The Politics and Poetics of Palestinian Resistance. The brutal Israeli military occupation of Palestine, [ongoing] since 1948, has systematically displaced, killed, and maimed millions of Palestinian people. And yet, from under the brutal weight of the occupation, Palestinians have produced their own culture and poetry of resistance. This class will examine the history of the [resistance] and the way that it is narrated by Palestinians in order to produce an understanding of the Intifada. . . . This class takes as its starting point the right of Palestinians to fight for their own self-determination. Conservative thinkers are encouraged to seek other sections.
Mr. Kimball cites this fulmination as another example of the sorry state of intellectual life in academia, but there are two other points that caught my eye. First, the "brutal Israeli military occupation of Palestine" is dated from 1948, that is, from the very birth of the Jewish state. Here there is no glossing over the real goal of Palestinian radicalism, which is not an Israeli return to the country's pre-1967 borders but rather its eradication from the map of the Middle East.
Second, the ideological prerequisite (I'm sure that conservatives are unwelcome in many other Berkeley courses; the instructor of this one deserves backhanded credit for candor) takes it for granted that only "conservative thinkers" will deny "the right of Palestinians to fight for their own self-determination". That assumption is not yet empirically accurate for the nation as a whole, but it wouldn't be surprising at ahead-of-the-curve Berkeley.
To a greater and greater extent, liberal support for Israel comes exclusively from elected officials, to whom pro-Israeli voters (not all of them Jewish) are an important bloc. Among the leftish intelligentsia, the writers and TV personalities who are forming the views of the next generation of liberals, contempt for Israel is pervasive and growing. When today's students become professors, English R1A may be among the more moderate offerings in Palestinian Studies.
May 7, 2002
Chris Patten, the European Union's Commissioner for External Relations, discovered only last week, according to his own account in today's Washington Post, that many Americans are upset by manifestations of antisemitism in Europe. He was "more than shocked" - not by the antisemitic incidents but by the revelation that Americans could believe "obscenely offensive rubbish" like George Will's column, "'Final Solution', Phase 2".
That Commissioner Patten was so blissfully out of touch with public opinion in the world's most important democracy should be of interest to the unelected bureaucrats who put him in charge of their "external relations". Of interest to the rest of us are the attitudes implicit in his defense of Europe, attitudes that suggest strongly that Mr. Will was too mild in his criticism.
What has led Americans to think that antisemitism is rising again on the European continent is not merely attacks on synagogues - the work, no doubt, of underclass Moslem fanatics - but the political elite's casual reaction to those barbarities, along with antisemitic cartoons in leading newspapers, allegations of "Jewish conspiracies" in major periodicals, overt sympathy by the political elite for the terrorist Palestinian Authority and casual obscenities directed at Israel by leading "moderate" politicians. (For a catalogue of what has been going on, vide the articles cited in my entry for February 9th.) Commissioner Patten ignores all of this record except the synagogue attacks, which he blames on "xenophobic extremism -- anti-immigrant, anti-outsider and doubtless sometimes anti-Semitic". So is the French ambassador to Britain, who at a dinner party denounced Israel as a "[obscenity] little country" a xenophobic extremist? Is the left-wing British magazine New Statesman, which carried a cover article on the "kosher conspiracy", an anti-immigrant, anti-outsider voice? Mr. Patten balances the fire bombing of Jewish places of worship with "many attacks on the symbols and followers of Islam". But official Europe is loud in its denunciations of the latter. It condemned Pim Fortuyn as a racist bigot for calling Islam "backward" and wanting to halt the increase in the Moslem population of the Netherlands. Even if anti-Jewish and anti-Moslem incidents were exactly equal in numbers and intensity, Americans would note the different levels of revulsion on the part of European leaders - perfunctory, at most, on one side, whole-hearted on the other.
In any case, the Commissioner assures us, we mustn't draw sweeping conclusions from this antisemitic "pustulation". "When a couple of years back there was an outbreak of arson attacks against African American churches in the United States, should we have leaped to the conclusion that the Ku Klux Klan was heading for the White House?"  No - because, first, the alleged outbreak was a hoax (as documented by science commentator Michael Fumento in a series of articles) and, second, American leaders of all political stripes strongly condemned the destruction of black churches and both state and federal governments launched major hunts for the supposed perpetrators. The situation would have been parallel to Europe today if the Attorney-General had dismissed African-Americans as a "[obscenity] little race".
After this preliminary sparring, we get to the root cause of America's new-found "visceral contempt for Europe".
Hunting for reasons for this, do we have to come back to poor Israel? A senior Democratic senator told a visiting European the other day: "All of us here are members of Likud now." So any criticism of the policies and philosophy of Likud condemns one as an anti-Semite?
Not exactly. Cartoons of a hook-nosed Ariel Sharon crucifying Jesus are more to the point. The "criticism of the policies and philosophy of Likud" that draws American wrath is that which denies all legitimacy to the Israeli point of view, is indifferent to the scores of innocent civilians who have been deliberately murdered by the Palestinian Authority and its allies, and instantly labels Israelis "war criminals" without investigation or opportunity to present a defense. The near-unanimous rush in the European media to portray the fighting in Jenin as a massacre - a charge that the Palestinian Authority itself has conceded to be untrue - is symptomatic.
But let us not accuse Mr. Patten of complete indifference to the sufferings of the Israelis. "The terrible suicide bombings must end; they are wicked acts, and it is a disgrace that they have not been more strongly condemned by Arab leaders." Not "more strongly condemned"? Which of the "Arab leaders" has condemned them at all? Iraq and Saudi-controlled Arabia pay reward money to the murderers' families. Captured documents show the Palestinian Authority paying for the bombs. Government-run media throughout the Arab world are extravagant in their praise of the "martyrs". That Commissioner Patten is unwilling even to say forthrightly that the Arab states support suicide bombing tells us much about how seriously he really views it.
Likewise revealing are his statements about what is needed to bring peace to the Middle East:
But a Palestinian state will require a return to the 1967 borders, or something very close to them, and it cannot be holed by settlements like a Swiss cheese [emphasis added]. Without such an outcome the madness will continue, children will be murdered, blood will flow. And the blame will not be all on one side.
Among the Palestinian Authority's demands is the removal of Jewish settlements from the West Bank. To Commissioner Patten that demand is obviously just. If the Israelis reject it, they will share the blame for continued bloodshed. Yet the presence of a small number of Jews within the territory of a Palestinian state would pose no threat to the Palestinians. Well over a million Arabs currently live inside Israel's pre-1967 borders. The West Bank settlers are a tiny fraction of that number (176,000, compared to 2.1 million West Bank Palestinians). The reason why Palestinian spokesmen insist on the expulsion of the settlers is that they want their land to be judenrein. To the European Commissioner for External Relations, that is evidently a reasonable position - not at all like M. Le Pen's desire to expel the Moslem minority from France.
Commissioner Patten concludes with an analogy drawn from his own country's experience:
As a British minister I used to try to persuade American congressmen to take a tougher line on the funding of Irish terrorism. I would argue -- usually to polite disagreement, I recall ruefully -- that terrorist acts were always wrong. I would begin my set piece by saying that the beginning of wisdom in Ireland was to recognize that there were two authentic cries of pain and rage. Well I still believe it. And the same applies in the Middle East.
It is not anti-Semitic to say that, any more than it is to suggest that we will do our common campaign against terrorism irreparable damage if we allow it to be hijacked by Likud. Heaven help Israel, heaven help Palestine, heaven help all of us, if this mad and grotesque assault on reasoned debate continues. But heaven, I fear, will have its work cut out.
So we are to understand that Israel is like the Irish Republican Army, a terrorist outfit that murders innocent noncombatants, and that to sympathize with it against the Palestinian Authority (whose constituents raucously cheered the collapse of the World Trade Center on September 11th) is to let the anti-terrorist war be "hijacked by Likud". "It is not anti-Semitic to say that". No, no, of course not. And Commissioner Patten is so many parsecs away from a clue that he may actually believe his own words. I'm sure that some of his best friends are Jews.
Update, 5/8/02: By happy contrast with the befuddled (at best) Mr. Patten, British Foreign Secretary Jack Straw yesterday vigorously defended his country's ties to the United States against the whines of European Commission President Romano Prodi (David Rennie, "Straw Rebukes EU Chief for Attack on American Link"). Ironically, Mr. Straw is a pretty left-wing Labourite and Mr. Patten a nominal (nowadays very nominal) Tory. Despite the impression given by the Prodis and the Pattens, there is still plenty of pro-American sentiment in Europe. Perhaps we need to think about ways to make sure that it isn't cowed and drowned out by the official strains of subservience to Islamofascism.
May 6, 2002
Until today, the number of Americans who could identify Pim Fortuyn and attach two or three meaningful and accurate sentences to his name was less than the number of Moslems residing in the Netherlands, probably much less. Now a lot of people will "know", for a day or two, that he was a "far right" Dutch politician gunned down by an as-yet-unidentified assailant. The murderer, evidently a native Dutchman, may have been a leftist fanatic or a real far rightist who did not want his cause tarnished by Mijnheer Fortuyn's libertine lifestyle or a personal enemy or a mere madman. His motives will presumably become clear over the next several days. What is already clear is that this assassination exposes both the narrow intolerance of "establishment" European politics and the near-impossibility of fashioning a reasonable response to the continent's tide of Moslem immigration.
By assigning Mijnheer Fortuyn to the "far right", the media and his political opponents linked him - surely with malice aforethought - to such figures as Jean-Marie Le Pen and Jörg Haider. As a few conservatives have pointed out, without any effect on labeling, the resemblances between the Dutch politician and his supposed French and Austrian counterparts is slight. Mijnheer Fortuyn was not in any degree antisemitic, advocated - by continental standards - a substantial degree of economic liberty (M. Le Pen, though years ago he flirted with Thatcherism, is a standard French dirigiste; Herr Haider's party is friendly toward market principles, but the subject does not appear to interest him personally) and was openly homosexual. On only two issues - immigration and the European Union - did the three man stand more or less on the same side, and there too large distinctions existed. Fortuyn did not want to expel immigrants already living in the Netherlands; in fact, he advocated spending more money on them, in hopes of encouraging assimilation. And he objected only to the political, not the economic, side of European integration. The statements that were most often put on display as proof of his xenophobia were unadorned truths, albeit not ones that can be uttered in bien pensant Eurocircles: Islamic society is backward by Western standards (his special complaints were its intolerance of sexual deviation and its mistreatment of women), and young Moslem males commit a disproportionate share of Dutch crimes.
To the European elites, however, criticism of Islam is the badge of intolerance. It is okay to tell lies about the Jews but unacceptable to tell the truth about Moslems. Everyone is supposed to pretend that the failure of Moslem immigrants in Europe to abide by ordinary standards of civilized conduct is not a concern of any kind, that the sole "problem" is nativist bigotry. The election manifesto of Fortuyn's party, Lijst Pim Fortuyn (translation provided by Rod Dreher of National Review Online), had this to say about immigration and assimilation:
Large groups in the community are lagging behind in social and cultural terms. These groups often originate from countries which did not participate in the Judeo-Christian-humanist developments which have been taking place in Europe for centuries. These shortfalls in development are highly regrettable, as they result in a divide in society and form a threat to the functioning of our large cities. This must be tackled vigorously, on the one hand by paying extra attention to housing, schools and cultural education for these groups, but on the other by requiring these groups to make a maximum effort themselves. Cultural developments which are diametrically opposed to the desired integration and emancipation, such as arranged marriages, honour revenge and female circumcision, must be fought by means of legislation and public information. Discrimination against women in fundamentalist Islamic circles is particularly unacceptable. In a democratic society like ours, all citizens have the same rights and obligations, irrespective of race, gender, beliefs and nature. There is a division of Church and State in the Netherlands, and therefore also of mosque and state. Thanks to the division of powers (the executive, legislative and judiciary powers), citizens can develop themselves in relative freedom. Our hard-fought freedoms are worth protecting against increasing fundamentalism. We must carry out a study into whether the introduction of a social and military service for boys and girls of eighteen years of age or older can contribute to integration.
The confusion of such mild views with Le Pen-like xenophobia shows the extent to which Moslem fundamentalism has ascended to a privileged position in left-wing European thought. The same mindset condemns Ariel Sharon as a "war criminal" and Israel as a bastion of "fascism", while looking sympathetically on despots like Yasser Arafat and Saddam Hussein.
Also noteworthy, though, is the obvious futility of the manifesto's policy prescriptions. What will compel groups coddled by the Dutch welfare state "to make a maximum effort themselves", and how will the Dutch police, scarcely able to deal with serious street crimes, root out underground practices like "arranged marriages, honor revenge and female circumcision", not to mention individual Moslems' "discrimination against women"? (The just released International Crime Victimisation Survey places the Netherlands in the top four among 17 industrialized countries in the percentage of inhabitants who were crime victims in 1999.)
Assimilation is a practicable policy only where immigrants want to become part of the country to which they have moved. In the United States, loud though the complaints about newcomers are in some quarters, the idea of becoming an American is an attractive one. Americans are, by and large, proud of their country, and our patriotism encourages others to join us. Can the same be said of the Netherlands or of any other European state? There the dominant culture regards love of country as a derisory anachronism. With the advent of the European Union, nations are giving way to administrative units. Meanwhile, on the cultural front, the faux relativism that proclaims all cultures as equal, except that Western civilization is less equal than others, is the only proper point of view. Is it any wonder that immigrants from the Arab world decline to change? Why should they become Dutchmen when Dutchmen are striving to turn themselves into generic welfare grubbers?
Europe may be reaching the point where unassimilable immigrants whose customs are incompatible with social order will cease to be a problem and instead become a condition. The former is potentially soluble. The latter is not and portends the evanescence of a society that traces its origins back 2,500 or more years to ancient Greece. The day seems to be coming when Europe will live only in America.
Note: News reports of Mijnheer Fortuyn's death have included variations on the statement that his is the first political murder in the history of Dutch democracy. When "Dutch democracy" began is a matter of taste, but let's not forget that William the Silent, the founder of the Dutch Republic, was assassinated in 1584 and that the judicial murder of Johan van Oldenbarnevelt, the early Republic's greatest statesman, shocked Europe in 1618.
Further reading: Gareth Harding, "Analysis: Dutch Politico's Last Interview"; Matthew Kaminski, "Pim's Misfortune"; Rod Dreher, "Murder in Holland"; Lijst Pim Fortuyn election manifesto
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