My Review of Ruchir Sharma's "What Went Wrong with Capitalism?"

Frightened of Risk

The essence of capitalism is risk taking, but over the past forty years or so both governments and the public at large are frightened of risk. With governments and central banks following a low or even zero interest rate policies and with the fiscal taps wide open at the sign of the slightest disturbance in the economy, capitalism no longer functions as it should, according to Ruchir Sharma, chair of Rockefeller Capital Management.

As a result, we now live in a world of zombie companies that should have purged in recessionary environments and because of very low interest rates we have the giant corporations swallowing the smaller and more dynamic businesses. Further instead of investing in new projects, the low interest rate environment encourages share buybacks and financial engineering at a time when the economy needs real engineering. As a result, the growth in productivity has collapsed.

Thus, in exchange for less volatility in the overall economy, real growth has slowed, and capital flowed into the financial markets. As Hyman Minsky noted many years ago, stability leads to instability, hence the crisis in 2008 and the crisis that likely lies ahead of us.

Sharma notes that over the past 40 plus years the growth of government has inexorably continues. Even under the Reagan and Thatcher regimes, governments continued to grow, taking an ever-larger share of the economy, and piling debts upon debts. Sharma argues the ball and chain of debt has been one of the reasons behind the tepid growth among the developed economies.

Sharma’s thesis made a great deal of sense up until 2022. Why? The zero-interest rate environment ended in 2023 with dramatic rate hikes in most of the developed world, and yet the economy did not mis a beat. Deficits remained extraordinarily high and the higher rates, save for parts of the real estate sector, have yet to see a surge in bankruptcies.  

Sharma would like to have us return to an era of a smaller state sector and a more relaxed policy towards recessions. Perhaps all good in theory, but the public would not stand for it. There is the rub! 

My Amazon Review of Walter Russell Mead's "The Arc of a Covenant: The United States, Israel and the Fate of the Jewish People"

 

America’s Changing Views on Israel

 

Bard College professor and Wall Street Journal foreign policy columnist Walter Russell Mead has written three books in one. The first is a history of the U.S- Israel relationship, the second a history of American foreign policy and the third is a recent history of domestic politics in the United States. In Mead’s view all three are inter-related. This book is above all on the how’s and why’s of the American view on Israel. I write this just as President Biden has left the middle east after visiting Israel and Saudi Arabia signaling a reconfiguration of the region’s chessboard.

 

At the outset Mead completely debunks the view that U.S.-Israel policy is controlled by the so called “Jewish Lobby.” To be sure there is a pro-Israel lobby, but it is far from controlling and it suffers from as many failures as successes. Further American presidents, Nixon, Reagan, W. Bush, and Trump who did much to cement the relationship between the United States and Israel were decidedly unpopular among the largely liberal Jewish community.

 

Mead starts his history in the late 19^th century where a group of Philo-semitic Protestants articulated the support for a return of the Jews to their ancient homeland. Steeped in the bible and the classics these Christians thought it was only natural for the Jews to have a state of their own especially after Greek independence earlier that century and the creation of new Rome in the form of Italy. These views predated Herzl’s Zionism.

 

Mead goes into great detail the policy arguments that took place in the Truman Administration concerning the formation of the State of Israel. His Secretaries of State and Defense were firmly against it, but Truman finally came down on the side of independence. Much was made at the time of the importance of the Jewish vote in the upcoming 1948 presidential election. However, Truman needed the support of the liberal internationalists under the leadership of Eleanor Roosevelt who viewed the success of the U.N resolution on Israel to be critical to that organization’s future. Truman needed to keep Roosevelt from supporting the far-left candidacy of Henry Wallace.

 

Of interest in 1948, Stalin, motivated by his need to make trouble for Britain and the United States in the middle east, gave the greenlight to Czechoslovakia to sell arms to Israel. Those arms made the crucial difference in Israel’s war for independence. It also supplied hard currency to the Czech’s who desperately needed it after turning down Marshall Plan aid.

 

As difficult as it seems today, the American Left was the home to most of Israel’s support in the 1950’s and 60’s. Israel, for all practical purposes, was a struggling socialist country supporting the dispossessed Jews of Europe and the Arab world. However, today the Left sees Israel as militaristic, capitalistic settler-colonialist state. It seems that the American Left just loves to penalize Israel’s success in building a modern state in an otherwise impoverished middle east. Those are the very attributes praised by the “Jacksonian evangelical Zionists” of the American Right.

 

Nevertheless, Mead leaves much out of his history. Not much is said about the 1956 Suez War where Eisenhower backs Egypt against Israel, France, and Britain; the 1982 Lebanon War which turned American public opinion against Israel, and the taking out of the Iraq nuclear program. Mead resumes his discussion U.S.-Israel relations in the 2000’s and highlights the failures of the magical thinking of George W. Bush’s neocons with the Iraq War and Obama’s with respect to the Arab Spring, Iran, and Israel. Ironically Obama’s missteps in region led the Abraham Accords and burgeoning alliance between Israel and the Sunni Arabs.

 

Although Mead supports the need for a Palestinian state, he like most others doesn’t present a roadmap to getting there. Regardless, Mead has offered up a work of history at its best.

For the full Amazon URL see: America's Changing Views on Israel (amazon.com)

 

My Amazon Review of Ben Macintyre's "The Spy and the Traitor: The Greatest Espionage Story of the Cold War"

Mrs. Thatcher’s Spy

It is not for nothing that John Le Carre noted in a front cover blurb “the best true spy story I have ever read.” Ben Macintyre’s biography of KGB Colonel and MI6 spy Oleg Gordievsky reads like a novel. His description of Gordievsky’s exfiltration from Moscow by MI6 under the watchful eyes of the KGB has all the hallmarks of a tension-packed Hollywood spy drama and that alone is worth the price of the book.

The story begins with Gordievsky growing up as the son of a KGB general who becomes disillusioned with life under Soviet communism. He follows in his father’s footsteps and is recruited by the KGB. He is initially stationed in Denmark and there he is willingly recruited by MI6.  As he rises in the KGB bureaucracy he become ever more important to the British. Along the way he marries, divorces remarries and has two daughters.

Where Gordievsky enters history is when he becomes a senior political officer in the KGB’s London rezindentura in the early 1980s. While there he reports to his MI6 handlers that the Soviets actually believed that the United States was going to launch a first strike on the Soviet Union. So paranoid is KGB head and future general secretary Yuri Andropov that he sets up Operation RYaN to find evidence of plans for a first strike. As in most bureaucracies the KGB spies produce such evidence thereby exacerbating his paranoia. The same thing happened with the CIA when it was ordered to look for weapons of mass destruction in Iraq twenty years later.

Compounding the problem was that at about the same time in 1983 NATO ordered up its massive Able Archer exercise which was a practice drill to deter a Soviet invasion of Western Europe. To the Russians it looked like a precursor to war. It was Gordievsky who tells the British of the Russian fears who then relay that information to the CIA. Several authors have noted that had not both sides deescalated, nuclear war was on the table. Gordievsky’s information to both Thatcher and Reagan was influential in bringing about from the de-escalation.

As the Soviet heir apparent, Gorbachev met with Margaret Thatcher in London in 1984. Here Gordievsky’s role is crucial because be briefed both Thatcher and Gorbachev as MI6 spy and KGB political officer on negotiating strategy. The meeting was a big success and Thatcher noted that Gorbachev was a man she could do business with. The end of the Cold War was now more than a pipe dream. Later, after his exfiltration, Gordievsky meets with Reagan to advise him on negotiating strategy for an upcoming meeting with Gorbachev.

But wait, what caused Gordievsky to be exfiltrated from Moscow, especially after he was made the Rezident of the KGB’s London office? In very short form the CIA is jealous of MI6 and wants to know who their source is. They soon find out and his name ends up on the desk of Aldrich Ames who was selling secrets to KGB officers in Washington. His betrayal leads to the death of scores of CIA operatives and sources in Russia and ultimately to the KGB investigation of Gordievsky. In Macintyre’s view Ames is a traitor who sold out his country for big bucks and Gordievsky is an honorable spy seeking to better his country.

This is a great book that I couldn’t put down and I highly recommend it. As an added plus you learn quite a bit of trade craft.

For the full Amazon URL see: https://www.amazon.com/review/R1DYCZTEAIL4ZH/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv

My Amazon Review of Dennis Ross' "Doomed to Succeed: The U.S. Israeli Relationship from Truman to Obama"

Myth Buster

Diplomat and former national Security Council member Dennis Ross has busted three important myths that have been guiding U.S. –Israeli policy since 1948. They are:

1   1)  Distance from Israel engenders Arab cooperation towards the U.S.  Ross convincingly notes that Arab states follow their own national interest irrespective of U.S. relations with Israel.

2   2)    U.S. cooperation with Israel will lose Arab support.  Fails for the same reason as above. And it doesn’t explain the growing Israeli-Saudi rapprochement.

3   3)    Solving the Israeli-Palestinian issue will lead to a transformation of the Middle East.  This myth obviously fails because settling that issue has nothing to do with the ongoing Sunni-Shia split.

Ross presents us with a clear-eyed view of U.S. –Israeli relations since 1948 as he thoughtfully reviews the policies of all of the presidents from Truman to Obama. Ross had a ringside seat in the formation of policy from Carter to Obama and he worked for all of the presidents since Carter with the exception of George W. Bush in various Pentagon, State and National Security Council capacities where he was for the most part up to his eyeballs in U.S. – Israeli relations. Of special note for me was that he worked for the legendary Andrew Marshall in the Pentagon’s Office of Net Assessment and he was Director of Policy Planning in the State Department. He is especially good when he was “inside the room” where the decisions were actually made.

He characterizes the various administrations as having policies of either cooperation or competition with Israel and those policies typically alternated. For example Truman was cooperative while Eisenhower was competitive; both Kennedy and Johnson were cooperative while Nixon initially was competitive. However when Nixon saw the potential of Soviet arms winning the 1973 war, he tilted dramatically in favor of Israel. Thus objectively he was cooperative. On the other hand, in Ross’ view, Carter was outright hostile to Israel. Ross theorizes that Carter felt so guilty about not fully supporting the civil rights revolution in his home state of Georgia; he tilted U.S. policy towards the Palestinians.  In contrast Reagan had a deep affinity towards Israel establishing a strategic cooperation arrangement. However that did not stop him in pushing through the AWACS deal over Israeli opposition and in censuring Israel for its invasion of Lebanon.

Although President George H.W. Bush moved the relationship back towards a more competitive one and was extremely unpopular with American Jewry, he continued the strategic cooperation agreement and worked a diplomatic miracle in keeping Israel out of the Iraq War all the while Israel was under rocket attack. Ross has extraordinarily kind words for the first President Bush.

President Clinton also had a deep affinity for Israel and thought of Israeli President Rabin as the father he didn’t have. He was crushed when Rabin was assassinated. He also learned not to trust the Palestinians after a series of Camp David meetings.

President George W. Bush continued the cooperative relationship with Israel while President Obama continued the high degree of cooperation on the military side; he was far from cooperative on the diplomatic side. On his first trip to the Middle East for his Cairo speech, he intentionally avoided going to Israel. Ross’ book ends before the U.S. abstention on the Security Council resolution condemning Israel for its settlement policy.

Two thoughts come through loud and clear from Ross’ important book. First the Israeli’s live up to their biblical forebears by being a “stiff-necked people.” It is hard to make a deal giving up tangible land for an intangible peace. In contrast the Palestinians come across a duplicitous. They say the right words, but when it comes down to it, they won’t make a deal. For them it remains “from the river to the sea.” They just can’t accept Israel as a Jewish State.

Ross has written an important book that should be read by all serious students of the Middle East. I highly recommend it.

The full amazon URL appears at:

https://www.amazon.com/review/R38N0PQ2QT5257/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv

In Bloomberg Newswire, January 3, 2011

“If you look at Jerry’s history, in 1975 the first thing he did was cut Ronald Reagan’s budget,” said David Shulman, a senior economist with the Anderson Forecast at the University of California, Los Angeles. “The Democratic legislature didn’t like it, but his poll numbers were high. It wouldn’t surprise me if he did that again.”


Full URL:
http://www.bloomberg.com/news/2011-01-03/brown-says-calif-budget-he-proposes-next-week-will-be-painful-.html