The Power and the Money

The frequency frontier in Japan

After the Fukushima nuclear disaster, the utility company Tepco faced a problem: how to keep the lights on with the reactors off? Four of my students (Dan Bodley, Andrew Boudreau, Allison Dee, and Nick Phoutrides) found the answer. It boils down to “they didn’t.” But why they didn’t turns out to be very interesting. Preview: it was not because the nation of Japan lacked the excess capacity to replace nuclear electricity.

Japan is divided into 10 different utility areas.Tepco enjoyed 65 GW of capacity (17 from nuclear) and imported up to 13 GW. Typical summer peak demand ran around 61 GW. The quake took 17 GW of nuclear off-line, leaving 48 GW of local capacity under the heroic assumption that the utility could run all its non-nuclear plants at peak capacity.

OK ... so just import! Problem solved, no blackouts, all good. And if you just looked at the headline numbers, that would have been feasible, even with the national reactor shut-down.

Except there were two problems. First, the quake bady hit Tohoku — which normally provided all of Tepco’s imports — even worse than Tepco.

The second problem was the “frequency frontier” that ran roughly along the border between the Tepco-Tohoku service areas and the Hokuriku-Chubu service areas. Back when Japan first electrified, in the 19th century, General Electric supplied the Osaka utilities whereas the precursors to Tepco bought from Allgemeine Elektricitäts-Gesellschaft. AEG ran its equipment at 50Hz, whereas G.E. used 60Hz. The end result was the “frequency frontier” that bisects the country. There were three converter stations on the frontier, but their combined capacity came to only 1.2 GW. The end result was that Tepco’s maximum available peak import capacity declined from 13GW before the quake to only 7.3GW ... and that 7.3GW number, remember, was a maximum.

In short, Tepco faced a peak shortfall of 5.4 GW. Here is how that worked out: 47.7GW non-nuclear supply + 7.3GW imports − 60.4GW peak demand = (5.4GW). Tepco filled the gap by “conservation.” Why the scare quotes? Well, we normally think of conservation as turning off the AC, keeping lights low, taking the stairs, that sort of thing. We do not think of rolling blackouts as conservation. But rolling blackouts are indeed how Tepco reduced demand. In fact, Tepco exported 1.4GW to Tohoku in August 2011.

Running the company’s thermal plants at full speed meant importing a lot of liquified natural gas (LNG): Tepco’s imports jumped from 959 BCF in 2010 to 1,127 BCF in 2011. Fortunately for Tepco, its LNG facilities had a capacity of 2,785 BCF.(Of that, Tepco wholly owned two terminals capable of producing 1,287 BCF, with another 1,377 BCF of capacity in two terminals co-owned with Tokyo Gas. Tokyo Gas is the sole owner of the fifth; the gas company imports about 560 BCF per year in total.)

2012 appears to have been little different from 2011. Demand peaked at 50.8GW; Tepco had a cushion of 3.8GW on imports peaking at 6.9GW. But demand was held to 50.8 only by dint of blackouts. LNG imports remained about the same, at 1,120 BCF.

And so there you have it. On paper, Japan could handle taking nuclear off-line almost as easily as Germany. In practice, not so much, because of decisions made a century ago about sourcing electrical equipment from Germany and the United States. Economic history, it is an awesome field.

The flowback from fracking, European edition

Gavin Wright is one of the best economic historians of the United States. In a seminal article, he advanced two findings. First, early American industrial success was due to access to cheap abundant natural resources. Second, there was nothing special about America’s geological endowment that caused it to enjoy cheaper and more abundant natural resources. Rather, Americans were particularly innovative in figuring out ways to turn their geological endowments into usable economic resources. In a 1995 paper with Paul David, the authors cheekily called American resource abundance “socially constructed.”

American industrial dominance faded as the technologies developed in the United States spread to other places. (Lower transportation costs helped: cheap Australian iron could power Japanese industrial exports, for example.) Over time, some countries also developed the ability to indigenously develop new natural resources (an article by Wright and Jesse Czelusta mentions various South American nations, in addition to Australia, Canada and Norway) but it really was not until the second half of the 20th century.

History is repeating itself. The technologies allowing for the development of shale gas and tight oil have originated in the United States. (There has got to be a paper in why.) But there is nothing particularly special about America’s geology. There is likely a lot of shale gas in Europe, among other places.

The question is how fast can the technologies invented in the United States be deployed overseas? The Economist points out that even if you can get past the political barriers, it will still likely take a decade for exploration and development. I am not so sure that it has to take that long, but there is a very serious obstacle to developing European shale ... the flowback.

Basically, when you dig a shale well it produces a lot of wastewater: the flowback (e.g., the fluid that you pumped down there to fracture the rock) and other water liberated during the drilling. That water is nasty stuff, regardless of what you pumped down there in the first place. It contains heavy metals, icky long-chain hydrocarbons, and is slightly radioactive. (The link goes to a USGS report.) In most U.S. plays, you get about 600,000 gallons of flowback and other water in the first ten days. You then get another 200 to 1,000 gallons per thousand cubic feet (MCF) of natural gas. (An EPA study is here.)

So what do you do with the toxic and salty and mildly radioactive flowback? Well, in the United States we pump it into Class II disposal wells: lightly regulated abandoned old wells, mostly owned and run by small mom-and-pop operations. (And I do mean lightly regulated. Click the link and be horrified.) We truck the stuff thousands of miles (in an exercise with some of my students, we estimated a minimum flowback disposal cost of 25¢ per MCF) or recycle it for use in other fracks. Chesapeake, for example, reuses about 6% of its water and aims to up that to 20% in some plays. But that will still leave 80% of the sludgy briny glowing water to be dumped somewhere.

And most of Europe does not have a century of oil and gas drilling behind it. The U.S. has literally hundreds of thousands of Class II wells lying around. Britain and Poland do not. So where are they going to dump the wastewater?

I would go so far as to call this a dealbreaker for most European countries (Ukraine excepted) save for one caveat: there is a huge opportunity for companies that can invent ways to better reuse the flowback. The DOE has already put some (rather small) monies towards this purpose. But this is a place where the case for subsidies is weak. There are huge incentives for anyone who can figure out a way to substantially cut the amount of flowback from fracking to make a lot of money.

In fact, some have started. So get moving! Europe awaits.

Legalizing marijuana in Uruguay

So Colorado and Washington have legalized marijuana! This is a big step, although it is going to be a problem that the federal government still bans the substance.

Now, it looks like Uruguay might be the first country on Earth to fully legalize marijuana. (Or “marihuana,” as they spell it.) The Netherlands tolerates it, but it is not fully legal.

It is pretty neat that a serious country may legalize marijuana, but to give away the punchline, I doubt very much that it will be a harbinger of much until the American or Canadian federal government moves. There is a lot of opposition to legalization in Latin America, and Uruguay is not considered a bellweather. (It is one in practice, but that is more because Uruguay gets to the future first and less because other nations deliberately emulate the Eastern Republic.)

The bill is pretty vague. Here is the complete text:

“The State will assume control and regulation over the importation, production, acquisition in any form, storage, commercialization and distribution of marihuana and its derivatives, under such terms and conditions as fixed by regulation.

“Likewise, the State will undertake such material activities as are necessary before, during and after to carry out the activities referred to in the previous paragraph, under such terms and conditions as fixed by regulation.

“The activities referred to in the previous paragraphs shall be realized exclusively under a policy of damage reduction that shall, therefore, alert the population to the consequences and adverse effects of marihuana consumption, as well as the effects of minimizing the risks and damages to the population of potential consumers under such conditions as fixed by regulation.”

It is worth noting here that the Uruguayan president is quite a bit more powerful than the American president. (At least inside the country. Outside Uruguay, I do not believe that Mr. Mujica has the ability to order flying robots to kill anyone.) As long as his cabinet concurs, the Uruguayan president can send bills directly to Parliament. (Officially, the “General Assembly,” but everyone calls it Parliament.) In fact, under Article 168 the president can designate bills as urgent. “Urgent” bills must be approved or disapproved with 85 days or they automatically become law. The catch is that the president can only submit one urgent bill at a time.

The marihuana bill is not urgent.

So it is taking its own sweet time through Parliament. Of the six security measures proposed by the President (the marihuana deal is considered a security measure) the legislature has approved only one, which reduced sentences for low-level drug dealing while increasing the penalties for corruption. Right now, the marihuana bill is in a dicey spot. It can pass, but only with support from the President’s Broad Front. So far, only one opposition legislator has come out in support.  President Mujica seems reluctant to pass such a significant bill on a party-line vote.

In order to get support, the administration has announced what the regulations might look like after the bill is passed. The drug will cost ₱700 per gram, around US$36. That is higher than the U.S. price of $14 per gram, but roughly the price in Uruguay. (Since marijuana is still illegal, it is hard to come up with a standardized price, even for tolerated medical marijuana.) If the law passes, Uruguayan consumers will receive a photo ID armed with a photo and bar code (that is high tech?) and be limited to 40 grams a month.

To sum, the bill looks likely to pass, but it is still generating controversy.

But I would also bet that the Mexican government is going to consider legalization but do nothing until the U.S. federal government moves. There is a great deal of conservative opposition in Mexico, deeper and wider than in Uruguay, and with a weaker president and a divided Congress everything is tougher.

In fact, contrary to popular belief, a great book by Isaac Campos shows that opposition to marijuana actually originated inside Mexico; it was not imposed by international norms. The reverse actually: had Mexicans been less anti-marijuana, then the world might not have gone prohibitionist.*

A too-brief history of zoning

As most of you know, I am not a big fan of zoning. In fact, my wife and I recently made the mistake of attending a Cambridge zoning hearing. It does bad things to my blood pressure to hear people state with apparent sincerity that limiting buildings to three stories will keep rents lower.

Seriously, this building should be at least as tall as the 1970s-era one right next to it.

Here is a nice short economic history of zoning. The argument is that the streetcar first enabled the creation of informal residential districts. (Before that, you just could not cleanly separate residential and commercial functions, since city size was limited and commutes painful. Workplaces and residences had to be close.) Then the truck and bus came along and busted up the informal zoning that had emerged. Ergo, formal zoning.

I am only partially convinced. After all, it should not have been surprising to anyone that apartment buildings would follow townhomes along the streetcar lines. Why wait until cars and trucks came along? In addition, the explanations for the 1970s spread and tightening of zoning laws are ad hoc. I would like to know more.

Ethiopia, North Korea, and Some Half-Formed Thoughts on Dictatorship

North Korean dictator Kim Jong-Il died late last year. He was promptly succeeded by his twentysomething son. Some observers questioned whether the son would be able to take over and impose effective personal rule, but nearly a year has passed and he seems to be doing just fine.

Ethiopian dictator Meles Zenawi died last month. He hasn’t been succeeded by anyone yet. (Formally, officially, the Deputy Prime Minister has stepped up. But nobody seems to be taking him too seriously. He’s a mild-mannered guy, not a member of the revolutionary generation, and the wrong ethnicity to boot.) Zenawi was a “slash the tallest flowers” kind of guy; years of life on the run as a guerrilla in the bush seem to have rendered him permanently paranoid. Anyone who seemed too popular or too competent got demoted. At best demoted. So there’s no obvious successor.

I think the odds of Ethiopia staying a dictatorship are pretty good. It’s a country that has never known democratic rule or any sort of pluralism. Since the Emperor Haile Selassie consolidated his rule in the late 1920s, Ethiopia has had exactly three rulers: Selassie himself, Stalinist dictator Haile Meriam Mengistu, and the recently deceased Mr. Zenawi. That’s just three guys in almost 90 years, all of them absolute rulers with little or no tolerance for dissent. The country has almost no liberal traditions. Civil society does exist — there are NGOs and labor unions and even a few lawyers who are willing to sue the government — but it’s young and small and weak. It won’t be too surprising if a new strongman emerges. But it may take a while, and Ethiopia may go through a period of oligarchic rule and jockeying for power before things sort out.

Regimes with clear lines of succession are generally stronger regimes. Part of the reason is that they’re slightly harder targets — you not only have to take out the top guy, you have to get rid of his designated successors as well. But I think the bigger reason is that everyone knows what’s coming next after the dictator. Even if the successor is a dubious character, he’s likely to seem better than chaos and uncertainty.

Traditional monarchs have known this for millenia. But the lesson applies to dictatorships as well. We currently have at least five extant examples of non-royal dictatorships that have been successfully transferred to a son or brother of the dictator: Azerbaijan, Congo, Cuba, Syria, and North Korea (twice). Gabon and Togo are authoritarian regimes run by sons of former dictators; if we include them, the club expands to seven.

Examples of transfer to a non-relative are much much rarer. There have been a couple in the past. (Ataturk hand-picked his successor; Mexico in 1934-94 had an extremely powerful president who chose his successor from the party leadership, but they did not meet the definition of dictator. After all, they had to leave after six years in office.) But not a single extant dictatorship fits this pattern! (Burma’s dictator chose a successor who is still in power, but the successor seems to prefer being primus inter pares to being a true lone ruler.)

Now, it’s a long established principle that old age is a dangerous time for a dictator. All three of the dictators picked off by the Arab Spring were in their golden years. (Porfirio Díaz in Mexico and Juan Velasco in Peru also went down in their dotage.) More generally, an old dictator with no clear successor is pretty clearly putting himself at risk. That said, some dictators do run the course and die, more or less peacefully, in office.

So what happens when a dictator manages to pull this off — grows old and dies without first being overthrown or losing an election or whatever? Well, we can sketch out a tentative typology.

1. A son or other close relative steps up. (Several extant examples, see above.)
2. A hand-picked successor takes over. (Rare; no extant examples.)
3. There is a party or other system independent of the dictator that chooses a new dictator. (Rare outside of the Communist world; Mexico in 1934-94 comes closest. No extant examples, though we might see one soon in Cuba.)
4. After a period of uncertainty, brief or prolonged, a new dictator takes over. (A couple of extant examples — Turkmenistan, South Sudan.)
5. There’s a shift to authoritarian but non-dictatorial rule, either by a single ruler, an oligarchy or junta, or a party system. (China, Vietnam, Ivory Coast.)  This seems to be the single most common outcome in the last decade or two.
6. There’s a relatively rapid shift to relatively liberal or democratic rule. (Portugal, Spain. In the former, it took six years and revolution to get democracy.) This happens, but it’s less common than we might like to think. A shift in the direction of liberalism is much more likely when the dictator has been overthrown, or has voluntarily stepped down (Indonesia, Tanzania, Singapore), or agreed to elections (Chile, Zambia, Senegal). A system that lets the dictator die in office seems less likely to produce democracy at first go.

Numbers 2 through 6 include the possibility of foreign intervention; the United States, France and the Soviet Union have all intervened in this manner at one time or another. We may call these 3a (party picks a new dictator, foreign approval makes the difference: the Eastern European model, 1945-1990), 4a (new dictator takes power subject to foreign approval) and so forth. There aren’t really any extant examples of these at the moment — the U.S. seems to have lost interest in installing dictators in Central America and the Caribbean — but I would not be surprised if Russia’s “near abroad” in Central Asia were to throw up a 4a or 5a in the next little while.

6a is damnably rare, actually nonexistant: Panama would be one of the rather few cases since WW2 in which foreign intervention replaced a dictatorship with a democracy. Iraq sort of maybe kinda if you squint really hard. The jury is out (to be charitable) in Libya. And all of those interventions happened when the dictator in question was very much still alive and in power.

Anyway. There are enough elderly dictators out there that we should expect to see some more examples in the next few years. I expect that (5) “a shift to authoritarian but non-dictatorial rule,” will continue be the most common outcome. Which means that some countries that are currently dictatorships will drop off the list! If the number of dictatorships is to remain constant, then new ones will have to emerge. How likely this is ... well, this post is long enough. In a bit.

The French won in Algeria, and that is why Assad will lose in Syria

A few posts ago, I noted that the French won the Algerian War militarily. My co-blogger has scolded me for being deliberately misleading. He is correct. The discussions with Lebanese army officers that produced the post were actually discussions about why the French experience illustrates why Assad is going to lose.

The French Army had three key advantages that Assad does not have. Moreover, at least one of the reasons why De Gaulle decided to abandon that military victory also apply. First, what advantages did the French have that Assad does not? First, French troop levels (proportional to the Algerian population) were four times the levels that Assad can muster. In theory, Assad can call up reservists and increase draft calls. In practice, that will not work.

Second,the French Army could draw on the resources of the Hexagon. In effect, it was financed by a large industrial power. Assad has ... nothing, except in Michael Ignatieff’s fever dreams.

Finally, troops could not and would not defect during the Algerian War. No matter how far morale declined (and it actually did not decline all that far) defection was simply not in their opportunity set. That is not true of Assad.

There are two more differences, but they are actually an epiphenomena of the above three French advantages. The French could credibly commit to remaining in control indefinitely. That commitment reduced the willingness to fight among the Algerian population. (That commitment turned out to be wrong, of course ... but in 1958 it seemed much more likely that France would be sovereign in Algeria in 1968 that it does that the Baath Party will still rule Syria in 2022.) In addition, the French army had the resources to engage large-scale population resettlements ... something far beyond Assad’s reach.

In other words, the reasons why France won in Algeria show why Assad is going to lose.

The problem is that he is going to lose slowly. He can easily fight on for another few months, although the correlation of forces has turned against him. De Gaulle abandoned the victory because of international pressure and because there were no real advantages (other than access to oil, which the Evian Agreements let France keep) to hanging on. The first applies to Assad. The second not so much.

What could change that timeline? Large-scale support for the rebels, which still does not seem to be happening, or a coup.

I see no signs of a coup, but I am not a Syria expert.

Another good reason Michael Ignatieff is not Prime Minister of Canada

He has a rather odd understanding of foreign affairs. This essay reads like a fever dream from a disillusioned neocon. Oh, wait ...

No, seriously, go read it. It is very odd. In its world, an allied Russia and China are backing the Syrian regime against the United States. You would get the impression that Bashir Assad is Ho Chi Minh. You wouldn’t learn that Russian “support” for Assad consists of, well, nothing. Sure, the Russian Federation has sold the Syrian Arab Republic a lot of weapons in the recent past, but that’s not the same thing as conducting “a proxy war between the Great Powers.”

Seriously, three attack helicopters is nothing compared to the massive amounts of materiel that went through Haiphong or over the Chinese border. Here is a CIA estimate of around 2,000 Soviet air defense personnel in North Vietnam circa 1965. There is also a frustratingly vague CIA estimate of Soviet military aid at the beginning of the war, but it gives some sense of the scale, and it dwarfs anything going to Syria. More information is in this 1968 CIA report about Sino-Soviet conflicts regarding military aid to the DRV. The discussion is over trainloads, for months, and massive airlifts, and shipments through Haiphong ... including potential Soviet military responses to a U.S. blockade.

And then the money document from 1968: go down to the last two pages. 2,230 artillery pieces in 1967! 70,000 tons of ammunition! 3,810 surface-to-air missiles! 123 armored vehicles! 700 vehicles from China, another 24,000 tons of ammunition, and 61 MiG fighter jets!

(By the way, did you know the U.S. operated unmanned drones in Vietnam? Page 2.)

Dude, that was a proxy war. This is Russia and China being annoying.

If you want some more serious intel about the Syrian civil war, this report is a good place to start. You also might want to check out this report about the Russian equipment used by the Syrian government. But Ignatieff’s essay is just completely goofy. Good thing he didn’t become Prime Minister. At least Canada doesn’t have the capability to act on the ahistorical bizarro-world musings of its head of government.

The 1940 census and the old neighborhood, no. 3

 I don’t think a whole lot about our time at East 71^st Street, even though it lasted through most of my high school years. There were three reasons for that. The first was that I hated the neighborhood. The building was great — I made lots of friends, not counting the Irish heroin addict from the sixth floor who burglarized our apartment and received a ... well, in these more enlightened times I shouldn’t say ... in return. But by the late 1980s the East Side south of 86th and east of Lexington was going on its third decade of what would today be called gentrification, and while I greatly appreciated the fact that I could space out on the walk from the subway station with no fear of getting mugged, I hated the neighborhood’s wealth with a deeply-burning passion impossible to describe. The second reason for my lack of nostalgia or good-feeling to the area was that most of my good friends lived elsewhere. I spent much more waking time in Stuyvesant Town and Loisaida and Washington Heights ... and I probably spent more nights at my friend Guy’s house in Queens — also the borough from which I drew most of my friends. (My wife is from there!) Which brings us the third reason. Life inside the apartment was not particularly salubrious. Not that I’m complaining! It just wasn’t a great time, so while I have heavy nostalgia for the late 1980s in Rego Park and Stuy Town and Washington Heights and Harlem (East and otherwise) and Loisaida, not so much for East 71st Street.

I’ll digitize some photos at some point, but as of right now I don’t have any. Which says something about my feelings towards the address, despite the fact that the neighborhood was much nicer than 115, 93, 77, or anywhere in Brooklyn, Bayville, or North Miami Beach. So here I give you a picture from 1986, when I lived on East 71. Dinner for the first person to ID the 16-year-old me.  

Forty-four years earlier, the East Side was significantly different from 1985-88. 416 East 71st, however, was remarkably similar. The difference is that in 1940 the building was representative of the census tract, whereas by late 1980s it was an outlier. It still had plenty of children, the sons and daughters of older folk who remained due to rent control rather than moving to the suburbs. Their kids were not in elite schools, and it was not easy to earn their toleration. It helped that I joined next-door Sokol Hall for gymnastics and tae kwon do. In short, the building was a little retro pocket of old-line white ethnics, in an neighborhood that had turned into a suburban-like mush of affluence. At the time it was not enough to compensate for my extreme antipathy to the rest of the neighborhood ... and to be honest, it is not enough now 24 years later. Maybe by the time my son turns 18.

In 1940, the entire neighborhood was Czech and Slovak. It wasn’t quite as Slavic as East Harlem was Italian, but it came close. Co-blogger Doug Muir had family who lived six blocks north at the time, and reports something similar. 

The 1940 census counted 21 households at 416 East 71st Street. Of those, eleven had the head of household (or both, if a married couple) born in “Czechoslovakia,” “Slovakia,” or in one case, “Bohemia.” The twelfth reported that the head of household — a 66-year-old widower named Tilly Dran — had a birthplace in “Austria.” Tilly lived with a single daughter aged 39, a married daughter (age 48), her 52-year-old husband (Harry Ledak), and their 20-year-old granddaughter. The older daughter and Tilly’s son-in-law had also been born in “Austria.” It isn’t unreasonable to assume that “Austria” probably meant Czechoslovakia, considering as he had emigrated before 1901. 

In addition to those 12, the Viddetzk (sp) family was born in New York (Joseph in 1905, Anna in 1914, and daughter Dorothy in 1934) but was likely of Czechoslovak origin. Similarly, up on the upper floors, Edward Holut (born in New York in 1894) lived with his “Austrian” mother. Meanwhile John Panelka of Ohio (33-years-old) lived with his 31-year-old wife from “Austria-Hungary” … who had been born in 1909, when there really was such a place. (They had two children, Eleanor aged 4, and Alfred aged 1.) Having moved into the building 44 years later, I am having trouble believing that John’s wife wasn’t actually from what would today be the Czech Republic or Slovakia.

That’s 15 households with origins inside the 1918-93 boundaries of Czechoslovakia. But there’s more! Sam and Anna Graycon (born in 1885 and 1884 respectively; she was in fact a year older than he was) reported having been born in Hungary. In 1885, Hungary included modern Slovakia. (Their 22-year-old daughter was born in New York.) The Slawinskis (born in 1875 and 1887 respectively) listed their birthplace as Poland at a time when there was no Poland. It is likely that they were Polish, but I am also sure that they felt comfortable around their fellow Slavs. (They lived with their four children, aged between 16 and 23.) In addition, the Hrabie family was born in New York and lived with their two children … along with the father’s mother, who had been born in Czechoslovakia.

At that point you’ve got 18 out of 21 households being some sort of Slavic — you can dig into the most West Indian parts of Brooklyn and Queens today and find less homogeneity. Who was left? Walter Thiele had been born in Germany in 1895, and his wife Olympia had been born in Russia in 1904. It’s possible that they weren’t Jewish, but that isn’t how I would bet. They lived their children, 18-year-old Rita and 13-year-old Ralph, both in school, and a lodger, Edward Parfer, who worked in a hospital laundry for $1500 per year. The family paid $32 per month in rent; nothing was reported from Mr. Parfer. For what it is worth, Edward had been born in New York in 1890.

The Cuthberts, aged 46 and 37, had both been born in Scotland. Their six-year-old son Robert was born in Short Hills, New Jersey, where they had been living in 1935. Cuthbert pere was a porter at a bank for $1352 a year. Their previous address implies serious downward mobility.  

There was also Leo (age 37) and Georgette (age 33) Larkin and their 4-year-old son, John. Leo was from Pennsylvania and Georgette from New York. Leo was an unemployed dockworker who had earned $830 in the previous year; Georgette didn’t work. They paid $23 a month in rent: $276 per year. Admittedly, the area was crappy back then, but imagine somebody making $13,300 a year living there now. My mother did it … but that was (a) almost three decades ago; and (b) involved judicious use of the rent control laws and (c) a significant other. 

The building hangs on around high-rise redevelopment that has utterly changed the character of the neighborhood. That is a good thing. I have moved left on most things over the years, but when it comes to land-use planning and historic preservation, I am of the libertarian “tear it down and build bigger” school. (I can accept that owners should have a property right to sunlight. But that is it.) I will survive if the charming brownstones of the Upper West Side are ripped down and replaced with 50-story towers ... and America will be better off. No need to mention the crappy little tenements around Pleasant Avenue. More towers, please, just like the ones on 93rd Street..

Before we end, I want to mention the Novak family. The widowed head of the family, Anna, had been born in Czechoslovakia in 1882. She lived with her three New York-born children, Emily (age 27), George (age 26), and Gerald (age 24.) The three children had eighth-grade educations. Emily worked as a bookkeeper for $1040 per year, and George worked as a delivery man for $680. Gerald was unemployed, but had previously worked as a machinist for $916.

Why do I report this? Because I knew George Novak, the bow-legged old man who ruled the building. He gave me fatherly advice on more than one occasion during the not-very-nice years of 1985-88. He was in his seventies, he had fought in World War Two, and he was a very good man. He deserves props, and I hope he is remembered.

I believe that this story was because of him. It does, in fact, date back to 1987. God bless you, Mr. Novak.

The 1940 census and the old neighborhood, no. 2

 The Upper West Side of Manhattan, like East Harlem (and the upper reaches of what used to be called Yorkville) had become a slum by the 1970s. It never reached the abandoned gang-ridden depths of East Harlem, and parts remained nice … but in general it was crappy. The San Juan Hill area was cleared for Lincoln Center and the Amsterdam Houses. During the 1977 blackout, looting hit the entire area, but it was especially bad in Manhattan Valley and the side streets off Amsterdam Avenue in the eighties and nineties. Broadway in the seventies wasn’t burnt-out terrible, but it was far from today’s disneyground. Needle Park on 72nd Street was so named because of the used heroin needles that littered it, not its shape.

The area’s decline set in before World War Two, and that shows up in the census data. Two other things also show up. First, East Harlem’s fertility really was strange. Second, the rise of Adolf Hitler to power had a profound effect on this part of New York.

The first family listed at 317 West 77th are the Landers. Herman and Eve (49 and 35 years old) were both born in Russia. They both graduated high school. Herman’s profession is unclear — it’s listed as “propietor, furnished apartments,” with no wage income listed. He doesn’t own the building, though: the census has him down as a renter for $50 per month. (That’s $802 in 2011 dollars — half the market rate in the same building today, and for a place that was probably four times the size.) They lived with their daughters, Joy and Helene, 14 and 9 years old. They employed a live-in maid, Jennie Richardson, 20, a black woman born in New Jersey. Jennie had been living there for over five years, meaning that she worked for them as a teenager. Jennie didn’t graduate high school, but she is listed as having had three years. She earned $360 per year — $5,770 in 2011 dollars — for a 60-hour week. Room was probably worth another $420, judging from what lodgers in the building paid, but that’s still a remarkably low wage by modern standards.

The next family was a young couple, almost certainly refugees from the Nazis. Samuel and Mary Hirschaut were born in Germany and Russia, respectively, in 1914 and 1916. In 1935, Samuel lived in Germany and Mary was in Switzerland. Both graduated from high school; Samuel worked as a leather dealer on his own account — no wages were reported, but he is listed as having earned income from other sources. His wife modelled dresses for about $100 per year. Neither were working when the census was taken: Mary checked “yes” to seeking work, Samuel said “no” on account that he said “yes” to the question: “If not seeking work, did he have a job, business, etc.?”

The third couple are also German refugees: Solomon Frohwirth, aged 28, was born in Poland. His wife Lottie was born in Germany, and had the same age. Both had been living in Germany five years previously. Solomon was a fur dealer. Solomon had only a ninth-grade education, but his wife reported one year of college. Both the Frohwirths and the Hirschauts paid $35 a month in rent.

Next up were the Pustay brothers: Walter and Fred, aged 20 and 17, both from Connecticut by way of Hackensack, New Jersey. They worked as clerks, Walter for an oil company, Fred in “exporting,” for $910 and $256 per year. (In 2011 dollars, that’s a combined income of $18,700.) They supplemented their income by taking in three boarders. And by now the pattern in the building should be obvious: at least two of the boarders were refugees from Hitler. Max Weingarten, age 26, had one year of postgraduate education—it doesn’t say in what, but he worked as a motion picture importer. Max had been born in Poland ... but listed Austria as his place of residence in 1935. It isn’t hard to connect the dots. Ditto for the second housemate: Deron Wachenhum, a 48-year-old German man who had been living in France five years previously. He worked as a magazine reviewer for only $948 per year. (He was listed as having two years of college.) The odd-woman-out was Florence Black, a married 29-year-old Romanian woman who made hats for $1462 per year. She had been living in Manhattan in 1935, and so was not likely a refugee. There was no sign of her husband.

The Pustay brothers did pretty well off the lodging. Their rent was $45 per month, but each boarder paid $35 — a nice annual increment of $720. ($11,500 in 2011 dollars.) Plus ça change and all that.

Finally, we have the Gerschel family. Stanley (age 40) was from New Jersey and his wife Alice (age 31) came from Pennsylvania. Their monthly rent was $38. The couple had probably experienced recent downward-mobility: in 1935, they had lived in  Baldwin, Long Island. Baldwin had experienced explosive suburban growth in the 1920s, going from 5,000 to 12,000 over the decade. (That’s a lot: the town covers less than three square miles.) It seems likely that they had been a suburban couple in 1935, and lost their home in the 1937 recession. (Conversely, many families lost title during the 1929-33 collapse, but weren’t forced to leave for some time thereafter: the Gerschels might have also fallen into that category.) Stanley sold dresses for $2,000 per year. His wife was listed as a dental assistant and did not say that she was unemployed, but reported no income. I’m not sure what to make of that: volunteer work? (She had one year of college, and so some training.) Pride? They lived with their 8-year-old daughter, Patricia, and a lodger.

Nicholas Vasilieff was not a refugee from Hitler. (By this point, I was surprised to realize that.) He had been born in Russia in 1906, but listed San Francisco as his place of residence in 1935. He had been unemployed for 26 weeks as of the census (March 24-30), but listed his occupation as dancer and claimed to have worked for 30 weeks in the past year — the math does not quite add up — for $1200 in wages. The Gerschels charged him no rent, so I suspect that he was a family friend or a distant relative.

It turns out that Vasilieff actually was a dancer. He performed in Laugh, Town, Laugh! in 1942.  (Were dancers exempt from the draft?) He then moved back West to Portland, where he helped found first a dance school, and then in 1954 the Portland Ballet Society. He died in Portland in 1976. His son Nick Vasilieff currently lives in that city, as does his grandaughter Nikole.

When my father moved into 317 West 77th in 1982, it was divided into nine apartments: one on the first floor, and two on the four upper floors. In 1940 it only had five apartments: likely one on each floor. That would explain the boarders: the tiny one-bedrooms into which they been divided by 1982 could not have held five people in anything less than barracks-like conditions, which would not be consistent with charging $35 per month for the privilege, not given what you could rent for that money. (Rent control did not yet exist in New York City.)

The neighboring building to the east, 315 West 77th, had already been subdivided into 16 apartments. In some ways, it was more interesting than 317 West 77th. In fact, in some ways it seems like it could have been transported out of the 21st Century, except for the rents. The average rent was $28.16 — a astonishingly low $451 in today’s money, with none under $400 or over $584. (From here on, all figures will be in 2011 dollars — the 1940 number multiplied by 16.) The reason for the low rents, of course, was twofold: low incomes and few zoning restrictions.

First, it had no children in it. None at all. That shouldn’t be surprising. You wouldn’t be surprised at a Manhattan apartment building with no children in it today, when 18% of New York City’s population is under age 15. Well, in 1940 only 20% of the City’s population was under 15; not that different — and the birth rate today is higher.

Second, three units were occupied by divorced women. The first was Vada (sp?) Littlepage, a 35-year-old professional photographer from Forth Worth, Texas. The second was Ida Howe, a 48-year old nurse from England. The third unit was occupied by a mother-daughter team, both from Mexico, both divorced. The daughter worked as a manicurist for $260 per year — her mother was out of the labor force, but reported having nonlabor income. Mom was named Rebeca Sanders, while the daughter was named Amelia García, the implication being that mom had married an American, split from him, and then brought Amelia up when she split from her husband. Amelia, it should be noted, was 36, and both reported living in New York five years previously.

There were seven single never-married working women in the building. 25-year-old Geraldine Bordeaux, from Quebec (“Canada-French”), lived with her older brother Francino. Both were unemployed “artist models.” Dorothy Donnelly was from “Canada-English,” 26-years-old, and an unemployed saleswoman from a department store. 23-year-old Anne Allen was from New York (although she had been living in the apartment since she turned 18) and worked as a stenographer in a bank for $17,120 in today’s money. 26-year-old Evelyn Griffin from Illinois worked as a receptionist in a department store for $12,480. Nina Echeverría from Uruguay worked as a floorlady in a dress shop for $16,000 and 33-year-old Edna Dolan from Massachusetts — who reported living in Astoria, Queens, five years earlier — made $21,120 working in a key factory. 24-year-old Alice Maher, also from New York, earned $12,480 as a bakers’ assistant … but reported having dropped out of the labor force. I suspect that she had just gotten engaged, since the census-taker had written “M” under marital status before crossing it out and pencilling in “S.”

The four married couples consisted of a native New Yorker married to an Irishwoman (both age 36), two Irish immigrants (aged 41 and 38), a Spanish chef married to a Panamanian stenographer from Los Angeles (aged 37 and 31, and clearly married for less than five years, since they were in different states then), and a 30-year-old unemployed laborer from Massachusetts married to a 29-year woman from New Jersey.

Add in widowed Gertrude Weckler from Germany (a 66-year-old who fit corsets in a department store) and divorced George Pitscharer from Austria (a 50-old bartender) and you have the set of a modern sitcom.

A happier view of 1940 than the one from my building on 115th Street. Moreover, the view from 317 West 77th in 2005 was even more marvellous!

Next up ... well, I am not sure. Maybe the people who lived in the houses that were demolished to make way for 100 Ocean Parkway in Brooklyn?

The 1940 census and the old neighborhood, no. 1

 The United States recently released the 1940 census manuscripts. They are fascinating. I am sad and depressed to realize that right-wing craziness means that our grandchildren in 2080 will not see the like for 2010, where the census was pared down to ten incredibly-boring questions. Hopefully, that will change.

It isn’t that those people (or, God forbid, robots) won’t be able to call up information about their ancestors in 2010. I have no doubt that with a flick of the hand towards some sort of hyper-attuned artificial intelligence agent — or at least a verbal request delivered in natural English — they’ll be able to instantly recall all the information that exists about any one of us. No, it’s that they won’t be able to call up the same sort of information about the people who lived in same place they live in. Because, you see, we don’t record that stuff anymore. And it’s fascinating! Social change made real.

We moved around a lot when I was a kid, albeit always within the counties of New York, Kings, Nassau, and what is today called Miami-Dade. I don’t recall the exact address of the house in North Miami Beach or the one in Bayville or the apt on 93rd; and neither 1780 First Avenue nor 34 Vanderbilt Plaza nor 100 Ocean Parkway existed in 1940. But 414 East 115th Street, 317 West 77th Street, and 416 East 71st Street were there!

East Harlem is today becoming a Mexican neighborhood, filled with young children and struggling parents, with lots of green-white-and-red alongside Old Glory. In 1940, it looked about the same, just without the eagle.

414 East 115th Street then, like now, had five families in it. The first listed is the Squittieri clan. Dominick and Geneviene had been born in Italy in 1888 and 1890 respectively. Dominick ran a grocery store and worked a 60-hour week to earn $1300 per year — $20,800 in 2011 dollars. They rented for $35 a month, or $561 in 2011 dollars. Dominick was listed as having had two years of schooling; his wife had never been to school at all. They lived with their ten children: Carmine, 24; Alphonse, 23; James, 22; Helen, 20; Yolanda, 18; John, 17; Mary, 16; Domenick Jr., 15; Louise, 12; and Gilda, 10.

You can see the lingering effect of the Depression in the statistics. Carmine worked as a painter (a 48-hour work week) for $1190 a year — $19,100 in 2011 dollars. Alphonse was not in the labor force. It isn’t completely clear why: there is a squiggle that is probably an “H,” meaning he was doing “housework.” It could, however, be a “U,” which would indicate “unable,” meaning a disability. He was not a student. His sister, Helen, was also out of the labor force and clearly listed as doing “housework.”

James, Yolanda, and John were unemployed and looking for work. The enumerator put “new worker” as their profession. All three had been unemployed for over a year. Carmine, Alphonse, James, Helen and Yolanda had all dropped out of school in the eighth grade; John had finished one year of high school before dropping out. The four youngest children were all in school.

Of course, it was a different time. I do not know what happened to the Squittieri family, but I bet you they went on to economic success — something that a Mexican-American family with the same statistics today will probably not achieve. But I don’t know: in 2022, it might be possible to try to track them down in the 1950 census.

The Mango family looked a lot like the Squittieris. Anthony had been born in Italy in 1880. His wife Antonette, however, had been born in America in 1887. Still, being born in America hadn’t given her any more opportunities — like Geneviene Squittieri, she was listed as having no education. (Anthony had eight years of schooling.) Anthony worked as a pressman in a junk shop for $926 per year, no vacations, and a 54-hour work week. ($14,800 in today’s money.) They lived with their seven children: John, 27; Louie, 26; Theresa, 22; Josephine, 20; Mary, 18; Emily, 14; and James, 12. None of the adult males made it past the eighth grade; Josephine had one year of high school and Mary had two — Emily and James were in school.

The Mango children did a little better in the labor market. John worked as a “shearer,” which can’t mean what I think it means. (Where the hell would you find sheep in Manhattan?) He cleared $1480 ($23,700 today) working 35 weeks at 40 hours. Louie was a shipping clerk, earning $625 ($10,000 today) on a 40-hour week for a full year. Theresa did something I can’t make out—“Frlnger”?—also for $625 and the same terms. The total household income, therefore, was $58,500 in today’s dollars. Mary was unemployed and looking for work; Josephine was not, helping out around the house instead. They paid only $32 per month in rent, or $513 in today’s money. Still, remember, I lived in those apartments: they were about 600 square feet, plus change, and that rent is actually not that different in real terms from the 1970s and early 1980s. (Our toilet had a cable that you had to full down to flush, something I’m pretty sure had to have been installed before World War Two, so these families enjoyed private bathrooms along with central heat and electricity.)
  
The other families looked a little more modern. Angelina Lombardo was from Italy, eighty years old, and lived alone. Her rent was $7 per month. No wage income was listed, but average monthly social security benefits for widows in 1940 were $20.36, although the program had only just started and I do not know if she would have qualified. Hopefully, she had some savings or support from children.

The Caldarise family were New York-born, 33 and 32 years, old, with three children (Dorothy, Joseph, and Violet) aged 10, 8, and 6. They had started young, but appeared to have taken control of their fertility: Antonette Caldarise had not had any children since she was 27, as opposed to Antonette Mango, who had her last child at age 41 with no more than a four-year gap between them, let alone Geneviene Squittieri. Joseph Caldarise worked (I think) making chromium plates for $1352 ($21,700) per year and a reasonable 40-hour week. (No vacations, though.) They paid $19 ($305) per month in rent.

Finally, there are the Antonuccis. Michael Antonucci, New York born, was 44-years-old and unemployed. He had, however, only been unemployed for six weeks — he had previously worked as a “buyer” for $1040 per year. His wife was quite a bit younger: Millie Antonucci, also New York-born was only 28. Neither had more than an eighth-grade education. They had only one child, baby Virginia, aged nine months. Rent? Twenty dollars.

Now for something important: language. The census did not ask every person about the language spoken at home. Rather, each census manuscript page asked two randomly-selected people “Language spoken in home in earliest childhood.” On the two pages covered by 414 East 115th, all four people asked happened to have been born in America ... and three of them reported “Italian.” The only one to report English was little Violet Caldarise, who had two young New York-born parents.

For those of you who know the statistics, this is not surprising: Mexican-Americans are learning English (and losing Spanish) quite a bit more rapidly than their Italian predecessors. But it is, I think, worth repeating.

Next up: 317 West 77th Street.

America has been at war for a long long time

 Rachel Maddow has a new book, Drift. I’ve skimmed it; it isn’t bad. In it, her contention is that for a variety of institutional reasons, it has since the 1980s become far too easy for America to go to war. 

The book started a debate between Kevin Drum and Jonathan Bernstein. Bernstein suggested, “U.S.-sponsored interventions of one form or another are hardly unusual, even before Maddow’s apparent jumping off point in the Reagan Administration. Perhaps the idea is that there was a golden age of sorts after Vietnam, but if so it lasted less than a decade. I’m not really sure it’s become easier to deploy troops for controversial missions or to begin interventions in other nations.”

Bernstein was supported by Armando at TalkLeft, who wrote, “That is not historically accurate in my view. The times getting into war was not easy was after wars that had been very costly and not particularly successful from the US point of view. Think World War I and Vietnam. Otherwise, going to war has been one of the great American pasttimes. I’m all for making going to war hard, but the history does not demonstrate that, except for isolated periods, that was ever really the case in the United States.”

Drum conceded the point, but suggested that there was still a difference between then and now: “So what’s different? I’d say this: it’s one thing to periodically wage brief, smallish military actions. The Dominican Republic occupation of 1965 falls into that category. So do Grenada and Panama ... the last couple of decades seem quite different. The Gulf War, followed by Somalia, followed by Haiti, followed by Kosovo, followed by Afghanistan, followed by Iraq, followed by Libya and Yemen, and all against a background of drone warfare that now seems all but perpetual, feels very different. It feels like we’re simply in a constant state of military action. In the last 20 years, there have only been three or four in which the U.S. military wasn’t at war.” Matt Yglesias supported Drum, adding that there might be an economic element: technology has made it cheaper and easier to project conventional military force, and therefore we do it more.

Bernstein is right. Everyone else, including Armando, is wrong. And none of it relevant to the argument in Drift.

In 1898, the United States went to war with Spain. Between 1898 and 1902, American troops battled Philippine insurgents. Peace came to Luzon in 1901-02, but fighting continued on Mindanao until 1912. In 1904, the U.S. navy bombarded rebel positions in the Dominican Republic; eventually U.S. Marines wound up (with the permission of the local government) occupying the customhouses. In 1906-09, we occupied Cuba, although there was (to be fair) not much fighting. In 1907 and 1911, we deployed to Honduras to halt Nicaraguan invasions. Between 1912 and 1925, U.S. Marines actively hunted insurgents (the original Sandinistas) in Nicaragua. In 1914, we once again bombarded Dominican rebels; we also occupied Veracruz to prevent arms from getting to the government. Between 1914 and 1934, we occupied Haiti: unlike Cuba in 1906-09, that one did involve quite a bit of fighting. We did the same on the other side of Hispaniola in 1916-24. In 1916-17, we invaded northern Mexico after Pancho Villa attacked Columbus.

Then there was World War 1. After which ... 

In 1917-19, U.S. troops again garrisoned Cuba. In 1919, we landed in Honduras to protect a neutral zone during a civil war. Between 1918 and 1920, American forces blundered pointlessly around Siberia doing something or other, and sustaining a lot of casualties. For a few days in Guatemala, Marines saw combat during a civil war in that country. In 1925, we invaded both Honduras and Panama during periods of unrest.  In 1933 and 1934, we waved gunboats around Cuba, but no war was necessary, since we succeeded in overthrowing the government by what would today be called covert action.

And then, peace until 1941.

Counting ... between 1898 and 1934, the United States was at peace for all of ... well, never, actually.

It is true that only the Philippine War rivalled the Iraq conflict in terms of intensity. (World War One, obviously, was hugely worse.) U.S. force levels rapidly grew from 12,000 in 1899 to 70,000 in 1900, by which point U.S. combat deaths approached two soldiers every day. By most metrics, the war (fought by a small all-volunteer army) was as intense as the Iraq War — proportional to the U.S. population, the peak force of 70,000 represented a per-capita commitment twice as large as the peak Iraq deployments in 2008. 

Because the Philippine War lasted 28 months, as opposed to the 102 months of the Iraq War, the total proportion of Americans who served in the conflict was about a third of the recent level. The 126,000 soldiers who served in  the Philippines over the entire course of combat operations amounted to 0.2% of the U.S. population, compared to the roughly 0.6% of the U.S. population who served at least one tour of duty in Iraq between March 20, 2003, and the official end of combat operations on August 31, 2010. The combat casualty rate, meanwhile (excluding deaths from disease) ran at 596 per 100,000 troops in 1900, almost exactly matching the 2004-07 rate of 608 in Iraq. (Iraq casualty rates per 100,000 ran at 718 in 2003, 650 in 2004, 588 in 2005, 583 in 2006, and 610 in 2007. They then plunged to 199 in 2008, 135 in 2009, and 121 in 2010.)

But ... that is fine. The Drum argument does not hinge on the big wars of the past decade; rather it hinges on the continual small wars since 1989. In that respect, 1989-2012 looks pretty much the same as 1898-34: lots of small wars punctuated by two big ones. Nor does Armando’s argument hold up. World War 1 had little effect on the American government’s propensity for military intervention. It is true that the U.S. avoided a potential big war during the Mexican Revolution, but that decision was made before we entered WW1; before, in fact, it was clear that we would.

The history is both worse and better for Matt Yglesias’s argument, depending on how you interpret it. In the Dominican Republic, for example, early insurgencies depended upon the seizure of customshouses to gain resources: naval bombardment, therefore, presented a cheap means of intervention. In general, I would venture to say that Yglesias’s hypothesis is correct: cheaper war probably means more war. (Someone should test that!) What the history does not support, however, is the rather specifc hypothesis that military intervention is cheaper today than it was in 1898-1934.

Let me add that this has little bearing on Rachel Maddow’s overall argument. She wants to explain why the post-Vietnam reforms designed to make intervention difficult failed. She does not claim that 1989-2012 (actually, 1983-2012 for her purposes) is unprecedented or novel. Other readers in the blogosphere have extended her argument, however, and I think it is probably worth adding a little historical corrective.

Policy of attraction, part 4

 Americans don’t spend enough time thinking about the Philippines. America behaved as a deucedly strange colonial power. One of the strangest things was the way the U.S. prevented Americans from investing in the new territories.

Worst empire ever? What was that all about? Well, in May 1901 1902, the Americans signed a peace agreement with Emilio Aguinaldo, the leader of the insurgency. The advent of a negotiated peace meant that the McKinley administration needed Congress to establish a civil government in the Philippines. Without a civil government, the U.S. would be unable to sell public land, issue mining concessions, or otherwise alter Spanish law.

Problem is, Democrats were inalterably opposed to allowing American investment into the islands. Not in agriculture, not in mining, and certainly not in manufacturing. Now, some of the worry was straight protectionism ... but less than you would think. In the early 20th century, the GOP was the party of protection; the Democrats were the party of free trade.

So why the opposition to allowing Americans to invest in the Philippines? Simply put, the Democrats hated the idea of America as a colonial power. They feared that sizeable U.S. investment would create a domestic interest group with an interest in the permanent retention of the archipelago. That would make annexation much harder to reverse. (Democratic opposition to permanent retention of the Philippines, it should be noted, had much of its roots in racial anxieties over the addition of 7 million “Malays” to the United States. If the Philippines had possessed the racial makeup of Cuba, the Democrats would have set it on the road to statehood; the loudest opponents of Philippine annexation also decried the decision to make Cuba a protectorate. Cuba, you see, had enough white people to imagine it as a state.)

But don’t take my word for it! Senator Fred Dubois (D-Idaho):

I have tried, in what I have said, to be temperate in language. I have endeavored to argue the question presented by this majority bill fairly, with good temper, and honestly. I do not think it will be easy to get out of the Philippine Islands, should future events demonstrate the wisdom and necessity of doing so, after American capital has gone there and is being employed under the tempting opportunities presented by this bill.

Do they not know, if this bill passes, the difficulties in our path will be multiplied many times, provided in the future it is deemed patriotic and wise to allow the Filipinos their own independent government? The granting of these extra privileges and unusual inducements which are offered to corporations and syndicates, it seems to me, contemplates a fixed purpose on the part of the advocates of this bill to retain the islands for all time to come as a colony, as a dependency of the United, States.

Representative John Robinson (D-Nebraska):

The bill which is now before the House provides for the organization of corporations to carry on all branches of business. It provides for the issuance of bonds by the Philippine government and certain of the cities of those islands. It invites the investment of capital, and in the future capital so invested in the Philippines, held by our own and citizens of other countries, will urge their claims to our protection with a stronger voice, and clamor more loudly than ever, that in honor we must not leave their interests unprotected in these islands: but that we must continue to hold down these people by force of arms. We must continue to spend millions of dollars annually to maintain an army there. We must continue to send the flower of our youth to these tropical islands, in order that foreign investors, seeking only worldly gain. may continue to exploit this unfortunate people.
  
An argument such as this, Mr. Chairman, would mean that the time will never come when we can withdraw our forces from these islands. It would mean that the reasons which prevent us now from granting these people their independence would become stronger with each passing year, and that at no time could we hope to withdraw our jurisdiction and leave these people in liberty and peace.

Representative John Williams (D-Mississippi):

Nor do we give away, or prepare to give away, their franchises. It would be contrary to the Democratic theory if we made the slightest preparation for that, because every vested interest which we plant in the Philippine Islands is one more strong voice enlisted in favor of their permanent retention — a vested interest pleading not to be left.

Representative Allan McDermott (D-New Jersey) similarly worried that allowing the government of the Philippine Islands to sell bonds to American investors would indelibly link them to the U.S.:

This bill settles the policy of the Republic Party. It is to be continuing possession and occupancy with unlimited additions to our bonded debt.This bill means that we are to permanently hold the Philippine Islands, and I predict the holding will prove a plague to ourselves and our children.

Representative David De Armond (D-Missouri):

Civil government for the Filipinos! Civil government in which the Filipinos do not participate; civil government in which the Filipinos have no part; civil government which-the Filipinos do not desire; civil government, not for the benefit of the American citizen, but for the American promoter, the American syndicate organizer, the American capitalist, the American boss, the American contributor to campaign funds, used to corrupt the needy voter, to overcome the judgment of the honest element of American citizens, and win victories by false pretenses and more positive wrong. [Applause on the Democratic side.]

And so the Democrats held up the bill, using the filibuster in the Senate and capitalizing on Republican protectionists in the House. The resulting Philippine Organic Act of 1902 heavily restricted the rights of non-Filipinos and all corporations to own land or invest in mineral rights in the Philippines. It banned Americans and American companies from owning more than 1024 hectares (2500 acres) of land and limited mining claims to one claim of 1,000 × 1,000 feet per lode. It also limited the ability of Americans to invest in public franchises and utilities.

For a colonial power, this was weird.

Congressional Democrats did not completely prevent Americans from investing in the Philippines. A 1905 act allowed the insular government to issue railroad concessions, for example. In addition, Americans could invest in sugar mills (although not sugar lands) and they could physically move to the islands and invest as Filipinos in mining operations. Nor did the Democrats manage to keep the Philippines outside of the American customs area; free trade arrived in 1913.

But caveats aside, the restrictions worked. When the Commonwealth of the Philippines became autonomous in 1935, they received a country that was almost entirely owned by Filipinos. That might not have been the best thing for the country’s economic growth, but it was seriously bizarre for a country that had just spent 37 years as a dependency.

Weirdest ... empire ... ever.

Policy of attraction, part 3

 In comments, J.H. asks why the Phillipines didn’t adopt the U.S. dollar. After all, Hawaii and Puerto Rico did, as did Cuba, Panama, and the Dominican Republic. So why not the Philippines?

By the time the Philippine War ended in 1902, five different monies circulated in the Philippine Islands:

(1) Mexican silver pesos;
(2) Spanish silver pesos minted under the 1897 Royal Decree;
(3) Fractional currency;
(4) bank notes issued by the Banco Español Filipino; and
(5) U.S. dollars paid to American troops during the war.

The silver currencies traded at values that had little to do with their actual silver content; the Philippines were basically on a fiat money standard, with the difference that nobody was actually in charge of issuing it. Nobody liked that, so the U.S. had to decide between three different options. First, it could regularize the silver currency, basically continuing the existing system but under the control of a single mint. Second, it could introduce the U.S. dollar. (The U.S. was then on the gold standard. Dollar coins had a fixed gold value, and federally-regulated banks were required to back their note issues with gold or U.S. government bonds.) Third, it could introduce a separate Philippine gold-backed currency.

Why adopt the dollar? I give the floor to Representative Ebenezer Hill (R-Connecticut): “I want to say to every one of these representative from the Pacific coast that whenever they vote to put a new and strange system of coinage in the Philippine Islands is to build a fence between the trade of those islands and the trade of that coast.”¹ Since Republicans backed the permanent retention of the Philippines, such a position was not terribly surprising.

What might be much more surprising is that most of the support for adopting the dollar came from the Democrats, who were loudly and uniformly opposed to annexation. What explains that? Well, examine the following exchange:

William Jones (D-Virginia): I would like to ask the gentleman if he does not think by extending the coinage laws of the United States to the Philippine Islands and giving them our lawful money we could get out of there if we wanted to much more easily than if we gave them a distinctive currency which we would have to redeem and pay for?

Sereno Payne (R-New York): Oh, on the other hand, I think it would look as though we meant to stay there forever. [Laughter on the Republican side.]²

What was Jones getting at? How would installing the dollar in the Philippines make it easier to leave? Well, let’s go to Representative James Williams (D-Illinois):

A moment ago the gentleman from New York twitted those of us who want to get out of the Philippines with some sort of imagined inconsistency because we were supporting the substitute bill. ... I believe with all my heart that a greater mistake was never made than ever having landed a man to stay upon the Philippine shore after the Spanish fleet was destroyed. ... But I claim that when we leave we should leave behind American money as a stimulating agency for the expansion of American trade in the future. ... I say today that if you turn the Philippine Archipelago loose as an independent nation upon the Earth, it can not by any legislation float a token coin.³

In other words, the Democrats supported introducing the dollar because they believed that it would promote economic stability, thereby making it easier for the U.S. to get out forthwith. After all, Cuba had the dollar but the United States was smoothly on the way out. (The Democrats had no problem with Puerto Rico, although they were upset that the constitution was not extended to the island.) This position was honest: as I may talk about in a future post, the Democrats also strongly supported restrictions on American investment in the islands as long as they were under American sovereignty.

So why did Republicans prefer the option of a gold-backed Philippine currency?

The first problem is the Philippines were poor. One cent in 1901 was worth 27¢ in 2010 in the United States. In 1901, the price level in the Philippines was a lot lower than the price level in the U.S. (This is a general phenomenon: prices are lower in poor countries than in rich ones.) So one American penny bought at least the equivalent of fifty cents, whereas a Filipino centavo bought half as much. Losing the smaller denomination would have been a serious problem.

Of course, Philippine poverty wasn’t the only problem: Representative Hill proposed that the U.S. reintroduce the half-cent as an easy solution. The second fear was a bout of inflation. Puerto Rico had seen that during the changeover, as merchants attempted to charge as much in the new currency as they had in the old. (In theory, that shouldn’t happen. In practice, it did, and it forced an unpleasant political response.) William Howard Taft, the governor of the Philippines, was particularly worried; the last thing he wanted was popular discontent. Puerto Rico had handled the trouble, but Puerto Rico wasn’t coming out of a vicious guerrilla war.⁴

Finally, the Commission government convinced itself that a new peso could be introduced faster than the dollar. The Taft government (and potential American investors) were unhappy with the exchange rate fluctuations that afflicted the archipelago. It wanted a gold peso to stabilize the situation, and it wanted it quickly. If it could not get a gold peso, then it wanted the right to mint silver ones, but it wanted something.

The Democrats were a minority in Congress. They couldn’t pass a bill adopting the dollar in the House. In the Senate, Democrats were willing to fight for investment restrictions, but they were not going to do that over the currency. So bills passed both houses.

Except different bills passed each chamber. The House of Representatives voted 89-55 in favor a gold-backed Philippine peso, whereas the Senate accepted unanimously a proposal to coin silver. No compromise was forthcoming. As a result, the Philippine Organic Act of 1902 contained no monetary proposal, save an authorization to mint small change.

After another year of monetary chaos in the Philippines, the Philippine Commission went back to Congress. On January 22, 1903, the House of Representatives changed its position and voted 147-127 to introduce the dollar into the islands. The Senate then also changed its position, and voted on February 16th to create a gold peso. This time, however, compromise was forthcoming, in the sense that the House reversed itself. On February 24th, the lower house voted 139-104 to create a gold peso at a fixed rate of 2:1 with the dollar.

The introduction turned out to be messy and unsettled. It proved difficult to get the old silver pesos out of circulation; the exchange ratewith silver varied wildly; and managing the new currency proved more difficult than expected. It is far from clear that switching to a gold peso avoided many of the problems that switching to the dollar would have entailed. But there you have it.

In short, Taft and the GOP wanted to create a fixed exchange rate with the U.S. (believing that would promote trade and investment) but without the delay and dislocation that they believed would come from introducing the dollar. They then got all the delay and most of the dislocation anyway because Congress could not decide.

That said, it is also extremely unlikely that adopting the dollar would have made much difference. For it to have had a big effect before independence, you would have to be a very strong believer in the (excellent!) work of Andrew Rose on the effect of currency unions on trade to argue that having the dollar (as opposed to a fixed rate of 2:1 under American sovereignty) would increase trade by much. (In fact, Rose would expect it to make no difference; the fixed exchange rate between the U.S. and the P.I. was already a strong currency union.) There was a big financial crisis in 1919-22, in which the management of the fixed exchange rate was involved, but it is unclear at best whether the dollar would have really made any difference. The combination of postwar dislocations and mismanagement at the Philippine National Bank would have been a major problem either way; the dollar did not protect Cuba.

As for post-independence Philippines, well, after WW2 the U.S. spent a lot of effort to de-dollarize countries that used the currency. Considering how important capital controls were for postwar Philippine governments, it is hard to see why the Philippines would have been any different. Capital controls would have still been imposed and an American commission would have helped introduce a new currency, and the only difference is that the exchange rate would have fixed under the Bell Trade Act at 1:1 instead of 2:1. Perhaps the Philippines would have resisted de-dollarization (Panama did) but that seems very unlikely.

In short, the Philippine currency embroglio probably belongs in the list of Great Debates That Turned Out Not To Matter. But it get the world some coins that it otherwise would not have had, and now you know why.

Angela Merkel finds her inner Teddy Roosevelt: Lessons from Santo Domingo

 It appears that the German government has just announced that it wants Greece to renounce its sovereignty in return for more credit. (Well, at least in return for the release of existing credit lines.) The idea isnt new: in 2002, two prominent economists seriously proposed that Argentina give up its sovereignty for five years. Of course, Argentina has done quite well for nine years by breaking all the rules, but it is far from clear that Greece could copy that, or that Argentina will continue to do well.

There is a historic parallel: the U.S. and the Dominican Republic in 1905. (Actually the U.S. and lots of Latin American countries, ranging as far afield as Peru and Bolivia, plus Liberia ... but let’s wait on that.) Short takeaway: Washington was way more generous back in those benighted days, with very little at stake, than Berlin is being today, despite massive repercussions for Germany if things go wrong.

The backstory was about what you might expect. The D.R. had defaulted; its government was facing multiple armed revolts; and the Germans were nosing around. This latter made Washington nervous that a rebel force (or one of the rapidly-changing governments of the day) might transfer a naval base to Germany in return for aid. In fact, after U.S. intelligence captured a letter from General Demetrio Rodríguez openly requesting aid for President Carlos Morales, Captain James Miller “invited” Rodríguez on board his ship, where he explained: “Neither he [Morales] nor anyone must think for a moment that Germany or any other foreign power could be situated in any portion of the Dominican territory.”

President Morales saw an opportunity. If he could convince the United States to take over his country’s customhouses, using the German threat as motivation, then he could kill three birds with one stone. First, having U.S. troops in the ports would remove them as strategic targets for rebel forces. Second, U.S. officials could manage the customhouses far better than corrupt Dominicans, thereby increasing revenue. Third, if the Americans could be convinced to skim a bit off the top and use that to guarantee debt repayments, then the D.R.’s borrowing costs would go down, and Morales could borrow more on top of the increased revenue. Win win win! Who needs sovereignty? (Two out of the three points, one might think, would apply to Greece today.)

Uncharacteristically, President Theodore Roosevelt (in his own words) chose to  “put off the action until the necessity became so clear that even the blindest can see it.” He was a bit worried that American public opinion might not be thrilled with the idea of involvement in somebody else’s civil war, not while the Philippine War had only just ended two year previously, and not with U.S. troops still fighting in Mindanao. So Roosevelt waited, and the Dominican situation got worse, and the Europeans kept nosing around, and American investors kept screaming, and finally in May 1904 the President proclaimed his famous corollary to the Monroe Doctrine. It read:

Any country whose people conduct themselves well can count upon our hearty friendship. If a nation shows that it knows how to act with reasonable efficiency and decency in social and political matters, if it keeps order and pays its obligations, it need fear no interference from the United States. Chronic wrongdoing, or an impotence which results in a general loosening of the ties of civilized society, may in America, as elsewhere, ultimately require intervention by some civilized nation, and in the Western Hemisphere the adherence of the United States to the Monroe Doctrine may force the United States, however reluctantly, in flagrant cases of such wrongdoing or impotence, to the exercise of an international police power.

Thing is, it still took a while to build support, and there was, you know, an election to win. President Roosevelt didn’t agree to Morales’s request until December 1904, a month after the U.S. presidential vote. The Senate, it turns out, had other ideas. Roosevelt decided that with the election past, that wasn’t a problem, and so the U.S. took over the customhours without a treaty on March 31, 1905.

Under the agreement, the U.S. directed 55% of customs revenue towards debt payments, but it did not do so mindlessly or automatically. Rather, it banked the money until February 1907, when it finally forced the D.R.’s creditors to accept a 50% haircut on their outstanding principal. (The average coupon was reduced to 5%.) In fact, if expropriation claims are excluded, creditors accepted a 57% haircut on their debt.

Moreover, the agreement worked: there was no austerity. Even after the U.S. took 55% off the top, government spending did not fall. Moreover, the D.R. managed to go to the capital markets as early as May 1907, when it refinanced its outstanding post-haircut debt of $15.8 million and borrowed an additional $3.9 million. ($3.9 million is, as a share of U.S. GDP, the equivalent of $1.7 billion in 2010.)

And therein lies the rub. Or rubs. First, the D.R. was not a democracy in 1904; Greece is one in 2012. Second, the D.R. asked for the receivership; the Greek government is not. Third, the U.S. used its good offices to obtain a very favorable debt restructuring; the E.U. (meaning the Germans, really) is letting Greece hash things out with its creditors on its own. Finally, in the case of the D.R. the U.S. really was able to improve custom collection; I’m not sure that anyone believes that a foreign administrator will be able to easily improve the Greek internal revenue service inside a culture of widespread evasion.

In other words, the U.S. was much more generous to its dirt-poor neighboring nondemocracy than the Germans are being towards their not-as-poor fellow democracy. Good luck with that. Unless, of course, failure is the plan.

Plus ça change, plus elle ressemble à un tas de debans de rue de Brooklyn

  A while ago, I discussed the problems of correctly implementing what should be, in theory, the world’s easiest counterinsurgency strategy for a country as rich as the United States: bribe your opponents. The U.S. has tried it in multiple ways; at best, it’s been a partial success, in the sense that things could be worse. But only partial. In October of last year, the Taliban hit the headquarters of the Panjshir provincial reconstruction team. When I was there in ‘06, Panjshir was quiet, well-protected by the local militia. That said, there were plenty of incidents like this, albeit not as deadly. Bribery is expensive, it is long-term, and it needs to be institutionalized (either formally or informally) in a way that aligns everyone’s incentives.

Are there lessons from history? Well, yes, but they’re not good. My co-blogger and I give you a report from 170 years ago:

The deceptive quietude of Afghanistan which followed the sharp lessons administered to the Dooranees and the Ghilzais was not seriously disturbed during the month of September 1841, and Macnaghten was in a full glow of cheerfulness. His services had been recognised by his appointment to the dignified and lucrative post of Governor of the Bombay Presidency, and he was looking forward to an early departure for a less harassing and tumultuous sphere of action than that in which he had been labouring for two troubled years. The belief that he would leave behind him a quiescent Afghanistan, and Shah Soojah firmly established on its throne, was the complement, to a proud and zealous man, of the satisfaction which his promotion afforded.

One distasteful task he had to perform before he should go. The Home Government had become seriously disquieted by the condition of affairs in Afghanistan. The Secret Committee of the Court of Directors, the channel through which the ministry communicated with the Governor-General, had expressed great concern at the heavy burden imposed on the Indian finances by the cost of the maintenance of the British force in Afghanistan, and by the lavish expenditure of the administration which Macnaghten directed. The Anglo-Indian Government was urgently required to review with great earnestness the question of its future policy in regard to Afghanistan, and to consider gravely whether an enterprise at once so costly and so unsatisfactory in results should not be frankly abandoned.

Lord Auckland was alive to the difficulties and embarrassments which encompassed the position beyond the Indus, but he was loth to admit that the policy of which he had been the author, and in which the Home Government had abetted him so eagerly, was an utter failure. He and his advisers finally decided in favour of the continued occupation of Afghanistan; and since the Indian treasury was empty ... Macnaghten was pressed to effect economies in the administration, and he was specially enjoined to cut down the subsidies which were paid to Afghan chiefs as bribes to keep them quiet.

Macnaghten had objected to this retrenchment, pointing out that the stipends to the chiefs were simply compensation for the abandonment by them of their immemorial practice of highway robbery, but he yielded to pressure, called to Cabul the chiefs in its vicinity, and informed them that thenceforth their subsidies would be reduced. The chiefs strongly remonstrated, but without effect, and they then formed a confederacy of rebellion.

The Ghilzai chiefs were the first to act. Quitting Cabul, they occupied the passes between the capital and Jellalabad, and entirely intercepted the communications with India by the Khyber route.

Macnaghten did not take alarm at this significant demonstration,regarding the outbreak merely as “provoking,” and writing to Rawlinson that “the rascals would be well trounced for their pains.” Yet warnings of gathering danger were rife, which but for his mood of optimism should have struck home to his apprehension. Pottinger had come down from the Kohistan, where he was acting as political officer, bent on impressing on him that a general rising of that region was certain unless strong measures of prevention were resorted to ...

Has war become more restrained?

 Two years ago, I discussed the idea that war was becoming much less common. It generated a spirited discussion.

Looking around at current wars, it seems as though wars have also become less destructive, and that seems to be entirely a product of restraint by the most powerful actors. Consider the following quote from a New Zealand defense analyst:

Counterfactual history does not have a good name, but it is particularly useful here. It is often difficult for us to imagine that past events might have happened differently; once they have occurred, they seem entirely logical, natural, and even inevitable, and we forget that they developed as only one of myriad potential options. As such, counterfactual history can be used to indicate how some of these recent conflicts might have unfolded had the West not returned to a ritualized and restrained way of war, but rather continued the trend toward totality exemplified by the World Wars. There is no intent to suggest that the counterfactuals described would have been better methods of fighting the wars mentioned. But we can devise better policy to the extent that we can reliably compare outcomes of rival courses of action.

In Vietnam, America might have unleashed almost the full power of its arsenal. Massive conventional forces might have landed in the north. Airpower might have been liberated from restrictive rules of engagement, allowing it to destroy almost anything that moved that was not regarded as friendly. An airtight blockade might have been imposed along the entire North Vietnamese coast. ...

In Somalia, America might have responded to the “Blackhawk down” incident with a massive escalation of force. Mogadishu might have been flattened, and the insurgent groups destroyed, regardless of collateral damage. In Kosovo, NATO might have quickly flooded the battlefield with armor from both north and south, accepting the risk of heavy casualties from anti-tank defenses in order to achieve a decisive victory and thus end perceived ethnic cleansing.

In Lebanon, Israel might have preceded a massive tank assault with a murderous artillery barrage reminiscent of the Somme, aiming to dig Hezbollah out of its holes with high explosives. In Afghanistan, a furious America might have dispatched a much larger invasion force to secure the border with Pakistan and then engage in sweep-and-destroy missions reminiscent of the Boer War, turning the mountains of Afghanistan into a depopulated wasteland. Finally, in Iraq, a much larger multinational force might have advanced more carefully, occupying and securing important cities with large garrisons, pacifying as it went. Once Saddam Hussein was defeated, the country might have been quartered in a manner reminiscent of Germany after World War II. A large occupation force would then have been maintained, one authorized to kill as many locals as required to ensure security and stability.

In other words, since the Korean War combatants have exercised a great deal of operational and tactical restraint when conducting military operations. (The Korean War was limited in its strategic goals, but operationally it was a total war.) The rest of the essay is confused, but the point holds. The recent Russo-Georgian War certainly follows the pattern.

The essay does not address the three important questions. First, how much is the operational savagery of the World Wars (and Korea) the anomaly that needs to be explained?

Second, is today’s restraint truly based in exogenous changes in norms (as the author avers) or is it a recognition of strategic realities that make the unbridled use of force counterproductive in terms of achieving national aims? Similarly, how could you distinguish between the two hypotheses?

Finally, does past performance predict future results?

The war that did not happen

 In an earlier post, I discussed the strategic nuclear balance on the eve of the Cuban Missile Crisis. The chief takeaway was that the Soviet Union possessed very little ability to threaten the United States in 1962. President John Kennedy was a hero not because he saved the United States, but because he took seriously the lives of the Russians and Europeans who would perish.

Here I want to draw attention to how lucky the world really was. A nuclear war that “spared” the United States (at least outside the southeastern cities within range of Cuba-based rockets) would nonetheless have been a horrifying event without parallel. Below is a BBC documentary from 1965 that gives a horrifyingly unvarnished view of what such a war (even had it occurred in 1962) would have entailed.

The movie has other virtues. The preacher around minute 27 explains why I strongly believe that conscription is a moral imperative for anyone who is not a pacifist. And it puts our modern fears in perspective. It is worth watching. (Credit to Charlie Stross.)

Thoughts?

Is the Commonwealth of the Bahamas an independent state?

 Is the Commonwealth of the Bahamas a sovereign nation? It has a seat in the United Nations, so it a technical legal sense the answer is clearly yes. And it has a very cool flag.

But in any other sense of the world, the Bahamas isn’t sovereign. Like many (perhaps most) microstates, the Bahamas has only managed to survive by a combination of outsourcing some state functions to bigger more powerful countries and giving control to powerful neighbors when their interests are at stake. 

Let’s start with the obvious: the Bahamas is fully dollarized. Technically there is a separate Bahamian dollar, maintained at parity with U.S. money — in reality the U.S. dollar circulates to the point where you have to go out of your way to receive Bahamian banknotes. Unlike Argentina during the days of the currency board, nobody bothers to hoard dead presidents. Still, the Bahamas hasn’t completely outsourced monetary policy to the United States: under the Exchange Control Act of 1956, the Central Bank retains the right to restrict foreign exchange dealings. In practice, this has worked as a tax on capital outflows, although there are also some restrictions on current transactions. Still, it’s telling that the act enabling the controls predates official sovereignty by 17 years — and yes, it applied to Great Britain as well.

Moreover, monetary policy is a poor test of sovereignty, even ignoring Bahamian capital controls. After all, many sovereign states outsource monetary policy. Zimbabwe is about as sovereign a country as you are likely to find, and even it adopted the U.S. dollar in the wake of a ruinous hyperinflation. So let’s turn to something more fundamental: law enforcement. Sovereign countries do not allow foreign courts to make decisions or foreign law enforcement agencies to make arrests. The United States, for example, is perfectly willing to help out the RCMP, and the links between the RCMP and the FBI are so profound that the agencies can be indistinguishable — but the Mounties don’t fly helicopters over Montana, and FBI agents don’t make arrests in Ontario. And while American and Canadian courts respect each other’s decisions, you can’t appeal an adverse outcome in Newfoundland to a court in Washington, D.C.

This is not true in the Bahamas, although, confusingly, the foreign power with judicial power and the foreign power with police power happen to be different. The Bahamas’ supreme court is the Judicial Committee of the Privy Council in London. In 2006, 2007, and 2009 the Privy Council held its sessions in the Bahamas — the only country to have that privilege outside the U.K. itself — but at the end of the day, it’s still a British court.  It creates some controversy, particularly over death penalty cases. Nonehteless, the Bahamas shows no sign of wanting to cut its links to it.

Meanwhile, with some caveats, U.S. law enforcement operates in the Bahamas almost as freely as it does in Florida. In the late Seventies and early Eighties, drug traffic through the islands into Greater Miami steadily escalated, and the Reagan Administration put more and more pressure on the Bahamas to do something about it. In November 1983, the Pindling government gave into the pressure and convened a commission of inquiry “To inquire into the illegal use of the Bahamas for the transshipment of dangerous drugs intended for the United States of America.” The commission was made up two Bahamians, an Australian, and a Canadian, and after 146 days it uncovered what everyone knew: the Colombians moved narcotics with impunity through the islands.

And I mean impunity. Aircraft from Colombia would land in Bimini or drop cargo to waiting boatmen, who would put them in speedboats for the 50-mile into Broward and Palm Beach counties. The chief local distributor on Bimini received $90,000 for each run, with local schoolchildren received $500 for a night’s work. A December 1979 raid by the Royal Bahamian Police ended with rocks being thrown at the cops “by children, adults and elderly.” It also uncovered corruption, which had not yet escalated to the upper channels of Bahamian law enforcement … but was clearly getting there.

The result was OPBAT: Operation Bahamas and Turks and Caicos. It started in 1984, but in 1987 the Bahamian government granted the U.S. Coast Guard the right to stop any and all ships and aircraft entering or leaving Bahamian territory. The USCG couldn’t officially make arrests without a Bahamian sign-off, but that was a distinction without a difference. In 2004, the Comprehensive Maritime Agreement between the U.S. and the GCOB (Government of the Commonwealth of the Bahamas) replaced the grab-bag of unofficial conventions and understanding, but had the effect of strengthening the U.S. position in the islands: now the Royal Bahamian Defence Force would regularly station “ship-riders” on U.S. vessels and helicopters, giving the full rights of arrest in Bahamian waters. This authority has proven useful not only in combatting the drug traffic, but also in preventing Haitian migration to either the Bahamas or the U.S. Of course, stopping emigration is not good for Haiti — and OPBAT’s success in curbing the Caribbean drug trade has been awful for Mexico. (I’m heading to Monterrey on Wednesday.) But it has prevented any chance that the Bahamas might become a narco-state.

(You can read Wikileaks’ rather anticlimactic revelations about Bahamian thoughts regarding Haiti and the CMA here. In 2007, the U.S. Army pulled out of OPBAT, and its helicopters were replaced by DEA aircraft, a distinction without a difference. All that happened were that Army UH-60s were replaced at Georgetown by three DEA Bell 212s and a fixed wing aircraft.)

To recap: Bahamian monetary policy is set by the Fed, the supreme court is in Britain, and American law enforcement freely operates in its national territory. Does that make for a sovereign country?  I report, you decide ... but if you pushed me, I would have to say not.

Fear of a black Canada

 Trinidad almost became an American territory in 1931. It didn’t because the British government was perfectly willing to default on its debts to the U.S. government. The Hoover Administration, sensibly, didn’t push the issue.

The Bahamas, it turns out, almost became a Canadian province in 1911. The colonial assembly in Nassau, backed by prominent Canadian investors in the islands, pushed hard to join. The population of the islands was only 56,000, but there was plenty of money to be made investing in infrastructure: the first telephones were only installed in 1906, and electricity arrived in the archipelago in 1909. The Royal Bank of Canada set up shop in 1908.

Canada’s share of Bahamian imports, however, remained small: $28,392 in 1911, compared to $1.3 million in American imports to the archipelago. Moreover, the fiscal cost of taking over the islands would have been minimal: the federal government spent only 6.1% of GDP in 1911, and transfers to provincial governments amounted to only 0.4% of GDP. (Federal infrastructure spending in the Bahamas would have contributed to economic growth in the islands and likely been a wash for the treasury. It also would have been negligible on the scale of the Confederation.)

So why didn’t it happen? Simply put, Canadian racism ... triggered by a wave of American political refugees. Prime Minister Wilfred Laurier (a Liberal) seemed open to the idea of letting the Bahamas join until, in 1911, a strange wave of racial fear arose from Manitoba. A group of about 1,000 wealthy black Americans from Oklahoma — fleeing the 1907 passage of Jim Crow laws after statehood — arrived at the Emerson border crossing. The result was panic on the prairies.

I’ll turn the floor over to William Thoburn, a Conservative MP from Ontario: “As long as we give the free homesteads in Canada’s northwest, they will come by the tens of thousands. I would like to ask the government if they think it is in the interests of Canada that we should have Negro colonization in the Canadian northwest. Would it not be preferable to preserve for Canada the land they propose to give to Negroes?”

The hysteria soon spread to Alberta. A group of prominent Albertans wrote to the federal interior minister, Frank Oliver, with a series of complaints straight out of an American inner suburb, circa 1970. First, they worried that “Negro immigration” would create white flight and drive down property values. (The idea of rural white flight on the Albertan prairies boggles the mind.) They then went on to worry about their women. “We do not wish that the fair fame of Western Canada should be sullied with the shadow of Lynch Law but we have no guarantee that our women will be safer in their scattered homesteads than other white women in other countries with a Negro population.” To his credit, Premier Arthur Sifton refused to block black immigration.

The panic was especially crazy because Canadian law required immigrants to have on them at least $50 per man, woman, and child. In 2010 dollars, that’s $1,185 — but that figure doesn’t take into account the fact that people were poorer a century ago. When adjusted for increases in average wages, each immigrant was required to have the 2010 equivalent of $7,425. In other words, these were not the huddled masses; these were well-heeled political refugees fleeing the sudden imposition of racial tyranny in their home state.

From the Toronto Mail and Empire of April 27, 1911: “If Negroes and white people cannot live in accord in the South, they cannot live in accord in the north. Our western population is being largely settled by white people from the United States. If we freely admit black people from that country, we should have race troubles that are a blot on the civilization of our neighbours ... The Negro question is of the United States’ own making and Canada cannot allow any part of her territory to be used as a relief colony on that account.”

The Canadian government ordered their agent in Kansas City “to refuse certificates or any encouragement to migration of this class” and “take immediate measures to check this class of immigrants.” It then limited black immigrants to Emerson and North Portal, where it subjected them to degrading medical examinations. It went so far as to hire a black doctor from Chicago to travel to Oklahoma and give lectures about how terrible the Canadian climate was for black people. Finally, in August 1911, with a federal election coming up fast, came this order-in-Council, pursuant to the Immigration Act of 1910, which allowed the government to ban “immigrants belonging to any race deemed unsuited to the climate or requirements of Canada”:

In this atmosphere — with the Liberals under fire for their support of the Reciprocity Treaty with the United States — it should come as no surprise that Prime Minister Wilfred Laurier (a Liberal) would decide against expanding Confederation to the Bahamas on grounds of, in his own words, incompatible “ethnical origin.” Laurier was willing to take West Indian islands as purely colonial concerns, with no representation in Ottawa and no right of immigration, but that wasn’t acceptable to West Indian elites which already enjoyed a modicum of self-government. The Bahamas, for example, possessed a parliament elected by a property-restricted suffrage. (The restrictions meant that white people held 26 out of the 29 parliamentary seats, even though they made up only a quarter of the population.)

When Laurier lost the September 1911 election to Robert Borden, the Bahamians tried once again. The big issue in the election was a proposed tariff-reducing Reciprocity Treaty with the United States. The Conservative Party opposed the agreement, and it used imperial rhetoric as part of its appeal. With pro-Empire Borden as Prime Minister, the (unelected) Governor of the Bahamas, William Grey-Wilson, travelled to Toronto. Among other things, he gave a speech before the Empire Club. In it, Grey-Wilson extolled the wonders of trade and tourism — which were, in fact, the biggest gain from Confederation. The Bahamas would win a secure market for its tropical products, and Canadian companies would gain control of that trade. (They would also cement their domination of Bahamian finance and services.) Grey-Wilson, of course, felt the need to assure Canadians that the absorption of the Bahamas would not lead to black members of parliament sitting in Ottawa:

Now, the constitution of the Bahamas, like the other three B’s of that portion of the Empire, is on a suffrage that is almost equivalent to yours in Canada. I have examined them. Separately and I think they are very much the same. That is to say, any member of a community who is in possession of a house of the value of $10 a year is entitled to vote. That, of course, is practically manhood suffrage. That vote is common to the blacks and to the whites. The inhabitants of the Bahamas are one quarter white and three quarters black.

The result of our elections has been for many years past — and I would remind you that the Bahamas have a constitution almost as old as Newfoundland — that the black man almost invariably elects a white man to represent him. And why is that, gentlemen? You here are conversant with the horrors of the situation in the Southern States of America. In the Bahamas we have no such position. (Applause.) I say that a white woman in the Bahamas, in the most isolated position, is as secure today as if she were in this room now. (Applause.) I defy anyone to say that about the Southern States of America.

Now, gentlemen, why is that? It is not because we have treated the black man as the equal of the white; no. He admits himself — the most intelligent of them with whom I have spoken — he admits himself that he is the white man’s inferior. He admits that he is of a child race, undeveloped; but it is because, being a child race, we have extended to him, as we have to all the other races of the Empire, that universal unswerving British justice.

Unfortunately, Governor Grey’s arguments failed to assuage Prime Minister Borden. In a meeting between Grey and Borden on October 18th, 1911, the Prime Minister rejected the possibility of taking the Bahamas into the Canadian confederation. His reasoning was that the events of the past year had proved that Canadian public opinion would not countenance the admission of a majority-black province, no matter how small or how far away. (The refusal of Toronto hotels to give rooms to black Bahamian visitors only reinforced his point.) The Colonial Office concurred. Worried by the hysteria engendered by the emigrants from Oklahoma, the C.O. reported the following about the possibility of a Bahamian province: “No doubt for the moment the Dominion government would safeguard their interests, but there are signs of the rise of a colour question in Canada and in any case it cannot be long before U.S. opinion gives the tone to Canada in regard the Negro.”

Ultimately, all that came out of the talks was a reciprocity treaty with several West Indian jurisdictions. Reciprocity entailed a 20% tariff cut; it was far from the free trade entailed in political union. It barely dented American domination of Bahamian commerce. And so, much as racism derailed an 1867 attempt by the United States to annex the Dominican Republic, racism derailed what should have been a simple, easy, and mutually-beneficial extension of the Canadian confederation into the Caribbean. Canada eventually absorbed poorer, less strategic, and more troubled Newfoundland, but those islanders had pale skins.

As for the Bahamas, it became part of the United States ... okay, not officially, but watch this space.

The Cuban missile crisis

 I am reading The Icarus Syndrome, by Peter Beinart. It’s a good book. Unfortunately, it gives a misleading impression of the strategic situation during the Cuban missile crisis. Moreover, the misleading impression is unnecessary for Beinart’s overall argument.

The Icarus Syndrome is about hubris and American foreign policy. Beinart argues that hubris (from different sources at different times) caused foreign policy overreach, first in World War 1, then in Vietnam, and then in Iraq. In the case of the Cuban missile crisis, he wants to fit it into a seamless narrative connecting Cold War “toughness” with the debacle in Indochina. Therefore, Beinart wants to imply that the Cuban confrontation of October 1961 was about toughness and signalling, rather than actual concrete strategic threats.

On page 155, Beinart writes:

At first Kennedy was not sure why the Cuban missiles posed such a grave threat. (“What difference does it make?” he mused. “They’ve got enough to blow us up now anyway.”) But when he met with his advisers, a consensus quickly formed that the missile were intolerable. Whether or not the actually threatened America, Kennedy later explained, they “would have appeared to, and appearances contribute to reality.”

This description gives a misleading view of President Kennedy’s actual thinking. The first quote comes from page 72 of James Hershberg’s piece on the Cuban missile crisis in the Cambridge History of the Cold War. The quote is from a months before the U.S. detected Soviet missiles in Cuba, and appears to have been an offhand comment taken from a tape recording. As I will explain in a moment, Soviet missiles in Cuba did in fact give the USSR an offensive capability that it otherwise lacked, something that JFK knew quite well.

The second quote comes from pp. 174-75 of Melvyn Leffler’s For the Soul of Mankind: the United States, the Soviet Union, and the Cold War, and Leffler’s paragraph is worth quoting in full:

Kennedy acknowledged that Khrushchev did not want to use the missiles in Cuba to attack the United States. But their presence in the Caribbean “would have politically changed the [world] balance of power. It would have appeared to, and appearances contribute to reality.” The Soviet leader had demonstrated again that he could not be trusted. Through guile and through daring, the Soviets ceaselessy sought to create “a monolithic communist world.”

In context (and Leffler is a very good historian) is clear that Kennedy’s comment referred to Soviet intentions, whereas Beinart makes it seem that it applied to Soviet capabilities. To analogize, Leffler recounts the fact that Kennedy stated that Khrushchev had loaded a gun and pointed it at the U.S., although he knew full that Khrushchev had no intention of pulling the trigger. Beinart, however, gives the impression that Kennedy was saying that the gun wasn’t loaded. (More accurately, he gives the impression that the Soviet leader was merely pointing a handgun at the U.S., when he already carried an assault rifle.)

In 1962, the Soviet Union possessed very little ability to threaten the continental United States with nuclear weapons. Let me repeat that. This is not something that was publicly known at the time, but it was something that was known by the President of the United States. In 1961, President Kennedy received a report indicating that the USSR possessed only four ICBMs, all at a test site in Plesetsk. In November 1961, the President received a dissenting CIA report that included the following table:

In other words, even the dissenters believed that the Russians likely had only 10 (or 25 on the outside) missiles, all of which were vulnerable to U.S. attack. We now know from Soviet sources that the low estimate was spot-on: the Strategic Rocket Forces had only 10 operational intercontinental ballistic missiles at the beginning of 1962, whose reliability the commanders did not trust. Soviet missiles at the time relied on radio guidance, which in turn depended on installations that were not likely to survive a war, given the American ability to quickly detect Soviet launches. 

As for bombers, here is Anthony Cordesman: “Soviet long range bomber forces consisted only of 100 Tu-Bears and 35 May Bison, whose range and flight characteristics forced them to fly at medium and high altitudes, and which made them extremely vulnerable to U.S. fighters and surface-to-air missiles.” What Cordesman doesn’t mention is that U.S. surface-to-air missiles at the time were armed with nuclear warheads, which made them extremely effective at destroying incoming aircraft.

In short, placing Soviet nuclear missiles in Cuba substantially changed the strategic balance. Moreover, in hanging tough, President Kennedy took less of a risk with American lives than is commonly perceived. The missiles in Cuba held the possibility of devastating wide swathes of the southeastern United States (and Western Europe would have been destroyed) but the sort of civilization-destroying attack that was very real by 1973 was not on the table in 1962. Of course, the logic also applies in the converse: by refusing calls to attack the missile sites in Cuba, the President was showing much greater restraint than he is commonly credited.

It is true, of course, that the Soviet buildup was so quick that within a decade any missiles in Cuba truly would have been superfluous. Moreover, as indicated, Kennedy did not believe that Moscow intended a first strike. (The fact that Moscow could not have pulled one off explains the President’s certainty, of course.) Restraint was of course an option. The point, however, is that there were solid strategic reasons to resist the placement of nuclear missiles in Cuba. It was not just about signalling and toughness and (by implication) pointless machismo. 

None of this alters Beinart’s overall point. He makes an excellent argument about hubris, the cult of toughness, and the descent into Vietnam. The problem is that he wanted to make the Cuban confrontation a seamless part of that narrative, but it just doesn’t easily fit.

War versus non-war

 Americans have a problem with the word “war.” In the dictionary, war is an armed conflict between organized groups for political objectives. In the U.S., however, the word took has the connotation of absolute war, an interstate conflict aimed at the unconditional surrender of the other side.

To some extent this has always been true. Three of our five declared wars — the War of 1812, the Mexican-American War, and the Spanish-American War — weren’t aimed at unconditional surrender, but they were aimed at the territorial dismemberment of our opponent. Moreover, in all three cases, the declaration of war rapidly led to an escalation of American aims. The War of 1812 immediately became a war to drive Britain out of North America. The Mexican-American War started over Texas and ended in an American occupation — and were it not for Nicholas Trist the southern boundary of the United States would be several hundred miles further south. The Spanish-American War started with a very 21st-century “authorization to use force,” but Congress declared war after Spain declared it on us ... and soon enough the U.S. was in possession of Puerto Rico, Guam, and the Philippines.

What does this have to do with Libya? Well, Libya is a massive food importer. In a total war, even a casualty-averse total war, his enemies could starve him out. But we are not fighting a total war, and we obviously should not be fighting a total war. Since Libya imports about 75% of its food needs, this means that the U.N. is soon going to have to organize relief efforts at the same time that NATO is blockading his ports.

It will get stranger.

Two traps in thinking about international relations in the 21st century

 Commentators often, I think, fall into two serious (and diametrically opposed) traps when discussing international politics.

The first is to assume that everything is different now that we’re in the 21st century. Globalization, democratiza-tion, international institutions, new norms, and the internets have all combined to create a brave new world where none of the old verities apply. I talked a lot about this back when people were all agog over the putative “Twitter revolutions,” but it applies to more conventional analysis. Take this from a month ago: 

“The U.S. should call for an urgent, immediate Security Council meeting and push for a strong resolution condeming Libya’s use of violence and authorizing targeted sanctions against the regime. Such steps could stand a chance of rever-sing the course of a rapidly deteriorating situation. An effective international response could not only save many Libyan lives, it might also send a powerful warning to other Arab leaders who might contemplate following suit against their own protest movements.”

A Security Council resolution is indeed a powerful thing. And that is what happened. But when it did not work, the same author produced an very odd follow-up a few days ago, when Libyan government forces were at the outskirts of  Benghazi:

“The administration should move quickly and aggressively to recognize the provisional Libyan government, release the frozen Libyan assets to that provisional government, and allow the flow of weapons to them. It should push for ever tighter targeted sanctions against Qaddafi, and continue to mobilize international consensus against his regime to make sure that he remains an absolute pariah without access to international institutions, revenues, or support. It could jam Qaddafi’s communications and provide intelligence, and more. The debate should move away from an exclusive focus on military action.”

Huh? Come again? What besides military action is supposed to dissuade the Colonel from slaughtering his opponents, conducting house-to-house raids, mass arrests, show trials, and the rest of the panoply of modern totalitarianism? Perhaps “crazy” is the wrong word, given that we are talking about the Colonel, but Gaddafi would be crazy not to bring out the full Stalin should he win, and I am at a loss as to why people think that our brave new globalized world of international institutions would change the logic of authoritarianism.

Of course, the second mistake is to assume things are just like the 19th century. In this view, the spread of democratic ideals is irrelevant, international institutions are mere epiphenomena, and norms only have meaning when backed up by force. Technology changes power balances, of course, but ideology does not, with the possible exception of nationalism. This is the mistake that Stratfor seems to make in its more head-scratching analyses. States are the only actors that matter, states are in a zero-sum game, international opinion does not exist, communication technology only matters in military terms, and political norms are meaningless once you move outside states. The problem with that view is that it contradicts our everyday experience of watching international politics happen. (It is also not entirely consistent with more concrete data.)

I tend more towards the second error, myself. That might be more common among Americans, since our approach to foreign relations has changed less than elsewhere, and international institutions and norms have less of a daily effect on our lives, but both extremes (everything is different now versus nothing has changed) are, I think, good things to avoid.

Things happened before the Internet, really

 Enough, already! Now Steven Walt has joined the ranks of the people stunned by the effect of the internets. “A combination of modern mass media (Al Jazeera, the Internet, email, Twitter, etc.) has clearly played a major role in driving the pace of events.” I could handle this kind of thing from 20-somethings who don’t remember when you had to wait for a letter to arrive in the mail. But Steven Walt?

I am at a loss as to why people keep coming back to the Internets. Here is a chronology of recent events:

Dec. 17 - Mohamed Bouazizi sets fire to himself in Sidi Bouzid, Tunisia.
Jan. 04 - Bouazizi dies of his burns. 
Jan. 14 - After days of riots, President Ben Ali flees to Saudi Arabia.
Jan. 22 - Protests in Algeria.
Jan. 23 - Protests in Yemen.
Jan. 25 - Protests in Cairo.

And here is an even more impressive and more rapid chain of events:

Feb. 22 - French government bans protest meetings. Riots break out.
Feb. 23 - Prime Minister Guizot resigns.
Feb. 26 - King flees to Britain.
Feb. 27 - Protest marches in Germany. Governments give into demands.
Mar. 13 - Riots flare in Vienna. Metternich resigns.
Mar. 15 - Mass demonstrations in Budapest.
Mar. 18 - Demonstrations in Berlin.
Mar. 20 - Uprising in Poland.
Mar. 31 - Constitution drafted for Germany.
Apr. 08 - Revolt in Moldava.

The difference? The first group happened in 2010-11, and the second in 1848. But somehow that has gone right into the memory hole. I am flabbergasted that the Brazilian, Philippine, and Chinese events of my living memory seem to have been forgotten. I am surprised that nobody seems to mention 1968. But I really stunned that 1848 has been lost in the frenzy to declare how super marvelicious the internet is for freedom.

I am making a strong argument here: if the internet had been magically shut down on December 17th, events would have proceeded in much the same way. News travels and people organize in ways that do not involve modern electronic communication.

And that is why Egypt’s internet shutdown is not having much effect. Except in surprising the more breathless techno-evangelists.

Animascope: or, what my father did after the wars and before the other wars

 My father, Leon Maurer, was a serial entrepreneur. One his cooler companies made this:

What is so cool about it, besides it being a cartoon featuring the Senate Appropriations Committee, manpower problems in the armed forces, overtired officers, and a coolly professional female space pilot confronting sexism with grace and aplomb? Well, three things. First, it was made in 1962. Second, it was made by my father. Third, it was made by Animascope (aka Colormation or rotoscopic animation) an automated process by which live actors could be used as templates for animation. Yessir, that’s exactly the process used in most CGI flicks today.

They used it to make Yellow Submarine and a cartoon version of The Lord of the Rings. I’m not sure why it faded after that. But I’m here to say that Animascope was my pop’s invention, and give him a loud shout-out, close enough to his 86th birthday for government work. Mazeltov, papito!

The blog is back, with notes on Finland, Zambia, and baseball

 We aren’t quite returning to normal levels of activity here, but we’re getting close. Things have been busy, what with teaching and casewriting and book-finishing. I still need to complete a book manuscript before the blog fully revives, but I do now have some time to breathe.

And so, I present you with four unrelated links. First, listen to Finland’s foreign minister talk a remarkable amount of sense regarding European defense. Time for Europe to “grow up,” says Alexander Stubb. “I don’t believe the US presence in Europe is permanent. The U.S. is starting to flirt with other partners than the Europeans. The E.U. is not as sexy as it once was. We are like a grumpy old couple. We’ve been together for 60 years. We nag at each other. We might have the same values but America is starting to look elsewhere. If the Americans are looking elsewhere then we have to start up coming up with European solutions, we can’t operate in the security field as 27 different entities.”

Well said. Budget-cutting is turning several Europeans forces into almost ceremonial remnants. He didn’t quite come out and call for a single European army, but that’s the implication. In a world of declining defense budgets, Europe has to decide whether to become a giant Costa Rica (with two nuclear-armed provinces) or try to get more bang for the euro by merging their militaries. The U.K. and France have already begun the process. The more direct politicians are about the choices, the better. (And no, I don’t think that the previous statement is always true.)

Second, Doug Muir is in Zambia! As always, he writes good stuff. The World of Warcraft reference goes over my head, which actually makes it funnier. He discusses Zambian English (which seems to be just another accent), trade with the DRC (which seems to suffer from a severe lack of transport infrastructure, if I’m reading it right), and the European presence. (I met several white Zambians in Mexico a few years back; they seemed healthily attached to the new country, although their accents seemed vaguely British.) He also tells us that Zambia tried to acquire nuclear weapons. That last is not something that I ever woulda guessed. Doug still refuses to carry a camera, though, for his own strange reasons and which I am sure he will regret in 20 years. Anyway, read the posts, and encourage him to keep it coming.

Third, we have Jussi Jalonen on the significance of Kaarlo Kurlo, a Finnish soldier who volunteered to fight in the Polish-Soviet war of 1919-21. It is fascinating stuff, which in a time gone by would have appeared on this blog here. (Yes, that makes me sad. But ni modo, progress is progress.)

Finally, baseball! Word, baseball. You might think that the sport expanded from the United States at the point of a bayonet, since the map of serious baseball countries looks a lot like a map of the unofficial American Empire circa 1940. But you would be wrong. Still no explanation of why the sport faded out in the Philippines.

A depressing thought for a sunny Tuesday

 Below the fold, Brad DeLong argues that what he calls the “Barrington Moore problematic” is no longer a useful way of ordering the social sciences.

What is the Barrington Moore problematic, you ask? (Yes, I had to google the name.) In short, it is the search for the answer to why 20th-century states gave rise to regimes like Nazi Germany and the Soviet Union. In an advanced industrial society and a backwards industrializing one, regimes arose which killed millions of people. And even without those horrible ideologies, the First World War showed modern states using nationalism to mobilize for slaughter on an unprecedented scale. Understanding why drove research agendas for a long time; it certainly provided a useful way to organize undergraduate education.

DeLong argues, with good reason, that this no longer dominates. Modern Western societies mobilize rapidly against even relatively mild forms of racism or authoritarianism. Other societies sometimes (but ever less) give rise to tinpot dictators or self-proclaimed socialists, but they are simply not the same.

Al-Qaeda is not about to seize control of any state. Hugo Chávez may be leading an increasingly authoritarian regime, but he is no Joseph Stalin: he isn’t even a Fidel Castro. (Heck, these days even Fidel Castro isn’t much of a Fidel Castro.) And for all the attention to the threat of chaos, embodied by nihilistic terrorists or drug cartels, neither has really been able to do much damage inside functioning modern democratic states.

We need, therefore, to find a new overarching question to bind together the social sciences.

Except ... well ... in one field, economics, a lot of people believed that we had achieved a Great Moderation. Depressions were a thing of the past. Well, not so much. In political science, many believed that we had a pretty good handle on what politics looked like under first-past-the-post. Again, not so much.

Do we really understand why the world hasn’t been turning up many Stalins lately? Are we sure that Communism and facism and future things like them are dead? Is it in fact time to abandon the study of dictatorship and democracy because things look like okay, right now?

Well, probably yes. That said, I worry that in a few years or decades the below essay (under the fold) just might (perhaps) look a little bit like the literature on the Great Moderation, or the Westminster system, or worse yet the positivism that preceeded the First World War. Maybe, just maybe, after the resurgence of problems that so many thought were dead, we just might not yet want to abandon the search for the roots of totalitarianism.

And it sure wouldn’t hurt to keep undergraduate education focused on it.

A brief and incomplete history of organized crime in northern Mexico

 The history of organized crime in Mexico goes back before Mr. Carrillo, of course. As far back as 1916, in the middle of the Mexican Revolution, U.S. customs officials in Los Angeles reported that the government of Baja California, one Colonel Esteban Cantú, was selling leases to smuggle opium into the U.S. for a $45,000 down payment and monthly leases around $10,500. (Of course, the dollar isn’t what it used to be: $10,500 in 1916 dollars is worth about $212,000 today.) Cantú didn’t last — he became involved in a bizarro-world attempt to secede, which led to his exile — but the governors who followed him continued their involvement with drugs, even after the federal government of Mexico banned marijuana in 1920 and opium in 1926.

Somewhat amusingly (at least to me) the Baja criminals were under the thumb of a group of Jewish gangsters based in Los Angeles. Harold “Happy” Meltzer, connected to Mickey Cohen, arranged with the Mexican consul in Los Angeles to use Mexican customs agents to smuggle opium across the border.

When Enrique Diarte (their source of supply in Tijuana) tried to go into business for himself, an American named Max Cossman (aka Max Webber) had him killed. Cossman had the support of the state government, but ran afoul of the feds, and wound up in a Mexico City jail in 1949. Mexican jails being what they were (and, sadly, are) his wife had no trouble smuggling heroin into the prison, which Cossman resold. He escaped and continued to operate across the border well into the 1950s, using the moniker “Francisco Mora.”

Smuggling soon spread away from Baja. In 1931, President Pascual Ortiz Rubio (who was actually not the true head of government at the time — that position being occupied by the Jefe Máximo de le Revolución, Plutarco Calles)  expressing worry over “the increase in national and international narcotics trafficking along the rail line joining Mexico City and Ciudad Juárez.” He went on to state that he was sending three “secret agents” who were “currently in Torreón” to combat the traffickers.

 
The head secret agent, Juan Requena, sent back a report stating that Torreón was the “main center for narcotics trafficking in the towns linked by the rail line from Mexico City to Ciudad Juárez and for the international trafficking carried out in this city.” It went on to say the main kingpin was a man of Chinese descent named Antonio Wong Yin, who was in continual contact with the mayor of Torreón (Francisco Ortiz Garza), a close friend of the governor of Coahuila (Nazario Ortiz Garza), and the head of the federal Army in the state, General Jesús  Garza Gutiérrez. (It was good to be a Garza!) He went on report that the traffickers “have a complete espionage service prepared to do anything.”

At that point Requena was transferred to Los Angeles. Sadly, I have no records of what this Mexican secret agent did there.

The next year, General Rodrigo Quevedo became governor. His brother became mayor of Juárez. They shot the head of the smuggling cartel there, who fled to Mexico City, where gunmen killed him in a tiny little park that used to be next to the Casa de Azulejos in 1937. That same year, the head of the federal Department of Public Health, José Siurob, called Juárez “possibly the most dangerous center where traffickers operate who ... defend their trafficking with gunfire.”

By 1947, Harry Anslinger, the head of the Federal Bureau of Narcotics, declared Mexico to be U.S.’s main opium supplier. He also accused state officials in Sinaloa (where it was grown) of being in the drug business, including Governor Pablo Macías Valenzuela. Surprisingly, the Mexican press picked up the accusations. There must have been some sort of infighting between Macías and President Miguel Alemán, because once the President made a trip to Sinaloa, the accusations stopped. Macías finished his term and became head of Military Camp No. 1 in Mexico City. The feds made a show of capturing one of the traffickers Macías was accused of protecting — Miguel Urías Uriarte — but he was soon released.

In short, organized crime was tied up with the political system practically from the very beginning. The result wasn’t good for Mexican governance, but it did mean that the politicians were in control of the gangsters. There were violent outbreaks in the 1960s and then again in the late 1980s, but organized crime simply didn’t exist separately from the political system. There were individual gangsters and criminals, but no independent syndicates and no armies upon which the capos could draw to resist the state or intimidate the citizenry ... at least not without the active cooperation of the politicians.

That went away with the transition to democracy in the late 1990s. But violence didn’t really get out of the control until the last few years. So something else is going on. If that “something” turns out to be Sicilianization, then the end result will be a return to the bad old days of the PRI’s dictatorship, minus the protectionism. In Sicily in 2007, extortion rackets collected about 12% of GDP from businesses on the island — that’s more than the Mexican federal government collects in non-oil revenue.

In fact, it could get far worse. Sicily is part of nation that isn’t (despite the Prime Minister’s best efforts) completely corrupt, and receives large-scale transfers from the rich north and the European Union. In Mexico, though, it’s the richest part of the nation what would be Sicilianizing.

Still, there are two big issues that need explaining. First, why did gang warfare break out in 2008, instead of 1998 or 2000 or 2006? And second, why hasn’t it spilled over the U.S. border?

Policy of repulsion, part 2, or why Americans should apologize to the next Filipino you run across

 I apologize for the sparse posting. That probably won't change before March of 2011, when I’ll have a manuscript ready for The Empire Trap and have teaching notes done for all my cases. Plus, the World Cup! (You don’t follow my Facebook page?)

But let’s take Scott’s half-joking question: Why didn’t the Phillipine Republic’s amazing access to the U.S. market trigger a sustained export boom? Simple: the fixed exchange rate mandated by the Philippine Trade Act. 

 

The Bell Trade Act fixed the parity of the Philippine peso at 50¢, the same as the prewar parity. That was ... how to put this? That was insane. Price levels jumped six times after the war. Nominal wages followed, but with a lag. After the war, the economy went through a brutal deflation ... which neither reduced nominal wages nor brought the real exchange rate back into line. It was economic insanity. The eurozone follies are nothing in comparison. Harry Dexter White testified before Congress about how insane it was, albeit in an understated way. “The very essence of sovereign monetary systems is that they may get out of line with each other. If you protect the loss against exchange by fixing that rate of exchange so that it cannot be altered, you may be subjecting the country to economic conditions which would be bad for the whole country.”

Had the Commonwealth of the Philippines received the status of Puerto Rico (better yet, Hawaii) its people would have emigrated en masse and it would have received far more reconstruction money. Had the United States really cared about the new Republic of the Philippines, it would have offered a perpetual customs union in return for giving U.S. investors equal treatment with Filipino ones and allowed the peso to be devalued to 20¢ before re-establishing parity. (Or better yet, a devaluation followed by dollarization.)

Neither happened. Representative Wilber Mills (D-AK) let the cat of the bag as to why. “We are attempting in the language there to safeguard the value of capital that may go from the United States to the Philippines.” That is not crazy. Devaluation would reduce the value of U.S. investments. But why not give the Philippines a head start by bringing the exchange rate into line with relative prices? Ah. Well. The Philippine Trade Act allowed the President of the United States to “establish the total amount of Philippine articles which may ... be entered or withdrawn from warehouse in the United States” whenever he find “that they are coming or likely to come into substantial competition with like articles that are the product of the United States.” Now that provision in itself did not handicap the Philippines, but a Congress that would insist on that provision was not a Congress that would allow the Philippines to adopt the trade policies that Japan, Germany, and South Korea would later adopt ... and which China (at a much larger and more damaging scale) is adopting today.

At this point, the story is pretty much done. Still, there is an important wrinkle, which is below the fold.

Policy of repulsion, part 1

 “Policy of detraction” didn’t seem quite right. This post deals with Philippine independence, and the unwinding of the American “policies of attraction” that I will continue to sporadically post about. 

 

The Republic of the Philippines gained sovereignty on July 4, 1946. In theory,the economic separation of the Philippines from the United States was hedged by the Philippine Trade Act of 1946.   The Truman Administration persuaded Congress to allow free trade for eight years, after which tariff privileges would be slowly withdrawn until July 3, 1974. The U.S. would subject the Philippines to quotas on sugar, cordage, rice, cigars, tobacco, and coconut oil, but that was nothing new. In addition, the law provided for a fixed exchange rate of 2:1 between the peso and the dollar, gave the nationals of each country full freedom to invest in the other, and prevented the Philippines from imposing capital controls “except by agreement with the President of the United States.” 

For all the claims of Philippine nationalists, the Trade Act was almost entirely a Philippine initiative. Washington had little desire to admit Philippine products. Nor did it have much desire to maintain an open market in the Philippines — major U.S. corporations, in fact, lobbied in favor of import controls during this period. Their reasoning was simple: in a small protected market, the first company in gains an enormous advantage. Scale economies would limit the establishment of competing plants, and trade barriers would keep out imports. Voila! Washington did, however, have reasons to keep the Philippine economy marginally viable and maintain favor with the Republic’s leaders. 

It was much easier for Truman to shepherd the Philippine Rehabilitation Act, an agreement to turn over U.S. property to the R.P., and an extension of Philippine access to the American market if he could claim that American business was getting something in return. That something was the freedom to invest and temporary free trade. According to page 17 of the U.S. Survey of Current Business, Volume 31, the U.S. granted the Philippines $166 million in grants and $64 in loans between the end of the war and mid-1948, followed by an additional $488 million in grants and $36 million in loans in 1948-50. 

This was a substantial, but far from overwhelming, amount of money. In nominal terms, it came to about $5 billion in grants and $800 million in loans, plus $6 billion in transferred property. Of course, the U.S. economy was much smaller then. An equivalently-sized foreign aid program today would cost $35 billion in grants, $5.6 billion in loans, and $44 billion in transferred property. Looking at it from the other perspective, U.S. grants averaged about 4% of Philippine GDP, with loans coming to another 1%. 

The catch? (You knew one was coming.) The Philippine government quickly figured out a way to protect the domestic market, with the full cooperation of the U.S. president using his power under the Philippine Trade Act. In essence, Manila managed to get the “best” of all worlds: access to the U.S. market, very high levels of protection at home, and essentially unconditional American aid.

Details forthcoming, as I drive through violence-torn northern Mexico on my way to the D.F.

The historical roots of German pacifism

 One the potential points of confusion between historians and non-historians is that when historians say something like “history matters,” they do not mean “people today bear history in mind when making decisions.” Rather, they mean “past events constrained (or even caused) present decisions.” This subtle difference has caused confusion between my friend Doug and myself on multiple occasions. The confusion is clearly my fault, for the simple reason that if you confuse somebody, you are by definition being confusing.

Since the memory of the war is indeed alive and well in many places outside Germany (and I know at least two Germans who have been unpleasantly blindsided by this fact) it is a good thing that most Germans have a hypersensitive reaction to any intimation that they might use military force in response something short of a direct attack on NATO soil.

The question is, then, what drives Germany’s oddly hypocritical yet surprisingly powerful pacifism? There is much evidence that it is not historical guilt. But absent that, then, how can events six decades ago shape attitudes today? I’ll turn the floor over to Mr. Muir, lifted from comments:

Let’s take it from the top. The German Constitution specifically prohibits “Angriffskriege.” That translates as “offensive war,” but the meaning in German is a bit broader. “No Angriffskriege” pretty much precludes anything but self-defense.

Note that the Germans didn’t put this provision in themselves! The Allies insisted — almost literally at gunpoint — that it be included. The initial German reaction to this was something like “glum resignation.” But over time, they got more enthusiastic about it, and today it’s as important — and as central to their identity — as any provision of the Bill of Rights is to Americans.

Anyway: just a few years after its drafting, the restriction hit its first snag: how could it be reconciled with German membership in NATO?

Answer: NATO formally assured the Germans that this alliance was strictly defensive. The Bundestag then solemnly passed a law saying “the Constitution allows us to join defensive alliances”. Subsequent court decisions confirmed that, okay, this was constitutional. This was back in Adenauer’s time, when the judiciary was pretty conservative and inclined to defer to the executive on security issues. It’s anyone’s guess if it would have flown a generation later. But fly it did, and 50+ years later it’s firmly established as both precedent and policy.

The odd result of this is that NATO occupies a special constitutional space. Basically, if NATO does it, it’s presumed defensive — not Angriffskrieg! — and therefore constitutional.

In 1999, the Kosovo war forced Germany to thread a very narrow passage: they simultaneously argued that the war wasn’t “offensive” because it was in defense of the helpless Albanians, while at the same time carefully limiting German participation. (This is why, for instance, the air offensive made use of Belgian and Dutch airplanes, but not German.) The German courts subsequently reviewed this and — barely and grudgingly — agreed. [German Tornados provided air cover for the initial RAF assault on Serb positions and later attacked Serb air defenses.] 

This in turn provided a precedent for German participation in Afghanistan. Again, it was limited — no German troops storming Taliban strongholds. Arguably the Germans could legally do this, but the political leadership wisely decided not to stretch the envelope.

Note that there was a huge internal debate over Kosovo, and another one over Afghanistan. This flares up again every time Germans do anything new in Afghanistan (“Can we do that?”) or every time a German soldier is killed (“What are we doing there!?”)

Somalia, on the other hand, was easy. There’s a body of law going back around 300 years stating that anti-piracy actions are never offensive. The reasoning is that pirates are the common enemies of all civilized nations; hoisting the Jolly Roger is legally equivalent to a declaration of war against the world. Once you become a pirate, ships of all nations are free to attack you at will. So, there wasn’t much controversy over sending German ships to help. (In fact, there was a bit of relief — here’s something useful we can do, without having a wrenching internal debate!)

Which brings us to the President’s resignation. You said this happened because of the burden of history. This is partly true, but also very incomplete; it ignores the 65 years of history since the war. Germans didn’t think the President’s statement was wrong because Germany has a history of offensive, hugely destructive war. They thought it was wrong because Germany is a peaceful, lawful nation that would never do anything that might be “Angriffskrieg.”

Germany has an extremely strong self-image of itself as a nation that is peaceful and law-abiding. Obviously that has historical roots in the postwar settlement imposed by the Allies, but it’s comfortably outlived both the war and the settlement and is now a historical fact in its own right. The last withered, centenarian WWII veteran will probably drop dead around 2035, but the Germans of that day will almost certainly still be pacifistic and inclined to hand-wringing over most forms of military action.

Events six decades ago constrain current actions, even without the direct consideration of the actors. History matters, even when unremembered. 

Thoughts?

Cowboys and Italians

 I was in Oklahoma to visit the headquarters of Laredo Petroleum, one of the leaders in the development of domestic shale gas and oil. I was also here to visit some of their field operations. I’ll have more to say about that later.

 
The reason why I’m going to wait is that along the way, I discovered something I did not know: southeastern Oklahoma was once a center of Italian settlement. Now, mass immigration this was not. In 1910, the census recorded 2,564 Italians in Oklahoma, with a further 1,303 native-born Italians. That’s a tiny part of a state of 1.6 million. Even in Coal, Latimer, and Pittsburg counties, Italians made up only 3% of the population in 1910. But they left a mark.

 
Why did they come? Well, the aforementioned names of the counties where they settled gives a clue. The first coal mines in Oklahoma opened in McAlester in 1872. In 1875, the mining companies built a labor camp in nearby Krebs. The companies recruited Italian workers in a deliberate attempt to prevent unionization — American coal miners had already become radicalized. In the words of a 1956 article: “Mine operators found the English, Irish, Scotch, and Welsh stock produced the best miners but also produced the chief trouble makers during periods of strikes in the 1880s and 1890s.”

It isn’t entirely clear why the mining companies had to worry. The mines were located deep in the Choctaw Nation. Before statehood, non-Choctaw residents of the area had to pay a residence fee of 25¢ per month (about $77.20 per year in today’s money). The mining companies deducted the fee directly from workers’ pay packets, and arranged with the Choctaws to make it impossible to pay any other way. Upshot: striking workers faced deportation.

Anyway, Italians they recruited, and Italians they came. The first “Columbus Society” in Oklahoma started in 1881.* Unlike most Italian immigrants to the United States, the Oklahoman Italians came from the north: three-quarters of them arrived from Piedmont, with the remainder from Abruzzo and Molise.** The coal mines, then as now, provided grueling employment for $545 per year ... a less-than-royal $12,700 in inflation-adjusted dollars.***  (Then again, the median household income in the tri-county area is only $17,500 today.) Mining conditions, of course, were much worse than the salaries would indicate. Things improved a little with statehood in 1907, when the new constitution provided for workers’ compensation, an eight-hour day, free public schools, and a ban on child labor in the mines.

Nowadays Krebs is dotted with Italian restaurants. But they don’t really serve Italian food, and I’m speaking as somebody who grew up in the land of the calzone and baked ziti. Consider the founding of the oldest of Krebs’ eateries: the famous Pete’s. Pete Pritchard — so named because none of the local kids could pronounce “Piegare” — who moved to the U.S. at the age of 8, in 1903. He attended school only sporadically, since his father had him work in the mines when they needed money, in contravention of the new state constitution. Pritchard broke his leg in 1923, while working in the mines. His wife and he had a small flock of chickens. They couldn’t sell them for any reasonable amount, and they couldn’t keep ‘em, so they served ‘em up to their friends ... and Pete’s was born.

The place became famous during Prohibition for serving home-brewed Choc beer; Pete himself got busted. Choc beer got its start with the European influx, which cheerily ignored the dry laws passed by the Choctaw Nation. An 1894 report written by an irritated Bureau of Indian Affairs official noted: “The sale of Choctaw beer, a drink compounded of barley, hops,tobacco, fishberries, and a small amount of alcohol, is manufactured without stint in many portions of this agency, especially in the mining communities. Many miners insist it is essential to their health, owing to the bad water usually found in mining camps, and they aver they use it rather as a tonic or medicine than as a beverage, and this idea, that it is a proper tonic, is fostered and encouraged by some physicians. But it is somewhat remarkable as a fact in the scientific world that the water is always bad in the immediate mining centers, but good in the adjacent neighborhoods.”

Eventually, coal mining declined. Many of the Italians left. The rest didn’t fully assimilate until World War 2: when the U.S. went to war, the first reaction of the local police was to raid Italian families and seize their weapons. Some people remained working in a giant socialist enterprise. By 2000, the population was down by a third from 1920. (A new hydrocarbon boom has begun, but more on that later.)

We didn’t eat at Pete’s. We ate at Isle of Capri. The restaurants are all basically converted houses, with big and scattered dining rooms bolted on as the customer base grew. It feels a bit like you’re snacking in somebody’s living room. So does the resolute unprofessionalism of the waiters, who were clearly family members, and strange way you pay, by wandering up to the front and asking for the bill, instead of having it brought to your table. (Sure, you pay on the way out at lots of places around the United States, like that diner out in Maspeth. I just don’t remember having to go to the counter to get your bill.) You can get lamb fries (don’t ask, you don’t want to know), ravioli, spaghetti, something called manicotti (I’m still not sure what it was) and sausage sandwiches the size of your head. Given how the restaurants in the area started (Pete was not unrepresentative) it shouldn’t be that surprising that the food bears little resemblance to the American cuisine you’ll find in other heavily-Italian parts of North America, let alone a real genuine Italian restaurant.

 

I ate a lot. Compare the fellow above with same fellow a few hours earlier, as pictured at the beginning of this post. As Italian food, it was awful. As food, it was awesome. If you’re in the area, I highly recommend it.

Random observations

 I don't do a lot of random observing on this blog. It may be time to start. So here are few. As always, comments and long involved arguments are desired.

(1) The internet and social networking are overrated. (I'm looking at you, Randy.) Way way overrated. Had computer technology been four decades more advanced, we would be pinning all the tumult of the sixties and seventies on the internet. Weather Underground, blame it on Facebook! Had it been six decades more advanced, we would have been bored. You know, like anyone surfing the net in the UAE can get bored. Click the link and tell me why I'm wrong. (That one goes to Charlie Stross. But how the hell did he manage to erase my post about meeting him in a bad bar in Boston?)

(2) Lay off my man from St. Lucia Saint Kitts! Alexander Hamilton is the hero of every muscular patriotic American pinko. He is why you can be a lefty Big Government type (with all respect to Alex Harrowell, I will have to disavow the term socialist, since it's become a curse word in my country) and still evoke the founding fathers. I will give props to libertarians (hey! Guy Tower! Why you don't read this, G?) but I will not let Dick Armey lie about the founding father of the nationalist American left.

(3) Basta with the Massa puns. (Scott? I haven't heard any from you, but I know you thinking 'em.) Seriously, people. Funny once. No more emails, please.

(4) You should all read more Alex Harrowell.

(5) I write this in Paris. Paris has a lot of white people. Really, the city is surprisingly chock full of 'em. But a major figure at a well-funded think tank says it ain't! Am I confused? So I looked up the figures. I was only able to find the 1999 results, which told me that 17.6% of the city's population was foreign born. Of those, 14% were Algerian-born, 13% from Portugal, 10% from Morocco, 6% from Tunisia, 4% from the madre patria, another 4% from the country that I often think really should be the madre patria, and 3% from Turkey. That comes to 54% of the foreign-born. Speaking as somebody who mistook the Moroccan fellow who drove him from the airport for an Eastern European and then asked his equally-Moroccan barber if he was from Italy, I leave any conclusions about Charles Murray's character (or my ability to identify accents in a foreign language) as an exercise for the reader. I do of course assume that Mr. Murray realized that people from Martinique, Guadaloupe, Guyana, Reunion, and (very soon) Mayotte are indeed as French as any blond German-speaking dude from Alsace.

(6) Man, there were a lot of cigarette butts in the gutter this morning when I took the metro in to the office. I ... like that.

I like France. I can't help it.

Really bad war propaganda

  Look, I’ll cop to supporting the invasion of Grenada. It is true that the New Jewel Movement consisted of a bunch of authoritarian thugs. It is true that they became even more authoritarian when they ousted Maurice Bishop. It is true that they signed secret military agreements with the Soviet Union and Cuba and received $24 million in military equipment from Moscow, including 10,000 assault rifles, 4,500 submachine guns, 11.5 million rounds of ammunition, 294 portable rocket launchers, 16,000 rockets for said launchers, 84 mortars with 8,400 shells, twelve 75mm cannon with 600 shells, 60 crew-served AA weapons with 600,000 rounds of ammunition, 15,000 hand grenades, 7,000 land mines, thirty 76mm field guns with 10,000 rounds, fifty howitzers with 1,800 projectiles, sixty APCs, four coastal patrol boats, and 20,000 uniforms.

Moreover, the Barbadian prime minister, Grantley Adams, tried to persuade the U.S. to intervene on October 19, six days before the invasion. Military casualties ran to only 24 Cubans, 21 Grenadians, and 18 Americans, and the invasion killed only 24 civilians (21 of which in a tragic attack on what turned out to be a mental hospital). The intervention was and remains popular among Grenadians. Plus, it really honestly did restore democracy. Heck, considering the nature of the Gairy regime, it wouldn’t be unfair to say that it introduced democracy.

Would standing aside and letting Grenada collapse into civil war (or be intervened by Soviet-backed Cubans) have cost less in lives and resources? Probably not. Veterans of Operation Urgent Fury should hold their heads up high; you would have to go back to World War 2 to find a case of a more just war. 

That said, the CIA went on to distribute comic books across the island that would have turned me into a gibbering opponent of the intervention:

 
Clicking on the picture will take you to the full comic book. It only gets worse. Christ, man, I worked with psy ops production people ... this is just terrible.

Really bad campaign slogan contest

 Courtesy of Nora Preece, I would like to start the bidding with “Get on the Raft with Taft,” for the 1908 U.S. presidential election.

William Taft, you may recall, weighed a little over 300 pounds.

The Commonwealth Realms of the Caribbean and the end of the British Empire

 This post has been substantially expanded. It was about nothing; now it’s about the slow withering of the British Empire, Margaret Thatcher notwithstanding.

 
Trinidad and Tobago was the first member of the Commonwealth Caribbean to become a republic, in 1976. After the Black Power disturbances of 1970, the government set up the Wooding Commission to review the clauses of the 1962 constitution. All sides of the political spectrum supported constitutional revision: some thought that its conservatism contributed to the instability; others worried in the aftermath of the Williams government’s powerful response to the riots that the pure Westminster system didn’t provide enough checks on the Prime Minister’s power. One solution to that problem was to strengthen the position of Governor-General ... but that caused a problem, since the Governor-General served officially as the Queen’s representative, and “among young people in particular the British Sovereign has no symbolic meaning.” The report did state some advantages of the monarchy — namely, a head of state “above the clash of race and class and ideology which makes up politics” — but they rejected them as inappropriate in the context of a head-of-state with actual executive authority, no matter how weak.* Williams did not accept all the recommendations of the Wooding Commission, but Trinidad got a new constitution ... and an elected President replaced the Queen as head-of-state.

Dominica followed Trinidad into republican status in 1978. One would have expected Grenada to follow.

In 1979, the New Jewel Movement shot its way into office. That came a surprise to nobody: the man who had ruled Grenada for the previous 12 years, Eric Gairy, was little more than a slightly more colorful version of Fulgencio Batista. His opposition knew this; they went so far as to unsuccessfully try to annex the island to Trinidad in order to prevent him from coming to power. (Unfortunately, Indo-Trinidadians were not particularly keen on bringing more African voters into the polity, so the idea failed.) After 12 years of increasingly corrupt Gairyismo (including a bizarre attempt to steal a Miss World competition) nobody was surprised when a small group of Marxist revolutionaries overthrew what was left of his government while Gairy was out of the country.

The rebels proceeded to issue a number of “people’s orders.” They mostly read like something out of an old Monty Python skit. People’s Order Number 1 declared, “The People’s Revolutionary Government now formerly enacts the Constitution of Grenada as hereby, has been suspended.” People’s Order Number 2 said that the People’s Revolutionary Government “shall be vested of executive and legislative power and the People’s Revolutionary Government shall appoint a Prime Minister.” People’s Order Number 4 went on to end all appeals to West Indian or British courts, People’s Order Number 7 established the People’s Revolutionary Army, People’s Order Number 8 created “preventative detention,” and People’s Order Number 10 reiterated the fact that the PRG was, in fact, issuing people’s orders: “For the time being, all People’s Laws shall become effective upon oral declaration and/or on publication of Radio Free Grenada by the Prime Minister or in the official Gazette under the hand of the Prime Minister.”

The weird thing was People’s Order Number 3. “The Head of State shall remain Her Majesty The Queen, and her representative in this country shall continue to be the Governor General who shall perform such functions as the People’s Revolutionary Government may from time to time advise.”

This became a problem when the U.S. was groping around for a legal rationale to intervene. They found a Governor-General, Paul Scoon, ready and waiting to provide them with one. In one of the stranger episodes in the long slow replacement of Britain’s empire with America’s not-empire, the British high commissioner to Grenada carried messages to the Governor-General on behalf of the United States and OECS, without London’s knowledge.

David Montgomery met Scoon on the Sunday before the invasion and asked him, “Would you welcome intervention?” Scoon replied that he saw it as the only thing that could prevent a civil war. He then agreed to issue an oral request for intervention, followed by a written order as soon as it was safe. A written letter to the Prime Minister of Barbados followed on Monday, October 24, 1983.

You are aware that there is a vacuum of authority in Grenada following the killing of the Prime Minister ... I am requesting your help to assist me in stabilizing this grave and dangerous situation. It is my desire that a peacekeeping force should be established in Grenada to facilitate a rapid return to peace and tranquility and also a return to democratic rule. In this connexion I am also seeking assistance from the United States, from Jamaica, and from the OECS through its current chairman the honorable Eugenia Charles (Prime Minister of Dominica) in the spirit of the treaty establishing that organization to which my country is a signatory.**

The Marines’ helicopter assault began at 5:00am on Tuesday.

The story gets stranger when you take into account Margaret Thatcher’s uncharacteristic reaction:

If you are pronouncing a new law that wherever Communism reigns against the will of the people, even though it's happened internally, there the United States shall enter, then we are going to have some really terrible wars in the world.

Who knew?

Why would a self-proclaimed socialist government, willing to ally itself with the Soviet Bloc, keep the Queen as its head of state? Especially when two nearby Commonwealth states had shown themselves completely willing to chuck her out? My guess would be that attachment to the monarchy must run very deep in the smaller islands. But that deep? Or perhaps they only played out two steps along the game tree. They knew that Britain almost certainly would not intervene under any circumstances, but it never occurred to them that the United States could as easily take advantage of the fact that the personal representative of Grenada’s head-of-state was not an appointee of the People’s Revolutionary Government.

Maybe so. I honestly do not know. The evidence is confusing. What is the role of the monarchy in the Commonwealth Caribbean? What should be its role? Does it persist out of popular sentiment, or simple inertia? 

The decolonization that wasn’t

 Spain holds two small enclaves on the Moroccan coast.  The twin cities are currently heavily-fenced enclaves of the European Union. Their presence causes occasional minor spats between Madrid and Rabat, but in general relations are very good. Neither government would gain any internal advantage from risking a conflict. The two countries had a brief spat over Perejil island in 2002, but war was never in the cards. (For a rather silly exploration of a 2002 Spanish-Moroccan war, go here.) If I had to bet, I would bet that Spain will still have control over Ceuta and Melilla 93 years from now, in the year 2103.  

It turns out, however, that if things had gone slightly differently 93 years ago, in 1917, the territories might indeed be Moroccan today. The British Foreign Office wrote a memo suggesting that it would make strategic and diplomatic sense to swap Gibraltar for the North African enclaves. The General Staff and the Air Ministry concurred; the Royal Navy, unsurprisingly, did not. Foreign Secretary Arthur Balfour concluded that “the difficulty of negotiating such an exchange (of Gibraltar for Ceuta) would be great, and that to raise the question at the Peace Conference would, therefore, only be justified if the naval and military advisers of His Majesty’s Government were in complete accord on the subject.” So nothing happened. Seven years later, in 1926, the Spanish government raised the possibility of making the swap, but this time the U.K. rejected it.

So what if Ceuta and Melilla became British in either 1919 or 1926? Well, given the history of British imperial retreat in the 1960s and 1970s, I’m having trouble imagining that London wouldn’t return the territories to Morocco. Why not? It buys goodwill with a strategic ally at no political, strategic, or economic cost. The Spanish inhabitants might or might not drift back to Spain (Britain certainly would not have allowed them entry) and that would be that.

OK, this is not a big change, as these things go. And it’s hard to see how the Royal Navy would have been convinced to change its position, or why Balfour would have decided to overrule the R.N. But it is an amusing little wrinkle in history; something I only noticed because of the earlier discussion of Britain’s proposal to “buy” an Indonesian island during the 1979 Vietnamese refugee crisis.

Thoughts? Not that I’m expecting any, but surprises are always welcome.

Failure modes of the United States, part 4a

  “The U.S. population might become apathetic and gullible to the point of civic dysfunction.”

 
At first glance, polls like this recent one of self-proclaimed Republicans makes one wonder. (Is there an equivalent poll for Democrats?) The rhetoric at the Tea Parties has been a little, well, out to lunch, not to mention the deliberate use of, uh, falsehoods by major Republican personages, like Senator Grassley. Fox News, meanwhile, is a national disgrace, and every recently Keith Olbermann has drifted in a similar direction, to the point where my wife hates his show. (Jon Stewart recently reigned him in.)

But then you just need to sit and think about it for a moment. With just a little bit of historical perspective, the fear drops away. Consider the history of health-care-related rhetoric in the United States.  (Click the link.)  Pretty crazy stuff, no?  Then consider the stuff the New Left used to say, at much higher volume than the marginal and muted lefties of the Bush Administration era.  Yet the Republic survived. Meanwhile many people worry about the decline of civic participation, the 2008 election uptick notwithstanding. It is something to be worried about ... but when you think about what real high-participation elections were like back in 19th-century America, it isn’t something to inspire nostalgia.  Consider:

On the morning of November 2, 1859 — Election Day — George Kyle, a merchant with the Baltimore firm of Dinsmore & Kyle, left his house with a bundle of ballots tucked under his arm. Kyle was a Democrat.  As he neared the polls in the city’s 15th Ward, which was heavily dominated by the American Party, a ruffian tried to snatch his ballots. Kyle dodged and wheeled, and heard a cry; his brother, just behind him, had been struck. Next, someone clobbered Kyle, who drew a knife, but didn’t have a chance to use it. “I felt a pistol put to my head,” he said. Grazed by a bullet, he fell. When he rose, he drew his own pistol, hidden in his pocket.  He spied his brother lying in the street. Someone else fired a shot, hitting Kyle in the arm. A man carrying a musket rushed at him. Another threw a brick, knocking him off his feet.  George Kyle picked himself up and ran. He never did cast his vote.  Nor did his brother, who died of his wounds. The Democratic candidate for Congress ... lost to the American Party’s Henry Davis.  Three months later, when the House of Representatives convened hearings into the election ... Davis’s victory was upheld on the ground that any “man of ordinary courage” could have made his way to the polls.

Apathy has its charms.

That said, I see two problems, one potential and unlikely, one with us right now. The potential and (IMHO) unlikely one is that the internet and cable news will somehow interact with America’s ideological cleavages to produce a dysfunctional electorate. I really have my doubts that there is anything to worry about here, but I can of course be convinced otherwise by a good argument.

The other problem is that too many voters do not realize that America’s constitution has shifted over the past few decades. We now live in a world of parliamentary parties. Yet too many Americans persist in believing that the candidate matters in elections for the federal legislature.  Even Doug Muir believed this. (I doubt that he still does, but Doug doesn’t admit error much. Partially because he’s rarely wrong.) More discussion here.

I had a very worrying discussion along these lines with family members at my niece’s recent wedding. (No, not a long discussion. There was dancing! With my wife! And little kids, lot of! For her to play with! Which she liked! A lot! Erm, gulp.) Americans want to believe that the person matters more than the party, which is simply not true.  If it were, the GOP would not have been able to muster the quite odd unanimous party-line votes that it recently did in favor of defaulting on U.S. debts and removing all limits on Congressional spending. The WTF-moment those votes inspire clarifies itself and makes perfect sense when you realize that we live in a parliamentary republic these days.

There seems to me a large risk that the disjunct between voter perceptions of the political system we live under and the reality of that system could lead our government to go off the rails. Especially with the recent emergence of the Senate supermajority norm.  Will voter perceptions catch up? I mean, if even Doug Muir was reluctant to abandon the idea that the Senators from Maine were different, we might be in trouble.

(BTW, for the record, on the thread linked to above?  Faeelin right, me wrong.)

Thoughts?

Customs receiverships and Crown Agents

  So Doug is in Tanzania, working on something mysterious designed to make the world a better place. On a previous excursion to Congo, Doug discussed the general malfeasance of the Congolese government. He also thought hard about the administrative competence of the Belgian bureaucrats who ran the colonial government. They ran that government to little purpose, but they ran it efficiently. 

One way to stylize Congo’s dilemma is that the government can’t control its own agents. To which there may be a solution: get foreigners to do it.

Kris Mitchener and I have just written a brief piece for Paul Romer’s Charter Cities blog that summarizes our work on customs receiverships and Crown Agents. The piece draws from the early 20th-century experience of circum-Caribbean countries with customs receiverships, where countries relinquished management of their customs services to a small group of American managers, and the early 21st-century southern African experience of doing the same thing with a small group of British managers. There was a failure — the fellow who was able to run customs in Haiti found the more sophisticated Panamanians running rings around him when he became the fiscal agent there — but in general corruption went down and collections went up. Crown Agents, the organization that took over in the 21st century, had an earlier cameo on this blog.

Politically feasible? Well, Angola and Mozambique did it. So did several eastern European countries (in a slightly disguised form) when customs corruption looked set to hold up their ability to join the E.U. Long-term benefits or spillovers to other parts of the government? Well, at best the jury is out. But sometimes peoples need their governments to do certain things well right now.

Read the piece and tell us what you think.

Black people and the GOP: a road not taken?

 “Dewey beats Truman” is an iconic headline. The election was close (arguments otherwise smack of hindsight bias) and could have gone the other way. What if it had?

Well, the Republican Party might have become the party of civil rights. Why do I say that? Well, this 1947 memo from Clark Clifford to Harry Truman (courtesy of Matt Yglesias):

Since 1932 … the northern Negro has voted Democratic, with the exception of 1946 in New York. A theory … is that the northern Negro voter today holds the balance of power in Presidential elections for the simple arithmetical reason that the Negroes not only vote in a bloc but are geographically concentrated in … New York, Illinois, Pennsylvania, Ohio, and Michigan.

This explains the assiduous and continuous cultivation of the New York Negro vote by Governor Dewey and his insistence that his controllable legislature pass a state antidiscrimination act. 

There are several straws … that the northern Negro is today ready to swing back to his traditional moorings — the Republican Party.  Under the tutelage of Walter White, of the NAACP, and other intelligent educated and sophisticated leaders, the Negro voter has become a cynical hardboiled trader. He believes the rising dominance of Southern conservatives in the Democratic councils of Congress and of the Party makes it only too clear that he can go no further by supporting the present Administration. 

Republican politicians … make no great secret of their intent to try to pass a FEPC Act and anti-poll tax statute in the next Congress.  The Democratic Party can only point to the obvious — that the really great improvement in the economic lot of the Negro of the North has come in the last 16 years only because of the sympathies and policies of a Democratic Administration.  The trouble is that this has worn a bit thin with the passage of the years.  Unless the Administration makes a determined campaign to help the Negro (and everybody else) on the problems of high prices and housing … the Negro vote is already lost.  Unless there are new and real efforts (as distinguished from mere political gestures which are today thoroughly understood and strongly resented by sophisticated Negro leaders) the Negro bloc, which certainly in Illinois and probably in New York and Ohio, does hold the balance of power, will go Republican.

Margaret Thatcher and island-buying in 1979: less than it seems

 Did Britain and Australia really propose to create a new Hong Kong in the Philippines to be populated by Indochinese refugees?  The Guardian says yes.  The documents from the National Archives say no.  Unless there is more than the Archives made available, or I missed the juicy stuff in my long skim, nobody seems to have really considered the creation of a new Crown Colony in 1979.  I can’t find any references to an entrepreneurial city or opposition from Lee Kwan Yew; I certainly can’t find any references to an actual transfer of sovereignty.

Judging from the documents, the story does have a grain of truth.  There was a bilateral meeting between Australia and Britain, although little seems to have been discussed other than the possibility of a joint position at the U.N. conference.  (Both countries had already tried and failed to get the main Western powers in for a sit-down before the U.N. meeting.)  The British ambassador to Jakarta did raise the possibility of buying an island from Indonesia for an expanded refugee camp capable of housing up to 200,000 people.  The thing about that is that the report about the British suggestion and the Indonesian response is phrased in vaguest possible terms.  It isn’t clear who exactly would have put up the money.  (I suspect that the British were thinking about the UNHCR, not HMG)  It certainly isn’t clear that the use of the term “buy” meant “transfer sovereignty” as opposed to a simple land purchase. 

The rest of the stuff in the Guardian story is easy to find, from the worries about riots to the weird decision to try to make it harder for immigrants to bring their spouses into the U.K.  But the island-buying and rival Singapore?  Can’t find it. Maybe I’m not reading carefully enough. 

The full story, best as I can tell, is below the fold.

The friendly society

 Governor Carter refused to limit emigration because the remittances sent back to Barbados from the Panama workers had markedly improved the economy, especially for poorer tenant farmers.  In a country that had recently been on the brink of collapse, he was not going to tinker with that.

 
The direct impact of the remittances was not that large.  In 1906, when Carter declared their importance, they came to 73¢ (U.S.) per inhabitant per year; call it three days wages.  That is not nothing, but it is also not an economic revolution.  Over time remittances grew, peaking at $2.39 per person in 1913 — a bit more than a week’s labor for a male worker at 1910 wage rates.  Not nothing, but not the millenium, either.

But the indirect impact was huge.  First, it bolstered the growth of smallholders.  In 1897, an estimated 8,500 small proprietors held a bit less than 10,000 acres.  By 1912, 13,152 smallholders owned plots.   Assuming that the average size of holding remained constant, this represented an increase in smallholder ownership of 5500 acres, or over 22 square kilometers, five percent of the land area of Barbados.  By 1929, the number of smallholding households had further increased to 17,731.  Land ownership on the island remained astoundingly concentrated, but the percentage of Barbadians who owned property rose from 18% in 1897 to 40% by 1929.* 

Second, it supercharged the Barbadian banking system.  Barbadians opened 16,094 new accounts in government savings banks between 1906 and 1913, and deposits increased 88%.  In 1920, deposits per person surpassed $11.  That was a level of financial penetration about half of contemporary Spain and two-thirds of Italy; very high for a country as poor as Barbados.  It prefigured the island’s emergence as a regional banking center a half-century later. 

Third, it prompted the emergence of a Barbadian social insurance state.  The “friendly society” served as a form of insurance pool.  For a weekly fee of 10 to 12 pence, the societies provided their members with sickness insurance, unemployment insurance, death benefits, free scholarships to household members, and an annual “bonus.”  In 1901, there were 101 societies; between 1907 and 1910 a further 110 were founded, peaking at 260 in 1920.  Their membership grew from 13,933 in 1904 to 46,207 in 1920.  The 1921 census found that 156,312 people lived in households belonging to a friendly society.  That was 94 percent of the population.  Alongside the friendlies were the “landships,” which provided similar services along with ceremonial drills and uniforms modeled on the Royal Navy. Infant mortality continued to lag the rest of the Caribbean until the 1950s, but the societies aided a huge increase in literacy, to 93 percent by 1946. 

In the Zone

  The Panama Canal Agency took charge of picking the workers and getting them to from Barbados to the Canal Zone. Recruiting took place in Trafalgar Square, in Bridgetown, conveniently near the main police station.  Today the place is called National Heroes Square (although a lot of people use the old name) right outside the Parliament building. 

 
Agents went out into the crowd to interview and select potential workers. A doctor then checked the potential workers, selecting those who would receive a contract.  In 1907, Arthur Bullard described the scene as follows:

Several policemen kept the crowd in order and sent them up into the recruiting station in batches of 100 at a time.  As the men came up, they were formed in a line around the wall.  First, all those who looked too old, or too young, or too weakly, were picked out and sent away.  Then they were told that no man who had previously worked on the canal would be taken again.  Then the doctor told them all to roll up their left sleeves and began a mysterious examination of their forearms.  He saw that a few men had been vaccinated by him already, and these were sent away.  One protested that a dog had bitten him there.  Then, he went over the whole line gain for trachoma, rolling back their eyelids and looking for inflammation.  Seven or eight fell at this test.  Then he made them strip, and went over them round after round for tuberculosis, heart trouble, and rupture. About 20 of 100 were left at the end.

The selected migrants reported back to the docks a few days later.  After a second medical examination and a check to insure that every emigrant had a number that matched the one on their contract, they boarded the steamers, where they had to find deck space and food for themselves during the 12 day voyage to Colón.  According to a report presented to the Barbados Legislative Council, the atmosphere on the docks was fairly hostile towards the ruling class.  The crowds would “abuse whites and aggressively denounce them” before boarding. 

 
The anger was understandable, given the situation the emigrants were leaving.  Ironically, the departure of so many angry young men gave plenty of leverage to those who stayed behind.  One prospective emigrant was heard telling his co-workers, “Why you don’t hit the manager in the head and come along with we?”  His co-workers refrained from assaulting the manager, but there was a wave of plantation labor disputes, and the following song became fairly common:

We want more wages, we want it now
And if we don’t get it, we’re going to Panama
Yankees say they want we down there
We want more wages, we want it now

And what do you know?  Wages went up.  By 1910, the American consul in Bridgetown reported that agricultural workers received 30¢ per day, a 25% rise in nominal wages over the 1900 level.   More importantly, unpaid labor — remember the located labor laws? — basically disappeared.  Planters reacted to the new environment.  First, they started to employ tenant women in the fields.  Second, they modernized production.  In 1910 there were no modern sugar centrals on the island — intead, windmill-powered presses wasted upwards of 30% of the raw material.   By 1921, in contrast, 19 modern sugar centrals had entered operation.  Third, they mobilized politically to halt emigration.

Barbados had seen the emigration movie in the 1870s, when Guyanese and Trinidadian labor brokers began recruiting on the island.  That time around, it ended with the Emigration Act of 1873, which effectively prevented labor recruiters from operating in Barbados.  (My wife’s grandfather is from Barbados, but he left for Trinidad in the early 20th century.)  Emigration fell from 2,676 in 1873 to only 613 by 1876. 

This time the movie ended differently.  In 1906, the Barbadian parliament passed a bill giving Governor Gilbert Carter the power to halt emigration.  Two angry public demonstrations convinced the Governor to take the then-extraordinary measure of publicly proclaiming that he had no intention of using his new powers.   The parliament then demanded that he appoint a commission of inquiry into emigration; he refused.  Five years later, in 1911, Carter retired and returned to Britain.  The new Governor, Leslie Probyn, appeared to bow to planter pressure by declaring a ban on labor recruiting for Panama ... but he took no action to enforce it.  Barbadians continued to leave for Panama. 

Emigration, then, had palpable economic effects on Barbados.  It raised wages (albeit to still-low levels) and prompted the renewal of the sugar industry.  That is not nothing.  But there was another effect.  In fact, that other effect was why Governor Carter refused to appoint a commission of inquiry ...

Where is the inflation in China?

 I have been resisting it, mostly because I don’t want to have to go back and reclassify all the China-related posts, but I have to add a China tag to this blog.  Ugh.

A few years ago, before I started my second-year course on geopolitics and the energy business, I taught in HBS’s first-year required political economy course.  In it, we had two cases on the collapse of Bretton Woods.  One of the teaching points of the Bretton Woods cases was that small countries effectively give up control of monetary policy when they fix their exchange rate.  During the class, I put up the following 1970 quote from Time magazine, which sums up the economics pretty well:

Foreign central banks have no practical alternative but to support the value of the dollar by absorbing any surplus dollars that are offered in their own market places.  If the Bank of France, for example, failed to do this, the resulting glut of dollars in the hands of French bankers and businessmen would cause the value of the dollar to fall in France and the value of French francs to soar.  This would raise the export price of Citroëns, Camembert and other French products, hurting sales abroad.  To avoid all that, the Bank of France buys up surplus dollars. But in order to make those purchases it must increase the supply of French francs in circulation. Thus, France and other foreign governments correctly complain that they are forced to adopt inflationary policies to cope with the dollar flow.

People forget this now but it was actually France, not Germany, what blew up the system.  (Which is not to say that Germany would not have blown it up, if France hadn’t taken the lead.)  It was De Gaulle who said, “There can be no other criterion, no other standard than gold.  Yes, gold ... which has no nationality and which is eternally and universally accepted as the unalterable fiduciary value par excellence.”

A fixed exchange rate is (outside Venezuela) a promise by a central bank to swap one currency for another at a fixed price.  If that promise is credible than nobody has any incentive to make a deal at any other price, for the simple reason that one of the parties could always get a better deal at the central bank.  In France’s case, back in the day, everyone wanted to buy its exports.  So they took their dollars, and swapped ‘em for francs at the Banque de France.  Where did the Banque de France get the francs?  It printed them!  That is what central banks do; they cannot hold their own currency as an asset, any more than a company can buy up its own debt and book it on the asset side of the balance sheet. 

Well, the People’s Bank of China (PBC) today is piling up bajillions of dollars in its vaults.  In theory it would have to print bajillions of yuan for that.  In practice, the Chinese government sterilizes the inflow by forcing the banks to buy government bonds.  In essence, a Chinese exporter turns over his or her dollars to the PBC for yuan accounts at a Chinese commercial bank.  (They have to do this, by law.)  The government, however, forces the commercial banks (which are mostly state-owned) to use the yuan deposited in them to buy central bank-issued bonds.  An utterly stylized way of thinking about it would be:

1. The central bank prints yuan in exchange for dollars.
2. The yuan are deposited in commercial banks.
3. The commercial banks lend the yuan back to the central bank in exchange for bonds.

And voila, inflation is kept under control. 

The point, however, is that the inflationary pressure is caused by the fixed exchange rate.  Only now the Chinese are claiming that their fear of inflation is a reason to keep the fixed exchange rate!  Whaa?  Paul Krugman and Dean Baker point out allowing the yuan to appreciate would reduce import prices, and thus lower inflation.  This post is reinforcing their arguments by pointing out that the pileup of reserves — which an appreciation of yuan would slow or stop — also causes inflationary pressure.  In short, Chinese policy makes no sense in terms of inflation.

I am coming around to the unfortunate conclusion that it may be time to credibly threaten to slap some pretty significant tariffs on Chinese goods.  Right now, that country is acting as an international demand suck, earning foreign income and then sitting on it.  Sure, it is nice that they invest those reserves in Treasury bonds ... but with American savings rates rising and interest rates as flat as they can get, now is the time for them to start buying less. 

I find this sort of thing irritating.  I found it irritating when the Chinese government, which quite successfully engages in massive buy-Chinese policies (google “State Council Document 18”) criticized the buy-American provisions of the stimulus.  That was small beans, however.  The Chinese government right now is playing with fire in refusing to allow its exchange rate to appreciate.  During the Great Depression, countries imposed tariffs in lieu of devaluation.  The U.S. can’t unilaterally devalue the dollar against the yuan without Chinese cooperation.  The implication is left as an exercise for the reader. 

(To be fair, the Eichengreen and Irwin paper makes a very different point.  Unlike the countries hit by the Great Depression, the U.S. is a gigantic economy, and the fixed exchange rate with China does not impose deflationary pressure that the Fed cannot fight.  But it does reduce aggregate demand, and it is a growing problem.  I hope the Chinese see the light before we slap tariffs on ‘em.)

Thoughts?

Teddy Roosevelt and Spanish labor unions save Barbados, hate Barbadians!

  I don’t have a whole lot of emotional attachment to the madre patria, not where it counts.  After all, the parliament has passed a law giving the descendents of Civil War refugees the option to apply for a passport.  Yet I have zero desire to do it.  No, I have a negative reaction to doing it.  In other words, at the level where it counts, my people are the people of the United States of America.

But sometimes I can’t resist borrowing a phrase from my good friend (and great American) Carlos Yu:  “Oh, my peoples.” The story of the labor troubles on the Panama Canal is one of those times.

 
In 1904, the United States began construction of the Panama Canal in earnest.  Problem was, it needed laborers.  Lots of laborers.  Preferably cheap laborers, which ruled out hiring Panamanians.  (The Canal labor force would peak at more than a quarter of Panama’s economically active population.  Wage rates would have skyrocketed, even had that many people been interested in killing themselves to dig a big ditch ... which they were not.)  So the U.S. turned to the same place from which the earlier French canal effort had got its workers:  Jamaica.  Problem was, the Jamaican government remembered the disaster that was the repatriation of Jamaican workers after the French canal effort collapsed in 1889.  The Crown Colony government insisted that the Americans guarantee repatriation costs for any and all workers.  That ended the idea of using Jamaican labor; ultimately, only 47 worked on the Canal.

At this point the Barbadians, and later the Spanish, enter the story ... the rest of which is below the fold.

Why is Barbados such a nice place?

   Barbados is a very nice place.  The water is wonderful, of course:  the limestone makes it a turquoise color that simply doesn’t look real.  But it isn’t just the water that makes it so nice:  Quintana Roo and Yucatán also have very nice limestone-saturated water.  No, what makes Barbados especially nice is the society inhabiting the island.  Crime is low, human development is high, institutions seem to work.  It terms of ex-colonies, it is the anti-Congo.  The question is why the place is so nice.  

 
One answer, which I find unsatisfactory, is good macroeconomic policy.  In that view, Barbadian governments managed the economy particularly well after independence, and thus the island grew (relatively) rich.  The problem with that view is that many of Barbados’ unique qualities emerged well before 1966.  In 1960, for example, real primary school teacher salaries in Barbados were 31% higher than in Jamaica, educational spending as a % of GDP was 52% higher and real per student primary school spending was 2.3 times higher.  In 1950, its GDP per capita was the third-highest in the British Caribbean, after an off-the-charts already-developed Bahamas and oil-rich Trinidad.  It was a full 60% higher than Jamaica’s.   Barbados and Trinidad were the only two countries in which less than 40 percent of the labor force worked in agriculture.  (32% in both countries; the Jamaican number was 57%.)  Lifespans at birth were five years higher than elsewhere in the Caribbean (except Trinidad) if still only 56 years.   Other statistics are hard to come by, but the general impression is that for all the poverty — and it was widespread — Barbados had already diverged from the rest of the West Indies.

Except here’s the thing:  if you jump backwards from 1950 to 1900, Barbados doesn’t look so special.  In fact, the place was a disaster, close to becoming what we’d today call a failed state.  In 1902, facing riots, assassinations and economic collapse, the U.K. would take the unprecedented step of approving the 2008 equivalent of a £164 million relief grant (measured as a percent of Britain’s GDP) ... or in purchasing-power terms the modern equivalent £125 per man, woman, and child in Barbados. 

What had gone wrong?  A brief history of the Barbadian collapse below the fold. 

Magersfontein, December 11th

  Eighty-five years and one-day ago, on December 11th, 1924, the Republic of Finland celebrated a very special anniversary.  The state and the military establishment hosted it at the Officers’ Casino Building in the Katajanokka neighborhood of Helsinki. The celebration commemorated the 25th anniversary of the Battle of Magersfontein, part of the Anglo-Boer War of 1899-1902.

The conservative newspaper Uusi Suomi (New Finland) advertised the event on its front page, and the periodicals of the Finnish Civil Guard published articles on the conflict between the Boer republics and the British Empire.  The celebration opened with the the Finnish Naval Orchestra’s performance of “Kent gij dat volk,” the South African anthem. Among the guests of honor were Lauri Malmberg, the minister of defense, and Per Zilliacus, the chief of staff of the Civil Guard. The Finnish Civil Guard also sent a wreath tied with blue-white ribbons to South Africa, where it was laid at the monument on the battlefield of Magersfontein. 

Why did independent Finland celebrate a battle fought in a British colonial conflict in South Africa?  Simple:  Finnish volunteers had fought in the battle as soldiers of the Scandinavian Corps of the Boer forces.  The Scandinavian Corps was founded in Pretoria on September 23rd, 1899, supposedly as a testimony of loyalty felt by the Scandinavian immigrants towards the South African Republic. It included 118 men; 48 Swedes, 24 Danes, 19 Finns, 13 Norwegians and 14 other miscellaneous nationalities, mainly Germans and Dutch. In addition, three Swedish women served as nurses in a separate ambulance unit. The Scandinavians fought in the siege of Mafeking and the battles of Magersfontein and Paardeberg; of these, Magersfontein was the most significant.

After the war, a special Scandinavian monument was constructed on the battlefield. The monument consisted of four cornerstones, representing the four Nordic countries, each decorated with the Scandinavian valkyrie and national symbols of each country. The verse is from Johan Ludvig Runeberg’s March of the Pori Regiment, these days the ofificial Finnish presidential march: “On valiant men the faces of their fathers smile.”

The names of the fallen soldiers are engraved on the shield. Emil Mattsson died in Magersfontein; he’s buried in the field. The British captured Henrik Hägglöf, who died from his wounds at an infirmary near the Orange River. Johan Jakob Johansson — whose name is mistakenly written “Jakobsson” — died at the prison camp on St. Helena and is buried in grave number 18 at the Knollcombe cemetery. The name of Matts Laggnäs, another Finnish volunteer who died in captivity on St. Helena, is missing.

My very first peer-reviewed academic article concerned this very topic, and it was published in the Finnish Journal of History a few years ago. Afterwards, I was delighted to note that an Afrikaner fluent in Finnish had read my article and discussed it in his own blog. Reading my own text translated in Afrikaans was an interesting experience. The term “Boer War” was translated as Tweede Vryheidsoorlog, the “Second War for Freedom.”  The official term in the Afrikaner historiography for the wars against the British Empire in 1880-1881 and 1899-1901 were the First and Second War for Freedom, and the terms seem to still be in use.  Non-Afrikaner South Africans do not seem to use the phrase, understandably enough.

The history leaves us with three obvious questions.  What significance does the Anglo-Boer War have today, eleven decades after the war broke out?  What is the significance of the Finnish Republic’s 1924 commemoration of its citizens’ participation in that war?  And what are we to make of the fact that an event considered highly significant in 1924 has been almost forgotten in 2009?

Beer, banks, and revolution

  Doug Muir observes that breweries and banks seem to survive civil wars.  Now, Doug would never tell you, because he’s modest, but it so happens that he has a friend who’s a little bit knowledgeable about the effects of political violence and instability on economic activity.  His friend has even written an entire book about banking and instability. 

So, is Doug correct that banks and breweries tend to make it through political instability?  Short answer:  yes. 

Long answer:  well, let’s examine the data from one of the worst bouts of political instability to afflict any country with a substantial financial sector and developed manufacturing, at least outside the benighted continent of Europe.  Between 1910 and 1929, Mexico suffered a revolution, two insurgencies against the winner of the revolution, a counter-revolution, a counter-counter revolution, a civil war among the winners of the counter-counter-revolution, a military coup, another bout of civil war after an attempted coup by the Secretary of the Treasury, a presidential assasination, three more attempted coups, and a third civil war fought by angry Catholic guerrillas with a penchant for dynamiting passenger trains.  Among all that, what happened to the banks and breweries? 

Let’s start with the breweries.  Mexico’s domestic industry was created almost overnight during the last decade of the 19th century, with local monopolies established in virtually every major city by the 1900.  One of the industry’s leading firms (the Cervecería Cuauhtémoc of Monterrey, Nuevo León) came to control 28 percent of the national market.  It went on to spin off a glass bottle making company (Vidriera Monterrey) that quickly established itself as a domestic glass monopoly.  The other two major breweries were the Cervecería Moctezuma (of Orizaba, Veracruz) and the Compañía Cervecera de Toluca y México near Mexico City.  

During the civil wars, armed factions viewed factories as strategic assets that could be used to generate income for the army.  What typically occurred in occupied areas was that a faction would seize the factories and run them for its own benefit, or it would threaten to do so unless the management made a “loan” to the revolutionaries.  In April 1914 the forces of Pablo González took control of Monterrey.  For most of the year González occupied and ran the Cervecería Cuauhtémoc, where he continued to employ the brewery’s workforce.  By November the company’s stocks of raw materials had been used up. 

At that point, having extracted what he could from the operation, González returned the factory, apparently undamaged, to its owners.   

The upshot is that while production dropped during periods of generalized violence — 1914-19 and to a lesser extent 1922-24 — the breweries themselves pretty much came through intact.  In fact, beer was such a good market that the Cervecería Modelo started up in 1925, while the country was still rather unstable. 

So what about the banks?  Well, the banks didn’t fare that well during the civil wars.  They were where the money was. Governments and revolutionary factions plundered their cash reserves, forced them to make loans, and engaged in the unrestricted printing of currency.  It did not do good things for the banking system, which by 1916 ended up in government receivership — although in many cases the Carranza government wound up with little more than a Mexico City branch office and some papers.  On the other hand, the governments that came to power after 1916, however, regardless of their stated ideologies, all recognized that they needed a source of credit in order to restore political order.  

    

It took a while to put humpty-dumpty back together again.  A private banking system came back to life, but a December 1920 banking panic caused most of them to fail.  In 1921, President Álvaro Obregón announced that twelve banks would be returned to their owners; only five were able to reopen.  The government tried to regain access to foreign capital markets by restarting payments on the foreign debt, but the civil war triggered by Treasury Secretary Adolfo de la Huerta’s revolt put paid to that.  On the same day the revolt began, Banamex (the largest private bank, and one that existed before the Revolution) transferred $13.5 million to the International Bankers Committee.   The government simultaneously borrowed $5 million from the Huasteca Petroleum Company against future oil tax liabilities, with the intention of using the funds to make additional payments on the foreign debt.   Instead, the funds went to fight De la Huerta.  The diversion of funds meant that the government had to borrow from Banamex to pay foreign creditors ... on July 2nd, 1924, the government gave up and defaulted once again, this time for good.

In other words, this was not a healthy banking system.  A snapshot in 1917 would have showed it as pretty much dead ... but no matter how you put it, five banks did survive (including the two largest) and the system schlumped along despite the occasional civil war.  The government needed the bankers too much to kill the system dead.  In fact, it went out of its way to reactivate bank lending in 1925.

So how did they reactivate the banking system in 1925?  That’s another story.  The moral of this story is that Doug is right:  banks and breweries can survive even extreme levels of violence. 

Doug in Congo, first days

   My good friend Doug Muir is in Congo, and as usual he has some interesting things to say.  So I’ll post some links below.  The fact that it never ever ever occurs to Doug to do likewise on either of the blogs that he regularly posts on, regarding either this blog or serious academic work, is not relevant.  

Here is a brief discussion of Congo’s bizarre borders, or at least the poor country’s lack of an Atlantic coast.  Congo is effectively land-locked, what with the eponymous river being impassable in its lower reaches.  I am surprised to hear that the railroad from Mabadi still works at all.  Doug tells you why the border was drawn so that Congo cuts the Cabinda enclave off from the rest of Angola, and how this weird geography sparked a long secessionist battle against Luanda. 

The unmentioned wrinkle is that Cabinda rests on a sea of oil, first discovered in 1962, late in the colonial era.  (It says something about the Portuguese desire to get the hell out of Africa that they didn’t set up Cabinda as a separate neocolonial enclave; it’s what Charles de Gaulle would have done.)   Cabinda’s Block Zero produces about 22% of the country’s production.  Block 14 produces another 3%, but it’s production is set to rise from 55,000 bdp to 340,000 by 2010.  Onshore exploration in the portion of Cabinda labeled “CN” on the map is underway. 

Currently the provincial government gets 10% of the oil revenues from its territory, which has done a lot to en ... uh ... lower the intensity of the insurgency.  Or at least get it down to a level where government ministers can credibly declare an end to the organized rebellion.  A Chinese company is supposedly developing a highway-bridge combo that will provide a direct link over Congo to the rest of Angola; I have my doubts, but it will be cool if it gets built.  (Note:  the article at the other end of the link was paid for by the government of Angola; it is not a real news report.) 

Meanwhile, here and here are some of Doug’s early impressions of Kinshasa; the place seems to make Tegucigalpa seem lively, Caracas seem safe, Maputo feel orderly, and Jalalabad seem ... well, it is probably better than Jalalabad.  Maybe.  That secret police story creeps me out, more so since they don’t seem to be a very effective secret police at creating a, you know, police state.  I eagerly await more reports.  Even if the jerk never bothers to link to me.

Failure modes of the United States, part 1a, a counterfactual

  Gah.  Still can’t sleep, but my concentration keeps coming in-and-out.  Here goes a short post on a random topic.

The story of how the Supreme Court tried to hold up much of the New Deal is well known.  Roosevelt tried to appoint six new justices, which thankfully failed, and the Supreme Court reversed itself.  In an earlier post, I argued that it would have made little difference had the Court stuck to its initial rulings.  All that would have happened would have been a constitutional amendment reading something like the following:

Congress shall have the power to legislate in all cases for the general interests of the union, and also in those in which the states are separately incompetent, or in which the harmony of the United States may be interrupted by the exercise of individual legislation.

A less poetic version listed an economic laundry list (wages, health and safety, etcetera) and then said:

The due process of law clauses of the fifth and fourteenth amendment shall be construed to impose no limitations upon legislation by Congress or the several states with respect to any of the subjects referred to in Section 1, except as to the methods or the procedure for the enforcement of such legislation.

Such amendments would have changed pretty much nothing.  The Gun-Free School Zones Act of 1990 would have been upheld, and that’s about it.  So not a very big change.

That said, there was another very different amendment in play at the same time, proposed by Senators Burton Wheeler (D-Montana) and Homer Bone (D-Washington).  It had a lot of support, and since Wheeler was one of the biggest opponents of FDR’s court-packing plans, it was probably the most likely amendment to pass.  (Or so I take away from Bruce Ackerman’s book.)  It read:

In case the Supreme Court renders any judgment holding any act of Congress or any provision of any such act unconstitutional, the question with respect to the constitutionality of such act or provision shall be promptly submitted to the Congress for its action at the earliest practical date that Congress is in session, but no action shall be taken by the Congress upon such question until an election shall have been held at which members of the House of Representatives are regularly by law to be chosen.  If such act or provision is re-enacted by two-thirds of each House of the Congress to which such members are elected at such election, such act or provision shall be deemed to be constitutional and effective from the date of such re-enactment.

That is a bit like Canada’s “notwithstanding” clause.  Congress would have been able to override the Supreme Court with a two-thirds vote.  Unlike Canada’s clause, which requires a notwithstanding declaration to be re-authorized every five years, a Congressional override would have been permanent.  It also would have required a Congressional re-vote, rather than merely authorizing one.  On the other-hand, two-thirds is a rather high bar to jump over. 

Unlike the more concrete economic amendments, which would have changed very little, it is not unreasonable to conclude that the Wheeler-Bone Amendment might have had very significant effects on American history.  The question is how significant, and in what direction.  Could a removal of a veto point create a failure mode?   

Immigration and assimilation in Venezuela

  Still beat down under the weather.  Ugh.  This is awful.  The congestion.  The congestion.  This is not a recent picture.

 
But Randy McDonald asked me about immigration to Venezuela, so I’ll talk a little about immigration to Venezuela.  Venezuela has experienced several waves of immigration, but the big ones from Europe came in the 1950s and the 1970s.  In the 1950s, Europeans migrated because of the oil boom.  Roughly 450,000 people acquired legal permanent residence during this wave.  The new democratic government in 1958 restricted migration (not unsurprisingly) and net migration turned negative during the period.  Then in 1973, with the second oil boom, immigration again spiked upwards.  By 1976, Venezuela had 270,000 resident Spaniards, 223,000 Italians, and 107,000 Portuguese.  Now, these numbers have to be interpreted carefully:  they also include, for example, 79,672 Americans, most of whom did not settle down permanently.  Nor are the figures comparable with the permanent residency figures also presented above.  But they are what we have. 

In 1976, at its peak, the various European nationalities (counting only those born overseas, not their Venezuelan-born children) made up about 3 percent of Venezuela’s then-population of 13.1 million.  It was a large migration, but it wasn’t transformative.  On the other hand, it did transform the nature of the country’s elites.  The European migrants were remarkably successful, going on to found myriads of small businesses.  In fact, it has been the descendents of those migrants, mostly Italian, who suffered the most from the government’s recent nationalization of the oil service companies.  (More on that in another post, when I’m feeling better.) 

One interesting question about immigration is:  how quickly (if at all) do the children of immigrants lose the cultural predilections of their parents?  Jewish-Americans, for example, continue to vote Democratic at far higher numbers than their income or occupational status would predict.  Does this apply to Venezuelans? 

Francisco Rodríguez of Wesleyan and Rodrigo Wagner, a grad student here at Harvard, have used the Maisanta list to ask just that question.  Maisanta, you’ll recall, was a list published by the Venezuelan government containing the names of everyone who had signed a 2004 recall petition against Hugo Chávez.  The list contained ID numbers, which can be cross-referenced against income data in the Venezuelan Social Security Institute database.  They then used people’s surnames to trace them back to various Italian regions.  They had to eliminate non-regionally-specific surnbames like Rossi, Russo, Ferrari, Esposito, Bianchi, Romano, and Colombo.  So, given all the potential objections to the methodology, what did they find?

Nothing.  There is no relationship between the political predilections of their parents’ region-of-origin in Italy and the predilections of Italian-Venezuelan voters today.  Inasmuch as Italian-Venezuelans have overwhelmingly achieved middle and upper-class status in Venezuela, they have also assimilated to the political predilections of those groups.