The (somewhat) rational basis for the US-Israel alliance

As the Gaza crisis intensified, I’m sure I’m not alone in having wondered why the US’s support for Israel is so absolutely unconditional. What’s in it for America? Hasn’t it reached a point where Israel is a liability and should be cut loose?

This post is an attempt to account for the seeming unshakability of the US-Israel alliance, on the basis of what would seem like good reasons to the bipartisan political elite. It seems that the core “US interest” motivating it is the desire to maintain the overall stability of the global capitalist system, which means assuring an uninterrupted flow of oil from the main oil-producing region on earth. Please note that it’s not a question of the US itself directly wanting to steal the oil or something — it’s maintaining the overall equilibrium of the global system in which US corporations and the US military operate.

Once it is conceded that this goal makes sense, the politics of the Mideast do not look promising. You’ve got a lot of potentially hostile factions, some nationalistic, some religious, some a combination of both. The borderlines drawn as part of the decolonization process don’t help, but redrawing them would likely lead to instability and conflict. The religious element is a further problem — an Islamic state is likely to have goals other than the free flow of capital and to be less susceptible to the kinds of incentives the US can offer. Hence: lockdown. Anyone who can keep the oil flowing and keep a lid on the population gets US support.

Yet — and here’s where it gets even uglier, if that were possible — all those dictators, whatever their other merits, are swarthy Arabs. How can (racist) Americans trust such people? Better to go with the more natural ally: Israel, which is led by people who are basically white Westerners. This element of trust became all the more essential after the end of the Cold War, when Saddam Hussein demonstrated that even previously faithful clients can go rogue. Similarly, we can assume that the importance of the alliance with Israel only increased when the Arab Spring called into question the Americans’ traditional methods of controlling political outcomes in the Mideast.

On their side, as the political situation in the Mideast destabilizes, Israel sees increasingly clearly that they are the only game in town for the US and that they can basically do whatever they want without endangering their aid or privileged status. And so the vicious cycle continues.

Does anyone have a better explanation?

Why are inflation and deficits bad?

A disproportionate amount of political debate centers around vague abstractions: government spending, deficits, and inflation. The latter two are supposed to be particularly horrible, leading to hyperinflation (and therefore Hitler) or else mountains of debt that are impossible to pay off (and therefore Hitler). Meanwhile, government spending is always at risk of “crowding out” the presumably much more desirable private sector spending.

A moment’s reflection will reveal that these three technocratic abstractions are actually code words for “stuff that makes rich assholes powerful.” Inflation decreases the spending power of hoarded money, and when it is kept at a moderate pace (which does not, as in Weimar Germany, vastly outstrip actual growth in production), it tips the balance of power away from rentiers and toward people who make their money from wages. It’s a way of indirectly decreasing the power of concentrated wealth, and hence moderate inflation is profoundly pro-democratic in its effects.

The same goes for government spending, which designates economic activity that is controlled by democratically accountable representatives rather than by the whims of individual rich assholes. In practice in the U.S., the rich assholes wind up directing some of the flow of this spending, but the bulk of it — such as Social Security, Medicare and Medicaid, and other government benefits — reduces people’s reliance on being exploited by rich assholes. Hence we’ve got to rein in that out of control government spending! Which means: spending that is out of rich assholes’ control and leaves people out of rich assholes’ control.

Government spending at least has the benefit of being tax-financed and hence parasitic on the wealth of rich assholes. Worst of all, however, is deficit spending, where the government creates money over and above its tax revenue in order to spend it in ways not controlled by rich assholes. Our current system requires newly-created money to be matched by a Treasury bond, which I like to think originated as a crafty way of tricking rich assholes into buy into a powerful federal government that would be beyond their effective control. It also has the positive side effect of providing a 100% guaranteed savings vehicle for the general public.

The Treasury bonds that pile up as a result of deficit spending look like “debt,” but it doesn’t work like your credit card, because the government actually creates the currency in which the debt is paid — hence we can always go ahead and “pay off the national debt” by liquidating all our Treasury bonds, and foreign governments who hold our debt can only “punish” us by converting their interest-bearing asset into non-interest-bearing cash. In the last analysis, the federal government’s currency sovereignty can only be controlled by our own elected representatives (and by the need to keep the inflation rate from too greatly outpacing economic growth).

Why the explicit or implicit invocations of Hitler around these abstractions, then? Presumably because it reinforces the message that populism always leads to totalitarianism and disaster. In reality, though, we have plenty of examples of healthy societies that have struck a different balance between the power of rich assholes and the power of democratic deliberation about people’s needs and priorities, and it turns out that none of them are in any danger of producing a Hitler. The only real danger they’re courting is that their rich assholes might wind up being less rich in the long run, and that’s a price I for one am willing to pay.

The inertia of the suburbs

The Girlfriend and I have been watching The Wonder Years lately, and it’s striking how generic the setting is — if not for references to news events in the late 1960s, it could be any time period from 1965 to the late 1990s (and I only posit that cut-off point because of the advent of the internet). The suburban model that was built out starting in the immediate postwar era has proven to be remarkably resilient, and even now it has a kind of self-evidence as the “mainstream” American approach to family and community life.

In the immediate postwar years, it seems as though there was a level of “buy-in” across the population, as the prospect of one’s own house, a car, etc., seemed like wonderful luxuries. By now, however, the suburban model has shown itself to be costly, environmentally destructive, and in many cases isolating and community-destroying. Further, the concentration of good schools in the suburbs perpetuates an ongoing vicious cycle of “white flight” that reinforces the systemic racism of our society. And as the financial crisis revealed, the aspiration to suburban middle class status increasingly carries the risk of financial ruin.

More and more people are realizing all of this and don’t want to buy into the suburban model — yet except for the very wealthy, there seems to be no real choice for middle class people if you want to have children. And the reason for this surprising persistence of a model that no one really wants anymore is the power of state planning. Even if the population could be initially convinced to want suburban-style development, the decisive factor was a concentrated effort on all levels of government to create all the necessary conditions for that lifestyle, through physical and legal infrastructure and often through explicit subsidies (such as the mortgage interest tax deducation, which seems to be invulnerable). All of the stuff they created in that heroic era of American urban planning is still in place. The roads and schools have been built, and the legal structures for expanding suburban development if needed are already in place and ready to go. All the incentives for middle-class families still point outward into the suburbs.

While reading about the ongoing disaster of education “reform,” I once thought: “What if cities stopped trying to attract tourists and started trying to gain permanent residents by creating awesome schools?” As I thought about what that would entail, however, it became clear that no one city has the resources to fully reverse the trend — to really work, it would have to entail a complete reshaping of the school funding structures, a build-out of public transportation infrastructure to support the expanded population, etc., etc. In other words, it would take forceful state planning on the model of what created the suburbs in the first place.

Unfortunately, it appears that the U.S. only had one relatively brief window for such forceful state planning, extending from FDR to Nixon (only 40 years out of the 200+ of the Republic’s existence) — and it wasted it on the suburbs. Barring a new FDR, we’re probably stuck with it. The bright side, I guess, is that The Wonder Years will remain legible and relatable for generations to come.

Why do the Gremlins love Snow White?

gremlins watching snow white

It’s a strange moment. The Gremlins, having eaten after midnight and turned from teddy bears into evil reptilian creatures, find themselves in a movie theater. Suddenly, Snow White starts playing — and they are transfixed. They all sing in unison along with the seven dwarves: “Hi ho!” Indeed, their love of Snow White proves to be their undoing, as their absorption in the movie is what ultimately allows them to be defeated when the protagonists start a fire, burning down the theater.

The use of Snow White cannot be random. Gremlins was not produced by Disney, and so the producers had to pay extra to use the film. But what does it mean? Read the rest of this entry »

“Skin in the game”: The market for high-stakes services

It is a commonplace in public policy that exposing citizens to more price signals for important services is an important part of bringing down costs. In the health care arena, for example, it’s often said that the reason medical costs are so high is that customers by and large are not paying their own bills and don’t even know the costs of the various procedures — if they were the ones who had to pay the difference in price between a brand-name or generic drug, they would be more likely to make the sensible, cost-effective decision.

This theory is completely, 180-degrees wrong. Even if we assume that consumers are rational utility-maximizers, “saving money” is not the relevant utility to maximize in the medical situation — preserving one’s health and, ultimately, one’s life is the priority that overrides all others. Even total financial ruin is preferable to death. Further, in the absence of specialized medical knowledge, it is understandable and even rational to use price as a proxy for effectiveness. Even if there is a point of diminishing returns, that extra little bit of effectiveness may be the decisive factor.

We can see a similar dynamic in other high-stakes scenarios. Higher education is an economic good, but it is an economic good of a very particular type: it permanently affects your long-term economic prospects, and you only get one shot at it. Here again, it is reasonable to use price as a proxy for quality in the absence of other information — and it is likely that the elaborate attempts to generate hard data about learning effectiveness will lead to the unsurprising conclusion that schools with better resources deliver better outcomes! Again, even if there is a point of diminishing returns on the price vs. quality graph, people will want to maximize the quality to the extent possible, in their one chance to go to college. In the choice between thwarted life prospects and unmanageable debt, unmanageable debt surely seems preferable. The analogy with legal services is easy to draw as well — when one’s freedom is at stake, no price is too high.

Once we acknowledge that there is a qualitative difference between high-stakes, life-or-death outcomes and financial outcomes, we should expect people in a private market to drive up costs for high-stakes services at every opportunity — which is in fact what we witness in practice. The only way to control prices is to control prices, i.e., to limit what can be charged for the relevant services either through government regulation, through negotiation on behalf of large groups of customers, or through the creation of a “public option” for the service in question (like public universities in the postwar era).

The theodicy of ethical consumerism

I wrote a few weeks ago about the ideological function of free will: we don’t blame people because they have free will, we say they have free will so we can blame them. In the theological realm, the goal of granting us free will isn’t to enhance our dignity or the meaningfulness of our life, but to make sure God has someone to blame for all the bad things that happen — and I believe we can apply the principle of a homology between the theological and the political realm here as well.

A perfect example of this is dynamic is ethical consumerism. It often strikes me as bizarre that we’re even given a choice between the gross processed food and the healthy organic food, or between the hideously wasteful product and the ecologically conscious product — much less that the “price signals” are invariably tilted toward the bad option. Wouldn’t it be better to remove the bad option in the first place? Why is something so important left to arbitrary individual choice?

Here I think the fact that we know consumers will generally make the wrong choice is not a bug, but a feature of ethical consumerism. The political class and business elites have already collectively decided that ethical farming and environmental sustainability are not important goals — and so they have left them up to individual consumer choices so that they can disavow responsibility and blame all of us for not choosing correctly.

Whenever we’re offered a free choice, we’re being set up.

A thought experiment

Imagine there was a new drug that could indefinitely increase a person’s physical strength — the more they have, the stronger they are. In the aggregate, the increased use of this drug would increase the total physical strength of the human race.

Now imagine two regimes for distributing this drug. In the first, access to the drug is limited to a relatively small portion of the population, who are able to get as much as they want. Human physical strength overall would be growing under this regime, but the vast majority of the population would be effectively weaker with all these Incredible Hulks walking around — in fact, even if their own strength remained constant throughout the process, most people would be in greater physical danger by virtue of the very existence of the Hulks.

In the second, access to the drug is widespread across the population. Everyone is able to do one-armed push-ups and free-standing hand-stands, but no one is able to gain a significant edge over anyone else. Here I think it would be more meaningful to talk about a general increase in human strength, even if the aggregate effects of the drug were less overall.

If the first distribution regime were the only possible one, I think we’d all agree that it would be better not to have the drug at all than to allow, say, 1% of the population to become Incredible Hulks and walk around among us — even if the Incredible Hulks were able to “create jobs” by forcing the weaklings to slave for them.

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