Herr Adolf Hitler: From “Dunderhead”to Demagogue


October 1, 2016

NY Times Book Review

 

How did Adolf Hitler — described by one eminent magazine editor in 1930 as a “half-insane rascal,” a “pathetic dunderhead,” a “nowhere fool,” a “big mouth” — rise to power in the land of Goethe and Beethoven? What persuaded millions of ordinary Germans to embrace him and his doctrine of hatred? How did this “most unlikely pretender to high state office” achieve absolute power in a once democratic country and set it on a course of monstrous horror?

A host of earlier biographers (most notably Alan Bullock, Joachim Fest and Ian Kershaw) have advanced theories about Hitler’s rise, and the dynamic between the man and his times. Some have focused on the social and political conditions in post-World War I Germany, which Hitler expertly exploited — bitterness over the harsh terms of the Treaty of Versailles and a yearning for a return to German greatness; unemployment and economic distress amid the worldwide Depression of the early 1930s; and longstanding ethnic prejudices and fears of “foreignization.”

Hitler, far right, with fellow soldiers from his Bavarian unit in 1916.

Hitler, far right, with fellow soldiers from his Bavarian unit in 1916. Photograph: Universal History Archive/Getty Images

Other writers — including the dictator’s latest biographer, the historian Volker Ullrich — have focused on Hitler as a politician who rose to power through demagoguery, showmanship and nativist appeals to the masses. In “Hitler: Ascent, 1889-1939,” Mr. Ullrich sets out to strip away the mythology that Hitler created around himself in “Mein Kampf,” and he also tries to look at this “mysterious, calamitous figure” not as a monster or madman, but as a human being with “undeniable talents and obviously deep-seated psychological complexes.”

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“In a sense,” he says in an introduction, “Hitler will be ‘normalized’ — although this will not make him seem more ‘normal.’ If anything, he will emerge as even more horrific.”

This is the first of two volumes (it ends in 1939 with the dictator’s 50th birthday) and there is little here that is substantially new. However, Mr. Ullrich offers a fascinating Shakespearean parable about how the confluence of circumstance, chance, a ruthless individual and the willful blindness of others can transform a country — and, in Hitler’s case, lead to an unimaginable nightmare for the world.

Mr. Ullrich, like other biographers, provides vivid insight into some factors that helped turn a “Munich rabble-rouser” — regarded by many as a self-obsessed “clown” with a strangely “scattershot, impulsive style” — into “the lord and master of the German Reich.”

• Hitler was often described as an egomaniac who “only loved himself” — a narcissist with a taste for self-dramatization and what Mr. Ullrich calls a “characteristic fondness for superlatives.” His manic speeches and penchant for taking all-or-nothing risks raised questions about his capacity for self-control, even his sanity. But Mr. Ullrich underscores Hitler’s shrewdness as a politician — with a “keen eye for the strengths and weaknesses of other people” and an ability to “instantaneously analyze and exploit situations.”

• Hitler was known, among colleagues, for a “bottomless mendacity” that would later be magnified by a slick propaganda machine that used the latest technology (radio, gramophone records, film) to spread his message. A former finance minister wrote that Hitler “was so thoroughly untruthful that he could no longer recognize the difference between lies and truth” and editors of one edition of “Mein Kampf” described it as a “swamp of lies, distortions, innuendoes, half-truths and real facts.”

• Hitler was an effective orator and actor, Mr. Ullrich reminds readers, adept at assuming various masks and feeding off the energy of his audiences. Although he concealed his anti-Semitism beneath a “mask of moderation” when trying to win the support of the socially liberal middle classes, he specialized in big, theatrical rallies staged with spectacular elements borrowed from the circus. Here, “Hitler adapted the content of his speeches to suit the tastes of his lower-middle-class, nationalist-conservative, ethnic-chauvinist and anti-Semitic listeners,” Mr. Ullrich writes. He peppered his speeches with coarse phrases and put-downs of hecklers. Even as he fomented chaos by playing to crowds’ fears and resentments, he offered himself as the visionary leader who could restore law and order.

• Hitler increasingly presented himself in messianic terms, promising “to lead Germany to a new era of national greatness,” though he was typically vague about his actual plans. He often harked back to a golden age for the country, Mr. Ullrich says, the better “to paint the present day in hues that were all the darker. Everywhere you looked now, there was only decline and decay.”

• Hitler’s repertoire of topics, Mr. Ullrich notes, was limited, and reading his speeches in retrospect, “it seems amazing that he attracted larger and larger audiences” with “repeated mantralike phrases” consisting largely of “accusations, vows of revenge and promises for the future.” But Hitler virtually wrote the modern playbook on demagoguery, arguing in “Mein Kampf” that propaganda must appeal to the emotions — not the reasoning powers — of the crowd. Its “purely intellectual level,” Hitler said, “will have to be that of the lowest mental common denominator among the public it is desired to reach.” Because the understanding of the masses “is feeble,” he went on, effective propaganda needed to be boiled down to a few slogans that should be “persistently repeated until the very last individual has come to grasp the idea that has been put forward.”

• Hitler’s rise was not inevitable, in Mr. Ullrich’s opinion. There were numerous points at which his ascent might have been derailed, he contends; even as late as January 1933, “it would have been eminently possible to prevent his nomination as Reich chancellor.” He benefited from a “constellation of crises that he was able to exploit cleverly and unscrupulously” — in addition to economic woes and unemployment, there was an “erosion of the political center” and a growing resentment of the elites. The unwillingness of Germany’s political parties to compromise had contributed to a perception of government dysfunction, Mr. Ullrich suggests, and the belief of Hitler supporters that the country needed “a man of iron” who could shake things up. “Why not give the National Socialists a chance?” a prominent banker said of the Nazis. “They seem pretty gutsy to me.”

• Hitler’s ascension was aided and abetted by the naïveté of domestic adversaries who failed to appreciate his ruthlessness and tenacity, and by foreign statesmen who believed they could control his aggression. Early on, revulsion at Hitler’s style and appearance, Mr. Ullrich writes, led some critics to underestimate the man and his popularity, while others dismissed him as a celebrity, a repellent but fascinating “evening’s entertainment.” Politicians, for their part, suffered from the delusion that the dominance of traditional conservatives in the cabinet would neutralize the threat of Nazi abuse of power and “fence Hitler in.” “As far as Hitler’s long-term wishes were concerned,” Mr. Ullrich observes, “his conservative coalition partners believed either that he was not serious or that they could exert a moderating influence on him. In any case, they were severely mistaken.”

• Hitler, it became obvious, could not be tamed — he needed only five months to consolidate absolute power after becoming chancellor. “Non-National Socialist German states” were brought into line, Mr. Ullrich writes, “with pressure from the party grassroots combining effectively with pseudo-legal measures ordered by the Reich government.” Many Germans jumped on the Nazi bandwagon not out of political conviction but in hopes of improving their career opportunities, he argues, while fear kept others from speaking out against the persecution of the Jews. The independent press was banned or suppressed and books deemed “un-German” were burned. By March 1933, Hitler had made it clear, Mr. Ullrich says, “that his government was going to do away with all norms of separation of powers and the rule of law.”

• Hitler had a dark, Darwinian view of the world. And he would not only become, in Mr. Ullrich’s words, “a mouthpiece of the cultural pessimism” growing in right-wing circles in the Weimar Republic, but also the avatar of what Thomas Mann identified as a turning away from reason and the fundamental principles of a civil society — namely, “liberty, equality, education, optimism and belief in progress.”

A version of this review appears in print on September 28, 2016, on page C1 of the New York edition with the headline: From ‘Dunderhead’ to Demagogue. Today’s Paper

Thomas Piketty’s Capital–A Book Review


September 30, 2016

BOOK REVIEW

Capital in the Twenty-first Century by Thomas Piketty

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by Stephanie Flanders

There has been an intense debate about this surprise bestseller. What is the upshot?

This is a VIB – very important book. Nearly everyone agrees about that. But the reasons for its importance have changed in the months since it was published. At first it was important because it was a big book on a big subject: a book of grand ambition about inequality, written not by the latest “thinker” but a respected academic economist with real numbers to go with his theory. We hadn’t had anything like that in ages. This was the “Piketty as rockstar” phase, when the book was an “improbable hit” and people wrote breathless articles about the modern successor to Marx who could crunch the numbers but also quote Balzac, The Simpsons and The West Wing.

Writing a bestselling economics book is usually a good way to make other economists hate you. But at first even they heaped praise on Thomas Piketty for casting fresh light on inequality – an area where the official statistics are notoriously weak. Say what you like about the theory, the argument went, you had to thank him for the numbers.

At this point you didn’t need to read it to have an opinion about it. Indeed for some, not having read it was a badge of pride. Ed Miliband unashamedly told people he hadn’t got beyond the first chapter – and kept on saying that for several weeks. Maybe he has now. Or maybe he’s just decided that the debate about the book is more important than the book itself. That’s certainly the conclusion I have come to, and not just because several of its central arguments have now been questioned.

There are many claims in the 700-odd pages, but let me highlight some of the important ones, before moving on to whether – and why – any of this matters.

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Claim one is that income inequality has increased sharply since the late 1970s, with a particularly dramatic rise in the share of total income going to the very highest earners. The most quoted Piketty statistic here is one that no one, to my knowledge, has questioned: that 60% of the increase in US national income in the 30 years after 1977 went to just the top 1% of earners. The only section of the US population that has done better than the top 1% is the top 10th of that 1%. The top 100th of the 1% have done best of all.

These are remarkable numbers. Uncovering and bringing together this data for the US and a handful of other countries using tax returns is a major achievement, which some say merits a Nobel prize on its own. Piketty goes on to show that this dramatic rise in income inequality hasn’t happened in all rich economies, and, oddly, does not really have much to do with capital. Even in the US, it has been driven by soaring salaries at the top end of the pay scale, not rising incomes from capital.

That rather large complication to the story does not stop Piketty focusing the rest of the book on capital, which he says has also become more unequally distributed since the 1970s, not just in the US but in Europe too. He believes this trend toward greater wealth inequality is very likely to continue, because the returns from capital are likely to grow faster than the economy itself, and faster than the owners of that wealth are likely to be able to spend it.

This is the “central contradiction of capitalism”, which he summarises with a Marxian turn of phrase: “the entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labour. Once constituted, capital reproduces itself faster than output increases. The past devours the future.”

This is where things get tricky, not just for Piketty but for the general reader, who simply wants to know whether he’s right. Let me cut to the chase and say that the evidence for rising wealth inequality is not nearly as clear as the evidence for rising inequality of incomes. Further, even some of Piketty’s biggest fans in the academic world have their doubts whether the forces pushing the economy in that direction are as strong as he suggests. Most would agree that the developed economies are likely to grow more slowly as their populations get older. This might have the “terrifying” consequences for wealth inequality that he suggests, but it’s also possible that slower growth will be as costly to the owners of capital as it is for everyone else. Their share of the total pie might even decrease.

That is actually what has happened in the UK recently. In the boom years after the mid 90s, the owners of capital took a larger share of national income, and the labour share tended to decline. But the trend reversed itself when the economy hit the skids in 2007, and the labour share is back to where it was in the early 70s. Income inequality has also fallen slightly over this period, at least in the UK. So, whatever terrible things have happened to our economy in the past five years, they haven’t followed the long-term path sketched out by Piketty. Rather the opposite.

There is some evidence that the top 10% in the US is sitting on a higher share of total wealth now than in the 70s. But it’s difficult to draw similar conclusions about Britain or France because the data is so patchy. From what we can tell, the share of total wealth held by the top 1% – and 0.01% – hasn’t changed much at all.

Piketty has some interesting analysis demonstrating that wealth begets more wealth: the richer university endowments, for example, tend to earn the highest returns on their investments, not just in absolute but percentage terms. This rings true and also has some economic logic to it. The more money you have to invest, the more – in cash terms – you can afford to spend on finding the best opportunities, without materially cutting into your returns. As a force for rising wealth inequality this makes sense and probably merits a book of its own, given that individuals across the developed world are increasingly having to take greater responsibility for saving for their retirement. It matters if small investors are going to be systematically disadvantaged in making these long-term investments.

But the concentration of wealth at the top doesn’t seem as inexorable as all that. As the economist and former US treasury secretary Larry Summers has pointed out, most of the people on the list of 400 wealthiest Americans in 1982 would have had enough to money to qualify in 2012 if they had simply earned a return of 4% a year. But fewer than a 10th actually did so. The proportion of the top 400 who inherited their wealth has actually been falling – not rising, as Piketty’s theory would also suggest.

Given what has been happening to incomes at the top, you would expect to have seen more concentration of wealth than we can find in the data. That might be – as Piketty suggests – because rich people are good at hiding their money from the taxman. But it might also be because they are very good at spending their money, and their children even more so. I was at a conference recently for advisers and trustees to family estates, and was amused to hear speaker after speaker assert that the “biggest threat” to a family fortune was “not the taxman or the markets but the family itself”.

Say we agree with Piketty, and conclude that wealth has become more concentrated, his own numbers show this is a fairly recent phenomenon. As he admits, the single most important structural change in the distribution of wealth in the past 100 years has been in the other direction. That is the emergence of a new “patrimonial class”, somewhere between rich and poor, owning 25%-35% of the nation’s wealth.

He describes the emergence of this class in the middle years of the 20th century as a transformation that “deeply altered the social landscape and the political structure of society and helped redefine the terms of distributive conflict”. That may well be true. But for me, what’s more interesting about this shift is not what it might or might not have done for “the terms of distributive conflict”, but what it did for households – and the broader economy. Piketty really doesn’t go into that at all, which is a shame because if you don’t have a clear understanding of the benefits of broader capital ownership it’s difficult to explain why it’s so “terrifying” if things are now moving back in the other direction.

The latest official survey of UK household incomes and wealth shows that around a third of all UK households has either negative net worth – debts greater than their assets – or net financial assets worth less than £5,000. I am more worried about that lack of wealth at the bottom and in the middle of the income scale than about the squillions being amassed by a very few.

We know that families with that little to fall back on are much more likely to fall into long-term cycles of dependency and poverty. We also know – and if we didn’t know we could learn from reading the Daily Mail that Piketty’s “patrimonial middle class” feels more squeezed these days, whatever might have happened to the financial value of their home. He seems to assume that all these things are connected, that the greater income flowing to the 1% is making things worse for everyone else. But he never really makes the case. That is remarkable omission for a book of such magisterial sweep.

When I was first learning economics in the late 80s and 90s, the UK was just getting used to the free-market idea that higher incomes at the top did not have to mean lower incomes at the bottom. To ensure growth in the economy, the message went, you had to give the “wealth creators” the incentive to increase both the pie and their slice of it. Economists still believe that, up to a point. But in the wake of the financial crisis there has been broader acceptance of the view that very high levels of income inequality can increase the risk of such crises, and so hurt the economy. We also have evidence – from the IMF, of all places – that in unequal economies, more redistributive taxes might promote faster growth. As with most things, it’s a matter of degree.

This all helps to explain why Piketty’s book has been such a smash. Many people are worried about the slow rate of growth in the developed economies since the financial crisis in 2008. Many are also worried about rising inequality. At first glance, Capital seems to offer an elegant way to explain both. But, by his own admission, the world is a lot more complicated than talk of a “central contradiction to capitalism” might suggest. So is the relationship between capital accumulation and growth.

Like Miliband, Piketty sees a clear difference between the wealth creators and the asset strippers – between the fat cat “rentier” capital that devours the future and the more socially useful capital of the entrepreneur. But his own broad definition of capital doesn’t really help us draw that kind of distinction. It’s all thrown in together, along with all of our houses, and everything else with a financial value that can be bought or sold. That’s a pity because if there’s one thing that policymakers around the world are looking for it’s a way to channel a bit more money into productive investment – and a bit less into house prices and stocks and shares.

Piketty deserves huge credit for kickstarting a debate about inequality and illuminating the distribution of income and wealth. But when it comes to the forces driving growth and wealth accumulation in our modern economy what he has probably done most to bring out into the open is our collective ignorance and confusion.

Stephanie Flanders is chief market strategist for Europe, JP Morgan Asset Management.

https://www.theguardian.com/books/2014/jul/17/capital-twenty-first-century-thomas-piketty-review

 

Henry Kissinger by Naill Ferguson


September 30, 2016

Naill Ferguson’s Kissinger: Setting the Record Neat

by Andrew Roberts

It is very rare for an official biography to be also a revisionist biography, but this one is. Usually it’s the official life that the revisionists attempt to dissect and ­refute, but such is the historical reputation of Henry Kissinger, and the avalanche of books and treatises already written about him, that Niall Ferguson’s official biography is in part an effort to revise the revisionists. Though not without trenchant criticisms, “Kissinger. Volume I. 1923-1968: The Ideal­ist” — which takes its subject up to the age of 45, about to begin his first stint of full-time government service — constitutes the most comprehensive defense of Kissinger’s outlooks and actions since his own three-volume, 3,900-page autobiography, published between 1979 and 1999.

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Unlike the revisionists, Ferguson has had access to every part of Kissinger’s vast archive at the Library of Congress, which weighs several tons and comprises 8,380 documents covering 37,645 pages on the digitized database alone. These include a heartfelt essay on “The Eternal Jew” written by the 22-year-old German-born Sergeant Kissinger after witnessing the liberation of a Nazi concentration camp; some loving but uncompromising letters to his parents about his separation from their Orthodox faith; a jejune and somewhat cringe-making teenage note to a would-be girlfriend; and the minutes he took as secretary of a Jewish youth organization to which he belonged as the Nazis were seizing power in his homeland. Although this book is long at 986 pages, and Kissinger has only just joined the Nixon administration as national security adviser when it ends, the sheer quality of the material unearthed justifies the length and detail.

Ferguson gives the full story of the Kissinger family’s experience under the Third Reich before they emigrated in 1938, and Ferguson has identified at least 23 close family members who perished in the Holocaust. (Of the 1,990 Jews who lived in their hometown, Fürth, in 1933, fewer than 40 were left by the end of the war.) The first chapters covering the Kissingers’ life in the late 1930s and early 1940s in the Washington Heights neighborhood of New York recapture the Jewish immigrant experience superbly and put into perspective the fact that Henry (born Heinz) became the first foreign-born United States citizen to serve as Secretary of State.

Whereas Kissinger has regularly underplayed his bravery during World War II, Ferguson shows that he saw action during the Battle of the Bulge, where he came under severe shelling. “His very presence” in the Meuse town of Marche “was hazardous in the extreme,” Ferguson writes, as German 88s, mortar shells and a V-1 rocket pulverized “the narrow streets of the town center where the divisional HQ was based.” After V-E Day, Kissinger became an extremely effective Nazi hunter with the Counter-­Intelligence Corps.

The subtitle of the book will surprise many for whom Kissinger’s name is almost synonymous with modern realpolitik and who are familiar with the revisionist accounts that equate him with Machiavelli, Bismarck and other such thinkers and statesmen normally thought far from idealists. Yet Ferguson’s investigation of Kissinger’s intellectual roots, especially through the influence of his Army mentor Fritz Kraemer and his Harvard supervisor William Yandell Elliott, shows Kissinger was indeed an idealist in the Kantian sense, rather than in its modern American political version. Kissinger’s unpublished senior thesis, “The Meaning of History,” was an investigation into Immanuel Kant’s philosophy of history, especially in contrast to the views of Arnold Toynbee and Oswald Spengler, although Ferguson slightly dismisses it as “an exercise in academic exhibitionism.”

In his thesis, Kissinger argued that “freedom is . . . an inner experience of life as a process of deciding meaningful alternatives” and that “whatever one’s conception about the necessity of events, at the moment of their performance their inevitability could offer no guide to action.” He also said, “However we may explain actions in retrospect, their accomplishment occurred with the inner conviction of choice.” The importance of choice led Kissinger to a belief in democracy. “Kissinger was never a Machiavellian,” Ferguson argues, but neither was he an idealist of the Woodrow Wilson variety. “It was an inherently moral act,” Ferguson says of Kissinger’s outlook, “to make a choice between lesser and greater evils.”

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Henry Kissinger and his Biographer, Naill Ferguson

What brought Kissinger to huge public prominence while still only an assistant professor was his radical prescription for how to deal with the perceived (though in fact chimerical) relative weakness of the United States vis-à-vis the Soviet Union at the time of the successful launch of the Sputnik space satellite in October 1957. As Ferguson puts it, “Sputnik launched Kissinger into a new orbit.” Kissinger had only months earlier published his widely reviewed and highly controversial best seller “Nuclear Weapons and Foreign Policy,” which argued that the threat of a limited nuclear war was a more effective deterrent to Soviet incursions in the third world than the Eisenhower administration’s strategy of mutually assured destruction. And as Kissinger wrote in Foreign Affairs magazine, “The best opportunity to compensate for our inferiority in manpower” is “to use our superiority in technology to best advantage” (although he did rule out using any bomb of more than 500 kilotons in a tactical situation). For Ferguson, Kissinger’s argument “fails to convince,” but it won Kissinger interviews on “Face the Nation” and with The New York Herald Tribune that — once his accent and acerbic wit came to be appreciated by the American public — put him on the trajectory to intellectual rock star status that he never lost.

Partly because he described himself as an independent, Kissinger could be called upon by both political parties for advice. After failing to make an impact as a consultant to the Kennedy administration — he didn’t like the men or the methods, and they didn’t see him fitting the Camelot image — he went to work for Gov. Nelson Rockefeller of New York. Ferguson is clearly fascinated by what he calls the “turbulent friendship” between the aristocrat and the immigrant, and is at pains to point out that “Henry Kissinger has often been portrayed as very ruthless and calculating in his pursuit of power. But in committing himself again and again to Rockefeller, he failed to see that he was backing a man who would never be president.” Kissinger’s loyalty was based on affection and genuine admiration, rather than mere miscalculation.

Ferguson’s access to the diaries Kissinger kept before, during and after his visits to Vietnam in 1965 and 1966 allows him to argue, totally convincingly, that on his missions for the Johnson administration, Kissinger realized very early on that the United States had little or no hope of winning the war and therefore needed to enter into direct negotiations with Hanoi sooner rather than later, albeit from a position of strength. This book contains the first full account of the abortive initiative to start talks with Hanoi in 1967; as Ferguson puts it, “to an extent never previously recognized by scholars,” Kissinger attempted “to broker some kind of peace agreement with the North Vietnamese, using a variety of indirect channels of communication to Hanoi that passed through not only Paris but also Moscow.”

Yet it is in Ferguson’s comprehensive demolition of the revisionist accounts of the 1968 election by Seymour Hersh, Christopher Hitchens and others that this book will be seen as controversial. For he totally rejects the conspiracy theory that blames Kissinger for leaking details of the Paris peace negotiations to the Nixon camp, details that enabled Nixon, it was said, to persuade the South Vietnamese that they would get better treatment if he and not Hubert Humphrey were in the White House. Ferguson goes into this theory in great detail, disproving it on several grounds, but especially for its lack of even the most basic actual or circumstantial evidence. (It turns out that one of the reasons Kissinger was in Paris in 1967 was that he was secretly going to the Sorbonne to woo the only great love of his life, Nancy Maginnes, whom he subsequently married.)

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Of course it will be in the second volume that Ferguson will come to grips with the revisionists’ attacks on Kissinger’s actions involving places like Chile, Argentina, Cyprus, East Timor (and Cambodia too) and Bangladesh. The book’s introduction strongly implies that he will be acquitting Kissinger of the monstrous charge of war criminality that the revisionists have made over the years.

Yet this is no hagiography. As well as being highly critical of Kissinger’s theory of limited nuclear war, Ferguson describes a letter of his as a “solipsistic screed”; says of one of Kissinger’s books that it “remained, at root, the work of a committee”; and states that Kissinger was “even more demanding to his own subordinates” than Rockefeller was to him: “He learned to rant and rage.” The criticisms — and there are many more waspish ones — absolve Ferguson from the charge of whitewashing Kissinger and make his praise all the more credible.

This is an admiring portrait rather than a particularly affectionate one. Ferguson acknowledges in his preface all of the “conversing with him, supping with him, even traveling with him” that he did over the many years he spent researching and writing this book. But if Kissinger’s official biographer cannot be accused of falling for his subject’s justifiably famed charm, he certainly gives the reader enough evidence to conclude that Henry Kissinger is one of the greatest Americans in the history of the Republic, someone who has been repulsively traduced over several decades and who deserved to have a defense of this comprehensiveness published years ago.

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Hillary Clinton and Henry Kissinger

Part of Kissinger’s charm of course derives from his highly developed sense of humor, which is given full rein here. “Nobody will ever win the battle of the ­sexes,” he once joked. “There’s just too much fraternizing with the enemy.” When someone came up to him at a reception and said, “Dr. Kissinger, I want to thank you for saving the world,” he replied, “You’re welcome.” All of this was delivered in the trademark voice that the journalist Oriana Fallaci described as like “that obsessive, hammering sound of rain falling on a roof.”

Niall Ferguson already has many important, scholarly and controversial books to his credit. But if the second volume of “Kissinger” is anywhere near as comprehensive, well written and riveting as the first, this will be his masterpiece.

 

Editors’ Note: October 2, 2015

After this review of the first volume of Niall Ferguson’s authorized biography of Henry Kissinger was published, editors learned that the reviewer, Andrew Roberts, had initially been approached by a publisher to write the biography himself; he says he turned the offer down for personal reasons, and Ferguson was eventually enlisted to undertake the task. In addition, Roberts and Ferguson were credited as co-authors of a chapter contributed to a book edited by Ferguson and first published in 1997 (Roberts describes their relationship as professional and friendly, but not close). Had editors been aware of these connections, they would have been disclosed in the review.

Andrew Roberts is the Lehrman ­Institute ­Distinguished Fellow at the New-York ­Historical Society.

A version of this review appears in print on October 4, 2015, on page BR12 of the Sunday Book Review with the headline: Kissinger the Idealist. Today’s Paper.

The Erudite and Prolific Noam Chomsky: A Man of Conviction


September 29, 2016

The Erudite and Prolific Noam Chomsky: A Man of Conviction

Knowledge and Power–A Documentary

Manufacturing Consent is my favorite Noam Chomsky book. It reminds me of the awesome power of government in shaping public perception and influencing the way we think about public and foreign policy.

The media dominates our lives for as long as I can remember. When I was very much younger in 1950s I relied on the media and the radio for news and views and never realised that I was being manipulated by Big Brother to support causes which I would not  have agreed to if I had access to sources of information other than what the government was sending out through the airwaves for public consumption.

Fortunately, to day I can no longer be led to accept “official truths”from my government and its controlled media. I have always maintained a posture of doubt and will not accept anything I read without subjecting them to careful scrutiny. Naom Chomsky’s books have influenced the way I think.–Din Merican

Book Review: War by Other Means: Geoeconomics and Statecraft.


September 18, 2016

http://www.thestrategybridge.com/the-bridge/2016/8/17/reviewing-war-by-other-means


There isn’t much grand about America’s post-Cold War grand strategy. Such is the consensus among the academic scholars, think-tankers, pundits, and many former national security officials who have chastised U.S. foreign policymakers for lacking strategic sophistication, or worse, failing to craft a coherent grand strategy at all.[1] For the last twenty five years, these critics claim, Washington has sought the wrong goals, under-resourced its efforts, and failed to anticipate the likely second-order effects of its policies.[2] In the main, these critical assessments have understandably focused on the military-security dimension of grand strategy. America’s national security policies since the mid-1990s cost much blood and treasure, degraded regional security environments, and inspired hostile reactions by other powers.[3]

In their well-crafted and important new book, War by Other Means: Geoeconomics and Statecraft, Robert Blackwill and Jennifer Harris join this discussion orthogonally, arguing that the United States has altogether abandoned the economic dimension of grand strategy. Since the mid-1960s, Washington has been gripped by a debilitating neoliberal (or, neoclassical economic) dogma that works as an ideological firewall separating the operation of markets from the pursuit of international political objectives. As a result, America’s substantial and diversified economic resources have been woefully underutilized as tools of grand strategy. At the same time, the United States’ most formidable challengers (China, Russia, and Iran) are all effective practitioners of economic statecraft. To secure its national interest in the years to come, Washington must relearn how to employ economic resources in the service of its geopolitical objectives. To do otherwise would cede the contest to states whose interests and actions will continue to undermine American security and prosperity.

War by Other Means is structured around three main themes. In the first three chapters, Blackwill and Harris examine economic statecraft generally, defining “geoeconomics” as “the use of economic instruments to promote and defend national interests and to produce beneficial geopolitical results; and the effects of other nations’ economic actions on a country’s geopolitical goals.”[4]  The authors argue that rising powers now turn first to economic statecraft because it effectively buttresses their geopolitical objectives while mitigating the risk of armed conflict.  Unlike past eras, state-capitalist challengers to the prevailing liberal order have many more economic instruments at the ready. Due to the expansion of global markets and their structural transformations over time, economic factors now impinge substantially on states’ geopolitical choices. By way of example, the authors note that “the fate of the European Union—perhaps the West’s greatest foreign policy achievement of the twentieth century and the closest U.S. foreign policy partner—for several years rested at least as much in the hands of bond markets as in European political capitals.”[5]  In sum, the current international system entails new economic and financial challenges and opportunities, offering states many powerful geoeconomic assets to employ against targets large and small.

Among the most insightful sections in these early chapters is Blackwill and Harris’s in-depth examination of the geoeconomic instruments available to states, including: trade policy, investment policy, economic sanctions, cyber, foreign aid, monetary policy, and energy and commodity policies. Not content merely to catalog these policy tools, the authors offer a valuable discussion of the interrelations among them—noting where synergies can be found and where tensions may lie. Most important is the authors’ argument pertaining to the sources of geoeconomic effectiveness. Blackwill and Harris maintain that effectiveness is in part a function of four “geoeconomic endowments”: the ability to control outbound investments, the particular features of domestic markets, the influence over commodity and energy flows, and the centrality of the state in the global financial system. Beyond these structural attributes are the contextual features that must factor into a state’s decision making process: the number and types of geoeconomic targets, the goals sought, and the selection of the proper economic tools that can deliver those goals.

China’s geoeconomic approach to statecraft is the second general theme taken up by Blackwill and Harris. The PRC has demonstrated remarkable capacities to employ explicit and implicit economic coercion to orient weaker states’ foreign policies in ways that support Beijing’s geopolitical objectives, to hedge against the actions of other regional competitors (namely, India and Russia), and to mount a challenge to American preeminence in the global economy. Blackwill and Harris maintain that China’s approach is a soft strategy of economic domination through its investment, natural resource extraction, development, and monetary policies. Not only does this approach pose a direct challenge to the U.S., but the indirect economic and security threats are substantial. China has “… locked up significant quantities of global energy resources, grown the coffers of dictators unfriendly to the United States; lent new momentum to domestic proponents of China’s own military buildup, and arguably have increased the odds of resource-based conflict.”[6] All of this while staying out of other states’ wars.

Compounding these challenges to the U.S. are self-imposed constraints on America’s practice of geoeconomics, the subject of the book’s third theme. Despite their overall dissatisfaction with American geoeconomic performance, Blackwill and Harris’s account of America’s dismal track record can be read as cautiously optimistic. The U.S. is, after all, the largest of the world’s economies, centrally positioned in global markets, and of monumental importance, the beneficiary of technological and geological endowments that are spurring a revolution in its energy portfolio (their chapter “The Geoeconomics of North America’s Energy Revolution” is alone worth the book’s sticker price). Moreover, the United States has a rich history of successfully practicing geoeconomics. The purpose of the Marshall Plan, for example, was quintessentially geoeconomic. As George Kennan argued in 1947, American aid to the war-ravaged states in Western Europe should attempt to redress “the economic maladjustment which makes European Society vulnerable to exploitation by any and all totalitarian movements and which Russian communism is now exploiting.”[7] Despite this and many other examples from its past, Blackwill and Harris maintain that the American foreign policy establishment has long since forgotten that the U.S. was once an avid and successful practitioner of geoeconomics.

The authors point to two causes of this strategic amnesia: the presumption that military-security affairs constitutes the most important component of grand strategy, and the “…widely held world view that markets are somehow apolitical, to be kept free from geopolitical encroachments, and in any case not a proper arena for state power politics.”[8] These assumptions, Blackwill and Harris argue, were not held for most of America’s history (becoming prominent only at the time of the Vietnam War), are rejected by the states that are posing the most salient challenges to America’s position in the world, and undermine the United States’ ability to forge an effective grand strategy in response. To properly rebalance its grand strategy, the U.S. must redress a number of challenges: a bipartisan deficit in presidential leadership, the reflexive overuse of economic sanctions, and the transfer of bureaucratic authority of geoeconomic policymaking out of the State Department. Most importantly, the U.S. must cultivate the intellectual capacities within the foreign policy establishment necessary to reincorporate economics into grand strategy.

Robert D. Blackwill and Jennifer M. Harris discuss War by Other Means (Council on Foreign Relations)

Robert D. Blackwill and Jennifer M. Harris discuss War by Other Means (Council on Foreign Relations)

War by Other Means is a well-reasoned and important book that offers useful alternatives to stale nostrums that have long dominated American statecraft. Notwithstanding its strengths, the book’s analysis suffers at times by not engaging fully with the literature it challenges. For example, Blackwill and Harris contend that the economic dimension of statecraft has been largely buried by an overriding focus on military-security considerations since the 1960s. This view is not universally shared, however. According to both Christopher Layne and Andrew Bacevich, American foreign policy has long sought to keep “economic open doors” ajar, a policy objective requiring the conjoined use of military and economic resources to make states and regions amenable to American economic and geopolitical influence.[9] Economic open door logic was evident in America’s Cold War grand strategies and was later manifest in Washington’s response to the crises in the Balkans in the 1990s. Further, as Richard Haass points out, “The U.S. interest in the [Middle East] region’s oil is strategic, one of ensuring American and world access to adequate supplies, not tied in any way to gaining financial advantage.”[10] This strategic imperative informed the first Bush administration’s decision to wage war against Iraq in the Persian Gulf War in 1991. In sum, economic instruments and objectives are seen, in this line of reasoning, as mainstays of U.S. statecraft, working hand in glove with military power.

Further, Blackwill and Harris lament the removal of American economic instruments from its grand strategic toolbox. Not only has this contributed to the winnowing of the range of responses the U.S. can make in response to geopolitical challenges, but the widespread belief that economic logic is fundamentally apolitical has done real strategic damage. The authors are on solid ground in diagnosing the current problems confronting the U.S. Still, a case can be made that by giving markets a freer hand (liberal trade and financial policies), the American economy benefitted both absolutely and relatively vis-à-vis the Soviet Union in Cold War’s final years. In particular, liberal economic policies championed by the U.S. fostered globalized inter- and intra-firm alliances that enhanced the efficiency of supply chains, allowed for greater access to capital, distributed risk, and fostered innovation. The results were profound: a decrepit and uncompetitive Soviet economy forced the Kremlin into retrenchment and strategic reorientation toward the West. As Stephen Brooks and William Wohlforth pithily note, “globalization was not global: it took sides in the Cold War.”[11] Geoeconomics, as Blackwill and Harris understand it, was not explicitly practiced in this case.  But in light of the international economic determinants of Soviet behavior in the late 1980s, it is difficult to argue that a wiser approach was on offer.

However one may quibble with its historical analysis, War by Other Means is fundamentally a book about present challenges and future responses. According to the authors, American policymakers must come to terms with a stark reality, that the “rules-based system… is delivering less and less in the way of strategic returns as rising powers (often through geoeconomic attempts of their own) undercut it.”[12] Furthermore, the present order does little to enhance U.S. strategic interests because it is flimsy and disproportionately advantages a growing China.

G. John Ikenberry on illiberal alternatives to the present order: “…on a global scale, such a system would not advance the interests of any of the major states, including China.”

Yet to effectively make the case that an explicit and assertive brand of geoeconomic statecraft is necessary because the American-led liberal order is failing to deliver, that global architecture needed to be thoroughly analyzed and shown to be wanting. Specifically, Blackwill and Harris needed to tackle the arguments which understand the liberal international order to be both durable and powerful in its socializing effects on rising challengers. According to this view, the order fashioned by the United States and its allies in the aftermath of World War II is loosely rules-based, nondiscriminatory, and densely institutionalized. Within this order, rising powers can gain substantially—but in ways that powerfully shape their interests and limit their revisionist tendencies. In other words, because it has grown within the order, China can neither abandon it without substantial penalty nor induce others join an alternative Sino-centric order. As G. John Ikenberry notes, there is no illiberal alternative to the present order, “…on a global scale, such a system would not advance the interests of any of the major states, including China.”[13] While the terms of ownership of the order may need renegotiation, the underlying logic is stable and mutually beneficial.[14]

Furthermore, the existence of the liberal order adds to China’s current strategic dilemmas.  As Edward Luttwak posited, the PRC’s simultaneous pursuit of economic growth, military expansion, and international political influence, will ultimately be met with a forceful geoeconomic reaction.[15] Should Beijing’s case of “great state autism” not be mitigated over time, other states will find intolerable Beijing’s selectively coercive and discriminatory brand of economic statecraft, and the existing liberal order more attractive. The upshot is that China’s economic statecraft may prove successful, but only for a time. Far better for the U.S. to demonstrate to China’s geoeconomic targets that the prevailing order offers them more benefits and less costs over the long term. The point is not to say that Blackwill and Harris are wrong in their descriptions of how China is using geoeconomics to challenge the U.S. Rather, that there are good reasons to believe that China is hemmed in by broad normative, institutional, and strategic features. In short, a more thorough analysis of the strengths and weaknesses of the prevailing liberal order would have benefited the authors’ arguments in a number of ways.

Spencer Bakich is an Associate Professor of Political Science at the Virginia Military Institute and the author of Success and Failure in Limited War: Information and Strategy in the Korean, Vietnam, Persian Gulf, and Iraq Wars.

NOTES:

[1] For a sampling of the debate, see contributors to “Obama’s World,” Foreign Affairs, vol. 94, no. 5 (September/October 2015), 2-78; contributors to “Obama’s World: Judging His Foreign Policy Record,” H-Diplo/ISSF Forum, no. 14 (2016); Barry R. Posen, Restraint: A New Foundation for U.S. Grand Strategy (Ithaca: Cornell University Press, 2014; and Colin Dueck, The Obama Doctrine: American Grand Strategy Today (New York: Oxford University Press, 2015).

[2] Richard K. Betts, American Force: Dangers, Delusions, and Dilemmas in National Security (New York: Columbia University Press, 2013).; Robert M. Gates, Duty: Memoirs of a Secretary at War (New York: Knopf, 2014); and Vali Nasr, The Dispensable Nation: American Foreign Policy in Retreat(New York: Doubleday, 2013).

[3] Martin Indyk, “The End of the U.S.-Dominated Order in the Middle East,” The Atlantic(March 13, 2016).

[4] Robert D. Blackwill and Jennifer M. Harris, War by Other Means: Geoeconomics and Statecraft(Cambridge: Harvard University Press, 2016), 9.

[5] Ibid., 37-38.

[6] Ibid., 151.

[7] Ibid., 163.

[8] Ibid, 153.

[9] Christopher Layne, The Peace of Illusions: American Grand Strategy from 1940 to the Present(Ithaca: Cornell University Press, 2006); Andrew J. Bacevich, American Empire: The Realities and Consequences of U.S. Diplomacy (Cambridge: Harvard University Press, 2002).

[10] Richard N. Haass, War of Necessity, War of Choice: A Memoir of Two Iraq Wars (New York: Simon and Schuster, 2009), 75.

[11] Stephen G. Brooks and William C. Wohlforth, “Power, Globalization, and the End of the Cold War: Reevaluating a Landmark Case for Ideas,” International Security, vol. 25, no. 3 (Winter, 2000-2001), pp. 5-53.

[12] Blackwill and Harris, 186.

[13] G. John Ikenberry, “The Future of the Liberal World Order: Internationalism After America,”Foreign Affairs, vol. 90, no. 3 (May/June 2011).

[14] G. John Ikenberry, Liberal Leviathan: The Origins, Crisis, and Transformation of the American World Order (Princeton: Princeton University Press, 2011).

[15] Edward N. Luttwak, The Rise of China vs. The Logic of Strategy (Cambridge: Harvard University Press, 2012).

Joseph Stiglitz: ‘The EU’s monetary union was the mistake’


September 17, 2016

Joseph Stiglitz: ‘The EU’s monetary union was the mistake’

by Jeremy Warner

I’m on my way to interview Joseph Stiglitz, economic guru of the political left, about his latest book, The Euro and its Threat to The Future of Europe.

Waiting in the reception of Penguin Books, I notice on display an early, Penguin “classic” edition of George Orwell’s 1984. Orwell is one of those authors who is claimed as their own by both right and left – the left because of his writings on social deprivation, but the right too because of his deep aversion, depicted in Animal Farm and 1984, to totalitarian communism.

I’m not sure Stiglitz, a Nobel prize winning economist who has advised the Scottish government on independence, the Far Left Syriza government in Greece, and very briefly sat on Jeremy Corbyn’s now disbanded economic advisory panel, crosses the boundaries in quite the same way, but there is no doubt that as a critique of the euro, his new book will appeal as much to a right as to the left.

I put this point to Stiglitz at the start of our interview.

It is the absence of any proper economic adjustment mechanism which is the over-riding failure in Europe–Joseph Stiglitz.

“Yes, it’s a fair summary”, he says, “except for one thing. One of the arguments I make for the failure of the euro is that at the time it was being constructed there was a “neo-liberal” ideology which said that all we need to do to make this thing work is to get deficits low, keep inflation low and take down barriers and then everything would be fine.

“That was a very conservative ideology,  that if you did those things the markets would on their own adjust and everything else would come right. Not all right wing conservatives thought that, but a lot of what I call ‘market fundamentalism’ did go into the thinking on the euro.”

 

But most of those in Britain who thought the euro a mad idea were on the political right, I point out.

Stiglitz says that he is not really talking about the issues of national sovereignty raised by the euro. “I was thinking more in terms of the macro-economic adjustment. It is the absence of any proper economic adjustment mechanism which is the over-riding failure in Europe. Where the left and right would agree – and this speaks to the whole Brexit debate – is that Europe needs economic arrangement that work well for a very diverse group of countries.

“This requires a balance between flexibility and harmonisation, and in opting for monetary union they didn’t get that balance right. We see the lack of it particularly in the rigidity that Germany imposes on the eurozone’s crisis hit countries”.

The theme of Stiglitz’s book is that monetary union was basically where it all went wrong for the European Union. A project that was meant to bring countries together has succeeded only in tearing them apart in a manner which now threatens wider European economic and social stability.

“There have been other things that Europe got wrong, but monetary union was the overarching macro economic mistake. We can see this most clearly in the fact that some countries not in the euro but with the same regulatory framework, such as the UK and Sweden, did much better.”

EU flag

So what, fundamentally, is the problem with the euro?

“For the first nine years up until 2008 there were no symptoms, or no obvious ones, of how dysfunctional things really were. But actually the euro was already creating its own problems.

“When the financial crisis hit, it was roundly blamed on the US, but in fact a very large part of Europe’s crisis was created by the euro.

“The single currency gave markets this excessive confidence. They began to confuse the absence of exchange rate risk with the absence of risk per se. Monetary union had taken away the ability of individual governments to curb domestic inflationary pressures, which led to an increase in price levels relative to Germany. Real exchange rates became out of line.

“One of the key points of the book is that it is easy to create these imbalances, made possible by the easy flow of money between countries under  the euro, but with a rigid exchange rate it is very hard to undo them.

“There are only two ways of doing it. Have Germany inflate, or have the others deflate. Germany was unwilling to inflate. But deflation doesn’t work easily either because your debts are still owed, and that means that in forcing countries to deflate you make them even more fragile”.

We move onto the issue that most puzzles Anglo-Saxon commentators such as myself; if the euro is so bad, how come it has lasted so long?

“Well, you have to take account of the eight or nine years before the problem became apparent. Then there was ‘oh it has worked for nine years’ – even though it hadn’t – ‘so the crisis will be over quickly and we can make it work again’. When you have already invested heavily in something, it is very difficult to cut your losses. There is always a tendency to think that with just a little more investment, it can be made to work.

“So the politicians said, just accept a little bit of temporary pain and everything will be OK again. After two years that wasn’t true. And time and again it turns out not to be true. Good money is constantly thrown after bad.

“Imagine yourself in the position of a Greek politician, with 25pc unemployment and an escalating financial commitment as a result of the fight to stay in the euro. As things go more and more wrong, you become ever more committed to the policy that got you there because to admit you are wrong is to say we have suffered all this pain for nothing”.

Joseph Stiglitz

Does this mean Europe is essentially damned, I ask?

“The most likely scenario is a continued muddling through, which is what they have been doing to date. But neither Frankfurt nor Brussels controls events, as the Brexit referendum vote shows, so what you see – and this is not for sure but almost predictable – is growing alienation.

“This is already apparent in electoral outcomes. More than 60pc of people in Spain, Greece and Portugal voted against austerity parties. The same thing with Brexit, which was also a rebellion against the political centre.

“The only thing that saves the centre ground is that the anti-establishment movement is divided between left and right. So you get a stalemate which is also not at all good for anyone, and out of that who knows what happens.

“Getting a political coalition in any country large enough to leave the euro is therefore difficult. What’s so troubling is that it is also proving impossible for Europe to agree on policies to fix the euro, so you have neither one thing or the other. Despite his apparent pessimism, Stiglitz is not short on suggested solutions.

“If you had a group of people sitting around a table rationally discussing the future of Europe, these are the sort of things they might come up with.

“One is to say let’s finish the job. The US shares a common currency among 50 diverse states, so what are the institutions and rules needed to make the single currency work.

“As a bare minimum, you need common deposit insurance, a banking union, Eurobonds, maybe industrial policies to allow those at the bottom to catch up, you need to move away from just inflation targeting, and you need some way of adjusting real exchange rate that doesn’t involve internal devaluation.

“Germany has to perform its role of allowing its economy to inflate relative to others. So those are the minimum to make a euro that works.

“But Germany takes the view that we are not a transfer union and we won’t even take the risk of a banking union or of common deposit insurance. This is like New York saying we don’t want to have federal deposit insurance because there is a bank in Alabama which might go bankrupt.”

If completing the job proves impossible, says Stiglitz, that leaves the alternative of an “amicable divorce”.

“In the book I use the example of marriage councillors. In the past, the job of the marriage councillor was to keep the marriage together, but modern ones sometimes say you should never have got married in the first place.

“Once you have accepted the marriage can’t be made to work, then the only issue is how to make splitting up go as smoothly as possible.

“In the book, I describe some novel ways of doing this. The core of the idea is that you are going to have to allow redenomination of debt, and allow some form of bankruptcy.

“A third way is the flexible euro where you say lets try and consolidate the institutional advances we have made but recognise that we are not anywhere near a single currency yet. And then I describe some mechanisms that would allow the exchange rate to be operated flexibly and allow economic adjustment”.

So what are the chances of any of these “solutions” being adopted, I ask.“I’m hopeful”, Stiglitz says with a grin, which somewhat suggests he’s not.