Saturday, January 30, 2010

Why no Haitian terrorists?

Why isn't Haiti- failed state, miserably poor- an Al Qaida haven?

Amongst all the news from Haiti, one thing we never hear is that renegade groups of Haitians are bent on delivering suicide bombs to the US. Not only do they have ideal proximity, they have been shabbily treated by the US and other Western powers for hundreds of years. If poverty and "lack of opportunity", not to mention justified historical grievance, were sufficient for terrorism and suicide bombing, we'd be in far more trouble than we are. Why not?

Well, there is no denying the obvious, which is that Islam is the missing ingredient. Many other issues come into play, such as the generally friendly relations we have with Haiti despite all the burdens of history, to the point that the US hosts large expatriate communities with close ties to home, including remitting 15% of Haiti's GDP. ("For Haiti, one of the most affected LDC's- with close to 65% of its educated population found in the United States, the dislocation of much needed human resources is compelling.") And the overwhelming security unbrella/menace that the US represents, perhaps preventing any hanky panky in advance (hard to credit, really, knowing our capabilities, and considering Cuba next door).

No, it comes down basically to culture, and whether the bitter totalitarianism of Islam has touched down in Haiti. I am watching a bit of Spike Lee's Malcom X film biography, which is a classic example of such an ideology trying with all its might to establish itself on US soil, in the fertile and very justifiedly aggrieved black community. Separatism and militancy is the tenor, but the Nation of Islam did not take hold, nor Black Power more generally, and nor has generic Islam.

Perhaps we can thank Christianity for being a "commensal" or relatively benign religion, keeping away more virulent strains. Haitians are overwhelmingly Christian, 60% Catholic from their Spanish and French colonial history, and 25% or more Protestant with strong Pentacostal influence. Pentacostalism tends to be a striving religion, focusing on personal worldly success, virtuous living, and good business connections. This is quite distinct from the political focus of Islam, devoted as it is to authority, and political and social uniformity.

Pentacostalism (and Baptistm too) comes to society from the perspective that it is a small religion in a big society, striving to succeed in a pluralistic world dominated by others. Islam, no matter how marginal its community, comes at the question quite differently, insisting that not only its theology, but its sociopolitical program is perfect and absolute. Possibly in abeyance due to temporary weakness and existence as a minority, but the totalitarian goal is always clear and enshrined in scripture.

Most strongly fundamentalist cults will take a similar position, nurturing fervent dreams of toppling the reigning cultural paradigm. But few have armed jihad written right into their scriptural DNA, which makes all the difference here.

Catholicism in Haiti, as elsewhere in the Carribean and South America, has worn two faces- the static traditional form comfortable with ancient, not to say regressive, social hierarchies and personal, quasi-animistic devotions, and the other face exemplified by forcibly exiled Bertrand Aristide, termed liberation theology, which takes Christ as a revolutionary example, amenable to a communist, or at least socialist, social order. Haiti is strongly divided along these lines, as are many poorer countries, between the few rich and the many poor. As mentioned previously, this kind of divide is corrosive both to economic prospects and to the civil society. The rich have spared no effort, including calling in friendly US assistance numerous times, to suppress the socialist / populist movements in Haiti.

Fortunately, none of this has much to do with Islam. Islam can neither make unroads with the poor, who become even more oppressed in this religion, (women in particular), nor with the rich, who might like the additional social structure afforded by Islam, but not its strictures against hedonism and its relocation of cultural leadership to Arabia.

So, al Queda hasn't gotten serious footholds in some of the most promising areas in the hemisphere of their arch-foe for good reasons of history and culture which we can only hope will stay relevant as we continue (hopefully) to deepen and improve our relationships with Haiti during this time of catastrophe.

On the other hand, al Queda has been diversifying, now even taking up the standard of global warming. Next might be Keynesianism and progressive media diversification, not to mention internet neutrality(!), at which point Osama bin Laden may become a legitimate global leader of the poor and oppressed, yearning to breathe free. A sort of stateless Chompskyite counterpoint to the hyperpower head Barack Obama, who each moment seems to be regressing towards greater compromise with the vested interests. Who knows what the future of the global political scene might hold?

  • Spending freeze is "Dingbat kabuki". The US government is not, and will never be, insolvent. If anyone were worried, it would be the Fed, and they would respond by raising interest rates to head off inflation. Are they? This policy buys into the defunct economics of the gold standard, which was replaced by Keynes only ... seventy years ago?
  • How many Harberger triangles can you fit into one Okun Gap?
  • Aussies have rednecks too.
  • A conversion from atheism.
  • Steve Jobs's megalomania knows no end.
  • But the marketing has a few holes.
  • When scientists don't know what they are doing.
  • Contemplating the nuclear option.
  • A. C. Grayling on the enlightenment.


  1. "Spending freeze is "Dingbat kabuki". The US government is not, and will never be, insolvent. "

    Spending freeze doesn't seem the right move currently. I understand the fear of a double dip recession when so much potential productivity is languishing in the unemployment line.

    Yet, surely quantitative easing is not a perpetual winner. It is useful now, and probably we shouldn't be too worried yet, since inflation is currently a non-starter, but we can't print money forever either.

    Should the Fed's job be primarily to save/maintain the economy or to maintain a consistent level of inflation - like the Central British Bank's mandate? Or both?

  2. Hi, Steven-

    My current slogan is "Real macroeconomists care about inflation, not debt". The Fed's mandated job is to care about both inflation and employment. But over the last decades, they have lost sight of the latter to focus on the former. Fair enough, when things are going well, but not so much today.

    The funny thing is that we can print money forever, indeed we have to, to balance the savings needs in the private economy and the savings needs abroad for those who want to hold paper dollars in return for sending us real goods. As our economy grows, money has to keep being created by the government to cover all this, and thus perpetual debt is the natural condition. It's really OK!

    How this debt is distributed, between simply printing the money, or issuing bonds to serve as the savings vehicle for people (and printing a bit more money to cover the interest), is not a big difference, and is handled by the Fed as part of monetary policy.

    MMT theorists claim that the last decades actually saw a deficiency of government money creation, driving people into the dangerous private credit bubble for their saving and consumption needs.

    I am only slowly gaining understanding of all this, but once you grasp the basic dynamics, the current debate looks dingbatty indeed.

    On the question of inflation, the general principle is that it rises when economic capacity is at 100%, and businesses meet higher demand by raising prices instead of making more goods.(Excepting exogenous shocks like rises in oil prices and exchange rates). This is one part of the MMT theory (macro-economics link, above) that seems a bit weak, or over-generalized, but at any rate, inflation dangers are now exceedingly low, as deflation is still the main worry (home prices still going down, for instance).

    Secondly, at current policy settings, the Fed has virtually infinite capacity to deal with inflation. It has trillions of assets on its books that it can sell to soak up money, and interest rates are at zero. One interesting part of the MMT theory is a claim that it would be possible to hold interest rates at zero in perpetuity, and control inflation through fiscal policy alone, printing/spending or not printing money as needed. In view of the stickiness of government spending, this seems a bit hopeful, but interesting to consider.

    So, in the end, government debt/spending exists to fund the private economy, and is not limited, indeed is essential up to the point where inflation becomes a problem. This happens also to be the point where employment should be close to full as well, and this is the policy nirvana. We are far away from that right now, and need more spending on the government side for a while yet.

    I'm no expert in all this, but it is a fascinating topic... Best wishes!

  3. " It has trillions of assets on its books that it can sell to soak up money, and interest rates are at zero"

    I am a little rusty on my Fed knowledge - what assets does the Fed have on its books? Treasury notes? Savings bonds?

    And if it does sell them, to soak up money, don't the new owners of the assets have the ability to liquidate and reverse the process? Or is there a time element, like a CD, where the bond has to mature?

    Also, if the government is printing more money, how does that translate into debt?

    thanks for your work on trying to understand this stuff.

  4. Hi, Steven-

    This is a difficult topic. My understanding is that when the Fed sells, say, bonds, it is draining liquidity out of the system. Bonds are quite liquid assets, but the dollars that the Fed takes in from the sale can be burned up in the back room. The person turning around and selling that bond privately will be getting money from someone else in the private economy, not from the government printer, which then is a wash, macro-economically. It is the government<->private economy transaction that is key.

    Private money = Input from government -
    (dollars lost to trade deficit
    and dollars lost to savings put back in government bonds
    and dollars paid back to the government in taxes)

    The private economy is sort of a closed system, getting its money from the government, though also able to create its own (temporary) credit-money through fractional banking. But as long as the fractional banking system is under some degree of control (the Fed stipulates minimum reserve levels, and also controls short interest rates), there are limits to how much credit can be added as money in this way. This obviously was not the case recently, so we had a huge bubble, followed now by deep retrenchment. Which is marked especially by increased savings, indeed a flight to safe savings (lots of people, including foreigners, buying bonds), which is one more reason the government needs to pump money out the door as stimulus and as the Fed buying bonds from the Treasury, which amounts to printing money, from what I understand, since the Treasury spends the newly minted money on government programs.

    The Fed has also accumulated all sorts of other junk through this downturn- stock, mortgage backed securites, etc., exchanging its money for private collateral of these types. All stuff that they never would have bought before, but when Wall Street calls ...

    Here, MBS means mortgage-backed securities.

  5. Oh- I forgot the other question about how printing money works. What I understand is that the Adminstration is artificially separated from the Fed, so whatever an Administration spends, it has to "fund", through taxes and borrowing. It is the Fed that can print money and destroy it at will, not the Treasury. So, for instance, the Fed buys the bonds offered by the Treasury, and viola, the government as a whole has printed money which it spends on fiscal programs.

    So, one would ask, why doesn't the Fed balance sheet keep growing indefinitely, as it puts out money in return for various forms of collateral? The answer seems to be that most of the time, the Fed just gives money to the banks as reserve money, and then the banks go on to lend and so forth on top of those reserves, creating the larger pool of circulating money. Lately, the Fed has been giving banks grossly excess reserves, in the belief that this would increase their ability to lend. But that was not the case- banks have to want to lend first, and no amount of (free) money on hand will change that business decision.

    You can see that banks are not independent exemplars of the American Way, but closely controlled and regulated entities, at least when the system is working correctly. One interesting bit from MMT theory is that the government could control the money supply through fiscal spending exclusively, making banks into 100% reserve institutions, and the Fed a minor adjunct of Treasury. Which system is harder to control is a matter of some debate.

  6. .. And at risk of really going on too long, the really critical policy issue at the moment is whether we sit around twiddling our thumbs, waiting for the banks to make the magical business decisions to lend, which will increase money creation and economic activity, or whether the government, surveying the macroeconomic scene and presumably caring about the great and long-term damage done by unemployment, jumps into the breach to get us out of the slump earlier.

  7. thanks for all the info, Burk. I am trying to make a little time to research Keynesian economics - it makes the most since to me, though I need to study the criticisms as well - and the ideas about what caused "stagflation" in the 70's.

    talk soon,