The Capitalist Muse

Bin Laden's Hideout - A Schematic

What an operation in the Abbottabad! The elimination of Osama bin Laden reads like a thriller. And it was.

It was run by elite Navy SEALs attached to the Joint Special Ops Command (JSOC). This particular group specializes in sensitive and risky assassinations and, in my opinion, if used with judgement, is the most effective weapon in the asymmetrical warfare against terrorism. One U.S. Military source describes them as “Sort of like Murder Incorporated” with a business of killing terrorist high value targets. Murder is a heinous act and for a long time we have forbidden it as part of U.S. war options, as being contrary to our values. In very special cases, however,  it is a very efficient alternative. Imagine if we had killed Hitler in 1939!

It was impressive how well the Abbottabad raid was thought out and executed. First the painstaking gathering of intelligence with hundreds of our spooks clandestinely on the ground in Pakistan – in an environment where you must build trust very carefully, and where your counterparts in the Pakistani Intelligence are highly unreliable and even helping/shielding elements in the terrorism’s high echelons.

Then the meticulous planning. The building of a mock compound in a hidden location in Afghanistan to train for the raid and plan out all contingencies.

Finally the operation itself. Middle of the night. Two helicopters flying into Pakistan from Afghanistan. The Pakistani authorities not informed about the details and timing of the op. The whole precision strike and abduction of the body plus the careful collection of all information found on the compound took only 40 minutes. Toward the end of these forty minutes the Pakistani fighter jets scrambled as they sensed something was going on. The SEALs had to avoid them and make a run back in their remaining craft. There was even talk that they were prepared to shoot down Pakistani airplanes if the desperate need for that arose. A daring and brilliant execution!

It took us 8 years to piece together enough intelligence to capture bin Laden. Why so long? Clearly this is a very difficult business – and bin Laden and his men were very good at countermeasures. But there is no doubt that he was being shielded and protected by some high-ups in the Pakistani Army and government. I remember when Osama first ran to Pakistan with us in hot pursuit from Afghanistan, Pakistani president Pervez Musharraf announced that he was dead from a kidney disease in order to throw us off. Ever since, many elements in Pakistan have deliberately tried to steer us away from him while they have kept him one step ahead of our pursuit. They have repeatedly said that he is not in Pakistan or hidden in very remote caves about which they have no information.

But we have been persistent in dealing with Pakistan – understanding the difficulties that they have with their torn loyalties and a dominant Army/Intelligence culture that has fostered and built much of the terrorist dragon that now comes back to haunt them. We have understood how many in Pakistan do want to support us, either through understanding the benefits of aligning with us or through realizing the much worse consequences of picking up an open fight with us. We have used the carrot and the stick – given them aid, have joint military programs that boost their military and kept them from being a pariah state such as Yemen, Somalia or even Syria might be becoming. We have even offered them state-of-the-art technology, such as the drones unmanned aircraft and all the smart tech that goes with it.

We hope, of course, that Pakistan will be swayed to join our bloc of democratic, secular, open societies and not gravitate toward the lure of the  theocratic or the autocratic, like China, with whom they have nothing in common but have a solid alliance based on their diverse goals and ambitions in the region. Pakistan was certainly a key (though hesitant and partly coerced) partner in making this operation against Bin Laden successful. It would be great if one of the consequences of this event is an even greater confidence in Pakistan that they can turn the page on their terrorist-haven reputation and join the world order of open, flourishing, democratic countries. Maybe join hands with India with whom they share a wealth of culture and history and move forward together into the 21st century as a major cultural bloc of people in the world.

But, for now, the U.S. took charge of the situation. Full marks to President Obama who, as soon as he took office, moved the elite JSOC teams from Iraq to Afghanistan and fully authorized them to target Bin Laden. With his great team (Patreus, Panetta, Bob Gates and Hillary Clinton) he fought this war in the way modern counterterrorism wars must be fought. Through intelligence and Special-Ops and precision targeting as opposed to an Iraq-style invasion.

There are only 2500 SEALs in the U.S. they work for the Navy and the Marine Corps. Our defense policy and spending for the future should be more geared to building up our asymmetrical war fighting capabilities: Much higher emphasis on Intelligence, elite ops groups, high-tech listening and data gathering using drones and the like, lots of local language speaking assets development etc. Had we built this kind of capabilities after the first Iraq war (under Bush Senior) we would not have acted with the poor intelligence regarding Weapons of Mass Destruction leading up to the second (and disastrous) Iraq war.

We must also develop a greater understanding and respect for the muslim peoples of this world and feel the forces and emotions that move them. We cannot tolerate the heinous radical ideologies that go under the Islamic name but most muslims would not choose them unless they felt afraid and misunderstood.

I think that the revolutions in Tunisia, Egypt, Libya etc – the so-called Arab Spring – are democratic, mostly secular and pro-west. In Libya we see the protesters holding up American flags and showing great affection for the pilot of the American plane that crashed there. Egypt too was a relatively secular uprising. No one in these countries is demanding Sharia law or Muslim theocratic states. These are the signs that we can be friends with the Arab street and that they essentially want to belong to our bloc of open democratic societies. Getting all these people into the umbrella of modernism is obviously the best way we can fight terrorism and getting the pan-Islamic radicals to wither away.

Have we taken leave of our senses?

The Super Attack and Spy Plane - Unmanned Drone

The US will gift Pakistan a billion dollars’ worth of drones as part of an annual 3 billion dollar military aid package. What?

This is state of the art stealth warfare and spying technology. Not even our true allies in the Western alliances have it. Why would we give it to an “ally” that consistently demands more and more and does less and less when it comes to fighting terrorism? The Pakistani spy agency, the ISI, who will surely share the technology with its great ally China, has already been decisively implicated in playing a double game – aiding terrorist groups, such as Jaish-e-Mohammed, while pretending to help us fight the Al Qaeda terrorists and the Taliban. They have shown no accountability on the billions we give them and, in fact, are known to have diverted our aid in increasing their nuclear warheads in the last few years.

What exactly are we achieving with our “partner” in fighting Al Qaeda and other terrorists? Consider the following recent news items:

• Pakistan urges Afghanistan to drop the U. S. as an ally and join up with them and China to form a new security zone and world alliance.
• A majority in Pakistan now think that the U.S. is the biggest threat to their country. The Taliban boast that they have a waiting list of over 250,000 Pakistani and Afghani people waiting to commit jihad (suicide bombers) for their cause.
• Pakistan has launched a program to almost double its 60 nuclear warheads in recent years while providing inadequate accounting of the money we give it in humanitarian and military aid. (This according to SIPRI,  the Stockholm International Peace Research Institute)
• The U.S. and India have definitely implicated Pakistan’s Spy/Military agency, the ISI, of masterminding and overseeing the Mumbai terrorist attacks.
• Pakistan has never delivered even one really important leader of Al Qaeda or the Taliban. In fact we are increasingly complaining of them shielding the big terror players.

The truth is that in having Pakistan as our partner in fighting terrorism we are achieving the exact opposite – we are making ourselves more vulnerable to terrorism. Elements in the Pakistani government and ISI almost certainly share all our strategic warfare data with Al Qaeda and Taliban leaders.

This is an unbelievable escalation of the arms race. Imagine what the drones can do in the hands of jihadi terrorists. It will not come as  a surprise to anyone if the drones we gift Pakistan are used  for aiding the Taliban anti-U.S. fighters in Af/Pak and for escalating the terrorist warfare against India. Also it will come as no surprise if China and other anti-West countries (N. Korea, Iran?) get to reverse engineer the technology resulting in a horrific escalation in the arms race.
So I was thinking how we could possibly be doing this. Could it be that we are now unable to disentangle ourselves from the Pakistan experiment without admitting we made a big mistake? Maybe we just don’t have the moral courage to radically change our direction in fighting against perceived terrorism, which even the Pentagon now secretly acknowledges is the wrong strategic direction for us. See my previous post, Obama, Oh Bummer!

Or is something diabolically clever that we are doing that no one has as yet a whiff of?

I got this brain wave last week as I read this article in the Economist. (You simply must read it!) It seems that we donate equipment to our Middle East allies which has spy devices embedded in them. For example in the Gulf war Iraq was using American made color photo-copiers to produce their war plans. And guess what! The circuitry in these photocopiers concealed transmitters that revealed their positions to our electronic warfare aircraft. Here’s an  excerpt from the Economist article:

Kill switches and other remote controls are on the minds of Western governments pondering whether to send weapons such as sophisticated anti-tank missiles, normally tightly policed, to allies. Chips can be designed to break down at a certain date. An innocent-looking component or even a bit of soldering can be a disguised antenna. When it receives the right radio signal, from, say, a mobile-phone network, aircraft or satellite, the device may blow up, shut down, or work differently.

Very Clever Indeed! So maybe we’re going to gift Pakistan these drones but they’re really a Trojan horse. Maybe we have supersmart spy devices embedded in them that report everything they are doing and even a secret “kill” switch that we can use to explode them when they fall into the hands of Osama Bin Laden and he is taking a joy ride.

Oh, I feel a lot better. We are ahead of these two-timing medievalist friends of ours after all. Whew!

There is something profoundly wrong with the direction in which America is headed. Everyone feels it. Recent polls show it. The number of people who feel despair about our future is surging. Many of us felt that with the election of Obama we would have new leadership and vision, we would have productive dialog and a bold change of direction reasserting America’s fundamental greatness, strengths and world leadership.

It has clearly not been the case. We are floundering on the most significant challenges that face us – we have no national energy policy, no honest debate about our role in the world and no definitive prescription for the reduction of our debt and the revival of jobs and the economy.

In the depths of despair, as members of Congress keep playing chicken with the budget and have moronic debates laden with ideological nonsense, a very interesting report was issued by someone at the Pentagon called Mr. Y. The report, which was highlighted by Fareed Zakaria on his Sunday Show, Fareed Zakaria GPS, is titled “A National Strategic Narrative”. Its basic findings are revelatory:

The United States is getting it fundamentally wrong in setting its priorities. It is

• Overreacting to the Islamist threat.
• Underinvesting in its youth and domestic strengths.
• Failing to embrace the sense of competition and opportunity that made us a world power.

Our internal debate is bogus – increasingly consumed by seeing the world through the lens of threat, while failing to understand that influence, competitiveness and innovation are the key to advancing American interests in the modern world.

Even though the report is authored in the Pentagon it makes the bold case that America continues to rely far too heavily on its military as the primary tool of engagement with the world and does not have an honest debate on the harnessing and utilization of its tremendous soft power

Amen. Obama came to power promising change. There is still time to take a bold stance on the key issues that the report says we should pursue and on the primacy of which I wholeheartedly agree with. I also know that Obama himself, when he is not mesmerized by Washington and all its noise, believes this is how we must move.

Obama should think about his legacy and what his presidency could mean to this country. He should act, as I know he is capable of, on the prime areas that need a major change in direction. Here are three  areas where we need a radical shift in priorities:

1. A comprehensive energy policy to make us self sufficient in the coming years. Obama invoked Kennedy’s national challenge of “Man on the Moon” in his state of the Union speech but has not led with a well defined blueprint. Too much debate, too little action. We have choices: Conservation, Natural Gas, Solar/Wind, More drilling in the short term, Shale oil, Nuclear Power, Clean Coal etc. Have you seen the excellent NOVA program, Power Surge,  last week on PBS covering this topic?
2. A complete, bold plan for overhauling our bloated and unenforceable tax system and for reigning in the federal debt. As a minimum Obama must endorse the Bowles-Simpson deficit reduction plan. It is a great, politically achievable blue print that will go a long way. But, with guts, he could propose something even bolder, simpler and workable – a flat national sales tax or VAT. This option, proposed by Paul O’Neill, the former Treasury secretary has great merit. Imagine: No record keeping, no tax accountants and no spending of billions by lobbyists wanting special tax considerations in Washington! More on this in a future blog.
3. Innovation and Education promotion. The U.S. invented virtually everything worth inventing in the last century. We are now falling behind tremendously. We need policies that will spur innovation and  entrepreneurship. Hand in hand with that an increased emphasis on education and fundamental research. Think of what would happen if we were to come up with a radical new battery technology, or photosynthesis technology in the lab, or a workable clean coal technology?

Mr. Obama, please wake up. Stop trying to be so dispassionate and incremental. Take some risks. You have the intelligence and the vision  and more power in Washington than you imagine. It will be a sad lost opportunity if you can’t do this. It might even be an existential blow to America’s superpower status.

I noticed that Standard and Poor put the US Federal debt on a “Negative Outlook” yesterday. The U.S. is incurring unsustainable deficits and soaring debt. For as long as I can remember the U.S. Treasuries have been synonymous with risk-free – is that now in jeopardy?

There was the usual blame mongering and finger pointing in Washington. To the new crop of congressman – young, ideological and full of certitude – the problem is Government spending gone amok. Their solution: Cut taxes on corporations and the wealthy and slash spending on health care and other social programs for the poor and elderly while still retaining huge deficits. (Then do some flim-flam math and show that the economy will grow so much that it will pay for the tax cuts.)

When asked why they would cut marginal tax rates which effect only the top 2% when we have a runaway debt crisis, House Majority Leader Eric Cantor, R-Va., said:

”Most people understand that Washington doesn’t have a revenue problem, it has a spending problem. We can’t raise taxes. … That was settled last November during the elections.”

Is that true?

Here’s a graph of the Federal Taxes collected as a percentage of the GDP in the last six decades:

Taxes as a Percentage of GDP

It was compiled by the very conservative Heritage Foundation.

You will notice that tax collections in 2010 (and also those predicted in 2011, not shown on chart) are the lowest in over 6 decades! The reason for this is that we had a 10 Trillion dollar mugging of our economy by the out-of-control financial sector culminating in 2008. The GDP shrunk at the rate of 6%, unemployment soared to over 10% (maybe as much as 17% if you count the underemployed) , peoples’ savings and pension plans were decimated and the Federal government had to bail out the banks to the tune of trillions more.

A recession of this magnitude is a once a century affair and if proactive moves were not made by the government we might have a collapse on our hands. When you have a recession not only does the GDP fall, but tax revenues as a percentage of GDP also fall – a double whammy!

Conversely when the GDP shows healthy growth the tax revenues increase as a percentage of growing GDP without an increase in tax rates. If you look at the chart above you will see that this happened in the 1990’s, mostly in the Clinton era, when 22 million new jobs were created and tax revenues soared to a historic 20.6% of GDP with a continued low tax rate. We had surpluses not deficits in our budget as late as the year 2000 as a result.

We have a deficit of 10% of the GDP now and 60% or so of it is due to a collapse in tax receipts, exacerbated by a lowering of tax rates, the two unfunded wars and the financial tsunami. Also we have been forced to spend more because of the financial meltdown and recession because failing to do so would have caused  a disaster. What is unconscionable though is the deficit build up of the Bush era, a time in which the economy was growing. Yes, we had 9/11. But the direction we chose as a result of 9/11 was more harmful than the bombings.

Our spending problem has not been our domestic social spending. It is not related to health care or education, or Planned Parenthood, or child malnutrition programs, or illegal immigrants, or even labor unions demanding too much.

If we are serious about reducing our debt we have to look at the big picture. The President’s commission on debt reduction came up the best approach so far – a balance between getting the revenues up  and gradually reducing the rate of growth of entitlements. More on this in a later post.