Wednesday, November 2, 2011

Long List of Suckers




Last week, I toured the great Mogul compound of Fatehpur Sikri, near the Taj Mahal. My Indian guide mentioned in passing that in the late 1500s, when Afghanistan was part of India and the Mogul Empire, the Iranian Persians invaded Afghanistan in an effort to “seize the towns of Herat and Kandahar” and a great battle ensued. I had to laugh to myself: “Well, add them to that long list of suckers — countries certain that controlling Afghanistan’s destiny was vital to their national security.”
There were already plenty on that list before, and there have been even more since. As America now debates how to extract itself from Iraq and Afghanistan, it is worth re-reading a little Central Asian history and recalling for how many centuries great powers — from India to Persia, from Britain to Russia, and now from America to Iran, Turkey and Pakistan — have wrestled for supremacy in this region, in different versions of what came to be called “The Great Game.” One can only weep at the thought of how much blood and treasure have been expended in this pursuit and how utterly ungreat this game has been in retrospect. No one ever wins for long, and all they win is a bill.
It is with this bias that I think about the debate following President Obama’s decision to withdraw all U.S. forces from Iraq, on schedule, at the end of this year — a decision that has been greeted with much huffing and puffing from hawkish Republicans about how Obama will be remembered for losing Iraq to Iran. Iraq will now fall under Iran’s “influence,” they proclaim, and none of us will ever be able to sleep well again.
Please put me down in the camp that thinks Obama did the right thing and that Iran’s mullahs will not be the winners.
Why? Well, for starters, centuries of history teach us that Arabs and Persians do not play well together. Yes, Iraq has a Shiite Muslim majority and so does Iran. But Iraqi Arab Shiites willingly fought for eight years against Persian Iranian Shiites in the Iran-Iraq war.
Moreover, I am certain that in recent years America’s lingering troop presence in Iraq actually gave Iran greater influence in Baghdad. The U.S., however well intentioned, became a lightening rod that absorbed a lot of Iraqis’ frustrations with their government’s underperformance, and the U.S. “occupation” drew all attention away from Iran’s shenanigans inside Iraq. Iraqis are a proud people. Once our troops are gone, Iraqi Arabs will surely focus entirely on their own government’s performance and on any Iranian or other attempts to try to be the puppeteer of Iraqi politics. Any Iraqi leader seen as Tehran’s lackey will have problems.
Indeed, once we’re gone, I actually think the dominant flow of influence will be from Iraq toward Iran — if (and it is still a big if) — Iraq’s democracy holds. If it does, Iranians will have to look across the border every day at Iraqis, with their dozens of free newspapers and freedom to form any party and vote for any leader, and wonder why these “inferior” Iraqi Arab Shiites enjoy such freedoms and “superior” Iranian Persian Shiites do not.
“Iran’s interests were served by the Arab status quo ante — ideologically bankrupt regimes brutalizing disenfranchised populations,” argues Karim Sadjadpour, an Iran expert at the Carnegie Endowment. “The more representative governments there are in the Middle East, the more it highlights the fact that the Islamic Republic of Iran is a salmon swimming upstream against the current of history.”
Some say Iran was the geopolitical winner of the U.S. intervention in Iraq. I’d hold off on that judgment, too. “The Iranian regime is at its lowest moment of influence in the region — 14 percent popularity in the latest Zogby poll,” remarked Abbas Milani, who teaches Iranian politics at Stanford. What you see today if you look underneath the Islamic revolutionary facade in Iran, added Milani, “is a flourishing of painting, films and music, driven by technology. It is a society seeking its own bottom-up blend of Islam and modernity. The regime has no role in this.”
Just as I don’t buy the notion that we need to keep playing The Great Game in Iraq, I also don’t buy it for Afghanistan.
“If the U.S. steps back, it will see that it has a lot more options,” argues C. Raja Mohan, a senior fellow at the Center for Policy Research, in New Delhi. “You let the contending regional forces play out against each other and then you can then tilt the balance.” He is referring to the India, Pakistan, Russia, Iran, China and Northern Alliance tribes in Afghanistan. “At this point, you have the opposite problem. You are sitting in the middle and are everyone’s hate-object, and everyone sees some great conspiracy in whatever you do. Once you pull out, and create the capacity to alter the balance, you will have a lot more options and influence to affect outcomes — rather than being pushed around and attacked by everyone.”
America today needs much more cost-efficient ways to influence geopolitics in Asia than keeping troops there indefinitely. We need to better leverage the natural competitions in this region to our ends. There is more than one way to play The Great Game, and we need to learn it.

Under 'Color of Federal Law'



The Supreme Court ruled three decades ago in Carlson v. Green that a federal prisoner could sue for money damages from prison employees who abused his constitutional rights. On Tuesday, in Minneci v. Pollard, the court heard the government and others contend that a prisoner held in a facility operated by a private contractor cannot bring this kind of action.
The court should reject this argument. If not, it will allow the government to contract away prisoners’ constitutional rights — and contract away its own responsibility to protect individuals imprisoned under the law.
While incarcerated for 20 months in a privately run facility, Richard Lee Pollard fell and broke his elbows, a serious injury. When he sought medical treatment, he was refused a splint to help repair his arms and forced to wear a handcuff-like device that caused him tremendous pain.
If he had been in a government-run prison, he clearly could have sued those who mistreated him for damages. The private facility where Mr. Pollard was imprisoned was different only in ownership. It operated under federal authority and functioned as a government facility. Those who worked there or provided services for it were operating “under the color of federal law,” a critical test.
The government and others also contend that such actions are reserved for extraordinary circumstances where the person alleging injury has no other basis for suing because, for example, state law provides no remedy and that Mr. Pollard could have brought a civil action under tort law in state court. But after the court held that is no substitute because of the vagaries of state laws, Congress twice affirmed the right to sue officials for redress in federal court.
The Pollard case matters so much because one of every six federal prisoners is now held in a privately run facility, compared with none two decades ago. Private facilities also house half the federal immigration detainees.
Bad as many government-run prisons are, some privately run prisons may well be worse. There is mounting evidence that private prisons pay guards less, have smaller staffs and give limited training, reducing the level of care and oversight and exposing prisoners to greater threats to health and safety. The prisons and the people who work there must be held accountable when they badly perform this role of government.

Corzine's Big Bet




Why did Jon S. Corzine make the risky bets that have now plunged MF Global Holdings into bankruptcy court? We don’t know, but the likely explanations are disturbing.
Over the past year, most investors have been fleeing the sovereign debt of Spain, Italy and other euro-zone basket cases. Not Mr. Corzine. The onetime chief executive of Goldman Sachs and former New Jersey senator and governor who has run MF Global since early 2010, was all in, buying up $6.3 billion worth of discounted euro-zone debt.
As Azam Ahmed reported in The Times on Tuesday, Mr. Corzine appeared to be wagering that the European Union would come to the rescue of Europe’s troubled economies, averting a default. In other words, Mr. Corzine was betting on a bailout.
A euro-zone bailout may well come, but not in time for Mr. Corzine and MF Global. Concerns about Mr. Corzine’s big bet led two ratings agencies to downgrade the firm to junk last week, draining investor confidence — and cash — from the firm, and sending it spiraling into bankruptcy proceedings. The fact that Mr. Corzine built a strategy betting on a government (in this case, European) rescue should be a chilling reminder of how far the world has not come since the darkest days of the financial crisis. Europe is trying to bail out Greece, in part, to protect its big banks.
In fact, the financial system, on both sides of the Atlantic, is still dominated by too-big-to-fail banks and regulations intended to ensure that their collapse won’t bring down the financial system are still a work in progress.
It is progress that in Europe, at least, creditors are being asked to bear some of the burden. But the need for bailouts is clearly still very much with us.
Another reason that Mr. Corzine’s bets may have gone so wrong — and another echo of the financial crisis — is that American regulators did not rein in the firm. MF Global was highly leveraged, with liabilities at the end of June of $44.4 billion and equity of only $1.4 billion.
In a research note published on Tuesday, Steve Blitz, a senior economist with ITG Investment Research, pointed out that MF Global was one of the firms designated by the Federal Reserve as a primary dealer in United States Treasuries. After the havoc of high leverage in the financial crisis, how is it possible that the Fed allowed MF Global to operate with so much leverage? Are the Fed, the Securities and Exchange Commission and other relevant regulators fully monitoring the risks at other broker dealers?
Meanwhile, self-regulation is clearly not the answer. The Wall Street Journal reported on Monday that the Financial Industry Regulatory Authority, a self-regulatory agency for brokerages, recently warned MF Global to shore up its capital to cushion against its increasingly risky positions. Whatever the firm did, if anything, clearly wasn’t enough.
In the end, the American people are lucky that MF Global was small enough to fail, its riskiness and recklessness absorbed by the bankruptcy process. But with the devastating damage from the crisis still hobbling the economy, relying on luck is not enough.
MF Global is a warning that the system is still far too vulnerable and the work of regulatory reform far from finished.

Monday, October 31, 2011

Beyond Accupy





Since I was passing through India on a reporting project, I decided to drop in on Anna Hazare, the anticorruption campaigner whose admirers speak of him as the reincarnation of Gandhi. Kisan Baburao Hazare (“Anna” is a Marathi honorific meaning “older brother”) has been a figure in provincial Indian affairs for decades, but he galvanized attention this year when his threat to fast to the death shamed the government into endorsing reforms. I wondered what Hazare, as an exemplar of a venerable style of civil pressure, made of Occupy Wall Street.
Back home, the Occupiers have been pandered to (“Love your energy!”); patronized (“Here, I’ve drafted you a list of demands ...”); co-opted by unions, celebrities and activists for various causes; demonized by the right; arrested and tear-gassed in some cities; and taken lightly by the likes of me. They have been a combination national mood ring and political Rorschach test. Perhaps by consulting someone who is a serious candidate for the pantheon of protest, I thought, I could sharpen my own understanding of what the Occupy project means.
About the time I put in my request for an interview, Hazare, exhausted by his latest hunger strike and weary of the media melodramas that have bedeviled his team, announced that he had taken an indefinite “vow of silence.” This raised questions in my mind — Was he planning to continue his protest as a mime? — but of course I had little hope of getting answers from him because ... well, you see the problem.
So I went to visit his associate, Kiran Bedi, who battled for reforms as India’s first policewoman before joining Hazare. Bedi speaks with the intense energy of a high-voltage circuit. No vow of silence for her. And it turned out the subject of Occupy Wall Street has been very much on the minds of Team Anna.
For those who haven’t been following the story, Hazare, 74, is a small landowner’s son with a seventh-grade education, a middle-class background by Indian standards of the time. He first gained some attention by using his army pension to help turn his ancestral village in Maharashtra into a model of rural development — building schools, organizing a dairy cooperative, fighting caste discrimination and alcoholism. One of his early successes as an organizer was a state law that required a vote on banning alcohol in a village if 25 percent of the women — the suffering wives of the indolent and abusive drunks — demanded it.
In his younger days he was given to vigilante tactics — smashing illegal stills, flogging drunks — but in his 60s he adopted the time-honored Indian pressure tactic of the indefinite fast, which, when it works, succeeds through a combination of public fascination and official shame. The political fast has a rich history in societies like India and Ireland that have some experience of starvation and an acute public sense of honor. I can’t imagine it catching on in America, especially if our national compassion is reflected in the likes of Ron (“Let Them Die on the Hospital Doorstep”) Paul and Herman (“If You’re Not Rich, It’s Your Own Fault”) Cain. But in India it is an effective form of coercion. One poll found 87 percent public support for Hazare’s 12-day August fast, and his hunger strikes almost always end in concessions.
Obviously, India is not America, but both countries were born in popular protest (against the same empire) and I found it instructive to examine my Occupying countrymen from this vantage point.
Like Occupy Wall Street, Hazare embodies a national frustration with broken democratic institutions. Indeed, India’s government makes our paralyzed Congress look nimble. Like Occupy, Hazare’s grand grievance is the wholesale diversion of wealth from the middle class and poor to the unworthy few — in India’s case through payoffs, patronage and thievery, in America’s through tax and regulatory policies that have expanded the gap between the richest few and everyone else.
In many telling respects, however, that’s where the similarities end.
“When we started the movement, it was like Occupy,” Bedi told me. “But we went beyond Occupy.”
For starters, while Occupy Wall Street is consensus-oriented and resolutely leaderless, Hazare is very much the center of attention. There was an anticorruption movement before Hazare, but it was fractious and weak until he supplied a core of moral authority. When he announces his intention to starve himself, he parks himself on an elevated platform in a public place, thousands gather, scores of others announce solidarity hunger strikes, and TV cameras congregate, hanging on his every word. Hazare and his entourage can seem self-important and high-handed, but he is a reminder that leadership matters.
Second, the Occupiers are a composite of idealistic causes, many of them vague. “End the Fed,” some placards demand. “End War.” “Get the money out of politics.” Much of the Occupy movement resides at the dreamy level of John Lennon lyrics. “Imagine no possessions. ...”
Hazare, in contrast, is always very explicit about his objectives: fire this corrupt minister, repeal that law bought by a special interest, open public access to official records.
His current mission is the creation of a kind of national anticorruption czar, a powerful independent ombudsman. The measure is advancing, and Team Anna hovers over the Parliament at every step, paying close attention to detail, to make sure nobody pulls the teeth out of it. Instead of a placard, Bedi has a PowerPoint presentation.
Occupy Wall Street is scornful of both parties and generally disdainful of electoral politics. Team Anna (yes, they call themselves that) likewise avoids aligning itself with any party or candidate, but it uses Indian democracy shrewdly, to target obstructionists. Recently Hazare turned a special election for a vacant parliamentary seat into a referendum, urging followers to vote against any party that refused to endorse his anticorruption bill. Hazare has also called for an amendment to the election laws to require that voters always be offered the option of “None of the Above.” When it prevails, parties would have to come up with better candidates.
“What really changes them,” Bedi said of recalcitrant politicians, “is the threat of losing an election.”
The Occupation has at least a strong undercurrent of anticapitalism. Not in India. An attempt to spark an Indian offshoot of Occupy Wall Street — a Facebook campaign branded with pictures of Che Guevara — went pretty much nowhere. Capitalism is one thing most Indians believe in; indeed, as my colleagues in the Delhi bureau have been illustrating in a fascinating series of articles this year, the entire economy is a great capitalist workaround. Hazare’s aim is to stop a political class from usurping the fruits of capitalism.
“We’re not anticapitalism,” Bedi told me. “We’re pro-integrity.”
I UNDERSTAND that it is not the job of a protest to draft legislation, to elect candidates, to agree on a 10-point plan for fixing what ails us. But that does not mean the job of fixing what ails us is any less urgent or admirable. At some point you need the unglamorous business of government, which entails not consensus but hard choices and reasoned compromise. The job of protest is to mobilize a mood — but to mobilize it with purpose.
“Occupy has been, to my mind, an engaging movement, and it’s driving home the message, to the banks, to the Wall Street circles,” Bedi said. “That’s exactly the way Anna did it. But we had a destination. I’m not aware these people — what is their destination? It’s occupy for what?”
I’m prepared to celebrate when the Occupiers — like the lone hunger artist of India — accomplish something more than organizing their own campsite cleanup, demonstrating their tolerance for tear gas, and distracting the conversation a little from the Tea Party. So far, the main achievement of Occupy Wall Street is showing up.

A Duty of Effective Counsel




The vast majority of criminal cases are resolved by plea bargains: 94 percent in state courts, 97 percent in federal. For defendants, accepting a prosecutor’s plea deal is less risky than going to trial and possibly being convicted on a more serious charge with a stiffer sentence.
Defendants offered plea deals need effective counsel to ensure that their decisions are well founded and voluntary, not coerced. Under the Sixth Amendment, theSupreme Court said last year, a plea is legitimate only if a defendant has had assistance of counsel while considering it.
In a case before the court on Monday, Galin Frye of Missouri clearly lacked effective counsel at a crucial stage in the felony case against him for driving with a revoked license. The state presented his lawyer a choice of pleas: Mr. Frye could plead guilty to the felony and the prosecutor would ask the judge that he serve 10 days in jail; or he could plead guilty to a misdemeanor, with a request he serve 90 days, although his sentence could be a year.
The lawyer did not tell Mr. Frye about the offer. Three months later, after the offer expired, Mr. Frye pleaded guilty to the felony and was sentenced to three years in prison. A month later, with Mr. Frye in jail, his new lawyer learned about the plea offer. Mr. Frye said he would have taken the misdemeanor deal. He made a motion in a Missouri court to withdraw his guilty plea, which was denied. The Missouri Court of Appeals reversed that ruling.
The state brought the case to the Supreme Court, arguing that Mr. Frye should serve the sentence he was given because he voluntarily pleaded guilty. It contends that since there is no right to a plea bargain, the lawyer’s failure to communicate the offer did not deprive Mr. Frye of any constitutional right. The Supreme Court should reject this bad analysis, which the Justice Department unwisely supports. The lawyer’s inexcusable failure to inform Mr. Frye of the plea offer affected the legal process and deprived him of a critical choice.
A few states require that plea offers be made in the presence of the defendant, but Missouri did not have that procedural safeguard. The Constitution’s guarantee of effective counsel requires that a defendant be informed of important developments. That protection means little if it does not include a right to know about plea offers.

Flat Taxes and Angry Voters



By wide margins, Americans are now telling pollsters they want a tax system that raises more money and is more fair by asking the rich to pay more. They are connecting the dots between the lavish high-end tax cuts of the past decade and today’s serious problems — including widening inequality and mounting deficits — and demanding change. The Republican presidential candidates aren’t listening.
Take the flat tax plan of Gov. Rick Perry of Texas. For all his talk about how it would make filing easier — that is dubious — what it would really do is give high-income Americans a big tax break, while almost everyone else could expect relatively modest tax savings or none at all.
In his plan, taxpayers could choose to stick with the current system or use the flat tax, under which wages and salary would be taxed at 20 percent, versus a current top rate of 35 percent for the affluent. Investment income and multimillion-dollar estates would be untaxed, versus a current top rate of 15 percent on most investments and 35 percent on estates.
In a recent interview with The Times and CNBC, Mr. Perry said “I don’t care” about criticisms that the plan is a giveaway to the rich. He expressed the magical belief that more and bigger high-end tax cuts would spur economic growth and generate significant new tax revenues.
That’s a fairy tale, of course, and one that the conservative Republicans who vote in primaries love to hear. The rest of the country is feeling a lot more skeptical.
According to the latest New York Times/CBS News poll, nearly 70 percent of Americans say that Congressional Republicans’ policies favor the rich and that they oppose lowering taxes for large corporations. Two-thirds polled say that wealth should be distributed more evenly; a similar share wants to increase taxes on millionaires, not cut them. In a previous Times/CBS poll from August, a majority of Americans also wanted to use tax increases to close the deficit, rather than rely only on spending cuts.
Mr. Perry has not provided the details necessary to independently analyze the plan’s impact, but economists of the right and left agree that it would be a huge revenue loser. Mr. Perry’s main prescription for dealing with the deficit is to slash government spending down to a level last seen in the 1960s — before programs like Medicare, Pell grants and Head Start had kicked in and long before the baby boom generation was facing retirement.
Of course, Mr. Perry isn’t the only Republican contender calling for cutting taxes on the rich and gutting the government’s ability to pay for important programs. Herman Cain’s “9-9-9” plan is a variant on the flat tax; Newt Gingrich supports a flat tax roughly similar to Mr. Perry’s.
Mitt Romney has not endorsed a flat tax, and in 1996, when Steve Forbes, then a presidential candidate, floated one, Mr. Romney derided it — justifiably — as a “tax cut for fat cats.” But he is in favor of extending the Bush-era tax cuts and cutting taxes on investments and on corporations. And to tame deficits, he has called for hard spending caps, a tool that could lead to indiscriminate and overly harsh cutting.
President Obama has a better plan, but it is only a start. He has called for closing some corporate loopholes, ending the high-end Bush-era tax cuts and capping the value of tax deductions for high-income Americans. Importantly, he would use the new revenue to both finance needed government spending and reduce the deficit.
The country also needs a comprehensive reform of the tax system, one that strengthens progressivity and raises more revenue from a mix of sources. All of the needed revenue — to meet health care needs; to improve education, infrastructure and security; to foster new technologies and protect the environment — cannot be raised from rich Americans, nor from the income tax alone.
It is encouraging that after reflexively rejecting tax increases for so long, more Americans are recognizing that, in fact, incessant tax cutting is largely to blame for the nation’s fragile condition, and that new taxes are part of the solution. If only more politicians would catch up.