Archive for December 31st, 2008

Illusions shatter in 2008

Some glimpses at the world in 2008:  In the African country of Zimbabwe almost a third of the population is dying as the country implodes due to the intransigence of Robert Mugabe, a former freedom fighter against white oppression who has become a tyrant willing to sacrifice his own population to protect his ego.  Although this crisis has been building for nearly a decade, with tremendous inflation and injustice, now children are literally wasting away as food scarcity grows and the government denies anything is wrong.

In Gaza a population suffering malnutrition, post-traumatic stress disorder, and chaos now faces an assault from Israel.  The Israelis are angry about rockets being shot at their citizens by a Hamas, an extremist militia.   The situation is complex, but one thing is true on both sides: the people who suffer the most are the innocents who happen to live in the wrong place at the wrong time.

In the US people are reeling from the onset of an economic crisis so severe that 2008 may be remembered alongside 1929 in terms of heralding a deep recession.  Events in September and October led to a financial crisis that has no easy way out.   This crisis is not just about banks or credit, but 30 years of unsustainable economic policies that need to be rebalanced.

2008 was also the year when the US finally recognized that its long term plans for a democratic Iraq as an American ally and model for the region was not achievable, and decided to cut its loses and find a way out.

In Afghanistan the Taliban is resurgent, al qaeda still operative, and most NATO countries are reducing their contribution.   While the US is likely to increase its forces in the country, there is no military solution for Afghanistan, the country is too large and US military options limited.

In 2008 the American public, sensing that things have gone very wrong in recent years, embraced a change in politics, building on the shift to the Democrats and the left started in 2006.  Barack Hussein Obama, a relatively inexperienced Senator from Illinois, a black man with a funny name, was elected President.   His calm, confident and intelligent demeanor inspired trust and hope, something the American people haven’t had for their political leaders for some time.   Obama’s election also surprised much of the world, he is so different from the kind of leader Americans usually embrace.   After President Bush’s earlier “with us or against us” errors of bluster and arrogance (which he himself stepped back from), Obama’s election creates a bit of good will internationally.

Obama’s election was also part of a year of wild political news, ranging from John McCain’s improbable comeback to win the GOP nomination, the long drawn out and sometimes bitter fight between Obama and Hillary Clinton for the Democratic nomination (ending with Clinton as Obama’s choice to be Secretary of State), and the weird but entertaining choice of Sarah Palin to be McCain’s running mate.   To top off all this political drama, disgraced Illinois governor Rod Blagojevich just chose Roland Burris to replace Obama in the Senate, defying Democratic party leaders who did not want him to make a choice.  I think the Senate should seat Burris, who has done nothing wrong, but egos are involved and expect the drama to continue.

2008 saw wild swings in the price of oil.   Production is level, and demand is inelastic.  That means that slight changes in demand not caused by changes in supply can yield rapid and dramatic price fluctuations.   That certainly happened this year!   The high prices earlier put us on notice that oil production cannot rise as fast as demand at stable prices — if the economy grows, oil prices will go up dramatically.   The recession gives us a respite, but it doesn’t make the problem go away.

The year also had it’s share of natural disaster — my first WordPress blog entry was about Nargis, a storm which hit Burma back in May, causing massive death and destruction.

So the year was historic, dramatic, with its share of bad news.  It was the perfect year to start a blog about ‘an era of crisis and transformation.’   The theme of 2008 to me is the shattering of illusions.  To be sure, some of these illusions were dispelled in 2006 and 2007, but in 2008 the process reached its peak, people realize we live in a different world than we thought, and so much of the past 20 years or so has been built on unsustainable practices.  The illusions now shattered:

1) The fundamentals of the economy are strong.  No.  The fundamentals have been wildly out of balance for almost three decades, and rebalancing will be painful and force the US to start producing again, and living within our means;

2) The US is the dominant world power.  No.  The US has had to define success way down in Iraq in order to create the chance for a face saving way out, and in Afghanistan seven years after the war started the Taliban is resurgent and NATO speaks of the possibility of defeat.  Both of these would have been seen as absurdly defeatist if predicted five years ago.  The US has a strong military, but in an era of terrorism and asymmetrical warfare, our capacity to win wars against large armies is overshadowed by the inability of military power to shape political results.   This isn’t anything against our military — they are tremendously effective at what they are trained to do.    But winning wars is different than nation building, and military power is only one dimension of effective counter-terrorism.

Given that and the prominence of economic factors, the world is now multipolar rather than unipolar, and globalization is trumping sovereignty.  Americans are slowly grasping that we can’t hold ourselves aloof from the world or comfort ourselves with myths that we’re better than others and they’re just jealous.  That illusion was dangerous.

3) Americans could never vote for an urbane, intellectual black candidate for President, especially if his name contains “Hussein” and rhymes with Osama.   The American people have never been on the “talk radio right” the way it seemed to many in recent years, nor are they partisan Democrats.  Despite the red-blue map most Americans are purple — centrist and pragmatic.  (And as a Minnesota Vikings fan, I like purple).

For all the drama and turmoil of the last year, 2008 is almost certain to be remembered as the start of a major transformation of US and perhaps world politics.   We have been brought back to reality, we now recognize the limits of our power, and the foolishness of living a debt-based existence beyond our means.  We realize that while our values are strong, we haven’t really being following them, seduced into a hyper-consumerist nationalist orgy of arrogance and denial.

The transition is just beginning.  The left hasn’t quite figured out how to reconcile their ambitious social agenda with a weakened economy.  They need to put interest-group oriented politics aside and work for pragmatic compromises with the right.   The right hasn’t figured out how to let go of the conservative populism of people like Limbaugh and Hannity, and recognize the need for multi-lateralism and pragmatism.  2009 is a year both political parties will need to reconstruct themselves to face reality.

And, though we face a recession, severe foreign policy challenges, and a world still riddled with crisis and instability, there is something cathartic about realizing that we at least started to put misguiding illusions aside and are beginning to understand the challenges ahead.    To solve any problem one first has to admit there is a problem.    Our illusions allowed us to live in denial for far too long.  That time is over.