Monday, July 19, 2010

Against Democracy: How America Created a Radical Iran Part 1

This week United Nations started to squeeze the Iranian Republic just a little more and further increasing the control of President Mahmoud Ahmadinejad over the people of Iran. The reason for the newest wave of sanctions is centered on the disputed Iranian nuclear program and the inability for Iran or its western opponents to come to a consensus. Fiery rhetoric has been the weapon of choice for American politicians towards the defiant Middle Eastern country and most American probably agree that the Iran is a danger to peace. However, only President Obama has briefly hinted that the monster that has become Iran was created by the United States. At some point the U.S. public is going to have to reap what its leaders sowed so many years ago and hopefully it will be a lesson how our empire is almost never a defender of democracy.

The battle for Iranian democracy is one of the most heroic and tragic histories in the 20th century. In 1906 a rebellion outside of the British Embassy was able to persuade the middle and trading class of Tehran to form a Parliament. The aging Shah had tried to stop the constitution rebellion in 1905 but had become sick and was near death when the first Iranian parliament was formed. The parliament moved quickly and modeled their new constitutional monarchy after Belgium. The Shah signed the constitution into law and died five days later. However, the new democracy was short lived and in 1907 exiled royalty swayed the Russian and British Empires to invade and control Iran for its oil reserves. Russian and British control would remain in place until 1950.

Mohammad Mosaddegh was an aristocrat from Iran that passionately opposed the interventions by the Russian and British powers. In 1951 he was elected prime minister by a new Iranian parliament and quickly nationalized the oil industry in Iran. The main reason for British and Russian interventions had been oil and the puppet shah government gave extremely favorable terms to a British oil company that would later become British Petroleum. Mosaddegh wanted to use the oil to increase the Iranian budget to modernize the impoverished nation. When the British government refused to accept the terms of the new Iranian democracy it blockaded oil exports from Iran.

Mosaddegh cut the Shah’s powers drastically and assumed control of the military after a protest in Tehran. However, his democratic actions were being drastically undercut due to the British oil blockade and the country was suffering severe economic depression due to the lack of oil sales. Britain was extremely bitter over their loss of control of the Iran oil industry and the oil blockade was not bringing the crisis to a quick conclusion. The United States had been in favor of Iranian democracy because of Mosaddegh’s open hate of socialism and communism but as Britain became increasingly desperate to regain control of Iran Winston Churchill appealed to the new President of the United States, Dwight D Eisenhower.

Winston Churchill told his old war ally General Eisenhower that Mosaddegh was moving towards communism. Being the height of the cold war that was all the United States needed to reverse its support of Iran and denounced Iran’s policies. The CIA was given almost unlimited monetary backing to bribe the Shah and the Iranian military to create a coup d’etat. The CIA hired criminals and tribal strongmen to stage massive protests in Tehran and over 300 people died in these fake revolts. The bribed military leaders than deployed to ensure peace and arrested Mosaddegh and held him accountable for the revolt. Mosaddegh was found guilty buy the CIA agents and was held under house arrest for the rest of his life. The unpopular and oppressive Shah returned in 1953 and quickly made deals with American and British oil companies with the urging of CIA agents. In trade for almost all of Iran’s oil the CIA funded the Shah’s oppressive military and secret police force. The CIA had single handedly crushed the only democracy in Asia Minor, for oil.

As for the 1979 Iranian revolution we all know about the hostage of the American embassy workers. The new Iranian republic was democratically elected but much more aggressive and radical compared to Mosaddegh. The chance to support a real and peaceful democracy in Iran was supplanted for oil. We now have to face a radical Iranian Republic that hates America more than it hated the Shah and is trying to create nuclear weapons. Who knows how much more peaceful the Middle East could have been if we had supported Mosaddegh?

Americas should be ashamed of our governments dealings with Iran, because like it or not, we gave and continue to give President Mahmoud Ahmadinejad an enemy that threatens the Iranian people which he uses to oppress the people of Iran. Instead of recognizing our mistakes Americans iclaim the reason Iran hates us is because we are a democracy, that Iran hates our freedom, that Iran hates Christians. No, Iran hates us because we killed their democracy single handedly. In part two, I will describe how America helped kill millions of Iranians in retaliation to the 1979 revolution.

Sometimes America makes me sick and I am ashamed to be part of this “great democratic nation.”


A Concise history of Iran, Saeed Shirazi

The Devil We Know: Dealing with the New Iranian Superpower, Robert Baer.

Mohammad Mosaddegh and the 1953 coup in Iran, Mark J. Gasiorowski and Malcolm Byrne

Friday, July 16, 2010

A Solution to the Federal Government Debt: End Income and Payroll Tax

American’s have become uneasy about the amount of Federal Debt that is stacking up in Washington and for good reason. This month the debt total topped $13 trillion and will reach $14 trillion within six months. Although these numbers are impressively large and hard to accept, the path to reverse them is not terribly hard.

To demonstrate that the debt problem could have been easily handled during the height of the crisis lets crunch some numbers. The cost of the government bailouts and guarantees the federal government granted was $7.7 trillion dollars. That’s what I said, $7.7 trillion and that does not include the $16.3 trillion of federal government guarantees that were made by many government agencies. After all that money was spent our economy is still weak and unemployment is still high.

Instead with that money the government could have protected the credit system with the $ 700 billion TARP fund and then canceled income and payroll taxes for two years. Sound crazy?

The world operates on incentives, especially the economy. If underlying economic indicators are weak than there is little incentive for investors to invest, for businesses to expand, and for creation of new jobs. However, if income taxes were canceled people would be able to spend and save much more rather than having to pick wither to save or to spend. If payroll taxes were cancelled corporations would be willing to risk expansion and hire more workers. Demand would grow due to increased savings rates and consumer spending. The country would experience an economic boom almost overnight.

To pay for the 50% decrease in federal government revenue a very small nationwide sales tax could be implemented and spending could be cut drastically. Ending the wars and cutting military spending, create a means test for social security and increase retirement age to 70, and deregulate healthcare which would make healthcare cost decrease. Those three tasks would cut the projected 2010 $3.7 trillion budget by 50 percent.

Alas that is not what happened, instead we received a stimulus package that has done little and spent a lot, bailouts of corrupt and greedy bankers, and no major decrease in unemployment. Since hindsight is 20/20 what could be done now? The answer is still the same one as above but just a little different.

Use the $700 billion TARP funds, use the remaining 45 percent of the stimulus package, end the wars and cut military spending, cancel the $800 billion dollar healthcare reform, and cut social security spending. Take all of that money and cancel the income tax and payroll taxes.

I am 100 percent confident that there would be unintended consequences but this plan would create positive incentives on the individual level rather than a trickledown effect. In a complex organization such as the economy solutions have to be regulated to the individuals in the free markets. With less federal government spending and nationwide sales tax there would be no real reason to bring back the income tax but if we did, it would be much lower and go directly to paying off the debt. America would once again become the greatest economic power in the world instead of coming in second to the social European Union.

Think Twice, Michael J Mauboussin

Friday, July 2, 2010

Apathy in America: Part One

Politics seems to have frozen the ability for America to react to any situation ranging from the bigwigs in Washington to the people sitting in front of their TV watching Glen Beck or Keith Olbermann. This general sense of apathy towards local and national issues has resulted in bad situations getting worse and although it is scary to see America slip into this indifferent state, it is not surprising. Be assured, there will be no ranting and repeating main stream political trash in this article, this will only be a thread of personal opinion regarding the negative system of incentives that exists in this nation.

The BP oil spill will serve as a starter and foundation to this thesis of apathy in America. The spill at the Deepwater Horizon drill site started about two months ago and it is projected that the relief wells being drilled will take another month to complete. Although this situation is a tragedy and future care must be taken to prevent such a large spill, the right thing for America as a nation right now is to clean up the oil as fast as possible. However, the very opposite has happened and now the entire country is thoroughly frustrated with; well, everyone. Republicans are blaming and bashing President Obama while Democrats and Obama are bashing BP. Meanwhile, the big media is breeding anger and hate at every possible level to insure people continue to watch the oil leaking on streaming video feeds. Every pundit has a solution in their own mind but none of the solutions are being implemented. Why?

The answer is not a one sentence solution as is the norm per the big media nor is it 100 percent accurate due to massive complexities of the oil spill. Instead, this answer does allow an explanation of why this spill has not been handled efficiently. It is all about the incentives.

In an Article by Paul H. Rubin (Wall Street Journal, 7/2/2010, opinion) he clearly lays out the many contributing factors of why the cleanup is progressing at such a slow pace but he fails to explain why these solutions are not being implemented. First, the EPA could temporarily relax restrictions on the amount of oil in discharge water which is currently at 15 parts per million. This law is used to clean up small spills in clean water, however, this is a very large spill and focusing so much on 15 parts per million is a colossal waste of time. What is stopping the EPA from temporarily easing regulations? Their incentives as an agency have been to increase the environmental responsibility of both the government and the privet sector. Easing restrictions on clean up laws would be seen as a loss of face in the political world and could inspire companies to challenge many of their hard earned laws. In addition, the agency would lose many of the environmental lobby groups that provide so much money to EPA. Easing restrictions would be political suicide for many of the EPA head leaders. The incentive to keep regulations outweighs the benefit of a faster clean up.

The second point made by Mr. Rubin is the failure of the President to issue an executive order to waive the Jones Act, which keeps foreign ships from operating in U.S coastal waters. Many nations have offered their ships and services to help clean up the oil and such experienced assistance would boost the cleanup dramatically. Incentives once again help explain why that on day 70 of the oil spill America has not accepted foreign help.

Obama has a very large support base from union labor which viciously defends the Jones Act regardless of the oil spill. Any temporary halt of the Jones Act would be considered a slap in the face to organized labor and Obama would lose money and support from union lobbyist. This would be a devastating blow to the Democratic Party right before important mid-term elections. Obama might commit political suicide if he waived the Jones Act. These incentives outweigh allowing the world’s largest oil skimmer from Taiwan to enter the Gulf of Mexico even though it can process nearly 500,000 barrels of oil a day out of the water.

The last point made by Mr. Rubin is why only 400 oil skimmers are operating in the Gulf out of the fleet of nearly 2000 in the United States. Bureaucracy and regulations are keeping these ships stationed at home ports in case of an oil spill. As a senator from Florida pointed out, “It is the equivalent of not sending fire trucks to the scene of a fire for fear that a fire could start.” If congress were to order ships to the oil spill from other areas of the country and a spill happened in those areas the ships had just left, the local anger at such an action would lose a voting congressman his next election. Although the chance of another major spill in another area of the country is astronomically high, the incentive to avoid losing an upcoming election is too high for a bill to find the floor of congress.

These were just three easy solutions pointed out by Mr. Rubin and there are thousands more ways to speed the oil clean up. The problem is that misplaced incentives in politics have kept actions from taking place. There is also a plethora of reasons that big media has not pointed out these easy solutions but incentives keep them from informing the public. An entire book could be written on misplaced incentives in the oil spill but that is a task for a smarter person with time on his hands.

The lesson to learn here is that incentives rule people’s actions and politics is no different. To find answers to issues, do some research and critical thinking on what could be preventing a solution to a situation. This can be done on every level of society, from individual day to day tasks all the way to geo-politics. Just remember, it’s all about the incentives.